AROUND THE WEB

New Price Set For Sugar, Rice, Chicken
http://www.zerohedge.com/news/2014-05-13/venezuela-sets-new-fair-prices-chicken-sugar-rice-coffee

Title Speaks For Itself
https://www.fidelity.com/viewpoints/investing-ideas/biotech-dip-or-bubble

Satellites In Your Neighborhood
http://www.nytimes.com/2014/05/13/books/no-place-to-hide-by-glenn-greenwald.html?

Drones, Satellites And Rogues
http://financialspuds.blogspot.com/2014/05/drones-satellites-and-rogues.html

Euphoria: Deserved Or No?
http://blogs.wsj.com/moneybeat/2014/05/13/qa-with-eqts-new-chief-the-market-euphoria-scares-me/

April Retails Disappoint Market Yawns
http://briefing.com/investor/markets/stock-market-update/2014/5/13/stocks-end-flat-after-s-and-p-500-tests-1900.htm

Turkey Gas Russian Interest
http://www.minyanville.com/trading-and-investing/commodities/articles/Russia-Showing-Interest-in-Natural-Gas/5/13/2014/id/54959

Watch Yield Curve
http://blogs.marketwatch.com/thetell/2014/05/13/bear-market-wont-come-until-the-yield-curve-says-so-kleintop/

HOW'D YOU DO IT, BEN?

  
The stock market is about the only positive thing going right now.

Though many dissidents to prove otherwise will roll out reams of data about declining joblessness, low interest rates and low inflation as far as the myopic can see. 

A while back on the Internet we came across an interview a successful entrepreneur granted a veteran reporter. The guy had been successful more than once, building several companies and selling them.

Reporters are noted for their skepticism, thick skin and supposed toughness. The truth is the only mean streets most of them ever grew up on were in their own imaginations. But we'll leave that for another time.

In interviews like this there's always that one point where the interviewer asks the bottom-line-what's your-secret question. It's sort of a reportorial version of a Malcolm Gladwell tipping point. 

In the late Arthur Miller's American tragedy, "Death of a Salesman," the pathetic, delusional Willy Loman keeps asking his dead brother, Ben, who went into the Brazilian jungle and came out one day a millionaire the same question. 
 
"How'd you do it, Ben?" "How'd you do it?"

The entrepreneur looked the reporter firmly in the eye and replied: "Just be absolutely honest, always tell the truth to everyone."

The story didn't run until weeks later after the reporter admitted he had tried out the advice. His conclusion was quite simple: "So far, far good."

Recently, one economic wag in the WSJ wrote an editorial piece listing all the positives negative folks never focus on. Problem with his list he chose to omit the many qualifiers one needs to make an open, fair discussion of his indicators. Many of them were abstract, sound-good-feel-good sound bites. The crux of his article aimed at the pessimists or the so-called cynical.

But it's not about being pessimistic; it's about being realistic. The MSM today featured a raft of stories on April's so-called shrinking budget deficit numbers. Good news for the economy and likely, so the media ranted, to hold down those dreaded higher interest rates investors lose sleep over.

In short, more fuel for the stock market.

Here's just one example. April numbers usually show a decline in such, a point few in the MSM chose to highlight.

The main problem as we see it is, to use a very kind term, the fudge factor. Governments, politicians, economists, the MSM for some inexplicable reason just don't believe the masses can stand the truth. Talk about your disrespect. That's the ultimate insult to a nation and its people. It's the ultimate elitist-driven slight, an intellectual put-down of major magnitude.

They love to rant and rave about the inequality gap between the have littles and the have lots. But wealth and poverty are hardly the only yard sticks. If you want to set a precedent, you want to evoke change, just start telling the freaking truth to people irrespective of their social, racial, economic or religious make-up.

Throw away your bogus polls, econometric nonsense and your phony, arrogant we-know-best attitudes. Try a big dose of honesty. We know it hurts, but you'll be surprised to discover it frees not kills.

                                                                                                                                                               

PICK ANY TWO

With the market opening up on a tear today the bulls are out in force.

Both the DJIA and the S&P 500 recorded intraday highs with the Dow up 100 points at 16,695 and the S&P index trading at 1892, not far from that magical 1900 level many bulls have predicted. Over on the Nasdaq smaller company shares also inhaled a breath of that higher, rarefied air adding 57 points mid-day.

European stocks lent a helping hand to the US opening, apparently discounting the latest negative news from the Ukraine. Stocks in the UK, France and Germany all closed up with the Stoxx index hitting a six-year high closing at its highest level since 2008.

Bulls are citing improved economic fundamentals, low inflation and lack of any signs on the horizon of those dreaded bubbles investors fear so much. Still another point the bulls lean on is over-concern about how high and how fast interest rates will go up.   

Now we're not suggesting their predictions for more gains are incorrect. We've are still net long. Driving through the south some years ago we ventured upon a popular home grown restaurant with a big home grown sign out front that said:  Great Food, Great Service, Great Prices. Pick Any Two.

The corollary of that in market parlance is you can pick the timing or you can pick the direction. But you'll seldom get both correct.  


http://www.cnbc.com/id/101663665

http://www.bloomberg.com/news/2014-05-12/gundlach-s-no-normal-means-treasury-yields-defy-market-selloff.html

STILL WATERS RUN DEEP

 







Often the real turbulence lay just below a calm surface.

That appears to be the case in Franco-German relations. For some it's just a matter of what's new? For these people it's like water and oil. They're never going to mix well together.

For others Franco-German relations represent the heart of the matter which is whether the European Union survives. To many the Germans are sticklers for rules. The French? Well, they're just sticklers.

It's no secret 15 years after Europe's bureaucrats rolled out what is basically a monetary union France has yet to meet the EU-mandated ceiling of 3% debt of GDP despite receiving a two year deadline extension.

The Germans come from a long-time concern about a strong currency, something French politicians privately loathe. It's hardly a secret that many in France blame the strong euro for its economic woes. French politicians would like a more French-tinged EU. For the Germans that represents an economic Achilles they have sought to avoid for decades.

Toss in the turbulence surrounding the Ukraine and matters get even murkier.

http://www.reuters.com/article/2014/05/12/us-germany-france-analysis-idUSBREA4B02H20140512

AROUND THE WEB

We like certain emerging markets. We're not alone. 

http://us.beyondbullsandbears.com/2014/04/22/hasenstab-separating-wheat-chaff/?nicamp=&nichn=twitter&nismseg=advertising

My secret love is no secret anymore goes a line in a popular ballad of long ago. Well, the Secret Service and it's troubles ain't no secret anymore either. And once again it looks like those at the top, guess what?--didn't know and didn't authorize. Now that's probably the biggest secret of all.
http://www.usatoday.com/story/news/politics/2014/05/11/secret-agents-patrols/8970083/

Too big to jail.
http://www.cnbc.com/id/101658888

 Say what you want. People hate capitalism. But is it really the only dream there is?
 http://www.spiegel.de/international/germany/the-business-of-moving-a-bulgarian-village-to-hamburg-a-967884-2.html

Want to make and keep friends or do you want to hear the truth? This guy will undoubtedly catch hell for telling the truth. What's new?
https://www.blogger.com/blogger.g?blogID=7498911011601559828#editor/target=post;postID=592805132746681151;onPublishedMenu=allposts;onClosedMenu=allposts;postNum=1;src=postname

Now you will know it all. Networking: A softer term for cronyism.
http://buzz.money.cnn.com/2014/05/09/wall-street-10-tips-sucess/?iid=HP_River

 Some are calling it a rotational rough spot. So the back testers are out in full force. But as one guru recently states about back testing: "I have never seen a bad one."
http://blogs.wsj.com/moneybeat/2014/05/11/the-markets-rough-rotation/?mod=WSJ_hpp_LEFTTopStories

Another Fed governor speaks.
http://www.bloomberg.com/news/2014-05-11/fed-s-lockhart-sees-end-of-u-s-qe-stimulus-program-this-year.html

Room full of measles.
http://financialspuds.blogspot.com/

Forget clouds in your coffee. Try a little butter.
http://www.businessinsider.com/butter-coffee-stronger-2014-5?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29/

DRONES, SATELLITES AND ROGUES

 

Of  late I've been noticing more than a few drones and satellites around my neighborhood.

As far as I know there aren't any drug dealers, ex-politicians, retired Cartel members or child molesters nearby, but then what do I know.

Most of my close friends are whenever I bring the subject up starting to become, to use the comparative case, a little less close. But I'm not too worried 'cause my dog, Taylor, he's a smart four-year old muti-pooh, also sees them and knows they're there. We go for an evening stroll most nights, rain, shine or clear-satellite-laden skies.

Still the whole thing got me to thinking recently one star-filled clear balmy spring evening a week or so ago about flash trading, satellites and drones. Maybe these rogues are after my trading secrets. 

But I got a message for them. Besides me Taylor's the only one who understands them. And he knows how to keep a secret. He told me so again on one of our walks just the other night.

Come to think of it there has been of late some guys in blue suits, white shirts with dark plain ties and short-cropped hair wearing aviator shades tooling around the neighborhood. At first I didn't give it much thought until one of my neighbors, a guy who owns a satellite company and recently went through a nasty divorce, casually told me about them a few days ago.

ROOM FULL OF MEASLES?

Measles is back.

In case you haven't been paying attention, measles, along with some other contagious disorders like chicken pox and TB, are making their rounds again. Now don't get confused. Measles and chicken pox are caused by viruses, TB a bacillus. There's a difference.

There's been much talk lately about small caps, their recent plight and the possibility of their being a leading indicator. Many small caps are domestic in that they do little if any business outside US borders. As such some view them as a voucher of sorts for the economy.

With all the noise--the usual suspects from jobless claims, earnings news and high P/E ratios, the Nasdaq changing hands around 35  times earnings--investors look a bit jumpy. The iShares Russell 2000, a proxy of sorts for the small cap universe, shed nearly 9% last week as investors pulled over $2 billion out of the ETF.

Either there's something afoot here or someone somewhere is trying to shake the heard down to go long at cheaper prices. Now before the next teardrop falls recall the ETF still sits on nearly $24 billion. But a 9% decline is going to open those out-pouchings of investor brains, their eyes. 

And if you're a moving average kind of  guy you won't find much solace there either. So the question remains. Is this going to be like a room full of measles?  The experts say no. What do you say? 

LOCAL CONTROL

 

Is this really a move against centralized control? Many see what's happening in the eastern Ukraine as just a grab by Putin-led Russia. And it may turn out to be just that. But beneath the surface bubbles something much bigger, much more subtle, the growing disdain and mistrust of federal or centralized control.
http://www.reuters.com/article/2014/05/11/us-ukraine-crisis-idUSBREA400LI20140511

Those in the MSM who quickly jumped on the criticism bandwagon against the Nevada rancher and his beef with Federal officials over grazing land is just one small example. Just this weekend in Utah more people protested about Federal control of local lands.

 The ride into Recapture Canyon, which comes amid heightened political tensions, is a protest against indecision by federal land managers on whether to reopen canyon trails to recreational vehicle use after more than seven years of study. http://www.reuters.com/article/2014/05/10/us-usa-utah-showdown-idUSBREA4903920140510  The key word here is indecision, something centralized government is famous for. See Mario Draghi and the ECB.

Take a  closer look at the European Union. With elections coming up, if you think there isn't growing disgruntlement against Brussels and the whole idea of centralized control, you have not been paying attention. The unhappiness about the euro and a host of other complaints grow daily. Here's an excerpt from a recent article from the Economist.

The reason why European politicians are worried about further reform is the fear of populism. Eurosceptic parties are leading the polls or running second in France, the Netherlands, Greece, Italy and in non-euro Britain and Denmark.

Talk of leaving the euro zone is resurfacing. Silvio Berlusconi, a former Italian prime minister, has said Italy and other countries might have to give up the currency unless the ECB loosens monetary policy.

 And in Finland, a creditor country, a paper published by a group of economists this week suggests that it would be better to leave the euro lest Finland gets dragged into a more federal system with joint liabilities such as Eurobonds.
  http://www.businessinsider.com/charlemagne-beware-of-europhoria-2014-5#ixzz31QUxfoTC

Two years ago it was the markets threatening to put the EU asunder. Now it might turn out to be the voters doing the market's job. 

Anyone naive enough to think that major corporations fleeing high tax states like California and high corporate tax nations like the US isn't about controlling one's own destiny or local control should look again. There are probably few things in life more tenuous than geographic boundaries, something history attests to.

Some laugh but in the huge, amorphous state of California there's a ballot petition floating around to have a referendum to break up that giant mess into six states. The growing gap between the haves and the have little and just how to close it is another lightening rod sitting in the wings.

Though many fail to get it, sovereignty is a term really about local control. 
 

GOT TO LOVE THE HEAVYWEIGHTS

Got to love the heavyweights, especially when they get into a debate of sorts with other heavyweights.

Here's a quote from heavyweight Harvard economists Ken Rogoff on CNBC over a comment by Marc Faber, another heavyweight, a well-known doomster, about high debt levels possibly coming home to roost in the second half of this year.

Faber's comment was most likely designed to send some shivers down investors' spines. Maybe Faber has a big short position already in place. Not beyond the pale is it? Here's an excerpt from Rogoff's interview.

Downplaying the likelihood of that scenario, Rogoff acknowledged that overall debt levels are "very high." But as long as interest rates "stay benign," he doesn't see debt as a big problem.

Here's an economist hedging at his very best. Can one get more abstract than the "stay benign" remark.

And who gets to define benign, the Fed? The Street? Rogoff went on to point out that debt levels this high would only be "worrisome" if interest rates were not so low. Rogoff then rolled out his big line of the interview: "I don't think all the lights are blinking red yet." Really?

So let's dissect that briefly. Should investors wait until they all are blinking red or is that when Rogoff will start pulling on his worry cap?  Is the market a true discounter or does it too wait until all the lights are blinking red?

You got to love these heavyweights, especially those who inhabit the safe confines of academia and the Eccles Building on Constitution Avenue. Most are infatuated with the sound of their own voice and not much else. 
http://www.cnbc.com/id/101658541 

END IT EARLY

Richard Fisher wants to end it early.

No, Richard Fisher is not a professional fighter. And this is not a 12 round heavyweight championship bout, though it's been going on long enough to seem like one. 

He is, however, a professional economist and president of the Dallas Federal Reserve Bank. So you could probably say he's at least a cruiser weight.

A consistent critic of the Fed's QE program particularly the bond purchases, apparently he is not without a sense of humor either. Speaking in New Orleans Friday at a bankers convention, Fisher wants to see the bond repurchase program end this October. Some others want to stretch it out a bit longer--December. 

Fisher said the Fed couldn't end the program earlier because markets are "somewhat addicted to our accommodations to their needs." A quick aside. With his use of the modifier, "somewhat," maybe Fisher should consider doing stand up comedy or hedge fund work.

Fisher also poked fun at what he called the "dot chart," a graphic that lays out a forecast for the Fed's benchmark interest rate, "Some analysts practically worship the dots."  Fisher went on: " They have become analytical idols around which an orthodoxy has developed."

A voting member of the Fed this year, Fisher emphasized the forecasts are little more than "best guesses." He also noted Fed voters have been in a state of flux.

Hello Chair Janet Yellen.

http://www.marketwatch.com/story/fed-bond-buying-should-end-in-october-fisher-2014-05-09-129106