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Yearly Archives: 2013

The Bulls Celebrate 5 Year Highs

U.S. equities rose to 5 year highs on the S&P led by energy, utilities, financials and technology.

DOW up 80

NASDAQ up 15

S&P up 11

WTI up $0.76

Gold up $17

You are dead….

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

 

 

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Obama Nominates Jack Lew to Succeed Geithner at Treasury

“Obama says Lew “a low-key guy” and “master of policy”

* Lew, 57, appears likely to win Senate confirmation

* Faces Republican questions about spending reforms

* Chamber president says Lew is “tough dude,” will do “just fine”

By Roberta Rampton

WASHINGTON, Jan 10 (Reuters) – President Barack Obama on Thursday nominated his chief of staff, Jack Lew, as the next Treasury secretary, praising him as a expert on the pressing national issues of spending cuts and deficit reduction.

Lew will succeed Timothy Geithner and take the lead on difficult negotiations with Congress on how to cut the nation’s massive debt and rein in spending – a central challenge for Obama’s second term.

Lew, a 57-year-old New Yorker who has previously served as White House budget chief, is likely to face tough questioning from Republicans in his Senate Finance Committee confirmation hearing after a bruising year-end battle over tax increases on the wealthy. He appears likely to win Senate confirmation.

Obama described Lew as “a low-key guy who prefers to surround himself with policy experts rather than television cameras, and said the son of a Polish immigrant had a deep belief in public service.

“Over the years, he’s built a reputation as a master of policy who can work with members of both parties and forge principled compromises,” Obama said…”

Full article 

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Pentagon Ordered to Begin ‘Prudent’ Steps to Prepare for Defense Cuts

Source

“Jan 10 (Reuters) – Defense Secretary Leon Panetta said on Thursday he had directed the U.S. military services to began taking “prudent” steps to offset the impact of huge budget cuts that could take effect on March 1, including curtailing some facilities maintenance and freezing civilian hiring.

“I’d like to believe that ultimately Congress will do the right thing,” Panetta said. But “we simply cannot sit back now and not be prepared for the worst.”

Panetta told a news conference he also directed the services to begin planning now in case the department has to put its nearly 800,000 civilian employees on unpaid leave for up to a month during the remaining months of the 2013 fiscal year.”

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State of the Nation: American Health in Serious Decline

 

“American health is in decline as new data finds that one in four US kids are on food stamps as of fiscal year 2011 and the younger generation is more prone to death and poorer health levels compared to their counterparts in other developed nations.

Almost 20 million children out of 73.9 million under the age of 18 were in the Supplemental Nutrition Assistance Program (SNAP), or food stamps, in 2011, according to data from the United States Department of Agriculture and US Census Bureau.

Moreover, children accounted for 45 per cent of aid receivers.

The number of people using the food stamp program has been on a rise, since 2009 about 15.5 million more individuals have been added to SNAP.

Latest data released for the month of October 2012 shows the drastic increase with one in 6.5 Americans using SNAP, while in the 1970s only one in 50 were part of the program.

Alabama Republican Sen. Jeff Sessions argues that US is not working towards any real solutions for the problem.

“It has become sadly clear that Agriculture Secretary Vilsack wishes to make welfare part of the normal American experience, with no regard for social or economic consequences,” Sessions told The Daily Caller.

Americans have lowest probability of surviving till 50…”

Full article

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Deadliest Flu in a Decade: Lethal Influenza Outbreak Ravages U.S.

“The US is experiencing its deadliest flu outbreak in a decade, prompting the city of Boston to declare a public health emergency after the virus killed more than a dozen people and left hundreds struggling to fight off the illness.

From Florida to Maine, emergency rooms across the nation are flooded with patients experiencing symptoms of the flu. Last January, Boston had seen only 70 cases of influenza. This year, the numbers have reached 700, with at least 18 dead in Massachusetts – and the number of cases is still on the rise.

“In the last two weeks alone we’ve doubled our number,” Dr. Barbara Ferrer, executive director of the Boston Public Health Commission, tells CBS News. “So, if we continue at this rate to see new cases, we’ll have an explosion of flu in the city of Boston. We really need to get ahead of it at this point in time.”

Most states haven’t seen an outbreak this bad since the swine flu plagued the US in 2009. But in some regions, the most recent influenza outbreak has already surpassed the H1N1 outbreak by creating a high number of sick and dying patients.

Nationwide, the number of flu cases has more than doubled in the past month, and the Centers for Disease Control and Prevention has declared 44 states are experiencing a widespread influenza. Hospitals are overwhelmed with patients, with the Lehigh Valley Hospital in Pennsylvania seeing as many as 100 new patients a day that have flu-like symptoms.

Even south Florida has seen an unusually large number of cases, and the illness most recently killed a 6-year-old girl in Texas.

This year’s severe flu season has created a shortage of Tamiflu, which is used to treat symptoms of influenza. Roche Holding AG, the company that produces the drug, told wholesalers that there would be a delay in Tamiflu shipments. Across the nation, pharmacies have the liquid version of Tamiflu on backorder, prompting compounding pharmacies to start making their own versions of the drug…..”

Flu article 

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2 Shot At California School, Suspected Gunman Arrested

“At least two people were shot at a California high school this morning, ABC 23 is reporting.

 

The shooting was reported around 9 a.m. local time and the shooter was reportedly taken into custody about 20 minutes later.

One of the victims was airlifted to Kern Medical Center but the second declined medical treatment, according to ABC 23.

Kern County Fire Department Capt. Eric Coughren told The Bakersfield California that fire officials were called to the scene about reports of two people injured but only one person received medical treatment.

The second victim is reportedly a teacher at the school.

The Californian is reporting the victim who went to the hospital was a student at the school.

Coughren also confirmed to KBAK that a suspect was in custody. Kern County Sheriff’s Department spokesman said the suspect is believed to be a student, The Associated Press has reported.

As of 10:13 a.m. local time the scene wasn’t secure as police were still searching the school room by room, KGET reported…..”

Read more

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Gimmie the Loot: How the Banks are Playing with Bearded Clam Bucks

 

“As Congress and the President wallow in finger pointing and fiscal gridlock, Federal Reserve Chairman Ben Bernanke plows ahead with his plan to disguise the country’s economic ills by carpet-bombing us with freshly printed money. Aided and abetted by the gnomes in the Bureau of Labor Statistics — who are doing their best to convince us that inflation remains at historic lows — Ben has promised to conjure up $1 trillion a year out of thin air until unemployment returns to a politically acceptable 6.5 percent.

Where is all that new fiat currency going, and why haven’t we seen it show up in double digit inflation? The answer should frighten you.

The narrative being promoted in Washington is that Helicopter Ben’s money is being loaned to businesses so they can expand and hire more people. Oh yeah, and it’s also supposed to finance cut-rate mortgages to help stabilize the housing market. Achieving both of these goals will supposedly goose up “aggregate demand,” the magic elixir that purportedly makes economies grow. Mainstream journalists, who blithely call a reduction in the rate of growth of government spending a “budget cut,” dutifully parrot the party line.

It’s a great story except for one problem: There is no evidence it is true.

According to the astute number crunchers at Zero Hedge, total issuance of commercial loans since September of 2008 has gone down by $120 billion. Think about it — who wants to lend money when the government artificially sets inflation-adjusted interest rates below zero? Spend two minutes in the real world and you can see the consequences for yourself. At a recent meeting between a local banker and a client of mine the banker complained that, “There are now 10 pecker-checkers for every pecker in the loan department!” Compliance paperwork has become so burdensome, and risk aversion so high, that only corporations that don’t need loans can get them. As a result, small businesses, the classic engine for job growth, go begging while Fortune 500 companies park record levels of cash on the sidelines.

Yes, mortgage rates have hit rock bottom. But underwriting standards have gone through the roof. My wife and I — she’s a doctor; I’m a venture capitalist — recently refinanced the mortgage on our condo. It took three months to get approval, despite the fact that the loan amount was for less than 30 percent of the condo’s appraised value and we have perfect credit scores and no other debt — and this only after we provided every bit of documentation short of proctology exams. What chance does a first-time home buyer have in a market like this?

So, where is Ben’s money actually going? The data show that it is being stuffed onto the balance sheets of the Too-Big-To-Fail (TBTF) banks, some of which only became “banks” overnight when their brokerage businesses faced imminent collapse. Recapitalizing these “banks” after their housing market malinvestments and the crash of their derivatives casino — the inevitable outcome of Alan Greenspan’s money printing to fuel Fannie Mae’s doomsday machine — has been the principal goal of both the Bush and Obama administrations.

With the boundaries between Goldman Sachs, Treasury, the Fed and the administration virtually disappearing; the big banks’ Democratic and Republican handmaidens running interference; and the media distracted while pursuing pissant stories about debit card fees, consumer protection rules, and shareholder gadfly proxy access; all is hunky dory in TBTF land.

But what happens to all that freshly printed money after it gets parked on bank balance sheets if it’s not loaned to businesses and consumers? Perhaps we could sleep at night if it just sat there, as a cushion against the recession that lies ahead. But unfortunately, the “banks” appear to have flocked back to the derivatives casino, confident that as officially recognized TBTF institutions they are free to privatize gains, gorging on bonuses while the sun shines, knowing they can socialize their inevitable losses.

To see how much of your money they are playing with, take a look at the scariest economic chart of 2012.

2013-01-07-BankDepositsandLoansDifference.jpg“Banks” are supposed to be chartered to take in deposits and use them to make loans. Under the magic of fractional reserve banking, only a percentage of the deposited money needs to be retained as ready reserves, while the rest is put to work in the real economy. And yet here we have a “banking system” that for the first time in history has $2 trillion more in deposits than outstanding loans!…”

Full article

[youtube://http://www.youtube.com/watch?v=PEPgA4ZQf0U 450 300]

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Doug Kass: 15 Surprises for 2013

“It’s that time of the year again!

It was a tough task repeating the success of my surprise list for 2011 over the past year.

This is particularly true since my most important surprise (No. 4) in 2011 — namely, that the S&P 500 would end the year at exactly the same price that it started the year (1257) — was eerily prescient. As well, in 2011 I basically nailed that the trading range over the course of that year would be narrow (between 1150 and 1300).

As we entered 2012, most strategists expressed a relatively sanguine economic view of a self-sustaining domestic recovery and an upbeat corporate profits picture but shared the view that the S&P 500 would rise but only modestly.

By contrast, I called for a much better equity market — one capable, in the second half of the year, of piercing the 2000 high of 1527. As it turns out, the S&P 500 breached 1480 to the upside in the fall — or about only 3% less than the 2000 peak. (In October, I concluded that the S&P 500’s fair market value was 1415, and the S&P closed the year just 10 points higher than that figure.)

Before reviewing what else went right in my surprise list for 2012 (and what went wrong), I wanted to give some historical perspective on the lessons of the past, on the role of the consensus and what I am trying to bring to the table in the construction of the surprise list.

 

Lessons Learned Over the Years…”

Full article 

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Get Out Your Wallets…Washington is Not Finished With You Yet

“WASHINGTON — In case you thought there was no risk of your taxes going up again, think again. Washington isn’t done with you yet.

Democrats, led by President Barack Obama, want lawmakers to consider a fresh set of tax increases in the next several weeks when they discuss whether to cut spending.

Republicans oppose raising tax rates, especially after they just raised some of them for the first time in two decades in the New Year’s deal that extended most – but not all – of the expiring Bush tax cuts.

But much of what Obama is talking about is raising tax revenue without actually raising tax rates. In Washington-speak, lawmakers will try to collect more tax money by closing tax loopholes, perhaps limiting popular tax deductions and to some degree changing the way citizens pay into the popular Medicare and Social Security programs.

The New Year’s deal raised income tax rates for individuals’ taxable income above $400,000 and family income above $450,000. That’s less than 1 percent of all U.S. taxpayers. The deal is projected to raise about $600 billion over 10 years, not enough to significantly chip away at deficits that still will total more than $6.8 trillion over the same period. Lawmakers on Capitol Hill will be looking to trim $2 trillion over 10 years from projected future deficits as part of any deal to raise the nation’s debt ceiling by the end of February and prevent $109 billion in deep spending cuts from occurring in March.

Democrats say Obama will continue to push for an equal split between revenues and cuts – $1 trillion in new tax revenues and $1 trillion in spending cuts….”

 

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Global Debt Crisis Explained (Infographic )

“Liam Fisher writes: “The global debt crisis is continuing, largely unabated. While significant measures are being put into place by governments around the world, there is little tangible effect being had on deficits that are continuing to pile up. Indeed, there is only limited agreement amongst economists on the severity of the debt crisis and its implications for the people of the world or the best ways to go about rectifying the problem. Some advocate drastic austerity measures and strict fiscal conservatism, while others take a more Keynesian approach that sees deficit spending as a way out of recession.

In this infographic from IronFX.com…”

Full article and infograph 

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Retailers Continue to Hit the Skids

“We’ve already noted the weak holiday sales report from Tiffany & Co. (NYSE: TIF) out this morning. Now two more specialty retailers, American Eagle Outfitters Inc. (NYSE: AEO) and Aeropostale Inc. (NYSE: ARO), have posted sales numbers for the period, and the situation has not improved much.

American Eagle reported same-store sales up 5% for the quarter to date, compared with a gain of 13% in the same period a year ago. Excluding online sales, sales increased just 1%, compared with a 12% increase excluding online sales last year.

At Aeropostale same-store sales fell 8% in the nine weeks to the end of December, and that includes online sales. Last year sales fell 9% excluding online sales.

American Eagle reiterated fourth-quarter earnings per share (EPS) guidance of $0.56 and same-stores sales growth in the mid-single digits.

Aeropostale cut its quarterly EPS guidance from a previous range of $0.36 to $0.41 to a new range of $0.20 to $0.24.

A third specialty retailer, Ascena Retail Group Inc. (NASDAQ: ASNA)….”

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The Consumer Financial Protection Bureau Rolls Out New Mortgage Lending Rules

“The federal Consumer Financial Protection Bureau (CFPB) announced today the adoption of new rules for mortgage lenders that prohibit deceptive teaser rates or no-documentation from borrowers, as well as requirements that lenders make a better effort to determine a borrower’s ability to repay the loan.

The CFPB’s director said:

When consumers sit down at the closing table, they shouldn’t be set up to fail with mortgages they can’t afford. Our Ability-to-Repay rule protects borrowers from the kinds of risky lending practices that resulted in so many families losing their homes. This common-sense rule ensures responsible borrowers get responsible loans.

The ability to pay rules require that lenders document a borrower’s financial information, evaluate and decide that the borrower can repay, and not base the ability to repay on a teaser rate.

A second set of rules applies to qualified mortgages. Lenders may still make loans to consumers with “insufficient or weak credit history”, but those will carry higher interest rates and the lender will be presumed to have assured itself that the borrower can repay the loan. Borrowers may challenge that presumption if they can prove that they did not have sufficient income to repay the mortgage. In general, a qualified mortgage will be available to borrowers whose debt-to-income ratio is less than or equal to 43%….”

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Behind the Recent Rise in Black Gold

“Prices for WTI crude have risen above $94 a barrel for the first time in nearly four months today, reaching a high point of $94.70 a barrel on the Nymex. Brent prices have also risen to highs today not seen since October

Two bits of data are behind the rise. The first is the unexpectedly sharp 14.1% jump in Chinese exports during the month of December, raising the country’s trade surplus to $31.6 billion. The rise was accompanied by the importing of an additional 300,000 tons of crude in the month (about 2.2 million barrels).

The second bit of data comes from a source cited by Bloomberg, who said Saudi Arabian crude production fell by 5% in December to 9.025 million barrels a day. The cut in production is clearly an attempt by the Saudis to stabilize the price of crude at around $100 a barrel, their preferred price point….”

 Full article

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The Most Innovative Companies In The World

“This week at the Consumer Electronics Show in Las Vegas, some of the biggest companies in the world will debut the next generation of products and technology. The goods on display are the product of years of research and billions of dollars. And to protect their investments, companies file for patents on the next game changing device, software, or technology.

The U.S. Patent Office and Trademark Office awards hundreds of thousands of patents to companies each year. Today, IFI Claims Patent Services, a producer of patent databases, released its top 50 ranking of the companies awarded the most U.S. patents in 2012. Based on IFI’s list, 24/7 Wall St. reviewed the 10 most innovative companies in the world.

24/7 Wall St.’s review of the IFI list finds that producing the most patents does not ensure a successful business — frequently, it can mean the exact opposite. Some of the biggest patent recipients last year are barely profitable, or are losing money. These corporations may be ramping up research and development as their current brand falters. Sony’s patent awards are up substantially compared to 2011, but its shares are down by nearly 40% in the past 12 months, and the company lost more than $5 billion in the last fiscal year.

Meanwhile, several companies that didn’t make our list are among the most profitable companies in the world. Companies like Apple and Google saw major increases in patents awarded last year. Apple’s patents increased by 68% between 2011 and 2012. Google’s grew by an astounding 170%. These two companies remain well out of the top 10 for global patents awarded last year. Apple was 22nd, and Google was 21st….”

Full article

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More on the Ridiculously Low VIX Handle

“Yesterday we touched on the implications relating to regime changes in the volatility space.  The phenomenon currently in the US is similar in Europe where European equity volatility trading has been trading marginally below the VIX.  This is displayed in the chart below from Cheuvreux’s recent Cross Asset Research paper from the 7th of January – The Tactical Message:

mt The Change in the Volatility Regime   Part 2

“The VStoxx index of implied volatility has followed the American example by falling to a cycle-low. The increase in America’s political-fiscal risk premium since September has allowed indices of European equity volatility to trade marginally below the VIX.” – source Cheuvreux Cross Asset Research, 7th of January 2013.

Cheuvreux makes the argument that the decline in financial volatility is a general phenomenon, with the lead coming from debt markets. Further, they argue that there is more to it than financial repression….”

Full article

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Belkin: Top 10 Reasons to be Bullish in 2013

“It is an understatement to say Michael Belkin is somewhat skeptical of all the bullish sentiment around these days — and in response to that, he put together a list of his favorite “reasons” to be bullish:

 

Top 10 Reasons to be Bullish in 2013

1) Congress and the Administration have spending, taxes and the budget deficit completely under control. Fiscal imbalances have been solved and won’t be a problem for the economy or markets anymore.

2) S&P500 earnings are declining and everyone knows stocks go up when earnings go down.

3) Hedge funds have their highest stock market exposure since just before the last time the S&P500 tumbled 50%. 10,000 hedge funds controlling $2 trillion can’t be wrong…”

 

Full list

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$TIF Will Post Lower Range Profits

“NEW YORK (MarketWatch) — Tiffany & Co.TIF -4.06% said Thursday its holiday same-store sales for the two-month period ended Dec. 31 were flat, excluding currency effects. Worldwide net sales increased by 4% to $992 million. Tiffany expects earnings for the year ending Jan. 31 near the low end of its forecast of $3.20 to $3.40 a share. Wall Street analysts expect the company to earn $3.29 a share, according to a survey by FactSet….”

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