would like to thank the Academy
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Notable earnings after Monday’s close: $ALNY, $AMTG, $APC, $ARRY, $BSFT, $CECO, $CHUY, $DPM, $ENOC, $EOG, $FSLR, $FST, $FTR, $GDP, $GSM, $GWAY, $HIMX, $HOLX, $LGCY, $MELI, $MKTG, $MMLP, $MR, $NOG, $NRP, $OTTR, $PAA, $PEGA, $PNG, $RKUS, $SGY, $SMG, $SNTS, $STAG, $VNO, $WMS
Notable earnings before Monday’s open: $APO, $BPI, $CRNT, $EXXI, $PETS, $SYY, $TESO, $TSN, $WLK, $ZINC
The Oil and Gold Booms Are Over
By Ruchir Sharma - May 5, 2013
The wreckage caused by China’s great, juddering slowdown continues to spread far beyond the country’s shores. Although most commodities enjoyed a bounce on May 3, after better-than-expected U.S. employment data, the plunge in their prices over the past few months suggests the past decade’s rally is truly broken.
For those of us not in the mining industry, this is actually good news -- one of the best signs yet that the global economy is returning to normal.
China’s voracious demand for every conceivable raw material -- oil, steel, soybeans, gold, to name a few -- once seemed to spell a future of endlessly rising commodity prices and falling living standards in developed nations. This was a Malthusian vision of scarcity: Rising demand from the growing economies of the emerging world would couple with shrinking supplies to drive up the prices of natural resources. Gas prices would never come back down; gold would cost thousands of dollars an ounce.
The response, for many international investors, was to bet big on China. Because it is hard to buy directly into China, many instead bought into the commodities that were being sucked into the gaping maw of the country’s economy: oil from Russia, iron ore from Australia and so on.
The China-commodity connection was born. Financial entrepreneurs started exchange-traded funds, which allowed individual investors to trade commodities, including silver and gold, as if they were stocks.
Supercycle Started
For the first time, U.S. pension funds started to allocate a share of their holdings to commodities. Even the Federal Reserve got involved, inadvertently, by printing so much money that a good portion of it wound up fueling speculative bets on China and the big emerging markets, often using commodities as a proxy.
Prices went parabolic. From 2000 to 2011, copper prices rose 450 percent, oil prices 365 percent, and gold prices more than 500 percent to a high of more than $1,900 an ounce. There was talk of oil hitting $200 a barrel, and gold reaching $10,000 an ounce. It was a wild time, all predicated on the idea that the rise of China had set off a commodity “supercycle” that could keep prices high indefinitely.
Commodity prices, such as that of gold, tend to rise when faith in the financial system is in decline and usually fall when confidence is high. In this they resemble the politician of whom Winston Churchill once said: “He has all the virtues I dislike and none of the vices I admire.”
High commodity prices enrich a class whose corrupting influence is legend, and whose chief skill is the ability to secure the right political contacts. Meanwhile, high commodity prices, particularly for oil, squeeze the poor and the middle class, and act as a brake on growth in the industrial world. During the 2000s, the U.S. fretted over the rise of corrupt oil tycoons and unstable dictators in nasty petro-states, and rightly so.
That’s why falling commodity prices -- both gold and copper are still down more than 10 percent this year despite the latest bounce -- are good news. The China-commodity connection is breaking. After three straight decades of ultrafast growth, China’s inevitable slowdown has let air out of the bubble: Since the peak in April 2011, the broadest available measure of commodity prices has fallen 16 percent. In recent months, money has started flowing out of exchange-traded funds for most commodities.
The Malthusian specter of rising demand and shrinking supply has been replaced by a new realization that, for most commodities, demand is flat and supply is rising fast. Oil demand in developed nations has been stable since 1995, because high oil prices have inspired conservation efforts in countries such as Japan and the U.S.
Flattening Demand
Now, as emerging nations begin to embrace energy efficiency as well -- China is working hard on electric cars, for instance, despite continuing to build dozens of coal plants -- global demand might flatten out this decade. The debate over “peak oil” scenarios may shift from the threat of dwindling supply to the threat of peaking demand.
Certainly, the world is no longer terrified of running out of important commodities. High prices have drawn investment to copper mines, aluminum smelters and other basic sources of supply. In the past decade, the amount of capital invested in the energy and materials sector, which includes most nonfarm commodities, has risen 600 percent, compared with an average increase of 200 percent in other sectors.
The much-discussed boom in U.S. shale-gas production is only one result of this spending: Since 2001, China has increased output of industrial metals by striking multiples, from about 140 percent for iron-ore commodities to 775 percent for nickel.
This is part of the normal cycle of the world economy, not a supercycle. Commodity-price booms restrain demand, while attracting money and innovation to increase supply, which leads to a bust. For the last 200 years, the average price of commodities has followed this predictable cycle: one decade up, often sharply, followed by two decades down, with the result that real prices haven’t risen since 1800. There are exceptions to the rule. Some commodities, including oil and copper, have gained somewhat in real terms. But gold has just retained its value. The price today (about $1,500 an ounce) is roughly the same as in 1980, when adjusted for inflation.
If the historical pattern holds, we are now entering a long period of falling commodity prices, which could last two decades. That is good for importers such as the U.S., as was the case in the 1980s and 1990s when commodity prices were falling. The current fall in retail gasoline prices should increase the purchasing power of the American consumer and offset the fiscal drag from the government sequestration cuts.
Meanwhile, the nations that have reveled in the commodity boom of recent years are likely to face a disheartening return to the mundane ordeals of normal life. Buddhist monks have a phrase for it: “After the ecstasy, the laundry.”
(Ruchir Sharma is the author of “Breakout Nations” and the head of emerging markets and global macro at Morgan Stanley Investment Management. The opinions expressed are his own.)
To contact the writer of this article: Ruchir Sharma at Ruchir.Sharma@morganstanley.com.
To contact the editor responsible for this article: Nisid Hajari at nhajari@bloomberg.net.
Damn, that is cool as heck, great post there Stuff!
AAPL very interesting here, I see just as many bearish posts as bullish, it can go either way, but it is FUN to hear both sides fight it out. AAPL board on ST can be a great source of amusement sometimes.
GOOD MORNING STUFF!
Late start, Monday ALWAYS sucks.
Excellent work EZ! You da MAN when it comes to the ponies.
Well, I was CLOSE, but no cigar. Congrats to Orb, and a big clap to Golden Soul that wasn't supposed to be anywhere NEAR the top 3.
I guess I should stay away more often! I had to do BRUTAL meetings with the brigade last night, that lasted forever. Didn't even bother firing up the laptop by the time I got back to my room, it would have gone at the speed of a gimpy snail. Imagine my surprise this morning when I saw the numbers! My CALL and HEK calls looking good, not so bad for BAC Puts, only up a few pennies on a historic day is ok, I still think it tanks over the next few weeks.
Final Preview For US April Employment Report - Goldman, BofA, Barclays, Credit Agricole http://stks.co/rAz7
Microsoft goes mainstream to win phone share
Thu, May 2 2013
By Bill Rigby
SEATTLE (Reuters) - Microsoft Corp's phone chief hates to call the new Nokia Lumia 521 cheap, but the lower-priced smartphone launching in the United States is the company's boldest move yet to win mass market share from leaders Apple Inc and Samsung Electronics.
The world's largest software company has so far focused on putting its Windows Phone software into expensive, high-end devices - chiefly from Nokia and HTC Corp.
But the new model will go on sale at Walmart later this month at an unsubsidized price under $150, relatively cheap for a new phone running up-to-date software without a long-term contract.
"There is an opportunity for us to offer a very high quality device in the mainstream," said Terry Myerson, head of the Windows Phone unit, at Microsoft's campus near Seattle last week. "That's where we've made progress in the last couple of months and it's a strategy we'll continue to explore in the United States."
The Nokia Lumia 521 went on sale on the Home Shopping Network (HSN) last week, where it has already sold out. The 4G phone, sold overseas as the Nokia 520, is essentially a mid-range phone with some high-end features, such as four-inch touch screen, five megapixel camera and high-definition video display.
Next week the phone will go on sale at less than $150 at Walmart, along with T-Mobile US Inc's $30 per month unlimited data and text plan, which works out much cheaper over the long run than heavily subsidized iPhones and upscale Android devices that generally come with pricy long-term contracts.
The early popularity of the Lumia 521 on HSN is a minor boost for Microsoft, whose mobile plans have stuttered and stumbled since Apple's iPhone destroyed its early dominance in the smartphone market in 2007.
After completely redesigning its software, Microsoft-powered phones now have 3.2 percent of the U.S. smartphone market, compared to 39 percent for Apple and 52 percent for Google Inc's Android system, according to comScore.
Nokia, which now only makes smartphones running Windows, sold 5.6 million of its Lumia handsets in the first quarter, up 27 percent from the previous quarter, although that is still dwarfed by 37 million iPhone sales.
MORE - http://www.reuters.com/article/2013/05/03/us-microsoft-phones-idUSBRE9411D120130503?feedType=RSS&feedName=businessNews
Why The Jobs Report Is The Most & Least Important Economic Data Release http://stks.co/cSlK @TheArmoTrader
April employment data to point to sluggish economy
By Lucia Mutikani
WASHINGTON (Reuters) - U.S. employment growth likely picked up in April, but probably not by enough to counter other signs that suggest the economy has lost a step in recent weeks.
Nonfarm payrolls are expected to have increased by 145,000 jobs, according to a Reuters survey of economists, after braking to a nine-month low of 88,000 in March. Taken together, the job creation pace over the past two months would still be far below the average of 200,000 for the first two months of this year.
"That would be consistent with an economy that's losing growth momentum but hasn't fallen out of bed," said Millan Mulraine, a senior economist at TD Securities in New York.
Although the economy grew at a 2.5 percent annual pace in the first quarter, data on construction spending, retail sales and trade suggested it ended the period with less speed.
Factory data for April imply the loss of momentum persisted early in the second quarter, setting the stage for a replay for a third straight year of what economists have called the spring swoon.
Economists say uncertainty over the full impact of higher taxes and deep government spending cuts on already sluggish demand was making businesses reluctant to hire. A 2 percent payroll tax cut ended at the start of the year, and $85 billion in federal budget cuts went into effect on March 1.
The forecast job gains should be just enough to hold the unemployment rate at a four-year low of 7.6 percent, though the rate could even fall as older Americans retire and younger people give up the hunt for work in frustration.
The labor force participation rate - the share of working-age Americans who either have a job or are looking for one - hit a 34-year low in March.
"We need more than 3 percent growth on a sustained basis to make real inroads in reducing not only the number of those counted as unemployed, but the legions of those who are nowhere to be found in the labor force data," said Patrick O'Keefe, head of Economic Research at CohnReznick in Roseland, New Jersey.
The Labor Department will release its April employment report on Friday at 8:30 a.m. (1230 GMT).
MORE - http://finance.yahoo.com/news/u-april-employment-data-point-042112259.html?l=1
Pentagon Approves Samsung, BlackBerry 10 for Military Use
Cohiba Note: Notice Apple was NOT chosen, may cause some droppage in price tomorrow, but who the heck knows.
By Nick Taborek and Tony Capaccio - May 2, 2013
The U.S. Defense Department approved use on its networks of Samsung Electronics Co. (005930) devices running a secure version of Google Inc. (GOOG)’s Android operating system.
The approval allows Suwon, South Korea-based Samsung, the largest seller of smartphones for commercial use, to compete with Waterloo, Ontario-based BlackBerry, the dominant mobile- device provider to the military.
The Pentagon also gave security approval to BlackBerry 10 smartphones and PlayBook tablets, according to a Defense Department statement.
“This is a significant step toward establishing a multi- vendor environment that supports a variety of state-of-the-art devices and operating systems,” Lieutenant Colonel Damien Pickart, a Pentagon spokesman, said in the statement.
A similar security clearance is expected for Apple Inc (AAPL).’s iOS 6 operating system early this month, Pickart said in an earlier e-mail.
The U.S. National Security Agency worked with Samsung to create “Secure-Enhanced Android,” a version of Google’s operating system with multiple layers of software and hardware protection, Tim Wagner, Samsung vice president and general manager of enterprise, has said.
Knox Security
The system, called Knox, lets employers keep corporate and military applications and data in a secure place on a smartphone or tablet, and remotely erase them if necessary. If a worker leaves the company or loses a device, employers don’t need to worry about data being lost, Wagner has said.
While the military has relied on BlackBerrys, which have consistently received federal certification for protecting sensitive data, it has been testing Android and Apple (AAP) alternatives.
Adam Yates, a spokesman for Samsung, didn’t immediately respond to a phone call and an e-mail seeking comment.
Scott Totzke, BlackBerry (BBRY)’s senior vice president of security, said in a statement that the new BlackBerry 10 “offers a rich, highly responsive mobile computing experience, along with BlackBerry’s proven and validated security model.”
To contact the reporters on this story: Nick Taborek in Washington at ntaborek@bloomberg.net; Tony Capaccio in Washington at acapaccio@bloomberg.net
To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net
WTI Drops to Pare Weekly Gain After Biggest Rally in Six Months
By Ben Sharples - May 3, 2013
West Texas Intermediate crude fell, paring a weekly advance, as traders awaited U.S. jobs data that may signal the economic recovery is accelerating.
Futures slid as much as 0.4 percent in New York a day after climbing 3.3 percent in the largest advance since Nov. 6. U.S. applications for unemployment benefits dropped to the lowest in five years, data from the Labor Department showed yesterday. A government report today may show employers boosted hiring in April. OPEC will hold off increases in shipments this month as weaker demand in the U.S. and Europe counters rising consumption in Asia, according to Oil Movements, a tanker tracker.
“The jobless claims data may give some insight into the fact that the jobs markets might not be as weak as some traders previously expected,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The evidence is still of a moderating tone in both the U.S. and Chinese economies.”
WTI for June delivery fell as much as 33 cents to $99.66 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.69 at 1:16 p.m. Singapore time. The volume of all contracts traded was 40 percent below the 100-day average. Futures surged $2.96 yesterday to $93.99, the highest closing price since April 29, and are up 0.7 percent this week.
Brent for June settlement slid 26 cents to $102.59 a barrel on the London-based ICE Futures Europe exchange. It rose $2.90, or 2.9 percent, to $102.85 yesterday. The European benchmark was at a premium of $8.90 to WTI. It closed at $8.86 yesterday, the narrowest gap since Dec. 30, 2011.
Technical Momentum
WTI may extend gains as a measure of technical momentum advances. On the daily chart, the moving average convergence- divergence indicator yesterday climbed above zero for the first time in three weeks, according to data compiled by Bloomberg. Futures rallied to about $98 a barrel after similar patterns in December and March.
U.S. payrolls probably increased by 140,000 workers after an 88,000 gain in March, according to the median forecast of economists surveyed by Bloomberg News before today’s Labor Department report. The unemployment rate stayed at 7.6 percent, matching March’s reading that was the lowest since December 2008, the survey showed.
U.S. Inventories
WTI may decline next week after U.S. crude stockpiles reached an 82-year high, a separate Bloomberg survey showed. Sixteen of 34 analysts and traders, or 47 percent, forecast futures will drop through May 3. Twelve respondents, or 35 percent, projected a gain and six said there would be little change.
Crude inventories rose by 6.7 million barrels last week to 395.3 million, the Energy Information Administration said May 1. Supplies were last at that level in 1931, based on monthly figures.
The Organization of Petroleum Exporting Countries will ship 23.7 million barrels a day in the four weeks to May 18, little changed from the previous period, Oil Movements said yesterday in an e-mailed report. The figures exclude Angola and Ecuador. U.S. crude imports by tanker have fallen about 13 percent this year, the consultant said.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
Talk about coming back from the dead! All about the momo, and now it is positive momo getting it back probably to $500 by end of June if not earlier.
Slept like a baby, another rocketless night.
Damn, did NOT see the SPY making such a huge move. BAC only eked out a small few cents, so hopefully those Puts will still pay off. Nice to see CALL and HEK making some strong moves. Still have time for those XLF lottos, but they are just jellybeans.
Going to do some reading and research to see what the heck caused such a monster move, and post it on up. Hope you are having pleasant dreams.
Ugh, there goes the SPY, popping nice over $159. POMO being injected this hour. Still think we end in the $158s.
Internet slower than heck, calling it a night, can't get anything accomplished. See ya all in the morning!
OK, last trade of the day, got some Lotto $4 June Calls on HEK at .15
Hoping for the SHORT SQUEEZE, the short interest is HUGE, and they should come out with good numbers and guidance as their business is starting to gain some traction. Earnings next week.
Those must be the Stuffie 'JellyBeans' that are turning into lollipops for ya. Way to go!
Just dabbling a bit here. Got me some BAC Puts, off the profits I made with C Puts. Banks are tanking in May, is my theory.
Hey Bubbs! That is awesome if your shares are popping up.
Ugh, FINALLY got some at .22. When I first was doing it, was at .19! So damn slow, the page wouldn't load.
GOt MAY $12 Puts at .22, hoping for TANKAGE in BAC these next few weeks.
OMG, my PUT order for BAC keeps timing out with this CRAPPY internet!!
Have never been, doing it this time with my wife. Fremont Street or something?
Oh man, sneak out in the middle two weeks of July. We can meet for drinks and dinner! You and my wife will pay for me and Bear, of course.
Oh, I almost forgot the top of the Stratosphere! Man, that place is awesome, just in a lousy area of Vegas.
Please tell me the ones you like.
Nah, just saw it on your list of movers.
My FAVORITE bar is the 32 degree bar all the way in the south at the M, it has over 100 beers on tap.
ALso love the bar at the Cosmopolitan at City Center.
CarneVino has a great bar for wine, I believe that is in the Venetian or Bellagio. Emerils Sports Bar another great one.
I'll hit the bar at the MGM Grand when in Vegas, and help out with the stock price in July!
LOL, yep you are right, jellybeans can also turn into....tic-tacs.
Just doing some pre-market research to find the best play for the day. Still leaning towards those BAC Puts, will watch the action this morning.
NUAN popping this morning, don't want to chase those calls, but the Icahn story is interesting.
MCD Puts also on watch.
Jellybeans can add up to full out lollipops.
Can't wait to see what the market does at the open. Everything tapering off the ECB and unemployment report highs. Even Europe.
Ugh, SPY dropping like a rock, 40+ cents off the PM high and dropping. Still think the POMO gives us a pop, but I was hoping for a bigger pop and drop.
You still holding those calls in AVEO? Hoping for a nice POP if you are.
LOL, yeah, got lucky, I was the only one in there! Usually it is a 10 minute wait, timed it just right.
Dang it, we are already dropping from the PM Highs. Draghi must be spewing idiocy from out of his mouth and messing up my plans!
Nice and clean now! And I SMELL good.
Still think we get a nice pop and drop, POMO will get us through the morning, and then we head down. May not end RED, but we end lower than we start this morning.
US Trade Balance M/M for March comes in at -$38.8B vs the expected -$42.3B and prior -$43B
Productivity consensus 1.3%, actual comes in at 0.7%. Costs consensus 0.1% vs actual 0.5%
The consensus number was just way stupid to begin with, but 324k STILL a heck of a lot of people going for unemployment. I am sure this will propel us higher this morning.
Still going to fade whatever pop materializes, all a lot of BS numbers. NFP will be ugly tomorrow, my guess.
Off to take a shower. Back in about 30 minutes.
Another ouch! Too many people going on diets now I guess.
Historical Intraday movements after ECB Rate Cute , 7/9 times closed down from open http://stks.co/tAoY
Wells Fargo Upgrades EZCORP ($EZPW) to Outperform, Sell-off Overdone
Is that why EZ is not on the board this morning? Is he celebrating somewhere?
Looks like the ECB rate cut made a nice pop in the futures. Too bad it will do NOTHING for the European economy, which is tanking worse than ours in a big way. Window dressing for the big boys to sell some stock to the bag holders, still my thought.