Big Blue Suggests a Grim Future Ahead

“IBM’s poor earnings performance in the first quarter likely foretells a rough time ahead for the stock market.

In an after-the-bell report Thursday, the information technology leader missed narrowly on bottom-line profit but widely on top-line revenue. Profit of $3 a share missed Wall Street estimates by a nickel, while revenue of $23.41 billion fell short of hopes for $24.62, a 5 percent whiff.

As a result, traders punished IBM in Friday action, with the shares closing down more than 8 percent.

IBM has been underperforming the market the way it is, dropping 10.9 percent over the past month while the Standard & Poor’s 500 has risen about 0.2 percent.

The earnings report may well confirm weakness both in the company and broader market.

IBM earnings, in fact, have served as a highly efficient proxy for market movement going all the way back 10 years, according to research from Bespoke Investment Group.

While many investors focus on Alcoa because it kicks off earnings season, as a barometer, IBM has proved more efficient.The company’s stock movement immediately after earnings has had a stunning 75 percent success rate in predicting market movement over the next five weeks.

More recently, the correlation has been perfect over the past five quarters. In the three times IBM rose after earnings, the S&P 500 also gained. Likewise, the correlation held in the two quarters when the company’s stock fell.

In the 10-year period, the trend has been more accurate when IBM has a positive earnings reaction, with the market up 80 percent of the time. Negative earnings have correlated with market movement at a 70 percent rate, Bespoke found.

“Part of the explanation lies in the fact that IBM generates more than half of its revenues from its services unit, which has a presence in practically every S&P 500 company,” Bespoke said. “Any weakness in the performance of corporate America (or even the corporate world) will likely show up in the results of IBM.” …”

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Always order your pink slime well done if you must indulge.

Just because a place tells you on the menu that is is freshly ground or of ‘Black Angus’ quality does not mean your getting quality product.

Truth in menus is dead and your health is seriously at risk!

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“With the bloom coming off the emerging markets rose, one economic model has drawn a circle around two countries that stand the greatest risk of falling into a crisis.

David Rees, emerging markets economist at Capital Economics, said the firm has developed five criteria to identify whether a country’s economy has overheated to the point where it is threatening to develop into a full-scale problem.

The good news is that the Capital model finds no country in “immediate threat of crisis.”

But the bad news is that at least two countries are tilting in that direction and could pose danger to investors.

Rees identifies the endangered duo as Turkey and Venezuela.

Turkey’s stock market has surged 7.3 percent in 2013 and is up 42 percent over the past 12 months. The country outperformed virtually all other emerging markets in 2012 as it modernizes its economy and pushes pro-growth programs.

Venezuela’s markets tell an even more robust story, with the Caracas exchange booming 37 percent this year and more than 200 percent over the past 12 months. While some feared the rally might falter due to political upheaval after President Hugo Chavez’s death, the market has gone on its merry way.

Despite the powerful gains, Rees advises investors to watch five factors: Growing current account deficits; rapid credit expansion; surging short-term external debt; bubbling stock market prices (50 percent is considered a red flag); and large growth in real exchange rates…..”

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“…..This week we saw our first real market rattling in awhile.

Commodities got absolutely hammered, and the renewed deflationary chill law to a series of violent up and down swings, resulting in the worst week in some time.

Also, US data is softening (and things aren’t hot in Europe or China either).

And yet. At least as of very recently, big money managers are bullish on historical levels.

From Barron’s cover story:

The stock market isn’t the only thing that has set records this spring. Barron’s semiannual Big Money poll of professional investors also is setting a record — for bullishness, that is. In our latest survey, 74% of money managers identify themselves as bullish or very bullish about the prospects for U.S. stocks — an all-time high for Big Money, going back more than 20 years. What’s more, about a third of managers expect the Dow Jones industrials to scale the 16,000 level by the middle of next year, notwithstanding a dismal week of selling that left the blue-chip index at 14,547.51 on Friday…..”

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Some 500k plus surgeries have been performed with robotic technologies from Intuitive Surgical. Unfortunately, there is a growing number of cases where routine surgeries are resulting in complications and even death. Lawsuits are beginning to mount…..

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“A couple of updates …

From Goldman Sachs economist Alec Phillips: The Federal Budget Deficit: Shrinking Faster:

The federal deficit continues to shrink. Through the first six months of the fiscal year, revenues have come in higher than expected, while spending has come in lower than expected. As a result we are lowering our deficit forecast for the current and next two fiscal years.

Earlier this year we lowered our FY2013 deficit forecast from $900bn (5.6% of GDP) to $850bn (5.3%). In light of recent trends, we are lowering it again to $775bn (4.8%). Spending in the fiscal year to date is lower than a year ago and the nominal growth rate is lower than it has been in decades. Revenues have also exceeded expectations, with a 12% gain fiscal year to date. What is more notable is that the strength in revenues preceded the payroll tax hike at the start of the year, and the spending decline does not seem to reflect sequestration, which has just started to take effect.

We expect the improvement to continue for the next few years….”

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“The FBI needs to explain in more detail why it failed to realize that the older Boston bombing suspect, Tamerlan Tsarnaev, was a terrorism risk.

By the FBI’s own admission, the FBI was warned about Tsarnaev in 2011 by a foreign government (presumably Russia).

The foreign government told the FBI that Tsarnaev had become “a follower of radical Islam and a strong believer and that he had changed drastically … as he prepared to leave the United States for travel to the country’s region to join unspecificied underground groups.”

In response to this warning, the FBI says it checked databases and interviewed Tsarnaev and other family members in the summer of 2011 but found no evidence of “terrorism activity.”

Then the FBI says it “requested more information” about Tsarnaev from the foreign government but never received it.

Less than two years later, Tsarnaev is suspected of masterminding a successful terrorist attack on the city of Boston that killed three people and injured nearly 200.

So the FBI has some questions to answer.

Namely:

• Given the explicit warning, why didn’t the FBI continue to monitor Tsarnaev?
• Why didn’t the FBI follow up with the foreign government when it didn’t get the additional information it requested?
• How common is a warning from a foreign government about a specific person like this? Does the FBI get thousands of them?
• What made the FBI effectively clear Tsarnaev — and what might the FBI change  to avoid making this mistake again?
• Will the FBI conduct a full investigation into what happened?

Here’s the key section of the FBI’s statement….”

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http://www.youtube.com/watch?v=796UFHldHM4

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Gawker.com has cracked open the tweets of one of the suspected bombers…

“A cached profile photo that matches his picture, and tweets from other users he’s interacted with suggest that this is the twitter account of 19-year-old Dzhokhar A. Tsarnaev, the fugitive suspect #2 in the Boston Marathon bombings: @J_tsar. The account is listed under the name “Jahar,” which is what classmates called him because his full name was hard to pronounce.

Surprisingly, Tsarnaev has been active on Twitter since the bombing. His last tweet was on Wednesday, two days after he is alleged to have helped carry out the Marathon bombing…”

Full article and tweets

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The U.S. is largely a Christian nation that goes by the religious motto of “Do onto others as you would have them do onto you.”

This country was founded for many reasons, of which do not seem to be upheld by our behavior.

Call it human nature, call it…. manipulation by a few. It is your duty as a citizen to be informed and to insist we adhere to a moral compass.

Otherwise, your patriotism and unspoken support of our behavior are complicit in allowing Devil like behavior to reign over this world.

Cheers on your weekend!

Click here for documentary

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

 

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[youtube://http://www.youtube.com/watch?v=7VOWnnEphjI 450 300]

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Source

“The US House of Representatives  passed the Cyber Intelligence Sharing and Protection Act (CISPA) on 18 April, by a margin of 288 to 127, despite President Barack Obama’s veto threat.

CISPA, which was approved by the House last year, allows the US government and authorities to have access to private companies’ cyber threat information.

In an official statement, the US government recognised the importance of disclosing cyber security data in order to prevent and respond to malicious activities.

However, “the Administration still seeks additional improvements and if the bill, as currently crafted, were presented to the President, his senior advisors would recommend that he veto the bill”, the White House said.”

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[youtube://htp://www.youtube.com/watch?v=QGZ5f1G1Ep0 450 300]

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U.S. equities managed to follow the lead of overseas markets and go green after a volatile week of downside action.

The DOW remains in negative territory, but not by much as $IBM weighs on the index. The NASDAQ and S&P show the bounce back with upside by as much as 1%.

Volume is low, gold and oil are rebounding along with equities.

Currently leading the market higher are conglomerates, consumer cyclicals, healthcare, transportation, and capital goods. Financials are doing alright while technology remains weak.

Leading the downside are the miners and ag stocks.

Europe managed to close higher than earlier unchanged trade action.

Market update

[youtube://http://www.youtube.com/watch?v=NIylUcGDi-Y 450 300]

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[youtube://http://www.youtube.com/watch?v=39lKIyehz9k 450 300]

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[youtube://http://www.youtube.com/watch?v=N3PLJUepISw 450 300]

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[youtube://http://www.youtube.com/watch?v=oBO2I2QRPLQ 450 300]

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“NEW YORKActivist investor Nelson Peltz has disclosed stakes in Mondelez (MDLZ) and PepsiCo (PEP), following earlier reports that the billionaire could be pushing for a marriage between the sweet and salty snack giants.

In a statement early Friday, PepsiCo said that it has held meetings with Peltz’s Trian Fund Management in recent weeks to consider its “ideas and initiatives” for long-term growth. A spokesman for Mondelez wasn’t immediately available say whether the company has met with Trian as well.

A representative for Trian declined to comment.

Peltz’s disclosures come at a sensitive time for the two U.S. food and drink makers. Mondelez, which makes Oreo cookies and Cadbury chocolates, has stumbled in its first quarters as an independent company after splitting from Kraft Foods. But in a short statement, the company noted that it has “created significant value through our transformation.” ….”

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“WASHINGTON (MarketWatch) – The Federal Reserve will be watching price data closely for further signs of falling prices, two central bank officials indicated on Thursday Richmond Fed President Jeffrey Lacker and Minneapolis Fed President Narayana Kocherlakota said that that the Fed must be on its guard against falling prices. “If inflation looked like it was going to sag further on a persistent basis, I would certainly consider stimulus for the purpose of bringing inflation up to target,” Lacker told reporters, according to Bloomberg. In a separate speech, Kocherlakota said that cooling price pressures were “definitely a cause for concern.” The comments echo remarks made Wednesday by St. Louis Fed President James Bullard, who said he was concerned that the Fed’s preferred measure of inflation, the personal consumption expenditures price index, increased at a 1.3% rate in February, well below the Fed’s 2% target. Economists said the implication of the concern is that the Fed may maintain its $85 billion-per-month asset-purchase program for longer than expected and perhaps augment it with other easing steps.”

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