“Deutsche Telekom AG (DTE), Germany’s biggest phone company, is considering a sale this year of its digital classifieds business that may fetch 1.5 billion euros ($2 billion), according to people familiar with the matter.

Deutsche Telekom intends to hire banks as early as this quarter to prepare for a sale or initial public offering of Scout24 Holding GmbH, said two of the people, who asked not to be identified because the discussions are private. The business may attract media companies Axel Springer AG (SPR) and Bertelsmann SE as well as buyout firms, they said. Deutsche Telekom may also look for a partner for Scout24, one of the people said….”

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“Russia’s government clashed with the central bank over its reluctance to stimulate the country’s sagging economy, with President Vladimir Putin urging an evaluation of both fiscal and monetary measures to boost growth.

Bank Rossii has “all the necessary grounds” to signal a future cut in borrowing costs, Finance Minister Anton Siluanov said yesterday and Deputy Economy Minister Andrei Klepach said monetary stimulus was “essential.” Easing policy would be “counterproductive,” said Alexey Ulyukayev, the central bank’s first deputy chairman.

“We should analyze whether we have really exhausted these measures’ potential in this situation, or whether, given the European recession, it still makes sense to keep doing something to stimulate demand using budget or monetary-policy measures,” Putin said in Moscow yesterday.

Economic growth in the largest energy exporter has decelerated to the weakest pace since a recovery began in 2010 as weakening demand from China and Europe hurts exports. The slump is challenging Bank Rossii Chairman Sergey Ignatiev, whose final term expires in June.

The benchmark Micex Index (INDEXCF) traded 0.4 percent higher at 1,521.16 at 2:21 p.m. in Moscow. The ruble was little changed at 30.3005 per dollar against the dollar and slid 0.4 percent to 40.4595 against the euro. Non-deliverable forwards, which provide a guide to expectations of currency movements, showed the ruble at 30.7140 in three months….”

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“Thailand joined a growing chorus of developing nations expressing alarm at the rapid appreciation of their currencies as increased monetary easing in the U.S. and Japan spurs demand for higher-yielding assets.

The baht climbed to a 17-month high today, before retreating after Finance Minister Kittiratt Na-Ranong said the exchange rate is “not at a good level” and exporters will face difficulties should it strengthen further. The Bloomberg- JPMorgan Asia Dollar Index is headed for a record eighth monthly gain and currencies in Colombia, Poland and Romania reached their strongest levels this month since at least February 2012….”

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Banks win again off your back….how does your back feel ?

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“Silver Lake Management LLC, the private-equity firm discussing a potential buyout of computer maker Dell Inc. (DELL), has raised more than $7 billion for its latest fund, according to two people with knowledge of the matter.

The fund, which officially started gathering money in March, had raised $4.1 billion as of August, meaning Silver Lake won about $3 billion since then. Silver Lake Partners IV LP is seeking $7.5 billion, with the option of raising as much as $10 billion.

Silver Lake, the largest technology-focused private-equity manager, is among investors in talks with Dell about taking the company private, people familiar with the matter told Bloomberg Newsthis week. A deal could require buyers to put together about $22 billion in debt and equity financing, the most for a leveraged buyout since 2007.

Gordon Goldstein, a spokesman for Menlo Park, California- based Silver Lake, declined to comment on the fund. The people with knowledge of the fundraising asked not to be named because the information is private….”

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“Venture capital database CB Insights is releasing a new report today on the state of the VC industry and investments in 2012. For the year, $28.3 billion was invested by venture capital firms in 3,267 deals. However, it’s interesting to note that while seed VC funding hit highs during the year, overall investment fell from 2011’s $30+ billion level. And VC funding actually dipped for the second consecutive quarter in Q4 2012.

After Q3 2012’s deal activity levels (these were the highest since the dot-com days), Q4 stayed strong on a number of deals, which dipped slightly from 835 financings to 834 in the quarter. Funding in Q4 fell for the second straight quarter coming in at $6.8 billion. Funding slipped 7.5 percent from 2011 but still remained up 36 percent versus 2009.

Seed funding, which hit record levels in Q3 2012, still saw a strong quarter in Q4 2012, posting the second highest quarter for seed deals. It looks like the Series A crunch may not have taken full effect yet, as Series A deals saw the highest percentage of VC funding in the last five quarters.

New Enterprise Associates leads…”

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“Companies in the euro area are poised to cut dividends to the lowest level in four years as chief executive officers stockpile cash to weather the region’s sovereign-debt crisis.

Payouts to shareholders in the Euro Stoxx 50 Index (SX5E) will fall by 3.3 percent to 115.48 euros a share this year, according to more than 500 analyst estimates compiled by Bloomberg. Reducing them by that much would cut the dividend yield to 4.3 percent from 6.3 percent in September 2011, even after cash on balance sheets climbed to the highest since 2008, the data show.

The forecasts suggest more companies will follow Royal KPN NV and Enel SpA (ENEL) in reducing payouts as the debt crisis pushes unemployment in Spain and Greece to more than 25 percent and China’s economy cools. Analysts are cutting estimates amid a rally that has sent the Euro Stoxx 50 to a 17-month high as central-bank measures hold down bond yields.

“Within Europe, it’s excess cash on balance sheets” that attracts investors, said Bank of America Corp.’s John Bilton, European investment strategist at Bank of America’s Merrill Lynch unit in London. “The current levels of dividend yield are not sustainable.”

Holdings of cash and equivalents at companies in the Euro Stoxx 50 climbed 9.3 percent to 1,834.44 euros a share in 2012, according to data compiled by Bloomberg. While the gauge’s estimated dividend yield fell over the past year, projections for the Standard & Poor’s 500 Index increased to 2.3 percent from 2.2 percent, Bloomberg data show.

Economy Shrinks…”

“The Bundesbank will repatriate 674 metric tons of gold from vaults in Paris and New York by 2020 to restore public confidence in the safety of Germany’s reserves.

The phased relocation of the gold, currently worth about 27 billion euros ($36 billion), will begin this year and result in half of Germany’s reserves being stored in Frankfurt by the end of the decade, the Bundesbank said in a statement today. It will bring home all 374 tons of its gold held at the Banque de France and a further 300 tons from the New York Federal Reserve, it said. Holdings at the Bank of England will remain unchanged.

“With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centers abroad within a short space of time,” the Bundesbank said. It said the complete withdrawal of reserves from Paris reflects the fact that Germany no longer depends on France as a financial center to exchange gold because both nations use the euro.

Germany’s Audit Court sparked a debate about the country’s gold reserves last year when it called on the Bundesbank to take stock of its holdings abroad, saying their existence had never been verified. German gold reserves, the second-largest in the world after the U.S., amounted to 3,391 tons as of Dec. 31 and were valued at 137.5 billion euros.

‘A Lot of Emotion’ …”

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“The share of millionaires planning to investing in stocks this year rose to 55 percent, up 10 percent from 2010, according to a survey of 1,450 millionaires by SpectremGroup.

That’s a nice increase, but it doesn’t mean they’re bullish on the economy.

“Millionaires are taking more risks, but not necessarily because they feel things are better from an economic standpoint,” Spectrem president George Walper told BI. “It’s strictly the challenge of desiring a better return and that’s been available because interest rates are so low. At the same time, they are also holding back money in reserve….”

Full article and charts 

In the past there was some balance based upon push and pull, but today all players are in one sided push action. We must ask what are the consequences and for how long can the insanity last?

Full article 

“Just as the president reminded us yesterday we are not a deadbeat nation, merely borrowing money today to pay the bills of yesterday, so, as theNY Times reports in this all-too-real article, many of the citizens of the US are also living not just paycheck-to-paycheck but short-term-loan-to-short-term-loan. As one debt-consolidation service noted “They’ve been borrowing just to meet payments on previous loans; it builds on itself.” Rings an awfully loud bell eh? (and yes, we know the government’s finances are not run like a households – though at some point the check book needs to balance). People in tough ‘economic’ situations fall into the ‘poverty trap’, borrowing money at ever higher interest rates in a shell game to keep previous borrowers at bay. The average debt for households earning $20,000 a year or less more than doubled to $26,000 between 2001 and 2010 – as people dig deeper, precisely because they long to escape. As the focus of the article notes, “the belt-tightening was the easy part… the larger problem was cash-flow.” Critically, experiments show that ‘economic’ scarcity by itself – independent of personality or any other factors – fuels a drive to borrow recklessly.

Via NY Times:

The belt-tightening was the easy part. Cancel the cable. Skip the air conditioners. Ration the cellphone, unplug the wireless Internet, cook rice and beans — done, and done. The larger problem for LaKeisha Tuggle, 33, who had lost her public relations job, was cash flow: After her unemployment insurance and savings ran dry, there was none.

 

…”

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“Prime Minister Shinzo Abe’s fiscal and monetary stimulus measures may trigger a collapse of Japan’s economy as early as this year, according to Takeshi Fujimaki, a former adviser to billionaire investor George Soros.

The yen has slumped 6 percent since elections last month returned power to the Liberal Democratic Party run by Abe, who’s demanded that the Bank of Japan (8301) undertake unlimited cash infusions to end deflation. The premier also unveiled 10.3 trillion yen ($116 billion) in extra spending last week, a step that will add to public debt that’s already more than double the size of the nation’s economy.

“Large-scale spending is ridiculous given the amount of debt Japan has accumulated, while I think highly of Abe in regards to his intention to weaken the yen to support growth,” the president of Fujimaki Japan, an investment advising company in Tokyo, said in an interview on Jan. 11. “Abe’s policies would have worked some 10 years ago, but now they will only accelerate an economic collapse.”

Fujimaki said in an interview last June that Japan may default on its debt within five years and the yen could weaken to as much as 400-500 per dollar. He advised Japanese investors then to hold assets in foreign currencies such as the greenback, Swiss franc, U.K. pound and the Australian and Canadian dollars.

Borrowing in yen and investing in those currencies would have returned an annualized 32 percent as of yesterday, Bloomberg data show….”

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“Yesterday, Citigroup floated the idea that a temporary government shutdown once the full array of debt ceiling extension measures expires some time in mid/late February, is possible, which would also mean the first technical default of the US depending on the prioritization of US debt payments. Now, Politico reports that this idea is rapidly gaining support within the GOP and that “more than half of GOP members are prepare to allow default unless Obama agress to dramatic cuts he has repeatedly said he opposes.” It gets better… or worse depending how many ES contracts on is long: “Many more members, including some party leaders, are prepared to shut down the government to make their point. House Speaker John Boehner “may need a shutdown just to get it out of their system,” said a top GOP leadership adviser. “We might need to do that for member-management purposes — so they have an endgame and can show their constituents they’re fighting.”” Of course, at this point not even a US government bankruptcy may send the ES more than one or two ticks lower. After all, there is no risk of anything happening anywhere, any time.

More from Politico….”

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“Hedge funds are borrowing more to buy equities just as loans by New York Stock Exchange brokers reach the highest in four years, signs of increasing confidence after professional investors trailed the market since 2008.

Leverage among managers who speculate on rising and falling shares climbed to the highest level to start any year since at least 2004, according to data compiled by Morgan Stanley. Margin debt at NYSE firms rose in November to the most since February 2008, data from NYSE Euronext show.

The rising use of borrowed money shows that everyone from the biggest firms to individuals is willing to take more risks after missing the rewards of the bull market that began in 2009. While leverage means bigger losses should stocks decline, investors are betting that record earnings and valuations 9.8 percent below the six-decade average will help push the Standard & Poor’s 500 Index toward the record it set in October 2007.

“The first step of increasing risk is just going long, the second part of that is levering up in order to go longer,” James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a Jan. 8 telephone interview. “Leverage increasing in the hedge-fund area suggests they’re now getting on board.”

The S&P 500 rose 0.4 percent to 1,472.05 last week on better-than-projected reports from Alcoa Inc. to Mosaic Co. (MOS)The index is about 6 percent away from the all-time high reached in October 2007 and has already gained 3.2 percent in 2013, led by Celgene (CELG) Corp. Futures on the S&P 500 advanced less than 0.1 percent at 8:24 a.m. in London today….”

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“The Bank of England’s Financial Policy Committee proposed powers to alter the amount of capital banks hold against real-estate assets as well as derivatives and bonds as it seeks to strengthen the financial system.

While the FPC will seek to act at the “highest level,” it also sees a potential need to target capital at a “more granular level,” it said a draft paper published in London today. “Such an approach might help to tackle threats to stability before they spread, particularly by leaning against exuberance in specific subsectors,” it said, noting high loan- to-value mortgages as an example.

The FPC has sought powers over so-called sectoral capital requirements — along with countercyclical capital buffers and leverage ratios — from the government as the Bank of Englandprepares to take over the role of ensuring financial stability. The committee, led by BOE Governor Mervyn King, is currently operating on an interim basis as legislation passes through Parliament.

The FPC said the use of the countercyclical capital buffer and the sectoral capital requirements “will improve the ability of the financial system to withstand shocks.” King is due to appear at a Parliament hearing in London tomorrow to answer lawmakers’ questions on the BOE’s semi-annual Financial Stability Report. FPC membersAndrew Haldane and Michael Cohrs will also attend the hearing….”

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“China’s stocks rose the most in a month after the head of the securities regulator said the nation can increase by 10 times the size of two investment programs that allow foreign investors to buy securities.

China can raise quotas to allow foreigners as well as offshore yuan holders in Hong Kong to buy stocks and bonds in the mainland, said Guo Shuqing, Chairman of the China Securities Regulatory Commission. Citic Securities Co. led a rally for brokerages on the prospect that increased demand for equities would boost profit. Hebei Sailhero Environmental Protection High-tech Co. (300137) jumped 10 percent and Tasly Pharmaceutical Group Co. surged to a record high as worsening pollution in Beijing may spur demand for health care and environmental protection.

The Shanghai Composite Index (SHCOMP) rose 3.1 percent to 2,311.74 at the close, the biggest advance since Dec. 14. The CSI 300 Index (SHSZ300) jumped 3.8 percent to 2,577.73, as gauges of financial, technology and health-care companies jumped more than 4 percent. TheHang Seng China Enterprises Index (HSCEI) added 1.3 percent.

“Guo’s comments are very significant as it shows the government is trying to get bullish on stocks and it’s a policy signal as well,” Hao Hong, Hong Kong-based managing director of research at Bank of Communications Co., said in a phone interview. China is trying to improve the quality of its economic growth and investing in environmental technology and health care fit into this plan, he said.

The Shanghai measure has risen 18 percent from an almost four-year low on Dec. 3, while the CSI 300 climbed 22 percent on signs economic growth is picking up. Government reports last week showed exports expanding more than economists forecast, while inflation accelerated….”

“Haven’t blogged in a while. So I decided to look back and pull out one of my first blog posts, from 2004.  An oldie, but goodie !

The Number I recommend that anyone with an interest in the market jump at the chance to buy it.

In 1990, I sold my company, MicroSolutions which specialized in what at the time was the relatively new business of helping companies network their computer equipment to CompuServe. After taxes, I walked away with about $2 million. That was going to be my nest egg, and my goal was to protect it at all costs, and grow it wisely.

I set about interviewing stockbrokers and settled upon a broker from Goldman Sachs, Raleigh Ralls. Raleigh was in his late 20s, and relatively new to Goldman. But we hit it off very well and I trusted him. As we planned my financial future, I made it clear that I wanted my nest egg to be invested not like I was 30 years old, but as if I were 60 years old. I was a widows and orphans investor.

Over the next year I stuck to my plan. I trusted Raleigh, and he put me in bonds, dividend-paying utilities and blue chips, just as I asked.

During that year, Raleigh began asking me a lot of questions about technology. Because of my experience at MicroSolutions, I knew the products and companies that were hot. Synoptics, Wellfleet, NetWorth, Lotus, Novell and others. I knew which had products that worked, didn’t work, were selling or not. How these companies were marketed, and whether or not they were or would be successful.

I couldn’t believe that I would have an advantage in the market. After all, I had read A Random Walk Down Wall Street in college. I truly thought that the markets were efficient, that any available knowledge about a company was already reflected in its stock price. Yet I saw Raleigh using the information I gave him to make money for
his clients. He finally broke me down to start using this information to my advantage to make some money in the market. Finally after more than a year, I relented. I was ready to trade.

Notice I didn’t use the word invest. I wasn’t an investor. I just wanted to make money. The reason I was ready to try was that it was patently obvious that the market wasn’t efficient. Someone like me with industry knowledge had an advantage. My knowledge could be used profitably. As we got ready to start, I asked Raleigh if he had any words of wisdom that I should remember. His response was simple. “Get Long, Get Loud”.

Get Long, Get Loud. As we started buying and selling technology stocks, most of which were in the local area networking field that I had specialized in at MicroSolutions, Raleigh put me on the phone with analysts, money managers, individual investors, reporters, anyone with money or influence who wanted to talk technology and stocks.

We talked about token ring topologies that didn’t work on 10BaseT. We talked about what companies were stuffing channels – selling more equipment to their distributors than the distributors really needed to meet the retail demand. We talked about who was winning, and who was losing. We talked about things that really amounted to the things you would hear if you attended any industry trade show panel. Yet after hanging up the phone with these people, I would watch stocks move up and down. Of course as the stocks moved, the number of people wanting to talk to me grew.

I remember buying stock in a Canadian company called Gandalf Technologies in the early 90s. Gandalf made Ethernet bridges that allowed businesses and homes to connect to the Internet and each other via high-speed digital phone lines called ISDN.

I had bought one for my house and liked the product, and I’d talked to other people who’d used it. They had decent results, nothing spectacular, but good enough. I had no idea Gandalf was even a public company until a friend of Raleigh’s asked me about it. What did I think about Gandalf Technologies? It was trading at the time at about a buck a share. It was a decent company, I said. It had competition, but the market was new and they had as much chance as anyone to succeed. Sure, I’ll buy some, and I would be happy to answer any questions about the technology. The market size, the competition, the growth rates. Whatever I knew, I would tell.

I bought the stock, I answered the questions, and I watched Gandalf climb from a dollar to about $20 a share over the next months.

At a dollar, I could make an argument that Gandalf could be attractive. Its market was growing, and compared to the competition, it was reasonably valued on a price-sales or price-earnings basis. But at $20, the company’s market value was close to $1 billion – which in those days was real money. The situation was crazy. People were buying the stock because other people were buying the stock.

To add to the volume, a mid-sized investment bank that specialized in technology companies came out with a buy rating on Gandalf. They reiterated all the marketing mishmash that was fun to talk about when the stock was a dollar. The ISDN market was exploding. The product was good. Gandalf was adding distributors. If they only maintained X percentage of the market, they would grow to some big number. Their competitors were trading at huge market caps, so this company looks cheap. Et cetera, et cetera……”

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“The U.S. December budget deficit was just $260 million. This is according to the latest Monthly Treasury Statement from the Financial Management Service.

Economists were forecasting a deficit of closer to $1 billion.

The December deficit was also the lowest December number since 2007, reports Bloomberg.

It’s worth noting that monthly numbers are noisy, and that seasonal factors tend to be considerable in December.

Regardless, this is an encouraging sign.

Receipts were $269.5 billion while the spending was $269.7 billion.  This is important to remember, because budget deficits and surpluses aren’t just about spending levels.  Indeed, growth plays just as important a role.

As GDP grows, the deficit shrinks.  To better understand this, read this and this.

Here’s a look at some historical numbers….”

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Look out below?

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