ben bernanke

Market Wrap-Up for Feb.9 (RL, DIS, AGU, IR, CSC, NYX, NOK, AAPL, more)

Federal Reserve Chairman Ben Bernanke was on the hot seat today as he gave his annual Washington presentations. With the markets being significantly higher than they were this time last year, he was certainly feeling better about some of the recent data. Some of his statements pointed to increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold. Also, real consumer spending rose at an annual rate of more than 4 percent in the fourth quarter. There is no question that we have been seeing economic stabilization, and the markets have certainly been pricing stocks as if the lift can be sustained. We actually made some ratings changes this morning, removing four names from our recommended list. We continue to see opportunities in the market, but we are also aware that some names may just not have the risk/reward profile we are searching for, so we need to make changes when we see fit. You can check out the post if you did not read the e-mail alert we sent out to Dividend.com Premium members earlier. The markets were moving sideways early on, but some sellers did show up in certain areas, especially the commodity names. Earnings were in play today with buyers jumping at positive news from Polo Ralph Lauren ( RL ), Walt Disney ( DIS ), Syngenta ( SYT ) and Agrium ( AGU ). On the flip side, it wasn’t a great day for shares of Computer Sciences ( CSC ) or Ingersoll-Rand ( IR ) following both companies’ less-than-stellar results. Also, shares of NYSE Euronext ( NYX ) were halted for some time, but then popped higher when the stock was released for trading on reports the exchange was involved in merger talks with the Deutsche Börse. Interesting story making the rounds this morning about Nokia’s ( NOK ) CEO sending out a reality check memo overnight to everyone in the company. The memo details how the company has lost its way, with rivals Apple ( AAPL ) and Google ( GOOG ) eating their lunch. It’s a real admission that change needs to happen quickly or the company’s future could quickly dim further. I couldn’t help but think of how this relates to the many people that still today have not taken the financial steps to safeguard their later years (whether you are 5,10,20,or 30 …

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Fear the Reaper

Filed in ben bernanke, BP, earnings, economy, Gold, GOld juniors, lead, o, recession, shares, stimulus by on January 24, 2011 0 Comments
Fear the Reaper

It’s been a hell of a run. The economy is back on track. A new survey from the National Association for Business Economics suggested that jobs were coming: The number of economists who saw hiring by their firms increasing over the next six months was 42 percent, compared with 7 percent who expected to lay off workers. The NRI of 35 was the highest in the 12 years that the question has been asked. Some talking heads are suggesting the economy grew 3% in the fourth quarter of 2010. Companies slashed costs, became mean and lean, and drove profitability to record levels. Intel — one of the companies I told you to buy two weeks ago — just said it was buying back $10 billion in shares. Ben Bernanke has been pumping up liquidity to drive the stock market higher. His plan has worked to perfection… The Dow only goes up There is only one trade on right now. Group-think means the trend is your friend. “Don’t fight the Fed” is the mantra bleated by the sheeple. The blind squirrel investors have found their nut and assume there is another one just over there, ready to be eaten. This of course, raises my contrarian hackles. Take a look at this chart… Barry Ritholtz over at ritholtz.com had a great point when he wrote: At 90% gains, this market has run further and faster than any previous rally. Indeed, in just 20 months it has far outpaced every other rally’s 24 month record by some 50%; the next closest gainer was 65.7%. That does raise some cause for concern short term. The market has never gone so far, so fast as it has in the last two years. After a 90% run, which is a more likely scenario — that the Dow goes up another 90%, or that it corrects? Small caps lead Not only do small cap stocks (under $300 million market cap) lead over the long haul, but they also lead the way out of recessions. These are the smaller, quicker companies that are able to adjust to the economic landscape, and fast to roll out new products. T. Rowe Price found that in the 12 months following the previous nine recessions, small-cap stocks gained 24%, versus 17.6% for the S&P 500. Merrill Lynch reported that in the 18 bear markets since the 1930s, small caps gained an average of 41.4% in the 12 months after the end of the decline, compared with a gain of 32.4% for large caps. It has been true with this bounce back, as well. Small caps have been on fire until last week. As of Friday, small caps were down 4% for the week and 1% for the year… No more bailouts to states Another reason to think about taking some profits is that there are no more bailouts coming. The majority of 2008’s stimulus package went to the states. This equals about $400 billion that the states used to keep running…

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The $600 Billion Gamble

The $600 Billion Gamble

  I’ve spilled so much ink on QE2 at this point that I must be beginning to sound like a broken record. So I’ll let this story speak for itself…. From Reuters by Jonathan Spicer entitled: Fed’s bond-buying could soon backfire: Plosser “ The U.S. Federal Reserve’s aggressive bond-buying plan could soon backfire unless the central bank gradually changes course to head off inflation, a top Fed official known for his hawkish stance said on Tuesday. Philadelphia Federal Reserve Bank President Charles Plosser said the $600-billion quantitative easing plan, known as QE2, would need to be reconsidered if the U.S. economy’s current “moderate recovery” picks up steam. The prospect of sustained price deflation — a worry for Fed Chairman Ben Bernanke and other backers of the controversial QE2 plan — is highly unlikely in part because the Fed’s massive reserves will eventually flow out into the economy, Plosser added. “If the economy begins to grow more quickly and the sustainability of this recovery continues to gain traction, then the purchase program will need to be reconsidered along with other aspects of our very accommodative policy stance,” Plosser said in a speech to the Risk Management Association. “The aggressiveness of our accommodative policy may soon backfire on us if we don’t begin to gradually reverse course,” he said. It comes as recent data show the U.S. economy is slowly recovering, but also as Fed officials increasingly rally behind QE2, which in early November set the Fed to purchasing Treasury securities in an effort to rejuvenate that recovery. While some have credited QE2 for having already played a role in the rebound, Plosser said that argument likely “stretches things.” Nothing more than a $600 billion gamble…Don’t you just love the Fed? Related Articles: Hoenig: QE2 May Lead to “future instability” Hoenig: QE2 Won’t Work Hoenig: Let Troubled Banks Fail Jim Grant on the Fed’s “Mission Creep” Jim Grant: “The Fed is out of its lane”   To learn more about Wealth Daily click here Advertisement Military’s Latest Energy Report Will Give You the Willies Inside, they confess a shocking truth… without any new developments, we only have 16 months of oil left! Before the media catches wind and panic drives the price of oil through the roof, I’ll show you how one group of companies solving the problem could make you filthy rich by Christmas. Click here to find out more.   The $600 Billion Gamble originally appeared in Wealth Daily . Wealth Daily is a free daily newsletter featuring contrarian investment insights and commentary.

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Big Ben’s Stimulus Party: Only the Top 20% Received an Invite

Big Ben’s Stimulus Party: Only the Top 20% Received an Invite

What if they threw a recovery party and only the top 20% showed up? It looks like we are about to find out….. From the Telegraph by Ambrose Evans-Pritchard entitled: Deepening crisis traps America’s have nots “ The US is drifting from a financial crisis to a deeper and more insidious social crisis. Self-congratulation by the US authorities that they have this time avoided a repeat of the 1930s is premature. There is a telling detail in the US retail chain store data for December. Stephen Lewis from Monument Securities points out that luxury outlets saw an 8.1pc rise from a year ago, but discount stores catering to America’s poorer half rose just 1.2pc. Tiffany’s, Nordstrom, and Saks Fifth Avenue are booming. Sales of Cadillac cars have jumped 35pc, while Porsche’s US sales are up 29pc. Cartier and Louis Vuitton have helped boost the luxury goods stock index by almost 50pc since October. Yet Best Buy, Target, and Walmart have languished. Such is the blighted fruit of Federal Reserve policy. The Fed no longer even denies that the purpose of its latest blast of bond purchases, or QE2, is to drive up Wall Street, perhaps because it has so signally failed to achieve its other purpose of driving down borrowing costs. Yet surely Ben Bernanke’s `trickle down’ strategy risks corroding America’s ethic of solidarity long before it does much to help America’s poor. The retail data can be quirky but…

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It’s Time for Bernanke to Just Go Away

This was taken from Wealth Wire, which you can still sign up for here … It’s FREE! Enjoy. I have no confidence in Ben Bernanke…  I don’t care what degrees he holds, or what he studied about the Great Depression. He’s done nothing but take us to the abyss…  and lie to us, all to save the financial system. He doesn’t beleive inflation is a problem.  But it is. He said he’s not monetizing debt.  But he is. He’s willing to continue further easing as long until unemployment improves… but it’ll do nothing more than hurt us more. And now he wants us to believe a recovery is sustainable.  Too bad he’s wrong. Here’s more from Reuters: “The U.S. economy may be finally hitting its stride, even if growth remains too weak to put a real dent in the nation’s jobless rate, Federal Reserve Chairman Ben Bernanke said on Friday. Offering no real clues on the future direction of monetary policy, Bernanke sounded cautiously more upbeat than he had in his most recent public remarks, citing improvements in consumer spending and a drop in claims for jobless benefits as hopeful signs that a languid recovery was perking up. “We have seen increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold,” the central bank chief said in his first testimony to Congress since the Fed launched a controversial plan to buy an additional $600 billion in government bonds. His remarks were made public just an hour after the Labor Department reported the economy generated a disappointing 103,000 jobs in December. The jobless rate dropped to 9.4 percent from 9.8 percent, but the decline was partly due to a troubling rise in the number of people exiting the workforce. Just a month ago, in an interview on the CBS program “60 Minutes”, Bernanke had voiced a degree of trepidation about the economy’s

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Weekend: Wall of Worry

Weekend: Wall of Worry

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. Before the bulls break out the champagne today, I would warn them not to get too far ahead of themselves. After all, euphoria is a dangerous emotion that can lead to big losses — in this market or in any other. What is crystal clear is that our problems are not only ongoing but persistent. Certain cans have been kicked, but they are still in the road. Fundamentally, the picture is as clear as mud, even though the bulls are ready to break out the party hats in 2011, insisting that the markets really will grow to the sky. If only it were so… Advertisement Gold’s “Louisiana Purchase” Not long ago, the world’s largest uranium giant practically gave away billions of dollars worth of gold to one small exploration company… for only $250,000! Before their next set of drill results are posted, find out how this rare opportunity could easily triple your money by September! Click Here For Your Free Report Now! Of course, we know otherwise. I’m firmly in the camp that believes a “new normal” has begun; it springs from economic necessity as the middle class digests a greater new reality. This brave new world will be focused more upon frugality than on frivolity. As unemployment persists, home prices continue to drop, and more wealth evaporates, consumers are more likely to try living within their means, no matter how hard that may be. As a result, without a steady up-tick in jobs or boost in income, a repeat of the consumption-bubble we just lived through simply isn’t going to happen. Nor can it be recreated — despite the fact that the Fed is trying its best to do just that. So, what we’re essentially left with is a classic case of a reluctance to borrow or consume. And that’s a big problem, since that’s what the lion share of the U.S. economy has been based on since 1982… We have too many cars, too many houses, and too many debt holders who can’t support it all. Sure, Ben Bernanke and friends are providing plenty of liquidity; but those mountains of dollars will have very little velocity when a nation of good-time Charlies suddenly decides to live within their means. As I’ve said before, you can lead a horse to water, but you can’t make him drink. That being said, I thought we would play …

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The Scariest Thing about Bernanke

The Scariest Thing about Bernanke

“The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt.” — Bertrand Russell “One hundred percent.” — Ben Bernanke, on his confidence that the Fed will control inflation Lately, I can’t help but reflect on Ron Paul’s End The Fed (ETF). It’s been over a year since I finished the book, yet I keep pulling it off the shelf. Throughout, Paul writes insightfully about politics and money in America. Like this part about the Bernank : Some people have been surprised by Bernanke’s irresponsible conduct of monetary policy. There was no reason to be surprised. He was on record promising unlimited amounts of inflation should the need arise. If Greenspan was cocky about the genius of central bankers, Bernanke is even more so. Congressman Paul — unlike some — is careful with his words. You don’t get many sexy sound-bytes out of the Rep. from Texas. So when he says Bernanke is worse than Greenspan (my interpretation, based on this and other passages in ETF ), it’s noteworthy. To be sure, moral hazard flourished under his predecessor. The notorious “Greenspan put” offered an implicit backstop to banks and kept monetary conditions plenty loose. Bernanke and the current monetary regime, though, are taking things further. They are determined to keep rates lower than any time in history, indefinitely. This will lead to pervasive malinvestment, bank bonuses, and price inflation. Meanwhile, retirees will continue to collect pitifully low income on their CDs.  But don’t worry; Wall Street bonuses are safe. Any bank that can’t make money in this environment should have their damn head examined. Borrow money at 0%, buy higher-yielding assets. Dip into various gov’t giveaways, let the bonuses flow, change accounting rules to conceal losses. Rinse, repeat. Financial sector profits are back up to 42% of all corporate profits in the United States — an absurdly high level. None of this should come as a surprise I guess, with Bernanke, William Dudley, and a few others at the helm of the Fed. Clearly, ” the Bernank ” has even less of an issue with moral hazard than Greenspan did, and under his leadership the Fed is even more determined to “ease” monetary conditions. Robbing the middle class and savers blind and enriching the banks are just unfortunate consequences of what’s good for the economy …

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Ron Paul Puts the Fed In the Crosshairs

Ron Paul Puts the Fed In the Crosshairs

If this isn’t Ben Bernanke’s worst Congressional nightmare, I don’t know what is. His arch-nemesis, Ron Paul, author of “End the Fed,” will take control of the House subcommittee that oversees the Federal Reserve. Yesterday, House Financial Services chairman-elect Spencer Bachus, chose Paul to lead the panel’s domestic monetary policy subcommittee when Republicans take the House majority next month. Meanwhile just last week, Paul said he is planning a whole new a set of hearings on U.S. monetary policy and will restart his push for an audit of all the Fed’s functions. In that regard, here’s a look the direction some of those hearings may take… From Forbes by Alexandra Zendrian entitled: Ron Paul’s Golden Rule Forbes: Why do you think the Federal Reserve needs to be audited? Dr. Ron Paul: For lots of reasons. I don’t believe in secrecy. I don’t think anyone should have so much power that they can create money out of thin air and spend it and interfere in the markets and do central economic planning without any oversight. Congress has a responsibility to know what they’re doing because they created the Fed, they’re very, very important, and people benefit from their actions. And I’d like to know who benefits and who suffers the consequence. I just think that it would be in the interest of the people to know exactly what the Fed is doing. Forbes: Why don’t we know what’s going on with the Fed? People have been pretty complacent, generally complacent, over many, many years because it’s been an insidious problem. I mean, in 1913, they came into existence and a lot of people didn’t know much about it. And they didn’t call for it. But over the years, there’s always been one or two saying, “We should know more about it.” And in the 1970s, when we had a pretty serious economic crisis with inflation and interest rates at 21%, there was a demand for an audit. So they passed an audit bill and what they did exactly was they put prohibitions in. Before that, it was a little vague, but they made it instead of opening up the doors for an audit, they made it absolutely much more difficult for us to find out what they were doing. And my bill essentially repeals what they put in place in 1978, the prohibitions against auditing the Fed. And they work in secrecy. They’re allowed to make arrangements with foreign governments, foreign central banks, international organizations, and they’ve really abused their power, although their power’s been on the books, to deal with corporations. It’s been this recent crisis that has really brought this to a head. They have literally bought over a trillion dollars’ worth of securities. And we don’t know who benefited from that or how much they paid for them. So I think it’s time that the people know what they’ve been up to. The Fed is all-powerful and they scare people and tell people “the world will come to an end.” That’s exactly what they’re doing right now. “This would be so horrible, we would lose our independence.” But all they’re talking about independence is secrecy. They argue, “Oh, no, we …

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Market Wrap-Up for Dec.8

I was reading more anecdotes from Ben Bernanke’s 60 Minutes appearance in which he discussed the Federal Reserve’s ability to easily control inflation and change course quickly on its recent accommodative monetary policy. We have seen the Fed raise interest rates in the past to control the stock market’s ramp, and when you turn back to the early 80′s we saw the process tame runaway commodity prices. Fast-forward to now and the playbook to stymie inflation is ready when needed. The biggest question and fear this time is that countries like China could come in and corner a valuable amount of needed commodities. How do you control that scenario? That is a tough question to answer, and one I hope the Federal Reserve gives a lot of thought to. Remaining in super-power status is a bit harder when you have run-away debt and China continuing to assert its buying power because it just can. I don’t mean to stray too far into politics, but all the moves that the Fed contemplates can have a varied affect on the companies we invest in, so it pays to keep a close eye on the big picture at all times. Speaking of inflation, I am keeping a closely monitoring gold prices as we are seeing a bit of a sell-off today. Gold has backed off making new highs once again. If the yellow metal keeps struggling at these levels, the crowded trade could get a bit sloppy with traders possibly looking

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Jon Stewart’s Big Bank Theory

Filed in ben bernanke, BP, GOld juniors, o, target by on December 8, 2010 1 Comment

  Here’s the latest from funny man Jon Stewart. In it he once again destroys our old pal and printer extraordinaire– Ben Bernanke.   The Daily Show With Jon Stewart Mon – Thurs 11p / 10c The Big Bank Theory www.thedailyshow.com Daily Show Full Episodes Political Humor The Daily Show on Facebook The sad part is that it’s all true and you have no idea how bad they are screwing you. Related Articles: Jon Stewart on the Foreclosure Fiasco Jon Stewart’s “Nightmare on Wall Street” Jon Stewart’s Poorhouse Jon Stewart On 40 Years of Broken Energy Promises Jon Stewart’s “Nightmare on Wall Street” To learn more about Wealth Daily click here Advertisement $1 Mining Company Takes Delivery of a $273 Billion Mineral Reserve This 500-square-mile chunk of land might be the most valuable property on Earth… And it just became the sole property of a tiny mining exploration company. To get the name and the story on this miraculous “country-making” stock… Click here. Jon Stewart’s Big Bank Theory originally appeared in Wealth Daily . Wealth Daily is a free daily newsletter featuring contrarian investment insights and commentary.

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Ultra-Deepwater Rigs are Back

Ultra-Deepwater Rigs are Back

Ben Bernanke, head of the Federal Reserve, went on 60 Minutes over the weekend and talked about a third round of quantitative easing (QE3).  I’m of the opinion that you can’t spend your way out of a debt crisis, but Ben believes in “priming the pump” by spending — or loaning to banks, anyway. And by banks, we mean the massive trading companies that got us into this mess to begin with. Bernanke thinks that by giving money to banks so that they can loan it will spur small business growth and other spending… The problem is that money is like your ex-girlfriend; it goes where it is treated best. And right now, the market believes that the commodity super-cycle spurred by emerging market demand and inflationary fears will continue to push higher. Unintended consequences As I write this, oil is running just shy of $90 a 26-month high. Gold popped up to $1,424 — a near record. Silver is at a 30-year high. According to the Associated Press , Bernanke said he hopes the Fed’s bond buying will lower bond yields and encourage investment in stocks, boosting business activity and economic growth in the country. But what is happening is that — at a time when we need inexpensive commodities to lower costs — we have record prices in coal and gasoline will average more than $3.00 a gallon by Christmas. If you remember the sharp rise in commodity prices (most notably oil to $147 a barrel) crushed the U.S. economy back in 2008. The low price of oil ($33bbl) coincided with the bottom in March of 2009. (Oil is black, SP500 is gold in the chart below):   The shakeout in commodities also took out a host of highly-leveraged hedge funds as they got crushed with margin calls. The New York Times reported in March 2009 that more than 200 hedge funds went under with losses of $84 billion. In December 2008, I recommended buying four gold companies that were trading at less than cash at the time. This was back when gold miners were sold off to a negative market value during a severe economic crisis, and when the gold price was moving up as a safe haven. That is the power of speculators in the commodities market.   And right now, the speculators are being fed free money from Ben…

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Market Wrap-Up for Dec.6 (BKS, FCX, MEE, FDX, YUM, more)

For property owners that have been watching the story of rising and falling home values, there is no better time than now to look into getting your property taxes reduced. A recent report from the National Taxpayers Union finds that up to 60 percent of U.S. homes are over-assessed. The study also finds only about 5% of homeowners have gone through an appeal process. It always makes sense for you to review your records to be sure there are no errors that could be costing you money (mistakes such as miscalculating the number of beds/baths, etc.). Another thing you want to do is check comparable homes that had recently been sold in your neighborhood, to see how prices are tracking and how that compares to your current assessment. You may be sitting on a decent windfall from reduced property taxes that you could be putting to work in high-quality dividend-paying stocks. Looking at today’s market, investors are coming out of the gate a bit slowly. We’re seeing lots of chatter about Fed Chairman Ben Bernanke’s appearance on CBS’ 60 Minutes program, in which he said the Federal Reserve is ready to do whatever it takes to prevent the U.S. economy from turning down once again. It was a mixed start for the week with some plays seeing red, such as FedEx ( FDX ) and Yum Brands ( YUM ). Commodity names Freeport McMoran ( FCX ) and Massey Energy ( MEE ) rose on continued interest from traders. Barnes & Noble ( BKS ) saw an early pop on a potential private equity/Border’s Group bid. Interesting to see the bid, as I am trying to picture where the new growth will come from in the book retailing space. There is certainly room for one big book retailing play, but without growth, the purchase seems to be about consolidation, cutting stores and employees, and really

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