U.S. equities traded in its narrowest range today for the year. Essentially it was a samich day. The DOW transports did hit new highs after Friday’s big gains…so some happiness there full the bulls.
Defensive stocks, drugs, and food companies lagged while bank stocks led the way.
[youtube://http://www.youtube.com/watch?v=X0B41tBTTko 450 300] Comments »
“The Financial Times reports exclusively the Commodities Futures and Exchange Commission is studying whether Bitcoin would fall under their purview.
CFTC head Bart Chilton told the paper Bitcoin “is for sure something we need to explore,” adding, “It’s not monopoly money.”
Another anonymous source said that the regulator is “seriously” examining the issue….”
Comments »“David Rosenberg the veteran Wall Street economist and bearish strategist at Gluskin Sheff, gave an intense presentation on Friday at John Mauldin’s Strategic Investment Conference.
Titled “Bernanke: The Wizard Of Potemkin,” this presentation offers a sobering look at the anemic U.S. economy, the labor market mess, and the Federal Reserve’s controversial efforts to get everything back on track.
Before you can even think about getting bullish, you must consider the eye-opening charts from Rosenberg’s presentation.
Thanks to Gluskin Sheff for giving us permission to feature this presentation…..
Comments »“David Kostin, Goldman Sachs‘ chief U.S. equity strategist, sees almost no upside to the S&P 500 from now through the end of the year.
However, within the market he sees no shortage of stocks and sectors expected to outperform.
In his new U.S. Monthly Chartbook, Kostin provided an updated list of stocks with the most upside potential today.
This time around, the list is dominated by oil and gas firms including drillers or refiners. The rest are ringers across a broad range of industries, from tires to telecom.
According to Goldman’s analysts, the 40 stocks on this list offer 23% to 57% upside relative to their recent prices.
Comments »“Dr. Ron Paul
Last week at its regular policy-setting meeting, the Federal Reserve announced it would double down on the policies that have failed to produce anything but a stagnant economy. It was a disappointing, but not surprising, move.
The Fed affirmed that it is prepared to increase its monthly purchases of Treasuries and mortgage-backed securities if things don’t start looking up. But actually the Fed has already been buying more than the announced $85 billion per month. Between February and March, the Fed’s securities holdings increased $95 billion. From March to April, they increased $100 billion. In all, the Fed has pumped more than a half trillion dollars into the economy since announcing its latest round of “quantitative easing” (QE3) in September 2012.
Although many were up in arms when the Fed said it would buy $600 billion in government debt outright for the previous round, QE2, all seems quiet about the magnitude of QE3 because it doesn’t come with huge up-front total price tag. But by year’s end the Fed’s balance sheet could hit $4 trillion.
With no recovery in sight, where’s all this money going? It is creating bubbles. Bubbles in the housing sector, the stock market, and government debt. The national debt is fast approaching $17 trillion, with the Fed monetizing most of the newly issued debt. The stock market has been hitting record highs for the past two months as investors seek to capitalize on the Fed’s easy money. After all, as long as the Fed keeps the spigot open, nominal profits are there for the taking. But this is a house of cards. Eventually, just like in 2008-2009, the market will discipline the bad actions of the Fed and seek to find the real normal….”
Comments »“What is “obvious” to those embedded in the conventional, MSM/state-manufactured worldview is not the same as what is obvious to those outside the asylum.
Longtime readers know my analytic perspective is based on what psychiatrist/author R.D. Laing called the Politics of Experience.
Survival+ 6: The Politics of Experience (April 2, 2009)
Survival+ 7: Simulacrum and the Politics of Experience (April 3, 2009)
In his prescient 1972 lecture, The Obvious, Laing explained the inherent difficulty of understanding “the obvious” when a systemic madness is taken as “normal”:
To a considerable extent what follows is an essay in stating what I take to be obvious. It is obvious that the social world situation is endangering the future of all life on this planet. To state the obvious is to share with you what (in your view) my misconceptions might be. The obvious can be dangerous. The deluded man frequently finds his delusions so obvious that he can hardly credit the good faith of those who do not share them.
We can summarize one aspect of this analysis by asking: what is “obvious” to those inside a system and what is “obvious” to those outside the system? Our experience of what is “obvious” says a lot about our cultural context and assumptions: the manufacture of our “news” and consensus, the mystification of our experience via propaganda and simulacra, what we perceive as “normal” relationships, work, goals, etc.
What is “obvious” to most participants is that the stock rally is fueled by central bank liquidity and quantitative easing, and since there is no limit in sight to these policies, there is also no limit to the stock market running higher.
It is also “obvious” that betting against this trend is an excellent way to lose money, so the number of people shorting the market dwindles with each push higher.
Equally “obvious” is the incentive to borrow money via margin to invest in the rising market: the higher it goes, the more you can borrow, and the more you borrow and plow into the market, the more you make. It is a wonderful self-reinforcing feedback loop.
Thus record-high margin debt is not a warning sign but evidence that the music is still playing, so by all means, keep on dancing:
Near-Record NYSE Margin Debt Leads to Caution (Bloomberg)
That the disconnect between the real economy and the stock market is widening is obvious, but there doesn’t seem to be any intrinsic reason why it can’t continue widening. As a result, many analysts are calling for a brief retrace and then another leg up to new highs. Others see a serious decline (10%+) this summer and a new high in Q4 2013 or Q1 2014.
In other words, what might be obvious to those outside the system–that all liquidity-driven bubbles end badly, usually when participants are convinced there is nothing to restrain the trend from going higher–is not at all obvious to participants and those cheering them on (the MSN, the Federal government and the Fed).
What I sense is a near-universal resignation of those attempting to call a top in the market, an acceptance that the trend is up for the foreseeable future and that trying to short this market (i.e. profit from a decline) is a fool’s game.
The number of those willing to short the market, i.e. take the other side of the trade, has dwindled. Every sharp rally like last Friday’s eliminates entire divisions of shorts, leaving the trade even more one-sided.
Yes, the market is manipulated and totally dependent on central bank QE, liquidity and outright buying of stocks and bonds. But the market is not as stable as presumed, and one-sided trades tend to capsize when everyone who feels safe being on one side of the boat least expects it.
Every trader wants to short the market after it becomes obvious the trend has reversed. But since there are so few shorts left, the decline (should one ever be allowed to happen) might not be orderly enough for everyone to pile on board. More likely, the train will leave with few on board and the initial drop will leave everyone who was convinced the uptrend was permanent standing shell-shocked on the platform with margin calls in hand…..”
Comments »“Last month we laid out the reasons why France was On The Brink Of A Secondary Depression—in short, due to a deadly collision of French politics with Frankensteinian monetary union. Unfortunately, subsequent data confirms the bleak trajectory:
The INSEE Business Climate Survey has fallen below 88 (or two sigma below the mean). This indicates France is entering into a recession as nasty as 1993 and perhaps as nasty as 2008-2009. She will enter into this recession with government spending at 57% of GDP, an all-time high, and with a debt-to-GDP ratio close to 90%—and that’s not including the liabilities for civil servant pensions. If they were included, the debt to GDP ratio could double, according to some estimates (see the report on public finances by Michel Pebereau).
Even Francois Hollande is beginning to wake up to just how destructive and anti-business the French agenda is. On Monday, Hollande announced measures designed to encourage the French entrepreneurial spirit – essentially by watering down programs he himself imposed after winning the presidential election last year.
The new agenda includes cuts in capital gains taxes. The effective capital gains tax will now decline by 2 percentage points, to 32.5%. This is better than last year’s outlandish move to effectively bump up the capital gains tax to as high as 62% in some cases. But the president’s reversal is the desperate move of a cornered politician, not a sign that we will see a steady hand on the tiller of reform in coming years.
Take a look at the table above. France is a serious laggard against most of the other major European economies (except Italy) on almost all tax indicators.
In this context, Hollande’s reversal on capital taxes reminds me of the guy walking up the steps to be hanged, who slips, falls and says “could have been worse.” France remains one of the deadliest environments for entrepreneurs…..”
Comments »Upgrades – CLF, DG, HBI, HUM, INTC, KNOP, PVTB, THOR, UNH, YRCW,
Downgrades – SAN, BBVA, BSFT, CORT, EGO, EXC, HTWR, MCO, PCAR, PAAS, WFT
Comments »“The stock markets closed on Friday at their all-time highs.
However, one of the biggest headscratchers has been the nature of the stock market rally.
Specifically, the more conservative sectors like health care have been outperforming the more volatile cyclical sectors.
If people feel good about the economy, they should hunger for risk and invest in more economically sensitive names.
However, investors have been doing the exact opposite month after month this year.
Morgan Stanley’s Adam Parker talks about this in a new note titled “The Definition Of Insanity”:
Doing something over and over again and expecting a different outcome? Once again, high-beta stocks, cyclicals and smaller stocks underperformed in a strong market during April. In a break from the prior three months, junk narrowly beat quality while value beat growth.
One explanation for this discrepancy could be…”
“Attention online shoppers: The days of tax-free shopping on the Internet may soon end for many of you.
The Senate is scheduled to vote Monday on a bill that would empower states to collect sales taxes for purchases made over the Internet. The measure is expected to pass because it has already survived three procedural votes. But it faces opposition in the House, where some Republicans regard it as a tax increase. A broad coalition of retailers is lobbying in favor of it.
Under current law, states can only require retailers to collect sales taxes if the store has a physical presence in the state.
(Read More: Are You a Tax Cheat If You Shop Online Tax-Free?)
That means big retailers with stores all over the country like Walmart, Best Buy and Target collect sales taxes when they sell goods over the Internet. But online retailers like eBay and Amazon don’t have to collect sales taxes, except in states where they have offices or distribution centers.
As a result, many online sales are tax-free, giving Internet retailers an advantage over brick-and-mortar stores.
The bill would empower states to require businesses to collect taxes for products they sell on the Internet, in catalogs and through radio and TV ads. Under the legislation, the sales taxes would be sent to the states where a shopper lives.
The measure pits brick-and-mortar stores against online services….”
“Private-equity firms TPG Capital and Warburg Pincus are exploring a sale or a public offering of Neiman Marcus Group, according to a Bloomberg News report late on Sunday.
The private-equity firms, which bought the Dallas-based retailer in 2005 for $5.1 billion, have interviewed banks and are about to hire Credit Suisse Group to run the dual track process, according to the report, which cited two people familiar with the situation.
A Credit Suisse spokesman declined to comment…..”
Comments »“TRENTON, N.J. (AP) — Men who are bashful about needing help in the bedroom no longer have to go to the drugstore to buy that little blue pill.
In a first for the drug industry, Pfizer Inc. told The Associated Press that the drugmaker will begin selling its popular erectile dysfunction pill Viagra directly to patients on its website.
Men still will need a prescription to buy the blue, diamond-shaped pill on viagra.com, but they no longer have to face a pharmacist to get it filled. And for those who are bothered by Viagra’s steep $25-a-pill price, Pfizer is offering three free pills with the first order and 30 percent off the second one.
Pfizer’s bold move blows up the drug industry’s distribution model. Drugmakers don’t sell medicines directly to patients. Instead, they sell in bulk to wholesalers, who then distribute the drugs to pharmacies, hospitals and doctors’ offices.
But the world’s second-largest drugmaker is trying a new strategy to tackle a problem that plagues the industry. Unscrupulous online pharmacies increasingly offer patients counterfeit versions of Viagra and other brand-name drugs for up to 95 percent off with no prescription needed. Patients don’t realize the drugs are fake or that legitimate pharmacies require a prescription.
Other major drugmakers likely will watch Pfizer’s move closely. If it works, drugmakers could begin selling other medicines that are rampantly counterfeited and sold online, particularly treatments for non-urgent conditions seen as embarrassing. Think: diet drugs, medicines for baldness and birth control pills.
“If it works, everybody will hop on the train,” says Les Funtleyder, a health care strategist at private equity fund Poliwogg who believes Pfizer’s site will attract “fence-sitters” who are nervous about buying online.
The online Viagra sales are Pfizer’s latest effort to combat a problem that has grown with the popularity of the Internet….”
Comments »“May 6 (Reuters) – Tyson Foods Inc, the largest U.S. meat processor, reported a 43 percent fall in quarterly profit as shoppers and restaurants switched to cheaper chicken from beef to save money.
“Our beef segment suffered margin compression as consumers opted for the relative value of chicken,” Chief Executive Donnie Smith said in a statement on Monday….”
Comments »“(Reuters) – Warren Buffett said on Monday the U.S. economy is gradually improving, helped by the efforts of Federal Reserve Chairman Ben Bernanke to stimulate it.
Speaking on CNBC television, Buffett said the economy is benefiting from improvement in areas that had not previously performed well, particularly homebuilding.
He also said the improved economy is helping create increased traffic for NetJets, Berkshire’s private plane unit.
“The economy is moving forward, but at a slow pace,” he said. “Demand has come back, but slowly.” …”
Comments »“West Texas Intermediate crude headed for the biggest three-day gain in nine months as air strikes in Syria renewed concern that unrest will spread in the Middle East and disrupt supply.London’s Brent oil rose.
WTI futures climbed as much as 1.6 percent in New York after Syria’s state news agency said Israeli aircraft attacked a military research center on the outskirts of Damascus yesterday. The offensive was a “declaration of war,” Syria’s deputy foreign minister told CNN. Israel didn’t confirm involvement. The Middle East accounted for 33 percent of global crude output in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy. WTI capped a second weekly gain May 3 after U.S. employment rose more than forecast.
“If the geopolitical events between Israel and Syria start to escalate, the market will automatically write in a premium and you should see a spike in the price of oil,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “The key on the topside is $98.50 and a break of that area may send the price to $100. Another couple of bombings and you will see it.”
WTI for June delivery gained as much as $1.56 to $97.17 a barrel in electronic trading on theNew York Mercantile Exchange and was at $96.23 at 3:12 p.m. Singapore time. The volume for all contracts traded was more than four times the 100-day average. Futures increased $1.62 to $95.61 on May 3, the highest close since April 2. Prices have risen 5.1 percent over the past three days, the most since August, and climbed 2.8 percent last week.
“Gold gained in New York on signs of a slowdown in investor sales of exchange-traded funds.
Assets fell about 0.5 metric ton to 2,262.148 tons on May 3, the smallest decline since holdings last gained on April 1, according to data compiled by Bloomberg. Prices have climbed the past two weeks on increased coin and jewelry demand.
“We need to see ETF redemptions slow down in order for the next leg higher.” said Xiang Nan, an analyst at Citics Futures Co., a unit of China’s biggest listed brokerage.
Gold for June delivery advanced 0.7 percent to $1,47.40 an ounce by 7:35 a.m. on Comex in New York. Prices slumped 13 percent over two days last month, the most in three decades.
Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., said he wouldn’t buy gold after the slump….”
Comments »“French Finance Minister Pierre Moscovici declared the era of austerity over after his German counterpart offered flexibility on deficit cutting amid renewed bickering between Europe’s two biggest economies.
“We’re witnessing the end of the dogma of austerity” as the only tool to fight the euro debt crisis, Moscovici said yesterday on Europe 1 radio. “We’ve been pleading for a growth policy for a year. Austerity on its own impedes growth.”
The gap between the French Socialist finance chief’s view and the election-year positioning of Germany’s Wolfgang Schaeuble underscores the divergence between their economies and the wrangling that has marked the crisis fight since Francois Hollande replaced Nicolas Sarkozy as French leader a year ago.
Coalition lawmakers in Germany are pushing back against the two-year extension for France to meet European Union deficit rules floated by Olli Rehn, the EU economic and monetary affairs commissioner.
“We made it clear to our government, the chancellor and finance minister that in the case of France a one-year delay to 2014 to fulfill the euro’s deficit rules is the absolute limit for us,” Norbert Barthle, budget-policy spokesman for Schaeuble’s Christian Democratic Union, said in a May 3 telephone interview from his constituency in southwestern Germany. “France must show that it’s willing to tackle structural reforms.”
“Italy’s economy will shrink this year more than the European Commission estimates as weak domestic demand and investment extend the country’s longest recession in more than two decades, the national statistics institute said.
Gross domestic product will decline 1.4 percent in 2013 before rising 0.7 percent next year, Rome-based Istat said in the institute’s annual report. Household consumption and corporate investments will both decline this year.
Istat’s GDP projections compare with forecasts by the European Commission for a 1.3 percent contraction this year and growth of 0.7 percent in 2014. The Organization for Economic Cooperation and Development said May 2 that the euro region’s third-biggest economy will shrink 1.5 percent this year and expand 0.5 percent next.
“In 2013 households will keep experiencing a further fall in available income with inevitably negative consequences on consumer spending,” today’s report said. “At the same time, a recovery in investment by companies appears unlikely because of the productive capacity utilization and of the persisting weakness of domestic demand.” …”
Comments »
