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Prieur’s readings (November 19, 2009)

Prieur du Plessis — Thu, 19 Nov 2009 09:17:21 +0000

This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy. Please also add the links to any other worthwhile articles you would like to share to the comments section.

Prieur’s readings (November 19, 2009)

Prieur du Plessis — Thu, 19 Nov 2009 09:17:21 +0000

Prieur’s readings (November 17, 2009)

Prieur du Plessis — Tue, 17 Nov 2009 08:50:30 +0000

How to play the dangerous dollar

Andrew Snyder — Thu, 12 Nov 2009 14:15:38 +0000

pBaltimore – (a href="http://www.todaysfinancial.com" target="_blank"TFN/a): The dollar is a dangerous entity these days. Never has there been such a globally important currency with as much political and financial manipulation./p pThe distortions from reality are mind-boggling, yet all of us depend on the status of the simple fiat for our financial wellbeing. /p pThe person with the most skin in the dollar game is, no doubt, President Obama. The nation’s economy hinges on the fate of the greenback and the White House knows it. That is why it is doing anything it can to slow the slide./p pEven if it is entirely psychological./p pToday, reports are flowing from Washington that show Obama may have plans to use up to $210 billion in TARP money to lower the#8230;/p

Dollar Decline in Perspective – Analyst Blog

Dirk Van Dijk — Tue, 10 Nov 2009 21:44:42 +0000

The dollar has clearly been under pressure this year. Most of the graphs of it that you have seen probably look like the first graph below, which shows what the dollar has done against two indexes since the start of the year. The blue line is how the greenback has fared against the major currencies like the Euro and the Yen, and the red line includes those, but also looks at how it has fared against a much broader collection of currencies.

Since March 9th, the day the market hit bottom -- and the dollar hit its high for the year -- it is down 14.4% against the major currencies and down 11.5% against the broad basket of currencies.

This has a number of implications. For starters, anyone from outside the country has seen nice gains if they invested in the U.S. market, but not nearly as eye-popping as the returns that domestic investors have seen. It also means that commodity prices have gone up much less for people based in Europe or Japan than they have for people in the U.S. Yes, the price of oil is up in Yen and Euros this year, but not by nearly as much as in the U.S.

There are those (many with very large soapboxes) who would have you believe that the decline in the dollar is a crisis. I, however, beg to differ.

While in the big picture over time it is not desirable to have the currency constantly devalued, at this point the decline is not likely to cause major problems. The major downside to a falling dollar is that it makes our imports more expensive, and thus can contribute to inflation. This is particularly true in the case of oil, which tends to rise as the dollar falls. After all, why should the price of oil for someone in France or Japan go down just because the dollar is weak?

However, right now such inflation is just offsetting deflation in other parts of the economy. The biggest weighting in the CPI is owner’s equivalent rent, or what it would cost you to rent a home identical to the one you own next door to your house. It makes up almost 24% of the overall CPI. Add in the rent that people pay to landlords if they don’t own a house and the figure gets close to 30%. It is part of core inflation, so if you strip out food and energy prices it is almost 40% of the core basket of goods.

Due to the weak housing market, and rapidly rising rental vacancy rates, rents are likely to be under substantial pressure for some time to come.

There is one currency, though, that the dollar has not declined against, and that is the Chinese Yuan, since the Chinese peg it to the dollar. Since we import a lot of goods from China, the decline in the dollar is not going to cause inflation in those prices.

The upside is that it means that our exports are much more competitive. This applies even in China, since we are often going head to head, not against local Chinese companies, but against European or Japanese firms. More exports mean more jobs, and a lower trade deficit.

Remember that net exports are a direct input into the GDP calculations. With an unemployment rate of 10.2% and rising, getting the economy moving again is a FAR higher priority than fighting inflation during a time of major deflationary pressures.

Since many U.S. companies have substantial operations abroad, or export goods, the decline in the dollar means a major tailwind to their earnings, since the euro they earned is worth more in dollars today than the euro they earned a few months ago was worth then. For the S&P 500 as a whole, more than 40% of the earnings come from abroad. For many companies like Coca Cola (KO) and Colgate Palmolive (CL), it is much higher than that.

One also has to take a longer-term look. The dollar has been slipping against both indexes since 2001, but there was a huge and sharp counter-trend rally a year ago as the world economy saw the wheels come off. The U.S. has always been a safe haven in times of distress, and around the world people flocked to pull their money out of Pounds and Rupees as they tried to find a safe place to hide in the turmoil.

The dollar still has not returned to the lows it saw early last year. Seeing the dollar decline as a crisis is sort of like seeing the decline in the TED spread as a crisis. It is not -- it is a sign that things are getting back to normal.

Also, the dollar has suffered far greater declines in the past with no major ill effects on the economy. To believe that a 14.4% decline in the dollar today is going to cause major havoc in the economy, then one must remember the last half of the 1980’s -- when the dollar fell by almost 40% against other major currencies -- as a period of economic disaster. Somehow that is not my recollection of the time.

Given the chronic trade deficits this country is running, and has been running for a long time, a weak dollar might not be good, but it is necessary. The last quarter we ran a trade surplus in was the 3Q of 1980. That’s right, when Jimmy Carter was in the White House.

While recently the trade deficit has come down, it was still 2.71% of GDP in the third quarter. That is still an awful number for our long-term economic health. However, it looks great when you consider that the trade deficit has averaged 4.575 of GDP so far this century and was over 5% of GDP for three straight years, from the second quarter of 2004 through the second quarter of 2007.

It is the trade deficit that determines how indebted we are to the rest of the world, not the fiscal deficit. We have run up big debts to the rest of the world, resulting in China for example owning over $1.5 Trillion in T-notes. In return, we got all the stuff that line the shelves of Wal-Mart (WMT). Now the credit card statement has come and we have to start paying. As the dollar falls it means we get to pay that debt back cheaper. We have to make and sell less stuff overseas compared to the stuff that was made abroad and sent here.

Now, other countries might not be all that happy about it, but what are they going to do? Sell their dollars so we can repay even cheaper? As long as the decline in the dollar is gradual and orderly, it will help boost the economy. The stock market realizes this. The fact that the market bottomed on the same day the dollar peaked out was no coincidence.
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Prieur’s readings (November 3, 2009)

Prieur du Plessis — Tue, 03 Nov 2009 08:00:08 +0000

Prieur’s readings (November 3, 2009)

Prieur du Plessis — Tue, 03 Nov 2009 08:00:08 +0000

What Will Obama Do to Stop Big Oil From Popping His Bubble?

Adam Lass — Mon, 02 Nov 2009 12:00:00 +0000

$80 Oil? So what! What will the White House do when it hits $120? “Oil down to $80!” A year ago, that headline was impressive, because crude futures had been hanging out around $144 a barrel, and...div class="feedflare" a href="http://feeds.taipanpublishinggroup.com/~ff/taipan?a=HNM95zA91nU:VeDGRtBTOHI:yIl2AUoC8zA"img src="http://feeds.feedburner.com/~ff/taipan?d=yIl2AUoC8zA" border="0"/img/a a href="http://feeds.taipanpublishinggroup.com/~ff/taipan?a=HNM95zA91nU:VeDGRtBTOHI:V_sGLiPBpWU"img src="http://feeds.feedburner.com/~ff/taipan?i=HNM95zA91nU:VeDGRtBTOHI:V_sGLiPBpWU" border="0"/img/a a href="http://feeds.taipanpublishinggroup.com/~ff/taipan?a=HNM95zA91nU:VeDGRtBTOHI:F7zBnMyn0Lo"img src="http://feeds.feedburner.com/~ff/taipan?i=HNM95zA91nU:VeDGRtBTOHI:F7zBnMyn0Lo" border="0"/img/a a href="http://feeds.taipanpublishinggroup.com/~ff/taipan?a=HNM95zA91nU:VeDGRtBTOHI:wd9GD17jvC4"img src="http://feeds.feedburner.com/~ff/taipan?d=wd9GD17jvC4" border="0"/img/a a href="http://feeds.taipanpublishinggroup.com/~ff/taipan?a=HNM95zA91nU:VeDGRtBTOHI:l6gmwiTKsz0"img src="http://feeds.feedburner.com/~ff/taipan?d=l6gmwiTKsz0" border="0"/img/a /divimg src="http://feeds.feedburner.com/~r/taipan/~4/HNM95zA91nU" height="1" width="1"/

Prieur’s readings (October 31, 2009)

Prieur du Plessis — Sat, 31 Oct 2009 08:29:39 +0000

GWS Technologies (GWSC.OB) and Renewables Industry to Benefit from Stimulus Spending on ‘Smart Grid’

QualityStocks — Wed, 28 Oct 2009 14:07:14 +0000

GWS Technologies is an alternative energy company that has been gaining much acclaim of late. Founded in 2005 in Scottsdale, Arizona, GWS became a fully-reporting company by March of 2007 and has had continued success since that time period. A recent announcement directed at stimulus spending will enhance GWS for years to come. Yesterday, [...]

Stimulus Spending on ‘Smart Grid’ Will Benefit Renewables, says GWS Technologies

Stuart T. Smith — Wed, 28 Oct 2009 13:45:02 +0000

Oct. 28, 2009 (Business Wire) — GWS Technologies, Inc. (OTCBB: GWSC), an alternative energy company developing and marketing solar and wind-powered renewable energy products and solutions, sees substantial benefits for wind and solar energy projects in yesterday’s White House announcement that $3.4 billion will be allocated to modernize the nation’s electrical power system to more [...]

Green Investor News – Stimulus Spending on ‘Smart Grid’ Will Benefit Renewables, says GWS Technologies

Dawn Van Zant — Wed, 28 Oct 2009 13:00:00 +0000

SCOTTSDALE, Ariz. - GWS Technologies, Inc. (OTCBB: GWSC), an alternative energy company developing and marketing solar and wind-powered renewable energy products and solutions, sees substantial benefits for wind and solar energy projects in yesterday's White House announcement that $3.4 billion will be allocated

Prieur’s readings (October 27, 2009)

Prieur du Plessis — Tue, 27 Oct 2009 09:20:08 +0000

This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy. Please also let me know what you have been reading.

PWRM, BCRX, DrStockPick.com Stock Report! Power 3 Medical Products Inc. and BioCryst Pharmaceuticals, Inc.

Dr. Stock Pick — Mon, 26 Oct 2009 17:33:48 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ Monday October 26, 2009 DrStockPick.com Stock Report! PWRM, BCRX ************************************************************** PWRM, Power 3 Medical Products Inc, PWRM.OB Power3 Medical Products, Inc. is a leading bio-medical company engaged in the commercialization of neurodegenerative disease and cancer biomarkers, pathways, and mechanisms of diseases through the development of diagnostic tests and drug [...]

Euro bests dollar by 79% in this millennium

Prieur du Plessis — Mon, 26 Oct 2009 08:35:30 +0000

"... the dollar will continue to weaken as interest rates in many countries and the eurozone are higher than the current rock-bottom US rates, providing currency traders carry-trade opportunities. This will encourage more selling of the dollar and buying up stocks, commodities and other currencies, which has been the general trend since spring," said Dian Chu in this guest contribution.

BCRX, AEMD, CVAT, DrStockPick.com Watch List! for Monday October 26, 2009, BioCryst Pharmaceuticals, Inc., Aethlon Medical Inc. and Cavitation Technologies Inc.

Dr. Stock Pick — Mon, 26 Oct 2009 03:03:10 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ DrStockPick.com Watch List! My Picks for Monday October 26, 2009, are: ************************************************************** BCRX, BioCryst Pharmaceuticals, Inc. U.S. President Barack Obama has declared 2009 H1N1 swine flu a national emergency, the White House said on Saturday. BCRX designs, optimizes and develops novel small-molecule pharmaceuticals that block key enzymes involved in [...]

President Barack Obama Declares Swine Flu a National Emergency. Emergency Use Authorization Granted For BCRX’s Peramivir. BCRX, X-Treme Hot Stock Alert by DrStockPick.com

Dr. Stock Pick — Sat, 24 Oct 2009 21:25:06 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ Saturday October 24, 2009 DrStockPick.com Stock Report! ************************************************************** U.S. President Barack Obama has declared 2009 H1N1 swine flu a national emergency, the White House said on Saturday. ________________________________________________ BCRX, BioCryst Pharmaceuticals, Inc. BCRX designs, optimizes and develops novel small-molecule pharmaceuticals that block key enzymes involved in infectious [...]

FCC Votes on Net Neutrality – Analyst Blog

Zacks Market Commentaries — Fri, 23 Oct 2009 18:00:13 +0000

The US telecom regulator Federal Communications Commission (“FCC") has reportedly voted unanimously for the implementation of the so-called “Net Neutrality" regulation, which is aimed at preventing Internet Service Providers (ISPs) and cable companies from blocking or restricting access to legal web site contents and applications. If enacted, the open Internet rule, which is presently applicable to wireline networks, will be extended to wireless.

All five FCC commissioners (including the FCC chairman Julius Genachowski), represented by three democrats and two republicans voted in favor of the proposed new rule, which will now invite public comments, a process which is expected to continue till Jan 14, 2010. This will be followed by the review of the public feedback by the FCC with a final rule is expected not before March 2010. However, the republicans remain skeptical about the proposed rule.

The net neutrality regulation, which consists of a set of proposals, represents the first major initiative ever by the U.S. telecom regulator to control the way the Internet industry is managed. The rule is also backed by the Congress and the White House who are in favor of more regulation of the Internet. The FCC has set six principles to guide legitimate network management by the incumbent service providers.

The rationale behind the net neutrality rule is that it will prohibit network operators from restricting any legal online content, devices, applications or services that competitive service providers wishes to run through the respective carrier’s networks. Operators have been accused of blocking or slowing traffic according to the revenues they generate from online contents.

However, the proposed “free and open Internet" rule also offers some flexibility to the network carriers to effectively manage their networks by preventing network congestion and blocking spam, viruses and illegal contents. While operators need to publicly disclose the way they manage their networks, they may be allowed to sell premium Internet services to the customers who pay more for their services.

The release of FCC’s proposal for net neutrality in September 2009 has become a bone of contention between the advocates of the rule and leading U.S. network operators. Large web content and application providers such as Google (GOOG), Amazon (AMZN) and eBay (EBAY) have joined a handful of public interest groups to raise voice against the discrimination by the ISPs and cable companies.

U.S. wireless and cable network operators such as AT&T (T), Comcast (CMCSA), Verizon (VZ) and Qwest (Q) however, have insisted that increased data traffic of bandwidth-intensive services and applications such as video streaming requires them to actively manage their networks.

Moreover, operators have argued that the new regulation will discourage investment associated with expansion and upgrade of their networks and would also throttle innovation and competition. As a result, government intervention through the implementation of net neutrality conjures significant threat to the network service providers. On the contrary, the rule will boost web content providers who will benefit from the increased data traffic over the Internet enabled by the next-generation wireless broadband technologies.

Read the full analyst report on "GOOG"
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Defense Solutions Holding Inc. (DFSH.OB) Growing into Global Power

QualityStocks — Fri, 23 Oct 2009 14:18:03 +0000

Defense Solutions Holding Incorporated is a company that is on the rise. Founded in 2001 in Exton, Pennsylvania, Defense Solutions is known as being one of the few American companies that does business in the U.S. and Iraq. Today, the company announced that one American refinery and two Asian refinery groups have asked [...]

Feedback from Buttonwood Gathering

Prieur du Plessis — Mon, 19 Oct 2009 08:12:12 +0000

The Buttonwood Gathering, a conference bringing together global regulators and bankers to discuss and debate new ideas and develop a new set of guidelines moving forward, has just taken place. Michael Panzer, writer of the Financial Armageddon blog, was in attendance and has kindly shared some of the more interesting quotes on his blog, as reported in this post.

Prieur’s readings (October 15, 2009)

Prieur du Plessis — Thu, 15 Oct 2009 09:11:11 +0000

This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find of interest. Please also add the links to any other worthwhile articles you would like to share to the comments section.

Prieur’s readings (October 14, 2009)

Prieur du Plessis — Wed, 14 Oct 2009 08:00:38 +0000

Rogozin vs. NATO, in 140 characters or less

Robert Amsterdam — Mon, 12 Oct 2009 15:35:50 +0000

One criticism that you not likely to hear about the Russian government is its lack of enthusiastic applications of new media technologies. The Prime Minister posts his topless photos at a much more timely rate that the White House page...

Stock Market News for October 12, 2009 – Market News

Zacks Market Commentaries — Mon, 12 Oct 2009 13:57:05 +0000

U.S. stocks ended modestly higher Friday, wounding up a week of solid gains as investors braced for the third-quarter financial results. Sentiments also got a boost after Federal Reserve Chairman Ben Bernanke indicated that the central bank will be ready to tighten monetary policy once the economy improves. Bernanke’s tightening comments helped the dollar regain some lost ground. Bond prices fell sharply.

After a two-week selloff, fueled in part by concerns that the seven-month old rally had gotten ahead of any economic recovery, stocks got a boost last week following better-than-estimated economic numbers and Alcoa’s (NYSE:AA) surprise quarterly profit. That helped investors set aside worries and extend the rally. Meanwhile, White House economic adviser Lawrence Summers reiterated the Obama administration’s commitment to a strong dollar, citing recent comments by U.S. Treasury Secretary Timothy Geithner.

This morning’s stock futures show markets are headed for a higher opening as the busy week of earnings commences. Ahead of the market's open, Dow Jones industrial average futures are up 59 points, or 0.6%, to 9,866. Standard & Poor's 500 index futures gained 7.30 points, or 0.7%, to 1,075.40, while Nasdaq 100 index futures rose 11 points, or 0.6%, to 1,736.50.

On Friday, the Dow Jones industrial average rose 78 points, or 0.8%, to 9,864.94 -- its highest closing level in a year. The S&P 500 index gained 6 points, or 0.6%, to 1,071.49 and the Nasdaq climbed 15 points, or 0.7%, to 2,139.28. On the New York Stock Exchange, advancing issues beat those that declined in price by a three-to-two margin. For the week, the DJIA rose 4% and the S&P 500 index gained 4.5% - their best performance since July. The Nasdaq advanced 4.5% during the week.

Last week's rally saw all but one of the S&P500 industry sector recording gains. Only telecommunications shares failed to advance, and fell 5.9%, following AT&T's (NYSE:T) announcement that it plans to allow internet-based phone calls on phones including Apple's (NASDAQ:AAPL) iPhones. The gains last week were led by basic materials (+8.4%), oil and gas (+7.6%), financials (+6.3%), industrials (+5.0%), tech (+4.9%), consumer services (+4.5%), consumer goods as well as utilities (+2.9%), and health care (+2.7%). Financials rose after a Goldman Sachs (NYSE:GS) report recommended large-cap banks. Gains in industrial shares were helped by last week’s fall in dollar and Caterpillar's (NYSE:CAT) announcement that it plans to hike prices globally in 2010. Retail shares rose after firms reported better-than-expected comparable monthly sales numbers.

This week sees the release of the first big batch of third-quarter earnings. Companies reporting their numbers include Johnson & Johnson (NYSE:JNJ), Intel (NASDAQ:INTC), JP Morgan (NYSE:JPM), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), Nokia (NYSE:NOK), Google (NASDAQ:GOOG), IBM (NYSE:IBM), Bank of America (NYSE:BAC), and General Electric (NYSE:GE).

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Top Performer for Fri: WellCare (WCG) – Zacks #1 Rank Top Performers

James Giaquinto — Fri, 09 Oct 2009 05:00:00 +0000

The share price for WellCare Health Plans, Inc. (WCG) is nearing a 10% gain Friday afternoon, which puts this company on the Zacks #1 Rank Top Performers List.

Volume has surged to nearly 1.5 million shares today, compared to the daily average of 444,000.

Today's share price gain comes in the wake of Wednesday's preliminary CBO assessment of the health care reform bill, which suggested that it could cost less than the White House had expected (given a certain degree of savings that some experts deem to be unrealistic).

Earnings estimates for WCG have been moving steadily higher in recent weeks, and the company announced a solid second-quarter performance in late July.

It is scheduled to report third-quarter numbers on Nov 4.

WCG provides managed care services exclusively for government-sponsored health care programs, focusing on Medicaid and Medicare. It offers a variety of health plans for families, children, and the aged, blind and disabled, as well as prescription drug plans. It serves about 2.4 million members.

WCG is the only company from the Medical-HMO industry on today's Zacks #1 Rank List, which includes 221 stocks.

Earnings Estimates

The Zacks Consensus Estimate for this year is at $2.93 per share, which is up 41% from $2.08 in 3 months and up 2.4% from $2.86 in 2 months.

During its second-quarter report, WCG updated its financial outlook for the year, stating a guidance between $2.75 and $2.95 per share.

Meanwhile, the Zacks Consensus Estimate for next year has gained 9.7% in 3 months to $2.37 per share. Furthermore, the past 30 days has seen an advance of 3.5% from $2.29.

Second-Quarter Report

As mentioned above, WCG will report its third-quarter results early next month. At the moment, the Zacks Consensus Estimate for the quarter is at 67 cents, up a penny in 30 days.

For its second quarter, WCG announced earnings per share of 88 cents, which beat the Zacks Consensus Estimate by more than 131%.

Premium revenue advanced 9% to $1.8 billion from last year, thanks to increased Medicare Advantage and Medicaid plan premium revenue.

"Like other government program health plans, we have a challenging 2010 ahead of us," stated President/CEO Heath Schiesser.

"We are committed to continuing to make progress in the reliability of our operations, improvements in health care quality and management of our costs," he continued.

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RA’s Daily Russian News Blast – October 6, 2009

Robert Amsterdam — Tue, 06 Oct 2009 08:02:25 +0000

TODAY: Iran uranium plan waiting to be concluded; Russia backs Serbia on Kosovo; Lavrov exit denied; Ingushetian cabinet out. Ex-US Yukos unit to launch mammoth lawsuit; picketed journalist gets unlikely defender; UN says Russia should improve immigration policies; grave...

In praise of emerging markets

Prieur du Plessis — Mon, 05 Oct 2009 05:30:06 +0000

"We are currently in the midst of a synchronized global recovery, and with aggressive government stimulus, strong balance sheets and an ever-growing share of global GDP, emerging markets are likely to outperform the developed markets due to strong domestic consumption and forward-looking infrastructure investments," said John Derrick in this guest post. A few interesting charts are included.

In Praise of Emerging MarketsIn Praise of Emerging Markets

Frank Holmes — Mon, 05 Oct 2009 05:00:00 +0000

This commentary is from John Derrick, U.S. Global Investorsrsquo; director of research. If you believe now is a good time to invest in U.S. stocks, emerging markets may offer even more opportunity. We believe global growth is the most powerful investment theme now and for the foreseeable future. You can see this playing out as countries like China, India and Brazil grow in economic stature. As we saw in Pittsburgh last week, the G-7 is being supplanted by the more inclusive G-20 when it comes to global economic decision-making. Emerging market stocks were hit especially hard during the financial crisis but have been among the best performers during the rebound. We are currently in the midst of a synchronized global recovery, and with aggressive government stimulus, strong balance sheets and an ever-growing share of global GDP, emerging markets are likely to outperform the developed markets due to strong domestic consumption and forward-looking infrastructure investments. The chart below from Goldman Sachs on consumer spending illustrates that point. Goldman estimates that consumer spending in China will increase by about 10 percent in 2010, while India and Brazil will be in the 4 percent to 6 percent range. At the same time, negative growth is expected in Spain, Britain and Italy, and the forecast for the United States is flat. Industrial production in emerging markets has recovered to roughly where it was when the recession began; in developed markets, IP is still down nearly 20 percent. This second chart, also from Goldman Sachs, compares the operating margins in developed and emerging markets for the companies in Europersquo;s Dow Jones Stoxx 600 Index. The analysis going back to the early 1990s found that the emerging-market operations of these companies have consistently yielded higher margins, and oftentimes the spreads have been significant. U.S. Global Investors recently hosted a global outlook webcast that featured Dr. Marc Faber, the well-known investor based in Hong Kong. In the course of that webcast, Dr. Faber addressed the developed-versus-emerging issue: If you look at the next 10 to 20 years in the West, I donrsquo;t see how the lifestyle of the average person will improve meaningfully. On the other hand, if you look at a country like Vietnam, they have a GDP per capita annually of $800 which may go to $3,000 over the next 15-20 years. The same is true for China and India. You suddenly have a middle class of 230 million people in India who will be buying cars like the $2,500 Nano and other goods. Once a family moves from the bicycle to the motorcycle, itrsquo;s an improvement in their standard of living. But when you move to the car and drive your children to school in your car, itrsquo;s a huge increase in your standard of living and your social class. Global growth has been a tremendous benefit for commodities, with the key driver being strong demand from China. And as we pointed out in a recent webcast focused on China, that use of commodities is less to fuel export growth and more to satisfy domestic demand as income levels rise. Increasing demand for commodities and the corresponding rise in prices has positive knock-on effects for much of the developing world. The increasing importance of emerging countries in the world order also argues for their currencies to strengthen relative to the dollar. International stock markets outperformed the U.S. market during the 1970s and much of the 1980s, with much of that outperformance relating to relative currency strength. A continuation of the dollarrsquo;s decline in the face of slow growth and yawning budget deficits ndash; nearly $11 trillion between 2009 and 2019, according to White House estimates ndash; would provide a significant tailwind for globally-minded investors. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. The Dow Jones STOXX 600 Index is an index of 600 stocks representing large-, mid- and small-capitalization companies in the developed countries of Europe.

In Praise of Emerging Markets

Frank Holmes — Mon, 05 Oct 2009 05:00:00 +0000

The Paul Joyal Shooting

Robert Amsterdam — Fri, 02 Oct 2009 20:38:18 +0000

The most dramatic account I've ever seen about the shooting of Paul Joyal (he did survive, and often shows up at Washington DC-area events on Russia), who was a producer on NBC Dateline's story to report on the murder of...

Stalking the Mighty Consumer

QualityStocks — Fri, 02 Oct 2009 12:01:54 +0000

What group can claim credit for being the driving force behind the world’s largest economy? Hint: You are probably a member of this group. The answer is U.S. consumers, whose spending is responsible for more than 70% of U.S. gross domestic product (GDP). As we’ve seen in recent years, when consumer conditions are bad, the effects [...]

Skinvisible, Inc (SKVI.OB) Enters Exclusive License Agreement

QualityStocks — Thu, 24 Sep 2009 15:36:44 +0000

Skinvisible, Inc., a pharmaceutical research and development company, announced that the company has entered into an exclusive license agreement with Mayquest Pharmaceuticals Pte. This license agreement grants Skinvisible the exclusive rights for the product Dermsafe in Singapore, Malaysia, Thailand, Indonesia, and the Philippines. Dermsafe is a patented antimicrobial hand sanitizer lotion proven to kill the [...]

RA’s Daily Russian News Blast – September 24, 2009

Robert Amsterdam — Thu, 24 Sep 2009 07:53:58 +0000

TODAY: Russia relenting on Iran sanctions; calls missile defense decision constructive; arms reductions talks are apparently progressing apace; Medvedev urges for Middle East arms cuts too. Island cooperation for Japan and Russia; Georgia undecided on Guantanamo guests; Poland - officially...

Green Investor News – Treasury, Energy Surpass $1 Billion Milestone in Recovery Act Awards for Clean Energy Projects

Dawn Van Zant — Wed, 23 Sep 2009 13:00:00 +0000

WASHINGTON - September 23, 2009 - This morning, Treasury Secretary Tim Geithner and Energy Secretary Steven Chu hosted a group of clean energy developers and manufacturers at the White House to discuss how the American Recovery and Reinvestment Act (Recovery Act) is creating jobs and helping expand the development of clean, renewable domestic energy.

Here’s Why the U.S.-China Tire Tiff Lead to Great Depression II

Martin Hutchinson — Tue, 22 Sep 2009 18:28:38 +0000

[Editor's Note: When it comes to global investing, longtime market guru Martin Hutchinson is one of the very best - because he knows the markets firsthand. After years of advising government finance ministers, crafting deals with global investment banks, and analyzing the world's financial markets, Hutchinson has used his creative insights to create a [...]

Zacks Earnings Preview: AutoZone, Bed, Bath & Beyond, General Mills, KB Home, Lennar, Paychex, CarMax, Research in Motion and Texas Industries – Press Releases

Charles Rotblut — Mon, 21 Sep 2009 12:00:13 +0000

For Immediate Release

Chicago, IL – September 21, 2009 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes AutoZone (AZO), Bed, Bath & Beyond (BBBY), General Mills (GIS), KB Home (KBH), Lennar (LEN), Paychex (PAYX), CarMax (KMX), Research in Motion (RIMM) and Texas Industries (TXI). To see more earnings analysis, visit http://at.zacks.com/?id=3207.

Every day, Zacks.com makes 4 stock picks available, free of charge. To see them, go to http://at.zacks.com/?id=5612.

This Week's Events

We will get another look at initial third-quarter results with 11 S&P 500 companies reporting. Included in this group are AutoZone (AZO), Bed, Bath & Beyond (BBBY), General Mills (GIS), KB Home (KBH), Lennar (LEN) and Paychex (PAYX). A total of 33 companies are on the calendar.

The Fed will hold a 2-day meeting starting on Tuesday. No change in rates is expected at either this or the November meeting. Traders will be looking for insight about the pace of recovery and updates on the various bailout programs.

In addition to the Fed meeting, the economic calendar features August Leading Indicators and home sales data.

Monday: August Leading Indicators
Tuesday: Federal Housing Finance Agency (FHFA) House Price Index
Wednesday: FOMC rate decision (about 2:10 pm), weekly crude inventories, weekly mortgage applications
Thursday: August existing home sales, weekly initial jobless claims, weekly natural gas inventories
Friday: August new home sales, August durable good orders, revised August University of Michigan consumer confidence

The Chicago Fed will host an international banking conference in Chicago. Speaking at the event will be White House economics advisor Christina Romer (Thursday) and Fed Reserve Board Governor Kevin Warsh (Friday).

Another big round of treasury auctions is slated. During a 3-day span, starting on Tuesday, the Treasury Department will offer $43 billion in 2-year notes, $40 billion in 5-year notes and $29 billion in 7-year bonds. Recent auctions have been heavily oversubscribed.

Though old adage of "buy Rosh Hashanah, Sell Yom Kippur" has not really worked in investors' favor, the bulls continue to remain in control. Therefore, it seems likely that we will hit Dow 10,000 this week. Investors should be aware, however, that this is a fear and greed market run by fast money.

To our Jewish readers, L'Shana Tova.

Companies That Could Issue Positive Earnings Surprises

As I write this, shares of Bed Bath & Beyond (BBBY) are trading higher in response to raised fiscal second-quarter estimates from one brokerage analyst. The change has yet to be factored into the Zacks Consensus Estimate, which currently stands at 47 cents per share. The most accurate estimate is slightly higher at 48 cents per share. The home goods retailer has topped expectations for 2 consecutive quarters and could be a beneficiary of the rebound in housing. Bed, Bath & Beyond is scheduled to report on Wednesday, Sep 23, after the close of trading.

Though used cars did not qualify for the Cash for Clunkers rebates, optimism about CarMax's (KMX) second-quarter results has been growing. During the past few weeks, 4 brokerage analysts have raised their profit projections. The revisions have pushed the Zacks Consensus Estimate 2 cents higher to 18 cents per share. The most accurate estimate is slightly more bullish at 19 cents per share. KMX beat expectations over the past 2 quarters after previously missing twice. CarMax is scheduled to report on Tuesday, Sep 22, before the start of trading.

Though KB Home (KBH) is projected to have lost 68 cents per share, the actual fiscal third-quarter loss could be less than most analysts forecast. The most accurate estimate is far more bullish, calling for a loss of 61 cents per share, and the homebuilder has topped expectations for 2 consecutive quarters. KB Home is scheduled to report on Friday, Sep 25, before the start of trading.

Research in Motion (RIMM) has topped expectations for 3 consecutive quarters. Ahead of the company's fiscal second-quarter report, 3 analysts have raised their projections. The changes were not significant enough to move the Zacks Consensus Estimate from its current level of $1 per share, though the most accurate estimate is a penny higher, at $1.01 per share. Research in Motion is scheduled to report on Thursday, Sep 24, after the close of trading.

Companies That Could Issue Negative Earnings Surprises

Texas Industries (TXI) has missed expectations during 3 out of the last 4 quarters. Shareholders should brace themselves for another disappointment with 3 of the 8 covering analysts cutting their fiscal first-quarter estimates within the past few weeks. The revisions have caused the Zacks Consensus Estimate to drop 7 cents to a projected loss of 5 cents per share. Texas Industries is scheduled to report on Thursday, Sep 24, before the start of trading.

Charles Rotblut, CFA, is the senior market analyst for Zacks.com.

About the Zacks Rank

Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank Stocks have generated an average annual return of +26%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 111% annually (-0.8% versus +8%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

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About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros by going to http://at.zacks.com/?id=5615.

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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact: Charles Rotblut, CFA
Company: Zacks.com
Phone: 312-265-9352
Email: pr@zacks.com
Visit: www.Zacks.com

Zacks Investment Research

RA’s Daily Russian News Blast – September 18, 2009

Robert Amsterdam — Fri, 18 Sep 2009 08:37:22 +0000

TODAY: US missile defense in Eastern Europe plans officially scrapped in favor of 'more efficient' new program. A matter of concession or conviction on Obama's part; mixed reaction from former would-be host countries fearful of Russian dominance; is the...

Earnings Preview for Sep 21 – 25 – Earnings Preview

Charles Rotblut — Fri, 18 Sep 2009 05:00:00 +0000

In addition to the Fed meeting, the economic calendar features August Leading Indicators and home sales data.

Monday: August Leading Indicators
Tuesday: Federal Housing Finance Agency (FHFA) House Price Index
Wednesday: FOMC rate decision (about 2:10 pm), weekly crude inventories, weekly mortgage applications
Thursday: August existing home sales, weekly initial jobless claims, weekly natural gas inventories
Friday: August new home sales, August durable good orders, revised August University of Michigan consumer confidence

To our Jewish readers, L'Shana Tova.

Companies That Could Issue Positive Earnings Surprises

Companies That Could Issue Negative Earnings Surprises

Charles Rotblut, CFA is the senior market analyst for Zacks.com.

Earnings Calendar

Here is a list of companies that we have confirmed will report during the week of Sep 21 - Sep 25. Prices are as of Thursday's, Sep 17, market close.

Company	Stock	Zacks Estimate	Year Ago EPS	Last Qtr Surprise	Date	Time	Price
Lennar Corp -A	LEN	($0.48)	($0.56)	80.7%	9/21	BTO	$16.60
Synnex Corp	SNX	$0.61	$0.66	18.8%	9/21	AMC	$31.81
Aar Corp	AIR	$0.25	$0.45	10.9%	9/22	AMC	$18.39
Carmax Gp (Cc)	KMX	$0.18	$0.06	175.0%	9/22	BTO	$18.79
Carnival Corp	CCL	$1.18	$1.65	13.8%	9/22	BTO	$32.86
Carnival Plc	CUK	$1.20	$1.65	60.0%	9/22	BTO	$34.08
Conagra Foods	CAG	$0.33	$0.27	0.0%	9/22	BTO	$22.15
Factset Resh	FDS	$0.73	$0.68	0.0%	9/22	BTO	$62.35
Finl Fed Corp	FIF	$0.37	$0.49	2.4%	9/22	AMC	$24.08
Fuller(Hb) Co	FUL	$0.36	$0.35	44.0%	9/22	AMC	$20.83
Progress Softwa	PRGS	$0.32	$0.30	0.0%	9/22	BTO	$23.05
Autozone Inc	AZO	$4.44	$3.88	9.7%	9/23	BTO	$147.37
Bed Bath&Beyond	BBBY	$0.47	$0.46	41.7%	9/23	AMC	$38.81
Cintas Corp	CTAS	$0.39	$0.51	5.6%	9/23	AMC	$29.46
Comtech Telecom	CMTL	$0.18	$0.61	31.8%	9/23	AMC	$34.50
Genl Mills	GIS	$1.03	$0.96	6.2%	9/23	BTO	$60.06
Paychex Inc	PAYX	$0.34	$0.41	(5.9%)	9/23	AMC	$29.74
Red Hat Inc	RHT	$0.11	$0.10	20.0%	9/23	AMC	$25.46
3Com Corp	COMS	$0.02	$0.09	150.0%	9/24	BTO	$4.71
Amer Greetings	AM	$0.06	$0.05	(65.0%)	9/24	BTO	$14.62
Analogic Corp	ALOG	$0.23	$0.55	(41.7%)	9/24	AMC	$37.76
Christopher&Bnk	CBK	($0.14)	$0.04	200.0%	9/24	AMC	$7.68
Finish Line-Cla	FINL	$0.21	$0.24	(999.0%)	9/24	AMC	$9.50
Mccormick & Co	MKC	$0.54	$0.50	2.4%	9/24	BTO	$33.87
Neogen Corp	NEOG	$0.26	$0.25	4.6%	9/24	BTO	$29.98
Research In Mot	RIMM	$1.00	$0.86	4.3%	9/24	AMC	$82.70
Rite Aid Corp	RAD	($0.15)	($0.27)	15.4%	9/24	BTO	$2.24
Saba Software	SABA	$0.01	($0.04)	66.7%	9/24	AMC	$4.12
Spectrum Contrl	SPEC	$0.18	$0.18	5.9%	9/24	AMC	$9.53
Steelcase Inc	SCS	$0.00	$0.28	114.3%	9/24	BTO	$7.11
Texas Inds	TXI	($0.05)	$0.28	(140.0%)	9/24	BTO	$44.95
Tibco Software	TIBX	$0.08	$0.09	28.6%	9/24	AMC	$9.13
Vail Resorts	MTN	($1.10)	($0.29)	8.39%	9/24	BTO	$34.19
KB Home	KBH	($0.68)	($1.87)	11.8%	9/25	BTO	$19.69

BTO = Before The Market Open, AMC = After The Market Close

Zacks Investment Research

RA’s Daily Russian News Blast – September 17, 2009

Robert Amsterdam — Thu, 17 Sep 2009 08:37:29 +0000

TODAY: US to modify or jettison missile defense plans? NATO chief to meet with Russian envoy; Lukaschenko sends out mixed messages. South Ossetia denies book burning; think tank leader says Putin could be heading for Brehznev-style decades in power; Medvedev...

Saudi Shopping List for Russian Arms Grows

Robert Amsterdam — Wed, 16 Sep 2009 20:21:36 +0000

Fresh off a deal with Venezuela, Russia's weapons maker appears to have its next willing customer in Saudi Arabia. First reported in English language press on August 29 (Interfax via Bloomberg), we now have significantly more detail on the slow-drip...

Here’s Why the U.S.-China Tire Tiff Lead to Great Depression II

Martin Hutchinson — Tue, 15 Sep 2009 15:51:01 +0000

Cars, Wishes and the Apocalypse

Contrarian Profits — Wed, 09 Sep 2009 23:32:52 +0000

pIn my larval, pre-blogging days, I always faced the back-to-school moment with abject dread. It meant returning to a program of the most severe, mind-numbing regimentation in the ghastly New York City public schools after a summer of idyllic unreality in the New Hampshire woods, where I went to a ema href="http://www.amazon.com/gp/product/B000FXT2LA?ie=UTF8#38;tag=whiskegunpow-20#38;linkCode=xm2#38;camp=1789#38;creativeASIN=B000FXT2LA" target="_blank"Lord of the Flies/a/em type of summer camp. And so here I am, many decades later, still uneasy as the final page of the August calendar flies away in a hot Santa Ana wind, and a great hellfire closes in on the far eastern reaches of Los Angeles, and the American money system falls into a peculiar limbo, and every fifth person is out of work, or going bankrupt, or glugging#8230;/p

Gold Aims to Retest Record Highs After Breaking Through the $1,000 Mark

Jason Simpkins — Wed, 09 Sep 2009 15:15:57 +0000

[Editor's Note: If you're new to the commodities-investing arena, and are uncertain about the landscape - or even if you're an "old hand" at natural-resource stocks, but want some insights into the new profit plays and new players - consider hiring a guide: Money Morning Contributing Editor Peter Krauth, a recognized expert in metals, [...]

This Recovery is an Imposter

Bill Bonner — Tue, 08 Sep 2009 11:51:11 +0000

pIt is amazing how many things have NOT happened./p pstrongProbably most incredible is that the dollar has NOT collapsed./strong It has lost ground, and was trading at $1.43 per euro on Friday, but no one laughs at you when go to exchange dollars…or offer to pay in dollars rather than the local currency./p pFor the last 10 years, the money supply in the United States has expanded at roughly twice the rate of GDP growth. And the Fed doubled its balance sheet in just the last 18 months. This last bit of information is stunning. It took the central bank nearly 100 years to build a balance sheet of $1 trillion. Then, under the leadership of Ben Bernanke, it added another $1 trillion#8230;/p

Prieur’s readings (September 8, 2009)

Prieur du Plessis — Tue, 08 Sep 2009 06:22:43 +0000

This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find interesting. Please also add the links to any other worthwhile articles you would like to share to the comments section.

Marc Fabers Bullish Case for Commodities

Frank Holmes — Thu, 03 Sep 2009 05:00:00 +0000

In the latest issue of the Gloom Boom Doom Report, Dr. Marc Faber tells readers why he sees good times ahead for commodities. The reason is the exploding federal deficit - a record $1.6 trillion in 2009 and the White House estimates another $9 trillion between 2010 and 2019. The U.S. government now pays around $350 billion each year just on interest, Dr. Faber says, and it will soon get to the point where new debt will have to be issued just to cover interest payments on the massive federal debt. Its like using one credit card to pay off another credit card. It might be your only option in a pinch, but its not a viable long-term strategy. Dr. Faber calls this a quot;Ponzi schemequot; that will further debase the U.S. dollar. A weak dollar is good for gold, oil and other natural resources, and this is why Dr. Faber favors commodities. He does caution that the U.S. dollar could see a short-term bounce - negative sentiment for the dollar has pushed it so low that a brief correction is statistically likely. Well have a lot more from Dr. Faber when he joins me for a webcast next Wednesday, September 9 at 11:00 a.m. Eastern. Its become a special annual event to have Dr. Faber share his thoughts with our listeners, and he never disappoints. Theres still time to register to listen live or have a notification sent to you when the replay is available. Visit the link below for details on what well cover and how to sign up. View the Replay*

Marc Fabers Bullish Case for CommoditiesMarc Fabers Bullish Case for Commodities

Frank Holmes — Thu, 03 Sep 2009 05:00:00 +0000

The Nerd Gets It Right

Terence Chan — Tue, 01 Sep 2009 11:17:00 +0000

pa href="http://feedads.g.doubleclick.net/~a/VY4fz0jMrni5yRDkLAUOGWLNXsU/0/da"img src="http://feedads.g.doubleclick.net/~a/VY4fz0jMrni5yRDkLAUOGWLNXsU/0/di" border="0" ismap="true"/img/abr/ a href="http://feedads.g.doubleclick.net/~a/VY4fz0jMrni5yRDkL...

History Lesson: September Is Best Month for Gold

Frank Holmes — Mon, 31 Aug 2009 05:00:00 +0000

Wersquo;re heading into September this week, so itrsquo;s a good time to revisit the historic seasonality of gold and gold stocks. Over the past four decades, September has been the best time for gold in terms of its month-over-month price appreciation. You can see this on the chart belowmdash;in a typical year, the price of gold in September rises 2.5 percent above its August price. The gold price has risen in 16 of the 20 Septembers since 1989, by far the best success ratio of any month of the year. What accounts for this predictable trend? September kicks off several of the planetrsquo;s most potent gold-demand drivers: The post-monsoon wedding season in India and Diwali, one of the countryrsquo;s most important festivals; Restocking by jewelry makers in advance of the Christmas shopping season in the United States; The holy month of Ramadan in the Muslim world, whose end in late September is marked by a period of celebration and gift-giving; And in China, the week-long National Day celebration starting October 1 and the run-up to the Chinese New Year in early 2010. This could be a challenging September in India, the worldrsquo;s largest gold consumer. The economic slowdown and gold prices near record highs drove jewelry demand down 31 percent in the second quarter compared to the same period in 2008. On the other hand, the World Gold Council says Indiarsquo;s bank deposits saw 22 percent year-over-year growth in the second quarter of 2009, so cash is available to be spent if the rupee price for gold weakens even slightly. The WGC also expects the wedding and Diwali season to ldquo;underpin a seasonal improvement over the remainder of 2009.rdquo; China, the worldrsquo;s #2 gold market, actually saw a year-over-year gold demand increase of 6 percent in the latest quarter, with buyers favoring 24-carat gold jewelry for its quality and as a store of value. The WGC says that trend toward the purer form of gold should continue, though the third quarter is usually the low season for this segment of the market. While September is a good month for gold, it is historically a great month for gold stocks as measured by the NYSE Arca Gold Miners Index (ticker GDM), as seen in the chart above. The GDM index comprises a broader collection of gold minersmdash;including more smaller-cap companiesmdash;than either the NYSE Arca Gold Bugs Index (HUI) or the Philadelphia Stock Exchange Gold and Silver Index (XAU). After the typically soft months of June and July, the gold miners start to bounce back with a 2 percent bump in August before shooting up another 8 percent in September. Since 1993, when it was created, the GDM has been up 11 times in September and down just five times. In September 1998, the GDM had by far its best-ever month (up 54.3 percent) when the bullion was bouncing off a two-decade low price of less than $275 per ounce. A decade later in September 2008, however, amid the severe credit squeeze triggered by the global financial crisis, the GDM fell 10.2 percent. The strong correlation between the gold price and the value of gold-mining stocks explains much of the average September jump for gold stocks. But the relationship is not lock-stepmdash;gold stocks (particularly for companies that do not hedge their production) have historically offered leverage to the gold price. In up markets, earnings growth has tended to exceed the increase in gold price. Of course, the leverage also works in the opposite directionmdash;gold stocks also tend to decline more when the price of bullion is falling. One of the most consistent correlations for gold is its inverse relationship with the U.S. dollarmdash;when gold is up, the dollar tends to be down, and vice versa. Looking at weekly data going back 20 years, this relationship occurs nearly 70 percent of the time. The seasonality chart above shows that September is only second to December in terms of dollar weakness, the average result for the U.S. Trade Weighted Dollar Index (DXY) being a 0.66 percent decline from August. Looking at the 39 Septembers going back to 1970, the dollar has seen negative performance 26 times, more than any other month of the year. The Federal Reserversquo;s massive stimulus spending and the expectation that the current low-interest-rate environment will continue for many more months are additional headwinds for the dollar, and thus tend to be positive for gold. In our June commentary ldquo;Why the Time Could Be Right for Gold Stocks,rdquo; we pointed out that gold stocks tend to outperform the overall stock market when the federal government is engaged in deficit spending. This yearrsquo;s federal deficit is expected to be a record $1.6 trillion, and the White House projected this week that the deficit will grow another $9 trillion between 2010 and 2019. These huge deficits will fan inflation fears and keep downward pressure on the dollar. Based on the long-term record, this may represent a good time for investors who want to establish or add to a gold or gold-stock position in advance of seasonal demand growth. The guidance provided by historical patterns may improve the chances for investment success, but of course, there are no guarantees that this September will follow the well-established trend. The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. The index benchmark value was 500.0 at the close of trading on December 20, 2002. The NYSE Arca Gold Bugs Index (HUI) is a modified equal-dollar weighted index of companies involved in major gold mining. The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver. The U.S. Trade Weighted Dollar Index (DXY) provides a general indication of the international value of the U.S. dollar. 09-589

History Lesson: September Is Best Month for GoldHistory Lesson: September Is Best Month for Gold

Frank Holmes — Mon, 31 Aug 2009 05:00:00 +0000

Employment Outlook Still Shaky

Michael E. Brisky — Wed, 26 Aug 2009 15:10:00 +0000

Employment numbers, while their decline has moderated, still haven't recovered. This will likely take some time and will weigh heavily on the economy no matter how much other span class="blsp-spelling-corrected" id="SPELLING_ERROR_0"indicators/span improve. Not many people seem to be covering this today, but the White House did release some interesting data yesterday (a href="http://www.bloomberg.com/apps/news?pid=20601087amp;sid=aNaqecavD9ek"span class="blsp-spelling-error" id="SPELLING_ERROR_1"bloomberg/span/a):br /br /blockquoteU.S. a href="http://www.bloomberg.com/apps/quote?ticker=USURTOT%3AIND" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true"unemployment/a will surge to 10 percent this year and the budget a href="http://www.bloomberg.com/apps/quote?ticker=FDEBTY%3AIND" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true"deficit/a will be $1.5 trillion next year, both higher than previous Obama administration forecastsbr /because of a recession that was deeper and longer than expected, White House budget chief a href="http://search.bloomberg.com/search?q=Peter+Orszagamp;site=wnewsamp;client=wnewsamp;proxystylesheet=wnewsamp;output=xml_no_dtdamp;ie=UTF-8amp;oe=UTF-8amp;filter=pamp;getfields=wnnisamp;sort=date:D:S:d1" t_delay="50" t_width="110" t_bgcolor="#ddedd9" t_fontface="Verdana,sans-serif" t_fontcolor="#000000" t_static="true" t_above="true"Peter span class="blsp-spelling-error" id="SPELLING_ERROR_2"Orszag/span/a said.br /br /The Office of Management and Budget forecasts a weaker economic recovery than it saw in May as the gross domestic product shrinks 2.8 percent this year before expanding 2 percent next year, according to the administration’s mid-year economic review issued today.br /br /The Congressional Budget Office, in a separate assessment, forecast the economy will grow 2.8 percent next year. Both see the GDP expanding 3.8 percent in 2011.br /br /“While the danger of the economy immediately falling into a deep recession has receded, the American economy is still in the midst of a serious economic downturn,” the White House report said. “The long-term deficit outlook remains daunting.”br //blockquotebr /br /Also, a little span class="blsp-spelling-corrected" id="SPELLING_ERROR_3"tidbit/span from the Fed's Fisher today (a href="http://www.reuters.com/article/newsOne/idUSTRE57P38Z20090826"span class="blsp-spelling-error" id="SPELLING_ERROR_4"reuters/span/a):br /br /blockquoteDallas Federal Reserve President Richard Fisher said on Wednesday the U.S. economy is poised for a slow, sluggish recovery as it emerges from a painful recession.br /br /"We're beginning to see indicators that we're coming out of this," he said in an interview with the Dallas Morning News."I think it will be a while before businesses rehire or increase pay," he said. Consumers are also likely to be cautious before starting to spend again, said Fisher, who is not a voter on the Fed's interest rate setting panel.br /br /"They're all going to be very, very conservative on that front until they feel comfortable that we have a global economy that is proceeding," he said. "I think that will take some time." Fisher said he believes the worst declines may be over for residential investment, inventories, exports, and possibly consumption.br //blockquotediv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/819581243324579563-7528990533140026835?l=briskycapital.blogspot.com'//div

Stock Market News for August 26, 2009 – Market News

Zacks Market Commentaries — Wed, 26 Aug 2009 14:25:59 +0000

Better-than-expected reports on housing and consumer confidence helped U.S. stocks record gains albeit in a tepid manner. Fed Chairman Ben Bernanke’s reappointment also added to the positive sentiments but the muted gains signaled investors were progressing with caution. Treasury prices rose after a successful auction of $42 billion two-year notes.

The Dow Jones industrial average added 30 points, or 0.3% and closed at its highest point since November 4. The S&P 500 index gained 2 points, or 0.2% to close at its highest level since November 6. The NASDAQ composite rose 6 points, or 0.3%, to 2024, its highest close since October 1. NYSE volume remained a modest 1.14 billion shares, with advancing issues ahead of decliners by a three-to-two margin.

After touching their 10-month high, crude prices retreated 3.1% to $72.05, reflecting yesterday's reported rise in stockpiles from the American Petroleum Institute, generating a 1.4% fall in the S&P's oil and gas sector. Among DJIA components ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) eased 0.9% and 0.2%, respectively.

A favorable housing report sent shares of Hovnanian (NYSE:HOV) up 6.5%, Pulte Home (NYSE:PHM) up 3.5%, and Lennar (NYSE:LEN) 2.8%. Among home improvement retailers, Lowe's (NYSE:LOW) shares gained 1.7% after it said it was entering Australian markets in a Woolworth partnership. Home Depot (NYSE:HD) shares rose 2.2%.

Consumer services shares rose 1.2% and were the leading gainers among the S&P 500 industry groups. Shares of retailers advanced with luxury-retailer Saks (NYSE:SKS) up 8.5%, Macy's (NYSE:M) up 3.5% and Sears Holdings (NASDAQ:SHLD) up 2.4%.

The Treasury sold $42 billion 2-year notes in its planned $109 billion auction for the week. Although, the response was average, with a high yield of 1.119%, Treasury prices rose on improved inflation expectations, with the longer-dated 30-year up 22/32 in price, and its yield down 4 bps to 4.22%. Three-month Libor fell to a record low of 0.38%, its lowest level since 1986, pointing to increased credit market liquidity.

In what could be a major policy matter, the government expects US debt over the next decade to almost double, as a less-vigorous-than-hoped-for economic recovery fails to offset increased spending on retirement and health care benefits. The White House expects a $9 trillion deficit over the next decade, $2 trillion more than previously anticipated, with a 2009 deficit of $1.58 trillion.

Zacks Investment Research

Two Companies Taking Advantage of the Growing Deficit

Andrew Snyder — Tue, 25 Aug 2009 20:43:48 +0000

pWashington is spending this country towards its demise. These two companies will hep you put your hard-earned tax dollars back in your pockets. /p pWhat does the government have up its sleeves this time? While the president is on vacation (playing golf with shady business connections), the White House put out a report detailing how the economy is much worse off than it originally anticipated./p pOf course, Wall Street shrugs it off, virtually saying, “Washington was wrong? What else is new?”/p pMost intriguing, or alarming, is the White House’s latest deficit predictions. Instead of the $7 trillion estimate predicted in May, our executive branch is now expecting a gap of $9 trillion./p pIt turns out the notion of higher taxes really does decrease revenues./p pWith#8230;/p

Chemical Giants Utilize Lobbying – Analyst Blog

Zacks Market Commentaries — Tue, 25 Aug 2009 20:40:56 +0000

The recent disclosure reports have revealed that lobbying is a frequent phenomenon with the chemical giants such as DuPont (DD) and Eastman Chemical (EMN).

The second quarter report suggested that DuPont spent more than $1.2 million to lobby on biotechnology, trade, taxes and more. During April-June, the company also lobbied Congress, the White House and a number of federal agencies including the departments of Agriculture, Commerce, Defense and Treasury on chemical plant security, patent reform, energy efficiency and climate change.

On the other hand, Eastman, the Tennessee-based manufacturer of coatings and specialty plastics spent $270,000 lobbying the federal government on clean energy, antitrust and other issues. During April-June, the company also lobbied Congress and the Energy Department on legislation dealing with industrial gasification incentives, shareholder rights as well as antitrust and labor issues.

The chemical industry is susceptible to environment-based litigation. This has prompted many chemical companies to seek safe haven through lobbying. Further, the global economic recession has generated weak demand across most of the U.S. markets. This has led the chemical companies to engage in lobbying to maintain their market share.
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OMB and CBO Economic Projections

Menzie Chinn — Tue, 25 Aug 2009 17:22:22 +0000

The WHite House has just released the Mid Session Review and the CBO the Budget and Economic Outlook: An Update. Here are the economic projections:

Excerpt from Table 2 from OMB, Mid-Session Review, August 25, 2009.

Table 2-1 from CBO, Budget and Economic Outlook, August 25, 2009.

Obama’s Right Call on Bernanke – Analyst Blog

Charles Rotblut — Tue, 25 Aug 2009 13:55:54 +0000

President Obama is reappointing Ben Bernanke as Fed Chairman. Though there will be those in Congress who disapprove, it is highly probable that Bernanke will keep his job after January 31st.

The move is part of a broader plan to keep the Obama economic team in place. A White House official told Politico.com, "The president wanted the team that has been working to rescue this economy together...This continuity is crucial."

Though Bernanke's actions have at times been controversial (e.g. the Bank of America [BAC] takeover of Merrill Lynch), reappointing the Fed Chairman is the right move. Bernanke inherited a bad set of financial circumstances and moved boldly in his attempts to limit the damage. We may never know whether his actions prevented a depression from occurring, but in a crisis situation, action is always better than no action.

The next challenge for Bernanke will be his hardest, and a real test of how many lessons he learned from his analysis of the Great Depression. The Fed Chairman must keep inflation from spiraling out of control and, at the same time, prevent a double-dip recession. This will be very difficult, as the margin for error is almost nil.

His next actions must include removing the programs that have made essentially free capital available to Wells Fargo (WFC), KeyCorp (KEY), U.S. Bancorp (USB) and many other banks.

He also needs to ensure than the freeze on lending continues to melt, or else face an even worse housing crisis -- just as D.R. Horton (DHI) and many others are now starting to find stable ground. At the same time, he may have to battle higher commodity prices, a weaker dollar and other inflationary pressures.

If Bernanke screws up, we will see a return of stagflation, or worse. If he makes the right policy moves, and gets the necessary fiscal restraint from Congress, he could successfully engineer a return to a lengthy period of economic growth.

Unfortunately, the odds are stacked against Bernanke and the entire Obama economic team. It's not that we won't see growth next year, but rather we also see potential for further economic problems in 2011 and 2012. Fortunately, the Fed Chairman appears to understand these risks, and that is precisely why he should get a second term.

Charles Rotblut, CFA is the senior market analyst for Zacks.com.
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In the Race for a U.S. Economic Rebound, Growing Debt and Budget Deficits Remain the Biggest Possible Roadblock

Contrarian Profits — Mon, 24 Aug 2009 22:33:22 +0000

pEven as investors get more and more bullish about the outlook for the U.S. economy, the economy’s underlying foundation continues to erode./p pIn a report to be released this week, the Obama administration will boost its 10-year projection for the federal budget deficit to about $9 trillion – an increase of roughly $2 trillion, or 29%, from its prior projection, strongemFox News/em/strong reported over the weekend, citing a source from the a href="http://www.whitehouse.gov/omb/" target="_blank"Office of Management and Budget/a (OMB)./p pThe new cumulative deficit projection – for 2010-2019 – replaces the a href="http://www.foxnews.com/politics/2009/08/21/official-obama-increase-year-deficit-trillion/?test=latestnews#38;test=health" target="_blank"administration’s previous estimate of $7.108 trillion./a Changes in budget projections – whether they result in a surplus or a deficit – are often refined as economic conditions change. This new projection was necessary because the recession has#8230;/p

Richard Posner Misunderstands Numbers, Yet Again

Menzie Chinn — Fri, 21 Aug 2009 23:59:48 +0000

Richard Posner displays his failure to understand the difference between expenditures (reported on Recovery.com) and tax rebates (not reported online, but have to be estimated).

Romer's speech argues that the disbursements of stimulus funds through the end of the second quarter of this year (that is, through June 30) have had a big effect on economic output and employment. I said this was unlikely as a matter of theory, and that she had no persuasive evidence to back up her claim. And I raised the question of the ethical responsibilities of an academic who takes a government job and then makes a speech that although it deals with a subject that she had studied and written about as an academic is not a responsible academic analysis. My concern is enhanced by the statement of one of my critics that the Council of Economic Advisers, of which Romer is the chairman, has a sterling reputation for political neutrality and analytical rigor. Romer's speech does not bode well for the preservation of that reputation. Another critic argues that since it was just a speech, intended therefore to be heard rather than read, Romer should be permitted to have rounded off her numbers, and thus to have rounded off $89 billion (this critic's estimate of how much stimulus money had been disbursed by the end of the second quarter) to "more than $100 billion" (her language). This overlooks the fact that the speech was posted on the CEA's website, and is replete with footnotes, which I doubt she read aloud.
In fact, while I am on the subject of the amount of stimulus money disbursed so far, $89 billion seems too high. The government's official figure is $60 billion, and a recent estimate by msnbc.com is $58 billion. One of my fiercest critics estimates the figure at "about $60 billion," without however remarking the discrepancy between "about 60 billion" and Romer's "more than $100 billion. [emphasis added - mdc]

"One of my fiercest critics" apparently is me. Since Mr. Posner clearly did not follow the link provided in my previous post, let me quote from Donald Marron, who was CBO Acting Director, and a member of the CEA under George W. Bush (hence, I suspect, not a "left-wing" economist, as Mr. Posner has characterized me):

In her recent speech about the impact of the stimulus effort, Christina Romer, Chair of the President’s Council of Economic Advisers, noted that "as of the end of June, more than $100 billion had been spent."
If you visit the government web site tracking the stimulus (Recovery.gov), however, it will tell you that the government had paid out only about $60 billion by July 3. (You can find this figure in the chart at the lower right hand corner of the home page.)
Why does Christi report a figure so much larger than the one reported on the official website? Because Recovery.gov isn’t tracking all of the budget effects of the stimulus.
Christi’s figure includes the $60 billion of spending reported on Recovery.gov plus an internal estimate, prepared by Treasury, of the tax reductions resulting from the stimulus effort through June 24. Those tax reductions are obviously a big deal, totaling $40 billion or slightly more through the end of June.

I used $60 billion, and IMF estimate, in my August 1st post, for want of a better guess. The $89 billion is yet again another estimate, from Mark Zandi (all of which I stated explicitly in my post). But from personal experience, I know two things: (1) the CEA has access to more information than those of us in the public have access to; and (2) the CEA would not publish and allow into a White House document (be it a speech or white paper or ERP) unverifiable numbers.

I think a whole bunch of former CEA economists, who have served in both Republican and Democratic administrations, will back me up on this specific point. Hence, on this issue, Mr. Posner simply does not know what he is talking about; I suggest he talk to somebody who has worked in the CEA.

So, to recap: $60 billion paid out on the spending side. $40 billion in tax rebates. No mystery, if one understands the numbers.

Healthcare Reform – Potential Winners – Analyst Blog

Charles Rotblut — Fri, 21 Aug 2009 15:43:18 +0000

The ongoing debate about health care has become more focused on ideological lines than on what realistically can and should be done. Though not surprising, it is unfortunate.

It would be wonderful if the conversation shifted to what changes can realistically be made and what changes should be made to prevent a worsening crisis. Here are some ideas, along with potential investment plays.

Big Pharma Is Not Going Away

Regardless of what you think about the drug companies, they are not going anywhere. The pharmaceutical lobby has made certain that it has a seat at the table and it seems probable that any new laws will benefit them. Even though some concessions will be made, the Obama Administration has quietly signaled a willingness not to pursue the most beneficial cost-saving strategies.

Furthermore, the White House is playing ball when it comes to patent expiration, a huge victory for drug and biotech companies. Incidentally, this is partially why I have Healthcare SPDR (XLV) in Zacks ETF Trader.

Potential winners not only include large drug companies like Bristol-Myers Squibb (BMY), but also biotechs such as Amgen (AMGN) and Genzyme (GENZ).

Insurance Companies Will Survive

Despite talk about a public option, the insurance companies are not going quietly into the night. Not only do these companies have a large number of lobbyists, they are also major employers. This makes dismantling the current system very unrealistic and extremely expensive.

Even if the insurers are forced to make big concessions, they could potentially gain millions in new members. Plus, any reduction in medical costs should ultimately help their bottom lines.

Potential winners include Aetna (AET) and United Health (UNH).

Medical Records and Billing Need to Be Changed

The Obama Administration wants to digitalize electronic medical records. Though having a high initial cost, the benefits are enormous.

Any reform should also directly address medical billing practices. The current system is a network of severely bloated bureaucracies. As a result, doctors have to employ additional staff just to contend with the insurance companies.

Similarly, patients have no idea of assessing what procedures will actually cost them. Not to mention that billing errors are common, partially because of the large number of codes and partially because an insurance's decision as to whether or not cover a procedure is dependant on how well the attending physician explains the reason for the treatment.

Potential winners include Microsoft (MSFT) and Google (GOOG). It also seems logical that other tech conglomerates, such as Hewlett-Packard (HPQ) and IBM (IBM) would be quick to jump into this very large market.

Costs Need to Be Contained

The current health care system is not sustainable. If nothing is done, spending on health care will quickly jump to 25% of GDP. Tort reform is not the answer either, since according to the nonpartisan CBO, malpractice costs account for a very small percentage of overall spending.

A free market system of high deductibles and price conscious consumers is not a viable solution either. As stated above, costs are not transparent. Consumers lack adequate information to quantitatively assess the quality of care.

Finally, there is the problem that many Americans with health care currently are not seeking adequate treatment. We see this in the large number of people with treatable but undiagnosed medical conditions such as diabetes and thyroid disease. If consumers put off regular examinations and treatments in an effort to preserve their health savings account, the potential costs could skyrocket even more in the future.

Any reform needs to reduce the spending on health care as a proportion of GDP. According to the CBO, the legislation considered by congressional Democrats prior to the summer break failed to provide adequate savings, a big problem. If we fail to cut costs, the federal deficit will be balloon and interest rates will soar.

So what is the solution? One idea is a hybrid system that breaks the relationship of getting insurance through one's employer. The Healthy Americans Act does just that. It is a bipartisan bill that has certified by the CBO as paying for itself, and it provides universal coverage. I'm not saying it's the best piece of legislation, but it is a good place to reframe the debate about what should be done.

Potential winners include the U.S. economy.

Americans Need to Make Changes

Finally, any true cost savings will require sacrifices on the part of you and me. Bluntly put, we need to exercise more, eat more vegetables and less meat, drink less soda and floss every single day. Changes to the tax code could easily help push Americans in the right direction. A sin tax on soda and snacks would be a good start.

The government could also help by making weight loss programs tax deductible to anyone whose BMI exceeds a specified level (the deduction is only currently available to those are medically required to lose weight). Additionally, gym memberships and gym equipment should also be tax deductible. Would there be some abuse? Sure, but the overall benefits would still be substantial.

Potential winners would include Weight Watchers (WTW), Lifetime Fitness (LTM) and Nike (NKE).
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Rationing? I Have to Disagree – Analyst Blog

Dirk Van Dijk — Fri, 21 Aug 2009 14:17:10 +0000

In yesterday’s Wall Street Journal, Martin Feldstein, Ronald Reagan’s top economist and a Harvard professor, claims the current health care proposals are all about rationing. I have to disagree. Excerpts from his article are below, along with my critique.

"Although administration officials are eager to deny it, rationing health care is central to President Barack Obama's health plan. The Obama strategy is to reduce health costs by rationing the services that we and future generations of patients will receive.

"The White House Council of Economic Advisers issued a report in June explaining the Obama Administration's goal of reducing projected health spending by 30% over the next two decades. That reduction would be achieved by eliminating 'high cost, low-value treatments' by 'implementing a set of performance measures that all providers would adopt' and by 'directly targeting individual providers . . . (and other) high-end outliers.'"

First and foremost, it is important to recognize that the current system already relies on rationing. It uses rationing by price. If you can’t afford the treatment, or are one of the over 47 million uninsured, tough.

However, insurance companies like Aetna (AET) and United Health (UNH) will also routinely decide that a treatment is not covered because it is too costly. For many conditions, there are several potential treatment alternatives.

The major health care reform proposals (there are currently 4 on the table, and one more is still being worked on) plan on looking at which methods work best, and eliminating costly treatment options that don’t work very well (but which might be highly lucrative to the doctor and/or hospital) in favor of lower cost, more effective options. If that be rationing, sign me up. Sounds like simple “best practices" to me.

"The president has emphasized the importance of limiting services to 'health care that works.' To identify such care, he provided more than $1 billion in the fiscal stimulus package to jump-start Comparative Effectiveness Research (CER) and to finance a federal CER advisory council to implement that idea.

"That could morph over time into a cost-control mechanism of the sort proposed by former Sen. Tom Daschle, Mr. Obama's original choice for White House health czar. Comparative effectiveness could become the vehicle for deciding whether each method of treatment provides enough of an improvement in health care to justify its cost."

Could, could, could -- but Marty, you provide absolutely no evidence as to the probability of that occurring. If the CER finds, for example, that radiation therapy is more effective than surgery for the treatment of a certain type of cancer, and that radiation therapy is also 30% less expensive, it seems downright stupid to keep having doctors do a lot of that type of surgery. The surgeons might make less money, but that is not anything like the specter that has been floated of the government denying care to old folks.

"In the British national health service, a government agency approves only those expensive treatments that add at least one Quality Adjusted Life Year (QALY) per £30,000 (about $49,685) of additional health-care spending. If a treatment costs more per QALY, the health service will not pay for it.

"The existence of such a program in the United States would not only deny lifesaving care, but would also cast a pall over medical researchers who would fear that government experts might reject their discoveries as 'too expensive.'"

There is nothing in any of the proposals that would prevent people from paying extra to get these marginal treatments, either by paying out of pocket or through supplemental insurance. It would not deny lifesaving care, it would simply decline to pay for every procedure, regardless of how expensive or how ineffective.

It might also focus researchers to look for treatments that bring down costs and are more effective. Those procedures would get a much bigger market share and would be very lucrative.

"One reason the Obama Administration is prepared to use rationing to limit health care is to rein in the government's exploding health-care budget. Government now pays for nearly half of all health care in the U.S. , primarily through the Medicare and Medicaid programs.

"The White House predicts that the aging of the population and the current trend in health-care spending per beneficiary would cause government outlays for Medicare and Medicaid to rise to 15% of GDP by 2040 from 6% now. Paying those bills without raising taxes would require cutting other existing social spending programs and shelving the administration's plans for new government transfers and spending programs."

Note that government spending is about 20% of GDP now, so it is not just existing social spending programs that would have to be cut, but just about everything. That includes the military. Going on the current trajectory on health care spending has the potential to seriously harm national security.

"The rising cost of medical treatments would not be such a large burden on future budgets if the government reduced its share in the financing of health services. Raising the existing Medicare and Medicaid deductibles and coinsurance would slow the growth of these programs without resorting to rationing. Physicians and their patients would continue to decide which tests and other services they believe are worth the cost.

"There is, of course, no reason why limiting outlays on Medicare and Medicaid requires cutting health services for the rest of the population. The idea that they must be cut in parallel is just an example of misplaced medical egalitarianism."

“Misplaced medical egalitarianism" -- we are talking life and death here! Every year, 18,000 Americans die prematurely because they lack access to proper medical care. That is more than 6x as many who died when the Twin Towers came down.

Raising the deductibles and coinsurance for Medicaid? Just who does the good Harvard professor think is on Medicaid? Here is a news flash for ya, Marty -- it's poor people. This would result in rationing of the very worst sort, not you get treatment A instead of treatment B because A is more cost effective, but you get no treatment at all and just suffer or die.

If Grandma can’t afford the higher deductable and copayment then what happens? Does the plug get pulled? Does he seriously think that runaway medical cost inflation outside of Medicare and Medicaid is not a problem for the economy, even though costs in those two programs have already been rising slower than overall medical costs?

"But budget considerations aside, health-economics experts agree that private health spending is too high because our tax rules lead to the wrong kind of insurance. Under existing law, employer payments for health insurance are deductible by the employer but are not included in the taxable income of the employee.

"While an extra $100 paid to someone who earns $45,000 a year will provide only about $60 of after-tax spendable cash, the employer could instead use that $100 to pay $100 of health-insurance premiums for that same individual. It is therefore not surprising that employers and employees have opted for very generous health insurance with very low copayment rates.

"Since a typical 20% copayment rate means that an extra dollar of health services costs the patient only 20 cents at the time of care, patients and their doctors opt for excessive tests and other inappropriately expensive forms of care. The evidence on health-care demand implies that the current tax rules raise private health-care spending by as much as 35%.

"The best solution to this problem of private overconsumption of health services would be to eliminate the tax rule that is causing the excessive insurance and the resulting rise in health spending. Alternatively, Congress could strengthen the incentives in the existing law for health savings accounts with high insurance copayments. Either way, the result would be more cost-conscious behavior that would lower health-care spending."

The result would be to push people out of group employer-sponsored plans and into the individual health insurance market. That market is FAR more abusive than the employer group market. That is where people get rejected for pre-existing conditions. That is where people get their health care coverage cancelled on the flimsiest of excuses as soon as they file a serious claim and actually need the insurance.

While I agree that the self-employed and those who are working for small businesses that don’t offer health benefits deserve a break, absent something reasonable to replace it, it would be reckless to dismantle the employer sponsored system. Now if you want to argue for scrapping the system and replacing it with a single-payer Medicare for All system, that would make a lot of sense.

Our current system is not something that anyone designed, but an outgrowth of wage controls during WWII, and is not what anyone starting from scratch would design. It is the system we have in place, and without a replacement it would be dangerous to get rid of it.

"But unlike reductions in care achieved by government rationing, individuals with different preferences about health and about risk could buy the care that best suits their preferences. While we all want better health, the different choices that people make about such things as smoking, weight and exercise show that there are substantial differences in the priority that different people attach to health.

"Although there has been some talk in Congress about limiting the current health-insurance exclusion, the Administration has not supported the idea. The unions are particularly vehement in their opposition to any reduction in the tax subsidy for health insurance, since they regard their ability to negotiate comprehensive health insurance for their members as a major part of their raison d'être."

Funny, the AFL-CIO has long argued for a single-payer system, one that would completely eliminate that major part of their raison d’etre. It is not just about your preferences for spending more or less on health care. Demand is the combination of desire for something plus the ability to pay for it. If you are poor, your desire to live and not to suffer counts for nothing in the world that Dr. Feldstein inhabits.

"If changing the tax rule that leads to excessive health insurance is not going to happen, the relevant political choice is between government rationing and continued high levels of health-care spending. Rationing is bad policy. It forces individuals with different preferences to accept the same care.

"It also imposes an arbitrary cap on the future growth of spending instead of letting it evolve in response to changes in technology, tastes and income. In my judgment, rationing would be much worse than excessive care.

"Those who worry about too much health care cite the Congressional Budget Office's prediction that health-care spending could rise to 30% of GDP in 2035 from 16% now. But during that 25-year period, GDP will rise to about $24 trillion from $14 trillion, implying that the GDP not spent on health will rise to $17 billion in 2035 from $12 billion now. So even if nothing else comes along to slow the growth of health spending during the next 25 years, there would still be a nearly 50% rise in income to spend on other things.

"Like virtually every economist I know, I believe the right approach to limiting health spending is by reforming the tax rules. But if that is not going to happen, let's not destroy the high quality of the best of American health care by government rationing and misplaced egalitarianism."

For starters there is a typo in the article, it is to $17 trillion, not billion. Leaving that aside, using his numbers, if we could just keep spending at 16% of GDP (keep in mind the next highest level of spending in the OECD is Switzerland at 11% of GDP, and everyone knows what a hellhole Swiss hospitals are), we are talking about a difference of $3.36 Trillion a year by 2035. That is a lot of money in my book.

Dr. Feldstein must have an awfully small circle of economists he knows (doubtful) to make that statement. There are few questions in economics that are universally agreed upon, and that is certainly not one of them. Taxing “platinum plans" might be a useful way to raise some of the revenues needed to help cover the uninsured, but to think just changing the tax code would solve the problem by itself is just plain silly.

The high quality of the best of American health care means little if it is only available to a tiny fraction of the population. If a few people ride around in Mercedes and Bentleys and most people have to walk does that mean you have a great transportation system? The claim that America has the best health care system in the world is not one that Dr. Feldstein should be making.

On every major public health indicator tracked by the World Health organization the U.S. is way down the list, and overall we rank neck and neck with Cuba, and far below places like France, Canada or the U.K. Sometimes when you pay the most, you get the best, other times it just means you are getting ripped off. The latter is clearly the case with the U.S. health care system.
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Stock Market News for August 20, 2009 – Market News

Zacks Market Commentaries — Thu, 20 Aug 2009 14:03:28 +0000

A sharp rebound in Chinese shares helped erase yesterday’s slump and sent Asian stocks sharply higher Thursday, a day after Shanghai’s big fall ignited fears of a Chinese stock collapse and triggered a selling spree around the world. Asian markets also drew comfort from an overnight recovery on Wall Street after a surprise drop in U.S. crude stockpiles lifted hopes for an economic recovery and sent investors back on the buying table.

Shanghai's main index jumped 126 points, or 4.5%, to 2,911.58, while Japan's Nikkei 225 stock average climbed 179.41 points, or 1.8%, to 10,383.41. Hong Kong's Hang Seng rose 374.63, or 2%, to 20,336.36. South Korea’s Kospi advanced 2% to 1,576.39.

Stock futures pointed to a higher open on Wall Street Thursday. Dow Jones industrial average futures rose 24, or 0.3%, to 9,300. Standard & Poor's 500 index futures edged up 3.70, or 0.4%, to 1,000.80, while Nasdaq 100 index futures rose 3.50, or 0.2%, to 1,602.25.

On Wednesday, the unexpected drop in crude inventories helped U.S. stocks wipe off early losses and finish the day with gains of less than 1% as investors looking for reassuring sings picked up oil and other commodity stocks. Rumors that the Obama Administration was considering a second stimulus package also helped sentiments on the Street yesterday. However, the rumors were later dismissed, with White House spokesman Gibbs noting, "There is no imminent economic announcement."

The 30-stock Dow Jones industrial average added 61 points, or 0.7%, to close at 9,279.16. The NASDAQ added 13.32 points, or 0.7% for a close at 1,969.24, and the S&P500 ended 6 points higher at 996, up 0.7%. Volume remained light with only 988 million shares trading on the NYSE and advancing shares ahead of decliners by a 3-to-2 margin.

On the earnings front, the picture was mixed as Hewlett-Packard (NYSE:HPQ), Deere (NYSE:DE) and PetSmart (NASDAQ:PETM) reported earnings that beat expectations, but outlook from these companies disappointed. Some retailers, though, were optimistic, with BJ's Wholesale (NYSE:BJ) and Limited (NYSE:LTD) offering improved yearly outlook.

Among S&P500 industry sectors, oil and gas shares advanced 1.9% and were the leading gainers. DJIA components Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) moved higher, up 1.8% and 2.3%, respectively. Commodity-related issues were not far behind, with basic material shares up 0.9%, following the broad-based gain in commodities. Freeport-McMoRan (NYSE:FCX) shares surged 2.7%. However, Alcoa (NYSE:AA) led the decliners on the DJIA after Goldman Sachs (NYSE:GS) downgraded the stock, citing Alcoa's (NYSE:AA) recent appreciation and advised rolling positions into Freeport-McMoRan (NYSE:FCX), which is on its Conviction Buy List.

Health care issues advanced 1.3%, as Merck's (NYSE:MRK) 2.5% advance led DJIA component gains. A New Jersey court upheld the firm's patent for asthma drug Singulair, and ruled against Teva Pharmaceuticals (NASDAQ:TEVA).

Despite the day's reported increase in weekly mortgage applications, financial shares failed to gain in the market advance, and eased 0.03%. News of last week's rise in mortgage applications on increased refinancing requests did not have an impact on financial shares. Bank of America (NYSE:BAC) shares dropped 0.9% and JP Morgan (NYSE:JPM) eased 0.7%.

Retailers scheduled to report include: Barnes and Noble (NYSE:BKS), GameStop (NYSE:GME), HJ Heinz (NYSE:HNZ), Hormel Foods (NYSE:HRL), Ross Stores (NASDAQ:ROST), Sears Holdings (NASDAQ:SHLD), and Gap (NYSE:GPS).

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Honesty, Dishonesty and Competence: Comments on Posner’s Critique

Menzie Chinn — Thu, 20 Aug 2009 05:02:48 +0000

Richard Posner has a critique of public intellectuals who work in the public sphere (with special reference to Christina Romer), either in government service, or in journalistic fora. Mark Thoma and Brad Delong have already made clear the (many) points at which Mr. Posner has gone astray. Parenthetically, I'll add that I wonder about the analytical abilities of anybody who lumps Phillip Glass (!) and Elliott Carter together into the highbrow music category (see page 18 in his tome Public Intellectuals: A Study of Decline (1991)). More substantively, I have a few of additional observations, some of which are amplifications of Brad Delong's points.

First, I agree with Mark Thoma that Mr. Posner apparently has little understanding of macroeconomics, either of old-style Keynesian type, or the new(er) real business cycle type, or certainly New Keynesian approaches. His charge that her current pronouncements are at sharp variance with her earlier academic work really makes me wonder if he's read any of Dr. Romer's previous work. I suspect that he's taken at face value the conservative mis-apprehension that her tax cut paper contradicts the view that government expenditures can have an impact on growth. As I've explained in my responses to reader comments here, Romer and Romer (2008) provided estimates of tax cut multipliers, but no spending multipliers. Hence, a comparison of instrument efficacy is not feasible (comparing multipliers across methodologies can be done, but would be inappropriate).

Second, I would not pass a student out of intermediate macro who wrote in an exam:

The impact of the public-works program on investment is more complicated. But suppose, plausibly in a serious economic downturn such as the one that we're in at present (and that was even more serious back when the stimulus bill was enacted), that a great deal of investment is in the form of passive savings, such as demand deposits and Treasury securities, because people and companies are anxious about their economic prospects, and they want safe savings, rather than savings that would be at risk because invested in entrepreneurial projects.

As Mark Thoma points out, this is confusing a financial investment with physical investment in a NIPA sense.

This confusion tells me that anybody writing far outside their area of expertise should think twice, consult a textbook or two, before committing virtual pen to virtual paper. (I'm not saying one shouldn't write outside of one's area of research expertise on a weblog -- just one has to be careful).

Third, before he pontificates on what economists who work in the government should or should not be doing, I think Mr. Posner should read Martin Feldstein's discussion of how the CEA works ("The Council of Economic Advisers and Economic Advising in the United States," The Economic Journal, Vol. 102, No. 414 (Sep., 1992), pp. 1223-1234 [JSTORE pdf]; excerpt here). Here's a quote:

Although the CEA is physically as well as operationally part of the White House complex (CEA offices are in the Old Executive Office Building adjacent to the White House and within the same security cordon), the economic staff functions in a completely professional and nonpartisan way. My very able and distinguished staff included Larry Summers, who was prominent as chief economic adviser to presidential candidate Michael Dukakis.
The tradition of professionalist is so strong that even in a presidential election year the CEA chairman appoints members of the staff for the coming academic year with the clear understanding that they will continue to serve even if the party in power loses the presidential election. ...

My limited observations, having been a staff economist in the situation mentioned in the last paragraph, is that CEA members (nominated by the President and confirmed by the Senate) do not "leave behind their academic scruples" when they move from academia to government service. That doesn't mean that I think they're correct in their analyses -- just that what they believed when they came in is pretty close to what they say in public. (After all, silence is also an option.)

Fourth, I think any blog post (let alone paper) should be internally consistent. Consider Mr. Posner's (approving) statement:

Most economists, however, believe that it is unrealistic to suppose that people have enough information about the future to adjust their current behavior to expectations of higher taxes, inflation, devaluation, or other possible consequences of an increase in the national debt. There is too much uncertainty.

Then, he says two paragraphs later:

But Romer actually gives some credence to the unrealistic picture of the far-sighted consumer or businessman by arguing that recipients of tax credits authorized by the stimulus bill will spend rather than save the tax-credit money because they will assume that the credits are permanent.

But if in fact consumers do not look forward (as Mr. Posner argues, not as Dr. Romer argues), they will only respond to current changes in disposable income, and in fact the multiplier will look pretty big.

(Actually, I find the biggest problem with Mr. Posner's argument here is that the failure of consumers to respond in a fashion consistent with unencumbered intertemporal optimization w/perfect certainty is not due only to uncertainty, but also liquidity constraints, as well as possibly more exotic utility functions.)

Fifth, Mr. Posner should read a bit more widely. He states:

Romer argues in her talk that by the end of the second quarter of this year, $100 billion of stimulus money had been spent. That is a suspiciously round number, and it is unclear how it was arrived at; but let us assume it is accurate. She then argues that this small expenditure--about two-thirds of one percent of the Gross Domestic Product--is responsible for the fact that the decline in GDP fell (on an annualized basis) from 6.2 percent in the first quarter of the year to 1 percent in the second quarter (though the latter figure is likely to be readjusted upwards).
This assertion is groundless. No one has the faintest idea what effect the stimulus has had.

As someone who had to "fact-check" numbers going into White House policy documents and speeches on occassion, I can say that the numbers are verifiable regardless of Administration (whether they are interpreted in an appropriate fashion is a fair question).

But the more substantive question is whether the math is so nonsensical. As I showed quite clearly in this post, the number Dr. Romer obtained was easily calculated and plausible.

Sixth, my impression is that former CEA staffers and members that have become bloggers are pretty careful with the numbers and analytics -- certainly more so than Mr. Posner. These include Jeff Frankel, Paul Krugman (notwithstanding Mr. Posner's barbs), Andy Samwick, Diane Lim Rogers, and Nouriel Roubini. (see this post for former gov't/Fed economists who became bloggers.)

Cash For Clunkers … and now “Cash For Traders”

Trading School — Tue, 18 Aug 2009 00:34:55 +0000

Before I get into the “Cash For Traders” topic, I have something to share with you that is very disturbing. I am getting spammed… that’s right, spammed by the White House. I have never asked for e-mails from the White House, nor have I signed up for e-mails from the White House. But for some [...]

North Caucasus a Fertile Ground for Extremism

Robert Amsterdam — Thu, 13 Aug 2009 22:42:57 +0000

We are pretty impressed with the latest article from Sarah Mendelson of the Center for Strategic and International Studies (CSIS) published by Foreign Policy. It is exceptionally easy to whine and moan about conditions of injustice and human rights violations...

The Paranoic Impulse in Current Discourse

Menzie Chinn — Tue, 11 Aug 2009 23:20:33 +0000

Or, "return of the black helicopters"

Plenty of examples of hyperbole in current policy discussions, but here I want to return [0] to the specific topic of whether several key data series examined by economic analysts can be trusted, or whether in fact they are deliberately manipulated by government bureaucrats. Case in point is Econbrowser reader DickF's comments:

The government thinks it can run the economy on data that is years old and inaccurate at best. Also any time numbers are manipulated by government there is a political element involved. The whole reason the numbers are manipulated is to the will be "more normal" but who decides what is normal? In the government political bureaucrats who know their jobs depend on pleasing the politically connected. This is just another reason why centrally planned economies always fail. The hubris in government economic circles is enormous.

...
I am not saying that the agencies are manipulating data to make "each respective Administration look good." Sometimes they manipulate date to make an Administration look worse than it actually is. It depends on their political inclination.

Here are some data revisions for GDP...

Figure 1: Growth rate of real GDP, SAAR, from 2008Q1 advance release (green), 2009Q1 final release (red), and 2009Q2 advance release+benchmark revision (blue). NBER defined peak at gray dashed line. Source: BEA, NIPA releases.

I'm cynical enough to believe that numbers quoted by governments and private companies are selected so as to put themselves in as good a light as possible (after all, the Bush White House was happy enough to sit on a global climate change report for a couple of years, and to defund statistical programs that measure the behavior of low income households). But this view is distinct from the perception that the statistical agencies that collect US national income and products account data (the BEA), the CPI and PPI and employment statistics (the BLS), industrial production and capacity utilization (the Federal Reserve), and import and export data (BEA/Census) purposefully and consciously distort and manipulate the data for their own nefarious purposes.

In my view, the reason why so many hold onto these views is because it's so much easier to remain ignorant, and leap to the conspiracy view, than to do the hard work to understand why the statistics are imprecise measures of economic concepts, and why they are revised over time. After all, the former requires nothing more than taking somebody's word, the latter entails reading the supporting documentation, comprehending what the terms used mean, and applying some basic math and statistics skills...And if that's too hard, there are many people trying to help (For instance, Jim Hamilton cited some work by Oldprof on the BLS birth/death model in his last post).

As I noted in my previous post (The Government's Macroeconomic Series: X-Files, Dilbert, or Resource Constraints?), there are (at least) three different categories of explanations for the shortcomings of government statistics. One is the conspiracy view (X-Files), one is the incompetence view (Dilbert), and one is a realization that government statistics are generated by organizations with limited resources, facing legal constraints on data collection, and confronted with an ever-changing structure of the economy.

So, if one wants improved government economic statistics, then tell your elected representative to keep up support for proper funding of the statistical agencies (time series here) FoxBusiness has some reportage.

See also Mark Thoma. Dean Croushore has a good review of why macro statistics exhibit the characteristics they do over different vintages.

The Debt Ceiling, Dividend Plays, A Currency Sea Change and More!

Contrarian Profits — Tue, 11 Aug 2009 15:00:11 +0000

pSay what? Geithner begs for higher debt ceiling, says it will restore world confidence#8230; Deficit now three times last year’s record… so Congress buys 8 private jets#8230; A currency sea change? Bill Jenkins on the dollar’s surprise rally#8230; Jim Nelson on the best sectors for income investing#8230; John Williams digs deeper into Friday’ jobs report… four data distortions you need to know#8230;/p p strong“It is critically important that Congress act before the [debt] limit is reached,”/strong Tim Geithner wrote over the weekend in a letter to lawmakers, “so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations.#8221;/p pSounds like our Treasury Secretary is finally putting his foot down, insisting that Congress pull back its lavish spending#8230;/p

Video-o-rama: Stabilization benefits risky assets

Prieur du Plessis — Sat, 08 Aug 2009 06:29:05 +0000

Stock markets recorded another strong week as further signs of economic stabilization emerged. The S&P 500 Index worked its way back to above the 1,000 level on Friday, and more upside lies ahead said market strategist Abby Joseph Cohen, expecting the Index to reach the 1,100 mark by year end. This week's Video-o-rama not only covers the outlook for stock markets, but also discussions about the economy's transition from recession to recovery and other topical issues.

China Is Through Screwing Around

Graham Summers — Fri, 07 Aug 2009 12:22:01 +0000

Starting with the re-opening of formal trade arrangements in 1971, China has undergone a near unprecedented level of economic transformations. The country’s per-capita income doubled from 1978 to 1987 and again from 1987 to 1996. In those 20 years, more than 300 million Chinese ascended out of poverty with accompanying dramatic changes in lifestyle, professions, and [...]

Paul Krugman: “I focus on crises”

Prieur du Plessis — Thu, 30 Jul 2009 09:36:07 +0000

This post features an interview with Paul Krugman on the reasons for the crisis, the lessons to be learned, and life as a winner of the Nobel Prize.

Lockheed’s F-35 Increases Its Reach to Sea – Analyst Blog

Zacks Market Commentaries — Wed, 29 Jul 2009 23:46:00 +0000

Lockheed Martin Corporation (LMT), the nation's largest defense contractor, unveiled yesterday the carrier variant of the F-35 fighter plane. The F-35 variant, known as F-35C Lightning II, is the first-ever stealth fighter added the U.S. Navy's arsenal.

Lockheed Martin is focusing on F-35 as its primary growth driver in the Aeronautics segment to offset the loss of F-22. The Senate recently voted to stop production of the F-22 plane, putting it as too advanced for the recent trend of low-intensity warfare.

Subsequent to the end of the second quarter of 2009, Lockheed Martin's Aeronautics segmental order backlog was $27.9 billion. The F-35 is slated to replace the F-16 and A-10 fleets. As per media reports, the Pentagon will have to procure about 3,000 F-35 variants over the coming decade for the purpose. The F-35 has three variants, of which two of them are land based differing on the take-off and landing aspects, while the third one is a carrier-based variant.

Lockheed Martin is the primary player in the F-35 program along with industry peers, Northrop Grumman (NOC) and BAE Systems (BAE).

The focus of the Pentagon on the F-35 program is evident as, to date, two separate, interchangeable F-35 engines are under development. The two engines under development are Pratt & Whitney F135 and GE Rolls-Royce Fighter Engine Team F136. However, given the recent White House focus on fund conservation, the GE Rolls-Royce Fighter Engine Team F136 engine being developed by General Electric (GE) for the F-35 has come under a lot of scrutiny lately.

We reiterate our BUY rating on LMT.

Read the full analyst report on "LMT"
Read the full analyst report on "NOC"
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Will Citigroup Lose its Top Energy Trader?

Jason Simpkins — Wed, 29 Jul 2009 20:13:08 +0000

Grow Rich Automatically with the World’s Only Gold-Backed “Cash” The U.S. Treasury Dept. has finally approved the new gold-backed “cash.” And according to gold expert Peter Schiff, this new money, called “Gold Dollars,” is not only the best place for your savings today… it could prove very profitable. Why? Because every “dollar” you hold in [...]

RA’s Daily Russian News Blast – July 28, 2009

Robert Amsterdam — Tue, 28 Jul 2009 07:39:11 +0000

TODAY: EU to extend Georgia monitoring mission; Kyrgyz opposition turns to Moscow. China-Russia relations strain over river proposal. Activist shot in face following threats. Moscow Patriarch Kirill appeals for unity in Ukraine. Putin song.White House spokesman Robert Gibbs has...

Biden: Russia is Shrinking and Pragmatic

Robert Amsterdam — Sat, 25 Jul 2009 14:02:31 +0000

The interview with Vice President Joseph Biden in today's Wall Street Journal makes for fascinating reading, though there are certainly some quotes that are bound to ruffle feathers, such as his comments about Russia's "withering" economy. Below are a few...

Prieur’s readings (July 23, 2009)

Prieur du Plessis — Thu, 23 Jul 2009 08:49:32 +0000

This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find interesting.

And Then There’s This…Wednesday, July 22nd, 2009

Contrarian Profits — Wed, 22 Jul 2009 19:00:45 +0000

pGold declined gently throughout Far East and early European trading on Tuesday#8230;and by shortly after lunchtime in London#8230;had given up around four bucks. From there, a smallish rally developed that made an attempt to continue rallying on the Comex, but got cut off at the knees [at its high of the day] shortly after 9:10 a.m. Eastern time. This decline lasted until 1:15 p.m. in New York#8230;and by the time electronic trading ended at 5:15 p.m. yesterday afternoon#8230;gold was back to virtually unchanged from Monday#8217;s close.br / Silver didn#8217;t do much. It lost a dime in choppy trading./p pI mentioned yesterday that the open interest decline on Friday [in that short-covering rally] would have been somewhat offset by the big rally that we#8230;/p

End of the road for F-22 – Analyst Blog

Zacks Market Commentaries — Wed, 22 Jul 2009 15:07:15 +0000

On Tuesday July 21, the Senate voted 58-40 and sent Lockheed Martin Corporation’s (LMT)) F-22 fighter to an early perdition. The air superiority fighters had entered the air force in 2005. The vote removed $1.75 billion set aside for seven more F-22s in the $680 billion 2010 defense bill.

The twin-engine F-22 Raptor fighter touted as the most advanced in the world was shelved primarily due to a lack of sophisticated planes to shoot at. Although advocates of F-22 put forward the Chinese and Russian menace, it looked too far fetched to convince the Senate and the White House.

The U.S. already has 187 of these Raptors. But the need of the day to tackle ground enemies dictates more low-cost F-35 Joint Strike Fighters and unmanned UAVs. The defense bill has thus allotted berth to 30 F-35s in the armory, which are also manufactured by Lockheed Martin. This single engine plane is designated to eventually replace the vintage F-16s.

The F-22 pill would not be easily swallowed by Lockheed Martin, since only the Aeronautics segment witnessed any upside in the second quarter 2009 results. With lower volumes in the C-130J and C-5 programs, the company in the near term will look for growth in Aeronautics only through the F-35 program. We reiterate our BUY rating on LMT.
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American Perestroika, Part 2

Robert Amsterdam — Tue, 21 Jul 2009 14:58:04 +0000

I am interested and confused by this article in the Moscow Times by the Kremlin polittechnologist Yevgeny Bashanov.Obama spoke to Russian leaders as equals in a manner befitting the leaders of sovereign states. The U.S. president could not behave otherwise;...

Market Recoils as CIT Edges Toward Bankruptcy

Contrarian Profits — Mon, 20 Jul 2009 15:00:22 +0000

pThe probably bankruptcy of strongCIT Group Inc. (NYSE: a href="http://www.google.com/finance?q=cit" target="_blank"CIT/a) could/strong have major implications on the retail and manufacturing sectors this week, as many related companies are reliant on the financing giant./p pWith options running out over the weekend, CIT advisors began preparations for a bankruptcy filing. As of Sunday, strongJPMorgan Chase #38; Co. (NYSE: a href="http://www.google.com/finance?q=jpm" target="_blank"JPM/a)/strong and strongMorgan Stanley (a href="http://www.google.com/finance?q=ms" target="_blank"MS/a) /stronga href="http://www.bloomberg.com/apps/news?pid=20601103#38;sid=aAxblWMCEuDg" target="_blank"were talking with other banks about a debtor-in-possession loan/a, used to fund a company’s operations after it seeks court protection from creditors, strongemBloomberg News /em/strongreported./p pBondholders held calls last week to discuss whether to swap some claims for equity to reduce indebtedness. Thomas Lauria, a lawyer at White #38; Case LLP, told strongemBloomberg/em/strong that a group of CIT creditors he represents offered to provide $3 billion in new loans to bridge CIT to#8230;/p

The Carbon Cap: The Newest Form of Taxation

Contrarian Profits — Fri, 17 Jul 2009 19:17:07 +0000

h4 class="red"It’s possible that no concept in history has ever come so far, so fast, and with so little substance behind it, as “global warming.” Or, to be precise, emanthropogenic global warming/em(AGW) – the kind caused by us puny humans rather than by that fireball that keeps the planet habitable. br / /h4 pWe’re extraordinarily lucky. If present thinking is correct, the first single-celled living organisms may have appeared as much as 3½ billion years ago, and it would appear that once life arrived, it never went away. That’s a very long time for conditions to have remained favorable enough to keep the chain from breaking./p pAs the eons unspooled, Earth’s climate varied, sometimes wildly. It has been much hotter than it is today, and much#8230;/p

Concerns about the Fed’s New Balance Sheet

James Hamilton — Wed, 15 Jul 2009 05:08:09 +0000

That's the title of a chapter I contributed to a new book edited by John Ciorciari and John Taylor entitled The Road Ahead for the Fed. The book grew out of a conference held at Stanford University in March.

In my chapter (a draft of which can be obtained here), I review the mechanics of what the Fed has been doing with its balance sheet, and then raise three concerns. One of my concerns is that the Fed's new balance sheet has compromised the independence of the central bank:

The decision of where public funds are best allocated is inherently political. Any risks on the Fed's new balance sheet are ultimately borne by the taxpayers. The U.S. Constitution specifies that decisions of how public funds get spent shall be up to Congress, and with good reason. Citizens have a right to vote on which risks they choose to absorb. And of course there are powerful established interests with views on which sectors should receive an infusion of public capital. The Fed is simply being naive if it thinks it can become involved in those decisions on a weekly basis and yet still retain its independence from Congress and the President.

The reason I find that loss of Fed independence to be a source of alarm is the observation that every hyperinflation in history has had two ingredients. The first is a fiscal debt for which there was no politically feasible ability to pay with tax increases or spending cuts. The second is a central bank that was drawn into the task of creating money as the only way to meet the obligations that the fiscal authority could not. Every historical hyperinflation has ended when the fiscal problems got resolved and independence of the central bank was restored.

Surely it is not far-fetched to suggest that the U.S. faces a profound political challenge in using spending cuts or tax increases to meet its current and planned fiscal obligations. Here's an observation that brought that reality home to me on a personal level: in fiscal year 2006, receipts collected by the U.S. federal government from personal income taxes totaled $1.06 trillion. Thus, to a first approximation of what an extra trillion dollars in taxes would mean for me personally, I just take the number I paid in 2006 and double it. And then I ask myself, how likely is it that Congress would actually do such a thing? With budget deficits in excess of a trillion dollars annually for the foreseeable future, it seems we are already well past the point at which the ability of the Treasury to fund the expanded liabilities through tax increases would reasonably be questioned.

Moreover, the detailed cooperation between the Fed and the Treasury in the various new credit measures seems to have arisen from precisely such pressures. Congress is, in fact, unwilling to accept explicitly the risks to which taxpayers are exposed as a result of the many new Fed-Treasury initiatives. If I were the chair of the Federal Reserve, I would want to be asking, "why was I invited to this party?" The answer unfortunately appears to be, "because you're the one with the deep pockets." That the Fed should find itself in a position where Congress and the White House are viewing its ability to print money as an asset to fund initiatives they otherwise couldn't afford is something that should give pause to any self-respecting central banker.

The book also includes a chapter by Donald Kohn in which the Fed's Vice-Chairman responded to some of these concerns. Here is what Kohn had to say about Fed independence:

Have we compromised our independence? No. Central banks all over the world and the legislatures that created them have recognized that considerable independence from short-run political influences is essential for the conduct of monetary policy that promotes economic growth and price stability. To be sure, in the process of combating financial instability, we have needed to cooperate in unprecedented ways with the Treasury. Our actions with the Treasury to support individual systemically important institutions have sparked intense public and legislative interest. As Chairman Bernanke has indicated, the absence of a regime for resolving systemically important nonbank financial institutions has been a serious deficiency in the current crisis, one that the Congress needs to remedy. Congress and the public, quite appropriately, want to know more about lending programs that have greatly increased the scope and size of the Federal Reserve's interventions in financial markets, and we will give them that information. In addition, our country, like others, is undertaking a broad examination of what changes are needed in our financial regulatory system. This examination will consider the role of the Federal Reserve in the supervision and regulation of financial institutions and the advantages and disadvantages of establishing a systemic risk authority.

It is natural and appropriate for our unusual actions in combating financial instability and recession to come under intense scrutiny. However, increased attention to, and occasional criticism of, our activities should not lead to a fundamental change in our place within our democracy. And I believe it will not; the essential role for an independent monetary policy authority pursuing economic growth and price stability remains widely appreciated and the Federal Reserve has played that role well over the years. The recent joint statement of the Treasury and the Federal Reserve included an agreement to pursue further tools to control our balance sheet, indicating the Administration's recognition of the importance of our ability to independently pursue our macroeconomic objectives.

My chapter also discusses two other concerns about the Fed's new balance sheet. The first is whether, insofar as the goal is to allocate capital to particular targeted categories, the Fed and Treasury have formed the correct vision of what we really want capital markets to be doing at the moment. A second concern is that the Fed's new balance sheet has handicapped the Fed's ability to fulfill its primary mission of promoting price stability. Specifically, I worry that the Fed's new actions have made it harder both to avoid deflation and to assure the public that the Fed will prevent a resurgence of inflation.

The book also includes contributions from a number of other prominent individuals. I particularly recommend the thoughtful analysis by Andrew Crockett (president of J.P. Morgan Chase International) on whether the Fed is the logical institution to be given broader regulatory functions given the desirability of maintaining central bank independence.

You can read my chapter here, or order the book from Amazon.

The 10 Reasons You Should Be Mad as Hell Right Now

Contrarian Profits — Tue, 14 Jul 2009 21:27:05 +0000

pDo you remember the first time you saw a rain drenched Peter Finch a title="scream" href="http://www.youtube.com/watch?v=QMBZDwf9dok" target="_blank"scream/a, “I’m as mad as hell, and I’m not going to take this anymore!”? We do. We were too young to see emNetwork/em in the cinema (the movie came out the year we were born: 1976). Instead, we watched it late one night on TV. And we’ll never forget the moment when Finch’s character, news anchor Howard Beale, arrives in the television studio in his tan raincoat with a deranged look on his face and begins to speak to camera./p p/p blockquote ulI don#8217;t have to tell you things are bad. Everybody knows things are bad. It#8217;s a depression. Everybody#8217;s out of work or scared of losing their job. The dollar buys a#8230;/ul/blockquote

Links for 2009-07-12

James Hamilton — Sun, 12 Jul 2009 14:42:13 +0000

A very neat interactive graphic from the NYT showing changes in same-store sales for different establishments. (Click on the store name at the left, and tip your hat to Economix).

Keith Hennessey, who used to have Larry Summers' job in the Bush White House, on the challenges facing the White House in framing discussion of the effectiveness of the existing stimulus package. See Obama's apparent answer here.

And a hilarious story via Calculated Risk on why Wells Fargo is suing itself.

Russia as the Besieged Fortess

Robert Amsterdam — Fri, 10 Jul 2009 15:48:27 +0000

Leon Aron at the American Enterprise Institute has a new brief out on Russia following the Summit. Here's just one section from the report on the use of anti-American propaganda by the Kremlin.The Kremlin's valiant defense of Russia against alleged...

Obama’s Financial System Overhaul Would Give the Fed Broad Powers Over Wall Street

Don Miller — Tue, 07 Jul 2009 22:03:59 +0000

Faber and Greenspan: Shills for Fed Snake Oil

Adrian Ash — Mon, 06 Jul 2009 23:00:21 +0000

pem“Just how can the Fed credibly promise to be irresponsible…?” Here’s a thought—that tiny handful of investors and analysts warning how Fed policy risks hyper-inflation are in fact doing the central bank’s work.br / /em/p pThe Fed emwants/em you to believe hyperinflation is looming. Or at least, it emshould/emwant that, if doubling its balance-sheet – purchasing and lending against investment junk – is going to work the wonders that modern central-bank theory says it can. And the Fed certainly wants you to believe it will stop at nothing to avoid deflation (”whatever means necessary” as the chairman put it a href="http://goldnews.bullionvault.com/deflation_bernanke_032320094" target="_blank"back in 2002/a)./p pSo anyone touting the a href="http://www.freemensch.com/2009/06/the-ever-present-threat-of-hyperinflation.html" target="_blank"hyperinflation risk/a in public is playing the shill, a decoy – seemingly unconnected – proclaiming the miracle powers of Dr.Ben Bernanke’s snake oil to#8230;/p

Will a Case of International Espionage Bring Down Goldman Sachs?

Contrarian Profits — Mon, 06 Jul 2009 19:46:49 +0000

pMathew Goldstein of Reuters broke a major story on Sunday implying just that. While most in the US were celebrating the 4th of July, a Russian immigrant living in New Jersey was being held on federal charges of stealing top-secret computer trading codes from a major New York-based financial institution—that sources say is none other than Goldman Sachs./p pThis news is huge. Why? Because Goldman consistently ranks number one in the NYSE’s program trading report. And this highly profitable desk is now in jeopardy./p pThe secret codes the accused man, Sergey Aleynikov, allegedly emstole /emaffect a section of the trading group that deals with low latency (microseconds) event-driven market data processing, strategy, and order submissions. Also known as one of Goldman’s biggest profit centers./p ulFederal#8230;/ul

Words from the (investment) wise for the week that was (June 22 – 28, 2009)

Prieur du Plessis — Sun, 28 Jun 2009 08:37:06 +0000

“Words from the Wise” this week comes to you in a shortened format as I do not have access to my normal research resources while on the road in Europe. Although very little commentary is provided, a full dose of excerpts from interesting news items and quotes from market commentators is included.

Does the Price of Gold Rise or Fall in a Deflation?

Adrian Ash — Fri, 26 Jun 2009 19:42:29 +0000

pDeflation and the price of Gold. Give yourself an extra point for spotting the trick question. It#8217;s already tripping up plenty of would-be answers. Because gold must fall during deflation, since it rose so much during the inflation of the 1970s – right?br / #8220;Gold Prices, in real inflation-adjusted terms, unsurprisingly tended to increase during inflationary times,#8221; nods one commentator, writing in London but posted at the emstrong#62;Business Times/em in Singapore. #8220;Its purchasing power tended to sag during depressions and deflation.#8221;/p pThe source for this claim? Besides syllogism (#8221;The #8217;70s gave us inflation and a gold bull market; ergo, the opposite must be bad for gold#8230;#8221;) it was apparently Roy Jastram#8217;s emThe Golden Constant/em, that dry, dusty study of gold#8217;s enduring stability across the#8230;/p

F-22: The Fighter Fights Back – Analyst Blog

Zacks Market Commentaries — Fri, 26 Jun 2009 17:10:33 +0000

The giant toddler of the U.S. Defense Industry -- Lockheed Martin Corporation
(LMT) -- can breathe easy for the moment -- things are looking up for F-22, the LMT fighter plane.

The threat that Secretary Gates will send the F-22 program to an early perdition in 2010 is proving to be just another ruse. Yesterday, both the U.S. House of Representatives and the Senate Armed Services Committee voted to keep the F-22 on its wings.

While the U.S. House of Representatives reserved a berth for it in the $550.4 billion defense authorization bill for fiscal 2010 it approved, the members of the Senate Armed Services Committee approved their version of the 2010 defense authorization bill, which included $1.7 billion in funding for seven more F-22 fighters.

This does not ensure all roses ahead for LMT, though. An extension of the lifeline of F-22 contradicts the presidential policy of defense cuts, and the threat of a White House veto overhangs.

All in all, a bloodbath is virtually ensured in front of the full Senate. However, with F-22s fortunes tied to 25,000 direct and 9,000 indirect workers spread over more than 40 states, we wonder if the Obama Administration will risk the hostility that an opposition will involve.

The decision was influenced by recent developments in Iran and North Korea, amid continued interest from Japan for F-22 procurement. However, export of the F-22 has been banned under an amendment by the House Appropriations Committee since 1998. This new lease on life will help to keep the F-22 assembly line open till such issues are resolved.

Subsequent to the end of the first quarter, LMT's backlog was $80.8 billion, up 8.0% sequentially and representing approximately 1.8x 2009 of estimated sales. The stock, with a high dividend yield of 2.81, has gone up more than 18% over the past three months, and gives us enough confidence to reiterate our BUY rating on LMT.
Read the full analyst report on "LMT"
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Obama’s Financial System Overhaul Would Give the Fed Broad Powers Over Wall Street

Don Miller — Thu, 18 Jun 2009 22:50:31 +0000

Must Reads Wednesday, June 17, 2009

Contrarian Profits — Wed, 17 Jun 2009 18:12:00 +0000

ul type="disc" lia href="http://www.merkfund.com/merk-perspective/insights/2009-06-16.html" target="_blank"The Dollar: the good, the bad, and the ugly/a emMerk Funds/em/li li/li lia href="http://www.bloomberg.com/apps/news?pid=20601087#38;sid=aIA5KsKdW74s" target="_blank"Obama to limit Fed lending power, grant systematic role/a emBloomberg/em/li li/li lia href="http://www.forbes.com/2009/06/16/stimulus-arra-government-spending-krugman-prescott-opinions-contributors-ohanian.html" target="_blank"Sorry Krugman: stimulus doesn’t stimulate/a emForbes/em/li li/li lia href="http://www.nakedcapitalism.com/2009/06/germans-to-install-gold-vending.html" target="_blank"Germans to install gold vending machines/a emNaked Capitalism/em/li li/li lia href="http://seekingalpha.com/instablog/420590-marli/8420-did-the-japanese-try-to-dump-135-billion-in-us-bonds-on-the-black-market" target="_blank"Japanese try to dump $134 billion of bonds on the black market/a emSeeking Alpha/em/li li/li lia href="http://www.mint.com/blog/finance-core/hyperinflation-the-story-of-9-failed-currencies/" target="_blank"Hyperinflation: the story of nine failed currencies/a emMint/em/li li/li lia href="http://www.economist.com/world/unitedstates/displayStory.cfm?story_id=13832411#38;source=hptextfeature" target="_blank"America’s debt is Obama’s biggest weakness/a emThe Economist/em/li li/li lia href="http://online.wsj.com/article/SB124511811033017539.html" target="_blank"The White House fires a watchdog/a emWSJ/em/li li/li lia href="http://www.bloomberg.com/apps/news?pid=20601087#38;sid=a7monBTRDAdQ" target="_blank"Where’s inflation?/a emBloomberg/em/li li/li lia href="http://www.lewrockwell.com/woods/woods115.html" target="_blank"The first Great Depression/a emLew Rockwell/em/li /ul

Food Inflation Returns, Watching the Fed, Dollar Bulls Rampage, Bestselling “Car” and More!

Addison Wiggin — Tue, 16 Jun 2009 13:54:33 +0000

pRice rationing redux? a href="http://www.contrarianprofits.com/articles/author/chris-mayer/" class="alinks_links"Chris Mayer/a on the return of rising food prices#8230; Dan Amoss on what the Fed says versus what the Fed does#8230; Russia sings dollar#8217;s praises, dollar bulls stampede#8230; Chuck Butler looks past the rhetoric#8230; China#8217;s latest resource grab#8230; Iraqi oil#8230; America#8217;s best-selling car#8230; with an MSRP of $60#8230;/p p strongWe begin a new week pondering the question that bedevils the conscientious market observer every day./strongInflation? Deflation? Or as Agora founder a href="http://dailyreckoning.com/author/bbonner/"Bill Bonner/a is wont to suggest, both?/p p strong“Inflation – rising prices, or a drop in the purchasing power of the dollar – will soon rise to the very top of economic concerns,” writes Chris Mayer./strong “I can’t understand why there are pundits who insist we can’t have inflation while the economy is weak. There are plenty of examples#8230;/p

The One Question to Ask Yourself

Zacks Market Commentaries — Fri, 12 Jun 2009 21:46:30 +0000

During the 1980 Presidential campaign Ronald Reagan asked voters one simple question for which the answer catapulted him into the White House. He asked people:

"Are you better off today than you were 4 years ago?"

I believe there is a similar, vital question that investors can ask themselves after this tumultuous bear market. And that is...

"Are you happy with your mutual fund ranking system?"

On the surface I know it doesn’t seem quite as profound. Nor will it help my chances of becoming President. But think about it this way. You probably have the majority of your life’s savings invested in mutual funds. And you most likely selected those funds based upon just one firm’s rating system.

So, if you believe that rating system is helping you successfully grow your wealth, then there is no need to read the rest of this article. However, if you wonder if there is a better way to bolster the performance of your life’s savings stored in those mutual funds, then read on.

Introducing the Zacks Mutual Fund Rank- Another Breakthrough for Investors

Zacks Investment Research has a history of creating innovations that truly help investors outpace the market. This started back in 1979 when our founder, Len Zacks PhD, discovered that earnings estimate revisions are were the most powerful force that impacts impacting stock prices.

To exploit that this force, he created the Zacks Rank stock picking system. Thirty 30 years and billions of dollars in trades later, it has more than tripled the S&P 500 with an average yearly gain of +26%.

After Since 1979, we’ve launched numerous innovations for investors, but none on par with our latest achievement. So now, after rigorous testing, we have isolated a number of factors that help us spot funds set to outperform. These unique "factors" are what makes the new Zacks Mutual Fund Rank so powerful.

At this stage, I’m sure you have three main questions. First, how does the mutual fund rank work? Second, how are the ratings created? Third, where can I see the rank for my funds? Your wish is my command.

How Does the Zacks Mutual Fund Rank Work?

Our new ranking system that covers over 18,000 mutual funds. These funds are ranked on a scale from 1 to 5, with 1 being the best funds to own for the future and 5 being the worst.

Mutual Fund Rank	Rating
1	Strong Buy
2	Buy
3	Hold
4	Sell
5	Strong Sell

Why did we use this scale? Two reasons

The Zacks Rank for stocks employs the same 1 to 5 rating system and we wanted continuity between the two systems for the convenience of our customers.
The most popular fund rating systems give #5 ratings to their best funds and yet history shows that these systems don’t help investors pick better funds. So we don’t want to follow their path.

How are the Ratings Created?

Every month we update the Zacks Mutual Fund Rankings based upon an exclusive process created by our founder Len Zacks and the Zacks Quantitative Research Department.

We have 2 two different fund systems to create the best mutual fund ratings. One system is exclusively applied to US stock based mutual funds and the other is used for all other funds. Below are explanations for each.

US Based Stock Mutual Fund Ranking System: The key to this ranking system is that we evaluate the average Zacks Rank for the stocks owned by the fund. We blend this with other criteria that our studies show are beneficial in finding funds that will outperform in the future. In general, the higher the average Zacks Rank for the stocks in the fund, then the higher the Zacks Mutual Fund Rank.

Why is this a better process than other mutual fund rankings? Because the Zacks Rank has proven itself to be one of the best stock ratings systems ever invented. So if a fund manager is buying more highly rated Zacks Rank stocks, then it shows that the manager has the expertise to buy stocks with qualities proven to beat the market. This leads to an increased likelihood that the fund will outperform its peers in the future.

To long time Zacks customers, you already know why the Zacks Rank helps pick superior stocks. And thus its application to mutual fund holdings makes perfect sense. If you are not familiar with the Zacks Rank for stocks, learn more with free articles and video resources in our Zacks Rank Education Section.

All Other Mutual Fund Ranking Systems: Len Zacks has isolated a number of key factors that will help find funds that will outperform. These factors include measures of a fund’s past performance along with some quality attributes.

Our tests to date show that these two systems will help investors pick better funds. Over time, Len Zacks and the research team will review the success of the model and make any and all adjustments to wring out additional gains for investors.

Where to Find the Mutual Fund Rank on Zacks.com?

We have a number of free and premium resources that will allow you to tap into the power of the Zacks Mutual Fund Rank. All of them are available on Zacks.com Funds Page.

On the free side of the ledger, you can find the Zacks Mutual Fund Rank for any of your funds on our quote pages. Just enter any mutual fund ticker symbol on Zacks.com quote search box. That will take you to the quote/profile page for the fund where you will clearly see the Zacks Mutual Fund Rank. Also for free, we write a number of weekly articles highlighting the Top 5 funds by category and by fund family. This can help you discover some great new funds to invest in now.

We also have a number of excellent resources that are part of our Zacks Premium service. Here are some of those top features.

Find all rated funds in 42 categories and for 500+ fund families
Check for similar funds. Enter any fund ticker and you’ll see its peers that may have higher rankings.
Compare funds. Enter up to 5 mutual funds and size up key differences at a glance
Screen for Best Funds: Use our robust, but easy to use mutual fund screener to find funds that meet your unique criteria.

If you made it this far, then it probably means you are not fully satisfied with your current mutual fund rating system. And hopefully I have made a solid case that the new Zacks Mutual Fund Rank could help you take better care of your life’s savings invested in mutual funds.

If that is true, then I invite you to take a free trial to our Zacks Premium service to gain full access to all of our mutual fund ranking resources (and stock ranking resources too). Just follow the link below to learn more.

Start Zacks Premium Free Trial

Good Investing,
Stephen Reitmeister

Steve runs Zacks.com and is its Editor-at-Large. You can learn more about his market insights by viewing our" Zacks Roundtable Review" and "Investing the Zacks Way" videos.

Zacks Investment Research

All this money … going, going, gone!!

Trading School — Fri, 12 Jun 2009 02:30:00 +0000

I found this by chance on CNN. It’s just plain scary to me. What do you think? Adam Troubled ASSET RELIEF PROGRAM Financial rescue plan aimed at restoring liquidity to the financial markets Program Committed Invested Description American International Group * See complete AIG bailout below $70 billion $69.8 billion $40 billion in preferred shares were converted to so-called non-cumulative shares that more closely resemble common stock. [...]

Obama Administration Wants New “Pay Czar” and Shareholder Vote to Reign in Executive Compensation

Don Miller — Thu, 11 Jun 2009 15:02:43 +0000

div class="entry" pThe Obama administration yesterday (Wednesday) continued its assault on highly paid Wall Street executives, announcing plans to appoint a “pay czar” to oversee compensation at financial firms receiving Troubled Asset Relief Program (TARP) funds. /p pThe government also will create a new program to give shareholders at nonparticipating firms a vote on executive pay packages./p pPresident Barack Obama has targeted executive pay practices as part of a larger effort to overhaul regulations and prevent a repeat of the worst financial crisis since the Great Depression./p pObama will unveil a “a href="http://www.bloomberg.com/apps/news?pid=20601109#38;sid=aV0wrDNqSfck" target="_blank"series of specific proposals/a” on June 17 designed to streamline and reorganize regulations, White House spokesman Robert Gibbs told strongemBloomberg News/em/strong./p pThe administration originally proposed regulations in early February to put a $500,000 per year lid#8230;/p/div

Obama Administration Wants New “Pay Czar” and Shareholder Vote to Reign in Executive Compensation

Don Miller — Thu, 11 Jun 2009 15:02:43 +0000

Defense Solutions Holding Inc. / DFSH Adds GAF(R) Materials to its Offerings in Iraq

Stuart T. Smith — Wed, 10 Jun 2009 18:48:15 +0000

Defense Solutions, Inc., an international project management and executive consulting firm, a wholly owned subsidiary of Defense Solutions Holding, Inc. (OTC Bulletin Board: DFSH), announces that the Company is the preferred supplier of GAF Materials Corporation products to Iraq. GAF Materials Corporation (”GAF”) is North America’s largest manufacturer of residential and commercial roofing. Founded in 1886, [...]

Revolving Debt Cheap Energy Economy on Its Knees

Contrarian Profits — Mon, 08 Jun 2009 19:41:41 +0000

pThrough the tangle of green shoots and sprouting mustard seeds, a certain nervous view persists that the arc of events is taking us to places unimaginable. The collapse of General Motors and Chrysler signifies more than the collapse of US car manufacturing. It spells the end of the motoring era in America per se and the puerile fantasy of personal liberation that allowed it to become such a curse to us./p pOf course, many Nobel prize-winning economists would argue that it has only been a blessing for us, but that only shows how the newspapers are committing suicide-by-irrelevance. And if other societies, such as China’s late-entry industrial start-up, want to adopt a similar fantasy, they will only find themselves all the#8230;/p

Stock Market News for June 4, 2009 – Market News

Zacks Market Commentaries — Thu, 04 Jun 2009 14:24:54 +0000

U.S. stocks slumped for the first time in five sessions after a report showed U.S. employers cut more jobs than expected. A government report showing factory orders grew less than expected also dragged shares lower. Meanwhile, Fed Chairman Ben Bernanke cautioned that the government cannot borrow indefinitely to finance the shortfall and urged lawmakers to work towards reducing the fiscal deficit. The DJIA declined more than 65 points to 8675, and the S&P, while holding above a key technical level of 928, closed the day 1.4% down. Technology focused NASDAQ was off 0.6%. Trading continued to remain light with only 1.3 billion shares exchanging hands. Market breadth was negative as declining stocks outpaced advancing issues by a seven-to-three margin. The US dollar gained versus other major currencies, closing up 1.1% against a basket of currencies.

Stock futures point to a higher opening on the Wall Street, amid ECB and BoE interest rate decisions and weekly employment numbers and retailers' May same-store-sales figures, which is expected to have dropped 3.6%, according to Thomson Reuters (NYSE:TRI).

All ten industry groups on the S&P 500 lost ground Wednesday, with basic material and oil and gas shares, down 4.2% and 3.6%, respectively, leading the decliners. A sharp decline in oil prices also hurt energy stocks. Crude prices dropped 3.5% on an unexpected rise in weekly US inventory. Valero Energy (NYSE:VLO), which said it expects to report a second quarter loss, plunged 18%; Alcoa (NYSE:AA) retreated 4.3%; Freeport-McMoRan (NYSE:FCX) shares dropped 5.7%. Among oil companies, Exxon Mobil (NYSE:XOM) declined 1.2% and Chevron (NYSE:CVX) declined 1.6%; Marathon Oil (NYSE:MRO) plunged 7.2% and ConocoPhillips stocks (NYSE:COP) registered a 4.8% decline.

In his prepared testimony to the House Budget Committee, Bernanke urged lawmakers that they should commit to control the nearly $2 trillion budget deficit. The Fed Chairman also reiterated that the pace of economic contraction appears to be slowing. The White House estimates that the budget deficit will reach around $1.8 trillion this year and decline to about $900 billion by 2011.

On Wednesday, ADP Employer Services reported US employers shed 532,000 jobs in May, more than the 525,000 expected. The numbers, nevertheless, were fewer than last months' downward-revised 545,000. Factory orders improved in 0.7% in April, versus expectations of a 0.9% gain, and up from the downward-revised 1.9% drop in March.

Credit Suisse's (NYSE:CS) equity analyst also cautioned against the current valuation levels given the recent spate of stock offerings and weak economic conditions. Nevertheless, the analyst maintained a 920 S&P projection for 2009. According to Bloomberg data, the S&P currently is priced at 15.5 times earnings, its most expensive since last October, although below the 19.8 times monthly average of the past decade.

Zacks Investment Research

Defense Solutions Holding Inc. / DFSH Awarded First Commercial Contract in Iraq

Stuart T. Smith — Thu, 04 Jun 2009 13:52:41 +0000

Defense Solutions, Inc., an international project management and executive consulting firm, a wholly owned subsidiary of Defense Solutions Holding, Inc. (OTC Bulletin Board: DFSH), announced today that the Company has signed a $750,000 contract to supply pipeline parts to North Gas Company, a state-owned company of Iraq. This contract represents Defense Solutions’ first commercial-based contract [...]