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Monthly Archives: September 2012

Economists Reluctantly Pick Romney

NEW YORK (CNNMoney) — Economists think Republican presidential candidate Mitt Romney would be better for the economy than President Obama. But they’re not very enthusiastic about either of them.

Nine of 17 top economists surveyed by CNNMoney picked Romney when asked who’s election would help the economy grow more. Only three picked Obama.

Read the rest here.

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Hussman: Present Market Conditions Give Us No Choice but To Remain Highly Defensive.

In the context of historical evidence and outcomes, present market conditions give us no choice but to remain highly defensive. Valuations remain rich on the basis of normalized earnings (which are better correlated with subsequent returns than numerous popular alternatives based on forward operating earnings, the Fed Model and the like). Investor sentiment is overcrowded on the bullish side even as corporate insiders are liquidating at a rate of eight shares sold for every share purchased – a surge that Investors Intelligence describes as a “panic.” Market conditions remain steeply overbought on an intermediate and long-term basis, with the S&P 500 still near its upper Bollinger bands (two standard deviations above the 20-period moving average) on weekly and monthly resolutions. We continue to observe wide divergences in market action, from century-old criteria such as the weakness in transports versus industrials (which suggests an unwanted buildup of inventories) to more subtle divergences and signs of exhaustion in market internals.

Overall, we continue to estimate a steeply negative return/risk for stocks on horizons from 2-weeks to 18 months….

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EXPERT: If You Were At Occupy Wall Street, Your Phone Was Probably Surveyed


Surveyed, as in, if it wasn’t shut off, the NYPD skimmed or “surveyed” most of your information, really your identity and all that goes along with it, straight off your phone.

leading privacy blogger and working member of the American Civil Liberties Union, Kade Ellis, recently took note of an obscure lecture posted to YouTube more than a month ago. At less than 900 hits (at the time this was written), this video passed well beneath the public radar.

The lecture was titled “Privacy is dead,” and private investigative expert Steven Rambam had this to say:

“I can tell you that everybody that attended an Occupy Wall Street protest, and didn’t turn their cell phone off, or put it — and sometimes even if they did — the identity of that cell phone has been logged, and everybody who was at that demonstration, whether they were arrested, not arrested, whether their photos were ID’d, whether an informant pointed them out, it’s known they were there anyway. This is routine.”

Read the rest here.


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Insight: Mom and Pop Investors Miss out on Stock Market Gains

(Reuters) – Stocks have more than doubled since the financial crisis and are closing in on a five-year high, but many Main Street investors have been absent from the party – especially those with the least saved.

Those who missed much of the rally did so because they reduced equity exposure after the benchmark S&P 500 index plummeted 57 percent between late 2007 and March 2009, according to an analysis by Reuters of mutual fund flows and changes in assets held in retirement accounts. Investors with the smallest savings typically saw the lowest percentage recovery in returns.

And while some have returned to the stock market during the subsequent rally, plenty of small investors remain on the sidelines.

“This is the most uncelebrated bull market in history,” said Tony Ferreira, managing director at Cogent Research, which provides research and consulting for large fund managers. “In the old days, people would be jumping on the bandwagon, but nobody’s chasing equity performance this time. Many people are still scared to wade back into the water.”

Read the rest here.

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High Frequency Traders’ Claims Refuted by Studies

Advocates of high frequency trading (HFT) like to point to the advantages it brings in terms of market efficiency.

The Futures Industry Association Principal Traders Group, a trade association, which includes high frequency traders, said in a September statement that “as markets have become more automated and competitive … trading costs are lower, markets are deeper and more liquid, and prices better reflect information about the value of stocks and commodities.”

But recent testimony before the US Senate Banking Committee and a new study by the Federal Reserve Bank of Chicago both paint HFT in a rather different light.

Read the rest here.

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Chicago PMI Falls Into Negative Territory

“WASHINGTON (MarketWatch) — The MNI Chicago Report said its purchasing managers’ index fell to 49.7 in September from 53.0 in August. Any reading below 50 indicates contraction. This is the lowest level in three years. The size of the decline was unexpected. Economists had expected only a small decline. ”

Full report

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To Regulate or Not to Regulate High Frequency Trading

“Having observed what high-frequency trading has done to U.S. markets, foreign governments are doing what American officials have avoided: regulate.

In traditional stock trading, a buyer, through a broker, purchases shares in a stock with the hope that over time they will grow in value. In high-frequency trading, institutional investors use computerized programs to buy stocks and then sell them within hours, minutes or even seconds, taking advantage of slight fluctuations in value.


On May 6, 2010, U.S. markets were disrupted by a “flash crash” that sent the Dow Jones average plummeting more than 600 points in a matter of minutes, before coming back again almost as quickly. On August 1 of this year, The Knight Capital Group lost $440 million in 45 minutes as a result of a computer glitch and sent the trading firm to the brink of bankruptcy.”

Full article

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Calling Out is Hurting Travelers and American Airlines

“(MoneyWatch) Labor strife between American Airlines and its pilots is grounding flights and angering passengers affected by flight cancellations and delays.

The bankrupt carrier says it has had to cancel hundreds of flights because of an increase in the number of pilots calling in sick. The pilots, angry over a contract imposed on them cutting their pay and benefits, also appear to be causing problems when they do show up. In the last month, four times as many flights as usual have been cancelled for maintenance issues resulting from last-minute plane inspections ordered by pilots.

In a report earlier this week, Ray Neidl, an analyst with Maxim Group, wrote that the pilots were the most important labor group at American, and that a deal with them was crucial.”

Full article

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Muni Buyers, BEWARE

(Money Magazine) — Cracks are starting to appear in the municipal bond market. If you’re investing for income, it’s time to pay attention.

Consider: Three California cities filed for bankruptcy this summer — unusual in such a short period — and ratings agencies warn that more trouble is coming. “We expect local governments to be struggling with this through 2013,” says Robert Kurtter, managing director, public finance, at Moody’s Investors Service.

Berkshire Hathaway (BRKA,Fortune 500) recently disclosed it was terminating half its contracts that insure against muni bond defaults — a sign, perhaps, that Warren Buffett is increasingly worried about the public sector’s fiscal health.

Policymakers looking to shrink the federal deficit are discussing limits on the tax benefits of munis, normally exempt from federal and, in some cases, state income taxes.


Full article

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The Bow Tie: Now’s the Time to Invest in Russia and the Ruble

“Russia and its currency represent very attractive investment venues, and investors looking to get in early should consider doing so now, says international investor Jim Rogers.

Political stability and a large economy make Russia a rising star.

“I am looking at Russia for the first time in my life, contemplating buying Russia. I am even looking at the ruble,” Rogers told Newsmax.TV in an exclusive interview. ”

Full interview

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SocGen Analyst: Stocks Will Take a ‘Bath’

“Stocks are about to take a bath, says Societe Generale strategist Albert Edwards.

To emphasize his point, he placed a photo of himself in a bathtub in his latest Global Strategy Weekly.

His wife purchased a cast iron tub, even though he questioned its cost and usefulness, he mentioned in his weekly commentary, according to Business Insider. The order, he says, seems to have prompted September’s pop in iron ore prices.

Edwards, a long-time bear, believes that deflation will hit stocks in a big way before inflation becomes a problem, according to Business Insider. So, he’s cutting his allocation in stocks for the first time in over four years.

“[W]hen I read direct quotes and commentary about [Federal Reserve Chairman Ben] Bernanke’s policy of driving up asset prices in general and equity prices in particular, I almost want to cry over the ludicrousness of this position,” Edwards writes.

Although the Fed’s policies will lead to rapid inflation eventually, inflation will arrive though “another visit of outright deflation fear,” he says.

Edwards argues that U.S. implied inflation expectations have diverged from the economic cycle. The time that happened was in the first quarter of 2008, just before he reduced his equity weighting by 30 percent.

“Bath time anyone?” he asks.”

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Experts: Gold, Emerging-Market Bonds Recommended to Counter the US Dollar Decline

“The dollar has dropped 5 percent against a basket of six major currencies over the past two months amid expectations, and now the fact, of additional easing by the Federal Reserve.

The concern is that the third round of quantitative easing will ultimately spark inflation. This worry could well continue, driving the dollar down further.

Experts have several recommendations for investors to deal with such a trend, SmartMoney reports.”

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Tim Cook of $AAPL Apologizes for Apple Maps, Suggests Alternatives

“Apple has finally made a real statement to its customers apologizing about the Maps dramathat’s been unfolding over the past few weeks with the introduction of iOS 6. According to CEO Tim Cook, the company “fell short” on its commitment to bring world-class products to its customers.

Last week, the only comment we got out of Apple was that this is “just the start.”

Within the letter, Cook makes mention of Google Maps being the first version of Maps on iOS, but that “as time progressed, [they] wanted to provide customers with even better Maps including features such as turn-by-turn directions, voice integration, Flyover and vector-based maps.”

Full article

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Crown Castle Forks Over $2.4 Billion to T-Mobile in Tower Deal

“(Reuters) – T-Mobile USA, the No. 4 U.S. mobile provider, has agreed to sell the rights to operate 7,200 of its wireless broadcast towers for $2.4 billion to Crown Castle International Corp to help its parent Deutsche Telekom pay back debt.

Crown Castle also has the option to pay another $2.4 billion to buy the towers outright from T-Mobile USA at the end of the lease term for each tower, under the deal announced Friday.

T-Mobile USA has been trying to sell its wireless towers since its proposed purchase by AT&T Inc failed last year due to regulatory opposition.

T-Mobile USA, which is spending $4 billion on a network upgrade, has also been looking for ways to become more financially independent from its parent.

Crown Castle estimates the towers will generate about $125 million to $130 million in adjusted funds from operations before financing costs in 2013.”

Full article

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