Wall Street Pit

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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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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Top Pre-Market Stock Upgrades/Downgrades May 16, 2013

Thu, 16 May 2013 09:21:12 -0400

UPGRADES Google (NASDAQ:GOOG) upgraded at RW Baird – GOOG price target raised to $1,025 from $830 at RW Baird RW Baird raised its price target for Google shares to $1,025 following the company’s I/O conference and keeps an Outperform rating on the name. Baird thinks Chrome continues to gain momentum and that yesterday’s event highlighted [...]

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What Could Derail Market’s Historic Run?

Thu, 16 May 2013 08:52:57 -0400

Futures are basically flat as markets around the world see some profit taking. Some are up, some down, but there are no big stand outs. The S&P remains very extended from both short- and long-term moving averages, and there seems little that troubles the market right now. Bad economic data means more QE, and good [...]

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Trade Ideas: LOCK, F, AAPL

Thu, 16 May 2013 08:45:59 -0400

Shares of Lifelock Inc (NYSE:LOCK) are starting to heat up again and are worth watching. If volume can pick up I think this stock can break through resistance at $10 and re-test its recent highs around 10.2 (click to enlarge) Ford Motor Company (NYSE:F) closed at 14.67 an increase by 40 cents or 2.8%. During [...]

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Now It’s Really Time For A Flat Tax

Thu, 16 May 2013 08:22:28 -0400

If the scandal over monitoring political groups that forced the acting commissioner of the IRS to resign this week doesn’t inspire dismantling the tax-collecting agency and introducing a flat tax, nothing will. It won’t happen, of course. But it should. There are easier, more efficient ways to collect taxes than allowing bloated bureaucracies to act [...]

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Big Money Blowing in the Shale Gale

Thu, 16 May 2013 08:18:55 -0400

How can you make money by investing in the stock market? It helps to go where the money is flowing. Along those lines, two of the strongest sectors of the current U.S. economy barely existed a few years ago. In fact, one sector was left for dead (and I mean roadkill!) when the U.S. government [...]

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Gold Is a ‘Classic Bubble’ and Could Go All the Way Down to $500 an ounce : Pro

Thu, 16 May 2013 05:44:41 -0400

Gold is a “classic bubble” and “it wouldn’t shock me to see it back at $500″, Michael Novogratz, the president of New York hedge fund Fortress Investment Group and a former partner at Goldman Sachs (GS), said on CNBC Wednesday. “I personally think gold is toast,” said Novogratz, adding that the precious metal peaked out [...]

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Bangladeshi Garment Workers and the Perversion of Ethics

Wed, 15 May 2013 20:39:55 -0400

For the last few days the newspapers have been filled with stories about how western garment manufacturers will now insist on greater safety for the worker who make their clothes in Bangladesh. They will pay for renovations and reconstructions of the physical plants. What is more the government in Bangladesh will raise the minimum wage [...]

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Stock Options Watch: BMY, TIBX, WM

Wed, 15 May 2013 13:57:25 -0400

(NYSE:BMY) – Bristol-Myers Squibb Co. – Shares in drug maker, Bristol-Myers Squibb Co., are ripping higher today, up 6.5% at $44.94, the highest level in more than a decade, ahead of the release of the American Society of Clinical Oncology (ASCO) 2013 Annual Meeting abstracts tonight. The ASCO Annual Meeting begins on May 31st in [...]

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Markets Shift to Overdrive

Wed, 15 May 2013 11:31:41 -0400

Put down that jelly donut for a second… Do you see what’s happening here? This market is in overdrive. The melt-up has been relentless, with the broad market gaining more than 1% yesterday. Nearly 200 domestically traded stocks finished the day up 5% or more. I told you it would be unwise to fight this [...]

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Industrial Output In April Slumps The Most In Eight Months

Wed, 15 May 2013 11:15:38 -0400

Industrial production fell more than expected last month, sliding 0.5% in April. That’s a bit deeper than economists projected, and it’s an even bigger drop relative to the modest gain that my econometric modeling suggested. But based on today’s release, it’s obvious that April was a rough month for the industrial sector. The worst, in [...]

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The Media’s Double Standard On Privacy

Wed, 15 May 2013 10:32:33 -0400

Privacy is an increasingly precious commodity in our era, and violating it often triggers outrage. But who is outraged depends upon who is being violated, and by whom. A couple of recent news items illustrate the contrast. In the first, the Justice Department recently informed The Associated Press that it had covertly seized records of [...]

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Top Pre-Market Upgrades/Downgrades: ABBV, PRU, NBL, GPS, UN, COO, GSS, BBRY, KEY, SWY, RENN

Wed, 15 May 2013 09:30:57 -0400

Upgrades AbbVie (NYSE:ABBV) initiated with an Outperform at Cowen Prudential (NYSE:PRU) upgraded to Buy from Hold at Argus – Argus upgraded Prudential following Q1 results citing its clean balance sheet, earnings visibility, and attractive valuation. Price target is $75 Noble Energy (NYSE:NBL) upgraded to Buy from Hold at Stifel – Stifel upgraded Noble Energy based [...]

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Where Does The Buck Stop?

Wed, 15 May 2013 09:15:35 -0400

So much for hope and change. The stench of the cesspool of scandalous activities in Washington is now bubbling over into the backyards of those who have previously stridently defended this administration. The flood of filth associated with the three current bombshell stories leaves me with a number of feelings and questions that I would [...]

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America’s Political Woes

Wed, 15 May 2013 08:58:59 -0400

Howard Baker’s famous question, uttered in the days of the Watergate hearings, is now being echoed in reference to Benghazi and other matters: “What did the President know and when did he know it?” A series of revelations seems to be damaging the Obama White House. These revelations and their aftermath mean trouble for the [...]

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Relentless Market Brings More of the Same

Wed, 15 May 2013 08:44:09 -0400

Futures are basically flat after another impressive move in the markets yesterday. Europe is up small as Japan rips another 2.29%. The S&P broke above 1636 and never really looked back most of the day. Micro support stands at 1645 and new pivot resistance is 1651. I wish there was something “new” to write, but [...]

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The Top Ten Hardware Companies In Venture Capital Today

Wed, 15 May 2013 08:12:25 -0400

A move toward hardware companies, once considered too risky to invest in, is taking Silicon Valley back to its roots. In recent years, Silicon Valley has been mostly about dot-com services, Web-based social networks and apps for smartphones. But while the software is not any less important than silicon, advancements in technology have made the [...]

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Apple (AAPL) Denies E-Book Price Fixing Allegations

Wed, 15 May 2013 06:31:36 -0400

A set of court filings made public on Tuesday (via Reuters), shows the U.S. Department of Justice [DOJ] accused Apple (AAPL) in April 2012 of engaging in a horizontal price-fixing scheme with major U.S. publishers to set the prices of e-books it was selling, and thereby help set the market. In a filing dated April [...]

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Upwards and Onwards for Record-Setting Market

Tue, 14 May 2013 18:21:27 -0400

The stealth rally continued today as the S&P and Dow traded to new all-time highs again in today’s session. The market opened around the flat-line but was off to the races once the bell rang following bullish comments from David Tepper on his morning appearance on CNBC. The S&P finished the day up 1.01%, the [...]

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Serious Cuts, Tax Increases Possible Due to Health Care, Pension Costs

Tue, 14 May 2013 17:37:50 -0400

HARRISBURG, Pa. — People will be paying more and getting less from their governments as health costs and pension obligations will force state and local governments to adjust their budgets over the next 50 years, according to a new report. The new report from the Government Accountability Office, a nonpartisan congressional agency that audits federal programs, paints a [...]

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What to Expect from Erdogan’s Washington Visit

Tue, 14 May 2013 15:35:36 -0400

Turkish Prime Minister Recep Tayyip Erdogan today heads off to Washington for a two-day visit that will find him and President Barack Obama covering several contentious issues, many of them ones where Turkey and the United States currently don’t see eye-to-eye. Turkish-American relations have clearly rebounded from their low point of a few years ago, [...]

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The Way to Star Trek Technology

Tue, 14 May 2013 14:17:15 -0400

Not long ago I was in Toronto for a couple of days for a conference on what people in the resource space call “Technology Metals.” These are critical elements that go into all manner of advanced materials, electronics, optics and more. Without technology metals, most modern technological systems won’t work like the builders advertise and [...]

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Fed’s Plosser on the Exit

Tue, 14 May 2013 13:52:22 -0400

As is well known, policymakers have been coalescing around a QE exit strategy for some time, since at least the March FOMC meeting. Two central issues with the exit are the timing and the communications. Officials do not want to undermine the recovery, knowing full-well that previous flirtations with exits have gone awry. As the [...]

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Money, Taxes and What We Can Afford

Tue, 14 May 2013 13:46:30 -0400

People sometimes seem to suggest that the Western democracies are at the end of the road economically. They claim that these governments are spent, broke, tapped out. They insinuate that Western nations can no longer afford to carry out ambitious projects of the kind they organized in the past, and must downsize or dismantle many [...]

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Hedge Fund Titans Hardcore Bullish Calls Signals Impending Market Doom

Tue, 14 May 2013 12:28:07 -0400

David Tepper and Laszlo Birinyi graced CNBC with their presence this morning. Both hedge fund titans, these players pumped the airwaves with bullish commentary like there was no tomorrow. Over the years, from the 2009 lows on the market, they have never been quite so bullish. The markets are already up well over 100% from [...]

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Don’t Fight the Tape, Stay Long

Tue, 14 May 2013 10:26:02 -0400

Earning season is coasting toward the finish line. The final household name to announce is Wal-Mart (WMT). That report will hit the wire Thursday. If it’s anything like the rest of the first quarter earnings we’ve seen, there won’t be much to talk about. Overall, first quarter results were a bore. No big surprises. We [...]

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The Not-So-Inside Skinny on the IRS Scandal

Tue, 14 May 2013 09:31:53 -0400

President Obama was shocked – shocked! – to learn from press reports that the Internal Revenue Service has been singling out his political opponents for special scrutiny. Clearly, the top-secret Daily Brief that the CIA prepares for the leader of the free world is a major waste of time. (Even Obama seems to think so, [...]

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The Short Squeeze Theme Continues to Dominate the Tape

Tue, 14 May 2013 09:08:40 -0400

Morning futures are slightly higher as we see some small profit taking around the world. The selling so far seems very contained and controlled (until it’s not). After the WSJ released an article after the close Friday highlighting the Fed’s potential exit plan from QE, many thought the market could experience some turmoil early this [...]

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Obamacare: Unaffordable for Many

Tue, 14 May 2013 08:57:22 -0400

A month ago Senator Max Baucus, a Democrat from Montana, projected that he envisioned the implementation of the President’s new health care program, aka Obamacare, as being “a train wreck.” Well, in reviewing a report released yesterday by the US House of Representatives Committee on Energy and Commerce, we gain a greater appreciation for just [...]

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