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QuickChat #234, June 5, 2012 195 comments
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"The Pirate Wench" by stan bruns
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It seems that potential applications keep popping up and the only thing left for CPST to do is actually turn a profit as volume scales up over time.
"New System Combines On-Site Power, Disinfection"
http://bit.ly/LmFRJm
HardToLove
http://bit.ly/Kv9RJC
His call for 800 on the S&P is a bit extreme -- but then no one believed him many years ago when he correctly predicted the "bond rally of a life time."
http://bit.ly/Lo4gSN
http://seekingalpha.co...
More QE rumor.
http://bit.ly/McVQP4
Europe out of recession.
http://bit.ly/L9ENKq
Really?!
BofA summarizes the full overnight action:
Risk on! Global equity markets are rallying sharply as Australian GDP came in better than expected. Also, there is speculation that China will easy policy and more proposals from Euro area leaders on how to solve the region's debt crisis. Overnight, all the Asian equity markets we cover finished over 1% higher, expect the Shanghai Composite. The best performer was the Indian Sensex, up 2.7%. The Japanese Nikkei rose 1.8% and the Hang Seng lifted 1.4%. On the flip side, the Shanghai Composite slipped 0.1%.
In Europe, equities are rallying sharply, up 1.5% in the aggregate. The region's blue chips are up 2.0%, while shares listed in London are up 1.2%. At home, futures are pointing to a strong rally later today as well. The S&P 500 is set to open 1.1% higher, following yesterday's 0.6% gain.
In bondland, Treasuries are selling off, with the 10-year 3bp higher, at 1.60%, and the long bond 2bp higher, at 2.66%. In Europe, UK gilts are sharply higher, up 13bp, to 1.65%, and the German bund is up 6bp, to 1.26%. Italy and Spain are both seeing their 10-year yields fall by 4bp, to 5.57% and 6.20%, respectively.
The dollar is weakening due the risk-on trade. The DXY index is down 0.4%. Commodity prices are higher, with WTI crude oil up $1.10, to $85.40, and gold up $18.88 an ounce, to $1,635.93.
http://bit.ly/MeHJId
I am sure that BOA would love to promote anything that will get their stock price out of the basement. There must be a lot of demand to push prices up across the world if this is doing it. This rally could last for weeks, errrr days, errrr hours at least!
ECB leaves rates unchanged at 1%....mkt was expecting a cut. The EZ just refuses to address the problem. Don't say inflation either, they are in the midst of deflation. It is headed to the USA & Germany too. German industrial production dropped 2% unexpected. This might be good as it puts pressure on them.
48 hours ago, the world was coming to an end fast...in fact Soros said in 90 days. now in 24 hours we are up 350 points. Go figure. Nothing really has changed. (except Germany may be agreeing to bail out a few more billionaires)
http://bit.ly/LrLRVg
Was yesterday the anticipation rally for this and is it now over already. See previous link in comment above about MS.
http://bit.ly/MKzxTh
Nancy in the white, Debbie in the red.
By no means am I promoting water boarding or bitch slapping.
http://bit.ly/NjFd5R
This may get censored.
More depressing stats included in this article.
http://bit.ly/L59zFU
http://bit.ly/KWNsD1
"for the past three months the Fed's balance sheet has contracted at an annualized rate of 10%".
Ben might have a personal interest in QE3.
http://bit.ly/KJWcOl
We had two months of decent job growth and then they tighten?
What fools, unless they are playing chicken with congress to do their part now.
Pretty good article on why Investors are pulling money out of the Market... hint is HFT
http://bit.ly/L6yLvC
Both are in deep guano.
Rate cut in China (250 basis points, first since meltdown in 2008) was at first greeted as "good" news, then triggered worries as xperts and analists began to figure that China was loosening things up as a result of "dire" numbers in May (many reports are due out this weekened, be aware folks...).
I have been monitoring China closely, and I believe the xperts are offbase with this one. April scared some folks, coming in weaker than expected and precipitated the beginning of China's central planners easing up on their fight against overheating and inflation. My take has been for a long time now that they were seeking to engineer a "soft landing", and these recent moves jibe well with that vision. They will oversoot their 8% goal just a little (7.9% is what the article indicates, and I agree with that sort of result), but I see this first interest rate cut in 4 years as very well-timed. They are also loosening up the reins on their banking sector, allowing them to offer lower interest rates than those set by the government (80% of official rates instead of the earlier 90%).
Taken together it looks like May will probably come in just a hair below their goals, but with the actions taken in June I believe they are looking good...
At least, until we see what happens with their #1 market, the EU.
Fear and loathing will be affecting markets tomorrow, though, and are doing nasty things to the ASX right now. Australia will get whipsawed by this news, and I expect Friday could well be bad news for us in anticipation of horrible news out of China during the weekend.
LOL, of course if the news is more solid and saner analists grab the media microphones, we could see a relief bounce come Monday, maybe a large one.
I am slowly coming to the conclusion that the Fed's QE3 -- is well underway -- its just happening in Europe instead of in the US!
Recently I was reminded by an MIT professor being interviewed that the cheap Fed fx swap lines with the ECB for US dollars are "UNlimited." I later confirmed from others that indeed the US could theoretically inject $1Trillion or more to bail out Europe. Congressional testimony a few months back pointed this out:
"What the Euro Crisis Means for Taxpayers and the U.S. Economy ... [we] may get to the $1 trillion level [on swaps] , or perhaps even higher."
http://bit.ly/MR8TYO
So I recalled that in early February the ECB total swap line usages had risen yet again to a fresh multi-year high of $89.7 billion http://bit.ly/KlAv16 Then in trying to get the most updated #s, I came across this data point from May 31, 2012 which I had not seen touted in any headlines recently:
"FX swap with foreign CBs totaled $10.569 bln in latest week. Fed says ECB was only CB to tap the facility. Report states current swaps are the largest since February. Implications are that credit between EU banks could be deteriorating." http://bit.ly/MR8SUX Note that is $10.5 billion in latest week!
As I understand how swaps work ( here's more: http://bit.ly/KlAudv) , every time the ECB exchanges Euros for USDs it promises to pay back the USDs to the Fed at the same exchange rate it borrowed. But, I worry about duration risk in the event the Greeks, Italians, and Spaniards decide around the same time they want USDs instead of Euros -- and the Fed honors the swap requests from the ECB. In that case -- we better hope the ECBs "promise to pay back at the same rate" does actually happen -- and hope it happens on schedule. I wouldn't want to see a new facility program with longer terms kick in -- to help the EZ at the expense of US taxpayers. This tangled mess has us roped in very tightly.
Welcome thoughts from others ...
MHO,
HardToLove
The EZ lacks the sovereign cohesion to make these sorts of things happen. For years now the Euro has been a soap bubble floating on an ocean of dollars...
This is one of those things which should be a hot button media issue, but is instead an invisible monster standing in the foyer which everyone has agreed is not really there, and thus nothing to worry about. The fact that it occasionally feels a hunger pang and reaches out and selects one of the herd to munch on is similarly ignored.
There is no political clout for bailouts ever again.
Personally, I know it would send us right into depression, but the refusal of the EZ/EU to make necessary moves means we should let them tank and break up.
At some point countries are like children, you have to let them fall and get hurt so they make better decisions. This will come to the USA again just as sure as we are sitting here. I still can't get over the contraction in the fed's balance sheet since Jan '12 at an annual rate of 10%....That is exactly why we are slowing down now. What the heck were they thinking?
I know it is not politically popular, but it is time for the legislatures to redirect the tremendous liquidity the CB's have injected. The other alternative is to just wait for the people who control it to fail into government hands or use it in the general economy. No sign of fiscal or private sector movement.
I don't think you see movement by corporations until after the election. I really don't think they are against Obama as much as we hear, but are afraid of the repubs revenge if they did help things more. I still think '13 is a bad year either way, and will force both sides to the bargaining table no matter who wins..
I still do not like the fed contracting their balance sheet. This slows things even in good times.
So you might keep in the back of your mind for later and teach your children when consumer debt hits near 100% of GDP we gonna crash. Probably true for Governments now too.
Quite honestly, I am sorta tired of the economic model that the consumer has to "borrow" to create an economy of growth. That makes it a "false economy" to me. They are all begging for the consumer to borrow / banks to lend to them...when that's what got us here in the first place.
http://yhoo.it/MRnpQu
http://seekingalpha.co...
They have powerful political connections and have become experts at milking the "alternate energy" government teat for big money. Electric vehicles (except maybe local delivery trucks), wind turbines and similar technologies are money sinks. There is no long term value in them. Grid scale battery storage has real possibilities and GE is trying to push their Sodium Metal Chloride batteries in that direction, most likely with some DOE funds for "trial" projects that should not need tax payer money.
So GE has gotten itself in bed with the US gov "big money machine". It should be lucrative, but it might not be a wise longer term play for just the alt energy reasons.
The one difference in my investing...with the exception of AXPW (and I knew it was a long shot when I invested in it) ...
I invest to make money. If a company makes money on gov't contracts and is smart enough to take free money for product development...then it is just good business at the time. If your gonna play the game, you play by the rules at the time so to speak.
I really don't care about political beliefs or preferences. Business is business. GE has positioned itself well with a very broad and diversified portfolio of energy projects. FedEx joining them is a plus. Therefore I think GE after being a laggard for many years is now in a position for the stock price to go up.
I have seen this happen a hundred times, where some interesting technology which I would really consider investing in were it the province of a discrete company and stock, is subsumed within a mountainous corporate amoeba where its impact is muffled.
http://seekingalpha.co...
3:52 PM Bloomberg sees a ray of hope for Chinese solar stocks, expecting China to dominate solar panel sales growth in 2012 with rising demand in China offsetting declines in Europe. China's five largest solar panel makers - STP -5.8%, YGE +1.5%, TSL +3.4%, CSIQ -1.8%, HSOL -1% - are projected to hike 2012 shipments by 27%-37% Y/Y. Comment! [Tech, Energy, Global & FX, On the Move
China's grid could stand some solar input without experiencing much disruption, given that they are still building coal and nuke plants.
Since I am distrustful of their promises and projections, I would not be a player in any event.
As for the Western companies you were mentioning earlier...
They are actually almost cheap enough for me to say "bad enough to take a chance if you believe in their business model".
Well, isn't this just what we need? Rating agencies are now refusing to allow their ratings of new bond issues to be quoted. They are no longer willing to stand behind their ratings because the Dodd-Frank financial regulations make them liable for mistakes. From the Wall Street Journal:
http://seekingalpha.co...
They are almost useless now. A detriment really. They can't wait to downgrade now. I really think they should be gone. They always downgrade slowly and after the fact.
This is the result of the stories describing Obama's clearing cyber attacks on Iran's facilities.
http://on.mktw.net/MlvuXD
The parasitic role of government in the economy continues. The question is whether or not it can be grown to become larger than its host has been tested, and shown to be a logical impossibility.
http://bit.ly/KV91nC
http://bit.ly/Mo14Em
When the Swiss Central Bank (SCB) decides that it can no longer support a peg to the Euro and removes the peg, I think that the anything denominated in the Swiss Franc will jump at least 30%. The longer the SCB maintains the peg, the more the reaction will be, like a rubber band being pulled and extended further and further. If the peg is removed before the breaking point for Switzerland, the reaction should be positive.
I don't know how long the SCB will continue the peg, but if the Euro drops below $1.20 I think I'll consider buying some quality Swiss stocks. I realize this would work even better if I lived in Greece.
So what do you think?
http://bit.ly/LKIhSj
This could make the Monday relief rally even more powerful. If some cohesive movement on the Spanish finances also occurs, it could be a large move.
http://yhoo.it/LcjWaQ
7:35 AM Get familiar with Article 65, writes John Dizard, because plenty of officials and corporate treasurers are. Article 65 in the EU treaty allows for countries to impose capital controls, and that's what he expects for Greece after its June 17 election (in which the spoils are reportedly already being divvied up by ND and Syriza). The Troika will have no choice but to fund Greece if it doesn't want the contagion to spread. 2 Comments [Global & FX]
We are entering a period where things can and will flip on an analog dime and leave 9 quantum cents change.
Trying to slog through and catch up on comments everywhere from the past couple of weeks - been busier than expected with moving into our new house.
My meandering mind wondered on a journey to/from the Home Depot/Lowe's hub of my current universe if Bernanke is holding back QE3 until after the election in preference for Romney over BO. (it would serve the Democrats right since a Democrat has not appointed a new Federal Reserve Chair since Carter appointed Volcker)
By the way... been away from investment situation for a bit over two weeks... net result seems to be pretty flat from my abbreviated vantage. Seems like either exhaustion or an explosive movement will come in the fall after a summer of trailing off into the tequila sunset.
Dinner with our neighboring OG tonight.
All best to the best group on the web... and hope to rejoin the banter on a more regular basis soon...
Tell OG she's missed.
HardToLove
HardToLove
http://bloom.bg/KZPthZ
Perhaps they will learn from this debacle to get started on such efforts so as to avoid trampling on black letter law.
They really do have a bad problem, but even this push (and even assuming it were done correctly) will not address the many multiple voters who cross every t and dot every i. Part of the problem is that there is really no downside to breaking the law and voting in multiple states (there are some folks who vote 3 or 4 times in 3 or 4 separate states, its not hard if you have multiple residencies), and then of course we have the infamous ACORN...
So long as this issue is treated like jaywalking, with virtually no chance of even being charged with that low penalty, the abuses will continue and grow.
Finally, this is a clear example of the party running the DOJ playing favorites. Were this an example of a Democrat state government seeking to pump in thousands of last minute registrations to inflate their voter ranks with fake identities, and it ran counter to the law (LOL), would the same effort be mounted to squash it?
Just another example of how the political spoils from the imperial Federal elections continue to corrupt the system from top to bottom. The corruption varies as to agenda and nature somewhat depending on whether its the Demicans or the Republicrats doing it, but its pervasive presence has become an accepted constant.
the pol's accept it, the people will not. We may be on the verge of some house cleaning soon. All this type of BS on both sides will be met with a fierce civil unrest and revolt. It's just a matter of time. The pol's can't resist, and they will pull this crap one too many times.
This just show you TB, it is not about what the voters want, it is not about what is good for the country and it's people, it is no longer about money either...it is POWER.
This is just not new. Its been going on for over 200 years, and the major difference between now and 100 years ago is that its moved from the deniable shadows into the blatant sunlight.
The fact that it HAS become so in your face and blatant just means that the citizen's longstanding ability to ignore it and hope it would go away has been removed.
Of the 3 potential responses (anger/action, apathy/inaction, or approval/participation because its "their" guy who is benefitting), I expect the huge majority of citizens to respond with apathy and inaction. This broad "center" will number over 60%, if not more. Combined with the third "approval/participation" group of partisans, they will control and prevent any effective address.
Revolution by the disenfranchised 30% IS, indeed, an option, and its noteworthy that the same percentage mounted the last 2 such efforts...
Maybe it's time for people like me and you and others here to send a message that this is not acceptable.
And yes, there is also DG's wonderful GOOOH group...
Writing to your congressman and Senators (particularly if you happen to have one who is complicit in whatever proximate problem, like voter fraud, is setting your hair on fire) is something which CAN work, so long as there are thousands of us doing it (I do this with great regularity).
Next thing you know, we'll be wanting join the Euro Zone and do away with the US dollar! No, that wouldn't work because we couldn't print more mone
Of course Democrats would never go for such a law because they would lose well over half of their voting base. I'm not trying to rig the system in favor of the Republicans, although it would in the short term. I just don't think that those who are getting a free ride from the system should not be allowed to vote because, as this group continues to grow, there is greater pressure to move more toward a socialist form of government. Those who want something for nothing should not be making the decisions for those who diligently pay their way.
I'm sure I'll get stretched over hot beds of coals for this one, but it's just a thought that has been lingering with me. In years when I was fortunate enough to have been able to zero out my income taxes (due to owning and managing depreciating assets back before the laws changed), I would have given up my right to vote in the years I paid no taxes. It didn't happen very often. But there are wealthy individuals who pay little or no taxes. Why should they be allowed to vote when they are playing the system?
I understand the arguments. They are just taking advantage of laws that were made to support economic growth. Just because they don't pay taxes doesn't make them any less of a citizen. Just because a family is poor doesn't mean they should have no voice.
So, why not make the receipt good for three years? That way only those who rarely, if ever, pay taxes would be the only ones unable to vote. That doesn't address the last question, I know. But, again if these people are doing nothing to better their lot in life and are totally dependent upon the welfare from the rest of us, tell me once again why the voice of those who drag the system down as dead weight should be making the decisions on how much the rest of us should be paying to help support them? We're not too far away from that situation; where those on welfare and not paying any income taxes are near being the majority and able to decide the future of the nation.
Will they vote for smaller government? I don't think so. Will they try to hold taxes down or support difficult decisions on Social Security or Medicare or Medicaid? Probably not because that might disadvantage their group. This is the direction in which we are heading. And that scares me more than anything else.
FREE GOVERNMENT CELL PHONES
Lifeline phone service provides free cell phones to America's financially disadvantaged
http://bit.ly/LQd4yR
Everyone wins & is happy.
None of this is remotely possible. I know that. So, I'm not going to try to justify every little possibility because that is just a game of futility. My point was really the direction in which the nation is moving and how serious it has become. Soon, unless the direction is changed, those who pay no fed income tax will be the largest voting block in the country and they will determine the future. That can't lead us to a good ending.
http://bit.ly/HoXvwC
I hardly think that the perception of people who ignore all the taxes that I listed previously will somehow change if we add a national sales tax to the burdens on the poor.
I call that welfare, spreading the wealth, selling your vote, and the list goes on. The point is they are getting money that was taken from the sweat of someone else.
I have a friend that has a tax return prep company. Many folks walk in and claim income of very minimal amounts, earned in cash, wink, wink, and then apply for the earned income credit. It is obvious to the most casual observer they are lying but there is no way to prove it. They get the earned income credit paid to them. Obviously there is corruption at both ends of the spectrum and folks in the middle are getting screwed.
Robert, redistributing to whom?
http://econ.st/KuIa3G
http://bit.ly/KuI7VI
http://on.mktw.net/Lg5cI6
He went on to write a couple good articles about it. That was on SA. He's since moved on to Econintersect and has touched on the subject over there as well.
Robert Martorana and I also touched on that and he also published about it here on SA.
Both a few years back.
HardToLove
http://on.mktw.net/NtqJAb
Having elected to take the last decade and "lose" it, now we see that we have also somehow misplaced the decade before that one...
And hey, does anyone else find it odd how often we see unintended coincidences in the news? Just after I read through the lost decades article, I ran across the most recent quote from our engenue President, he who must not be named (else an army of trolls will descend upon us), Voldemort:
"The private sector is doing fine".
LOL, and from a perspective which deletes the last 20 years or so, that might even be true.
Magikal.
That's better.
Perpetual Growth Myth:
http://on.mktw.net/MzrK4f
http://yhoo.it/LPHXU4
9:02 AM Humana (HUM) and Aetna (AET) yesterday joined UnitedHealth (UNH) in saying that they would offer some Obamacare provisions regardless of whether the Supreme Court voids all or part of the Act, including free preventative care. However, WellPoint (WLP) and Cigna (CI) are holding back on any pledges until after the court rules. (previous) Comment! [Healthcare]
It would be as if an auto manufacturer who had been including side airbags in all their cars for 20 years were asked about a new law mandating side airbags - but which was being fought in the high court by those who think side airbags are a bad idea... The manufacturer would almost certain mention that they agree with the new requirement, and will be building side airbags into their cars whether the new legislation stands or not.
This is simply smart business, to take advantage of the situation.
Or, I could be off base and just overly cynical.
http://bit.ly/LGgl7O
I guess he could have said, "I have a dream". Some how I do not see the R's doing this much good.
http://bit.ly/LhHXNU
TEVA's attractive financials plus the following considerations have attracted me to this stock in the past:
1) Global economic uncertainties plus Obamacare legal uncertainties appear to favor a cost effective - generic product line;
2) Shares were unduly battered (IMO) by investors thinking that being based in Israel -- the Iran nuclear threat would impact TEVA -- whereas its locations are spread all over the globe;
3) And I think analysts over-reacted to the new CEO's delay in giving new guidance after being a few days on the job (the guy came from Bristol Myers). I think he did the right thing in waiting until he had reviewed all the business lines.
My financial analysis and those reasons listed above made TEVA a buy for me recently any time it appoached $38. BUT, a major NEW market uncertainty was introduced last week which motivated me to book my gains on TEVA and I am now watching on the sidelines before I get back in.
The game changer in my opinion was China's latest move to weaken intellectual property rights for drug makers:
"The amended Chinese patent law allows Beijing to issue compulsory licenses to eligible companies to produce generic versions of patented drugs during state emergencies, or unusual circumstances, or in the interests of the public.
For "reasons of public health", eligible drug makers can also ask to export these medicines to other countries, including members of the World Trade Organisation."
http://on.msnbc.com/L3......
Well -- it appears to me that China is sanctioning violations of drug licensing -- anytime -- anywhere. As you may know, even before this overt maneuver -- Chinese drug makers are said to rule the counterfeit drug trade on the internet. In fact, a recent FDA warning of an internet counterfeit drug was related to one of TEVA's generics.
So -- China was supposed to be one of the growth markets for TEVA and now this loose generic drug provision is likely to only grow TEVA competitors and imposters out of China -- that's a game changer IMHO. I am watching on the sidelines only unless the stock gets really cheap during our market meltdowns.
I have been a fan of the more efficient generic makers in the past, BUT with a watchful eye on China. You called this one dead on.
What is more important is the fact that this blatant move draws into sharp relief the thousands of dumb Western firms which have handed over their proprietory technology to Chinese "partners". Now every one of these moves must be measured against the likelihood that their knowledge base is going to be pillaged by a predatory nation state.
The mention of the WTO is a shot fired by China across the bow of the clueless Westerners who believe that China's membership in that international body will, in the end, mean anything.
Of particular interest to me at this point are those companies which have managed to avoid falling into the Chinese tiger trap. Just as an example, look over the automakers: GM... gone. Chrysler... gone. Ford... maybe not. Relatively little of their capital base is tied up there, and the impact on proprietory knowledge is low...
Many other major industries need to viewed in a similar fashion.
Apple...
Vulnerable.
That is the one most dangerous to the company.
I really think China is gearing up to have every thing "in-house" after the final global collapses take place. Even if they withdrew from the WTO, who could change anything ?
If they get the technology, or just the parts where their scientist can use it for a foundation and build out the rest themselves..they basically lock out any foreign company from profiting on the Chinese population when they turn inside for growth and sustainability ....IMO, they are very close now.
Meanwhile, myopic Western leaders are preoccupied contemplating their sovereign debt navels and trusting in what amounts to a "gentleman's agreement" with flimsy international organizations to replace their lack of competent foreign policy or national defense planning.
Hmmm.... I think you have explained just what I think is happening with
China. The only thing I believe could derail the China experiment now is for the U.S. to impose the fair tax. I know our politicians won't do this because it would mean giving up almost all their power because it resides in their manipulation of the tax code. But, the fair tax would stimulate most of the multinational companies to locate as many of their facilities and HQs here as feasible. Jobs would come home and more jobs would come here from all over the globe. We would need to fix other pieces of the infrastructure and government policies in order to accommodate the demand for labor like education/retraining, border security and immigration.
That move alone could suck the wind out of the Chinese economic sails. And once the slide begins...
Well, anyway that's my opinion.
With diamonds.
I think you've got it right also, but I suspect that you are a little early on the timing. Even though the law is in place and existing generics are already being pirated, it is the potential of the blockbuster drugs coming off patent in 2012 and 2013 that have me salivating. I think Teva is still going to be a good bet until around 2014 when the Chinese have had time to do the backward engineering necessary to create the drugs. I may be wrong about the timing, but I think there is such a huge potential crop of major multi-billion dollar drugs coming off patent that Teva will command its share, especially since the company is first in line for many of those generics. Just my point of view. "But in the end I realize that yours is a safer route to take.
Yep diamonds on the soles of your shoes.
http://bit.ly/KqMiBO
I'm staying away from TEVA right now for not nearly as good a reason as you gave: I simply don't like the macro picture for the US or any other market. We're hedged across the board.
It comes as no shock to me that China is a predatory autocratic regime (which we are short via YXI in some client accounts as part of our hedging program) and I think TEVA, re China, "got along without them before and they can get along without them now." Will the Chinese reverse engineer any product they can get their hands on? Sure, but they'll get caught often enough (toxins in milk, lead in toys, people dying from counterfeit drugs) that they will end up harming themselves more than the ethical, in both senses of the word, pharmaceutical companies.
TEVA remains on page 1 of our short list for that dreamy day when we can actually buy and hold top drawer companies and go kayaking during market hours rather than stay glued to the daily follies. History says that day is coming again. Anywhere below 35 we start writing puts on TEVA ...
Most Big Pharma companies have long term plans to move their R&D facilities to China. Currently, many of manufacturing plants are in Puerto Rico or Ireland and it would not surprise me if Manufacturing is eventually moved to China as well. Implementing the fair tax code would help, but it will not derail the freight train. Even if some of the jobs come back, who would fill them?
The reverse brain drain is already happening at large, and it will not surprise me if the brain drain of the best Europeans and Americans happen in the future.
Of course, if the elections in this country go the other way, and they are looking like they will, the equation needs to include that likely outcome as well.
Overall, I believe we are not the only ones seeing things this way, LT, and the current price action could be the result.
I believe this is potentially linked to the wild claims coming out of A123 about a new wonder battery which solves all the existing problems. Its much lighter, holds more energy, costs almost nothing, and is extremely safe! And just in time to keep A123 from augering into a final death spiral!
This has energized the moribund altenergy sector, of course...
If, as I believe, this is actually just some very purposeful loose talk about immature research (rather than a real product) which will probably never pan out to anything... The pop will be transitory and the result will be a nasty death for A123.
But hey, maybe ex post machina really DOES work, and Zeus really is going to swoop down and save A123 at the penultimate second.
Spain went the other way, now has a center-right government which has pointedly detached the altenergy leach from their dwindling treasury. Any further support they get will NOT be flowing that direction.
The new UK government is now thoroughly centrist, but the population is behind the green myth and the anthrowarmist theory.
In the US, the prospects are for funding for altenergy to dry up dramatically, though not altogether. This prospect, added to the high profile government funding scandals and failing altenergy headliners everywhere, has already resulted in a general flight (sector rotation) out of the sector.
Europe is likely to remain the bright beacon, at least until the last few Germans with money have their pockets picked by their neighbors.
As the Iron Lady once so famously observed (and I am quoting from memory, so bear with any errors please):
"The problem with socialism is that eventually you run out of other people's money".
(where have I heard that before)
http://yhoo.it/KqHr3x
2:57 PM JA Solar (JASO +6.7%), China's largest solar cell maker, says it may move production out of China to evade U.S. anti-dumping tariffs, CEO Peng Fang says in comments highlighting growing tensions between European and U.S. governments and the Chinese state over its aid for renewable energy companies. Comment! [Tech, Energy]
That makes it a US domestic product, doesn't it?
Hillarys reset with Putin must have erased their hard drive.
They have been buried in the dessert for all those years..............:-)
I'm just hoping that it will also be Syrians shooting them down.
To the big pile of razor scrapings in hell.
I asked you a question a little over half the way up this QC about the Swiss Franc again. I had some new thoughts about it and wanted to see what your view might be. Joseph had an interesting recommendation in the comment that followed. This is in case you missed it since I posted over the weekend.
re: Soros
He gave them 90 days, and you can bet things move faster now, Spain, Italy, Greece again after this weekends elections, then quickly thru the rest of the EZ.
Short of worldwide effort, I just do not see how they survive intact.
http://bit.ly/LXHgKE
The US just officially signed on to help the formation of the US of E.
Oh, and if anyone was still doubting that the Bush tax cuts would be extended (again), that's a foregone conclusion, and now the only thing to talk about to the Republicrats is the debt ceiling, which should be another "extension" as such.
Its the new mantra, now everybody repeat:
"...the private sector is doing fine..."
ooooohmmmmm
"...the private sector is doing fine..."
oooohhhhhmm...
If you repeat a lie often enough and loud enough, you can always fool a certain portion of the herd into believing it.
(everyone SING)
"...the private sector is doing fine..."
(and yes, its a universal nostrum, good medicine for all political ideologies that share the need to perpetuate Big Lies to rule)
"...the private sector is doing fine..."
oooohhhmmmm
http://bit.ly/KoxzpJ
"The supply chain inflation continues to be inverted - with deflation in the crude and intermediate goods portion of the index. Historically, crude goods trends drive finished goods trends. The Producer Price Index (http://bit.ly/LmKBjM) finished goods prices increased 0.7% year-over-year in May 2012 (less than the 1.9% in April) - and declined 1.0% month-over-month.
"The PPI represents inflation pressure (or lack thereof) that migrates into consumer prices - and the PPI continues to moderate. This moderation in PPI has global aspects. The market had been expecting a 0.4% to 0.7% month-over-month contraction in finished goods prices (compared to the 1.0% contraction)."
Confirmation that inflation is moderating. I look at the European recession (ongoing), the lack of energy in the faltering American economy, belt tightening in China, and a dollar strengthening due to the euro's demise as presenting this result. Oil going down in price is the cherry on top...
http://bit.ly/LZGUmQ
http://seekingalpha.co...
"... even though robots might be situated in China, making goods for Apple, it is hard to see how China as a country benefits. Unless, of course, someone steals Apple's secrets. Maybe Canon has the right strategy - with robots you can take production back home."
I won't go into the possibilities of penalties or tax breaks to hire in the USA...but I think next year, the pols will redo some things and at least offer incentives for hiring here. Penalties....who knows.
FairTax.
We would promptly go from high unemployment and a rotting economy to a labor shortage and long term growth economy requiring loosening of existing (though currently unenforced) immigration laws.
http://bit.ly/KwhwaH
They then leave the interview and cut checks to both Demicans and Republicrats to cover that side of the bet.
Then they return to figuring out how to earn more money in tax havens overseas that they can use to exploit new markets far away from the Washington tax bite.
So, this $39billion company created (or preserved, must use the new pc angle) 150 American jobs this past year...
Impressed... I am not.
Of course I don't really BLAME these companies for what they do. They are just reacting to the cattle prod of government. If we want them to behave differently, we should elect a government which might dial back the voltage a few amps... BUT I do not hesitate to pop any smoke rings they blow seeking to seize the patriotic or moral high ground.
Today, on CNBC (God help me, I had the volume on), the CEO of (IP) was saying that his problem right now is aggregate demand. Tax cuts are nice. Subsidized credit for workers is nice. Neither do anything for demand. Exports won't bring prosperity because markets abroad aren't big enough. Spending that doesn't start with or filter down to worker levels won't help. He needs orders. Orders come from customers which, it just so happens, need to employees.
So what is the attack?
multiply that x500 (S&P 500, Fortune 500, APPL x 1 million)
Sorry LT, still unimpressed, and that metric implies that the average size of the S&P 500 is about $40billion market cap (I don't know what it is, but I doubt its that high).
Logically Apple as about 13 times the market cap of Starbucks, so they might be expected (following the Bux example) to add 1950 jobs.
Sentiment is not to be trusted as a motivation for corporations to add labor cost in hard times.
There is no substitute for a serious tax overhaul.
Let the corporate giants crunch real-world numbers which hammer them into pulling foreign investments into the US and employing Americans. I would leave the sentiment to the churches, that is their proper bailiwick.
It should be obvious to you that demand is down because unemployment it up. No job = no money = can't buy.
Sentiment isn't a factor to me. I agree with the last paragraph too.
I am looking for some higher yield investments with some growth, Is the EZ a 100% threat to MS survival ?
http://seekingalpha.co...
7:44 AM Emerging markets are starting to regain some of their investment appeal. Shares are beginning to look cheap after falling nearly 20% from the year's highs and investors are encouraged that central banks in China, Brazil and elsewhere are taking steps to boost growth. The MSCI Emerging Markets Index could gain over 30% by year-end, says Morgan Stanley. 1 Comment [Quick Ideas]
In my experience there is almost always a point where "stable" means "flatline"... And where "flatline" moves up or down to form a point of decision. Then "stable" changes to whatever comes next.
The whole idea of watching shipping is to try to judge what comes next.
OK, shipping shows either no or very weak growth. What is happening which will improve that picture? Conversely, what is happening to make the picture worse?
As usual, the shipping numbers are telling us something valuable: It could go either way.
Otherwise, they seem to have stabilized higher than last year and may be trying to stage a small rally. I am watching closely for an entry. That's why I asked earlier about MS.
Even vultures have a function cleaning up the trash.
http://bit.ly/LM5mJT
In otherwards they are recommending that you not have any open positions in the euro this weekend. They are scared shitless and have warned their clients to STAY OUT.
Pay particular attention to the plans laid out by Japan.
Unlimited access to US Fed dollars...
40trillion yen asset purchase fund...
Direct intervention to prevent the yen from increasing in value...
China is set to do the same...
The Swiss are looking at Capital Controls...
And everyone seems to be poised to pull trillion dollar rabbits out of the free window at the Fed.
http://seekingalpha.co...
Is $3 trillion euros enough to save the EU ?
http://seekingalpha.co...
A constitutional court ruling on Thursday means that the whole of the lower house of Egypt's parliament will be dissolved and a new election will have to be held, the court's head Farouk Soltan told Reuters by telephone after the ruling was issued.
"The ruling regarding parliament includes the dissolution of the lower house of parliament in its entirety because the law upon which the elections were held is contrary to rules of the constitution," he said, speaking two days before another election to pick a new president.
Soltan said the ruling was binding on all institutions of state, adding that it would be up to the executive to call for the new election that he said would take place.
http://bit.ly/Kqrjha
PS: France just got downgraded.
I don't think any of them will get an outright majority, and the smaller parties may once again refuse to play ball.
How many government resets does their constitution allow? These mulligans are getting costly for them...
"Capacity Utilization Rate In April 2012 At 79.2% Pointing To Inflation" from May.
http://seekingalpha.co...
His primary thought is that PMs will shortly experience upward pressure.
That led me to get curious and led me to some data that suggests the article's conclusions may not come to fruition as soon as predicted. Courtesy of the Federal Reserve, the capacity utilization hasn't continued the trend in a consistent fashion.
http://1.usa.gov/KaStUC
I used the above link so that we could see the 6/15/2012, and any subsequent releases, regardless of the "current" release.
HardToLove
I might follow this as an interesting concept, but I would not invest money based upon it.
There seems some sense in that if one assumes increased capacity utilization leads to upward pricing pressures on the resources.
Anyway, I just found it interesting in that I hadn't before seen someone link PM prices with that.
HardToLove
This theory might be useful in differentiating between a "normal" economic condition (say, an average recession) and scary deflation levels capable of wrecking a society (such as we flirted with in 2008 and 2009). Therefore it might be interesting to take his example and expand the analysis backward to "normal" recessionary periods and see if the logic still holds. I suspect it would not, or be so uncertain as to be useless.
These indication-hunters remind me of the more limited military and political leaders, who spend all their time preparing to re-fight the last war rather than prevent the next one.
This article has some good stuff, sure reinforces my complaint of the Fed shrinking their balance sheet at the annual rate of 10% in 2012 so far. This in some ways explains the slow down, rise in dollar, and skewed numbers.
$2 T US DOLLAR SHORTAGE
http://bloom.bg/MYZvwM
I am not looking for the consumer to ever come back like we knew it in the past, and increased consumer debt does not fly anymore. Growth must be fueled by something other than debt, I am not predicting a crash, but with tech stocks paying dividends now, big corps increasing dividends, things could just turn flat...of course indexes can still go up with the "re-indexing of new companies" into the make-up.
http://bloom.bg/MZm6cG
I want to shake such "investors" by the shoulders, look them in the eye, and with as much quiet clarity as I can muster, relay that getting a cheap high for a few minutes or even a few months is not the same as getting clean. Our nation needs to get clean. Our markets will follow.
I suppose this sort of behavior is a factor that an adept investor can add to the lexicon...
But its a redefinition which nauseates the thoughtful.
Easy money is like easy meth: http://bit.ly/LweLWz
Has anyone seen any meat out of the G-20 ? I have not.
They are trying to present an image of global cooperation, but it appears very weak to me.
http://seekingalpha.co...
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