My morning reads:
• The Fear Gauge Goes Quiet—Too Quiet (WSJ) see also Stocks Approach Multiyear Highs (WSJ)
• Derivatives industry no likey new margin requirements (FT.com)
• Is Mark Zuckerberg in over his hoodie as Facebook CEO? (LA Times)
• Neuroeconomics two-fer
…..-Why are people overconfident so often? It’s all about social status (Barkeley HAAS)
…..-Studying Brain Responses Gives Marketers Increased Ability to Predict How People Make Decisions (Barkeley HAAS)
• Quelle Surprise! SEC Plans to Make the World Safer for Fraudsters, Push Through JOBS Act Con-Artist-Friendly Solicitation Rules (Naked Capitalism)
• China and India Lose Their Hunger for Gold (WSJ)
• New rules expose bigger funding gaps for public pensions (Washington Post) see also 11 reasons to leave your 401(k) behind (Market Watch)
• Google: Central Banks’ New Economic Indicator (Businessweek)
• The Single Most Important Object in the Global Economy (Slate)
• Fiscal Cliff Crisis Rooted in Senate Ploy to Pass Bush Tax Cuts (Businessweek)
What are you reading?
For Europe’s Economy, a Lost Decade Looms
Source: NYT
Category: Financial Press
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
Loved the Slate article The Single Most Important Object in the Global Economyon pallets. It reminded me that I am, by nature, an engineer. :-)
MB
My reading is e-mails and conversations related to:
The shifting positions of Euro currency “Sovereigns” to related “Notional” Derivatives in several large banks
Continued updates on useless and damaging pages of updates to Dodd Frank. (I believe Dodd Frank was invented to keep a Glass Steagall Bill from being introduced.
Study fundamentals leading to Futures movement, that’s where I invest, today Coffee, Gold, Oil.
Phone calls to Germany to check on what’s really happening to Euro situation. (Merkel’s losing body count in the electorate, growing willingness to have expensive D-Mark if bleeding to death supporting Socialistic life styles is only alternative. Germans remember the austerity they had blending in the East Bloc.)
Continue the debate on Derivative Public Exchanges and imposition of Glass Steagall-like Bill
Have a good day
given this..”11 reasons to leave your 401(k) behind”
honestly, I thought that it was fixin’ to Counsel that ~’Individuals should Bail from that *Racket..’
and, was going to be (very) Surprised–given The Source (Marketwatch)
obviously, ‘little, have I learned..’ ~
http://www.marketwatch.com/Story/story/print?guid=647D7AB6-E709-11E1-A54F-002128049AD6
Wrong NYT chart?
Is it too early to call FB breaking through the $20-21 support level?
This guy talks about support levels at $18.30 and $16:
http://www.inthemoneystocks.com/rant-and-rave-blog/item/95888-how-low-will-facebook-go
When are you getting in, Barry? I still have some ways to go.
if your only tool is a hammer (or austerity) then every thing looks like a nail?
trying to use Canada to justify more austerity, ignores a few minor points. like Canada is the biggest supplier of oil to the US. or that there is a global slow down in trade? or that you will need to depreciate your currency to make you more competitive in global trade? or that you have to have really low interest rates (which doesn’t apply to the US. we already have really low interest rates)
or that reducing a deficit by 1 percent of GDP, leads to a drop of 2/3% of output,and an increase in unemployment by 1/%.
http://economistsview.typepad.com/timduy/2012/08/when-you-only-have-a-hammer.html
high equity returns…turning down ward?
http://www.reuters.com/article/2012/08/16/us-stocks-wealth-saft-idUSBRE87F16X20120816?feedType=RSS&feedName=PersonalFinance
the liebor scandal the result deregulation?
http://finance.fortune.cnn.com/2012/08/17/libor-scandal-fed/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+fortunefinance+%28Fortune+Finance:+Hedge+Funds,+Markets,+Mergers+&+Acquisitions,+Private+Equity,+Venture+Capital,+Wall+St
Good article on Fa(r)ceBook in the LA Times.
“The challenge for Facebook’s stock could worsen in coming months.”
The article then cites additional times at which other stock option lock-ups expire:
“Facebook freed up about 271 million shares Thursday, adding to the 421 million the company sold in the IPO. An additional 192 million will be released in mid-October and a whopping 1.2 billion shares in mid-November.”
“Many investors are hesitant to buy Facebook shares until that cloud is lifted.”
“Whatever happens this week is a dress rehearsal for November,” said Kevin Landis, chief investment officer at Firsthand Capital Management in San Jose.”
[end of quotes]
Mark those dates!
– mid-October
– mid-November
In reply to The Retired CNBC Sucks — I am getting in when FB hits zero, and then I am all in with my entire life savings.
Have a good weekend.
PS — Do I recognize the name Kevin Landis from the Internet bubble of the 1990′s? Did he run a mutual fund devoted to Internet “hot stocks” similar to FB now?
You can’t make this stuff up!
PS re: FB —
The November date is the 14th, and 1.2 billion shares will become available, OVER ONE-HALF of FB’s outstanding shares!
Beware the Ides of November!
This is the Wednesday of November’s Options Week, BTW.
http://seekingalpha.com/instablog/3798491-brandon-hall/937791-facebook-s-lock-up-expirations-what-to-expect-and-how-to-profit
Business week fiscal cliff story is spot on. Republicans claim they are fiscally conservative. I don’t believe them or trust them. I wonder why…
and then there is this on that iran sanctions evasion by a bank
http://baselinescenario.com/2012/08/16/oblivious/
seems many want to protect the weak and helpless bank who broke the law.
It looks Like India and the US are not the only places struggling with their electrical grids. This article, from Der Spiegel, would have it that even the German grid has problems too.
http://www.spiegel.de/international/germany/instability-in-power-grid-comes-at-high-cost-for-german-industry-a-850419.html
However, the articles raises the issue of the German aluminum industry. No country like Germany (or the US) should have an aluminum industry. It’s a notoriously electricity-intensive process. The last concentration of US aluminum plants was in the Pacific Northwest and the reason for that was incredibly cheap hydroelectric power from the Columbia river.
Aluminum has moved to enormously large (and remote) developments like this:
http://en.wikipedia.org/wiki/Hydro-Qu%C3%A9bec
The arc furnaces (which aren’t just Iron Man) that are characteristic of mini-mills, and companies like Nucor which I believe is now the largest steel manufacturer in the US, are also very electricity intensive. That’s why, to date, many of Nucor’s mills are in the SE US: you know, all those enormous 2 GW coal burners down there that provide cheap electricity. However, many of those are being retired in favor of smaller (and less polluting) natural gas co-gen plants.
Still, Nucor has always been an innovative firm. I assume they’re building this new plant in Louisiana
http://www.businessweek.com/news/2012-08-13/america-s-energy-seen-adding-3-dot-6-million-jobs-along-with-3-percent-gdp
since they’ve found a way of substituting natural gas (which is now abundant and cheap) for electricity as the plant’s primary energy input.
medicare myths?
MYTH ONE: MEDICARE COSTS ARE OUT OF CONTROL
Facts: Medicare spending will soar in the years ahead as the number of seniors grows, but its per-capita growth is slower than private health insurance – and it is getting better. “We may be reaching the point now where Medicare healthcare expenses are growing no more quickly than growth of the economy overall,” said John Rother, chief executive officer of the National Coalition on Health Care (NCHC). “That’s important, but it might as well be a state secret as far as the public and Congress goes.”
The average annual per-capita spending growth rate through 2019 is projected at 3.1 percent for Medicare, compared with 4.9 percent for private insurance plans, according to the Kaiser Family Foundation. The 3.1 percent projection even includes higher payments to doctors as part of a long-term solution to the long-running problem of the sustainable growth rate (SGR) used under current law to control Medicare spending on physician services.
The 3.1 percent projection also is smaller than the 3.7 percent annual growth in gross domestic product for that period projected by the Congressional Budget Office.
Although we hear plenty about fraud and abuse in Medicare – which is a legitimate area of concern – the program is dramatically more efficient than private insurance. Medicare spent just 1.4 percent of every dollar on administrative overhead, even including money spent to fight fraud and abuse, compared with 25 percent overhead in private plans, according to Richard Kaplan, a professor at the University of Illinois College of Law who specializes in elder law matters.
MYTH TWO: MEDICARE IS GOVERNMENT HEALTHCARE
Facts: The government funds Medicare, but healthcare delivery is entirely private.
The phrase “government healthcare” implies that the Medicare program actually delivers the care – as the National Health Service does in Great Britain, or the U.S. Department of Veterans Affairs does here. Medicare is simply a government-financed health insurance provider.
“The government provides the financing, so it’s appropriate to say the government is the health insurance company,” Kaplan said. “But all the doctors, pharmacies, and nursing homes are private. The provider sends a bill – instead of Blue Cross Blue Shield, the federal government writes the check. But you go to whatever hospital you want.”
MYTH THREE: OBAMACARE SLASHES $700 BLN FROM MEDICARE
Facts: The Romney-Ryan campaign has trotted out this scary-sounding number to deflect attention from Ryan’s voucher plan. But it is largely a false claim because it implies that the health reform law slashes benefits.
The Affordable Care Act actually delivers expanded benefits to seniors. It closes the prescription drug donut hole over time, with 3.6 million seniors saving a collective $2.1 billion last year; it also expands preventive services, including an annual wellness visit, mammograms and prostate cancer screenings with no out-of-pocket cost.
Obamacare does cut $700 billion in Medicare spending over a 10-year period. But the cuts are adjustments in payments to Medicare providers, which are mostly meaningless to patients. According to the CBO, the ACA’s 10-year cuts include $415 billion in fee-for-service payments to healthcare providers, $156 billion in reduced payments to Medicare Advantage plans, $56 billion to hospitals, and $114 billion in other miscellaneous cuts far too numerous to detail here.
MYTH FOUR: DOCTORS WILL NOT ACCEPT MEDICARE BECAUSE OF ALL THESE CUTS
Facts: Most Medicare patients do not have trouble finding doctors who will see them, but there is growing concern about access to primary care physicians.
This issue is monitored closely by the Medicare Payment Advisory Commission (MedPAC), an independent Congressional agency charged with advising Congress on Medicare. The agency’s most recent annual survey of Medicare patients found that just 2 percent of beneficiaries had problems of any kind finding a new primary care doctor willing to accept Medicare – the same percentage of patients aged 50-64 with private insurance who report problems.
Likewise, just 2.1 percent report trouble of any kind finding specialists willing to accept Medicare, compared with 2.3 percent for patients with private insurance.
MYTH FIVE: THE WEALTHY ARE GETTING A FREE RIDE
Facts: Medicare has been means-tested since 2003, when the Medicare Modernization Act established higher premiums for Part B (outpatient services) for individuals with $85,000 or more in annual income, and joint filers with income over $170,000.
The ACA expanded these income-related premiums to the Part D prescription drug benefit, and to the Part C Medicare Advantage program. Wealthy Americans – of all ages – also will start paying a new 3.8 percent Medicare contribution tax on unearned income. The tax affects individuals with more than $200,000 in modified adjusted gross income (MAGI), and married couples filing jointly with more than $250,000 of MAGI.
MYTH SIX: RISING LONGEVITY WILL SINK MEDICARE
Facts: It is true that people are living longer, and Medicare’s eligibility age is fixed for everyone at 65. But that does not mean Medicare costs are rising as a result. That is because nursing homes, which are the biggest area of expense incurred in advanced age, are not covered under Medicare.
Medicare covers most hospital costs, but a very limited amount of nursing home expenses. A study published in the New England Journal of Medicine found that the cumulative cost borne by the Medicare program plateaus at age 80.
“It’s logical that longer living means more cumulative healthcare expense,” Kaplan said. “But what happens is we need more nursing care, and less hospital care.”
Investors losing faith in Face:
http://dealbook.nytimes.com/2012/08/17/finding-the-facebook-magic/?hp
@PeterR: i should say . . .
http://www.dailymail.co.uk/news/article-2189264/Institute-Policy-Studies-26-companies-paid-CEO-paid-taxes.html#ixzz23od8X0ra
Revealed: The 26 ‘kingpin’ corporations that paid their CEOs more than they paid in taxes… and for most the public paid THEM a refund
(in the article)
The Institute for Policy Studies lists these 26 companies that paid their CEOs more than they paid the federal government in taxes:
Company CEO CEO pay Taxes Profits
Abbott Laboratories Miles D White $19 million $586 million refund $4.73 billion
AMD Rory P Read $15.6 million $3 million refund $491 million
Altera John P Daane $29.6 million $22 million $771 million
AIG Robert Benmosche $14 million $208 million refund $17.8 billion
Anadarko Petroleum James T Hackett $19.5 million $381 million refund $2.65 billion
AT&T Randall Stephenson $18.7 million $420 million refund $3.94 billion
Boeing James McNerney Jr $18.4 million $605 refund $4.02billion
Broadcom Scott A McGregor $16.1 million $0 $927 million
Chesapeake Energy Aubrey McClendon $17.9 million $13 million $1.74 billion
Citigroup Vikram S Pandit $14.9 million $144 million refund $11.02 billion
Cooper Industries Kirk S Hachigian $21.1 million $29 million refund $828 million
Danaher H Lawrence Culp Jr $21.7 million $6 million refund $2.17 billion
Devon Energy John Richels $13.9 million $143 million refund $4.7 billion
FirstEnergy Anthony J Alexander $14.4 million $243 million refund $885 million
Ford Motors Alan Mulally $29.5 million $4 million refund $20.21 billion
Halliburton David J Lesar $15.8 million $1.03 billion refund $2.84billion
International Paper John V Faraci $13.9 million $78 million refund $1.34 billion
Leucadia National Ian Cumming $28.2 million $0 $68 million
Marathon Oil Clarence P Cazalot $29.9million $210 million refund $2.95 billion
Marsh & McLennan Brian Duperreault $14.3 million $7 million $993 million
Motorola Mobility Sanjay K Jha $47.2 million $0 $249 million loss
Motorola Solutions Gregory Q Brown $29.3 million $2 million $1.16 billion
Newell Rubbermaid Michael B Polk $18.9 million $37 million refund $125 million
Salesforce.com Marc R Benioff $17.7 million $9million $11million loss
Travelers Companies Jay S Fishman $15.8 million $176 million refund $1.43 billion
Tyco International Edward D Breen $16.5 million $4 million refund $17.36 billion
Now, i’m just a lowly adjunct professor but how the hell can a company LOSE millions of dollars and still pay some clown over $17 million for his “good work?” No wonder Wall St. is so effed up.
Anyone recall this old article? [lol]
———–
Wall Street struggles to find Facebook’s worth
22 May 2012
NEW YORK (Reuters) – In its three days of trading, Facebook’s stock has dropped 18 percent from its $38 issue price. For the thousands of investors that bought at the IPO, that’s bad enough, but one analysis of its earnings prospects suggests it could get a lot worse – more like $10 a share.
Setting aside the hype and the cultural phenomenon that is the online networking site, Facebook Inc would be fairly priced at $9.59, according to the smattering of Wall Street estimates analyzed and modeled by Thomson Reuters StarMine.
Data from six brokerages modeled by StarMine forecast the company’s estimated annualized earnings growth over the next 10 years at 10.8 percent. That’s almost exactly the mean for the technology sector and far below the 24 percent growth rate implied by the current stock price.
Some analysts, however, see the stock returning to the $40 per share level it traded at last week.
…”
Leung has maintained $48 price target on the stock. He said shares have fallen in part because underwriters overestimated the retail and institutional demand, along with allocation issues, and “noise” like General Motors’ move to stop advertising on Facebook.
“That does not change my fundamental view of the company,” Leung said. Susquehanna is a market-maker in the shares of Facebook.
Shares were down more than 8 percent on Tuesday and volumes were still high, making Facebook the third-most active issue on U.S. exchanges.
“Almost without exception (brokers) are saying it is oversold, and it’s a good opportunity to buy in the pullback,” said Tim Murphy, general manager for the Americas at TIM Group, which transmits and tracks equity trade ideas from 750 brokerage firms for institutional investors.
“Some are saying it could be back in the $40 level in the next few weeks.”
http://news.yahoo.com/wall-street-struggles-facebooks-worth-204757844–sector.html
FB “Stay Away” signal:
http://www.marketwatch.com/story/what-the-facebook-skeptics-know-2012-08-17?dist=countdown
Not a great day for FB in the press!
If the post-Options-Week open on Monday is a downer, FB could fall flat on its …………….
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(you are guessing here)
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FACE!
Have a good weekend.
Tracking the economy and GDP through trash
Hey Barry,
You never mentioned your appearance on “Capital Account” which is a great show. It seems that TR is the ONLY place prepared to speak the truth. How ironic is that!!
~~~
BR: See this post under video/media: Ghosts Haunting the Zombified US Housing Market
I do my same schtick in every appearance I make, whatever the venue — show up, say what I think, move on . . .
Where are the Romney Bumper stickers?