The Dollar is Going Up
by Zero Hedge - May 21st, 2013 3:10 am
Courtesy of ZeroHedge. View original post here.
Submitted by Monetary Metals.
Let’s take a look at a few graphs of the dollar, from Feb 1, 2013 through Friday May 17, 2013. Yes, I said graphs of the dollar. I’ve priced the dollar in gold first (of course), then silver, the euro, and even the yen. The pattern is obvious. The dollar is going up.
I did not show copper, lumber, or wheat though they show the same trend. These commodities are not money, of course.
My point is simple. It’s not gold that is going anywhere. In past articles, I’ve used the analogy of measuring a steel ruler using rubber bands. Using the dollar to measure gold is like that. In this article I show that it’s not just gold, but silver, other currencies, and commodities. The dollar is rising now matter how we measure it.
The question not to ask is: “how are they manipulating gold?” The question is: “why is the dollar rising?”
To answer that, we first have to understand why the dollar had been going down. Most would say that it’s because the Fed has been “printing” and increasing the quantity of dollars. If that is so, then why would the dollar ever rise, as it has before (e.g. in the 1980’s), and as it is doing now? The Fed cannot and does not “un-print” dollars. This stock explanation is not satisfactory.
In one word, the answer is: arbitrage.
Let’s take a step back and look at the Treasury bond. The government pays for net expenses above tax revenues by borrowing. To borrow money, the Department of the Treasury sells bonds. This is an important aspect of our current form of government, as voters have demanded far more government expenditures than they are willing or able to pay for via taxes. In this aspect, the Treasury bond is a tool of fiscal policy, or spending, and cash flow to pay for it.
There is another aspect to the Treasury bond. It is the key asset of our monetary system. It is the asset on the Fed’s balance sheet (increasingly, post 2008, there are also mortgage bonds) to back its liabilities. The liability of the Fed is the Federal Reserve Note, commonly called the dollar. The Treasury bond is also a significant backing for the liabilities of commercial banks,…
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Merkel Pins Cameron in Corner; Will Cameron Bury His Head in the Sand, Pretending to Not Notice?
by ilene - May 21st, 2013 2:59 am
Courtesy of Mish.
UK prime minister, David Cameron, promised to hold a referendum on whether Great Britain should remain in the EU, but only on two conditions. The first condition, that Cameron be re-elected as prime minister is iffy enough.
The second condition, that Cameron renegotiate the Lisbon Treaty, I said would never happen. And it won’t.
German Chancellor Angela Merkel sealed the fate on that score as Berlin plans to streamline EU but avoid wholesale treaty change.
Berlin is drawing up plans for treaty changes to streamline decision-making in the eurozone, while stopping short of any wholesale renegotiation that would allow the UK to repatriate powers from Brussels.
Although Angela Merkel, German chancellor, has expressed her desire to keep the UK inside the EU, the move being discussed in Berlin would thwart a plan by David Cameron, UK prime minister, to piggyback on eurozone reforms to renegotiate the British relationship with Brussels.
Mr Cameron had hoped to exploit renewed interest in Berlin for wholesale EU treaty changes as a way to renegotiate the UK’s membership terms. But Berlin’s strategy for a new, narrowly focused treaty could force the UK premier into a repeat of the dilemma he faced in December 2011, when Mr Cameron rejected the fiscal compact treaty but most other EU countries went along without him.
Senior German officials acknowledged that they were isolated on treaty change, which is fraught with political landmines in several countries – particularly France, which would probably require a national referendum if major changes were made to EU law.
The timing of treaty changes remains a matter of debate but it could come as early as next year, after elections to the European parliament in May. The way ahead is due to be discussed at a summit next month.
Pinned in the Corner
The sooner Merkel proceeds with her strategy, the better for everyone involved, especially UK citizens. Merkel has effectively preempted Cameron’s strategy in a way he cannot realistically deny.
Since there is now no possible hope of wholesale renegotiation (not that there ever really was in the first place), there is no reason for the UK to avoid a referendum now.
Will Cameron bury his head in the sand like an ostrich once again? We will find out shortly.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
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Oil Market Manipulation Reaches Absurd Levels
by Zero Hedge - May 21st, 2013 1:49 am
Courtesy of ZeroHedge. View original post here.
Submitted by EconMatters.
By EconMatters
Markets & Manipulation: A long History
Most markets these days are manipulated to some extent, and this is nothing new if we look back through the history of financial markets. But there are some strange things happening right now in the oil market worth mentioning.
Computer Pegging Algo
For the first time ever in the history of the oil market the June and July WTI Futures contracts the last 2 days have had the exact same price tick for tick. The June contract is rolling over on Tuesday, but normally the front month and rollover month have different prices, a typical spread would be in the range of 30 cents. But the two months are always priced differently. It is unheard of for the two months to have the exact price tick for tick for 2 days.
So what is going on here? It is obvious that a computer is pegging both markets, and that this is a new approach to a typical manipulation scheme of running up a contract at rollover, so those who need to rollover, pay the highest price to do so. There is nothing new about this scheme it goes on in Brent and WTI all the time for years. But this is the first time that it has been done with such brazen and open contempt for regulators that they just peg the two WTI months to
…
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Benzinga’s M&A Chatter for Monday May 20, 2013
by Insider Scoop - May 21st, 2013 12:00 am
Courtesy of Benzinga.
The following are the M&A deals, rumors and chatter circulating on Wall Street for Monday May 20, 2013:
Actavis to Acquire Warner Chilcott for $8.5B or $20.08/Share in Stock Deal
The Deal:
Actavis (NYSE: ACT) and Warner Chilcott (NASDAQ: WCRX) announced Monday an agreement under which Actavis will acquire Warner Chilcott. Under the terms of agreement, Warner Chilcott shareholders will receive 0.160 shares of New Actavis for each Warner Chilcott share they own, which equals $20.08 per Warner Chilcott share based on Actavis’ closing share price of $125.50 on May 17, 2013.
Actavis closed at $127.15 Monday, a gain of 1%, while Warner Chilcott gained 2%, closing at $19.60.
Dell Special Committee Seeks Additional Information from Carl Icahn and Southeastern Asset Management
The Letter:
The Special Committee of the Board of Directors of Dell Inc. (NASDAQ: DELL) sent a letter to Carl Icahn and Southeastern Asset Management on Monday, asking for additional information regarding the proposed leveraged recapitalization transaction submitted to the Board on May 9, 2013.
The letter stated: “Unless the Board of Directors of Dell determines that your proposal could reasonably be expected to result in a “Superior Proposal” as defined in the Company’s existing merger agreement with affiliates of Silver Lake and Michael Dell, we are not permitted to provide you with information or engage in discussions concerning your proposal.”
Dell closed at $13.41 Monday, a gain of $0.01 on lower than average volume.
Yahoo to Acquire Tumblr for $1.1B
The Deal:
Yahoo! (NASDAQ: YHOO) and Tumblr announced Monday that they have reached a definitive agreement for Yahoo! to acquire Tumblr, which allows users to post text, photos, quotes, links, music, and videos, for $1.1 billion in cash.
The transaction is expected to close in the second half of the year.
Yahoo closed at $26.58 Monday, a gain of $0.06 on 1.5 times average volume.
Royalty Increases bid for Elan to $12.50/Share in Cash
The Offer:
Royalty Pharma announced Monday its intention to increase its offer for Elan Corporation (NYSE: ELN) to $12.50 per share in cash. Elan’s Board said it will assess the Royalty Pharma announcement and will advise…
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U.S. Steel, Genomic Health and Other Stocks Insiders Are Buying
by Insider Scoop - May 21st, 2013 12:00 am
Courtesy of Benzinga.
Insiders may sell shares for any number of reasons, but conventional wisdom is that insiders really only buy shares of a company for one reason — they believe the stock price will move higher and they want to profit from it.
Pullbacks and sell-offs provide a perfect opportunity for investors who have faith in a company to snap up shares. Here are some stocks that have seen insider buying recently.
ACADIA Pharmaceuticals
One director, Felix Baker, bought more than 1.9 million shares last week. That was worth more than $24.9 million. This San Diego-based biopharmaceutical company has been discussed as a possible takeover target and it last week announced a secondary offering.
The market capitalization is about $1 billion and the long-term earnings per share (EPS) growth forecast is about 20 percent. Shares of ACADIA Pharmaceuticals (NASDAQ: ACAD) are up more than 180% year-to-date. Over the past six months, the stock has outperformed larger competitors AstraZeneca (NYSE: AZN) and Eli Lilly (NYSE: LLY).
Genomic Health
A director, Felix Baker again, last week bought more than 311,000 shares, which was worth more than $10.8 million, of this health care company. A novel genetic test by Genomic Health (NASDAQ: GHDX) to gauge the aggressiveness of prostate cancer became available on the market last week.
The diagnostics company has a market cap near $1.1 billion. While the long-term EPS growth forecast is about 33 percent, the return on equity is less than six percent. The share price is up more than 37 percent year-to-date and just shy of a new 52-week high. The stock has outperformed the broader markets over the past six months.
Murphy Oil
One director scooped up 30,000 Murphy Oil (NYSE: MUR) shares recently, at a price of more than $1.9 million, while other directors and executives were selling shares. This same director also bought 100,000 shares back in February.
This El Dorado, Arkansas-based oil and gas producer is in the process of spinning off its retail gas stations into a separate, publicly traded company. It has a market cap more than $12 billion and a dividend yield near…
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AdCare Health Systems Issues Employment Inducement Grant to New Chief Financial Officer
by Insider Scoop - May 21st, 2013 12:00 am
Courtesy of Benzinga.
AdCare Health Systems (NYSE: ADK) (NYSE: ADK.PRA) announced today that it has issued to Ronald W. Fleming, who commenced serving as AdCare’s Chief Financial Officer on May 15, 2013, a ten-year warrant to purchase 70,000 shares of AdCare’s common stock with an exercise price of $5.90 per share. One-third of the shares underlying the warrant shall vest ratably on each of May 15, 2014, May 15, 2015 and May 15, 2016. The vesting of the underlying shares shall accelerate upon a change in control of AdCare. The warrant is exercisable for cash or by cashless exercise. The issuance of the warrant was approved by the Compensation Committee of AdCare’s Board of Directors.
About AdCare Health Systems, Inc. AdCare Health Systems, Inc. is a recognized provider of senior living and health care facility management. AdCare owns and manages long-term care facilities and retirement communities, and since the company’s inception in 1988, its mission has been to provide the highest quality of healthcare services to the elderly through its operating subsidiaries, including a broad range of skilled nursing and sub-acute care services. For more information about AdCare, visit www.adcarehealth.com.
Important Cautions Regarding Forward-Looking Statements This press release includes statements that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including with regard to the Company’s future expectations and prospects. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management’s control. Factors that can affect future results are discussed in the documents filed by the Company from time to time with the Securities and Exchange Commission. Except where required by law, the Company undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date of this press release.
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Benzinga Market Primer: Wednesday, May 15
by Insider Scoop - May 21st, 2013 12:00 am
Courtesy of Benzinga.
Futures Lower on Weak European Growth Data
U.S. equity futures traded lower in early pre-market trade following a weaker than expected GDP report from the eurozone for the first quarter. GDP growth rose to -0.2 percent on a quarterly basis from -0.6 percent but missed forecasts of a 0.1 percent contraction. Weakness was notably seen in Germany, France, and Italy in the report, with the annualized rate of growth for Germany dropping to -1.4 percent vs. 0.2 percent growth forecast.
Top News
In other news around the markets:
- The U.K. had fewer people claim unemployment benefits in April than expected, a positive sign for the labor market as the unemployment rate fell. The Claimant Count Change in the U.K. was released at -7.3 thousand people vs. a forecast of -3.0 thousand as the unemployment rate unexpectedly declined 0.1 percent to 7.8 percent. However, most of the drop was due to people leaving the labor force.
- The Bank of England issued an upbeat forecast for the U.K. economy in its latest Inflation Report, the last of Governor Mervyn King’s tenure at the BoE. The Bank forecasts that the U.K. will grow 0.5 percent in the second quarter with growth accelerating to 1.7 percent in the second quarter of 2014 and 2.2 percent in the same period of 2015. Notably, the Bank mentioned that it sees the effects of the financial crisis easing, finally.
- Wal-Mart (NYSE: WMT) has refused to sign a new safety pact for its suppliers in Bangladesh but has announced that it will increase inspections in the country in the wake of the disaster that left numerous workers dead and more injured.
- S&P 500 futures fell 3.7 points to 1,644.30.
- The EUR/USD was lower at 1.2887.
- Spanish 10-year government bond yields rose 2 basis points to 4.37 percent.
- Italian 10-year government bond yields rose 5 basis points to 4.06 percent.
- Gold fell 0.95 percent to $1,410.90 per ounce.
Asian Markets
Asian shares were mostly higher overnight save for Australia following mixed trading on Wall Street as the Nikkei crossed the 15,000 level for the first time since 2008 as the yen continued…
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Benzinga Market Primer: Tuesday, May 14
by Insider Scoop - May 21st, 2013 12:00 am
Courtesy of Benzinga.
Futures Slightly Lower on Mixed European Data
U.S. equity futures traded slightly lower in early pre-market trade following mixed economic data out of the eurozone. The moves follow basically flat trading on Wall Street from Monday after futures rallied into the open following weaker than expected Chinese data.
Top News
In other news around the markets:
- The German ZEW Economic Sentiment Index rose to 36.4 in May from 36.3 in April but missed expectations of a gain to 38.3. The current conditions index was also weak and over 77 percent of respondents said they do not expect another rate cut in the next six months.
- Industrial Production across the eurozone rose faster than expected in March as IP rose 1.0 percent vs. a 0.4 percent forecast gain.February’s reading was revised downwards to 0.3 percent from 0.4 percent.
- Australia’s just released budget for the next fiscal year sees growth at 3 percent, alleviating some fears of a more protracted slowdown in the resource-rich nation.
- S&P 500 futures fell 2.8 points to 1,628.00.
- The EUR/USD was higher at 1.3006.
- Spanish 10-year government bond yields rose 3 basis points to 4.32 percent.
- Italian 10-year government bond yields rose 3 basis points to 4.01 percent.
- Gold rose 0.05 percent to $1,435.00 per ounce.
Asian Markets
Asian shares were mostly lower overnight as the yen retreated from recent lows against the dollar. The Japanese Nikkei Index fell 0.16 percent and the Shanghai Composite Index fell 1.11 percent while the Hang Seng Index lost 0.26 percent. Also, the Korean Kospi gained 1.03 percent and Australian shares rose 0.2 percent.
European Markets
European shares were mostly lower following the mixed economic data. The Spanish Ibex Index fell 0.6 percent and the Italian FTSE MIB Index declined 0.22 percent. Meanwhile, the German DAX declined 0.21 percent and the French CAC 40 lost 0.43 percent while U.K. shares fell 0.1 percent.
Commodities
Commodities were mixed overnight in quiet moves as the dollar gave back some of its recent gains, boosting commodity prices. WTI Crude futures rose 0.02 percent to $95.19 per barrel and Brent Crude futures rose 0.07 percent to $102.89 per barrel. Copper futures…
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Benzinga’s M&A Chatter for Friday May 10, 2013
by Insider Scoop - May 21st, 2013 12:00 am
Courtesy of Benzinga.
The following are the M&A deals, rumors and chatter circulating on Wall Street for Friday May 10, 2013:
Illumina Shares Soar on Rumor of Roche $88/Share Bid
The Rumor:
Shares of Illumina (NASDAQ: ILMN) surged higher Friday, after Swiss publication L’Agefi reported Swiss pharma giant Roche (OTC: RHHBY) had offered $88 per share to acquire the San Diego, CA-based genetic technology company. Illumina shares rose as high as $77.11 during the session.
After initially declining comment on the rumor, Roche said a deal for Illumina was “off the table”. Roche had previously made offers of $44.50 and $51 per share for Illumina, both of which were rejected by Illumina’s board. A rumored $60 offer never materialized.
Illumina closed at $69.98 Friday, a gain of 4% on 5.5 times average volume.
Actavis Confirms Merger Talks with Warner Chilcott
The Talks:
Shares of generic drug maker Actavis (NYSE: ACT) and Irish specialty pharmaceutical company Warner Chilcott (NASDAQ: WCRX) moved sharply higher Friday on a Bloomberg report that Actavis was in talks to acquire Warner Chilcott. Acatvis had reportedly been in merger talks with Valeant Pharmaceuticals (NYSE: VRX).
Both companies later confirmed that they were in early stage discussions regarding a potential merger, though no agreement had been reached.
Actavis shares gained 12% Friday, closing at $119.86 Friday. Warner Chilcott gained 20%, closing at $18.01.
True Religion to be Acquired by TowerBrook Capital Partners for $32/Share in Cash
The Deal:
After months of speculation, True Religion Apparel (NASDAQ: TRLG) announced Friday that it had entered into an agreement to be acquired by TowerBrook Capital Partners for $32.00 per share in cash, for a total of $835 million. The transaction is expected to close in Q3 2013.
True Religion Apparel closed at $31.82 Friday, a gain of 8% on 27 times average volume.
Hearing Unconfirmed Chatter of Icahn $25/Share Bid for Nuance
The Rumor:
There was vague market chatter Friday that investor Carl Icahn might bid as much as $25 per share for Nuance Communications. The chatter resulted most likely from a report that Icahn would be appearing mid-day on CNBC. Icahn currently has approximately…
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Starbucks, Huntington Bancshares and Other Stocks Insiders Are Buying
by Insider Scoop - May 21st, 2013 12:00 am
Courtesy of Benzinga.
Insiders may sell shares for any number of reasons, but conventional wisdom is that insiders really only buy shares of a company for one reason — they believe the stock price will move higher and they want to profit from it.
Pullbacks and sell-offs provide a perfect opportunity for investors who have faith in a company to snap up shares. Here are some stocks that have seen insider buying recently.
Huntington Bancshares
The CEO and two directors bought more than 112,000 shares in the past two weeks. Altogether, that was worth more than $797,000. This commercial and consumer banking services provider recently boosted its dividend and last week named a new head of its treasury management division.
This Columbus, Ohio-based regional bank has a market capitalization of about $6.1 billion and a dividend yield near 2.8 percent. The price-to-earnings (P/E) ratio is lower than the industry average and the return on equity is less than 12 percent.
Shares of Huntington Bancshares (NASDAQ: HBAN) pulled back about eight percent in mid-April but have begun to recover. But over the past six months, the stock has underperformed competitors Fifth Third Bancorp (NASDAQ: FITB) and Keycorp (NYSE: KEY).
Key Energy Services
The CEO, COO, controller and two directors last week bought a combined 112,500 shares, which was worth more than $613,000, of this Houston-based onshore rig-based well servicing contractor. First-quarter EPS fell more than expected due to a falling inland rig count.
Key Energy Services (NYSE: KEG) has a market cap near $948 million. While the long-term EPS growth forecast is about nine percent, the return on equity is less than nine percent. The share price is down more than 12 percent year-to-date and hit a multiyear low last week. Over the past six months, the stock has underperformed the Dow Jones Industrial Average.
NuStar Energy
Three directors recently purchased 61,000 shares altogether of this San Antonio-based master limited partnership (MLP). That was worth more than $3.1 million. The company saw an analyst downgrade after posting first-quarter earnings that fell short of expectations.
NuStar Energy (NYSE: NS) has a market cap of…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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