Hard money man Peter Schiff argues we're in a bubble. The stock market rally is manufactured by the Fed:

We have a completely phoney economy driven 100% by cheap money; the minute you take it away, the whole thing implodes. (emphasis added)

He's hardly alone, and, superficially, this is an attractive line of reasoning. Indeed, interest rates are at rock bottom, yields are at rock bottom, and the Fed is pumping unprecedented amounts of money into the banking system through its purchases of assets. In one thing Schiff is right -- very little of this money is trickling into the real economy.

However, once you correct the record S&P 500 for inflation, as Antonio Fatas and Ilian Mihov have done, it turns out we're not quite at record levels:

And they went on to gauge how expensive the market is with respect to earnings (via the price/earnings

NQ Mobile (NQ) offers a wide array of security solutions for Android smartphones. NQ Mobile has two divisions:

• Consumer Mobile Services, which consists of mobile security and privacy services, and mobile games and advertising
• Enterprise Mobility, which offers managed mobility services to some 1200 enterprise customers

NQ Mobile's core business is providing security software for smartphones, but they also provide additional services, like privacy and family protection, anti-data theft, and the like. All these are offered as a software as a service (SAAS) cloud computing business model which usually carries higher margins and higher valuations compared to the traditional software license sales model.

Business model
The company uses a fremium model, where its basic services are free:

the company says that 85 (now 97.7) million of its 242 (now 283.4) million registered users are active. But over 90 percent of those users receive a free service and generate no income,

The euro (or European Monetary Union, EMU) has proven to be an unmitigated disaster. Rather than providing economic stability and prosperity, it has produced exactly the opposite. As the eurozone limps from one crisis to another, the bleeding in much of the periphery (and a fair part of the center as well, see the recessions in countries like France and the Netherlands) goes unmitigated and the proverbial recovery that was supposed to be just around the corner remains just that.

Really only Germany has greatly benefited from the euro. While capital inflows to the periphery whacked its competitiveness out of sync with Germany (rather than leading to an appreciation of its exchange rate), it also produced demand for German exports. While the boom times are definitely over in the periphery, much of the difference in competitiveness remains, and the way the eurozone authorities are dealing with that, through adjustment

After many discussions with conservative economists, often in the comment section of the numerous economic articles we've written, we think we're able to condense the main differences of views on the economy to essentially a single issue. Let's describe some of these differences, and see how they fit into a central theme. The main policy differences are, according to us:

• The risks of large budget deficits
• The risks and efficiency of hyper expansionary monetary policy

We will try to show that much of the difference in views about these policies depend on whether it is acknowledged that the economy is in some kind of 'special state.' Many liberal economist argue the economy is in such a special state (called a liquidity trap or a balance sheet recession) while many conservative economist keep on applying what we will call 'equilibrium', or 'full-employment' economics to the present economy.

Underneath it all is

Voices to ditch the euro are getting louder. Not only in the really depressed economies of the eurozone periphery, like Spain and Italy, but now also in core countries like Germany. We're pretty sure that had people known what would happen, the euro would never have been introduced.

It's interesting at this juncture to review the different supposed advantages for the euro, as it will turn out that on pure economic grounds, the case for the euro is pretty weak, and always has been.

Completing the Single Market
The Single Market project aim is to remove barriers to trade between EU member countries. That entails quite a lot, it's not just tariffs and quotas, it's mostly differences of regulation that prevent European economies from merging into a seamless market. There is still quite a lot to be done here (trade in services, for instance), but having a single currency was

We read dire warnings about coming, or already ongoing currency wars, in which countries supposedly embark on policies with the explicit aim of devaluing their currencies in the forex markets. There is a book, highly popular in some circles, by James Rickards called "Currency Wars: The Making of the Next Global Crisis."

According to the author, these 'wars' have already begun:

Currency wars "have already begun," according to Rickards, citing comments from Brazil's finance minister in 2010. The Fed started this currency war with its initial response to the 2008 financial crisis and ongoing "extraordinary" measures. All the Fed's efforts - from zero interest rate policy to quantitative easing - are largely designed to weaken the dollar, putting pressure on foreign central bankers to competitively devalue their own currencies, according to Rickards.

We're not convinced (to put it mildly), so what's the damage of these currency wars, who

The morning of March 11, the VIX, a measure of market volatility, crashed below 12 to a 3-year low:

(click to enlarge)

Since the VIX is one of those measures that have a habit of returning to its mean (about 20), this isn't going to last, that much is fairly certain. Is there a way to profit?

The answer turns out to be surprisingly complex.

The first problem is that the VIX itself isn't a tradable product, but simply an indicator. That means, one has to look for other instruments that are actually tradable to take a position.

There are plenty of these instruments:

1. VIX futures
2. VIX ETFs and ETNs
3. VIX options

Vix Futures
The most obvious investment would be in VIX futures. There are monthly futures, expiring on the third Wednesday of the month. These products are very liquid, but just taking a position in a single future involves

The three investment banks assisting InterOil (IOC) in selling a part of their Elk/Antelope resource confirmed last Friday that they received several binding bids from parties wanting to participate in the project of monetizing the gas (and possibly the liquids, although InterOil already has an agreement with Mitsui of Japan for this in place, the outcome of which depends on the conclusion of the present deal).

The simple but near inescapable reality of this is that InterOil will have an LNG project partner in the very near future. There are several important conclusions to be drawn from that simple fact. Even a "disappointing" deal would result in:

• De-risking the whole LNG project substantially
• Setting the clock ticking towards first monetization of gas and liquids
• InterOil will receive funds for greatly enhanced exploration and appraisal of other, already discovered resources.

But we're sure the deal will not disappoint. These investment bankers

Much has been said and written about the fall in Apple's (AAPL) shares from above $700 to the $400s level where they are now. Many people are stunned how this company, which generates extraordinary amounts of revenues, profits, margins, cash flow and sits on a mountain of cash can be so cheap, with the shares falling so precipitously.

Just consider the revenue growth:
(click to enlarge)

Or profit growth

(click to enlarge)

Or free cash flow growth:

(click to enlarge)

And compare these impressive developments with the market valuation, which has moved downwards (apart from the dip in the aftermath of the financial crisis in 2008-9).

(click to enlarge)

This is a curious contrast. Indeed, at present metrics, Apple can only be called cheap, especially if one realizes that its main products (the iPhone and the iPad) are emblematic products at the center of some of the biggest growth markets

The euro crisis is back with a vengeance. This isn't actually surprising, as the way to solve it has been distinctly dubious. At the heart, there was a trade-off. The ECB would, when asked, buy unlimited quantities of bonds (via its OMT program, or "Outright Monetary Transactions") from countries in trouble, if the latter ascribed to the policies du rigeur, that means, strict austerity and economic reforms.

So far, there wasn't a need for the ECB to activate the OMT program, as there was no formal request from any country. More importantly, just announcing the OMT program was enough to douse the flames of panic in the peripheral bond markets, just as we always argued it would.

Adding to the calm was the fact that, most countries more or less adhered to the 'virtual' terms of the OMT program, or the diktat from Brussels (or Berlin), enforcing austerity and economic

Well, we seemed to have ran out of a string of luck making calls on the shares of Ellie Mae (ELLI). We first advised to buy at $15, then argued the stock was getting expensive in the high 20s. Then earlier this month a vicious sell-off took the shares to $19 and we argued the sell-off was overdone.

On cue, the shares recovered, and in the meantime, Ellie Mae produced stellar results and increased guidance for 2013, but the shares slumped while we concluded from the earnings that they had only one way to go and that was up. What's going on? Obviously, with the stellar earnings result still fresh, we have no reason to re-evaluate fundamentals.

So the first thing we have to say is that we're not losing sleep over the renewed selling, we think it won't last, unless there is a serious correction

We recently argued that the emerging bear case for Ellie Mae (ELLI) was way overdone. This bear case seemed to have been produced by a report from analyst house William Blair, arguing that the company would not be able to sustain its conversion rate in users of self-hosted software (mainly Encompass) to Ellie Mae hosted software as a service (SAAS).

Another element of the bear thesis (or Blair thesis, if one wishes) is that for this year, there is a good deal of headwind in the mortgage origination numbers. That might be somewhat surprising when we hear soundbites about a recovery in the housing market, but it isn't as it's based on prognostications from Freddie Mac (FMCC.OB), Fannie Mae (FNMA.OB) and the Mortgage Bankers Association.

These organizations produce monthly forecasts and assume the fall in the number of refinancing existing mortgages will trump the number of new mortgages

There has been a rather massive sell-off going on in the shares of Ellie Mae (ELLI), what's going on?

(click to enlarge)

First, the sell-off was sharp, and on high volume, and the shares broke through the 200-day moving average like it wasn't even there. When something like that happens, one has to take notice.

The immediate catalyst seems to have been a downgrade from William Blair (from buy to neutral), on the following grounds:

• The decline in refinancing existing mortgages will outweigh the increase in new mortgages for 2013
• The conversion of on-site customers to Ellie's SaaS business is slowing.

The curious thing is, nothing of this is actually new. If you read last quarter's conference call transcript (Q3 CC), you would have known that Ellie Mae itself has based 2013 guidance on a 20% headwind in the market. The company also argued that more than

On June 27 of last year, we wrote an article suggesting you buy two stocks, InvenSense (INVN) and ChipMos (IMOS). Do we think you should still buy them, and how did they fare? The first article will be about InvenSense.

InvenSense
InvenSense sells micro electro mechanical systems (MEMS) like gyroscopes and accelerometers, and related software. This is the stuff that enables your smartphones and tablets doing all kinds of funny stuff, like motion tracking. But this stuff also has other applications, like optical image stabilization, gaming and even mobile payments. InvenSense's competitive advantage lies mostly in the gyroscope, the most complex of these small instruments.

InvenSense is the 'easier' of the two stocks for quite a few reasons:

• It basically has only one major competitor, STMicroelectronics (STM).
• It's highly leveraged to the advance of smartphones and tablets.
• It already produced Q4 2012 results, and these were, well, more than

Nobel prize winning economist Joseph Stiglitz has forwarded an interesting theory, which argues that rising inequality holds back the recovery and growth in general and leads to a situation known as an underconsumption crisis. Why? Well, the rich tend to save more and spend proportionally less of their money, so rising inequality will lead to less national buyers for our output.

Another Nobel prize winning economist, Paul Krugman has several good arguments against this thesis:

• Rising inequality since the 1970s has gone hand in hand with falling savings, not rising savings.
• Rising inequality went hand in hand with robust demand, at least until 2007.
• A cross-sectional evidence of saving and spending isn't very useful at any particular point in time.

Krugman is right on the first two points, the last needs some explanation:

Consumer spending tends to reflect expected income over an extended period. If you take a

Some time ago, we started a series on solar energy innovation that proved quite popular (part 1, part 2, part 3). While there is steady and gradual progress in conversion efficiencies (the part of sunlight converted into electricity) and cost, there are companies and labs all around the world working on more radical concepts.

Radical concepts that could offer existing solar players (almost all of them already deeply plagued by market circumstances) a run for their money, but at the same time offer a critical break through to a future without subsidies and mass adoption.

We feel that investors in existing solar companies (or any company) tend to be insufficiently aware of industry characteristics. For instance, many investors were focusing on the growth in demand and steady cost reduction, while having insufficient appreciation for the lack of pricing power, due to the fact that solar cells

In answering this question, it's important to make a distinction to the short and the long-term. In the short-term, the US doesn't really have a public spending problem, as spending is what is required to compensate private sector deleveraging (spending less and saving more in order to repair balance sheets, greatly damaged as a result of the financial crisis).

Public spending is also needed to compensate for the relative powerlessness of monetary policy, the usual tool to improve demand. Interest rates are essentially zero, making monetary policy near impotent, as at the same time making borrowing for the public sector very cheap.

But, of course, monetary conditions the economy will ultimately recover, and public spending can't increase forever, the critics are right about that. Still, there are two additional points to be made here. The first is that not everybody realizes that an economic crisis automatically increases public spending and

Bass didn't explicitly say it would be in Europe. However, he did say this:

I don't know who's going to fight who, but I'm fairly certain that in the next few years you will see wars erupt, and not just small ones [CNBC]

He bases this view on the high levels of debt in the world, by his calculations this has reached 340% of global output, and the world has never lived with these levels in peacetime. He also doesn't expect the eurozone to survive in it's present form so it's fair to say that the eurozone is in the hot seat.

How realistic are these apocalyptic predictions? Well, there are a couple of mechanisms we can imagine that could spark conflict:

• These high levels of debt have to be restructured or monetized, the chance that these can be reduced through normal economic growth and/or austerity is rather

Capitalism, with its property rights and free markets, has been a great motor for economic wealth creation, technological advancement and bettering the lives of millions of people. One of the great institutional benefits of capitalism is that, by and large, it aligns private to social incentives. That is, people pursuing their private benefits usually increase social welfare as well.

This is simply Adam Smith's invisible hand. By creating products and services consumers want, entrepreneurs are creating economic activity, jobs, shareholder wealth, and these societal benefits multiply when much of the created incomes and wealth gets spend, increasing demand for other products and services.

As Friedrich Hayek explained in what is one of the most important economic publications of the past century (Hayek's "The use of knowledge in society"), it is the distributed nature of knowledge and information that makes centralized solutions distinctly second best. Capitalism works because it manages to

In the eurozone periphery, after several years of eurocrisis, debt/GDP ratios are still rising and the periphery is subject to several deadly vicious cycles. Forced austerity worsens the economic crisis, increases joblessness and bankruptcies, thereby reducing the tax base and forcing yet more budget cuts.

The specter of high interest rates, economic crisis, increasing tax rates, and uncertainty over the health of banks and euro membership leads to an investors strike and capital flight and emigration of the best and the brightest, further worsening economic conditions.

This paralysis is most manifest in Greece. After several conditional aid packages and debt haircuts, the situation has only dramatically worsened. Large haircuts on Greek bondholders have already taken place, but not even that has stabilized the debt/GDP ratio, or brought that any nearer, let alone having led to any modicum of economic stability. The Greek economy is now in its sixth year of