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by Ben Carlson, A Wealth of Common Sense

There are many market analogies and cliches that can actually be useful, but there are plenty that are useless or could use some context. Here are two phrases I hear all the time that I could do without.

“The easy money has been made.” The Warren Buffett Way by Robert Hagstrom was published in 1994. By this time Buffett was a well-known commodity to those in the investment world and he was famous for building his fortune as an investor, but this book introduced Buffett to a wider audience than ever. It remains one of my favorite books on Buffett to this day because it encompasses all of the main points you need to learn from The Oracle – his principles, how he developed his strategy over time, the importance of psychology and emotional intelligence and lessons from some of his best and worst investments.

I’m sure there were many readers who bought this book at the time who said to themselves, “The easy money has been made. Why would I buy Berkshire now?” I probably would have thought the same thing after seeing that Buffett had compounded Berkshire Hathaway’s shares at over 29% per year since 1965. This would have been a mistake. Since 1994 Berkshire has risen 13.3% per year against the S&P 500’s 9.2% annual return.

In his latest missive that came out yesterday Howard Marks wrote, “When you look at the chart for something that’s gone up and to the right for 20 years, think about all the times a holder would have had to convince himself not to sell.”

The financial markets are never easy. This is true of both gains and losses. Things only appear easy in hindsight.

“I’ve seen this movie before and it ends badly.” Cocktail, with Tom Cruise, is one of my all-time favorite movies from the 1980s. Cruise’s character, Brian Flanagan has a great line in the movie when he says, “Everything ends badly, otherwise it wouldn’t end.”

Many in the financial industry use this phrase to try to scare investors. And I understand the idea behind it. No investment goes up in a straight line forever, as young Flanagan so eloquently points out. But many fear-mongering pundits make it sound like when the markets eventually fall that the entire system is going to collapse.

All right everyone, it finally happened. Things ended badly. Let’s all go home. The markets are closed for good. Everyone settle your profits and losses. Someone turn out the lights.

There’s no end point in the the markets. Individual companies can go out of business but the markets don’t stop because there’s a crash. Markets are cyclical. They go up and down. That’s how cycles work. Going back to the late-1920s there have been over 20 bear markets where stocks fell in excess of 20%. That means it’s happened roughly once every four years, on average. Bull markets end and often in spectacular fashion, but life and the markets go on.

Yes these periods are painful, but many talking heads make it sound like the world is going to come to an end when markets crash. One of the hardest lessons for people to learn is that a market crash can be one of the best things to happen to you as an investor, provided you have the capital, time horizon and courage to take advantage when stocks go on sale.

No one ever says, “I’ve seen this movie before and it ends with higher dividend yields, lower prices, better valuations and higher expected returns.”

But that’s a more accurate assessment that’s actually helpful to investors.

Further Reading:
Words and Phrases That Should Be Banished From Finance
The Most Overused Analogies in Finance

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Copyright © A Wealth of Common Sense


The other sign health insurance markets are in the early stages of a death spiral is the age mix of those buying policies through Obamacare. Originally it was estimated that around 40 percent of enrollees had to be in the relatively healthy 18 to 34-year-old age segment, so their premiums could be used to pay for the health expenses of older, less-healthy enrollees. So far it appears only some 28 percent of enrollees are in that coveted age group

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

Increasingly over the past year or so, when people ask me what I do, and that happens a lot on a trip like the one I’m currently on in the world of down under, I find myself not just stating the usual ‘I write about finance and energy’, but adding: ‘it seems to become more and more about geopolitics too’. And it’s by no means just me: a large part of the ‘alternative finance blogosphere’, or whatever you wish to call it, is shifting towards that same orientation.

Not that no-one ever wrote about geopolitics before, but it used to be far less prevalent. Much of that, I think, has to do with a growing feeling of discontent with the manner in which a number of topics are handled by the major media and the political world. Moreover, as would seem obvious, certain topics lay bare in very transparent ways how finance and geopolitics are intertwined.

In the past year, we’ve seen the crash of the oil price, which will have – financial and political – effects in the future that dwarf what we’ve seen thus far. We’ve seen Europe and its banks stepping up their efforts to wrestle Greece into – financial and political – submission. And then there’s the nigh unparalleled propaganda machine that envelops the Ukraine-Crimea-Russia issue, which has bankrupted the economy of the first and imposed heavy economic sanctions on the latter, for political reasons.

And while there are plenty people out there all across the west who may feel convinced that Greece had it coming, that waging wars in far away lands is the only way to keep the west safe, and that Putin is the biggest and meanest bogeyman this side of Stalin, if not worse, many also have come to question the official version(s) of events. Something that, if you ask me, is always good, even if it doesn’t mean the conclusions arrived at are always top notch.

For that matter, even Société Générale does geopolitical commentary, as evidenced in a note published by Tyler Durden:

Western sanctions have exerted a broad-based negative impact on Russian businesses. The cost of borrowing has climbed considerably not just for sanctioned institutions, but also for other Russian entities. Risk management departments across global enterprises are likely to continue erring on the side of caution, continually assessing the risk of sanctions materializing for counterparties in Russia. Normalization of business practices may only reemerge long after the removal of sanctions. Although this does not mean completely avoiding interactions with Russian entities, businesses and investors are increasingly cautious and selective in their participation…


Western sanctions against Russia may persist indefinitely. Some locals believe in the likelihood of de-escalation later this year, pointing to the lack of political cohesion and unanimity among Europe’s political leaders, and increasing calls for easing of sanctions. Russian businesses believe that escalation of sanctions may be hard to implement, given that they will also hurt European counterparties.


Some local asset managers are optimistic on the performance of Russian assets later this year, based on a perceived high likelihood of improvement in geopolitics. Although locals differ in their assessment of the timeline when sanctions may be lifted, they appear united in their support and admiration of President Putin. Few care to speculate on President Putin’s ultimate game plan, or whether one exists, citing the opacity of the situation. With that said, locals broadly concur that Russia would never (again) relinquish Crimea. In this light, Western sanctions against Russia based on its annexation of Crimea may persist indefinitely…

While in my opinion the conclusions in the note leave to be desired, which may be an indication that the boys are somewhat new to the topic, the very fact that SocGen issues notes about geopolitics, and uses the term itself, is interesting and – to an extent – solidifies the link about finance and geopolitics I noted before.

Still, I’d be inclined to think that when it comes to Greece, the bank’s analysts are capable of leaving their narrow finance perch behind for a broader vista that allows for a view that makes Greece a political instead of a financial issue. Because that’s what is has become, whether the parties involved wish to acknowledge it or not.

Greece, like Ukraine, is about power politics, executed at about the same level of intelligence and sophistication that you and I had when we are still playing in a sandbox. And finance, economics, is one of the very favorite weapons to try and get the side perceived as weaker to say Uncle.

And that in and of itself is still far from the worst thing. The worst is that what reaches the general public about these power games – which are far from innocent, they kill, maim, hurt real people – is a distorted and simplified precooked storyline, so hardly anyone can make up their own mind about what happens. That is why the ‘alternative finance blogosphere’ feels increasingly compelled to cover that part of the story as well.

This is also a major problem in the more domestic issue of economic recovery. Unless we would agree, which we really shouldn’t, that making a small group of the population richer while the much larger rest is made poorer, is how we define ‘recovery’, we have no recovery. But it is still accepted and proclaimed like a gospel: our economies are in recovery.

If you take a step back and watch things from a distance, it’s truly too silly to be true, but endless repetition of the same lines, be they true or not, has them accepted as being cast in stone. It’s like selling detergent. It’s exactly like that: say something often enough and people start to believe it, connect to it. Of course it doesn’t hurt that people very much want to believe a recovery is here. Just as they want to believe product X will turn them into shiny happy people dressed in ultra white shirts.

And of the best pieces I’ve seen in a while on the illusionary recovery topic comes from Scott Minerd at Guggenheim Partners, writing in the FT:

QE Will Lower Living Standards Long Term

New monetary orthodoxy is likely to permanently impair living standards for generations to come, while creating a false perception of reviving prosperity. As economic growth returns again to Europe and Japan, the prospect of a synchronous global expansion is taking hold. Or, then again, maybe not. In a recent research piece published by Bank of America Merrill Lynch, global economic growth, as measured in nominal US dollars, is projected to decline in 2015 for the first time since 2009, the height of the financial crisis.


In fact, the prospect of improvement in economic growth is largely a monetary illusion. No one needs to explain how policy makers have made painfully little progress on the structural reforms necessary to increase global productive capacity and stimulate employment and demand. Lacking the political will necessary to address the issues, central bankers have been left to paper over the global malaise with reams of fiat currency. [..]

What I decidedly do not like about Minerd’s piece is the suggestion that if only policy makers had made more progress on ‘structural reforms necessary to increase global productive capacity’, things would have been fine, or better at least. Like if someone came up with a better way towards growth, that would solve our problems.

In my view, this is not about failing to find the right way towards more growth, it’s that more growth itself is not the right way to solve the issues. When he says policy makers and central bankers are ‘lacking the political will necessary to address the issues’, I can only hope he means the will needed to restructure the entire financial system, force bankrupt banks into bankruptcy and break up what’s left into pieces too small to ever again threaten an economy, let alone the entire financial system. But I don’t see him say it, so I’m left doubting that’s what he means.

Essentially, monetary authorities around the globe are levying a tax on investors and providing a subsidy to borrowers. Taxation and subsidies, as well as other wealth transfer payment schemes, have historically fallen within the realm of fiscal policy under the control of the electorate. Under the new monetary orthodoxy, the responsibility for critical aspects of fiscal policy has been surrendered into the hands of appointed officials who have been left to salvage their economies, often under the guise of pursuing monetary order.


The consequences of the new monetary orthodoxy are yet to be fully understood. For the time being, the latest rounds of QE should support continued U.S. dollar strength and limit increases in interest rates. Additionally, risk assets such as high-yield debt and global equities should continue to perform strongly.


Despite ultra-loose monetary policies over the past several years, incomes adjusted for inflation have fallen for the median U.S. family. With the benefits of monetary expansion going to a small share of the population and wage growth stagnating, incomes have been essentially flat over the past 20 years.

That last bit is the same as saying there is no recovery. Which is a tad curious, because Minerd started out saying, in his first paragraph: ‘As economic growth returns again to Europe and Japan’. Pick one, I’d say.

In the long run, however, classical economics would tell us that the pricing distortions created by the current global regimes of QE will lead to a suboptimal allocation of capital and investment, which will result in lower output and lower standards of living over time.


In fact, although U.S. equity prices are setting record highs, real median household incomes are 9% lower than 1999 highs. The report from BoA Merrill Lynch plainly supports the conclusion that QE and the associated currency depreciation is not leading to higher global output. The cost of QE is greater than the income lost to savers and investors. The long-term consequence of the new monetary orthodoxy is likely to permanently impair living standards for generations to come while creating a false illusion of reviving prosperity.

It’s by no means the first time I bring this up, but I’ll do it again until there’s no more need. The stories we are bombarded with 24/7 under the quite hilarious misnomer ‘News’ have been prepared, pre-cooked and pre-chewed for our smooth and painless digestion, and as such they contain only tiny little flakes of reality. They are designed to make us feel good, not understand the world around us.

It’s up to sites like this to expose these storylines and narratives for what they really are: tools to sell detergents. Their purpose is not to inform people, but to manipulate them into forming opinions about their world that serve the intentions of one or more groups of people hungry enough for power to occupy themselves with this sort of scheming.

Somewhere on the not so sharp edge between money and power, there are lots of people who devote their entire lives towards devising ways to make up your mind for you. And if you’re like most people, you like that, because it absolves you from having to think for yourself. But the price to pay doesn’t come with the commercials: if you let others think for you, you or your children may be called into war at any time of somebody else’s choosing.

And, as Scott Minerd says, the economic future for your entire families will look utterly bleak. Because that recovery they talk about? It’s not for you.

For the 4th month in a row, personal spending growth missed expectations. With a 0.1% gain in February (against expectations of a 0.2% rise), this growth rate remains below all of 2014's growth. Income rose slightly more than expected at 0.4% (against +0.3% exp) but this is the same growth as January's upwardly reviused +0.4%. That leaves the powers that be very disappointed as the savings rate jumps to the highest since 2012, not exactly the Keynesian pump-primed, low gas prices tax cut spendfest all the smartest people in the room promised.


Spending misses for 4th month in a row.


Leaving the savings rate surging to the highest since 2012. What is ironic is that since this is a goalseeked data point, and one which was massively revised lower in the end of 2014 since the BEA was unable to account for Obamacare spending, expect this to eventually be revised far lower once again.


For now, however, the divergence grows.


Even as spending on goods, both durables and non-durable, has gone exactly nowhere in recent months...

... as Americans continue spend the bulk of their meager disposable income only on services.

Bottom line, expect another avalanche of downward GDP revisions, with all eyes on the Atlanta Fed which will have no choice but to cut its Q1 GDP to 0.0% now, or even push it negative.

Mylan N.V. (NASDAQ: MYL) shares declined ...

Full story available on

In addition to Janet Yellen's confused ramblings at 3:45 pm on Friday, which did all they could to push the S&P to close green for the year, the other catalyst that sent stocks higher on Friday afternoon was the unconfirmed rumor reported by the WSJ that Intel would purchase Altera, the news of which briefly sent INTC stock higher than the entire market cap of Altera on what can only be described as the latest short squeeze. Yet one entity that appears unhappy with this news is none other than Goldman Sachs which likely was snubbed as an advisor or an underwriter by Intel in recent months, and which all else equal, once again slaughtered the muppets who listened to its recommendation to Sell Intel stock (just days after another comparable slaughter by Goldman on SanDisk longs this time on the Conviction Buy side).

Here is the Goldman bottom line to Kermit:

On Friday afternoon, the Wall Street Journal reported Intel may be considering the acquisition of Altera but provided no additional information. Recall that Altera is a provider of programmable logic chips into the communications infrastructure, networking, and industrial end markets. For context, the median semi deal has been done at a 35% equity premium and 22X NTM EPS (vs. ALTR trading at 22X 2015E as of 3/26 close) and 10X NTM EBITDA (vs. ALTR at 16X 2015E).


Our 12-month price target is $23, based on 10X normalized EPS of $2.30.

The good news that fading Goldman is becoming rapidly the most profitable trade since we discovered the gem that is MacNeil Curry. Expect a posting by an anonymous and overly defensive Vampire Squid defending Goldman's sellside practices in the Brookings Institution blog in the coming weeks.


The men behind the wall at the military base lob mortars and shoot artillery in what seems like an aimless direction. They shoot with almost no consequences. Not once in the past five days, at least, did the ISIS militants fire back, the soldiers say.

Cellular Dynamics International, Inc. (NASDAQ: ICEL) ...

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We'll talk currencies, commodities, quantitative trading and much more on this ...

Full story available on

  • Setbacks and progress as Iran, six powers meet to end nuclear impasse (Reuters)
  • Russia’s Foreign Minister Sergei Lavrov to Leave Iran Nuclear Talks (WSJ)
  • Obama Ramps Up Lobbying on Iran as Deadline Looms (WSJ)
  • Greek yields edge up as lenders scrutinise reform pledge (Reuters)
  • Oil prices drop on possible Iran deal, dollar (Reuters)
  • Yemen’s Houthis Battle for Aden as Saudi Strikes Hit Rebels (BBG)
  • Iran nuclear deal to see $20 oil if Tehran floods crude market (Telegraph)
  • China’s Zhou Says PBOC Has Room to Act on Growth Slowdown (BBG)
  • Just what autism nation needs: It’s Really Here: TV for Babies (WSJ)
  • How DIY Bond Traders Displaced Wall Street’s Hot Shots (BBG)
  • Greece’s Tsipras to Address Lawmakers on Creditor Talks (BBG)
  • FDA 'Taking a Very Light Touch' on Regulating the Apple Watch (BBG)
  • Oil Speculators Focused on Glut Miss Surge as Bombs Hit Yemen (BBG)
  • Why are interest rates so low? (Ben Bernanke)


Overnight Media Digest


* BabyFirstTV, which is owned by BFTV LLC, is making its way into more U.S. homes after cutting deals with pay-TV distributors including Time Warner Cable and is aiming its programming at children as young as six months. (

* Ford and General Motors, two biggest U.S. auto makers will unveil new passenger cars at the New York International Auto Show later this week. (

* Facebook Inc is hiring in Hong Kong and has tapped a second local partner to reach advertisers and is waging a charm campaign to draw more business from Chinese companies, even though Chinese users can't access its service. (

* Reynolds American Inc and Lorillard Inc. are expected to meet this week with members of the Federal Trade Commission ahead of a final decision by the agency on whether to allow the companies to merge, according to people familiar with the matter. (

* EIG Global Energy Partners agreed to invest $1 billion in Breitburn Energy Partners LP, a publicly traded oil and gas exploration and production company, as energy producers turn to alternative capital sources in an effort to bolster their balance sheets amid slumping oil prices. (



Britain's opposition Labour Party leader Ed Miliband will try to align the party on Monday with a sceptical business community, urging that only he can avert the "clear and present danger" posed to the economy by a Conservative referendum on Europe.

British Prime Minister David Cameron will be driven to Buckingham Palace on Monday to notify Queen Elizabeth of the dissolution of parliament, as he seeks to deploy the grandeur of his office to reboot a stumbling start to the general election campaign.

Fewer migrants have come to the UK looking for work during the current parliament's tenure than under Labour's final term in office, and they are ever more highly skilled, new research by the Oxford-based Migration Observatory, commissioned by the Financial Times shows.

British investment company Alliance Trust has come under fresh attack from Tim Ingram, a former director who sat on the board for two years until 2012, who criticised the company's "dismal" performance and pay of its chief executive Katherine Garrett-Cox.



* Some of the most aggressive contemporary purveyors of information, journalistic and otherwise, are betting on feature-length motion pictures. In the last several years, BuzzFeed Media, Vice Media, CNN, Condé Nast and Newsweek have all built units or alliances aimed in part at creating long-form narrative or documentary films that will be seen in theaters. (

* Johanna Basford's intricately hand-drawn coloring book "Secret Garden", which released in the spring of 2013, has sold more than 1.4 million copies in 22 languages. It shot to the top of Amazon's best-seller list this month, overtaking books by authors like Harper Lee, Anthony Doerr and Paula Hawkins. (

* Ford Motor Co will unveil a new version of its full-size Continental sedan this week at the New York International Auto Show, signifying the return of a car that epitomized elegance in the 1960s before it faded into obscurity and went out of production in 2002. (

* GNC Holdings Inc, United States' largest specialty retailer of dietary supplements, has agreed to institute sweeping new testing procedures that far exceed quality controls mandated under federal law. (

* The extraordinary circumstances that led to last week's crash of the Germanwings jet, where a pilot seemingly brought down an airplane, killing everyone aboard, means that the airline's insurers could end up paying hundreds of millions of dollars to the victims' families, according to legal experts. (




** Canada's municipalities are calling for the federal budget to include at least C$1 billion ($791.2 million) a year in new cash for public transit, insisting the projects will boost economic growth and reduce commute times. The specific request to be announced by the Federation of Canadian Municipalities comes as urban transit issues are shaping up to be a key focus for the 2015 federal election. (

** The closing of two General Motors Co assembly plants in Oshawa, Ontario, would wipe out about 30,000 jobs, slice more than C$5 billion out of Ontario's gross domestic product and cost the federal and Ontario governments C$1-billion in lost revenue. (

** After taking 26 months to launch its first stores in Canada, U.S. discounter Target Corp is now looking at shutting all 133 of them in just three months, a month less than originally planned. Target Canada plans to speed its store closings by one month and turn off the lights by mid-April, a court filing says. (


** Best Buy Co Inc announced it is shutting down dozens of Future Shop stores across Canada, effective immediately, resulting in about 1,500 job losses. Of 131 Future Shop locations across the country, 66 will be shuttered for good and the remaining 65 will be turned into Best Buy outlets. (

** Postmedia Network Canada Corp's apparent plans to sell the 35 properties it is acquiring from Quebecor Media Inc won't come to fruition overnight, but there is a market for the portfolio which consists mostly of real estate in small towns, say industry analysts. A single buyer for the entire portfolio seems unlikely, said John Redvers, acting national manager of Royal LePage Commercial. (

** Oil inventories at key Alberta storage hubs of Edmonton and Hardisty breached 10 million barrels in each location last week, according to data from global energy consultancy Genscape, suggesting Canadian oil prices may trend even lower in the near future. (




- China's monetary policies are unconventional during the "new normal" period, which means liquidity is ample but the government has to continue monetary easing as the country faces pressure to achieve its goal of 7 percent GDP growth in the first quarter, said Chen Yulu, member of the monetary policy committee of People's Bank of China.

- China's medium and large-scale steel companies continued to post losses in the first quarter of this year, which indicates increasing pressures due to the slowdown in the economy.

- A total of 1,029 listed companies released their annual financial results. Net profit increased by 1.74 trillion yuan ($279.99 billion) or 5.7 percent in 2014, data from Wind Information, a domestic financial data provider, showed.


- China Pacific Insurance Group's net profit grew 19.3 percent in 2014, its annual report showed on Monday.

- China's over-the-counter Beijing equity board reached transaction volumes of over 6.5 billion yuan last week, another all time high, according to's CHOICE data service.

- The Shanghai bond clearing house will begin implementing centralized clearing to the interbank market on Monday, in accordance with a decision announced in February.


- China will need about 10,000 new light aircraft within the next five years to accommodate the general aviation expansion, said Pan Liwu, executive vice-president of AVIC International Holding Corp, a state-controlled aviation firm.


The Times


The Treasury has criticised the British government's own statisticians for a catalogue of sloppiness, including mistakes and slow responses with data. (


Alliance Trust, the investment trust under attack by an American hedge fund, has come under fire on a second front. Tim Ingram, a former non-executive director who claims that he was eased out of the embattled investment trust, has written to shareholders, 60,000 of whom are private investors, arguing that Alliance had lagged the average return in its sector over five years. (

The Guardian


Britain's opposition Labour Party leader Ed Miliband will attempt to win over a reluctant business community on Monday by warning that an EU referendum proposed by David Cameron would trigger a bitter two-year campaign in which a re-elected Tory party would tear itself apart over whether the UK should remain in Europe. (


More than 40 percent of Britain's recession-scarred workers expect to receive a pay freeze or a cut to their wages this year despite Britain's Finance Minister George Osborne's claim to have restored living standards, ensuring they would "grow strongly every year for the rest of the decade". (

The Telegraph


Britain's biggest building society is planning a major investment in its branches, despite its banking rivals close hundreds of high-street locations. Nationwide plans to spend around 300 million pounds ($446.88 million) on its branch network over the next five years, it is understood, in a ringing endorsement of its bricks and mortar operation. (


The Government is thought to be exploring restructuring options over the future of Network Rail, fuelling speculation that the state-owned company could be broken up or sold. (

Sky News


Labour leader Ed Miliband has launched his party's General Election campaign with a promise to safeguard the future of the National Health Service. (


Investors in a controversial London-listed oil company are demanding that it begins hunting a successor to its chairman in return for backing a 30 million pounds fundraising. (

The Independent


Sports Direct ignored repeated attempts by administrators to consult with staff who lost their jobs in the "dodgy" collapse of its fashion brand USC, and could potentially face employment tribunals for not giving workers enough notice. (


Google Inc could face a wave of privacy lawsuits in the UK after three people won the right to sue the search giant for snooping on their web browsing. (

Fly on The Wall Pre-Market Buzz


Domestic economic reports scheduled for today include:
Personal income for February at 8:30--consensus up 0.3%
Consumer spending for February at 8:30--consensus up 0.2%
Pending home sales index for February at 10:00--consensus up 0.4%
Dallas Fed manufacturing activity index for March at 10:30--consensus -9.0



Analog Devices (ADI) upgraded to Overweight from Equal Weight at Barclays
BHP Billiton (BHP) upgraded to Outperformer from Sector Performer at CIBC
Continental Resources (CLR) upgraded to Buy from Hold at Societe Generale
FirstEnergy (FE) upgraded to Overweight from Equal Weight at Barclays
Gibraltar Industries (ROCK) upgraded to Overweight from Sector Weight at KeyBanc
ITG (ITG) upgraded to Buy from Hold at Evercore ISI
Madison Square Garden (MSG) upgraded to Buy from Hold at Topeka
Madison Square Garden (MSG) upgraded to Overweight at Morgan Stanley
Nike (NKE) upgraded to Outperform from Neutral at RW Baird
Restoration Hardware (RH) upgraded to Buy from Neutral at Goldman
Western Union (WU) upgraded to Buy from Hold at Evercore ISI
Wolverine World Wide (WWW) upgraded to Outperform from Neutral at RW Baird


Altera (ALTR) downgraded to Equal Weight from Overweight at Morgan Stanley
Genesco (GCO) downgraded to Neutral from Outperform at RW Baird
LINN Energy (LINE) downgraded to Sell from Neutral at UBS
LinnCo (LNCO) downgraded to Sell from Neutral at UBS
MTN Group (MTNOY) downgraded to Sell from Neutral at Goldman
Melco Crown (MPEL) downgraded to Underperform from Neutral at BofA/Merrill
S&T Bancorp (STBA) downgraded to Market Perform from Outperform at Raymond James
Spark Energy (SPKE) downgraded to Hold from Buy at Stifel
WM Morrison (MRWSY) downgraded to Neutral from Buy at Goldman
World Point Terminals (WPT) downgraded to Hold from Buy at Stifel
Xilinx (XLNX) downgraded to Equal Weight from Overweight at Morgan Stanley
Xilinx (XLNX) downgraded to Neutral from Buy at MKM Partners


Carrizo Oil & Gas (CRZO) initiated with a Buy at Societe Generale
Dominion Midstream (DM) initiated with a Market Perform at Wells Fargo
Hilltop Holdings (HTH) initiated with an Outperform at Macquarie
Hortonworks (HDP) initiated with an Equal Weight at Barclays
InfraREIT (HIFR) initiated with a Buy at Evercore ISI
LendingClub (LC) initiated with a Sector Perform at Pacific Crest
On Deck Capital (ONDK) initiated with an Outperform at Pacific Crest
Stonegate Bank (SGBK) initiated with a Market Perform at Keefe Bruyette
Summit Therapeutics (smmt) initiated with a Buy at Needham
TiVo (TIVO) initiated with an Outperform at Macquarie


Microsoft (MSFT), Yahoo (YHOO) extend search partnership discussions for 30 days
UnitedHealth's (UNH) OptumRX to acquire Catamaran (CTRX) for $61.50 per share in cash
Horizon Pharma (HZNP) to acquire Hyperion Therapeutics (HPTX) for $46.00 per share
Best Buy Canada (BBY) announced consolidation of Future Shop and Best Buy stores
BreitBurn Energy (BBEP) announced $1B strategic investment by EIG, said to reduce common distribution to 50c per unit on an annualized basis
GSK (GSK) reached agreement with U.K. on meningitis B vaccine
Realty Income (O) to replace Windstream (WIN) in S&P 500 as of 4/6 close


Companies that beat consensus earnings expectations last night and today include:
Fifth Street Asset (FSAM)

Companies that missed consensus earnings expectations include:
Cypress Energy (CELP)

China Nepstar (NPD) reports Q4 EPS 6c, one estimate (1c)
Best Buy (BBY) sees FY16 EPS lower by 10c-20c due to Canada consolidation
Earthstone Energy (ESTE) reports Q4 EPS ($3.83) vs. ($1.41) in Q413


Intel (INTC) in talks to buy Altera (ALTR), WSJ reports
If Intel (INTC) buys Altera (ALTR), Xilinx (XLNX) may become a takeover target, Re/code reports
BNY Mellon (BK) denies initiating CEO search, FT reports
Yahoo's (YHOO) Mayer may look to 'shuffle' executive suite, NY Post reports
Reynolds American (RAI), Lorillard (LO) to meet with FTC this week, WSJ reports
HD Supply (HDS) could gain over 30%, Barron's says
J.M. Smucker (SJM) could rise 25%, Barron's says
Investors should use caution with Urban Outfitters (URBN), Barron's says
Shake Shack (SHAK) looks overvalued, Barron's says


Aldeyra (ALDX) files to sell 2.23M shares of common stock for holders
BlackRock Capital Investment Corp. (BKCC) files $1.5B mixed securities shelf
Cara Therapeutics (CARA) files $150M mixed securities shelf
Crown Castle (CCI) files automatic mixed securities shelf
Dara BioSciences (DARA) files $30M mixed securities shelf
MPLX (MPLX) files to sell $1.5B of common units representing limited partners
Mylan (MYL) files to sell 35M shares of stock for Abbott subsidiaries

The higher the stock prices are, the more people are buying them,” said Gao Haibao, a 58-year-old electrician who says he has dabbled in stocks since 1990.

It would appear the $250,000/hour speaking opportunities for Ben Bernanke have ground to a halt, and as such, the former Chairsatan has decided to dispense his wisdom for free to anyone who cares, by becoming a blogger at Brookings. And, not surprisingly, in his first post, the person who less than a decade ago said the following, in exactly those words...

Well, I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.

... is out and about defending the Fed and central banks from pushing rates so low, in Europe you are now paid to borrow money, and are charged to save.

So, to those who are too lazy to click on the following link to the Brookings blog where Bernanke is now blogger emeritus, here is the punchline.

In what can only be described as a litany of defensive insecurity, Bernanke launches a full-on assault on all those who accuse the Fed of crushing the economy, which now includes not only tin-foil fringe blogs of the Austrian economics persuasion, but such "very serious people" as Guggenheim's CIO Scott Minerd who over the weekend said "The long-term consequences of global QE are likely to permanently impair living standards for generations to come while creating a false illusion of reviving prosperity" and rhetorically asks "Why are interest rates so low? Will they remain low? What are the implications for the economy of low interest rates?"

His response to this rhetorical question, is the following: "If you asked the person in the street, “Why are interest rates so low?”, he or she would likely answer that the Fed is keeping them low. That’s true only in a very narrow sense."

Actually, it is true inn every sense. What is Bernanke's loophole? He introduces the concept of the equilibrium real interest rate. In Bernanke's words:

Except in the short run, real interest rates are determined by a wide range of economic factors, including prospects for economic growth—not by the Fed.


To understand why this is so, it helps to introduce the concept of the equilibrium real interest rate (sometimes called the Wicksellian interest rate, after the late-nineteenth- and early twentieth-century Swedish economist Knut Wicksell). The equilibrium interest rate is the real interest rate consistent with full employment of labor and capital resources, perhaps after some period of adjustment. Many factors affect the equilibrium rate, which can and does change over time. In a rapidly growing, dynamic economy, we would expect the equilibrium interest rate to be high, all else equal, reflecting the high prospective return on capital investments. In a slowly growing or recessionary economy, the equilibrium real rate is likely to be low, since investment opportunities are limited and relatively unprofitable. Government spending and taxation policies also affect the equilibrium real rate: Large deficits will tend to increase the equilibrium real rate (again, all else equal), because government borrowing diverts savings away from private investment.

He is absolutely right. What he just fails to notice is that the entire world is gripped in ZIRP, and increasingly NIRP, is that the current bubble implosion aftermath, now 7 years after the Lehman collapse, is merely the 3rd consecutive bubble burst in the past 15 years. In other words, the Fed may spout whatever mumbo jumbo it wants about why its response to the crisis was required, what it has zero defense against is why its only policy under the Greenspan "Great Moderation" paradigm has been to inflate bubbles, and replace a post-bubble vacuum with another bubble, ultimately leading to a complete and global economic halt, and a world in which central banks now have to monetize all net developed world issuance!

In essence there is no Weimar state any more - the entire world has become Weimar, and the only reason why no currency is hyperinflating in isolation is because absolutely everyone is doing the same cardinal monetary sin at the same time.

Of course, none of this will get much exposure.

What will, however, is the former Chairman's surprisingly defensive pivot in which it is almost as if he sense what is coming over the horizon when he unexpectedly says it wasn't his fault the entire nation's senior population was decimated due to his and Greenspan's ludicrous policies.

When I was chairman, more than one legislator accused me and my colleagues on the Fed’s policy-setting Federal Open Market Committee of “throwing seniors under the bus” (to use the words of one senator) by keeping interest rates low. The legislators were concerned about retirees living off their savings and able to obtain only very low rates of return on those savings.

And the punchline:

I was concerned about those seniors as well.

Perhaps he is referring to seniors such as Omaha Octagenarians who had tens of billions in investments in a financial system that would have gotten insolvent overnight if he hadn't bailed it out?

But if the goal was for retirees to enjoy sustainably higher real returns, then the Fed’s raising interest rates prematurely would have been exactly the wrong thing to do. In the weak (but recovering) economy of the past few years, all indications are that the equilibrium real interest rate has been exceptionally low, probably negative. A premature increase in interest rates engineered by the Fed would therefore have likely led after a short time to an economic slowdown and, consequently, lower returns on capital investments. The slowing economy in turn would have forced the Fed to capitulate and reduce market interest rates again. This is hardly a hypothetical scenario: In recent years, several major central banks have prematurely raised interest rates, only to be forced by a worsening economy to backpedal and retract the increases. Ultimately, the best way to improve the returns attainable by savers was to do what the Fed actually did: keep rates low (closer to the low equilibrium rate), so that the economy could recover and more quickly reach the point of producing healthier investment returns.

Well thank you for the admission that there really is no getting out of a world in which three consecutive and ever larger bubbles has burst, and now with central banks all-in to support the last one, the final outcome will be a global catastrophe with a good global war thrown in for good measure, unlike any seen before.

Yet the funniest part of Bernanke's diatribe is when he tacitly shifts away from the Fed as the culprit for all that is wrong, and implicitly blames the government.

A similarly confused criticism often heard is that the Fed is somehow distorting financial markets and investment decisions by keeping interest rates “artificially low.” Contrary to what sometimes seems to be alleged, the Fed cannot somehow withdraw and leave interest rates to be determined by “the markets.” The Fed’s actions determine the money supply and thus short-term interest rates; it has no choice but to set the short-term interest rate somewhere. So where should that be? The best strategy for the Fed I can think of is to set rates at a level consistent with the healthy operation of the economy over the medium term, that is, at the (today, low) equilibrium rate. There is absolutely nothing artificial about that! Of course, it’s legitimate to argue about where the equilibrium rate actually is at a given time, a debate that Fed policymakers engage in at their every meeting. But that doesn’t seem to be the source of the criticism.


The state of the economy, not the Fed, is the ultimate determinant of the sustainable level of real returns. This helps explain why real interest rates are low throughout the industrialized world, not just in the United States. What features of the economic landscape are the ultimate sources of today’s low real rates? I’ll tackle that in later posts.

Let us guess: features such a Congress which is now completely and utterly incapable of passing even one law perhaps because the passage of any real reforms is vastly unpopular for any politician (just look at Greece), and after all why bother: "get to work, Mr. Chairman" has been the operative principle of the US Congress since 2009, a Congress which has had some $4 trillion in deficit funding to keep America going, monetized by Bernanke's own Fed.

But don't expect any mention of that in Bernanke's blog. And likewise, don't expect your comment to appear on the Brookings blog.

Comments are welcome, but because of the volume, we only post selected comments.

By selected they of course mean only those which praise the man who threw America's seniors under the bus, er pardon, didn't.

And certainly not any comments which remind the broader public of all previous Ben Bernanke greatest hits of whicht he following is a small sampling:

7/1/05 – Interview on CNBC

INTERVIEWER: Tell me, what is the worst-case scenario? We have so many economists coming on our air saying ‘Oh, this is a bubble, and it’s going to burst, and this is going to be a real issue for the economy.’ Some say it could even cause a recession at some point. What is the worst-case scenario if in fact we were to see prices come down substantially across the country?

BERNANKE: Well, I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.

10/20/05 – Testimony before the Joint Economic Committee, Congress

House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.

11/15/05 – Confirmation Hearing before Senate Banking Committee

SEN. SARBANES: Warren Buffet has warned us that derivatives are time bombs, both for the parties that deal in them and the economic system. The Financial Times has said so far, there has been no explosion, but the risks of this fast growing market remain real. How do you respond to these concerns?

BERNANKE: I am more sanguine about derivatives than the position you have just suggested. I think, generally speaking, they are very valuable… With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly. The Federal Reserve’s responsibility is to make sure that the institutions it regulates have good systems and good procedures for ensuring that their derivatives portfolios are well-managed and do not create excessive risk in their institutions.

3/6/07 – At bankers’ conference in Honolulu, Hawaii… as delinquencies in the subprime mortgage sector rise

The credit risks associated with an affordable-housing portfolio need not be any greater than mortgage portfolios generally.

3/28/07 – Testimony before the Joint Economic Committee, Congress

Although the turmoil in the subprime mortgage market has created severe financial problems for many individuals and families, the implications of these developments for the housing market as a whole are less clear…At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.

5/17/07 – Remarks before the Federal Reserve Board of Chicago

...we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well.

8/31/07 – Remarks at the Fed Economic Symposium in Jackson Hole

It is not the responsibility of the Federal Reserve--nor would it be appropriate--to protect lenders and investors from the consequences of their financial decisions

1/10/08 – Response to a Question after Speech in Washington, D.C.

The Federal Reserve is not currently forecasting a recession.

2/27/08 – Testimony before the Senate Banking Committee

I expect there will be some failures [among smaller regional banks]… Among the largest banks, the capital ratios remain good and I don’t anticipate any serious problems of that sort among the large, internationally active banks that make up a very substantial part of our banking system.

4/2/08 – New York Times article after the collapse of Bear Stearns

“In separate comments, Mr. Bernanke went further than he had in the past, suggesting that the Fed would remain aggressive and vigilant to prevent a repetition of a collapse like that of Bear Stearns, though he said he saw no such problems on the horizon.”

6/10/08 – Remarks before a bankers’ conference in Chatham, Massachusetts

The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.

7/16/08 – Testimony before House Financial Services Committee

[Fannie Mae and Freddie Mac are] adequately capitalized. They are in no danger of failing… [However,] the weakness in market confidence is having real effects as their stock prices fall, and it’s difficult for them to raise capital.

Full Bernanke blog post here.

The Iran-Lausanne-Yemen axis is very dangerous to humanity, and must be stopped.”.........The "Iran-Lausanne-Yemen axis"?............This is the ultimate expression of the paranoia – the sheer outright craziness – represented not only by the Israeli Prime Minister but by the ultra-nationalists who have come to dominate Israel’s political landscape.

With the rest of the developed world's central banks waiting for the Fed to admit defeat for one more year and delay its proposed rate hike (or launch NIRP/QE4 outright) it was all about China (the same China which a month ago we said would launch QE sooner or later) and hope that its central bank would boost asset prices, when over the weekend the PBoC governor hinted that more easing is imminent to offset the accelerating drag after he admitted that the nation’s growth rate has tumbled "a bit" too much and that policy makers have scope to respond. How much scope it really has now that its bad debt is rising exponentially is a different question. It got so bad, Shanghai Securities News leaked a false rumor earlier forcing many to believe China would announce an unexpected rate cut as soon as today, in the process sending the Shanghai Composite soaring by 2.6%.


This was promptly denied:


... But the momentum for the dumb money (and we mean dumb money: remember that 30% Of New Equity Investors In China Have Elementary Education Or Less, Bloomberg Says) was already in place, and the already unprecedented Chinese stock bubble just got that much bigger and that much closer to popping.

For now, algos don't care, and the surge in China was quickly carried over to Europe and the US, both of which have seen substantial strength across equity markets, even as the German 10Y Bund dropped to 0.18% earlier, now that every single bank is fighting every other single bank for what little unencumbered "high quality collateral" remains.

But if China's rumors were positive for stocks, oil couldn't care less and Brent extended Friday's selloff into a second day, falling below $56/bbl amid indications bearish pressure from Iran nuclear talks is building, and the upside related to the Yemen proxy war is fading. WTI outpacing Brent decline.

"Further downward pressure may come at any time from a nuclear agreement with Iran,” says Societe Generale head of oil mkt research Michael Wittner. “Talks are reportedly intense, with twists and turns seeming to occur at least daily.”Wittner added that "The conflict in Yemen poses no threat to Saudi production, Yemeni production is small and unimportant, and the risk of a disruption to oil shipments through the Bab el-Mandeb Strait is considered low. We believe there will be continued downward pressure on oil prices.”

Well, the PBOC better step up and fast.

European equities have started the week on the front foot in a continuation of the positive sentiment seen overnight in Asia-Pacific trade with Chinese equities supported by comments from the PBoC Governor who hinted at more easing (PBoC announced new housing measures at 1003BST) and as details emerged over China’s Silk Road economic belt plans which will help boost infrastructure in the country. As such, Hang Seng (+1.5%) rose the most for the year while the Shanghai Comp (+2.6%) touched its highest level since May’08. Furthermore, sentiment in Europe has also been supported by comments out of Athens suggesting the Greek government are increasing their efforts to secure much-needed financing. Additionally, from a technical perspective, German equities were further boosted after the DAX cash broke above 12,000, with German export names also supported by the broadly weaker EUR.

From a fixed income perspective, Bunds have traded higher since the get-go with some suggesting the move higher could be a by-product of increased QE purchases by the ECB. This also comes alongside USTs trading lower, so could help provide some explanation for the move with flows into core European paper. From a supply perspective, focus for Europe will also reside on the upcoming BTP offering from the Italian treasury at 1000BST.

Fitch downgraded Greece to CCC from B. Fitch said the downgrade reflects lack of access to markets and uncertainty regarding potential disbursements from the Troika group of lenders. (RTRS) European finance ministers will probably not meet again before the middle of April to give the country more funds. Officials added that the proposals sent by Greece are lacking the required detail. (WSJ) Conversely EU sources suggest that the talks between the Eurogroup and Greece are `encouraging` and Greece may receive funds in the first three days of the week. (La Republicca) Additionally, sources also suggest Greece could enter into bankruptcy by 20th April if it fails to secure additional financing. (RTRS) Of note, the Syriza party is due hold an emergency cabinet council meeting at 4pm local time. German Finance Ministry Spokesman Jaeger today said that Greek proposals have not yet been submitted. (BBG)

As has been the case over the past few weeks, the USD-index has provided a bulk of the price action with the greenback continuing to pull away from its post-GDP lows, with the higher US yields also providing the USD with a boost, particularly in USD/JPY. Elsewhere, EUR/GBP was initially subject to some month-demand with the cross also led higher by political uncertainty in the UK. Nonetheless, this upside was short-lived after the USD-strength saw EUR/USD trip stops through 1.0850 to the downside. However, it is worth keeping an eye on major pairs as the USD-index pulls away from its best levels heading into the European open, with GBP broadly benefitting from a move higher in GBP/JPY.

In summary: European stocks slightly pare earlier gains, rise most since March 20 as PBOC head Zhou Xiaochuan indicated that China’s growth rate has slipped, and that the govt is able to respond. Dollar rises with U.S. equity index futures while crude declines.  Goldman reiterates overweight call on global equities on 3-, 12-month terms. German Finance Min. says Greece hasn’t yet submitted it’s official list of reforms.

Market Wrap

  • S&P 500 futures up 0.6% to 2065.5
  • Stoxx 600 up 0.9% to 399
  • US 10Yr yield little changed at 1.96%
  • German 10Yr yield down 2bps to 0.19%
  • MSCI Asia Pacific up 0.1% to 146.7
  • Gold spot down 1% to $1187.3/oz
  • Eurostoxx 50 +1.1%, FTSE 100 +0.5%, CAC 40 +1%, DAX +1.5%, IBEX +0.7%, FTSEMIB +1.1%, SMI +0.9%
  • Asian stocks gain slightly with Shanghai Composite outperforming and ASX underperforming.
  • MSCI Asia Pacific up 0.1% to 146.7
  • Nikkei 225 up 0.7%, Hang Seng up 1.5%, Kospi up 0.5%, Shanghai Composite up 2.6%, ASX down 1.2%, Sensex up 1.9%
  • UnitedHealth to Buy Catamaran to Boost Pharmacy Benefit Svc
  • Horizon to Buy Hyperion for $1.1b, Gain Rare-Disease Drug
  • Euro down 0.34% to $1.0852
  • Dollar Index up 0.42% to 97.7
  • Italian 10Yr yield down 1bps to 1.34%
  • Spanish 10Yr yield down 1bps to 1.32%
  • French 10Yr yield down 1bps to 0.49%
  • S&P GSCI Index down 1.1% to 398.3
  • Brent Futures down 1.7% to $55.4/bbl, WTI Futures down 2.4% to $47.7/bbl
  • LME 3m Copper up 0.6% to $6093/MT
  • LME 3m Nickel down 1.1% to $13140/MT
  • Wheat futures up 0.6% to 511 USd/bu


Bulletin headline summary by Bloomberg and RanSquawk

  • Europe trades higher in a continuation of the trend seen during Asia-Pacific trade, with participants also optimistic over Greek/Eurogroup negotiations
  • USD-index continues to lead the way for FX markets after recovering from post-GDP lows, although has since given back some of its gains heading into the North American open
  • Looking ahead, today sees the release of US personal income, personal spending and pending home sales.
  • Treasuries steady before personal income/ spending reports as market’s focus shifts to ADP on Wednesday, nonfarm payrolls on Good Friday.
  • China’s central bank chief said that the nation’s growth rate has tumbled “a bit” too much and that policy makers have scope to respond, underscoring forecasts for further monetary easing in the world’s second-largest economy
  • China lowered down-payment requirements for some second homes, further easing mortgage policies as the government seeks to prop up the property market and counter an economic slowdown
  • Greece PM Tsipras will update lawmakers Monday on talks held over the weekend in Brussels between Greek officials and representatives of the country’s creditors to secure more funds from the euro area and stave off fiscal collapse
  • Shiite Houthis fought forces loyal to Yemen’s embattled president for control of his government’s last stronghold as Saudi Arabia led air assaults on rebel positions and held out the possibility of a ground invasion
  • Iran and six world powers intensified efforts to reach a nuclear accord as foreign ministers from all sides met with their deadline less than 48 hours away
  • Sovereign 10Y yields mostly lower. Asian, European stocks gain, U.S. equity-index futures rise. Crude and gold decline, copper higher

US Event Calendar

  • 8:30am: Personal Income, Feb., est. 0.3% (prior 0.3%)
    • Personal Spending, Feb., est. 0.2% (prior -0.2%)
    • Inflation Adjusted Personal Spending, Feb., est. 0.1% (prior 0.3%)
    • PCE Deflator m/m, Feb., est. 0.2% (prior -0.5%)
    • PCE Deflator y/y, Feb., est. 0.3% (prior 0.2%)
    • PCE Core m/m, Feb., est. 0.1% (prior 0.1%)
    • PCE Core y/y, Feb., est. 1.3% (prior 1.3%)
  • 10:00am: Pending Home Sales m/m, Feb., est. 0.4% (prior 1.7%)
  • Pending Home Sales NSA y/y, Feb., est. 9.7% (prior 6.5%)
  • 10:30am: Dallas Fed Mfg Activity, March, est. -9 (prior -11.2)

DB's Jim Reid wraps up the weekend event summary

As we start Easter week Asian markets have started on a firmer footing. The Nikkei (+0.68%), Hang Seng (+1.50%), Shanghai Comp (+1.62%) and Kospi (+0.43%) are all higher as we go to print. Markets in China in particular appeared to be trading with better sentiment after the PBOC Governor Zhou indicated that the Central Bank still has room to move given that growth has fallen more than desired. Specifically Zhou noted that China can have room to act with both interest rates and quantitative measures. Credit markets are 1- 2bps better this morning.

Geopolitics continues to bubble under the surface however with the Iran nuclear talks attracting plenty of attention over the weekend with tensions continuing to run high and talks appearing near deadlocked. According to the BBC, ahead of tomorrow’s deadline, leaders from Iran and Western diplomats are due to reconvene in an effort bid to finalize an agreement. As per the report, US officials have said that all parties, including Iran, have agreed upon there needing to be ‘a phased step by step reciprocal approach’ in the hope that Iran’s approach to stepping back from its nuclear programme coincides with a phased lifting of sanctions. Negotiations appear to be tense with a conclusion before the deadline far from certain. UK Foreign Minister Hammond commented that ‘Iran has to take a deep breath and take tough decisions’ while Iran’s Deputy Foreign Minister Araghchi noted that ‘the other side must make serious decisions’.

Elsewhere Greece continues to dominate the headlines and on Friday we learned that the government has submitted a list of measures to its creditors. The list - which is more of a ‘staff level agreement’ rather than a submitted list of reform proposals given that the technical teams are still in data collection mode and have yet to have started negotiations – includes a number of revenue raising measures aimed at securing €3bn, including a controversial series of privatizations, raising income tax, increasing levies on alcohol and tax and cutting down on tax evasion. Greek press Ekathimerini also reported that the outline includes a 1.5% budget surplus target for 2015, which is well below the current 3% target in the existing bailout program. After talks between the government and its creditors over the weekend, Reuters quoted a Greek government official as saying that  the ‘Brussels Group discussions continue in a good climate of cooperation’ but that ‘we have agreed that we need to draw up suitable policies which  will shift the burden from those on the lowest income to the highest’, suggesting that further substance and detail will be required before we see any sort of agreement on reform measures and a subsequent release of funds. Headlines on Bloomberg suggest that PM Tsipras is due to update lawmakers on Monday over the weekend’s talks.

Back to markets and recapping Friday's session, US equities snapped a four consecutive sessions of declines with a +0.24% gain on Friday, taking the index modestly back into positive territory (+0.10%) YTD. Treasuries firmed throughout the session, with the benchmark 10y yield eventually finishing 2.8bps tighter at 1.962% while the Dollar, as measured by the broader DXY, was a touch lower (-0.15%). Despite a relatively muted market move, comments towards the end of the US session from the Fed’s Yellen attracted the bulk of the headlines. In comments at a conference in San Francisco, the Fed Chair said that given an improvement in economic conditions, an ‘increase in the target range for that rate may well be warranted later this year’’. Yellen went on to say that the ‘actual path of policy will evolve as economic conditions evolve, and policy tightening could speed up, slow down, pause, or even reverse course depending on actual and expected developments in real activity and inflation’, before going on to say that any move would be gradual (Reuters). Despite being balanced to the more hawkish side, the comments essentially reflected the previous FOMC statement by keeping open the option of a move, but highlighting the data dependency that will essentially determine the date and pace of liftoff.

Away from Yellen and on the data front, the third Q4 GDP reading was unchanged at +2.2% saar, although below expectations of +2.4%. Personal consumption meanwhile was revised up 20bps to +4.4% qoq as expected while the Core PCE print was unchanged at +1.1% qoq (as expected). The final March reading of the University of Michigan consumer sentiment reading was encouraging with the reading revised up 1.8pts to 93.0, a point ahead of expectations.

Elsewhere there was something of a reversal in oil markets on Friday, as WTI (-4.98%) and Brent (-4.70%) gave up most of Thursday’s gains to close at $48.57/bbl and $56.41/bbl respectively. The +4.94% weekly return for WTI in particular however did snap three consecutive negative weekly returns. Equity markets in the Middle-East closed firmer over the weekend, led by markets in Saudi Arabia (+1.9%) having been supported by comments from the Saudi King Salman who told a group of leaders in the region that the coalition would continue its offensive until stability is restored. Meanwhile, Reuters has reported further airstrikes overnight with key rebel military targets struck. The same article also quoted a Saudi spokesman as saying that the coalition would step up the pressure on the Houthis and their allies over the coming days and haven’t ruled out the potential for ground force. Despite a unified front from the coalition to restore some sort of stability, geopolitical risk remains high with the Iranian finance minister pleading for a stop to the airstrikes on Friday and the BBC reporting that Iran is alleged to be providing support to the rebel Houthis.

Moving on, it was a similar story in Europe on Friday with bourses a touch firmer at the close. Indeed, the Stoxx 600 (+0.24%), DAX (+0.21%) and CAC (+0.55%) all closed higher following a somewhat volatile week in which most major markets closed lower. Bond markets were largely mixed. 10y Bunds closed 0.8bps tighter at 0.206% while markets in Italy and Spain were 4bps and 6bps wider respectively. Data offered little in the way of surprises on the whole. French consumer confidence for March printed in line with consensus at 93 and at the highest level since November 2010. Elsewhere, Italian retail sales (+1.7% yoy vs. -0.3% expected) and the German import price index came in ahead of expectations (-3.0% yoy vs. -4.4% expected).

Wrapping up, it’s a busy calendar in a holiday-shortened week. We start in the UK this morning with mortgage approvals, money supply and net consumer credit data and follow this up with confidence indicators for the Euro-area as well as the preliminary March CPI reading out of Germany. It’s no less quiet in the US this afternoon where we get personal income and spending data, along with the PCE deflator reading, pending home sales and the Dallas Fed manufacturing activity reading. Tuesday kicks off in the Asia timezone where we get a host of readings for Japan including cash earnings, housing starts and private sector credit. Closer to home, the all-important advanced March Euro-area CPI print will be front and centre while we’ve also got French PPI and consumer spending, German unemployment and Q4 GDP in the UK to look forward to. Data in the US on Tuesday includes the ISM Milwaukee, S&P/Case Shiller, consumer confidence and Chicago PMI. We start the new month on Wednesday in Japan with the Tankan survey while the official and HSBC manufacturing print in China will also be due up. Manufacturing PMI’s dominate the data docket in Europe on Wednesday too with the final March prints for France, Germany and the Euro-area as well as the preliminary releases in the UK and Italy. The afternoon focus in the US will be on the ADP employment changed print, along with the final reading for the manufacturing PMI, ISM manufacturing and prices paid, vehicle sales and finally construction spending. The calendar takes a breather on Thursday with no releases due in Europe. Across the Atlantic however Challenger job cuts and initial jobless claims kick off the session, followed by the February trade balance, ISM NY and factory orders. With it being a public holiday for most markets on Friday, we’ve just got the services and composite PMI’s due in China and Japan in the morning. The likely main highlight of the week comes on Friday afternoon however in the US where we get the March payrolls number and associated employment indicators with it. Finally, there’ll be no shortage of Fedspeak this week with George, Lacker, Lockhart, Mester and Kocherlakota all due to speak.

AAR Corp. (NYSE: AIR) is expected to report its Q3 ...

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Some of the stocks that may grab investor focus today are:

Wall Street expects ...

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Confused about the war in Yemen?

Here’s what’s really going on …

Yemen – previously called “Aden” – has one of the oldest civilizations in the Middle East.  But it has been racked with violence for a long time.

In the 1960s, a pro-Arab nationalist faction clashed with the British – who wanted Yemen to become a Western-controlled natural resource hub – and devolved into brutal fighting, with both sides using terrorism.

Yemen’s first president – Saleh – was in power from 1990 to 2012.  The U.S supported Saleh, but Saleh was a double-dealing scoundrel.

The Arab Spring protests ousted Saleh, and America helped broker immunity for prosecution in return for his leaving office.

Saleh was corrupt and tyrannical.   As the Telegraph reports:

For years, the Americans saw President Ali Abdullah Saleh as a key ally in the fight against al-Qaeda. He allowed his air bases to be used by US drones to strike at the movement’s operatives, and gladly received Western aid in development cash and arms supplies.


Yet according to claims in a United Nations report last month, one of the first things Mr Saleh did when his three-decade rule was threatened by the 2011 Arab Spring was strike a secret deal to give an entire southern province to al-Qaeda. The more he could portray Yemen as falling into militant hands, he calculated, the more the West want to keep him in office at all costs.

The U.S. brokered Saleh’s replacement by Yemen’s current president, Hadi. Hadi was a long-time high-level assistant to Hadi.

The presidential election “ballot” had only one choice … Hadi:

The opposition which took over the country – the Houthis (also called “Zaydis”) – are violent fundamentalist idiots. Yes, they are closer to Shiites (like the majority in Iran) than Sunnis (like Saudi Arabia).  But they are virtually indistinguishable from Sunni fundamentalist terrorists in their behavior:

Although a Shi’a group, Zaydi theological differences with Sunnis are few ….

Hadi is such a traitor to his own Yemeni people that he is calling for a foreign power – Saudi Arabia – to keep bombing Yemen until his opposition is defeated.

But – here’s the kicker – guess who is behind the Houthi revolt that led to the taking over Yemen from Hadi?

If you guessed Iran, you’re wrong.

It's deposed president Saleh!   He's baaaaaaack!

Indeed, the reason that the Houthis were able to take over the country so quickly is that many of the troops and police are still loyal to Saleh.  So – at Saleh’s instruction – while the Houthis advanced, the soldiers and guards simply walked away from their posts when Saleh told them to scram.

Bottom line: There are no saints in this conflict …

Many are calling this a proxy war between Saudi Arabia and Iran. But it’s not.

Initially, Saudi Arabia is directly bombing Yemen. It’s not doing so through a  proxy.

Moreover, while Iran is sending the Houthis some money, this is really a power struggle between two corrupt idiots:   Saleh and Hadi.  Iran is not very involved.

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

In recent months, Facebook has been quietly holding talks with at least half a dozen media companies about hosting their content inside Facebook rather than making users tap a link to go to an external site.


The new proposal by Facebook carries another risk for publishers: the loss of valuable consumer data. When readers click on an article, an array of tracking tools allow the host site to collect valuable information on who they are, how often they visit and what else they have done on the web.


And if Facebook pushes beyond the experimental stage and makes content hosted on the site commonplace, those who do not participate in the program could lose substantial traffic — a factor that has played into the thinking of some publishers. Their articles might load more slowly than their competitors’, and over time readers might avoid those sites.


- From the New York Times article: Facebook May Host News Sites’ Content

Last week, I came across an incredibly important article from the New York Times, which described Facebook’s plan to provide direct access to other websites’ content in exchange for some sort of advertising partnership. The implications of this are so huge that at this point I have far more questions than answers.

Let’s start with a few excerpts from the article:

With 1.4 billion users, the social media site has become a vital source of traffic for publishers looking to reach an increasingly fragmented audience glued to smartphones. In recent months, Facebook has been quietly holding talks with at least half a dozen media companies about hosting their content inside Facebook rather than making users tap a link to go to an external site.


Such a plan would represent a leap of faith for news organizations accustomed to keeping their readers within their own ecosystems, as well as accumulating valuable data on them. Facebook has been trying to allay their fears, according to several of the people briefed on the talks, who spoke on condition of anonymity because they were bound by nondisclosure agreements.


Facebook intends to begin testing the new format in the next several months, according to two people with knowledge of the discussions. The initial partners are expected to be The New York Times, BuzzFeed and National Geographic, although others may be added since discussions are continuing. The Times and Facebook are moving closer to a firm deal, one person said.


Facebook has said publicly that it wants to make the experience of consuming content online more seamless. News articles on Facebook are currently linked to the publisher’s own website, and open in a web browser, typically taking about eight seconds to load. Facebook thinks that this is too much time, especially on a mobile device, and that when it comes to catching the roving eyeballs of readers, milliseconds matter.


The Huffington Post and the business and economics website Quartz were also approached. Both also declined to discuss their involvement.


Facebook declined to comment on its specific discussions with publishers. But the company noted that it had provided features to help publishers get better traction on Facebook, including tools unveiled in December that let them target their articles to specific groups of Facebook users, such as young women living in New York who like to travel.


The new proposal by Facebook carries another risk for publishers: the loss of valuable consumer data. When readers click on an article, an array of tracking tools allow the host site to collect valuable information on who they are, how often they visit and what else they have done on the web.


And if Facebook pushes beyond the experimental stage and makes content hosted on the site commonplace, those who do not participate in the program could lose substantial traffic — a factor that has played into the thinking of some publishers. Their articles might load more slowly than their competitors’, and over time readers might avoid those sites.


And just as Facebook has changed its news feed to automatically play videos hosted directly on the site, giving them an advantage compared with videos hosted on YouTube, it could change the feed to give priority to articles hosted directly on its site.

Let me try to address this the best I can from several different angles. First off, what’s the big picture plan here? As the number two ranked website in the world with 1.4 billion users, Facebook itself is already something like an alternative internet where a disturbing number of individuals spend a disproportionate amount of their time. The only thing that seems to make many of its users click away is content hosted on other people’s websites linked to from Facebook users. Other than this outside content, many FB users might never leave the site.

While this is scary to someone like me, to Facebook it is an abomination. The company doesn’t want people to leave their site ever — for any reason. Hence the aggressive push to carry outside news content, and create a better positioned alternative web centrally controlled by it. This is a huge power play move. 

Second, the New York Times righty asks the question concerning what will publishers get from Facebook for allowing their content to appear on the site seamlessly. Some sort of revenue share from advertisers seems to be an obvious angle, but perhaps there’s more.

While Facebook isn’t a huge traffic driver for Liberty Blitzkrieg, it isn’t totally irrelevant either. For example, FB provided about 3% of the site’s traffic over the past 12 months. This is despite the fact that LBK doesn’t even have a Facebook page, and I’ve never shared a link through it. Even more impressive, Facebook drove more traffic to LBK over the same time period than Twitter, and I am very active on that platform. So I can only imagine how important FB is to website editors who actually use it.

This brings me to a key point about leverage. It seems to me that Facebook has all the leverage in negotiations with content providers. If you’re a news website that refuses to join in this program, over time you might see your traffic evaporate compared to your competitors whose content will load seamlessly and be promoted by the FB algorithm. If a large percentage of your traffic is being generated by Facebook, can you really afford to lose this?

One thing that FB might be willing to offer publishers in return other than advertising dollars, is increased access to their fan base. For example, when I try to figure out through Google analytics who specifically (or what page) on Facebook is sharing my work, I can’t easily do so. Clearly this information could prove very useful for networking purposes and could be quite valuable.

Looking for some additional insight and words of wisdom, I asked the smartest tech/internet person I know for his opinion. It was more optimistic than I thought:

This could be a huge shaper of news on the internet. or it could turn out to be nothing.


Other than saying that I don’t really know how to predict what might or might not happen, and I sort of don’t care much because it is in the realm (for now at least) of stuff that I don’t read (mainstream news), on a site that I never see (Facebook). However, the one thing I wonder in terms of the viability of this is whether in the end it may drive people away from FB.


Back in the day, probably when you weren’t so aware of the nascent net, there were two giant “services” on the Internet called Compuserve and America Online. They were each what you are thinking that Facebook is heading toward; exclusive, centralized portals to the whole net. They were also giant and successful at the time. Then people outside of them started doing things that were so much more creative and interesting. At the same time, in order to make everything fit inside their proprietary boxes and categories, they were making everything ever more standardized and boring. Then they just abruptly died.

Given the enormity of what Facebook is trying to achieve, I have some obvious concerns. First, since all of the leverage seems to reside with Facebook, I fear they are likely to get the better part of any deal by wide margin. Second, if they succeed in this push, this single company’s ability to control access to news and what is trending and deemed important by a huge section of humanity will be extraordinary.

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