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Monthly Archives: December 2012

If Investors Are Dumping Stocks, Why Are ETFs So Hot?

“It’s increasingly tricky to understand how investors really feel about the stock market. On the one hand, they are withdrawing assets from equity mutual funds, according to the weekly fund flows data reported by Lipper and other organizations that use this information as a barometer of investor sentiment. That trend has given rise to reports that investors are fleeing stocks and foolishly piling into bond funds. On the other hand, investors continue to plow money into equity-linked exchange-traded funds, or ETFs.

That sounds counterintuitive, since in theory a large-cap stock fund is going to give an investor roughly the same kind of market exposure as an ETF based on the S&P 500 index or other similar broad market barometer. And yet, the pattern repeated itself in the most recent five-day period reported by Lipper, as investors yanked some $4.1 billion from the coffers of equity mutual funds while investing a net $6.3 billion into equity ETFs. That’s the 20th consecutive week in which U.S. equity mutual funds have experienced net withdrawals, a trend that has remained in place regardless of whether major market indexes happen to be gaining ground or falling.

In contrast, the flows into or out of ETFs appear to be more volatile; while during many of those five-day periods investors have continued putting money into ETFs, it hasn’t been as consistent a trend. In mid-September, for instance, ETFs lost assets.

Have investors developed some kind of multiple personality disorder? Or is there a logical explanation for this kind of data? ”
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Sick of Religion? Become a Jedi Knight


“…..The new figures reveal that the lightsabre-wielding disciples are only behind Christianity, Islam, Hinduism, Sikhism, Judaism and Buddhism in the popularity stakes, excluding non-religious people and people who did not answer.

Following a nationwide campaign, Jedi made it onto the 2001 census, with 390,127 people identifying themselves a decade ago as followers of the fictional Star Wars creed.

Although the number of Jedis has dropped by more than 50 per cent over the previous 10 years, they are still the most selected “alternative” faith on the Census, and constitute 0.31% of all people’s stated religious affiliation in England and Wales….”

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Syrian Rebels Pledge Allegiance to Al-Qaeda Group That Killed U.S. Troops

“A new petition posted on the ‘We The People’ section of the WhiteHouse.gov website demands that the Obama administration cease all funding and support for terrorists and extremist rebels in Syria, as news emerges of 29 different Syrian rebel groups pledging allegiance to the Al-Qaeda affiliated Nusra Front, a group responsible for killing U.S. troops in Iraq and one that is currently the primary fighting force in the NATO-backed bid to topple President Bashar Al-Assad.”

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White House: Too Big to Fail Will Also Be Known as Too Big to Jail…No Really!

“One of the great things about being too big to fail is that you’re also too big to jail, apparently.

So saith the Obama administration, via the New York Times, in its front-page story on Tuesday about HSBC’s settlement with the government over money-laundering charges. Though the British banking giant had to pay a wrist-stinging $1.9 billion, the settlement helped it avoid formal criminal charges. The NYT quotes anonymous government officials who say they were skittish about indicting HSBC because formal charges would amount to a “death penalty” for the bank, potentially roiling the financial system.

This is at least three very specific flavors of bullshit.

For one thing, according to University of Notre Dame law professor Jimmy Gurulé, a former assistant U.S. Attorney General and former Undersecretary for Enforcement for the U.S. Treasury Department, the government could have formally charged Europe’s biggest bank in such a way as to help it avoid death. The bank’s U.S. business may have been disrupted for some time, but the bank could have survived. The punishment that was meted out — taking about half a quarter’s profit — was so far removed from a “death penalty” that it can’t possibly be a deterrent for any other big bank.”

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“Bare Naked Truth About the Fed”

“Shah Gilani writes: The top line story, according to the FDIC’s latest Quarterly Banking Review, is that the majority of U.S. banks are in better shape today than they have been in years.

The untold story is that when the Federal Reserve is done transitioning the United States from capitalism to socialism, the few dozen banks that remain in America will all be profitable until they need bailing out again, but will never die and live on in infamy.

Is that just hyperbole or some wild conspiracy theory? It’s neither. Unfortunately, it’s the bare, naked truth about the Fed.

It doesn’t matter that you didn’t know the Federal Reserve System was the brainchild of a handful of the world’s most powerful bankers.

Or that all of them took a secret train from New Jersey to Jekyll Island, Georgia (owned by J.P. Morgan) in 1910 aboard Rhode Island Senator Nelson Aldrich’s private car to devise and orchestrate the creation of the Federal Reserve.

Or that Aldrich was an investment associate of J.P. Morgan, that his son-in-law was John D. Rockefeller, Jr., or that he was the political spokesman for big business and banking interests in Congress.

It doesn’t matter if you don’t know who the powerful bankers are today that run the Fed’s twelve district banks. Or that the Fed’s New York Bank conducts all its open market operations with a bunch of favored big banks it protects (Case in point, MF Global).

Or that one former Chairman of the New York Bank’s Board, who was also and still is a Goldman Sachs board member, resigned from the Fed when it was discovered he bought $3 million worth of Goldman’s stock right before the Fed made sure Goldman wouldn’t have to go out of business at the height of the financial crisis.

What matters, is that without the Federal Reserve the banking system in the United States would be more honest, more competitive and less of a risk to the economy than it is now.

And what really matters, is understanding the Federal Reserve could never exist and do what it does in an open democracy, and that its agenda of socializing risks (making taxpayers eat bankers’ losses) and privatizing their profits (letting them keep their bonuses) for the benefit of its club members (the banks) means the Federal Reserve has to transform America to a socialist model in order to maintain its own growth and ultimate power…..”

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Blacrock’s Fink is Tickled Pink on U.S. Economy

“Larry Fink, CEO of BlackRock, guest hosted Bloomberg TV’s “Market Makers” with Erik Schatzker and Stephanie Ruhle today.  Fink said that he’s “very bullish” on the United States and “our corporations are in fabulous shape with $1.7 trillion in cash…I don’t believe you’re going to see that much default risk in the next few years….”

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Breakthrough: Doctors Cure 6 Year Old With Leukemia by Giving Her HIV

Doctors suggested they sign Emily up to a clinical trial that would use a disabled form of HIV to carry cancer-fighting genes into her T-cells (disease fighting cells). The hope was that this would re-programme her immune system to recognise the cancer cells and start killing them.
Several adults had already been enrolled in the study at the Hospital of the University of Pennsylvania and had responded well, but as it was so new the treatment wasn’t without risks. But time was running out for Emily, who is also known as Emma.
Mr Whitehead said: ‘We were told that we were down to 48 hours of making a decision or she could start having organ failure.’
They comforted themselves with the knowledge that even if the treatment didn’t work, it would provide doctors with information that could help them save other sick children.

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Asian Markets Open Higher on Cool Aid Dreams and Hopium Over the Fiscal Cliff

HONG KONG (MarketWatch) — Asia stocks gained Wednesday amid sustained optimism for an agreement on upcoming U.S. tax hikes and spending cuts, ahead of the conclusion of a Federal Open Market Committee that may see it undertake more asset buying.

Japan’s Nikkei Stock Average JP:100000018 +0.47%  rose 0.6%, while Australia’s S&P/ASX 200 index AU:XJO +0.42%  added 0.5%.

South Korea’s Kospi KR:SEU +0.27%  advanced 0.3%, paring gains after reports of a rocket launch by North Korea. Read: North Korea launches long-range rocket: reports

In Chinese trading, Hong Kong’s Hang Seng Index HK:HSI +0.59% advanced 0.6% while the Shanghai Composite index CN:000001 -0.12% traded fractionally higher…”

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World indices

S&P 500 Futures

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Greenspan: Fed Tactics ‘Not Having Major Effect’ on Economy

“The Federal Reserve’s stimulus measures aren’t having as strong an impact on the economy these days as people think, said former Fed Chairman Alan Greenspan.

Since the downturn, the Fed has sought to spur recovery by slashing interest rates to near zero and taken more unorthodox measures such as buying bonds like mortgage debt or Treasury holdings from banks, a stimulus tool known as quantitative easing that injects liquidity
into the economy to keep rates low and encourage investing and hiring.

Critics dub quantitative easing as printing money out of thin air that will fuel inflationary pressures down the road.

Either way, the Fed’s policies aren’t having much of an impact, especially while banks hold off on lending out all that fresh money.

“I’ve not commented about Fed policy since I got out of office, but I will say this: that whatever the Fed is doing, whether you like it or not, it’s not actually, in my judgment, having a major effect,” Greenspan told CNBC.

“The issue here is that they have created a very large expansion to the balance sheet that’s ended up as reserves on the asset side out of all the commercial banks and savings banks and that’s not being re-lent. And unless and until it is re-lent, it will not have a significant impact on the
economy,” Greenspan added.

“I think the Fed is not as big a player as most people think.”

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Doves Rule the Nest AKA You’re Fucking Dead!

“The Fed is set to become considerably more dovish in 2013 and beyond as Evans and Rosengren become voting members. It seems unlikely that any new ‘Bernanke’ would drastically alter the Fed’s path; and so we present the ‘Doves’ path to prosperity (in nominal terms)….

Via BofAML:

The rise of the doves means Fed policy should stay easy even if the data continue to show improvement.

Over the past several weeks, the markets have focused on who might succeed Chairman Bernanke once his term as Fed Chair expires in January 2014. With President Obama winning re-election, we expect continuity in Fed policy in 2014. Meanwhile, as the end of the year approaches it is worth noting that the 2013 FOMC could be one of the most dovish in some time. Thus, market participants should be careful not to price out further Fed easing on somewhat better data.


Doves rule the nest”

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A welcome home parade is being planned, no doubt.

A lawyer for John McAfee said Tuesday a judge has ordered the software company founder released from a Guatemalan detention center where he has been fighting being returned to Belize.

Lawyer Telesforo Guerra said the judge notified him verbally of the ruling, but added that it may take a day for formal written notification to win McAfee’s release, possibly as soon as Wednesday.

Judge Judith Secaida did not immediately return phone calls seeking to confirm the ruling.

Guerra said Secaida ruled that McAfee’s detention was illegal, ordered him released, and gave him 10 days to put his immigration situation in order. It was not immediately clear if McAfee could get some kind of temporary or transit visa to allow him to leave Guatemala.

He has said that he wants to return to the United States with his 20-year-old Belizean girlfriend. Guerra agreed that that would be his best option.

“For me, it’s best that McAfee go to the United States, that’s definitely the country where he will be safest,” Guerra said. “In Guatemala, he runs the risk that anything could happen to him.”

McAfee was detained last week for immigration violations after he sneaked into Guatemala from neighboring Belize. He had been on the lam for weeks before that, avoiding Belizean police who want to question him in the fatal shooting in November of a U.S. expatriate, Gregory Viant Faull, who lived near his home on a Belizean island.

McAfee acknowledges that his dogs were bothersome and that Faull had complained about them, but denies killing Faull. Faull’s home was a couple of houses down from McAfee’s compound in Ambergris Caye, off Belize’s Caribbean coast.

McAfee has said corrupt Belizean authorities are persecuting him, something officials in Belize deny.

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North Korea Launches Rocket in Defiance of Critics

“Isolated and impoverished North Korea launched its second long- range rocket of 2012 on Wednesday and may have finally succeeded in putting a satellite into space, the stated aim of what critics say is a disguised ballistic missile test.

The rocket was launched just before 10 a.m. Korean time (0100 GMT) and overflew the Japanese island of Okinawa. Its April rocket launch was aborted after less than two minutes flight.

Both South Korea and Japan called meetings of their top security councils after the launch. Japanese television station NHK said the second stage of the rocket had crashed into seas off the Philippines as planned.

It was not immediately clear if the third stage carrying the satellite had made it into space.

There was no immediate annoucement from North Korea on the launch. It made a formal announcement when the April launch had failed, but has previously claimed that it put a satellite into space in 2009, something no one has been able to verify.”

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