Full video article

“Billionaires attending the World Economic Forum’s annual meeting this week in Davos, Switzerland, expect to be richer when they return to the Alpine village next year.

About a half-dozen of the wealthiest participants, including Aliko Dangote, Africa’s richest person, and Irish telecommunications mogul Denis O’Brien, said stocks will rise, interest rates will remain low and they’d avoid investing in the virtual currency Bitcoin in 2014.

“The bull market will continue, we’ve actually turned the corner,” Dangote said in an interview at the forum’s Congress Center last night. “I believe it’s going to be a whole new ballgame. Things are improving in all sectors: in banking, in vehicle manufacturing, almost all the sectors. And I think we’ve left the bad past behind.”

Dangote is one of at least 80 billionaires joining more than 2,500 business and political leaders in Davos this week, according to a list of attendees and promotional materials obtained by Bloomberg News.

As billionaires bet on accelerating growth and rising asset prices, income inequality is emerging as a key theme for this week’s annual meeting. A study released last week by the forum identified the income gap as the most probable menace to the global economy during the next decade. Wealth disparity — driven by globalization and the recent financial crisis — threatens to breed poverty and social disorder, it said.

UBS Study

Billionaires attending Davos two years ago said income inequality was an issue they wanted to discuss amid the Occupy Wall Street movement, which targeted the world’s richest 1 percent.

The wealthiest people on the planet got even richer last year, adding $524 billion to their collective net worth, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 300 wealthiest individuals. The aggregate net worth of the world’s top billionaires stood at $3.6 trillion at the market close yesterday, according to the ranking.

A study by UBS AG economist Paul Donovan last month found that pretax income of the top one percent of Americans amounts to about 20 percent of all U.S. income, which is comparable with levels in the early 20th century.

Using Gini coefficients to measure income inequality, Donovan found those for the U.S., U.K., Japan, France and Canada have each risen since 2005….”

Full article

“A short-covering rally is in store for gold after its 28 percent drop in 2013, says legendary investor Jim Rogers, chairman of Rogers Holdings.

Already, the precious metal has gained 4 percent this month, with the February Comex contract trading at $1,241 an ounce Wednesday morning.

Investors sold gold last year as anticipation that the Federal Reserve would taper its quantitative easing quelled worries about inflation.

“There are huge shorts that have developed in precious metals,” Rogers explains, according to The Economic Times of India.

“So, it’s overdue for a rally. We had a big drop in 2013. Everybody got negative, everybody got short. So, we are going to have a rally.”

But the upswing is unlikely to last, Rogers notes…..”

Full article

“A new report and analysis on the deadly chemical-weapon attack in Syria last August — blamed on the Assad regime by warmongering Western governments and Sunni Arab dictators — offers further evidence that the Obama administration almost certainly used deception in its failed bid to more deeply embroil the United States and its military in Syria’s ongoing war. Congress and a public uproar eventually slammed the brakes on overt intervention in Syria by U.S. armed forces, but the experts behind the latest study say the implications surrounding the use of bogus “intelligence” to start wars are massive.

Based on the latest findings of two prominent experts, which appear to confirm other reports and investigations, it would have been impossible for the Assad dictatorship to have perpetrated the chemical attack outside Damascus as outlined by Obama and other Western officials. Instead, it seems that the more likely culprits of the attack were foreign-backed “rebel” groups hoping to overthrow the relatively secular regime and install an Islamist dictatorship based on sharia law. Estimates suggest almost 1,500 people died in the attack, including more than 400 children.

The new report, entitled “Possible Implications of Faulty U.S. Technical Intelligence,” was published by the Massachusetts Institute of Technology’s Science, Technology, and Global Security Working Group. It was written by former United Nations weapons inspector Richard Lloyd and MIT Science, Technology, and National Security Policy Professor Theodore Postol. Among other major concerns, the two experts in the field found that despite official claims and “intelligence,” the August 21 nerve-agent attack in East Ghouta “could not possibly” have come from the center or even the Eastern edge of regime-controlled territory.

Indeed, the crude rockets with chemical agents on them only had a range of about two kilometers — a far cry from the five to ten kilometers required for them to have been fired from the heart of Damascus. Those findings concur with the conclusions of other investigators, including those of the UN independent assessment of the range of the chemical munitions. “We don’t know the weight, or a few other factors, but two kilometers is a good estimate,” UN weapons inspector Åke Sellström told reporters. Military experts quoted in German media reports agreed with the findings as well.

Other primary policy issues raised in the report include the fact that the “mistaken intelligence” could have led to an “unjustified U.S. military action based on false intelligence.” According to the authors, “a proper vetting of the fact that the munition was of such short range would have led to a completely different assessment of the situation for the gathered data.” Regardless of the reasons for what the authors called the “egregious errors in the intelligence,” the source of the errors needs to be explained, they said.

“If the source of these errors is not identified, the procedures that led to this intelligence failure will go uncorrected, and the chances of a future policy disaster will grow with certainty,” the report concluded. In other words, if the obvious problems in the so-called “intelligence” juggernaut are not fixed, the prospect of even more wars based on lies — or “faulty intelligence,” as some apologists for never-ending U.S. government interventionism refer to it — will continue to escalate.

Citing alleged “intelligence,” Obama and multiple top administration officials claimed repeatedly that the Assad regime had perpetrated the attack. In response to crossing the “red line,” the administration argued, the U.S. government must start raining missiles down on Syria. The dictatorship denied having deployed chemical weapons in the war, and as The New Americandocumented extensively, vast amounts of evidence emerged in the days and weeks after the attack suggesting that it had actually been perpetrated by rebel forces. Such attacks are often referred to as “false flags.”

While the report is not conclusive evidence that the regime was not in fact responsible for the attack, it does demolish multiple claims made by the Obama administration. Indeed, according to the MIT study, based on the estimated range of the rockets involved and their landing spots, all possible launch points for the primary weapons would have been inside rebel-held territory. Maps of the area provided by the White House showing what areas were under whose control were used to illustrate the conclusions in the report. The authors also noted that U.S. Secretary of State John Kerry’s claim that “satellite images” had shown the location of impacts were probably not true.

“My view when I started this process was that it couldn’t be anything but the Syrian government behind the attack,” MIT Professor Postol was quoted as saying by the McClatchy news service after an interview about the findings. “But now I’m not sure of anything. The administration narrative was not even close to reality. Our intelligence cannot possibly be correct.” He also pointed out that the “Syrian rebels most definitely have the ability to make these weapons.” In fact, he added, “I think they might have more ability than the Syrian government.” Based on its disclosures, the Syrian regime does not even possess such weapons. “What, exactly, are we spending all this money on intelligence for?” Postol asked.

Of course, the implosion of the Obama administration’s apparently bogus narrative on Syria follows a long pattern of deceptive so-called “intelligence” being cited by U.S. presidents to wage unconstitutional and unwise wars. The most obvious example is Iraq, where the Bush administration continually cited claims and “intelligence” about “Weapons of Mass Destruction” that were never found. Former President Bush later joked about the non-existent WMDs, although few others found humor in the loss of life and treasure that followed the war based on “flawed intelligence.” In Libya, Obama also cited erroneous “intelligence” to justify an unconstitutional war without so much as approval from Congress.

Perhaps weary of bogus information being used to spark more wars, Americans were outraged, with a deafening public outcry and congressional opposition following Obama’s demand for war in Syria — likely putting an end to the plot to overtly inject the U.S. military into Syria’s civil war. However, from the start, the Obama administration and other foreign powers have been crucial to the jihadist rebels’ cause — supplying weapons, funding, training, and international cover in the establishment’s bid to secure “regime change” in Damascus. The fruits of those machinations are now clear to see: Over 100,000 dead, minorities being targeted for extermination, millions displaced, and more. ….”

Full article

“On Friday, Chinese state media reported that China Credit Trust Co. warned investors that they may not be repaid when one of its wealth management products matures on January 31, the first day of the Year of the Horse.

The industrial and Commercial Bank of China sold the China Credit Trust to its customers in inland Shanxi Province. This bank, the world’s largest by assets, on Thursday suggested they would not compensate investors, stating in a phone interview with Reuters that ” a situation does not completely exist in which ICBC will assume the main responsibility.”

There should be no mystery why this investment known as ” 2010 China Credit-Equals Gold #1 Collective Trust Product” is on the verge of default….”

Full article

“The stock market is more overvalued than at most of its other tops since 1900, as measured by six prominent valuation measures, says Mark Hulbert, publisher of Hulbert Financial Digest.

“That doesn’t mean the bull market is coming to an end, of course, since some past bull markets were even more overvalued when they topped out,” he writes in The Wall Street Journal.

“Nevertheless, the evidence suggests that risks are high. You may want to consider selling some of your stock holdings and building up cash.”

Hulbert looked at 35 bull market tops since 1900, as defined by Ned Davis Research.

When it comes to the price-earnings (P/E) ratio, based on the previous year’s earnings, the Standard & Poor’s ratio is now 18.6, exceeding 24 of the 35 prior tops.

Moreover, Robert Shiller’s cyclically adjusted P/E ratio, which uses 10 years of earnings, sits at 25.6, beating 29 of the 35 previous tops.

Meanwhile, the S&P 500’s dividend yield stands at 2 percent, lower than 30 of the 35 prior tops. A lower yield can mean higher stock prices.

The other three indicators are…”

Full article

“Remember when banks were exposed manipulating virtually everything except precious metals, because obviously nobody ever manipulates the price of gold and silver? After all, the biggest “conspiracy theory” of all is that crazy gold bugs blame every move against them on some vile manipulator. It may be time to shift yet another conspiracy “theory” into the “fact” bin, thanks to Elke Koenig, the president of Germany’s top financial regulator, Bafin, which apparently is not as corrupt, complicit and clueless as its US equivalent, and who said that in addition to currency rates, manipulation of precious metals “is worse than the Libor-rigging scandal.” Hear that Bart Chilton and friends from the CFTC?

More on what Eike said from Bloomberg:

The allegations about the currency and precious metals markets are “particularly serious, because such reference values are based — unlike Libor and Euribor — typically on transactions in liquid markets and not on estimates of the banks,” Elke Koenig, the president of Bafin, said in a speech in Frankfurt today…..”

Full article

“Hold on to your stocks and don’t be rattled by fear of bubbles, advise Goldman Sachs researchers.

“Our key takeaway is that both the odds and the penalty of being wrong when underweighting U.S. equities are very high,” Goldman Sachs researchers emphasize in a recent report.

Although U.S. equities are expensive compared with their historical standards and other developed and emerging markets, high valuations are not a good reason to underweight stocks, state Goldman’s Investment Strategy Group’s Chief Investment Officer Sharmin Mossavar-Rahmani and Managing Director Brett Nelson.

They cite four reasons why they see no bubble troubles in equities.

First, they note, “Credit growth, a key feature of financial asset bubbles, is not excessive.” The latest year-over-year credit growth was 4.4 percent, well below the average of 7.3 percent since 1947 and near the lowest in more than 60 years.

Second, investor flows into U.S. equities, which turned positive in early 2013 after five years of outflows, have also been subdued.

Third, sentiment toward the United States still has more room to improve due to the nation’s many strengths.

And finally, higher valuations do not foreshadow a market “implosion” or even negative returns. In fact, the Goldman team predicts earnings-per-share growth of about 6 percent for 2014….”

Full article

“The Federal Reserve should give the economy the stimulus it needs despite “credible” worries that its massive bond-buying program could destabilize the financial system, Fed Chairman Ben Bernanke said on Thursday.

In his last planned public remarks as head of the central bank, Bernanke said concern about the potential harm to financial stability is the only risk from unconventional monetary policies “that I find personally credible.”

But, he added “at this point we don’t think that, and I think I can speak for my colleagues on this, we don’t think that financial stability concerns should at this point detract from the need for monetary policy accommodation, which we are continuing to provide,” Bernanke said.

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks 

During his tenure, Bernanke pushed the Fed far into unconventional territory, not only slashing short-term interest rates to zero and keeping them there since December 2008, but providing long-term “forward guidance” assuring investors the Fed would keep interest rates low for a long time to come.

In a second unprecedented move, he quadrupled the Fed’s balance sheet to $4 trillion through three rounds of bond-buying aimed at lowering long-term rates and spurring hiring.

“I do think by the way that they both have been helpful,” Bernanke said at a Brookings Institution event. And neither, he said, have delivered the potential costs that many warned they would, including unbridled inflation.

Inflation, by the Fed’s preferred gauge, has risen just 1.1 percent in the past 12 months, well below the Fed’s 2-percent target….”

Full article

“Global growth is set to accelerate in 2014 as advanced economies turn a corner five years after the global financial crisis, said the World Bank.

Growth is projected to strengthen to 3.2 percent this year, 3.4 percent in 2015, and 3.6 percent in 2016 – up from 2.4 percent in 2013.

“Most of the acceleration is expected to come from high-income countries, as the drag on growth from fiscal consolidation and policy uncertainty eases and private sector recoveries gain firmer footing,” the World Bank wrote in its newly-released Global Economic Prospects report on Wednesday.

Stronger growth and increased demand from developed nations will be an important tailwind for developing countries and should help compensate for the impending tightening of financial conditions, the Washington-based development bank said.

Growth in high-income countries is forecast to quicken to 2.2 percent this year from 1.3 percent in 2013. Meanwhile, growth in developing countries is estimated to pick up modestly to 5.3 percent from 4.8 percent.

The bank says the withdrawal of quantitative easing and corresponding increase in global interest rates is expected to weigh only modestly on investment and growth in developing countries as capital costs rise and capital flows moderate in line with a global portfolio rebalancing….”

Full article

“As stocks returned a whopping 30% in 2013, there have been growing concerns about a stock market bubble. Especially considering that the rally supported by only meager earnings growth.

While many have made comprehensive arguments showing why stocks are not in a bubble, Marc Faber, author of “The Gloom Boom And Doom Report,” continues to argue that we’re in a bubble that’ll pop as we head for a financial crisis.

In an interview with Bloomberg TV, he says we are in a “gigantic financial asset bubble.” He also thinks the bubble could burst at any moment.

“I think we are in a gigantic financial asset bubble. But it is interesting that that despite of all the money printing, bond yields didn’t go down. They bottomed out on July 25, 2012 at 1.43% on the 10-years. We went to over 3.0%. We’re now at 2.85% or something thereabout. But we’re up substantially. Now, this hasn’t had an impact on stocks yet. In fact, it pushed money into the stock market out of the bond market. But if the 10-years goes to say 3.5% to 4.0%, then the 30-year goes to close to 5.0%, the mortgage rates go to 6.0%. That will hit the economy very hard.”

“[The bubble] could burst before. It could burst any day. I think we are very stretched….”

Full article

[youtube://http://www.youtube.com/watch?v=p_OFh8xk35k#t=177 450 300]

“Favorable readings from multiple indicators buoyed expectations for Friday’s jobs report, stirring hopes that the economy’s momentum at last is spreading to the labor market.

Economists’ median forecast for December payrolls climbed to 200,000 from 191,000, in the Dow Jones Newswires survey. The revision came after Wednesday’s ADP National Employment Report said that private businesses added 238,000 jobs in the final month of 2013. Expectations held steady for the unemployment rate, now 7.0%. Reports Thursday that both layoffs and claims for jobless benefits eased at year-end kindled optimism for the report to be released Friday by the Labor Department.

“What’s happening is the economy is generating some momentum,” said Ward McCarthy, chief financial economist ofJefferies LLC. “We’re seeing the effects of that accelerated growth on the labor market.” He pointed to the 4.1% growth in third-quarter gross domestic product, and said fourth-quarter GDP — the advance estimate will be released in three weeks — could come in around 3%.

December’s reading will signal whether the labor market’s strength late last year is enduring. Since September, U.S. employers have added an average of 193,000 positions a month. The unemployment rate declined almost a full percentage point throughout 2013 — nearly twice the 0.5 percentage-point decline during 2012. The drop reflects good news and bad news. While some job-seekers found new positions, others gave up and left the work force. Those exits from the work force — along with the effects of an aging population — are seen in the labor-force participation rate, which, at 63.0, is three percentage points below its prerecession level.

The Labor Department report also is a critical benchmark for Federal Reserve policy makers, whose January meeting will focus on the central bank’s bond-buying stimulus. Minutes from the panel’s December meeting, released Wednesday, showed agreement on the decision to reduce the purchases by $10 billion, to $75 billion, starting this month. Fed policy makers have said they expect to dial back the program steadily in 2014, as long as the economy looks strong enough to progress without such support.

All told, the U.S. is about 1 million jobs away from recouping the roughly 9 million positions lost during and after the recession.

Economists in the most recent Wall Street Journal survey forecast on average that in 2014 the U.S. will add almost 198,000 jobs a month — the highest estimate since 2005, when the survey first posed the question. Such a pace would put the country on track to return to prerecession job levels before July.

However, when one factors in steady population growth, it would take the U.S. until April 2019 to reach where it would have been without the recession’s toll. If labor-market gains accelerate to a pace of 250,000 jobs a month, the U.S. would reach that point sooner, in August 2017. (Note that monthly job gains most recently notched such a pace in 1999.)

Returning to net payroll growth for the first time since January 2008 “doesn’t mean the labor market will be back to normal but it’s a major step along the way to normalcy,” Mr. McCarthy said…..”

Full article

Actual job creation came in at +74k jobs. The unemployment rate dropped to 6.7%. The participation rate falls to a new low….

Full report

“In a White House speech Thursday promoting his supposed offensive against inequality, President Barack Obama will formally name five communities as so-called “promise zones.” The White House on Wednesday released a statement identifying impoverished neighborhoods in Philadelphia, Los Angeles and San Antonio, as well as Southeastern Kentucky and the Choctaw Nation of Oklahoma, as the first such zones. Another fifteen regions are to be designated in the coming months.

In an attempt to lend an aura of progressive reform to the measures it is proposing, the administration scheduled the speech for the week of the 50th anniversary of Lyndon Johnson’s declaration of a “War on Poverty.” Besides the “promise zones,” these measures include a restoration of three months of jobless benefits for the long-term unemployed and a small increase in the federal minimum wage.

The counterposition of these paltry proposals to the last significant social reforms in the US, including Medicare, Medicaid and food stamps, only underscores the repudiation by the political establishment and both big business parties of social reform and their joint drive to dismantle the reforms of the past. Obama’s claims to be fighting inequality are belied not only by his past record, but by the further attacks on the working class he is presently pursuing.

The White House and the Democratic Party are cynically seeking to use the Christmas-time expiration of benefits for 1.3 million long-term unemployed workers, which they engineered by dropping an extension from the two-year budget deal they negotiated with the Republicans, to attack the Republicans and posture as advocates of working and poor people in advance of the 2014 midterm elections. The Democrats have already indicated they will agree to new social cuts elsewhere in exchange for Republican acceptance of a mere 90-day extension of the benefits.

The increase in the minimum wage to $10.10 an hour being advanced by the Democrats would leave the base wage, in real terms, lower than it was in the 1960s.

Obama’s “promise zones” are at once derisory in their scale and funding and reactionary in their content. It appears that the proposal has been cobbled together by combining and repackaging previously announced “revitalization” efforts such as “promise neighborhoods” and “choice neighborhoods.” It is not clear whether any additional funds are proposed for the new program. According to the Department of Housing and Urban Development, the administration has since 2009 spent a mere $350 million “in 100 of the nation’s persistent pockets of poverty.”

This compares to the trillions of dollars handed over to the banks and corporations in the form of taxpayer bailouts and the tens of billions in monthly subsidies to the financial markets provided by the Federal Reserve Board. The Democratic-controlled Senate this week ensured the continuation of this policy by handily confirming Obama’s nominee and Wall Street’s pick, Janet Yellen, to succeed Ben Bernanke as the next Fed chairman.

Obama’s singled-minded focus on covering the bad bets of Wall Street and further enriching the financial elite, in part by driving stock prices and corporate profits to record highs, has fueled a staggering increase in social inequality. The total wealth of billionaires has more than doubled since the stock market hit bottom in March of 2009. Since then, the Standard & Poor’s 500 stock index has risen by 170 percent. More than 95 percent of all income gains in the US during Obama’s first term went to the richest 1 percent of the country.

On the other side of the ledger, Obama has combined an unprecedented assault on social spending with a relentless drive to slash workers’ wages and increase their exploitation. At the center of the 2009 forced bankruptcy of General Motors and Chrysler, engineered by Obama’s Auto Task Force, was a 50 percent cut in the wages of new-hires as well as sharp reductions in the benefits of active and retired workers. This became the trigger for a nationwide assault on workers’ wages and benefits.

The majority of new jobs created in the US since the 2008 Wall Street crash pay between $7.67 and $13.83 an hour. The number of temporary jobs has increased by 50 percent.

Just as the auto bailout was presented as a boon to auto workers, every so-called “job creation” and “antipoverty” measure has centered on driving down wages and increasing speedup, while granting new tax breaks to business, so as to make US corporations more “competitive,” i.e., profitable, and increase US exports.

This was summed up in Obama’s choice of an Amazon.com fulfillment center in Chattanooga, Tennessee as the site of what was billed as a major economic policy speech last August. Speaking at a facility where the base pay is $11 an hour and working conditions are notoriously brutal, Obama praised the company’s “job creation” and declared Amazon to be “a great example of what’s possible.”

Meanwhile, Obama is proposing alongside his “promise zones” another $5 billion in tax incentives for businesses that take advantage of the poverty-wage labor being offered up.

The zones do not constitute an antipoverty program at all. They involve no government-funded jobs, but are rather, like free enterprise zones internationally, an inducement to private companies to profit from highly exploited, low-paid labor. The Philadelphia zone includes 35,000 residents in an area where the official poverty rate is close to 51 percent and unemployment is 13.6 percent. The first priority listed in the Philadelphia proposal is to “fight crime” by partnering with the police department….”

Full article

“It’s beginning to look as if JPMorgan Chase has had a hand in every major banking scandal of the last decade. In fact, it’s the Zelig of Wall Street crime. Take a snapshot of any major bank fraud and chances are you’ll see JPMorgan Chase staring out at you from the frame.JP Morgan CEO Jamie Dimon. (Photograph: Karen Bleier / AFP / Getty Images)

Foreclosure fraud, investor fraud, cheating customers, market manipulation, LIBOR … and now, the coup de grâce to JPM’s tattered reputation: a $2 billion fine for closing its eyes and covering up as Bernie Madoff literally bilked widows and orphans, along with a lot of other families and charities. (Here’s a list of investors.)

Does Jamie Dimon, the bank’s CEO, still think people don’t say enough nice things about him? Do his friends?

More importantly, how does the largest bank in the country (measured in assets) get away with being worse than Enron? That one’s easy: By being the largest bank in the country.

Guilty as Sin

JPMorgan Chase was hit with a “deferred prosecution agreement” for criminal behavior in this latest settlement, which basically means they won’t be prosecuted as long as they honor the agreement and keep admitting to their own wrongdoing. As the New York Times notes, this kind of arrangement is “nearly unheard-of for a giant American bank,” is “typically employed only when misconduct is extreme,” and “underscores the magnitude of the case against JPMorgan.”

According to publicly available information, the case against JPMorgan Chase is extremely damning. Even after highly suspicious facts came to light about the Madoff operation, JPM continued to package and sell Madoff-fed funds to its customers. It failed to report him to the authorities even after concluding that he was engaged in massive fraud….”

Full article

“Janet Yellen was confirmed today as the first woman to lead the U.S. Federal Reserve — becoming one of the most powerful people in global finance and the top regulator in the U.S. financial system.

The Center for Public Integrity spoke to Yellen in June about her views on bank regulation and supervision. The incoming Fed chairwoman appears to be someone who will be tougher than her predecessor when it comes to financial oversight.

When it comes to monetary policy by contrast, Yellen is known as a “dove,” someone who favors lowering interest rates to help boost job growth at the risk of allowing some inflation.

Here are a few key quotes from Yellen during the past year — fromspeeches, interviews and her nomination hearing — that show where she stands on a variety of issues.

On Fed policy: 

“I would be strongly committed to working with the FOMC to continue promoting a robust economic recovery … I consider it imperative that we do what we can to promote a very strong recovery.”

On unemployment: 

“About 36 percent of those unemployed have been unemployed for more than six months. This is a very unprecedented situation. We know that those long spells of unemployment are particularly painful for households, impose great hardships and costs on those without work, on the marriages of those who suffer these long unemployment spells and on their families.”

On financial stability:

“One of our top priorities is ramping up and monitoring of the financial system as a whole to detect financial stability risks. That’s something we weren’t doing on an adequate basis before the crisis.”

“We cannot rule out the possibility that monetary policy might have to do something related to financial stability … Monetary policy could be creating financial risk, even while we’re trying to achieve other concrete goals … We need to know what those risks are.’’

On mega-bank regulation….”

Full article

“More and more young technology companies are achieving a $1 billion valuation, but not all of them are destined to become the next Google or Facebook.

The billion-dollar club is expanding even faster than at the peak of the dot-com bubble, The New York Times reports.

In 2011 through 2013, at least 34 investments were made valuing companies at $1 billion or more, compared with 16 from 1998 through 2000, according to Dow Jones VentureSource data cited by The Times.

One problem child is Fab.com, which sells clothes and home wares online, The Times notes. The company’s early strong growth drew renowned venture capital investors such as Andreessen Horowitz.

And a $150 million investment in June valued the company at $1 billion. But that didn’t last. Financial problems hit, and the company unloaded hundreds of workers.

Tales like Fab.com have some experts concerned that another technology bubble is brewing.

“Where we are today, I don’t see where the values are coming from based upon any judicious or even very optimistic view of a company’s future cash flow and revenue,” Brian Hamilton, chairman of Sageworks, which analyzes the financial conditions of private companies, tells The Times….”

Full article

“The rise in equities does not mean stocks “buy” more commodities in the real world–they buy less.

If the new highs in the Dow Jones Industrial Average (DJIA) are so wonderful, why does one share of the Dow-30 buy less than it did 14 years ago? What does a nominal new high in the stock market mean in the real world? The only way to know is to ask if the purchasing power of a share of the Dow buys more than it did when the Dow was at lower levels.

If one share of the Dow (defined as one share of each of the constituent 30 companies) buys less than it did when the Dow was as lower levels, the nominal new high is a mirage in terms of increased purchasing power of equities.

Another way of assessing the real-world impact of a nominal new high in equities is to perform a relative strength analysis: did equities outperform essential commodities, or did equities underperform these essentials? If the Dow underperformed, then a new high is an illusion: if equities buy less stuff in the real world, the nominal new high is misleading.

Longtime correspondent Harun I. recently shared a series of charts which reveals what’s real and what’s false about nominal new highs in the Dow:

Wonderful post, What’s Real? What’s Fake? (December 16, 2013). Below you will find some charts that may answer: What is real?RS charts are not new to us, but they need constant study. Nobody eats, clothes, shelters, heats their shelter or fills their gas tank with equity shares. Therefore, when we convert those shares to currency in order to purchase things that are generally useful, their real value is revealed. Purchasing power cannot be faked.

There are several questions that can be explored, however, today I wish to point out the most obvious.

The trend in commodities relative equities over the period ranging from 1970-2000 was down. This indicated that the Dow outperformed commodities, or put another way, was able to purchase more per unit during this time. It is useful to remember that, as you and many others have pointed out, that during this time debt expanded as well. Two wage earners were required per household to produce a standard of living that once required only one wage earner. This effectively was a 50% loss of purchasing power.

However, the fact that household debt expanded to the extent that it has in order to maintain a particular standard of living with even two wage earners suggests an even greater decline in net purchasing power. But I digress.

The downtrend lines drawn on the charts below indicate secular trends that were in place for approximately a thirty year period, much like the decline in interest rates. With equities at new nominal highs, there are many who argue that the worst is behind us.

However, as I point out on the first chart (Gold/Dow Ratio), the amount of debt that created the secular bull market previously is dwarfed by the amount of debt that it has taken to create what may be a normal correction in what appears to be a secular bear phase. Despite new historic nominal highs, despite parabolic increases in public debt, not one chart displayed indicates the Dow as having recovered its purchasing power which peaked roughly in 1999.

If we are to believe that the worst is over, we must at the very least answer a few basic questions…..”

Full article

“Socialist luminaries and international bureaucrats at various outfits funded primarily by U.S. taxpayers are seizing on a “devastating” new American taxation scheme, known as the Foreign Account Tax Compliance Act, or FATCA, to help foist a radical tax information-sharing regime on the world. The repercussions for Americans and people around the globe — especially when it comes to financial privacy and economic freedom — will be crushing, experts argue. Analysts say the end goal, meanwhile, is the creation of a planetary taxation authority.

Leading the charge to create the new global tax regime is the Group of 20 (G-20), a coalition of governments and brutal dictatorships that are in the process of building what virtually every major media outlet recently described as a “New World Order.” Top officials in the outfit, which includes the ruthless Communist regime ruling mainland China, among other barbaric autocracies, publicly announced a plot in recent years to share financial data and more on all citizens with each other. The goal, for now: extract as much wealth as possible.

To implement what critics call their nightmarish vision of a “World Tax Organization” — supposedly aimed at stopping tax evasion — the G-20 asked the United Nations-linked Organization for Economic Co-operation and Development (OECD) to take the lead. The widely criticized “cartel” of tax-hungry politicians, infamous primarily for fanatical efforts to crush national sovereignty and for bullying jurisdictions with relatively low taxes into surrendering their competitive advantage, is now working to develop the taxation regime and prod its member governments into adopting it. …”

Full article

“U.S. stocks can’t go straight up forever. And if the end of QE1 and QE2 taught investors anything, the market could suffer a significant correction this year as the Federal Reserve starts dialing back its stimulus.

That view comes courtesy of Peter Boockvar, managing director and chief market analyst at the Lindsey Group, who on Thursday predicted the S&P 500 could drop 15% to 20% in 2014 and finish the year between 1550 and 1600.

The S&P 500 opened the year down 0.6% at 1837. The index surged 30% last year, its best performance since 1997.

In his morning missive, Mr. Boockvar laid out a bearish thesis for stocks while noting the eventual end of the Fed’s quantitative easing, or QE, will lead to a rocky road ahead for investors.

“QE doesn’t create a safer world, it is just a temporary high and the danger always comes on the flip side as previously seen,” he says. “Let’s be honest, we are in an investing world that none of us has ever seen before with central banks around the world being aggressive in concert on a scale never seen.

“These are not normal times where the ordinary analysis of company fundamentals and the economic and earnings outlook are the main drivers.”

In 2013, most Wall Street strategists including Mr. Boockvar was surprised by the strength of the stock-market rally. At the start of last year, a group of strategists predicted the S&P 500 would gain 8.2% in 2013, far lower than what the rally ultimately achieved.

At that time, Mr. Boockvar also incorrectly called for a mid-single-digit return. Now, he acknowledges how far out on a limb his call is in relation to what other strategists are predicting.

“It’s blasphemy, I know, to call for a down year,” he says. “I already hear the heckling and the perma bear calls as I did in ’06 and ’07.”

But Mr. Boockvar can’t get past the fact that stocks suffered significant pullbacks the past two times the Fed pulled back the punch bowl. He finds it hard to figure why this time would be any different.

He says stocks are in a “Fed-induced bubble” which has manifested in the Treasury market and has filtered through to other markets.

“Higher prices for stocks, junk debt, paintings, wine, cars, comic books and NYC high end apartments are just by-products of the mispricing of the cost of money,” he says. “We are, however, finishing 2013 with the bond bubble showing signs of leaking air as evidenced by the sharp rise in yields across the curve notwithstanding the Fed’s hope.”

Higher interest rates in 2014 could act as “a major headwind for stocks,” he says. “When bubbles burst, there is no place to hide other than in cash which conversely and positively provides dry powder to take advantage of better values.”

Other market watchers share similar assessment….”

Full article