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Monthly Archives: December 2012

BofA: Here Are 3 Reasons Why Stocks Could Enter A Bear Market In 2013

“BofA Merrill Lynch technical analyst Mary Ann Bartels is out with her 2013 outlook, and it contains a bit of a dire prediction for investors.

Bartels says that if certain underlying market trends don’t turn around soon, there could be a big correction in stocks that ushers in a bear market next year.

“We expect the US equity market to remain strong moving into year end 2012 and into early 2013, but the risk of a bear market in excess of 20% beginning in 2013,” she writes.

There are three things that have Bartels worried. The first is the advance-decline line, which she says hasn’t confirmed the recent rally in stocks.

(The advance-decline line measures the number of stocks that are rising, less the number of stocks that are falling.)

Below is a chart showing the S&P 500, which has rallied, while the A/D line has remained flat: ”

Full article and charts

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Nouriel Roubini: The EU Monetary Union Remains an Unstable Disequilibrium

“NEW YORK – The risks facing the eurozone have been reduced since the summer, when a Greek exit looked imminent and borrowing costs for Spain and Italy reached new and unsustainable heights. But, while financial strains have since eased, economic conditions on the eurozone’s periphery remain shaky.

Several factors account for the reduction in risks. For starters, the European Central Bank’s “outright monetary transactions” program has been incredibly effective: interest-rate spreads for Spain and Italy have fallen by about 250 basis points, even before a single euro has been spent to purchase government bonds. The introduction of the European Stability Mechanism (ESM), which provides another €500 billion ($650 billion) to be used to backstop banks and sovereigns, has also helped, as has European leaders’ recognition that a monetary union alone is unstable and incomplete, requiring deeper banking, fiscal, economic, and political integration…”

Full article

 

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Top Conservatives Are Blown Away By John Boehner’s Fiscal Cliff Offer

“The conservative group Club For Growth derided Speaker John Boehner Monday over his latest fiscal cliff offer, attacking the House Republican leader for offering concessions on raising tax rates and the debt ceiling. 

“First Speaker Boehner offered to raise tax rates after promising not to, and now he’s offering to raise the debt ceiling. Raising tax rates is anti-growth and raising the debt ceiling is pro-government growth – and this is the Republican position?” Club for Growth President Chris Chocola said in a statement.

Chocola’s reaction reflects a growing criticism of Boehner among grassroots Republican activists who feel that the Speaker has abandoned conservative principles in his negotiations with President Barack Obama over the fiscal cliff.

The complaints, which began with Boehner’s decision to “purge” four conservative congressmen from top House committees, reached a new level of panic this weekend with the news that Boehner has offered to let tax rates rise for millionaires.

But what really pushed Club for Growth over the edge was last night’s Washington Post report that said Boehner is willing to take the debt ceiling off the table…”

Read more

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Ex-Moody’s Analyst: Ratings System Was Broken by 2006

“William J. Harrington was a senior analyst at the rating agency Moody’s between 1999 and 2010 in New York. Since then he has been campaigning for reform and drawing attention to ongoing problems with ratings. Bill is coming into the comment threads here to answer your questions and discuss his views.

“The rating agencies have been the all-purpose bogeymen for the crisis. They bear a heavy responsibility, absolutely, but this exclusive focus obscures how the problems are embedded in the whole system: the big banks, accountancy firms, financial law firms, investment firms, regulators, the financial press. The rating agencies have done us a disservice by allowing so much of the blame to rest on them. They are effectively protecting these other players – who seem quite happy with this arrangement. Meanwhile, people at rating agencies say: ‘Just blame us, we’re used to it.’

“The rating agencies are such small entities in such a huge industry. They are like the Panama canal. Crucial but very small. Worldwide the nine big registered rating agencies have less than 4,000 junior and senior analysts working for them, combined across all activities. JP Morgan alone employs a quarter of a million people. Again, this state of affairs seems to suit the big players well. The rating agencies are one moving piece in the machine that they can push around.

“An added problem is that rating agencies form an oligopoly, with Moody’s, Fitch and S&P [Standard and Poor’s] controlling 97% of the market between them. If there were many significant rating agencies of varying sizes and ownership structures rather than three indistinguishable large ones, then if a few changed their approach it would be hard for the rest to simply continue to go along for the ride. Currently, this is not a self-correcting system.

“The CEO of Moody’s in the run-up to the fiasco in 2008 is now … still the CEO of Moody’s. Last year his compensation was $6m, in line with his five-year average. Rating agencies make so much money … Moody’s has never had a losing quarter. This is why analysts who follow Moody’s for investors really like Moody’s. Moody’s always makes a profit…”

Full article

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Treasury: Foreign Demand for U.S. Assets Weak

“NEW YORK (Reuters) – Foreigners ditched U.S. equities and cut mortgage-backed debt in October in favor of government bonds, U.S. Treasury data showed on Monday, as market and global economic uncertainty increased.
Overall, overseas investors bought $1.3 billion in long-term U.S. securities, the fewest in at least three years, with much of the selling coming at the expense of stocks and bonds issued or guaranteed by the biggest U.S. mortgage financing agencies.
The shift appeared to reverse the heavy purchases of stocks and mortgage-related bonds seen in September after the Federal Reserve announced plans to start buying $40 billion of mortgage debt per month to cut long-term interest rates and stoke growth.
“It looks like we’re seeing an unwind of the post-QE 3 trade,” said TD Securities U.S. strategist Gennadiy Goldberg, referring to the Fed’s third round of monetary easing, known as quantitative easing, or QE.
When including short-term assets such as bills, Treasury data showed foreigners were net sellers of U.S. assets to the tune of $56.7 billion, the largest outflow since July 2011.
Some of the shift may reflect demand for higher-yielding assets abroad, analysts said. By suppressing rates and flooding the system with dollars, the Fed’s several asset-buying programs have weighed on the greenback and dulled the appeal of dollar-denominated assets…”

Full article

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$LOW Leads the Sandy Reconstruction Rally

“Purchase applications are a leading indicator for single-family home sales and housing construction. Yesterday, the Mortgage Bankers Association announced that purchase applications rose 1% in the week of Dec. 7, making it the fifth straight week applications have increased.

This news is an encouraging sign for large home-improvement retailers, including Home Depot  (NYSE: HD  ) , Lowe’s  (NYSE: LOW  ) , and Lumber Liquidators (NYSE: LL  ) . These three companies benefit directly by selling appliances and materials for housing-related projects, serving three customer groups:

  • Do-it-yourself customers, who complete their own projects and installations.
  • Do-it-for-me customers, who purchase their own materials and hire another party to complete the project.
  • Professional customers, contractors, remodelers, or tradesmen…”
  • Full article

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Sun Life to Sell U.S. Annuity Business

“TORONTO (Reuters) – Sun Life Financial Inc will sell its U.S. annuity business for $1.35 billion to a unit of asset manager Guggenheim Partners in a deal that should reduce the exposure of the insurer’s earnings to market swings and boost its cash levels.

Even so, shareholders pulled Sun Life’s stock down by 2.5 percent on Monday after the Canadian company announced the deal, which will reduce its book value and core earnings.

“The financial implications are more negative than we had assumed both in terms of the book value decline and the ongoing earnings impairment,” CIBC World Markets analyst Robert Sedran wrote in a research note.

Guggenheim’s Delaware Life Holdings unit will take on the business, which also includes some life insurance assets, and rename it Delaware Life Insurance Co.

New York-based Guggenheim, which has about $160 billion in assets under management, recently emerged as the lead bidder for the Sun Life assets, outbidding at least two other parties, sources told Reuters in November.

Sun Life, Canada’s No. 3 insurer, said last year it would stop selling variable annuities and individual life products in the United States to focus more on group insurance and voluntary benefits…”

Full article

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$CLWR Takes a Higher Bid From $S

“(Reuters) – Clearwire Corp agreed to sell roughly half of the company for $2.2 billion to majority shareholder Sprint Nextel Corp, which would then have full ownership of spectrum that will help it offer high-speed wireless services.

The $2.97-per-share deal is only 7 cents per share higher than a bid many minority shareholders said was too low days before. Clearwire shares tumbled 12.2 percent to $2.96 in morning trading on Monday.

Sprint already owns slightly more than half of Clearwire. The company said owners of 13 percent of Clearwire shares – Comcast Corp, Intel Corp and Bright House Networks LLC – had agreed to vote for the deal.

But it was not immediately clear whether Sprint, the No. 3 U.S. wireless carrier, could win the backing of a majority of Clearwire’s minority shareholders, which it needs to take control…”

Full article

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$LMT to Pick up a $2.6 Billion Satellite Contract

 

Lockheed Martin Corp. (LMT) is expected to receive a military satellite contract from the U.S. Air Force by Dec. 31 that may be valued at almost $2.6 billion, according to the service and the company.

The contract would cover the purchase of two space vehicles, the final installment in a six-satellite constellation of the Advanced Extremely High Frequency communications program…”

Full article

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Gun Shows Are Still Incredibly Busy

A gun show in Montgomery County drew a huge crowd on Sunday, despite calls for stricter gun control after a shooting rampage at an elementary school in Newtown, Connecticut.

If gun control advocates were hoping the scale of death at Sandy Hook Elementary School would dampen enthusiasm for the purchase of guns, the line of people waiting to get in to the Greater Philadelphia Expo Center was evidence to the contrary.

Full Article

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Market Update

U.S. equities have the wind in their sails as David Tepper described this morning. The fed is going to put a trillion dollars on the table and everything is going to melt up.

Gold and oil pared early losses despite a stronger dollar.

Equities ignored horrible Empire manufacturing data….grace was allowed for hurricane Sandy.

Big bank stocks, home builders, and technology leads the way higher.

Market update

World Indices

3D heat map

[youtube://http://www.youtube.com/watch?v=lwlogyj7nFE 450 300]

 

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Stevie Cohen from SAC Could Very Well Be Fucked

Two days before Dell Inc. (DELL) was set to report second-quarter 2008 earnings, Jon Horvath, a technology analyst at SAC Capital Advisors LP, e-mailed his boss Michael S. Steinberg and another portfolio manager to warn that the computer maker would miss earnings estimates.

“I have a 2nd hand read from someone at the company,” Horvath began the Aug. 26 message, which provided details on gross margins, expenditures and revenue. “Please keep to yourself as obviously not well known.”

 

Full Article

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Gapping Up and Down This Morning

NYSE 

GAINERS

Symb Last Change Chg %
HCI.N 21.76 +0.88 +4.21
RKUS.N 20.05 +0.60 +3.08
LOCK.N 7.66 +0.22 +2.96
PBF.N 27.02 +0.77 +2.93
TRQ.N 7.93 +0.22 +2.85

LOSERS

Symb Last Change Chg %
ABBV_w.N 33.00 -0.80 -2.37
NBHC.N 18.03 -0.37 -2.01
TRLA.N 16.97 -0.33 -1.91
NASDAQ 

GAINERS

Symb Last Change Chg %
BOSC.OQ 3.99 +1.15 +40.49
STXS.OQ 2.40 +0.40 +20.00
RIGL.OQ 6.52 +1.03 +18.76
LFVN.OQ 2.10 +0.33 +18.64
NYNY.OQ 2.08 +0.28 +15.56

LOSERS

Symb Last Change Chg %
ARIA.OQ 18.94 -4.94 -20.69
LPTN.OQ 4.83 -1.17 -19.50
NVGN.OQ 7.14 -1.61 -18.40
AMEX 

GAINERS

Symb Last Change Chg %
SAND.A 12.55 +0.19 +1.54
BXE.A 4.09 +0.04 +0.99

LOSERS

Symb Last Change Chg %
WVT.A 10.50 -0.35 -3.23
SVLC.A 2.49 -0.07 -2.73
FU.A 3.30 -0.05 -1.49
MHR_pe.A 22.99 -0.25 -1.08
CTF.A 24.44 -0.06 -0.24

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