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Making Investment Grade Is Only the Beginning for Turkey

Tue, 21 May 2013 15:04:59 -0400

It’s been a few months since I was in Istanbul and wrote about Turkey’s exciting cultural and economic transformation, and the country is still making headlines. The Emerging Europe Fund’s (EUROX) portfolio manager, Tim Steinle, has been very bullish on Turkey for multiple reasons, including its young growing demographic, its fiscal and monetary policies geared [...]

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Bernanke KIKs the Can

Tue, 21 May 2013 14:51:02 -0400

In February, when Ben Bernanke gave his report to Congress, he spoke of his concern about “Excessive risk taking”. On May 10 he repeated his warning: very low interest rates, if maintained for a considerable time, could impair financial stability. For example, portfolio managers dissatisfied with low returns may “reach for yield” by taking on [...]

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Rand Paul Upsets Senate’s Apple (AAPL) Witch-Hunt

Tue, 21 May 2013 14:31:03 -0400

The Senate hearings on Apple’s (NASDAQ:AAPL) alleged manipulation of corporate tax laws have taken a rather unexpected turn. The usual political grandstanding even when it makes no logical sense has taken place, to wit John McCain’s comments: “Apple’s corporate tax strategy reflects a flawed corporate tax system that allows large multinational corporations to shift profits [...]

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Stock Options Watch: SKS, HLF, ABFS

Tue, 21 May 2013 13:55:17 -0400

(NYSE:SKS) - Saks, Inc. – High-end retailer, Saks, Inc., popped up on our ‘hot by options volume’ market scanner this morning on heavier than usual trading traffic in upside calls. Shares in Saks are up 10% on Tuesday morning at a new 52-week high of $13.54 after the company posted first-quarter earnings in line with analyst [...]

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Forget Stocks, It Is The Japanese Yen That Is Moving Markets

Tue, 21 May 2013 10:58:27 -0400

As we all know, almost every central bank in the world is printing money to boost exports and support asset prices in the stock market. To their credit, the money printing idea has worked as markets around the world have been rallying. Japan is now the most aggressive money printing country. The Bank of Japan [...]

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Stocks Continue Their Sharp Ascent

Tue, 21 May 2013 10:50:10 -0400

In what feels like the blink of an eye, the broad market is up nearly 17% in 2013… Look back to earlier this year. The boring stocks led us higher. Your mega-cap, super-safe, dividend-paying names were the stocks to own. These stodgy companies sprinted higher for weeks. Safe became the new speculative. Now, the rally [...]

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America’s New Energy Weapons

Tue, 21 May 2013 10:22:40 -0400

Last week I was in London attending the Platts Crude Oil Conference. In particular, much of the trip is geared toward energy and mineral issues, about which I write in my paid-up newsletters. Then again, I’ve spent time discussing the future of military technology with several people I know who follow these things from across [...]

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Stocks to Watch: BBRY, FB, CLF, BIDU

Tue, 21 May 2013 09:22:51 -0400

Research In Motion Ltd (NASDAQ:BBRY) The technical chart shows possibility of new rally as the stock bounced up after dropping back to EMA50. Further rebound is expected to test 15.55. If a break above this level occurs, price could eventually target the 16 region to the upside. Initial support is at 14.50, only a fall [...]

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Top Pre-Market Stocks Upgrades/Downgrades May 21, 2013

Tue, 21 May 2013 09:19:49 -0400

UPGRADES BlackRock (NYSE:BLK) upgraded to Outperform from Neutral at Macquarie -Price target raised to $315 from $253 IntercontinentalExchange (NYSE:ICE) upgraded to Outperform from Neutral at Macquarie – Price target raised to $207 from $153 DOWNGRADES First Republic Bank (NYSE:FRC) downgraded to Hold from Buy at Jefferies – Jefferies downgraded First Republic Bank with a $40 [...]

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Syria: Outside Patronage and a New Offensive for the Regime

Tue, 21 May 2013 08:10:50 -0400

The battle for the Syrian city of Al-Qusayr, which came under regime artillery fire May 19, is actually part of a larger battle for the highly coveted Homs governorate. As we noted in 2012, the battle has wide-reaching ramifications for the Syrian rebels since Al-Qusayr sits along a major transit point for rebel supplies and [...]

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Ergen Said to Bid $2 Billion for LightSquared Wireless Spectrum

Mon, 20 May 2013 16:27:21 -0400

Charlie Ergen, chairman of satellite-TV provider Dish Network Corp. (NASDAQ:DISH), made a $2 billion bid for spectrum from LightSquared Inc., the bankrupt wireless-broadband company owned by Philip Falcone’s hedge-fund firm, according to people familiar with the offer. Ergen, 60, has offered to buy the spectrum — the radio frequencies used for wireless communications — even [...]

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Stock Options Watch: VOYA, GRPN, SIGM

Mon, 20 May 2013 14:15:04 -0400

(NYSE:VOYA) – ING US, Inc. – Shares in ING Group’s U.S. retirement, investment and insurance business are up as much as 8.0% today to $26.98, the highest level since the company’s May 2nd IPO. ING US was rated new ‘buy’ at BTIG LLC with a 12-month target share price of $31.00 today. The stock has [...]

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Solar Stocks on Fire – FSLR, SCTY, JASO

Mon, 20 May 2013 13:17:37 -0400

The solar stocks continue to rip higher. Many of these plays are up well over 100% in just the last month. This is a case of shorts being in a crowded trade. In this market, that almost always ends in disaster. Understand a crowded trade and avoid it in this market. First, let’s talk about [...]

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Silver’s Next Leg Lower Starts Now

Mon, 20 May 2013 11:38:30 -0400

For a few short minutes Sunday evening, a bit of chaos roiled the futures markets. Silver tanked at the open, dropping as much as 8% to a low of $20.25 before recovering later in the evening. Price continues to fight higher this morning. As I type, silver is off by almost 3%, while gold is [...]

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Facebook (FB) Gets Defriended by the Market

Mon, 20 May 2013 11:10:03 -0400

This morning, the leading social networking stock in the world Facebook Inc (NASDAQ:FB) is coming under selling pressure again. This stock has been selling off since May 3, 2013, when it traded as high as $29.07 a share. Today, FB is trading lower by 0.38 cents to $25.87 a share. With this action in the [...]

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Equity Risk Premiums (ERP) and Stocks: Bullish or Bearish Indicator

Mon, 20 May 2013 11:02:29 -0400

If you have been following my blog postings, you are probably aware that I have an obsession with equity risk premiums (ERP), and have done an annual survey paper on the topic every year since 2008 (with the 2013 update here). I also post a monthly update for the ERP for the S&P 500 at the [...]

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Is Nuclear Winter Coming to the Senate this Summer?

Mon, 20 May 2013 10:14:49 -0400

It seems the Senate could have a really hot summer. Majority leader Harry Reid (D-NV) has reportedly threatened to “go nuclear” this July—meaning that Senate Democrats would move by majority vote to ban filibusters of executive and judicial branch nominees. According to these reports, if Senate Republicans block three key nominations (Richard Cordray to head [...]

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Fed-speak: Ease Air Out of Bonds – Support Equities

Mon, 20 May 2013 09:51:31 -0400

While the fundamentals of our underlying economy bump along with continued structural headwinds and fiscal support from Uncle Sam remaining anemic, the Federal Reserve’s QE-infinity remains the underlying cornerstone supporting our markets. With equities making new highs and high yield bonds trading at stratospheric levels, recent pronouncements from Fed officials strike me as looking to [...]

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America’s Future Early Education System

Mon, 20 May 2013 09:48:28 -0400

At some point, the United States is likely to have universal publicly-funded early education for children aged one to four. But while we led the way in establishing universal elementary and secondary schooling and in expanding access to college, on early education we lag well behind some other rich nations. We should pick up the [...]

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Top Pre-Market Stock Upgrades/Downgrades May 20, 2013

Mon, 20 May 2013 09:21:39 -0400

UPGRADES J.C. Penney (NYSE:JCP) upgraded to Buy from Hold at Maxim – Maxim upgraded J.C. Penney on expectations the company’s strategy changes under new CEO Mike Ullman will drive traffic. The firm said its recent channel checks indicate that store traffic has increased and it raised its price target for shares to $27 from $16.50 [...]

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The Lesson from Japan

Mon, 20 May 2013 09:12:11 -0400

Japan’s stock market is on a roll, largely because expectations have dramatically changed this year about the underlying state of macro for the planet’s third-largest economy. The iShares MSCI Japan Index ETF (EWJ) is up a potent 24% year-to-date. That’s a substantial premium over the 18% gain for US stocks SPDR S&P 500 (SPY), for [...]

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Japan’s QE is Exporting Deflation

Mon, 20 May 2013 09:00:33 -0400

Japan’s effort at super QE is likely to export its deflation to trading partners. John Mauldin has a long a analysis of this in his current newsletter. Our occasional guestblogger Yves comes to a similar conclusion. He wraps it into several conclusions: Stocks: his bullish indicator has turned Yellow – time to take profits. It [...]

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Yahoo (YHOO) Approves Billion-Dollar Tumblr Cash Deal

Mon, 20 May 2013 05:58:44 -0400

Yahoo (YHOO)’s board of directors has agreed to acquire popular social blogging platform Tumblr for $1.1 billion in cash, The New York Times reports. Details of the acquisition were first reported by AllThingsD on Thursday, which also cited the same cash figure. The deal, sealed at a meeting of Yahoo’s board, is expected to be [...]

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Sovereign Debt Concerns in 2013

Sun, 19 May 2013 18:27:14 -0400

Interest rates on government debt for a number of European countries– notably Greece, Portugal, Ireland, Italy, and Spain– shot up considerably during 2010-2012. Those yields have fallen significantly from their peaks, though these five countries still face higher borrowing costs than most other countries in Europe. Yields on long-term government bonds, Jan 2009 to April [...]

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Fiscal Prioritisation: Lessons from Three Wars

Sun, 19 May 2013 08:28:49 -0400

Can we learn from previous instances of fiscal prioritisation? This column surveys the US Treasury’s response to three wars – the Revolutionary War, The War of 1812 and the Civil War. Contemporary advocates of engaging in fiscal discrimination might ponder the actions of previous US Presidents Madison and Grant, who honoured all existing federal obligations [...]

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Stocks: What to Do When Things are Nuts?

Sun, 19 May 2013 08:18:22 -0400

I have not been a fan of this rally, and I have been selling into it. I do have a rule for equity clients — cash never goes above 20%. I have been close to that recently, and after rebalancing some companies that have hit the top of the weighting band, I have bought those [...]

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Obamacare Bulge?

Sun, 19 May 2013 08:00:09 -0400

The Congressional Budget Office put conservative economic thinkers on their ass this week. In this Report (pdf), the CBO concluded that the US budget deficit is about to collapse to insignificance. The improvement in the deficit outlook is so large that it has lead liberal thinkers to start calling for more stimulus spending. If it [...]

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Heidi Strikes Back

Sat, 18 May 2013 16:07:21 -0400

It took more than two decades, but Sen. Mary Kathryn “Heidi” Heitkamp got a long-awaited chance to have the last word against the Supreme Court. That’s no small accomplishment for a freshman Democrat from North Dakota. Heitkamp co-sponsored and helped pass the Marketplace Fairness Act of 2013, otherwise known as the Internet sales tax bill. [...]

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Europe is in Recession Because ECB Wants It

Sat, 18 May 2013 15:57:17 -0400

I am traveling today, so only have time to complain about some themes I keep coming across when reading the press and speaking to people out in the real world. No links. 1. There is no reason at all for the ECB to look around for transmission mechanisms to boost the eurozone economy. Europe is [...]

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Google (GOOG) and Tesla (TSLA): Can These Two Market Titans Keep It Up?

Sat, 18 May 2013 07:30:38 -0400

Two days after surpassing the $900 level for the first time ever, Google‘s (GOOG) surge on Wall Street is still showing no signs of slowing down. The ticker traded as high as $913 per share intraday in Friday’s session in New York, pushing the search giant’s stock market value above $300 billion. Since mid-January lows [...]

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A Congressman from Illinois Wants the IRS to Do Your Taxes for You

Fri, 17 May 2013 21:17:05 -0400

Former acting commissioner of the Internal Revenue Service Steven Miller was rolling along pretty good on Friday, bravely facing down his inquisitors from the House Ways and Means Committee. And then he had to go and admit it. Time and time again when asked Miller insisted there was nothing politically maniacal about IRS agents singling [...]

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Strong May Market Flipping Old Trading Adage on Its Head

Fri, 17 May 2013 19:14:29 -0400

The old trading adage “sell in May and go away” is being flipped on its head this month, and the rally shows no signs of abating. Many traders sit on the sidelines on options expiration Fridays, but not even even that could slow down this market today. While many stocks rested and perhaps saw some [...]

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Confidence Boom?

Fri, 17 May 2013 18:45:19 -0400

The early read on the Thomson Reuters/University of Michigan Consumer Sentiment index jumped to 83.7 in May, up from 76.4 in April. Just a quick reminder before we get too excited – sentiment has tended to be low relative to actual spending. May’s sentiment bounce just returns us to trend: (click to enlarge) (click to enlarge) [...]

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Treasury Sec. Jack Lew on the IRS Controversy

Fri, 17 May 2013 16:31:13 -0400

On this week’s “Political Capital with Al Hunt,” airing tonight at 9:00PM/ET, Bloomberg TV anchor and Bloomberg View columnist Al Hunt interviews Treasury Secretary Jacob Lew on the IRS controversy and the economy. Secretary Lew told Hunt on when he found out about the IRS controversy: “I didn’t know any of the details of it [...]

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Don’t Drink Market’s Kool Aid

Fri, 17 May 2013 15:59:24 -0400

Here is a joke that I heard from Warren Buffet years back. A very successful oilman dies. He faces Saint Peter, who says, “You’ve been a good man and normally I’d send you to heaven, but heaven is full. We only have a place in hell.” The oilman says, “Any chance I could talk to [...]

The Real Scandal and Systemic Abuse of Power

Fri, 17 May 2013 13:30:34 -0400

“This systematic abuse cannot be fixed with just one resignation, or two,” said David Camp, the Republican chairman of the House tax-writing committee, at an oversight hearing Friday morning dealing with the IRS. “This is not a personnel problem. This is a problem of the IRS being too large, too intrusive, too abusive.” David Camp [...]

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No, It Looks Like the House Has Not Unintentionally Eliminated the Debt Ceiling After All

Fri, 17 May 2013 12:22:56 -0400

In my previous post I argued that, in passing H.R. 807 on May 9th, the House of Representatives might have unintentionally eliminated the debt ceiling “as a serious political and operational consideration going forward.” But upon further reflection, and benefiting from the insightful reactions of several commenters, I now think my reading of the act [...]

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Abenomics and the Supply of Safe Assets

Fri, 17 May 2013 10:39:52 -0400

One of the big challenges facing the global economy is the shortage of safe assets. These are the highly liquid, information-insensitive assets that function as money. The financial crisis raised the demand for these safe assets just as many of them were disappearing. This cyclically-driven safe asset shortage (or excess money demand) that emerged continues [...]

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It’s Not The End of OPEC…But Might As Well Be

Fri, 17 May 2013 09:57:29 -0400

If you could safely turn $8 dollars into $40, would you? What about turning $800 into $4,000? Same question, right? If you answered yes to those questions, which I’m sure you did, then you’re already onboard with half of today’s energy story. That is, most American shale oil wells are set to payout at the [...]

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Tesla Motors (TSLA): What’s to Like?

Fri, 17 May 2013 09:27:07 -0400

This is a post I started to write last week, got sidetracked and now it seems a bit timely once more. I’m talking about Tesla Motors (NASDAQ:TSLA), the electric car manufacturer, and frankly I don’t see what the hype is about, why the stock has gone through the roof and why anyone would buy into [...]

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Top Pre-Market Stock Upgrades/Downgrades May 17, 2013

Fri, 17 May 2013 09:21:48 -0400

UPGRADES General Motors (NYSE:GM) upgraded to Buy from Underperform at CLSA – CLSA upgraded General Motors two notches to Buy from Underperform and raised its price target for shares to $40 from $31. The firm is positive on GM’s product cycle in the U.S. and its turnaround in Europe DOWNGRADES Applied Materials (NASDAQ:AMAT) downgraded to [...]

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The Myth of Liquidity and Bubbles in Financial Markets

Fri, 17 May 2013 09:10:17 -0400

Gillian Tett at the Financial Times wonders today about how long the stock market rally will continue. Her argument is that we see data that are at odds with historical norms: the stock market goes up when unemployment is still rising in Europe, earnings come short of expectations and the rally continues. uncertainty is still [...]

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Google (GOOG) Next Stop $1,000?

Fri, 17 May 2013 06:16:21 -0400

With shares of Google (GOOG) up more than 28% so far this year and the stock printing the tape above $900 on Wednesday for the first time ever, raising the search giant’s market cap beyond the $300 billion threshold, many investors are fantasizing about a quadruple digit stock price. In fact, Google $1,000 is now [...]

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The ‘Smart Money’ Ain’t So Smart Anymore

Thu, 16 May 2013 18:49:36 -0400

Not long ago it seemed that the “smart money” was invested in hedge funds which generated outsized returns for investors. When broad markets fell by 40% in the crash of 2008 and 2009, hedgies like John Paulson, who bet against mortgage-backed securities, made fortunes. In 2007, Paulson made $3.7 billion. In 2010, he made $5 [...]

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U.S. Shale Gale vs. the Debt Leviathan

Thu, 16 May 2013 18:34:27 -0400

The wind was blowing so hard on the banks of the River Thames we had to replay it a few times to hear correctly. “The need for OPEC to…” We turned up the volume some more… “The need for OPEC to be a player in the U.S. oil market isn’t really there. We’re not going [...]

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Did the House of Representatives Just (Unintentionally) Eliminate the Debt Ceiling?

Thu, 16 May 2013 17:15:21 -0400

My fellow NEP blogger Joe Firestone wrote recently about House Resolution 807, the Full Faith and Credit Act, which was passed on May 9th by the US House of Representatives. The supposed purpose of the act is to prevent default on the public debt as a result of the debt ceiling. Many have described the [...]

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Pyromaniacs on the Potomac: The Problem With Obama’s Second Term

Thu, 16 May 2013 13:23:13 -0400

Six months into a second term and the Obama White House is on the defensive and floundering: Benghazi, the IRS’s investigations of right-wing groups, the Justice Department’s snooping into journalists’ phone records, Obamacare behind schedule, the Administration’s push for gun control ending in failure. Should the blame fall mainly on congressional Republicans and their allies [...]

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We See Bubbles Everywhere – PIMCO’s Bill Gross

Thu, 16 May 2013 13:02:19 -0400

PIMCO’s Bill Gross brought a smile face mug on Bloomberg TV’s “Market Makers” today to illustrate to Erik Schatzker and Sara Eisen how happy he is. Gross said the end of the 30 year US bond rally is unlikely to be like 1994 and he sees 12-months of treasury, corporate and high yields that don’t [...]

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Fed Watch: Dodged That Bullet

Thu, 16 May 2013 12:51:21 -0400

I was reading Robin Harding’s take on the possible nomination of Federal Reserve Vice Chair Janet Yellen for the top job at the Fed, and a chill went down my spine when he reminded me of this: Mr Bernanke’s own appointment in 2005 was a case in point. There were several candidates that year. According [...]

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A Japanese Recovery?

Thu, 16 May 2013 10:38:36 -0400

Japan’s new GDP numbers look a bit puzzling: Japan’s economy expanded the most in a year last quarter as consumer spending and export gains outweighed the weakest business investment since the wake of the March 2011 earthquake and tsunami. Gross domestic product rose an annualized 3.5 percent, a Cabinet Office release showed in Tokyo. Private [...]

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