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Documentary: Consuming Kids – The Commercialization of Childhood

Cheers on your weekend !

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Consuming Kids throws desperately needed light on the practices of a relentless multi-billion dollar marketing machine that now sells kids and their parents everything from junk food and violent video games to bogus educational products and the family car. Drawing on the insights of health care professionals, children’s advocates, and industry insiders, the film focuses on the explosive growth of child marketing in the wake of deregulation, showing how youth marketers have used the latest advances in psychology, anthropology, and neuroscience to transform American children into one of the most powerful and profitable consumer demographics in the world.

Consuming Kids pushes back against the wholesale commercialization of childhood, raising urgent questions about the ethics of children’s marketing and its impact on the health and well-being of kids.
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Junk Bonds Start to Lose Their Luster

“A selloff in junk bonds is fueling fears among some investors that the best days of the bond boom may be in the past.

The spread between the yields on low-rated corporate debt and comparable U.S. Treasurys jumped 0.18 percentage point Wednesday to 4.39 points, its highest level since April.

The action is unusual because junk bonds tend to outperform higher-rated debt such as Treasurys and high-rated corporate bonds when interest rates rise. The yield on the benchmark 10-year Treasury note has risen 0.5 percentage point over the past month.

The selloff of junk bonds this week indicates that many investors who have been pouring money into riskier debt were caught off guard by the pace of the past month’s rise in Treasury yields. Investors who moved into riskier asset classes such as junk bonds because of a lack of high-yielding alternatives may be pulling away from the assets as they position themselves for an eventual return to higher interest rates, which have been held near record lows by robust central-bank support programs, observers said.

“The salad days for risk assets might be drawing to a close,” said Thomas Byrne, director of fixed income at Wealth Strategies & Management LLC. He said the selloff has been driven by investors fleeing from bonds amid chatter that the Federal Reserve might soon begin reducing the scale of its $85 billion monthly bond-purchase program known as quantitative easing.

Typically, the spread between Treasurys and junk bonds narrows as Treasury yields rise, as investors bet that an improving economy will mean fewer defaults on bonds issued by low-rated companies.

But in the past four weeks, not only did premiums on junk bonds not improve much, they recently worsened. Some see that break in the pattern as a potential inflection point in the debt markets…..”

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The Chinese Wall Falls Again

“It’s been ten years since prosecutors announced a $1.4 billion settlement with the Wall Street’s biggest investment banks and two individual stock analysts over accusations that the firms and analysts had duped investors to curry favor with corporate clients. Under the terms of the settlement, twelve investment banks agreed to separate their securities analysis from their investment banking business.

One of the key reforms put in place in the settlement was the bar on basing the compensation of stock analysts on their contribution to investment banking revenue. This was meant to prevent analysts from becoming shills for the corporate clients that were paying fees to the investment banks for stock and bond underwriting deals.

A new study suggests that this part of the settlement may have fallen by the wayside.

Four researchers—Lawrence Brown of Temple University, Andrew Call of Arizona State University, Michael B. Clement of the University of Texas at Austin and Nathan Y. Sharp of Texas A&M University—surveyed 365 sell-side analysts to see how the business of stock analysis is conducted these days. Startlingly, they found that 44 percent of the analysts indicated that their success at generating underwriting business or trading commissions is “very important” to their compensation.

Only 20 percent indicated that underwriting and commissions were “not important” to their compensation. Which means that another 36 percent said these things—supposedly walled off ten years ago—were somewhat important. That’s a total of 80 percent who said that generating underwriting business and trading commissions play some role in their compensation.

In other words, the so-called Chinese walls between analysis and investment banking appear to have come crashing down—and almost no one has noticed….”

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Equity Prices and Earnings Disconnect, Substantial Correction Could Be Upon Us

“While earnings have grown only modestly over the past few quarters, stock prices have surged, sending what could be a disconcerting message to investors.

The Dow industrials, in particular, have seen a 17 percent jump in 2013 alone even as earnings in the past two quarters have grown little.

That trend disrupted a formerly symbiotic relationship between earnings and stock prices and is indicating that the bluechip average is in for a substantial pullback, according to Tom Kee, who runs the StockTradersDaily investor web site.

“They’ve been moving in tandem since 2009, until recently. Earnings per share for the Dow Jones industrial average have flatlined and the price has taken off,” Kee said. “There is something happening here that defines a bubble.”

After being stuck at $19.17 a share in early 2009, Dow earnings jumped to a peak of $36.15 in 2012.

But they’ve stayed in that range over the past two quarters, hovering around $35 and most recently at $34.84 in the first quarter.

A similar situation has happened on the Standard & Poor’s 500, which saw first-quarter earnings increase 5.1 percent on revenue growth of just 1.1 percent.

At one point not long ago, earnings for S&P 500 and the price surge from the 2009 lows were nearly identical, but that relationship also has begun breaking down….”

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$TSLA Promises to Make More Fueling Stations Across the U.S. & Canada

“DETROIT (AP) — Electric car maker Tesla Motors Inc. promises to boost the number of fast-charging stations in the U.S. and Canada to make cross-country travel by electric car possible in the next year.

The company said Thursday that by the end of next month, it will triple the number of charging stations it runs from the current eight, and the number will go to around 100 in the coming year, putting stations within reach of almost the entire populations of both countries.

The pace of construction is about twice as fast as the company had previously announced.

The expanded “supercharger” network will allow owners of Tesla’s $70,000 Model S sedans to travel from Los Angeles to New York, probably by the coming winter, as well as make other long-distance trips. The Model S can travel about 200 miles, or for about three hours, when fully charged. With the network, it can be recharged to 50 percent of its battery capacity in 20 to 30 minutes, allowing drivers to make quick stops before driving on.

The supercharging stations are about 10 times as faster than most public charging stations, Tesla said on its website.

Currently Tesla has eight supercharger stations in California and on the East Coast. It has plans to add four stations in California this summer. Stations also will be added during the summer so drivers can go from Vancouver, British Columbia, to Seattle and Portland; and from Austin, Texas, to Dallas. They also will come on-line quickly in Illinois and Colorado.

In addition, the company intends to add four stations this summer in the densely populated Eastern Seaboard, where it currently has two.

Elon Musk, who leads the company, said Thursday that the stations will always be free for owners of the large-battery version of the Model S. Owners of the brand’s smaller-battery version will have to pay for the option of using the stations….”

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$BA Picks Up a Nice Order From Singapore Airlines

“SINGAPORE/PARIS (Reuters) – Singapore Airlines Ltd agreed to spend $17 billion to buy 30 Airbusand 30 Boeing Co. aircraft, underscoring the airline’s bet on a pick-up in the struggling premium class market.

The significant orders announced on Thursday make Singapore Airlines (SIA) the long-awaited launch customer for a proposed stretched version of the 787 Dreamliner, boosting Boeing’s plans to offer a 320-seat aircraft designed in large part for crowded intra-Asian routes.

The move comes as SIA attempts a big strategy overhaul, pushing into the budget airlines segment and expanding its regional network.

“They demonstrate our commitment to the Singapore hub and our confidence in the future for premium full-service travel,” SIA Chief Executive Goh Choon Phong said in a statement.

“Today’s aircraft orders are among the biggest in Singapore Airlines’ history, helping to ensure that we retain our industry leading position.”

This month, SIA reported weaker-than-expected full-year results and warned of a deteriorating environment as it struggles to cope with the rapid emergence of Gulf carriers and low cost Asian rivals such as Malaysia’s AirAsia Bhd and Indonesia’s Lion Air.

State-backed Emirates Airline, Etihad Airways and Qatar Airways are stitching deals, while Gulf states race to become regional hubs linking Asia-Pacific and Europe.

Boeing has been talking up the possibility of a third model of its newest passenger plane for over a year. But the project took a back seat as Boeing grappled with a three-month grounding of the 787 fleet due to battery problems earlier this year….”

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Q1 GDP Revised Lower

“WASHINGTON (Reuters) – A drop in government spending dragged more on the U.S. economy than initially thought in the first three months of the year, although consumer spending looked relatively resilient to Washington’s austerity drive.

Other reports on Thursday showed the number of new jobless claims rose modestly last week while contracts on previously owned homes climbed to a three-year high in April.

Together, the reports pointed to an economy that has held up reasonably well despite government constraints, but nevertheless faced headwinds severe enough to dissuade the U.S. Federal Reservefrom trimming its monetary stimulus in the immediate future.

“(The reports) paint the picture of an economy with strengthening fundamentals that is facing significant fiscal drag,” said Ellen Zentner, an economist at Nomura in New York.

Gross domestic product, a measure of the country’s total economic output, expanded at a 2.4 percent annual rate during the first quarter, down a tenth of a point from an initial estimate, the Commerce Department said.

Analysts had forecast a 2.5 percent gain.

Government spending tumbled at a 4.9 percent annual rate, which was faster than the 4.1 percent rate initially estimated. Also holding back growth during the quarter, businesses outside the farm sector stocked their shelves at a slower pace.

Washington has been tightening its belt for several years but ramped up austerity measures in 2013, hiking taxes in January and slashing the federal budget in March.

“We are dramatically under-spending in Washington,” said Michael Strauss, a market strategist at Commonfund in Wilton, Connecticut.

U.S. stocks rose and the dollar weakened as some investors bet the data could dissuade the Fed from rushing to taper a bond buying program that has acted as a bulwark against government belt tightening. Prices for U.S. government debt pared losses.

Despite the signs of a substantial fiscal drag, the GDP report also highlighted a resilience that has surprised many economists.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity. rose at a 3.4 percent annual rate, up two tenths of a point from the government’s previous estimate.

Excluding the volatile inventories component, GDP rose at an upwardly revised 1.8 percent rate, slightly higher than analysts had forecast. This suggests that an improvement in hiring and incomes over the last year has helped keep economic momentum intact.

“(It’s) steady as she goes,” said Stephen Stanley, an economist at Pierpont Securities in Stamford, Connecticut


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Market Update

U.S. equities managed not to have follow through after a down Wednesday. Circle jerk action in true fashion.

Currently the DOW is up 85 with WTI up a bit and Brent remaining negative. Gold is up nicely today, and the 10 year treasury is currently hugging the flat line after being in negative territory.

The dollar failed to have upside follow through and is currently down .73%

Market Update

The Story

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Behold WW3 Has Begun

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What If Stocks, Bonds and Housing All Go Down Together?

“About the claim that central banks will never let asset bubbles pop ever again–their track record of permanently inflating asset bubbles leaves much to be desired.

The problem with trying to solve all our structural problems by injecting “free money” liquidity into financial Elites is that all the money sloshing around seeks a high-yield home, and in doing so it inflates bubbles that inevitably pop with devastating consequences.

As noted yesterday, the Grand Narrative of the U.S. economy is a global empire that has substituted financialization for sustainable economic expansion. In shorthand, those people with access to near-zero-cost central bank-issued credit can take advantage of the many asset bubbles financialization inflates.

Those people who do not have capital or access to credit become poorer. That is the harsh reality of neofeudal, neocolonial financialization. Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012).

Injecting liquidity by creating credit and central bank cash out of thin air is not a helicopter drop of money into the economy–it is a flood of money delivered to the banks and financial elites. The elites at the top of the neofeudal financialization machine already have immense wealth, and so they have no purpose for all the credit gifted to them by the central banks except to speculate with it, chasing yields, carry trades and nascent bubbles (get in early and dump near the top).

Life is good for the kleptocratic financial Aristocracy: for debt-serfs, not so good.


No wonder the art market and super-luxury auto sales have both exploded higher. Thanks to the central banks’ liquidity largesse, the supremely wealthy literally have so much money and credit they don’t know what to do with it all.

If you want to borrow money to attend college, the government-controlled interest rate is 9%. If you want to speculate in the yen carry trade or buy 10,000 houses, the rate is near-zero or at worst, the rate of inflation (around 2% to 3%). If you want to borrow money for anything other than a socialized mortgage to buy a single-family home, tough luck, you don’t qualify. But if you want to speculate with $10 billion–here’s the cash, please please please take it off our soft central-banker hands.

If your speculations end badly, then no problem, we transfer the toxic trash heap of debt and phantom assets onto the balance sheet of the central bank or onto the public (government) ledger.

Given this reality, it was inevitable that the stock, bond and housing markets would all be inflated into bubbles by this monumental flood of free money. Please consider these three charts…”

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Is America is Being Led Astray by Narcissists ?

“Capitalism is now a cult, and Jamie Dimon is the self-appointed leader of the “cult of capitalism.”

That message is gleaned from a Huffington Post column by Mark Gongloff, whose headline stated that not only is the J.P. Morgan CEO and chairman a cult leader but a “very dangerous” one. Why? Because apparently shareholders have signed “a billion-year contract” to join the cult, notwithstanding portrayals of Dimon as a greedy egomaniac and poster boy for everything wrong with capitalism.

His is a monster of a cult: Warren Buffett is a member. So is CNBC’s Jim Cramer. Says Gongloff, who labels Cramer a “shouty man”: “Cramer joined Warren Buffett and many more VIPs in singing Dimon’s praises and warning of the woe that would befall shareholders” if they split his roles. Still, “the media played along, helping … Dimon keep both of his jobs” as J.P. Morgan Chase & Co.’s chief executive and chairman.

Dimon, meanwhile, was doing what any self-respecting egomaniac under such a threat would do: acting like a petulant teenager and threatening to quit.

Today, reconfirmed as leader of the cult of capitalism, Dimon could serve as the perfect example of what psychologist Ernest Becker wrote about in his Pulitzer Prize–winning classic, “The Denial of Death,” a favorite from my years at Morgan Stanley. Dimon fits the cult-leader profile: charismatic narcissist, uncompromising, manipulating and threatening to his co-conspirators in the “cult of capitalism” and to the masses marching to the drumbeat of his destiny, off another economic cliff, bigger than 2008’s….”

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On the Matter of a Lethal Brew of Rising Home Prices and Mortgages

“A sharp rise in mortgage rates over the last few weeks means it may already be too late for many homeowners to benefit from a refinance.

This just as thousands were gaining equity in their homes and finally becoming eligible.

At the same time, it is pushing some renters off the fence, fearing they too will miss the boat on the best conditions for home buying.

Refinances dropped 12 percent last week, while mortgage applications to purchase a home rose 3 percent and are now up 14 percent from a year ago, according to the Mortgage Bankers Association…..”

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NYSE Margin Debt Hits All Time High

“The latest reading on April margin debt at the NYSE showed an all-time high.  The most recent reading of $384,370MM topped the all-time high from July 2007 when margin debt reached $381,370MM.

As I’ve explained in the past, this is one sign of how the disaggregation of credit has come to dominate many borrowing trends in the last 30 years.  Instead of seeing credit used for productive purposes it has increasingly been used for things such as speculation in asset prices.  My guess is that this is largely the result of a Fed driven economy whose policies have been uniquely asset price focused leading many to speculate due to excessive faith in the “Bernanke Put” or the “Greenspan Put”.

This trend is particularly interesting during the most recent recession since household credit has remained extremely tight….”

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Gartner: Server Sales Fall 5% in Q1

“Gartner Research reports worldwide server sales are down 5 percent for the first quarter of the year, with IBM, HP and other members of the top five taking the biggest hit. Server shipments declined 0.7 percent.

But the drop in server sales is not at all surprising. Cloud apps are popping up by the thousands across the market, as the developer movement speeds up. But these apps are not surfacing from that souped-up x86 server made for big workloads. Developers instead are turning to the cloud. Enterprise companies are buying fewer of those high-priced machines that customers once bought when IT budgets were plentiful.

According to Gartner, x86 server shipments were flat during the quarter, with revenues up 1.8 percent. Server revenues reflect the problems that the vendors face. All of the top five vendors suffered revenue declines in the first quarter of 2013 except for Dell which grew 14.4 percent.


RISC/Itanium Unix servers had a 38.8 percent drop in shipments and were down 35.8 percent in vendor revenue compared to the same quarter last year. Mainframes showed a 3.6 percent increase in worldwide revenue. They will never die….”

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Fund Managers Report a Spike in Margin Loans to Buy Real Estate

“More and more people are borrowing against their brokerage accounts to buy condos and expand their businesses. That’s not reassuring.

Close-up of roulette wheelFORTUNE — Like the recent bull market? How about taking a home renovation to go with it? That apparently is what some investors have been doing with their stock gains.

The recent run-up in the market, financial advisers say, has led to a resurgence of the type of loan not seen since the end of the housing boom — cash out financing. But this time, though, people aren’t tapping their inflated house for money. These days stock portfolios appear to be the well of choice.

Financial planners say in recent months clients have taken out so-called margin loans to buy real estate, fund small business acquisitions, or to provide gap financing before a traditional loan could be secured from a bank.

“No one wants to be out of the market for 90 days,” says Mark Brown, a financial planner for Brown Tedstrom in Denver. “People just don’t want to sell right now.”

Borrowing against brokerage accounts hit an all-time high earlier this year, according to data from FINRA, and has continued to go higher. Margin loans outstanding totaled nearly $409 billion at the end of April. That compares to $381 billion back in July 2007, the last time stock-market-fueled lending peaked.

Debt is often seen in bubbles, and loose lending was a key part of what led to the housing bust. So the recent rise in stock market borrowing has some people nervous, especially at a time when the market is already making new highs, and seemingly headed straight up. Despite being down on Wednesday, the market has not suffered a three-day string of losses all year, which is not typical. Nonetheless, according to a recent Wall Street Journal article, investors should be less worried about all this margin debt because people aren’t using the borrowed funds to buy more stocks, they are using it as a cheap source of fast cash…..”

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Monster Tax Breaks for the 1% Cost Uncle Sam $12 Trillion Over the Next Decade

major tax expendituresIncome ranges for family of four: Highest quintile ($163K and up); fourth quintile ($110K to $163K); middle quintile ($77K to $110K); second quintile ($50K to $77K); lowest quintile (less than $50K).


There are more than 200 tax breaks in the U.S. tax code, and the top 10 for individuals are by far the most expensive. How expensive? They will cost federal coffers $12 trillion over the next decade.

But the dollar benefits of those top 10 breaks are not distributed evenly across income groups.

The top 20% of households will enjoy more than half of the combined benefits of the major tax expenditures this year, according to a report by the Congressional Budget Office released Wednesday.

And within that top 20%, the benefits skew disproportionately to the highest earners.

The top 1% — who make at least $327,000 as individuals or $654,000 as a family of four — get 17% of the breaks’ value.

The largest breaks include the tax-free treatment of employer contributions to workers’health insurance; tax preferred retirement savings; state and local tax deductions; and reduced rates on capital gains and dividends.

That’s not to say that low- and middle-income households don’t benefit from the major tax breaks and wouldn’t notice if they were curtailed — a distinct possibility when lawmakers eventually do embark on tax reform.

This year, households in the middle income quintile will enjoy about 13% of the value of the biggest breaks, the budget office estimates. Those in the middle include one-person households earning roughly $39,000 to $55,000 and four-person households earning between $77,000 and $110,000.

The lowest earners, who make no more than $25,000 as singles or $50,000 as four-person households, will get only 8% of the benefit of the tax expenditures. What value they do see will come primarily from the Earned Income Tax Credit and, to a lesser extent, the child tax credit.

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$BLK’s Fink: DOW 28k in Five to Six Years

“Stocks are hitting record highs on a seemingly daily basis, and BlackRock CEO Larry Fink thinks the bull market has another five or six years to go.

Investors could experience annual returns of 8 to 10 percent during that period, he tells CNBC. This could put the Dow Jones industrial Average above 28,000 in 2019.

“Sounds pretty good, doesn’t it?” he quips.

That would represent an 83 percent jump from the 15,314 level prevailing Wednesday afternoon. The Dow reached an all-time peak of 15,542 a week ago.

Given corporate earnings strength, stocks offer attractive values, Fink says.

“The S&P [500] is around 15½, 16 times earnings,” he explains. “There’s no question in my mind that equities remain … fairly cheap.” …”


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Investment Expert Landesman: Fed Tactics Have ‘Insanely’ Inflated Stocks

“This you can bet on: The Federal Reserve will eventually stop its $85 billion-a-month bond-buying program, an economic lifeline aimed at getting the country back on its feet after the financial crisis.

While no one knows when the central bank will start winding down the quantitative easing that has pushed down interest rates, Fed Chairman Ben Bernanke hinted last week that the taps may start running dry sooner rather than later — perhaps as early as this summer.

The very thought sent a shiver through world stock and bond markets, though investors took some comfort after a closer look at Bernanke’s remarks and reassurances from European and Japanese central banks.

Markets got back on track this week on the prevailing view that Bernanke may not act all that soon after all. Still, the underlying message was clear: All good things must come to an end.

That said, there are ways to protect your portfolio and perhaps profit from the big shift. Experts recommend three strategies — a move into cash, alternative bond funds and buying shares that have lagged the recent run-up in stock prices — among other ideas.

Here are some tactics investors might consider as the era of quantitative easing ends:


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FDIC: Bank Profits Hit All Time Highs

“U.S. banks earned more from January through March than during any quarter on record, buoyed by greater income from fees and fewer losses from bad loans.

The Federal Deposit Insurance Corp. said Wednesday the banking industry earned $40.3 billion in the first quarter, up 15.8 percent from the $34.8 billion earned in the first quarter of 2012. The previous high mark was when the industry was smaller in terms of total assets.

Despite record earnings, the report sketched a mixed picture for an industry that is still finding its way five years after the peak of the 2008 financial crisis.

Only about half of U.S. banks reported improved earnings from a year earlier, the lowest proportion since 2009. Bank lending declined after several quarters of increases. And bank profits from interest charged fell to the lowest level in nearly seven years.

A reduction in expenses for legal costs and proceeds from a settlement boosted earnings during the quarter, the FDIC said.

Banks also reduced to a six-year low the amount they set aside in case of losses on loans, the FDIC said…..”

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