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Charts from the Future – Updating our Big Chart

This is a big deal.

We haven't updated our Big Chart since mid 2012 but we've finally cleared the top of the NYSE's range and it's time for us to ratchet up our expectations for this rally.  

As you can see on our current Big Chart, our mid-point targets were 16,000 on the Dow,  1,600 on the S&P, 3,300 on the Nasdaq, 10,000 on the NYSE and 1,000 on the Russell.  

As with all our 5% Rule™ ranges, we allow for 10% overshoots but, at this point, 4 of our 5 indexes have made it and now it's time to redraw our lines, adjusting for things like the Dollar, changes to the Index Components and volume consolidations we've seen in the past two years.  

As you can see, we were right to be skeptical in 2012 and we ultimately had our 10% pullback but that then triggered QE3 from the Fed, which has since become QInfinity and they pretty much haven't let the market have a proper pullback since.  We did have a quick dip this January but if you blinked – you missed that one and the Russell and Nasdaq faltered in March, but promises of more QE have them back on track now as well. 

The small correction we had last summer gives us a decent consolidation point 20-30% below our current levels, but those are the bottom of our Must Hold ranges.  The question is, if this rally is real – what do we expect out of it?  The easy answer is not much.   Without the constant infusion of Fed funds, we'd never be this high in the first place.  Of course, when I say Fed, I mean all Central Banks, as 60% of the S&P's revenue now comes from outside the US.  

SPX WEEKLYAs you can see from the Fibonacci view of the S&P above, the logical line to move our "Must Hold" level to on that index is 1,800 but 1,980 would already be 10% above 1,800 so it seems sort of silly to draw a line that's already so far behind.  But 1,800, on the other hand is still the level the S&P MUST HOLD to keep us bullish – and that is the point of the Big Chart – to let us know which side of the trade to be on in our Long-Term Portfolios.  

As the S&P crossed it's current 20% line, at 1,920, we cashed our out Long-Term Porfolio, which was outpacing the S&P with a 20% gain for the year.  In the past two weeks, we've already added back 11 positions – as the pullback we expected never came and our Big Chart indicated the rally would contine – that's what it's there for!  

Perhaps the issue is that the Big Chart was designed for calmer markets and these 2-year, 50% moves that are resulting from artificial stimulus simply call for wider bands and wider fault tolerances.  When the S&P first broke over 1,200 in 1998, it rocketed up to 1,560 (+30%) before a major pullback – and that pullback went all the way to 800!  We tested 1,600 again in 2007, back to 800 in 2009 and now, on our 3rd attempt (and with A LOT of artificial stimulus), we've finally broken over the line and 30% over 1,600 is 2,080 – so let's call that our goaaaaaaaallllllllllllllllll.  

As you can see, adjusting our Fibonacci lines to a base at 1,600 shows the S&P following a fairly well-behaved pattern through those lines.  Since our goal is going to be very bullish, it makes sense to move the "Must Hold" line to the middle of that range, which would be 1,840 and simply widen our expectations a bit.  But, as I said, we also adjust for the Dollar and Component Changes so we're going to use 1,850 as our new Must Hold Line on the S&P and that will put the 5% up level at 1,942 and 5% down at 1,757:

As you can see, we did get nice consolidation around the 1,850 line from March through May and it acted as good resistance in January, with a small correction back to the -5% line.  Those are the attributes we expect from a Must Hold line – so 1,850 gets the job!  

The Dow is more complicated because they keep changing it.  Since our last Big Chart update, KFT was replaced by UNH and AA, BAC and HPQ were replaced by GS, NKE and V.  Since the Dow is price-weighted and since GS, NKE and V add up to $455 vs $64 on the components they replaced, the last 3 components came in with 7 TIMES more weighting than the stocks they replace.  

The good news (from a charting perspective) is that none of them have done much since last September, when they were added, so they haven't thrown the Dow too far out of kilter.  Also, keep in mind TA people don't take any of this into account and they chart the Dow as if nothing has ever changed – despite the fact that there were 7 other changes in the past 10 years alone.  That means 1/3 of this index wasn't even in the index in 2004 – yet "TA Professionals" act as if nothing has changed!  

INDU WEEKLYWith the new components, our Dollar adjustments and taking into account that the Dow has been lagging our other indexes by a wide margin, we're going to give it a more aggressive Must Hold line at 16,600, which will make 18,260 the 10% line and our rally goal (20%) line way up at 19,920.  Since the 5% Rule is not an exact science, however, and since we know the market has an affinity for whole numbers – we should probably use 20,000 as the goal and that makes -10% the 18,000 line and -20% the 16,000 line.  

Now we have to apply some logic and consider whether or not the Dow can or SHOULD gain almost 20% from where it is now (16,947) and the quick answer is no.  In other words, should IBM be $220?  Should XOM be $125?  Should WMT be $92?  If not, then how they Hell would the Dow get to 20,000?  So it's an unrealistic goal (for the next 12 months, at least) and that should keep us overall cautious (see our famous "tugboat" model) with the other indices

Realistically, that brings us right back to 16,000 as the Must Hold – but that's where the Must Hold line is now and, if that's the case, then we shouldn't be adjusting the Big Chart at all but, instead, preparing for a correction – because it's the other indexes that are wrong!  Since we are TRYING to go with the bullish flow, however, we'll move the Must Hold up 10% to 17,600 (higher than the Dow is now) and, if the rally is real – they should be able to take it out in short order.  If not, that red line will remind us that all is not entirely well.  

The Nasdaq is easy since the goaaaallll there has been 5,000 since 2000 and we're finally making a proper run.  That's going to make 4,000 the new Must Hold line and we're already just under the 4,400 10% line – but it don't mean a thing until we take it out.  

NYA 11,000 is what we've been waiting for to redraw the Big Chart but we only just made it last week so let's not get too excited unless it holds it.  Therefore – you guessed it – 11,000 MUST HOLD in order for us to stay bullish!  See how easy this stuff is.  That's the origin of the term "Must Hold" and that's exactly how we use it – we find key levels to support a bullish premise and, as long as they hold, we can keep BUYBUYBUYing.  

RUT WEEKLYFinally then, the Russell and that one has completely blown the doors off our 1,000 Must Hold line.  Of course, it did that back in March as well and then fell over 10% in short order so this second attempt isn't going to impress us until they are over for a week.  Still, 1,000 is clearly an inadequate Must Hold line and, in fact, the Russell Must hold 1,200 for us to really be bullish (ie. stop expecting a pullback) and 1,100 is what needs to hold on a pullback.  

1,080 has been the bottom of the recent range and – guess what? – if we move the Must Hold line up to 1,200, then 1,080 becomes the -10% line, which is SUPPOSED to be the bottom of the range.  Isn't it amazing how these things work out?  Not really – our 5% Rule™ has been holding up since the dawn of computerized trading and only gets stronger every year as more and more trading is automated.  

Soon, they won't need us at all to make the markets – just our money!  Meanwhile, our official new Must Hold lines will be:  Dow 17,600, S&P 1,850, Nasdaq 4,000, NYSE 11,000 and Russell 1,200.  That means we need 3 of 5 of those to be green to stay bullish in our Long-Term Portfolios so we'll watch the Russell (1,188) and Dow (16,847) closely to make sure they get over and they NYSE (11,018) needs to stay over or we'll be looking for more downside protection.  

 


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  1. From Bloomberg, Jun 23, 2014, 5:04:43 AM

    European stocks declined, after
    posting a ninth weekly gain in ten, as investors watched
    developments in Iraq and as euro-area manufacturing weakened.
    U.S. index futures and Asian shares were little changed.

    To read the entire article, go to http://bloom.bg/1md3gUG

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  2. From Bloomberg, Jun 23, 2014, 6:12:42 AM

    Dubai shares plunged, dragging the benchmark index down 20 percent from a peak in May and bringing to an end the biggest bull market since 2005.

    To read the entire article, go to http://bloom.bg/1lKwWbg

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  3. From Bloomberg, Jun 23, 2014, 4:59:39 AM


    June 23 (Bloomberg) — Hans Redeker, head of global currency strategy at Morgan Stanley, discusses the Chinese economy, the Australian dollar, U.S. bond yields and expectations for the euro.
    He speaks with Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    Euro-area manufacturing and services
    activity weakened in June amid a further slowdown in France’s
    economy, underscoring the fragility of the recovery in the 18-nation region.

    To read the entire article, go to http://bloom.bg/1mdhV2a

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  4. From Bloomberg, Jun 23, 2014, 4:36:31 AM


    June 23 (Bloomberg) — Hans Redeker, head of global currency strategy at Morgan Stanley, discusses the Chinese economy, the Australian dollar, U.S. bond yields and expectations for the euro.
    He speaks with Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    Mario Draghi indicated that the
    European Central Bank’s interest rates will probably remain low
    for at least another 2 1/2 years.

    To read the entire article, go to http://bloom.bg/1l2emXM

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  5. From Bloomberg, Jun 23, 2014, 4:46:46 AM


    June 23 (Bloomberg) –- Bloomberg’s Manus Cranny reports on BNP Paribas being close to an agreement with U.S. regulators to plead guilty and pay a fine of up to $9B to settle allegations it violated U.S. sanctions. He speaks to Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    BNP Paribas SA (BNP) is close to an
    agreement to plead guilty and pay $8 billion to $9 billion to
    settle allegations it violated U.S. sanctions, according to a
    person familiar with the negotiations.

    To read the entire article, go to http://bloom.bg/1pZQawN

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  6. From Bloomberg, Jun 23, 2014, 6:04:21 AM


    June 23 (Bloomberg) — Hans Redeker, head of global currency strategy at Morgan Stanley, discusses the Chinese economy, the Australian dollar, U.S. bond yields and expectations for the euro.
    He speaks with Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    Britain’s pound is the most coveted
    currency among traders, who are betting a rally that pushed it
    to the strongest level since 2008 is just getting started.

    To read the entire article, go to http://bloom.bg/T2ApXz

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  7. From Bloomberg, Jun 23, 2014, 5:55:37 AM

    Good morning. Here’s my take on some of the stories driving the debate in politics, finance and social issues across Asia today:

    To read the entire article, go to http://bv.ms/1ip3RmX

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  8. From Bloomberg, Jun 22, 2014, 7:00:01 PM


    June 19 (Bloomberg) — Christian Schulz, senior economist at Berenberg Bank, discusses the U.S. economy and Federal Reserve Chair Janet Yellen’s news conference yesterday.
    He speaks with Olivia Sterns and Guy Johnson on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)

    As the Federal Reserve works to
    extricate itself from the bond market, its influence over debt
    investors is only increasing and boosting the chance of a soft
    landing for Treasuries.

    To read the entire article, go to http://bloom.bg/1l2eK8v

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  9. From Bloomberg, Jun 23, 2014, 4:37:27 AM

    Gold traded below a two-month high
    as investors weighed the outlook for U.S. borrowing costs to
    remain low and tension in Iraq against signs of weaker physical
    demand. Platinum and palladium declined.

    To read the entire article, go to http://bloom.bg/1pZwhWP

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  10. Watch this video at http://bloom.bg/1pt7o1T

    China’s Economy Has Turned a Corner: HSBC

    June 23 (Bloomberg) –- HSBC Greater China Economist John Zhu discusses China’s just released June Flash PMI data, which came in better than expected, and what it means for the economy with Rishaad Salamat on Bloomberg Television’s “On The Move.” (Source: Bloomberg)

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  11. Watch this video at http://bloom.bg/U8FOgU

    China Housing Market to Stabilize: JLL’s Klibaner

    June 18: Michael Klibaner, greater China research head at JLL, talks about China’s housing market and government policies.

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  12. From Bloomberg, Jun 23, 2014, 4:54:35 AM

    Brent traded near the highest level
    since September and West Texas Intermediate gained as militants
    in Iraq seized more territory and President Obama warned that
    the crisis may spill over into other countries.

    To read the entire article, go to http://bloom.bg/1l2fsCO

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  13. From Bloomberg, Jun 23, 2014, 12:01:00 AM

    An employee cleans an automatic capsule filling machine at the Lupin Ltd. pharmaceutical plant in Salcette, Goa. In addition to specialized drugmakers with markets in Western Europe, Mumbai-based Lupin is looking for companies that give it access to generic markets in Russia, China and Brazil. Photographer: Dhiraj Singh/Bloomberg

    U.S. regulators, armed with a year-old Supreme Court decision, are stepping up probes of pharmaceutical deals that delay the sale of generic drugs, arrangements they view as illegally hurting competition.

    To read the entire article, go to http://bloom.bg/1j3MhzE

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  14. From Bloomberg, Jun 23, 2014, 4:04:42 AM

    A technician works in a laboratory inside Nestle SA’s Institute of Health Sciences at the Swiss Federal Institute of Technology (EPFL) in Lausanne. Nestle is working on a program code-named “Iron Man,” part of the Swiss company’s efforts to treat metabolic, brain and gastrointestinal disorders with new foods and beverages. Photographer: Valentin Flauraud/Bloomberg

    Nestle SA (NESN) has made billions of
    dollars serving up tasty jolts of caffeine with its Nespresso
    coffee machines. Now, its scientists aim to deliver much-needed
    vitamins and minerals to people worldwide in a similar fashion.

    To read the entire article, go to http://bloom.bg/1l2f9rv

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  15. From Bloomberg, Jun 23, 2014, 2:21:45 AM


    The Topix rose 2 percent last week. The Japanese measure fell as much as 13 percent this year amid growing doubt Prime Minister Shinzo Abe will make good on promises for reforms from loosening labor laws to reducing government support for farmers. Photographer: Tomohiro Ohsumi/Bloomberg

    Japanese businesses left behind this
    year as global equities rallied to a record found a winning
    strategy in buying back shares the rest of the world preferred
    to avoid.

    To read the entire article, go to http://bloom.bg/1lJQ1Me

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  16. From Bloomberg, Jun 19, 2014, 4:48:31 AM

    The Bank of Japan holds the key to
    stabilizing the government bond market once the country’s
    largest pension fund starts selling its holdings, according to
    the nation’s bank lobby.

    To read the entire article, go to http://bloom.bg/1pif5YR

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  17. From Bloomberg, Jun 23, 2014, 6:08:55 AM

    People walk past a LVMH Moet Hennessy Louis Vuitton SA store at the DLF Emporio shopping mall in New Delhi, India. Photographer: Graham Crouch/Bloomberg

    Krishnan Ganesh, who sold his online-tutoring company in Bangalore for $213 million, is the type of client that attracted global wealth managers to India. His refusal to use them helps explain why some are leaving.

    To read the entire article, go to http://bloom.bg/1lJX1r1

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  18. From Bloomberg, Jun 23, 2014, 5:18:46 AM


    June 23 (Bloomberg) — Hans Redeker, head of global currency strategy at Morgan Stanley, discusses the Chinese economy, the Australian dollar, U.S. bond yields and expectations for the euro.
    He speaks with Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    Industrial metals led an index of
    commodities to the highest level in more than nine months as
    China’s factory orders beat estimates. European stocks fell and
    the dollar weakened.

    To read the entire article, go to http://bloom.bg/1l2dL8g

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  19. From Bloomberg, Jun 22, 2014, 8:00:35 PM

    No state is needier than West Virginia when it comes to fixing crumbling highways, airports and water works, with annual repair needs of $1,035 per resident that’s three times the national average.

    To read the entire article, go to http://bloom.bg/1j2X2lL

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  20. From Bloomberg, Jun 23, 2014, 5:16:24 AM


    June 23 (Bloomberg) — David Gaud, a senior money manager at Edmond de Rothschild Asset Management in Hong Kong, talks about India and China stocks.
    Gaud also talks about oil prices. He speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    Hong Kong’s benchmark stock index
    tumbled the most in three months amid concerns over slumping
    Chinese property prices, higher money-market rates and political
    tension between the city and the mainland.

    To read the entire article, go to http://bloom.bg/1pZxA8e

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  21. From Bloomberg, Jun 23, 2014, 5:03:31 AM


        
    March 11 (Source: Bloomberg) — Gregory Smith, founder of Australian investment company Global Commodities Ltd., talks about the outlook for silver and agricultural commodities.
    He speaks from Singapore with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    Hedge funds got more bullish on
    sugar before prices climbed to the highest since October as dry
    weather threatened supply from India to Brazil.

    To read the entire article, go to http://bloom.bg/1ixNLXG

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  22. From Bloomberg, Jun 23, 2014, 4:29:48 AM


    June 23 (Bloomberg) — Canadian Finance Minister Joe Oliver discusses the country’s 2 percent inflation target, expected trade surplus next year, tax policy and global growth.
    He speaks with Anna Edwards on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    Canadian Finance Minister Joe Oliver said today that the U.S. is heading toward a “reasonably
    solid” economic expansion while he sees some concern about
    China.

    To read the entire article, go to http://bloom.bg/T2EPO1

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  23. From Bloomberg, Jun 23, 2014, 5:34:16 AM


    June 23 (Bloomberg) –- HSBC Greater China Economist John Zhu discusses China’s just released June Flash PMI data, which came in better than expected, and what it means for the economy with Rishaad Salamat on Bloomberg Television’s “On The Move.” (Source: Bloomberg)

    A Chinese manufacturing gauge rose to a seven-month high in June, supporting Premier Li Keqiang’s contention that the economy will avoid a hard landing as the government steps up efforts to spur growth.

    To read the entire article, go to http://bloom.bg/1j3gHlx

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  24. From Bloomberg, Jun 23, 2014, 3:30:00 AM

    Services activity in Germany slowed
    more than analysts predicted as manufacturing strengthened
    further, highlighting the uneven pace of growth in the euro
    area’s largest economy.

    To read the entire article, go to http://bloom.bg/1mde6Kj

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  25. From Bloomberg, Jun 23, 2014, 3:00:00 AM


    The manufacturing PMI fell to 47.8 from 49.6 in May, the lowest level since December. Photographer: Balint Porneczi/Bloomberg

    French manufacturing and services
    contracted for a second month in June, highlighting the euro
    area’s struggle to sustain its economic recovery.

    To read the entire article, go to http://bloom.bg/1md82S9

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  26. From Bloomberg, Jun 22, 2014, 10:58:06 PM


    Australia’s Prime Minister Tony Abbott is now staking his government’s popularity on the push for a budget surplus of 1 percent of Australian gross domestic product within a decade. Photographer: Andrew Harrer/Bloomberg

    Australia re-introduced a bill today
    to repeal a carbon-price mechanism brought in by the previous
    Labor government ahead of a power shift in the Senate, which has
    previously rejected the levy’s removal.

    To read the entire article, go to http://bloom.bg/1qBAAYj

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  27. From Bloomberg, Jun 22, 2014, 11:38:34 PM

    A pro-democracy activist holds a tablet showing an app to vote online outside a polling station in Hong Kong.

    Perhaps rumors of Hong Kong‘s demise weren’t exaggerated after all.

    To read the entire article, go to http://bv.ms/1p8fAJe

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  28. On the hour

    07:05 AM ET

    • S&P +0.02%.
    • 10-yr flat.
    • Euro -0.11% vs. dollar.
    • Crude +0.19% to $107.03.
    • Gold -0.42% to $1,311.10.


  29. Overseas

    06:00 AM ET

    • Japan +0.13%.
    • Hong Kong -1.68%.
    • China -0.11%.
    • India -0.10%.
    • London -0.20%.
    • Paris -0.57%.
    • Frankfurt -0.61%.


  30. Monday’s economic calendar

    12:00 AM ET


  31. Audi ready to expand EV production

    07:09 AM ET · VLKAY

    • Audi (VLKAY) has plans in place to develop more electric vehicle models if demand picks up.
    • The German automaker will launch its first EV next year when the R8 debuts.


  32. Lululemon founder makes noise over gaining more control

    06:55 AM ET · LULU

    • Lululemon (LULU) founder Chip Wilson is in talks with Goldman Sachs over constructing a strategy to gain more control at the company, according to The Wall Street Journal.
    • Options for Wilson include starting a proxy fight to gain more board seats or finding a P-E partner for a buyout.
    • LULU +1.9% premarket


  33. Global infrastructure, capital spending estimated at $9T a year by 2025

    06:09 AM ET · CHXX

    • PwC forecasts global spending on capital projects and infrastructure to increase by more than $9T a year by 2025, and estimates $78T in total global spending between now and then. Spending for 2012 was $4T.
    • The new calculation also projects a much faster growth rate in China and other Asian countries that have not faced the brunt of the financial crisis. China surpassed American capital and infrastructure spending in 2009.
    • U.S. capital projects and infrastructure spending is expected to increase 3.5% annually, reaching $1T a year by 2025.
    • ETFs: CHXX, KFYP


  34. Brent may top 9-month record

    05:15 AM ET · USO

    • As the crisis in Iraq escalates, brent crude climbed above $115 today towards its 9-month record high. Brent rose 62 cents to $115.43 by 6:35 a.m. GMT, and may break its Thursday record of $115.71 – the highest price since September 9.
    • Concerns of Iraqi supply are causing brent to rocket. Militants yesterday took control of three towns, two crossings on the Iraq-Syrian border, and stopped traffic on the main highway from Jordan to Baghdad.
    • U.S. crude for August delivery also gained, soaring 50 cents to $107.33. The July contract expired on Friday.
    • ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, USL, UWTI, DWTI, DNO, SZO, OLO, OLEM


  35. Nikkei rises to five-month high

    04:15 AM ET · DXJ

    • Japanese shares rose to a five-month high today, after a positive survey on Chinese manufacturing added to gains caused by the Fed’s dovish monetary policy. The Nikkei climbed 0.1% to 15,369.28, its highest close since January 29. The benchmark has risen almost 10% since the end of May.
    • The Topix also rose 0.1% to 1,267.48 at the close of trading in Tokyo, with 1.96B shares changing hands. JPX-Nikkei Index 400 fell 0.1% to 11,537.06.
    • ETFs: DXJ, EWJ, DFJ, NKY, DBJP, EZJ, EWV, SCJ, JPNL, DXJS, JSC, ITF, JPP, JPNS, HEWJ, FJP, DXJH, DXJR, DXJF, DXJC, DXJT, FXY, YCS, JYN, YCL


  36. France obtains Alstom stake, clears GE deal

    02:25 AM ET · GE

    • The last remaining element to the General Electric (GE)-Alstom (ALSMY) deal has now been complete, after the French government secured its 20% stake in Alstom from Bouygues (BOUYF). Bouygues will lend the shares to the French state, in order for the government to become an immediate shareholder.
    • After being ousted from the the deal, Siemens (SIEGY) CEO Joe Kaeser says he’s still ready to negotiate with Alstom should the agreement between GE and the power equipment company fall apart.
    • Previous coverage


  37. Oracle expected to announce $5B MICROS Systems deal

    02:02 AM ET · ORCL

    • Oracle (ORCL) is expected to announce a $5B acquisition of MICROS Systems (MCRS) this morning. The deal values MICROS at more than $67 a share, a slight premium to its $65.77 Friday close.
    • If confirmed, the acquisition would be Oracle’s largest deal since it bought Sun Microsystems for $5.6B in 2009.
    • ORCL +0.1% AH


  38. Handicapping the Aereo vs. Broadcasters SCOTUS case

    Sat, Jun 21 · CBS

    • A decision by the Supreme Court in the case pitting Aereo against major broadcasters (CBS, FOXA, CMCSA, DIS) is expected to be announced next week. A check of the court’s docket shows June 23, June 25, and June 26 as possible announcement dates.
    • If Aereo wins a favorable ruling from SCOTUS rapid expansion could be on tap, even though the start-up might still face a fight on Capitol Hill and with the FCC. Investments from media giants or P-E firms could push Aereo into dreamland.
    • The reaction from broadcasters to an Aereo win is hard to gauge, although the “nuclear option” of moving all content to cable has been thrown out by top execs.
    • If Aereo loses the company will likely go away. CEO Chet Kanojia has dismissed talk that paying broadcasters a carriage fee was an option.
    • Beyond the headline from the high court on Aereo, media attorneys will be busy looking at the nuts and bolts of the ruling. The legal precedent set in the case could guide how content is distributed and fees sliced up in the future.
    • The stock to watch: CBS has been tipped by analysts as the broadcaster which could see the most volatility as the ruling is dissected. Nomura is a buyer on weakness.


  39. Passing next stress test is job #1 at Citi

    Sat, Jun 21 · C

    • “I’ll put my jacket on and walk out the door,” Citigroup (C) CEO Michael Corbat has told Chairman Michael O’Neill should the bank flunk the Fed’s stress test next year. In a WSJ “inside baseball” account of the failure and Citi’s efforts since, Corbat is described as having turned his attention away from moving the business forward for instead a laser focus on proving to bureaucrats at the Fed that Citi’s global business model is one that can survive the next crisis.
    • “Are you targeting our business model? Our strategy,” asked Corbat point-blank to Fed officials in a person-to-person meeting shortly after the stress test failure. For Citi to continue to operate all over the world, replied the Fed group, the bank needed to significantly improve its ability to operate and assess risk.
    • Corbat returned from the meeting with an urgency to simplify operations and overhaul aspects of the bank’s risk apparatus, and Citi has since sold its Greek consumer unit and put its Spanish one on the block. “The federal government’s overreach is excessive over these big banks, particularly of Citi,” says longtime investor William Smith of SAM Advisors, urging Corbat to instead push back against regulators.
    • Becoming more clear is that a stress test failure next year will mean not just Corbat’s job, but also a likely break-up of the bank. “Two extremes, from agitated investors to tough-minded regulators, will unite to break up Citigroup as too big to manage,” says Mike Mayo.


  40. Google’s Nest to buy Dropcam for $555M

    Fri, Jun 20 · GOOG

    • Google’s (GOOG) Nest Labs agrees to buy video monitoring and security startup Dropcam for $555M, in a push to become the dominant operating system for connected devices in and around the home.
    • Nest, which makes smart thermostat and smoke alarms, will work with Dropcam to “reinvent products that will help shape the future of the conscious home,” Nest’s Matt Rogers says.
    • The acquisition may stir concerns about privacy, but Rogers says Dropcam will come under Nest’s privacy policy, which means data from the monitoring service won’t be shared with GOOG or any other company without a customer’s permission.
    • Nest was bought by GOOG earlier this year for $3.2B.


  41. Nikkei: Panasonic to sell 60% of TV plant for ~$97M

    Fri, Jun 20 · PCRFY

    • The Nikkei reports Panasonic (PCRFY) plans to sell 60% of a 120K-sq. meter Japanese TV plant to Daiwa House Industry by next spring for ~¥10B ($97M).
    • Panasonic is also thinking of selling the rest of the plant to other buyers. No TVs have been made there in 2012, but the facility is still used for maintenance work (among other things).
    • The struggling electronics OEM has already been busy restructuring. It recently transferred 3 chip manufacturing plants to a 49/51 JV owned in partnership with Israel’s TowerJazz (TSEM). Panasonic received 870K TowerJazz shares (current value of $8.2M) in return.
    • The efforts are yielding results: Panasonic expects to end the current fiscal year (ends March ’15) with no net debt for the first time in 6 years.