Archive for 2012

Yahoo! and Alibaba Reach Agreement on Comprehensive Plan for Alibaba Stake

Courtesy of Benzinga.

Yahoo! (NASDAQ: YHOO) and Alibaba Group Holding Limited (ALBCF) announced Sunday they have entered into a definitive agreement for a staged and comprehensive value realization plan for Yahoo!’s stake in Alibaba.

The first step is the repurchase by Alibaba of up to one-half of Yahoo!’s stake, or approximately 20% of Alibaba’s fully-diluted shares. The purchase price will be based on a valuation of Alibaba to be established through equity financings that Alibaba intends to undertake to finance the transaction, subject to a floor valuation of approximately US$35 billion. The agreement includes substantial financial incentives for Alibaba to raise the additional equity at a valuation higher than US$35 billion. At the minimum price and assuming the initial repurchase of the full 20% stake, Yahoo! would receive from Alibaba consideration of approximately US$7.1 billion, composed of at least US$6.3 billion in cash proceeds and up to US$800 million in newly-issued Alibaba preferred stock.

Yahoo! intends to return substantially all of the after-tax cash proceeds to shareholders following the closing of the transaction. While the form of the return of capital to shareholders has not yet been finalized, Yahoo!’s board has increased Yahoo!’s share buyback authorization by US $5 billion concurrently with this transaction.

The transaction is subject to customary closing conditions. Alibaba will be required to close the repurchase with respect to at least one-quarter of Yahoo!’s current stake in Alibaba regardless of the amount of financing raised, and up to one-half of Yahoo!’s current stake if it obtains the requisite financing. Alibaba intends to finance the repurchase through a combination of its own cash resources, debt, equity and equity-linked financing. The transaction is expected to close within approximately six months.


For more Benzinga, visit Benzinga Professional Service, Value Investor, and Stocks Under $5.





Weighing the Week Ahead: Any Help from the European Summit?

Courtesy of Doug Short.

The turmoil in Greece and the potential contagion have once again taken center stage.

While the economic and debt problems are well-known, the question for many is why should Greece be so important? The answer lies in whether there is a threat to global financial stability, or whether the rest of the world will experience secondary effects from reduced European growth.

A year ago the systemic risk question seemed to be off the table as a result of more aggressive policies, especially the ECB’s LTRO program. What happened?

The Greek and French elections have underscored the limits of the austerity solution. The severe, multi-year recession in Greece is worse than ever and government programs face future cuts. This account from The New Athenian has a nice summary:

  • 72% of Greeks believe the parties should make concessions to each other and form a government, while 23% believe Greece should have repeat elections
  • 78% want Greece to stay in the euro, while 12% want a return to the drachma
  • In answer to the question “which of the parties elected to parliament would you like to see participating in the government?” the top two are (radical) Syriza and (moderate) Democratic Left, so it seems absolutely correct for conservatives and socialists not to try and build a government that skirts around them
  • Asked whether they find Syriza’s proposal realistic, 35% say quite realistic or very, while 62% say a little or not at all, which suggests that while the great majority don’t believe Syriza can implement what they say, it still wants them in to hopefully change things in the right direction, even if it doesn’t go all the way.

The Greeks expect and hope for further concessions, but want to remain in the euro. Many (most?) believe that this will not be possible, but it really depends upon what concessions the rest of Europe will make. There is also a wide range of possible outcomes, some of which are illustrated in this WSJ review.

I will have some thoughts about Europe in the conclusion, but first let us review last week’s news and data.

Background on “Weighing the Week Ahead”

There are many good sources for a list of upcoming events. In contrast, I single out what will be most important in the coming week. My theme…
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European Crisis: Your 1 Minute Update

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

This is where we stand right about now.

  • Future of the euro area — German Finance Minister Schäuble and former ECB president Trichet float proposals on the future of the euro area – an elected EU president, political union, “federation by exception”. While more integration is likely as a response to the current crisis, progress is not likely to be quick.
  • France and the fiscal compact — German FM Schäuble and Eurogroup chairman Juncker are confident that French President Hollande and German Chancellor Merkel will find a common position on the fiscal and growth pact. New French FM Moscovici says France will not ratify the pact unless it includes ambitious commitments to promote economic growth. However, with results of the French public finance audit due on 1 June, fiscal consolidation may get more airtime in the legislative election campaign than during the presidential one.
  • EU bank resolution scheme: The head of the banking unit at the EU Commission indicated that a crisis management proposal to wind up failing banks would be adopted by the EU on June 6.
  • Spain — Economy secretary Fernando Jimenez was quoted by Reuters on Thursday saying that, with Spain having done everything necessary in terms of fiscal policy adjustments and structural reforms, “we think that there should be some type of reaction from the ECB”. He denied the story run in El Pais that Bankia has lost over €1bn in deposits, around 1% of retail and corporate accounts, in the past week. LCH.Clearnet hiked Spanish bond margins (>1.5 years) on Friday. 
  • Moody’s downgrades 16 Spanish banks. Spanish government approves 2012 budgets for 16 out 17 of the autonomous regions. In the process, Spain discovered that its 2011 budget deficit was not 8.5% of GDP, but 8.9%. Oops 
  • Netherlands: Some details on austerity measures. According to De Telegraaf, the austerity package will include measures worth €16bn and taking into account the impact on the economy and also €1bn of extra spending, the government will expect a reduction in the budget deficit of €12bn.
  • Greece — Fitch downgrades Greece rating from B- to CCC. Fitch said that should new elections fail to result in a mandate for a new government to continue austerity measures, a Greek exit from the monetary union would be “probable”.One poll shows New Democracy back in


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By The Time Operation Twist 1 Is Over, The Fed Will Have Quietly Completed 40% Of Operation Twist 2 As Well

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

By the time Operation Twist (1) ends in just over 40 days time, on June 30, Fed Chairman Ben Bernanke, according to his previously announced “loose” target, will hope to have extended the average maturity of all bonds in the System Open Market Account (SOMA) to a record of roughly 100 months from 75 month at the onset of the program in October 2011. After all the sole purpose of Twist was to load up the Fed’s portfolio with duration, forcing the rest of the market to shift its investing curve even further into risky assets, as the Fed will have effectively onboarded the bulk of securities in the 3-4% return interval. Now as we showed back in early April, hopes that the Fed will simply continue with Operation Twist 2 after the end of “season” 1, as suggested by some clueless “access journalists” who merely relay what they are told by higher powers, are completely misguided as the Fed simply does not have enough short-term securities (1-3 years) to sell, and would have at most 2 months of inventory for a continued sterilized operation. Which however, does not mean that the Fed can not be quietly ramping up its operations in the ongoing Twisting episode. Because as Stone McCarthy demonstrates, as of the past week, the Fed has already surpassed its 100 month maturity target of 100 months, and is at 102.82 months as of May 16. And this is with 6 more weeks of Twist to go: at the current rate of SOMA purchases, the Fed will have a total portfolio average maturity of just shy of 110 months by June 30! Which means that contrary to market expectations of what the Fed’s own stated goal may have been, Bernanke will have gobbled up nearly 40% more long-dated Flow relative to estimates! In other words, Ben does not need to do a full blown Operation Twist 2 episode: by the time Twist 1 is over, he will have attained nearly 40% of the goals of the next potential sterilized operation.

Why is this important? Well, recall that over a month ago Goldman Sachs itself admitted what we have been saying for over 3 years: it is not stock that matters… it is flow. Recall the Goldman punchline:


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Yahoo, Alibaba Near Deal on Stake

Courtesy of Benzinga.

Yahoo (NASDAQ: YHOO) is very close to selling back half of its stake in China’s Alibaba (ALBCF) for $7.1 billion. The deal could be announced as early as Sunday night.


For more Benzinga, visit Benzinga Professional Service, Value Investor, and Stocks Under $5.





Weekly Market Commentary: Another Heavy Week of Selling

Courtesy of Declan Fallon

Markets were left in an interesting position by Friday’s close.  Ordinarily, I like to be a buyer when the S&P is at least 10% below its 200-day MA and sector breadth is in the position it’s in, but I think there is enough here to have me jump in on Monday’s open and add to my long term positions.   I suspect there will be a big one day gain to help establish the swing low. But I doubt it will be the absolute low for the current decline; at the same time, I don’t want to be looking at a swing low with hindsight!

Market Breadth is in swing low territory.  The Percentage of Nasdaq Stocks above 50-day MA dropped sharply to 18% although stochastics for this breadth indicator have not yet reached oversold territory.  Although the MACD histogram reached a new multi-year low – lower than the 2008 low.

The Nasdaq Summation Index has some way to go before turning oversold based on stochastics, although the Index is close to a swing low based on past occurrences.

The Nasdaq Bullish Percents is the only market breadth indicator which hasn’t yet reached swing low territory.  Also, supporting stochastics only recently dropped out of overbought territory.

Last week’s losses left the 2012 Nasdaq rally high-and-dry.  The decline is on course to test the broadening wedge with support around 2,600 (but rising).

The Russell 2000 broke the rising channel line and 760 support – a double whammy for the index. However, I think it more likely a large trading range bound by 625 support and 850 resistance will emerge from this decline; part of a consolidation of the rally from March 2009.

Finally, the S&P edged outside of its rising channel in a probable breakdown, but more worryingly, there was a ‘bull trap’ to the 1,370 breakout.


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Stock World Weekly: Test Issue

NEW: Ilene is available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here is this week's test version of the latest newsletter. We apologize for some formatting issues that need to be worked out. Please tell us what you think. 

Click on Stock World Weekly here, and sign in/sign up.





Europe’s Firewall Is Insufficient – A One Chart Explanation

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Unlike Eurocrat rhetoric, which is increasingly full of lies (thank you Jean Claude), prevarications, and half-truths, math is simple and binary. There either are enough numbers, or there aren’t. In the case of the European firewall, there aren’t (and that is even assuming the IMF somehow manages to convert all the money pledged for a European bailout bailout into money available for disbursement… because there is a world of difference between the two).

Source: Deutsche Bank





Guest Post: Italy And The Great Tax Revolt

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by James Miller of the Ludwig von Mises Institute of Canada

Italy And The Great Tax Revolt

Taxation is theft.

There is no denying this.  If I and a few brutes appeared at the door of an unsuspecting individual and demanded monetary compensation less we drag him off to jail, this would be a clear cut case of robbery.  It is a common tactic used by mobs or street gangs to offer protection with the barrel of a gun.  The only difference between shakedowns by private thugs and those employed by the state is the badge.  The badge legalizes extortion and imprisonment.

With that being said, it has been three years since the financial crisis and governments around the world are still reeling in the lesser Depression.  Tax collections are down while public expenditures have skyrocketed in a vain effort to stabilize the economy.  Much of this mass orgy in spending has been financed by central banks printing money and the suppression of interest rates down to artificially low levels.  This is the Keynesian remedy to recession.  Spend what you don’t have via the printing press.  Have central bankers create paradise on Earth through counterfeiting.

So far it hasn’t worked.

Like the Great Depression before, regime uncertainty and an emphasis on consumption over private investment have prevented a sustainable recovery from taking hold.  Public debts continue their upward trend with no conceivable end in sight.  The bond vigilantes have started their attack on the Eurozone; namely Greece, Portugal, Italy, and Spain.  Greece is all but finished as even the most dimwitted of commentators is conceding than an exit from the euro is likely.  Meanwhile in Italy, the lack of tax collection has forced the hand of Prime Minister Mario Monti to crack down on tax evasion.  This hasn’t gone over well with the Italian public.  From the San Francisco Chronicle:

Equitalia, the state tax-collection agency, has been targeted in a wave of attacks as Italians chafe under stepped-up efforts to recover an estimated 120 billion euros ($153 billion) in lost revenue from evasion. On May 12, a Molotov cocktail exploded outside Equitalia’s Livorno office, one day after a parcel bomb was delivered to the Rome headquarters, site of a December explosion that tore off…
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Zero Hedge

Johns Hopkins, Bristol-Myers Face $1 Billion Suit For Infecting Guatemalan Hookers With Syphilis 

Courtesy of ZeroHedge. View original post here.

A federal judge in Maryland said Johns Hopkins University, pharmaceutical company Bristol-Myers Squibb and the Rockefeller Foundation must face a $1 billion lawsuit over their roles in a top-secret program in the 1940s ran by the US government that injected hundreds of Guatemalans with syphilis, reported Reuters.

Several doctors from Hopkins an...



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Phil's Favorites

This Is The One Chart Every Trader Should Have "Taped To Their Screen"

Courtesy of Zero Hedge

After a year of tapering, the Fed’s balance sheet finally captured the market’s attention during the last three months of 2018.

By the start of the fourth quarter, the Fed had finished raising the caps on monthly roll-off of its balance sheet to the full $50bn per month (peaking at $30bn USTs, $20bn MBS, although on many months the (balance sheet) B/S does not actually shrink by this full amount which depends on the redemption schedule) and by end-Q4 markets also experienced some of the largest volatility and drawdowns in nearly a decade.

As Nomura&...



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ValueWalk

The Competition For Capital Has Made Stocks Cheap

By Michelle Jones. Originally published at ValueWalk.

The new year is upon us, and now is the time many investors look at what 2018 was and prepare for what 2019 might be. Recession jitters are starting to pick back up again, especially now that the full picture of 2018 is in the books. But what if you could pick only one theme for 2018? Jefferies strategist Sean Darby and team have a suggestion which is especially timely given that it appears to mark the end of an era.

StockSnap / PixabayVolatility carries into the new year

This past year was one of extremes, and the markets ended i...



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Kimble Charting Solutions

Stock declines did not break 9-year support, says Joe Friday

Courtesy of Chris Kimble.

We often hear “Stocks take an escalator up and an elevator down!” No doubt stocks did experience a swift decline from the September highs to the Christmas eve lows. Looks like the “elevator” part of the phrase came true as 2018 was coming to an end.

The first part of the “stocks take an escalator up” seems to still be in play as well despite the swift decline of late.

Joe Friday Just The Facts Ma’am- All of these indices hit long-term rising support on Christmas Eve at each (1), where support held and rallies have followed.

If you find long-term perspectives helpf...



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Digital Currencies

Transparency and privacy: Empowering people through blockchain

 

Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...



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Insider Scoop

Cars.com Explores Strategic Alternatives, Analyst Sees Possible Sale Price Around $30 Per Share

Courtesy of Benzinga.

Related 44 Biggest Movers From Yesterday 38 Stocks Moving In Wednesday's Mid-Day Session ...

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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

Reminder: We are available to chat with Members, comments are found below each post.

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

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Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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About Phil:

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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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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