RUMOR: OBAMA TO WITHDRAW ALL U.S. TROOPS FROM IRAQ BY YEAR END

DEVELOPING…

STORY & VIDEO HERE 

The Occupy Wall Street movement is ending its fifth week, and despite its successes so far, people are starting to ask what comes next.

After sparking protests nationwide and globally on October 15 and garnering massive media coverage, the movement now faces fresh challenges. How will it combat media fatigue, cold weather, and how will it focus its demands?

“At some point, as with any tactic, one has to find a second act. That’s true with any movement,” said Michael Kazin, a professor of social movements at Georgetown University and co-editor of the magazine Dissent.

“I hope that the protesters are flexible enough to be talking about what the next step will be once most of them leave the park,” said Kazin. “I don’t think the media’s going to be writing about so many people sitting in the park if they’re still there in December.”

Going into last week, the Occupy movement had a target, in the form of the global October 15 protests. It provided a date, a place, even a convenient Twitter hashtag to mobilize allies.

With that achieved, though, there is less of a sense of the next big thing. Organizers are starting to talk about Bank Transfer Day, a November 5 action for supporters to withdraw funds from big banks in favor of credit unions, but that is still more than two weeks hence.

Momentum may be flagging. Twitter activity around the core “OccupyWallSt” hashtag has steadily declined since the October 15 events, according to Trendistic. Meanwhile, heavy rains Wednesday drove about half the protesters out of lower Manhattan’s Zuccotti Park.

But veteran New York protesters say that as the movement evolves, staying out in the park will become less important.

“There’s going to be a challenge in maintaining the same scale of a presence in the plaza in New York City in winter time but I think the movement is becoming more mobile,” said Louis Guida, a union organizer and protest veteran. “There may not be a thousand people camping out in the park all winter long, but it’s not a camping trip, it’s a protest movement.”

A COLD WIND BLOWS

The protesters of Occupy Wall Street have faced down the police and the city but perhaps its biggest challenger will be the bitter New York winter. Daytime temperatures are dropping into the upper 50s this week and overnight is heading to the freezing point — two months before winter’s official start in December.

“Temp(eratures) will be colder starting this weekend, dropping each night during the next two weeks leading up to temps in the 30s,” Nicholas Isabella, the protesters’ meteorologist, told Reuters via Twitter.

Isabella, a trained forecaster who now finds himself working on a dinner boat around Manhattan, said he stressed to his compatriots the need to prepare for winter. Huddled over a laptop in the center of the park, he has been something of a lone voice among the more immediate needs of food and shelter.

The occupation’s first cold-weather committee met Wednesday night, following a day of pouring rain.

“People sometimes don’t realize that the only thing keeping you warm is your own body, so it’s not (about) keeping the cold out, it’s keeping the warmth inside your body,” said Robert Burke of Outward Bound in the borough of Queens who teaches urban-based courses for New York City schools.

Some of protesters already have thermal blankets and there is talk of building snow berms to shelter from wind.

Medical professionals say protesters will run the same risks many of the city’s homeless face in winter.

“What we wind up seeing with the homeless in particular is injuries to their feet and hands,” said Lisandro Irizarry, the chairman of the emergency medicine department at Brooklyn Hospital Center.

He said people usually manage to keep their hands warm but that feet, particularly when wet, cause significant loss of heat, leading to injuries.

Other cold-weather experts offered some sage advice that most New Yorkers already know, but some tend to forget.

“Your head does not have a lot of fat,” said Amy Saxton, a former winter dog sledding course instructor in northern Minnesota who also works for Outward Bound. “It’s your body’s chimney. The heat flows right up and out of your head. It’s the most critical piece of clothing. Hat before gloves, hat before coat. Hat, hat, hat.”

SOURCE 

Greek austerity bill passes parliament despite dissent by governing Socialist party member – @AP

SOURCE

Pennsylvania Governor Tom Corbett signed legislation Thursday that allows for the takeover of the capital city of Harrisburg, according to the governor’s spokeswoman Kelli Roberts.

The bill empowers the governor to declare a state of fiscal emergency in Harrisburg and petition for the appointment of a receiver.

The receiver would be charged with drafting and implementing a long-term recovery plan.

“I remain a strong proponent for municipal governments tackling their own problems and coming together to develop a fiscal recovery plan when necessary,” Corbett said in a statement.

“But when that fails to happen, the state has to take action to ensure public safety.

In a bid to resolve its debt crisis, the Harrisburg City Council voted 4-3 on Oct. 11 to file for a Chapter 9 municipal bankruptcy.

The action immediately generated conflict between the City Council and the mayor, Linda Thompson, and the state legislature and the governor.

All dispute the legality of the Council’s action in filing for bankruptcy.

SOURCE 

NOTE: Commentary from Jon Friedman at Marketwatch

__________________

Someday, cultural historians will look back on the early 21st century and speculate about what killed the credibility of America’s so-called liberal-media elite.

They will ask, Were the wounds self-inflicted or the product of a methodical plot?

Make no mistake about it. We did this to ourselves.

As a card-carrying member of the leftist media near-elite — alas, I’m not nearly rich or famous enough to be regarded as a 100% elitist — it pains me to see my brethren sinking like the sun in the west. But we have nobody to blame but ourselves.

We’ve been out of touch with what people on the streets are thinking. The problem is twofold. We didn’t care to listen to them, and by the time we heard them we had missed the opportunity to break the story and inform the public. We were followers, not leaders.

In the 20th century, the two biggest media triumphs were exposing the Vietnam War as a failure and the Watergate-soaked corruption of the Nixon administration. In those instances, heroic reporters had their ears to the ground. That’s the difference between then and now.

To be objective — like everyone says the media ought to be, but seldom are — and blunt, let me post this simple question: Why should anyone believe us any more?

Our pledge to be on top of the news now rings as hollow as one of blustery New York Jets coach Rex Ryan’s promises of taking his middling team to the Super Bowl.

We did ourselves in by failing to shine a light on big stories involving ordinary Americans. Were we ignorant about the underlying causes of the news? Or blissfully elitist?

Sorry to say: Yes. And yes.

Let’s take three major examples.

The economy

You could argue that President Obama was swept into 1600 Pennsylvania Ave. in 2008 on the wings of a magnificent populist surge. But the media were slow in realizing that Main Street was hurting a lot worse than Wall Street shortly after Barack Obama took office.

In the aftermath of Obama’s unlikely and inspiring victories over Sen. Hillary Clinton in the Democratic primaries and then Sen. John McCain in the general election, the new U.S. president demanded the nation’s respect. He also deserved the benefit of the doubt in unwinding George W. Bush’s handling of the economy, Iraq and Afghanistan. Fair enough.

But why did journalists take so long to see that the new president’s administration was in over its head in its stewardship of the economy?

The tea party

The tea party movement was another example of the mainstream media’s failings. Liberals, laughing them off as extremists, dismissed the tea party because they didn’t agree with their politics. Big mistake.

As a result of their biases, reporters didn’t understand that the tea party was a compelling story because the organization’s members represented a large number of disenfranchised voters. That fact alone qualifies the tea party as something worth chronicling in a serious way.

This kind of journalistic intolerance is inexcusable, even in polarized 2011 America. But serious journalists dropped the ball because they let their political bent get in the way of objectively reporting the news. They missed a very big and interesting story. Lesson for the reporters: You don’t have to vote for Michele Bachmann & Co., but you should take the time to understand why so many people support her.

Occupy Wall Street

Ultimately, the media failed to understand the underlying reasons why something like the tea party could flourish. You’d think they might have learned their lesson by the time the Occupy Wall Street movement began to gain traction over the past few weeks. I’m as guilty of negligence as anyone. I and so many media stalwarts work in Manhattan, for heaven’s sake. We have no excuse. It’s not as if all this discontent had been brewing in some outpost like St. Louis before overflowing on national television.

Reuters A sign posted by the Occupy Wall Street campaign demonstrators stands in Zuccotti Park, near Wall Street in New York.

Once again, we shrugged off the protestors as members of the fringe, not as angry Americans who had something substantial to say about the depressing state of the union.

Many journalists still don’t know how to cover the movement or even come to terms with it. Is it a social movement? Is it a touchstone of a new counter-culture? Are the protestors idealistic, aimless or admirable? We can’t seem to make up our minds.

On Monday, the widely read Poynter site publicized that Salon took the Washington Post to task for choosing an image of a bearded protestor “seeming to assault a cop to illustrate a movement that has been overwhelmingly — almost without exception — nonviolent.”

Hopefully, we in the media elite — and yes, the near-elite, like me — can get it together the next time.

MEDIA WEB QUESTION OF THE DAY: Are the “liberal media” on the run in 2011?

SOURCE: CNNMoney

Developing…

STORY HERE

The Federal Reserve might have to hike interest rates if it saw a potential threat to financial stability, Federal Reserve Board Chairman Ben Bernanke said Tuesday. Many Fed officials argued before the financial crisis that using interest rates to pop an asset bubble would be too blunt and analysts now say the Fed could use new bank supervisory powers to curb risks like excessive credit growth. But Bernanke said regulatory tools remain unproven. “The possibility that monetary policy could be used directly to support financial stability goals, at least on the margin, should not be ruled out,” he said. Bernanke also said the Fed would stop buying assets if economic conditions returned to normal. But the Fed would still use new forms of forward guidance and other forms of communications about policy that have evolved during the crisis, he said.

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Driving from Vermont to New York City for the seventh annual Value Investing Congress this week, I realized just how far off the beaten path we are in the rural Green Mountains.

The six-hour drive was a bit longer than expected, thanks to the more frequent stops that are required when traveling with a small child. This was the first time I’ve traveled to the Big Apple since our son was born in mid-2010.

While I often feel that I’m best positioned to evaluate the financial markets and individual stocks from the quiet comfort of our Vermont office, every once in a while I need a dose of new ideas from like-minded investors.  The first day at the Value Investing Congress was exactly what I needed.

In this market, stock prices have been incredibly volatile. My economic outlook and investment approach has become more cautious in the last six months. As a result, I’ve been favoring value-oriented investments in this time of increased uncertainty due to the possibility for slower economic growth in the U.S. and rising European sovereign debt concerns.

Little did I know that I would drive 300 miles to attend a hedge fund investor conference to hear a presentation slamming a company located just 30 miles from my home in Vermont.

The best presentation of the first day, on Monday, came from David Einhorn of Greenlight Capital. Einhorn started his hedge fund in 1996 with less than $1 million in assets, and has grown his funds to over $8 billion today.

Value investors around the world know Einhorn for his book titled “Fooling Some of the People All of the Time” and his famous call to “short-sell” Lehman Brothers back in 2007 (a recommendation that he first shared at the Value Investing Congress).  At last year’s New York City Congress event, Einhorn revealed his “short” interest in The St. Joe Company (NYSE: JOE). He’s since battled publicly with Bruce Berkowitz of The Fairholme Fund (FAIRX), who has taken over St. Joe Co. as chairman. (JOE shares have since dropped 21 percent in the last year).

Einhorn’s 110-slide presentation to the room of value investors – that included hedge fund managers, mutual fund managers, large private investors, and lowly investment newsletter editors – was titled “GAAP-uccino,” and revealed his bearish case for shares ofGreen Mountain Coffee Roasters (Nasdaq: GMCR).

It’s no surprise that Green Mountain Coffee is attracting the interest of short-sellers.  After all, shares of the maker of the Keurig coffee machines and K-Cup single-serve coffee were up 172 percent year-to-date in 2011 (before Einhorn’s presentation). That alone is enough to get short-sellers excited.

But Einhorn didn’t build his successful hedge fund simply by short-selling stocks that have risen dramatically in price. And his research into Green Mountain Coffee appears to be exhaustive – including “channel checks” and numerous interviews with current and former employees at Green Mountain Coffee and its partners.

Green Mountain Coffee has been a darling among growth investors who see the rapid top-line revenue growth as an indication of a future gravy train of profits. The company has evolved from a small coffee roasting company into a maker of single serve coffee machines.

The company’s business model has evolved and today resembles that of the “razors and razorblades” model used by the likes of Gillette. This means that Green Mountain is selling coffee machines at or near its cost (essentially making little or no profit), while getting consumers hooked on its single serve K-Cup product. As a result, all that really matters for Green Mountain is how successful the company is at penetrating the market and then selling K-Cups (the “razors”) to customers.

Einhorn’s research indicates that Green Mountain Coffee has already achieved significant market penetration and that the addressable market may be smaller than forecast by the company and bullish analysts.

Currently, K-Cups sell for around $0.85 apiece. They’re a bargain compared with a latte from Starbucks, but expensive relative to making a pot in your Mr. Coffee Machine. The Keurig machines are similarly expensive, making them an unaffordable coffee brewing option for many consumers. Einhorn suggests that the affluent early adopters have already purchased their machines, and that growth of the market is smaller than expected.

Similarly, Einhorn believes that the number of K-Cups sold per Keurig machine (known as “attachment rate”) is actually declining. The reason for this is that early adopters of single serve coffee are the biggest coffee drinkers, and new buyers are consuming less.

However, it’s been hard for investors to get a complete understanding of the falling attachment rate, since Green Mountain management has changed its disclosure policy and is no longer providing this information to investors.

Einhorn is publicly critical of Green Mountain’s management team for regularly changing its disclosure in quarterly S.E.C. filings, an effort that he believes is designed to mislead investors and make it difficult to analyze the stock.

In spite of these concerns, investors have embraced GMCR shares. Big deals with Dunkin’ Donuts (Nasdaq: DNKN), Smuckers andStarbucks (Nasdaq: SBUX) sent Green Mountain shares soaring.

However, Einhorn points out that the deals with Starbucks and others are not exclusive. Add on the fact that Green Mountain’s patent on K-Cups expires in September 2012, and he believes that some partners and other competitors will begin making K-Cups for use in the Keurig (less than one year from now, they will be allowed to do so). The introduction of new single serve cups that could be used with Green Mountain’s Keurig will hurt profit margins for the company, as the company’s “virtual monopoly” will come to an end.

Today Green Mountain earns a profit of about $0.15 per K-Cup sold. However, data from its partnership with Smuckers indicates that on sales of these K-Cups for which Green Mountain licenses the Smuckers brand, the profit per K-Cup is around $0.06 – $0.07. With Green Mountain reporting that the Starbucks relationship is similar, investors should be expecting falling profit margins in the future.

Perhaps the most concerning part of Einhorn’s presentation was the feedback he had received from current and former employees at Green Mountain Coffee and its distribution partners. It seems that numerous people who have worked with the company have reported that Green Mountain Coffee uses shipping and transport of both Keurig machines and K-Cups between facilities in order to book revenues in an attempt to meet or beat quarterly financial estimates. Such efforts are considered fraudulent, since the only reason to perform these activities would be to inflate earnings and intentionally mislead investors.

The growth-oriented company also appears to be playing it fast and loose with its financial performance, as highlighted by a recent S.E.C. inquiry and Green Mountain Coffee’s public admission that its accounting systems and processes were not sufficient.

The actions of company insiders are similarly concerning. Thus far in 2011, company “insiders” who are “in the know” have been selling massive amounts of stock.  Year-to-date insider sales total an impressive $172 million of stock, allowing management to personally cash in on the rise of GMCR shares.

When will the company’s growth come to an end? It’s hard to say. Green Mountain has been investing heavily in its growth, so much so that the company has had negative cash flow for years. Meanwhile, their capital spending in 2011 is expected to equal 130 percent of net income, and is slated to rise to 200 percent of net income in 2012.

It’s unclear where the S.E.C. investigation into Green Mountain Coffee will lead next. But Einhorn presented a compelling case for staying far away from this growth stock darling. In fact, his recommendation to the Value Investing Congress was clearly to “sell short” GMCR shares. Given the stock’s 10 percent drop yesterday, it appears that many conference attendees (myself included) agreed with the analysis.

Before Einhorn’s presentation, shares of Green Mountain Coffee were trading at 55-times estimated 2011 EPS and 35 times estimated 2012 EPS. Thus far, most investors have accepted those as fair multiples for this high growth stock.

The risk to short-sellers with a stock like GMCR is that the revenue and EPS growth can continue for a long period of time, which can result in a rising share price.  That certainly could be the case with Green Mountain Coffee – one of the best performing stocks over the last decade and in 2011. Caution is advised, and short-selling is not for the risk-averse.

However, if Einhorn is correct about even part of his investment thesis presented on Monday, it could spell trouble for GMCR shares. And any one of these issues could send the earnings multiple for the stock crashing.

It appears that there are many potential risks facing GMCR – and its stock – these days.

First there is the market penetration and “attachment rate” issue. Second, there is the patent expiration in just 11 months that could crush profit margins. Third, there are shrinking profit margins from “partnerships” with the likes of Starbucks. Fourth, there is an alleged intentional lack of disclosure from management about the performance of the business. Fifth, there is substantial insider selling. And sixth, there are claims of fraudulent shipping in an attempt to book revenues and profits.

On top of all that, it’s possible that the S.E.C. could step up its investigation into GMCR’s accounting practices at any moment.

Put simply, the risks involved with this stock are very real.  And so I personally initiated a “short” position in shares of GMCR yesterday afternoon at $81.13 after hearing Einhorn’s presentation first hand.

Given Einhorn’s track record for calling some of the biggest “shorts” of the decade, I encourage you to do you own homework and dig into Green Mountain.

I’ll be at the Value Investing Congress again today, and will be sharing more takeaway ideas with you in the coming days. Stay tuned.

Regards,

Ian Wyatt
Editor
Daily Profit

Full Disclosure: Ian Wyatt “sold short” shares of Green Mountain Coffee Roasters (Nasdaq: GMCR) following David Einhorn’s presentation on October 17. He intends to add to this position in the coming days.

It’s a den of thieves!

Occupy Wall Street protesters said yesterday that packs of brazen crooks within their ranks have been robbing their fellow demonstrators blind, making off with pricey cameras, phones and laptops — and even a hefty bundle of donated cash and food.

“Stealing is our biggest problem at the moment,” said Nan Terrie, 18, a kitchen and legal-team volunteer from Fort Lauderdale.

“I had my Mac stolen — that was like $5,500. Every night, something else is gone. Last night, our entire [kitchen] budget for the day was stolen, so the first thing I had to do was . . . get the message out to our supporters that we needed food!”

Read more: http://www.nypost.com/p/news/local/manhattan/criminal_occupation_oh3CnKANUqYHrGPCaZaLRK#ixzz1b9dB0sb6

Social Security recipients will get a raise in January – their first increase in benefits since 2009. Experts project the increase will be about 3.5 percent, and on Wednesday, about 55 million beneficiaries will find out for sure.

The annual cost-of-living adjustment, or COLA, is based on a measure of inflation that Congress adopted in the 1970s. Since then, it has resulted in annual increases averaging 4.2 percent.

There was no COLA in 2010 or 2011 because inflation was too low. That, however, has been small comfort to the millions of retirees and disabled people who have seen their retirement accounts dwindle and their home values drop during the economic downturn.

SOURCE 

Earlier on Monday, iBankCoin Financial News reposted commentary by Charles Gasparino about the Occupy protestors. Because we like to present all viewpoints here at iBC FN in order to piss off everyone, here is The Reformed Broker (Josh Brown) with an opposite take on the movement. Josh’s must-read blog can be found here: thereformedbroker.com

SOURCE 

___________________

And the men who hold high places
Must be the ones who start
To mould a new reality
Closer to the Heart
– Rush

Today I had the audacity to disagree with Charlie Gasparino about the nature of the Occupy Wall Street movement and he wasted no time in going ad hominem on me, espousing that I don’t “know anything”.  I felt bad for ten seconds and then checked his Twitter stream – it reads like the a menu of insults and defensive barbs against anyone who dares to feel differently than he does about any given issue.  For a tough guy reporter, he has an awfully thin skin.  I liked that guy, too, what a shame.

But what I’d like to do tonight is explain why I’ve got a banner across the top left of this site proclaiming my support for Occupy Wall Street lest anyone misunderstand where I’m coming from.  I’d also like to reiterate how important it is for my colleagues on The Street -the proverbialMen Who Hold High Places – to give a fair shake to the kids down there and to give them the benefit of the doubt that they are not all “Marxists” as Charlie would have you believe.

The first thing to understand is that Karl Marx actually got it half-right; the philosopher taught that capitalism, left completely unchecked, would ultimately destroy itself.  Marx said that the capitalists would figure out a way to industrialize to the point where workers were no longer necessary and that the result would be a social order and economy that would cave in on itself.  If you can’t see that this prediction was a shockingly accurate depiction of our current Jobless Recovery for the Few then you’re simply not paying attention.

The part that Marx gets wrong – the most important part in my estimation – is that capitalism is astoundingly good at repairing itself after a major fall.  This is because capitalism, while flawed, is, at the end of the day, the closest approximation to human nature that we find among all the different economic theories.

We can argue about when it was that capitalism began destroying itself for hours and hours.  Some would say it goes back to Reagan and the logic of “deficits don’t matter”.  Others would say that the orgiastic deregulation of the second Clinton administration and both Bush terms was the trigger.  Regardless, the undeniable fact is that we tilted the scales too far and chainsawed the rulebooks, allowing that lack of regulation to chainsaw our economy and tilt it into the abyss.  Business is guilty, government is guilty, banking is guilty and the voters are guilty – so let’s accept that and move on.

The fundamental question facing those of us who seek a way out as opposed to political victories is whether or not things must change.  I stolidly answer that question in the affirmative.  To me, the fact that an Occupy Wall Street even exists after so much acquiescence and docility in the American public is a positive sign.  Agents of change often scare the shit of the mainstream at first.  Think of Jesus Christ overturning the moneychangers’ tables at the Temple, think of the booming cannonfire at Lexington and Concord.

Is it a bit too precious to compare the outcry in Zuccotti Park to some of the most momentous rebellions in human history?  Perhaps, but I am nothing if not dramatic and if I cannot be dramatic about something as thrilling as this, then what kind of blogger would I be?

The simple fact is that, as Suzanne explained, OWS is about checks and balances in an era of nearly unparalleled financial system dominance.  It’s about ripping back the opportunity from those who have hoarded it for themselves and bringing back an economy where students don’t begin life as debt slaves forced to choose between dead-end jobs and no jobs.  It’s about punishing those who’ve inflicted so much punishment on the rest of us, enabled by their position on the crony capitalist totem pole.  It’s about wrenching apart the hand-in-glove coziness of Congress and Wall Street so that a few inches of daylight can shine through on everyone else.

I am not blind, and I recognize that there are anarchists, extremists and socialists among the demonstrators.  But no one is forcing me or you to agree with every single sign held aloft at the various protests being held all over the country.  One doesn’t have to agree with all of the causes, only with the fact that there are causes currently worth fighting for, now more than ever.

Obama promised Change and didn’t even attempt to deliver.  But should his epic failure stop us from seeking to effect that change ourselves?  Can we really afford to wait for 2012 and the next functional psychopath who is voted in by the disconnected electoral machine?

And so when I see The Men Who Hold High Places like Bill Gross and Mark Cuban and Jim Chanos and the like express their understanding for the protesters and their anger, I am encouraged to do so myself.  When I see tandem movements start up like the 1% that supports the 99%, I am proud of the fact that there are Wall Streeters like myself who are both Capitalist and Humanist at once.

And to the elitists and defenders of the feudalist status quo, I say this: Pay close attention – closer attention than to anything else that currently occupies your thoughts – because when capitalism repairs itself as it always does, your role in administering it may be greatly diminished.

Sleep tight.

Read Also:

A Call to Action (TRB)

Asian stocks and commodities fell on Tuesday after Germany’s finance minister cautioned against hopes for a quick fix to Europe’s debt problem, reminding investors not to become too optimistic about a rapid development to the two-year-old crisis.

Investors rushed to seek protection in the options market against losses, with the CBOE Volatility index VIX — Wall Street’s so-called fear gauge — rising 18.2 percent to 33.39 on Monday, its highest one-day jump since August.

In Asian credit markets, spreads on the iTraxx Asia ex-Japan investment grade index, another gauge for whether investor risk appetite is returning, were about 12 basis points wider early on Tuesday, after tightening by about 26 points over the past week on hopes of progress in Europe.

Germany’s finance minister, Wolfgang Schaeuble, said on Monday that even though European governments would adopt a five-point platform to address the crisis, a definitive solution would not be reached at the October 23 European Union summit.

This came in the heels of a Group of 20 meeting of finance ministers in Paris the past weekend, which had raised expectations that European banks would be recapitalized, and the region’s bailout fund expanded to deal with a potential debt default by Greece.

“Although markets were not expecting the debt crisis to be resolved overnight, shares prices are likely to succumb to profit-taking after a rally,” said Hiroichi Nishi, equity general manager at SMBC Nikko Securities.

MSCI’s broadest index of Asia Pacific shares outside Japan fell 1.2 percent, with the materials sector in the MSCI index slumping more than 2 percent.

The Nikkei stock average opened down 1.4 percent, while Australian shares were down 1.6 percent.

World stocks, as measured by the MSCI’s all-country world equity index, fell 1 percent, and U.S. stocks suffered their worst loss in two weeks on Monday, with the Dow Jones industrial average down 2.12 percent.

The MSCI have recovered from 15-month lows by more than 10 percent in the past nine days, on growing expectations Europe was finally accelerating efforts to resolve its debt crisis.

The euro fell from a one-month high against the dollar of $1.39148 hit on Monday.

Oil was also lower, with Brent crude down 0.2 percent to $109.90 a barrel and U.S. crude futuresdown 0.2 percent at $86.19.

Retreating appetite for risks benefited government bonds, with 10-year U.S. Treasuries gaining 23/32 in price to yield 2.17 percent on Monday.

The declines in the markets may be limited given a lack of rush into other assets perceived as safe-haven.

Gold was flat and the dollar index was also little changed.

SOURCE 

The more than $25 billion in energy deals in just two days suggest there could be a whole lot more merger activity among companies looking to grab a bigger part of the shale oil and gas production business.

Kinder Morgan [KMI  28.19    1.30  (+4.83%)   ]Sunday announced its acquisition of El Paso Corp [EP  24.45    4.86  (+24.81%)   ] for $21.1 billion, a deal that would create the largest operator of natural gas pipelines in the U.S. The new company would have 67,000 miles of natural gas pipelines spanning the U.S. and reach every major natural gas production center. It would also take Kinder Morgan into Florida and connect Pennsylvania, Arkansas and Texas.

The second deal was Statoil’s $4.4 billion acquisition of Brigham Exploration[BEXP  36.75    6.39  (+21.05%)   ], which has assets in the Bakken and Three Forks oil formations. They are estimated to have 300 million to 500 million of equity-based oil equivalents. Norwegian state-owned Statoil already has a stake with Chesapeake Energy in the Marcellus shale formation, centered in Pennsylvania. It also owns acreage in the Eagle Ford prospect in Texas with Talisman Energy.

“Marcellus is primarily dry gas, Eagle Ford is a combination of dry gas and liquids and this (Brigham) is oil. We now have a good deep position in the U.S. in unconventionals,” said Statoil Chief Executive Helge Lund, according to Reuters.

Daniel Yergin, chairman of IHS Cambridge Energy Research, Associates, said this type of deal activity is bound to continue, as the growth in shale oil and gas exploration and production was off the radar of many big industry players just several years ago. “These pioneers went into it a few years ago, when nobody was paying attention. It was thought to be a thing for independents, but it’s clear it’s a big resource play for majors who have the capital these developments require,” he said in an interview from Seattle Monday.

“We reached the high point in terms of (oil) imports in 2005. Sixty percent of our domestic consumption was net imports. Today, it’s down to 47 percent. Part of it is conservation, efficiency. A big part of it is increasing production. What we’re seeing is a reversal in what seemed to be an irreversible trend in terms of dependence on foreign oil. It shows what technology and innovation can do. It wasn’t in very many peoples’ play books several years ago,” he said

“Suddenly, U.S. oil production is up 10 percent since 2008. This is like a new burst of life in the U.S. upstream, and it’s driven by technology,” he said.

Yergin, also CNBC’s global energy analyst, is currently on tour with his new best-selling book, “The Quest: Energy, Security, and the Remaking of the Modern World.”

In his book, Yergin explores what he calls the “natural gas revolution,” which came with the breakthrough in horizontal drilling and hydraulic fracturing technology. For instance, the U.S. recovered just 1 percent of the natural gas supply from shale in the year 2000. It is now about 30 percent, and Yergin expects it to be 50 percent within the next several years.

While creating a boom, the so called “fracking” process is not without its critics. It has raised concerns about water contamination, a topic Yergin also discusses in the book.

The El Paso deal was clearly spurred by the boom in U.S.-produced shale gas, and Kinder Morgan said it will take whatever steps it needs in order to get the deal approved by regulators.

“As natural gas expands and becomes an even larger component of our energy economy, it positions this combined company to have an integrated national system and clearly as this new production comes on line in places as far apart as Pennsylvania and North Dakota, there is going to be a need for new pipeline,” Yergin said.

Yergin said Bakken has put North Dakota on the map as the fourth largest oil producing state in the U.S. “The Bakken formation not so many years ago was producing 10,000 barrels a day. Now it’s 450,000. We expect altogether tight [unconventional] oil in the U.S. to reach as much as two million barrels a day by 2020 and perhaps even more,” he said.

(In full disclosure, Yergin kicked off his book tour in New York Sept. 19, at an event held by the Financial Women’s Association of New York, of which I am a board member. I interviewed him about his book and energy industry issues during that event.)

SOURCE: CNBC 

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China’s foreign ministry said Monday the Occupy Wall Street movement highlights issues that are worth considering, but that debates generated by the protests should promote global economic growth.

The movement began a month ago in Manhattan’s Zuccotti Park with loosely organized protests against what demonstrators consider unbridled corporate greed.

It has swelled to include demonstrations on Saturday elsewhere in the U.S. and in Europe involving hundreds of thousands of people. In China, online calls for similar protests did not appear to elicit any responses.

“We feel that there are issues here that are worth pondering,” said Liu Weimin, a foreign ministry spokesman during a regular briefing in Beijing.

“We have also noticed that in the media there has been a lot of commentary, discussion and reflection. But we think that all of these reflections should be conducive to maintaining the sound and steady development of the world economy,” Liu said, without elaborating.

The state-run Global Times newspaper said in an editorial that the Chinese should “calmly observe the protest movement and the global situation, and not be confused by extreme points of view.”

Earlier in the year, anonymous online calls for protests in China inspired by those that have swept across the Middle East and North Africa spooked the Chinese government into launching one of its broadest campaigns of repression in years. The calls for demonstrations every Sunday did not draw any overt protesters.

SOURCE: AP