AMAG

Market Wrap-Up for Feb.17 (WTW, DPS, CLF, WMB, KO, LO, SJM, more)

Filed in AMAG, Apple, dividend, earnings, Ford, Gold, Gold Bullion prices, lead, o, shares by on February 17, 2011 0 Comments

It was an overall steady day for the markets, along with a decent number of dividend payouts coming over the wires. Earnings boosted several dividend names, but the biggest winner of the day was Weight Watchers ( WTW ) after the company just stunned analysts with the size of its 2011 earnings estimates. Shares of WTW rallied over $20 this morning on that news. Other earnings plays that had a good day included recently-recommended name Dr. Pepper Snapple Group ( DPS ). Cliffs Natural Resources ( CLF ) and J.M. Smucker Company ( SJM ) traded in the green as well following earnings results. Williams Co. ( WMB ) was up on news the company will be splitting in two. The company also announced a dividend boost. Late in the morning, beverage giant Coca-Cola ( KO ) announced a 7% increase in its dividend payout. Tobacco play Lorillard ( LO ) announced a 16% increase in its dividend payout to lift shares almost 2%. We had removed shares of Lorillard from our recommended list recently on concerns we have surrounding the coming FDA judgement/opinion on use of menthol in cigarettes, which accounts for the majority of Lorillard’s sales. I have to admit, I am a big fan of American Idol. My kids and I really enjoy the whole “dreams can come true” mindset for the contestants. Last night was another episode of “cut-downs” as singers needed to perform as part of groups. It’s always interesting to see the type of friction this can cause as egos are clashing everywhere you turn. What amazes me is that often times the individual performers that we thought were amazing on their own, begin to crumble when taken into a different situation. They lose sight of what needs to be done to get through to the next rounds. You see some completely unravel and throw the opportunity they had once cherished right down the drain. This phenomenon isn’t unlike the investing world in that many individuals know what needs to get done to build wealth, but for some reason or another, can not seize the moment. Whether it is just putting some extra coin to the side every month, spending some money to find quality research and investment ideas, or swallowing their pride when an investment idea doesn’t pan out, investors consistently make big mistakes. I know the market continues to move higher and some people may be waiting for a pullback. There is nothing wrong with doing so, but don’t skip your monthly investments you can be making because of that. There are plenty of good yield plays that you can still find to put money to work in, even after the nice run the market has had. Taking financial responsibility and knowing what you can afford to do is the key. I talk about investing in quality dividend-paying stocks as a great way to build up your future income, but if you are spending like there’s no tomorrow as well, then that is a risk that could eventually negate all the good you might be doing on the investment side. Saving is a mantra that needs to also be adopted…

Continue Reading »

The Miracle of Regenerative Medicine

Filed in AMAG, BP, Gold, Gold Market, HAL, o, target by on February 17, 2011 0 Comments
The Miracle of Regenerative Medicine

Tall, dark, and handsome… Dr. Anthony Atala is not a guy you could easily mistake for Dr. Frankenstein. Yet, in his white lab coat, Atala is doing exactly what author Mary Shelley wrote about so long ago. A mad scientist in his own right, he is busy growing body parts in his Wake Forest lab. A finger here, a bladder there, Atala is currently growing dozens of different tissues. And from heart valves to muscles to ears, his Institute for Regenerative Medicine is literally about to turn the world on its head. Working at one of the world’s largest research facilities dedicated to regenerative medicine, the modern Dr. Frankenstein is adamant that his research will one day replace diseased or damaged tissue using homegrown replacement parts. After all, as Dr. Atala often pondered, “A salamander can grow back its leg, why can’t a human do the same?” Now, some twenty-four years later, that notion is no longer just a wild hypothetical; it’s a feat of modern science, stripped from the pages of a 194-year-old novel. Today, regenerative medicine stocks are the companies to watch as this amazing new technology unfolds. The promise of regenerative medicine Take the story of Claudia Castillo, for instance. In 2008, this 30-year-old mother of two became the first patient to receive a whole organ transplant without the need for powerful anti-rejection drugs. Damaged by a bout of tuberculosis, her entire windpipe was repaired with a replacement part created with the help of her own stem cells. And given the choice between losing a lung or becoming a guinea pig for a radical new medical technique, Castillo chose the latter— becoming one of the pioneers for future regenerative surgeries. Her life these days is not only back to normal… She recently called her doctors from a nightclub to tell them she had been out dancing all night. Before the ground-breaking surgery, Castillo could barely climb the stairs. Claudia’s story is just the beginning… In fact Dr. Atala’s team is currently working on re-growing over 23 different organs including the liver, heart, kidney, and bladder. Along the way, they have conquered a number of milestones in the field. From the website , these firsts include: Developing biological strategies to enable certain human cell types that were previously thought not to be expandable outside the body to be grown in…

Continue Reading »

The 10 Year $1.5 Trillion Tax Hike

Filed in AMAG, BP, dividend, Gold Market, o, obama, revenue, target, ubs, Uncategorized by on February 14, 2011 0 Comments

While our goal with this blog isn’t to bash the government, we do want to point out what’s likely to impact the markets, small businesses, and families across the country. The US government plays a substantial role in what happens on Wall Street… every single day. ————— The new Obama budget basically shoves a 10 year, $1.5 trillion tax hike down our throats. So much for that “No family making less than $250,000 a year will see any form of tax increase” promise . As pointed out by Americans for Tax Reform, here’s what we can look forward to: “President Obama released his budget this morning. Rather than focusing on Washington’s over-spending problem, the budget calls for higher taxes on families and small businesses to pay for even more government spending. Under the Obama budget, tax revenues will grow from 14.4% of GDP in 2011 to 20% of GDP in 2021. By comparison, the historical average is only 18% of GDP. Tax hike lowlights include: Raising the top marginal income tax rate (at which a majority of small business profits face taxation) from 35% to 39.6%. This is a $709 billion/10 year tax hike Raising the capital gains and dividends rate from 15% to 20% Raising the death tax rate from 35% to 45% and lowering the death tax exemption amount from $5 million ($10 million for couples) to $3.5 million. This is a $98 billion/ten year tax hike Capping the value of itemized deductions at the 28% bracket rate. This will effectively cut tax deductions for mortgage interest, charitable contributions, property taxes, state and local income or sales taxes, out-of-pocket medical expenses, and unreimbursed employee business expenses. A new means-tested phaseout of itemized deductions limits them even more. This is a $321 billion/ten year tax hike New bank taxes totaling $33 billion over ten years New international corporate tax hikes totaling $129 billion over ten years New life insurance company taxes totaling $14 billion over ten years Massive new taxes on energy, including LIFO repeal, Superfund, domestic energy manufacturing, and many others totaling $120 billion over ten years Increasing unemployment payroll taxes by $15 billion over ten years Taxing management capital gains in an investment partnership (“carried interest”) as ordinary income. This is a tax hike of $15 billion over ten years A giveaway to the trial lawyers—not letting companies deduct the cost of punitive damages from a lawsuit settlement. This is a tax hike of $300 million over ten years Increasing tax penalties, information reporting, and IRS information sharing. This is a ten-year tax hike of $20 billion. You can read more here. The 10 Year $1.5 Trillion Tax Hike originally appeared in Wealth Daily . Wealth Daily is a free daily newsletter featuring contrarian investment insights and commentary.

Continue Reading »

Sysco Confirms Our Worst Fears

Filed in AMAG, BP, GOld juniors, Gold Market, HAL, inflation, lead, Lear, o, target by on February 14, 2011 0 Comments

The food inflation strategies we outlined here and here and here may have sounded a bit gloomy, but considering what’s been happening in the commodity markets (inflation, weather-related disasters, and freezing conditions in Mexico), the well-timed strategies remain in place. ———————— Now that Sysco has confirmed their prices are rocketing (which also means your food prices will head north), it’s about to get a lot worse for the millions already struggling to pay their outrageous food bills… According to reports, you’ll pay double… even triple the price for produce within weeks thanks to a freeze that wiped out crops in Mexico and the southwestern US. And, according to Zero Hedge, “Now might be a good time to hit the frozen foods (or fresh produce if you’ve got a vacuum sealer) aisle at your local grocery store and stock up on your favorite fruits and veggies, as there may be a severe supply crunch coming in the next couple weeks lasting perhaps several months.” “Why pay premium prices later when you can prepare yourself today, before the rest of the country gets wind of it,” says Zero Hedge, as inflationary risks, supply problems, weather related incidents, and a recent freeze in Mexico that’s lead to an 80% and 100% crop damage makes life a bit more unbearable for companies that Sysco, which just released the following note: ALL OF OUR GROWERS HAVE INVOKED THE ACT OF GOD CLAUSE ON OUR CONTRACTS DUE TO THE FOLLOWING RELEASE. WE WILL BE CONTACTING YOU PERSONALLY TO REVIEW HOW THIS WILL AFFECT OUR CONTRACTED ITEMS WITH YOU GOING FORWARD. THE DEVASTATING FREEZE IN MEXICO IS WORST FREEZE IN OVER 50 YEARS… THE EXTREME FREEZING TEMPERATURES HIT A VERY BROAD SECTION OF MAJOR GROWING REGIONS IN MEXICO, FROM HERMOSILLO IN THE NORTH ALL THE WAY SOUTH TO LOS MOCHIS AND EVEN SOUTH OF CULIACAN. THE EARLY REPORTS ARE STILL COMING IN BUT MOST ARE SHOWING LOSSES OF CROPS IN THE RANGE OF 80 TO 100%. EVEN SHADE HOUSE PRODUCT WAS HIT BY THE EXTREMELY COLD TEMPS. IT WILL TAKE 7-10 DAYS TO HAVE A CLEARER PICTURE FROM GROWERS AND FIELD SUPERVISORS, BUT THESE GROWING REGIONS HAVEN’T HAD COLD LIKE THIS IN OVER A HALF CENTURY. THIS TIME OF YEAR, MEXICO SUPPLIES A SIGNIFICANT PERCENT OF NORTH AMERICA’S ROW CROP VEGETABLES SUCH AS: GREEN BEANS, EGGPLANT, CUCUMBERS, SQUASH, PEPPERS, ASPARAGUS, AND ROUND AND ROMA TOMATOES. FLORIDA NORMALLY IS A MAJOR SUPPLIER FOR THESE ITEMS AS WELL BUT THEY HAVE ALREADY BEEN STRUCK WITH SEVERE FREEZE DAMAGE IN DECEMBER AND JANUARY AND UP UNTIL NOW HAVE HAD TO PURCHASE PRODUCT OUT OF MEXICO TO FILL THEIR COMMITMENTS, THAT IS NO LONGER AND OPTION. WITH THE SERIES OF WEATHER DISASTERS THAT HAS OCCURRED IN BOTH OF THESE MAJOR GROWING AREAS WE WILL EXPERIENCE IMMEDIATE VOLATILE PRICES, EXPECTED LIMITED AVAILABILITY, AND MEDIOCRE QUALITY AT BEST. THIS WILL NOT ONLY HAVE AN IMMEDIATE…

Continue Reading »

Blinder Understates Cost of Carbon Tax

Filed in AMAG, BP, deflation, economy, job creation, lead, Lear, New Gold, o, Spot Gold by on February 4, 2011 0 Comments

In a recent article in the Wall Street Journal , Alan Blinder listed numerous alleged benefits of a phased-in carbon tax. Out of his entire column, he devoted a single sentence to the possible downside of his plan when he wrote, “No one likes to pay higher taxes.” A more balanced assessment shows that a carbon tax presents very real dangers, even if we rely on the same economic analysis that so enthralled Blinder. Spurring Innovation through Higher Taxes? Here’s Blinder explaining the economic benefits of a carbon tax that starts out low, but will eventually become quite steep: “Once America’s entrepreneurs and corporate executives see lucrative opportunities from carbon-saving devices and technologies, they will start investing right away — and in ways that make the most economic sense. I don’t know whether all this innovation will lead to 80% of our electricity being generated by clean energy sources in 2035, which is the president’s goal. But I can hardly wait to witness the outpouring of ideas it would unleash. The next Steve Jobs, Bill Gates and Mark Zuckerberg are waiting in the wings to make themselves rich by helping the environment.” We should also be clear that Blinder’s argument for job creation does not rely on the “negative externalities” of carbon emissions. Earlier in the piece, he made a list of the “few nice side effects” that would result from a carbon tax: “reducing our trade deficit, making our economy more efficient, ameliorating global warming …” Because he puts global warming at third in the list, we see that there is nothing peculiar to greenhouse gases behind his main argument for job creation. No, Blinder is making the simple observation that if the government imposes artificial costs on the…

Continue Reading »

Answering Krugman on Austrian Economic Theory

Answering Krugman on Austrian Economic Theory

I still get the sense that Krugman truly doesn’t understand the Austrian position. For example, he asks, “Why is there overwhelming evidence that when central banks decide to slow the economy, the economy does indeed slow?” But because the Austrian theory says the bust occurs when the central bank backs off and allows interest rates to rise toward their “correct” level, this is hardly a problem. In fact, if central banks couldn’t slow the economy, as an Austrian economist I would be worried about my theory. Krugman also poses questions concerning (price) inflation rates and the connection between nominal and real GDP. But I think he is conflating the Austrian theory with a purely “real” business-cycle theory. Austrians understand that monetary influences can have real effects. To repeat, that is the very essence of the Mises-Hayek theory. Although most of Krugman’s objections are due to his unfamiliarity with the actual Austrian theory, I think one source of confusion came from the particular illustration I used in my article. First let’s set the context by quoting Krugman : “So what is the essence of this Austrian story? Basically, it says that what we call an economic boom is actually something like China’s disastrous Great Leap Forward, which led to a temporary surge in consumption but only at the expense of degradation of the country’s underlying productive capacity. And the unemployment that follows is a result of that degradation: there’s simply nothing useful for the unemployed workers to do. “I like this story, and there are probably other cases besides China 1958–1961 to which it applies. But what reason do we have to think that it has anything to do with the business cycles we actually see in market economies?” First, I should say I’m glad that Krugman at least concedes that (his understanding of) the Austrian explanation both is theoretically possible and actually happens in the real world — coming from the guy who referred to it in 1998 as equivalent to the “phlogiston theory of fire,” this is progress! However, Krugman still doesn’t have quite the right understanding of the Austrian view of the “capital consumption” that occurs during the unsustainable boom. As I said above, on this particular issue the fault lies with the necessarily simplistic “sushi model” I used in the article that Krugman read . In that article, in order to make sure the reader really saw why Krugman (and Tyler Cowen) were overlooking something basic, I had the villagers boost their daily sushi intake even while they developed a new technology to help augment their fishing. So during their “boom,” it would have seemed to a dull villager that both consumption and investment were rising. In my fable, this was physically possible because the villagers neglected the regular maintenance of their boats…

Continue Reading »

How Not to Stop a Terrorist

Filed in AMAG, BP, deflation, euro, lead, Lear, New Gold, o, silver, target by on January 26, 2011 0 Comments

As Glenn Greenwald predicted, terrorists have attacked the next most logical target. A suicide bomber has caused the death of nearly three dozen people in Moscow’s Domodedovo Airport by attacking a crowded area not subject to rigorous security measures. Mr. Greenwald expected the next terrorist bombing to take place in the crowded lines just before the security checkpoint. Instead, they went for a soft target just outside of the hard target, but it wasn’t quite the soft target Mr. Greenwald expected… The suicide bomber went to the back door instead of the front. The other unguarded end of the airport was attacked: the part just beyond the security line where passengers crowd together to pick up their bags and find ground transportation or meet relatives and friends. “Medvedev Orders Bomb Probe, Threatens Sackings,” reads an Associated Press headline this morning. The article continues… “Medvedev lashed out at law enforcement and airport authorities over the attack at Domodedovo, an international hub and major gateway to Russia, which killed at least eight foreigners… “‘It is clear that there is a systemic failure to provide security for people’ at Domodedovo, said Medvedev. “He ordered the Interior Ministry to recommend transport security officials for dismissal and said authorities found culpable would be held responsible, suggesting they could face prosecution.” Exactly what were security officials supposed to do?: “Domodedovo Airport said it was not responsible for the blast. ‘We fully met all the requirements in the sphere of air transport security for which we are responsible,’ spokeswoman Yelena Galanova said in televised comments.” Domodedovo Airport is like just about every other airport in the world. That is to say, there is no protocol to stop random people from wandering into the baggage claim area. Now I suppose there may be. But I’m not sure it will help. You can “harden” one target all you want; there will still be an unprotect zone just beyond your securest point. Medvedev doesn’t want to accept that… “He urged officials to develop a system that would provide for ‘total checks’ on people and bags at airports.” I’m not sure what this is supposed to mean. Wherever these “total checks” start, there will be people congregating somewhere prior to being totally checked. These people will…

Continue Reading »

How to Profit as Your Food Bill Explodes

I hate to say I told you so. But with food companies no longer able to absorb the margin drops, and being forced to pass higher costs to the consumer… I told you so. General Mills, Kraft and Kellogg, for examples are already hiking prices… and it’ll get a lot worse, as we said in this Wealth Daily article: If you thought your $200 weekly grocery bill was bad, just wait. It’s about to jump 20% to 30% next month, as the Fed embraces another round of quantitative easing to combat global currency manipulation and devaluation. But that very move could do more harm than good. It’s likely to create another food price bubble, similar to what we saw in 2007-2008. Three years ago, wheat prices skyrocketed even as the consumption-to-stock ratio warranted falling prices… Bread was up to $1.32 at the time — a 32% rise in less than three years… The price of eggs rocketed 50%. Overall, food prices rose more than 5% and the average family’s grocery bill rang in $80 higher. And we’re going to see it happen again, as historically high corn prices drive the cost of beef to twenty-five-year highs… The sad fact is, this situation has no chance of improvement if the Fed floods the global economy with more dollars. What the move will do is further damage the U.S. economy Apparently, we’re not paying enough for food, energy, or clothing… It doesn’t matter that 20% of Americans are unemployed or under-employed. It doesn’t matter that, since the Fed last spoke, gold and other commodities have spiked… Crude oil has already soared some 27%. Wheat is up 84%. Sugar is up 55%. Soybeans are up some 24%. And corn just rocketed another 15% in two days — the biggest move in recent history, and a move that prompted some to warn of another food crisis. The meat industry just warned of a game-changer in pricing and profitability; the cost and contraction of corn supplies could mean higher prices for…

Continue Reading »

In Praise of Anarchy

Filed in AMAG, BP, deflation, Lear, o, Spot Gold, ubs, US Dollar by on January 24, 2011 0 Comments

Left alone, good people tend to do good things. And, when unobstructed by coercion, force, violence or any other tool employed by the state in order to foster and maintain a more “responsible,” “socially conscious” citizenship, most people tend toward being good people…all on their very own. Nowhere was this sentiment better expressed during the past few weeks than in the flood-stricken state of Queensland, Australia (and, more lately, in the state of Victoria, to Queensland’s south). The rains that inundated an area the size of France and Germany (combined!) across the Sunshine State wrought havoc and destruction upon its people. Lives were lost, property damaged and industry crippled. When the worst of Mother Nature’s wrath had subsided, Queensland residents were left with a monumental clean up. To their credit, these individuals, in the face of near-immeasurable disaster, performed admirably. They did what came naturally. Contrary to the patriotic rally cries of politicians, they didn’t do what Queenslanders do; they did what good people do. And it was beautiful. The general feeling was perhaps best summed up by Wally “The King” Lewis, a retired national football hero, who spent the last week of his holidays helping his fellow Brisbane residents prepare sandbags and to bail rising flood waters out of their homes. (It is worth pointing out here that, for many Australians, there is no higher office to be attained in the land than that of venerated sporting legend.) Speaking to National Nine News from the waterlogged front yard of a neighbor – whom he had never met – Wally said, “If someone’s doing it tough, I think it’s the right thing to do to put the hand up and ask them if they want any help.” The interviewer then turned his microphone to another volunteer. “What was your reaction when Wally Lewis turned up?” Typifying the laid back disposition of the crowd, the young man casually replied, “[Laughs] Yeah, I was a little surprised but…you know…people help out. It’s all good.” The Australian people appeared to be perilously close to discovering something very important about themselves; something, perhaps, they’ve always known; an instinctual tendency toward human solidarity, the natural urge to help a neighbor in distress, to lend a hand; in short, to volunteer. Alas, barely had the first piece of debris been cleared away when the media, as it typically does, lost sight of the bigger picture. Alongside inspirational stories of non-violent, voluntary cooperation, the local papers turned their attention to the state’s role in the cleanup. Should the state and federal governments remain focused on returning “their” budgets to surplus, or should they deploy funds to assist those in need of help? In other words, how “best” should the state spend its citizens’ money…as if the only just, honest option had not already expired on point of expropriation in the first place? [The answer, in other words, is not to steal it.] While sifting through the news …

Continue Reading »

Weekend: A Digital Pearl Harbor

Welcome to the Wealth Daily Weekend Edition— our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles. From Sun Tzu to “Stormin’ Norman” Schwarzkopf, the goal of every military commander has always been pretty simple: to kill people and break things. Beat the other guy, and your name will find its way into the history books… The only thing that changes is the technology. From the longbow to the ballistic missile, the arms race is one that never sleeps. One of the fastest growing fronts in this struggle is in cyberspace. Today’s style of combat is geek versus geek. But don’t believe for a second that it’s not just as dangerous… Because while it doesn’t involve tanks or fighter squadrons, cyberwar’s ability to disrupt an enemy is just as effective, and often equally destructive. It’s war by other means — one that focuses on using computer code to strike an enemy’s Achilles’ heel. Full-scale cyberwar The recent discovery of a computer worm called Stuxnet is a perfect example of the damage a hacker armed with code can create. Using the “most advanced and aggressive malware in history,” cyberwarriors have now set Iran’s nuclear ambitions back by two years, according to most estimates. (Not surprisingly, Israel and the United States are at the top of the suspect list.) The worm itself attacked controllers critical to operations at Natanz, a sprawling enrichment site in Iran’s desert. As operators stared blankly at their screens, the bug’s centrifuges spun wildly out of control, tearing systems apart. “This was nearly as effective as a military strike, but even better since there are no fatalities and no full-blown war. From a military perspective, this was a huge success,” said Ralph Langer, a top German Security expert. “It will take two years for Iran to get back on track.” This is only the latest cyber skirmish… Back in 2007, Estonia fell victim to what Wired Magazine dubbed “Web War One”. Hounded by three weeks of digital assaults, Estonia’s electronic Maginot Line proved as feeble as the original. The country’s firewalls withered as a flood of data sent by the nation’s unknown opponents quickly crashed one system after another, crippling numerous vital public services. Websites of government ministries, banks, and newspapers all fell victim. And while the rest of the world watched the attacks with a combination of curiosity and indifference, military planners…

Continue Reading »

Inflation and the Damage Done

Filed in AMAG, BP, economy, Gold, inflation, money supply, o, silver by on January 14, 2011 0 Comments

The Mogambo Stupidity Prize (MSP) is a not-so-rare honor bestowed to highlight the laughable kind of stupidity about inflation that is so prevalent these days that I find myself screaming at the radio, the newspaper and the TV, wildly ranting, arms akimbo like some kind of demented old man, about how inflation is the Worst Inflation and the Damage Done originally appeared in the Daily Reckoning . The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Continue Reading »

Afghanistan, Iraq, Collateral Damage and the Banality of Killing

Filed in AMAG, BP, deflation, New Gold, o, sov by on January 14, 2011 0 Comments

The standard explanations for the Arizona killings are now being set forth, such as widespread violence in America and right-wing extremism. I’d like to weigh in with another possible factor, one that I can’t prove but one that I think Americans ought to at least consider: the fact that killing has now become an accepted, essential, normal, and permanent part of American life. No, I’m not referring to the widespread gun violence in America that liberals point to as part of their gun-control agenda. I’m not even referring to the widespread violence that accompanies the decades-long drug war, especially in Mexico. I’m instead referring to the U.S. government’s regular killing of people thousands of miles away in Afghanistan and Iraq, killing that has now gone on regularly for some 10 years and that has become a fairly hum-drum part of our daily lives. Six people were killed and 14 were injured in the Arizona shootings, including a woman who was shot through the head and a 9-year-old girl whose life was snuffed out. Everyone is shocked over the horror, which is detailed on the front page of every newspaper across the country. But let’s face it: Such killings go on every week in Afghanistan and Iraq and have for some 10 years. Parents, children, brothers, sisters, cousins, grandparents, friends, brides, grooms, and wedding parties. People are killed in those two countries …

Continue Reading »