Category: zerohedge

GM: Momentum Stock Candidate 2014

By EconMatters

 

Momentum Stocks


Every year on average there are at least 4 momentum stocks that capture Wall Street`s fancy and all the fund managers pile into these names. Hedge funds realize this investing phenomenon and try to figure out which names are going to be the chosen ones this year so they can ride along the coattails of the institutions, pension funds and money managers. These stocks are the absolute best stocks to invest in from a risk and return standpoint because you are riding along with the smart money, the crowd and every other technically based buy program as these stock charts are an investor`s paradise.

 

Impossible to Short Momentum Stocks in Heart of Momentum Run


The shorts come in at various times thinking these names are overdone on valuation concerns and they get their head handed to them, or shorts more specifically, causing additional fuel for the upside trek to higher monthly highs in the stocks. In essence, these stocks are ‘un-shortable’ and short sellers need to recognize what constitutes a Momentum Stock on Wall Street just as much as longs because failure to do so is just like committing investor suicide.

 

Notable Momentum Stocks


Notable Momentum Stocks in the past have been Blackberry (BBRY), Crocs, Inc. (CROX), Google Inc. (GOOG), Apple Inc. (AAPL), First Solar, Inc. (FSLR), Potash Corp. of Saskatchewan, Inc. (POT), Sears Holdings Corporation (SHLD), and Freeport-McMoRan Copper & Gold Inc. (FCX).

 

2013 Momentum Stocks


This past year for 2013 the momentum stocks were Netflix, Inc. (NFLX), Amazon.com Inc. (AMZN), Tesla Motors, Inc. (TSLA), priceline.com Incorporated (PCLN), Google Inc. and The Boeing Company (BA). One look at these charts can tell the investor why identifying next year`s momentum stock candidates is so important from an investment strategy. It is very helpful to be aligned with all the players on the right side of the investment.

 

Drivers for GM being a Momentum Stock


Here are some of the reasons why I think General Motors Company (GM) makes for a good momentum stock candidate in 2014. First, the government has finally exited their stake in the company freeing up institutional investors to start acquiring a sizable position in the automaker now that GM is no longer influenced by the government`s jurisdiction.

 

 

The second factor is that several other notable players like Kyle Bass of Hayman Capital Management, L.P. have started talking up the name recently, and when Hedge Funds start talking the old adage where there is smoke, there is fire applies here. GM is being talked about in the investment community which includes conferences, meetings, seminars and money raising initiatives. Big players raise money around investment ideas, and I think GM is one of these names.

 

Relaxing Oil Export Ban is Bad News for US Consumers

 

The third factor is the broader economy seems to be slowly getting better with the jobs environment improving each quarter; this bodes well for new vehicle sales.

 

The fourth factor is now that the government is no longer involved with management influence in regards to decisions, GM can be more aggressive in driving the profit factor, and they should be able to pursue more aggressive business practices which generate better quarterly results year over year on a comparison basis.

 

The fifth driver for the stock is the way it is trading relative to the broader market, and while the broader market has exhibited some weakness mainly on the risks associated with the FOMC meeting this week, GM has been hanging in there quite strong and fighting against this overall recent market weakness. This is a very bullish sign, and it usually means that investors think there is considerable long-term value in the stock so they aren`t selling, and other players like institutions are probably holding this stock up because they are in the acquiring mode on any weakness in the stock. Again, this is what an investor wants to see in a stock, how well it trades against the broader market.

 

Potential Concerns


One potential concern is that GM has sold a lot of automobiles over the last three years, and if there is one factor to watch it is how many more customers there are in the broader economy that need to upgrade to a new vehicle this year. I have seen just an amazing number of those Chevrolet Camaros on the streets, and I wonder if GM could run into some tough comps on certain product categories, and market and product saturation issues. This is something to monitor as a possible concern, and to follow in the quarterly presentations by the company.

 

 

 

The other possible concern is that GM is up about 18% in 6 months, and 61% in 2013. However, the stock is only up 17% over a five year time period, and the government yielded considerable influence during this period both from a management perspective and an ownership stake in the company.

 

My thesis is that with the government being a net seller on the market, this has limited GM`s upside, and now that longer term investors have acquired these shares, the company is set to really take off in 2014 like some of the Momentum Stocks of the past 5 years.

 

Price Targets


However, all that being said my initial price target for the stock is $65 a share sometime over the next six months, and maybe as soon as this April. I also have my mid-term price target at $80 a share towards the end of 2014. Some of this depends upon what the overall stock market is doing, but I am assuming in this analysis that GM holds up better, probably outperforms the overall broader market.

 

Acquiring GM Position & Entry Points


Thus, this is my first Momentum Stock candidate for 2014 in General Motors Company and I would recommend buying this stock if possible on a slight pullback, in the $38 a share range would be a great entry price. However, I have been watching this name, and the investor may not get the chance to get into the stock on a pullback, so beware of that possibility. Sometimes good stocks that everybody is interested in don`t offer ideal pullback entry points, regardless I would recommend acquiring a position before 2014 begins in the investing universe.

 

 

 

Article Update

 

We wrote this article prior to the Ford 2014 Profit Downgrade, which sent GM shares lower just below $40 a share before rebounding higher, but it seems investors are worried that Ford`s troubles may be hinting of broader concerns in the vehicle marketplace. The question for investors is whether these concerns are Ford specific or have broader implications for the rest of the automakers? The next quarterly earnings calls should shed some light on this subject, and give possible clues for investors.  However, GM the stock has definitely underperformed the broader market once the Ford news came out, something to watch before putting new money to work in the stock.

 

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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/V0U-NX0rePQ/story01.htm EconMatters

Itemizing The Obamacare Fees

Obamacare’s rollout may be in limbo even though the official deadline has come and gone (despite a much touted 2 million visitors to healthcare.gov on Monday which probably means it should IPO immediately), but the real sticker shock of actual fees awaits. And even as most insurers are opting to keep the full impact of the higher cost hidden, instead adding them to the overhead premiums charged, one company, Blue Cross Blue Shield of Alabama, has itemized the impact of the Unaffordable Care Act by adding a separate line itme for the “Affordable Care Act Fees and Taxes.” Here is how these add up according to a breakdown conducted by the Post.

The new taxes on one customer’s bill added up to $23.14 a month, or $277.68 annually, according to Kaiser Health News. It boosted the monthly premium from $322.26 to $345.40 for that individual.

 

The new taxes and fees include a 2 percent levy on every health plan, which is expected to net about $8 billion for the government in 2014 and increase to $14.3 billion in 2018.

 

There’s also a $2 fee per policy that goes into a new medical-research trust fund called the Patient Centered Outcomes Research Institute.

 

Americans also will pay hidden taxes, such as the 2.3 percent medical-device tax that will inflate the cost of items such as pacemakers, stents and prosthetic limbs.

 

Those with high out-of-pocket medical expenses also will get smaller income-tax deductions.

 

Americans are currently allowed to deduct expenses that exceed 7.5 percent of their annual income. The threshold jumps to 10 percent under ObamaCare, costing taxpayers about $15 billion over 10 years.

Then there is the new Medicare tax:

Under ObamaCare, individual tax filers earning more than $200,000 and families earning more than $250,000 will pay an added 0.9 percent Medicare surtax on top of the existing 1.45 percent Medicare payroll tax. They’ll also pay an extra 3.8 percent Medicare tax on unearned income, such as investment dividends, rental income and capital gains.

So will a big story for 2014 be Americans taking out student loans, already over $1 trillion and more than all US credit card debt, to pay for their health insurance? We hope to find out soon as the biggest capital misallocation in US history continues.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/VvfRjocM3k0/story01.htm Tyler Durden

Albert Einstein: “A Foolish Faith In Authority Is The Worst Enemy Of The Truth”

 

Albert Einstein said:

A foolish faith in authority is the worst enemy of the truth.

Indeed, scientists have shown that people will go to absurd lengths – and engage in mental gymnastics – in order to cling to their belief in what those in authority have said.

Part of the reason so many are so vulnerable to naive belief in authority is that we evolved in small tribes … and we assume that the super-elites are just like us.

In reality, there are millions of psychopaths in the world … and they are largely running D.C. and on Wall Street.

These people have no hesitation in lying to promote their goals.

The Assistant Secretary of Defense for Public Affairs told Morley Safer of 60 Minutes and CBS News:

Look, if you think any American official is going to tell you the truth, then you’re stupid. Did you hear that? — stupid.

And studies show that the super-rich lie, cheat and steal more than the rest of us.

Who’s to Blame … Big Government or Big Business?

Conservatives tend to believe that the captains of industry are virtuous and that the government can’t be trusted.

Liberals tend to believe that government servants are virtuous and that corporations can’t be trusted.

But the truth is that psychopaths are psychopaths … whether they’re in the private sector or government.

And there is no such thing as representative government or free market capitalism anymore. Big corporate money has coopted the government; and ill-guided politicians have destroyed the free market.

Corrupt government agencies and officials and corrupt corporations and executives have become intertwined in a malignant, symbiotic relationship.

And they’re trying to grab more and more power and wealth every day.

Big Business Has Turned Into a Criminal Syndicate

Big banks and giant oil companies have more or less become criminal enterprises.

And conservatives are not amused.

Government Has Gone Rogue

If the government were accountable, then government corruption, deceit and wrongdoing would be held to a modest level.

But the government is not accountable.

When bad government policy leads to bad results, the government manipulates the data … instead of changing policy.

Government pumps out massive amounts of propaganda through the mainstream and “gatekeeper” alternative media, movies, video games, and other venues.

The government has launched a war on journalism, and censors and manipulates social media. And see this.

The massive NSA is spying on all of us – including government officials, reporters, and everyone else – as a way to crush dissent.

And people who criticize government policy or government officials may literally be labeled terrorists.

No wonder the American public has lost faith in the 2 party system. And see this.

People of faith shouldn’t be fooled into blindly deferring to government authority.

Bonus:


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/G3AwDBbM4Hc/story01.htm George Washington

French Hope Dashed As Joblessness Surges Back Towards Record High

For the second time in 6 months, French joblessness has re-surged back towards record highs, dashing the hopes and dreams of a European recovery. The first time it was thousands of texts that didn’t get sent that implied joblessness dropped, this time, no excuse and we push back to within 2k of the all-time high unemployment in France. As Germany heads inexorably in the other direction, one can only hope the French President does not decide to take matters into his own hands and ‘draft’ the youth into employment.

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/FTxAGS2g-3U/story01.htm Tyler Durden

This Is Not The European Recovery You Were Looking For

As US and European stocks glide effortlessly higher, even the most ardent of US bulls has begun to realize things are getting out of hand. In order to keep his AUM flowing (and afford the next yacht), the friendly local asset gatherer will offer insights like… “there is value overseas” or “Europe is cheap” in hopes that his audience is none the wise as to the true state of affairs elsewhere in the world, let alone in the US. The truth, the gap between US and European earnings has never been wider and with 3 (or 4) false dawns already, European earnings (supposedly the true mother’s milk of the stock market) continue to fall – as the strong ‘whatever-it-takes’ EUR does nothing but stymie their recovery.

 

 

S&P 500 earnings are 14% above their 2007 peak while euro-area profits are 53% below their all-time high in March 2008 (of course, this is not firm EBITDA but earnings per share – which is a mirage of low-credit-cost buyback-driven float shrink in some nations of the world… but still)


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/rDGRm3YLSY0/story01.htm Tyler Durden

Gold and Silver Sentiments Violently Diverged in 2013

by Keith Weiner

 

There are two reasons why people buy gold and silver. The first is that they’re the monetary metals. Many people don’t want more than a certain exposure to the risks of the banking system. They hold dollars for liquidity and beyond that exchange them for metallic money. This money is not for trading.

The second is to trade or, more specifically, to speculate. They buy with the expectation of a rising price. The gold price, measured in dollars, is really just the inverse of the dollar price measured in gold. As the Fed abuses its credit, the quality of its liability falls. This liability—the dollar—has been falling in quality and price for 100 years. Measured in gold, the dollar is now just under 26mg. Or, measured in silver, it’s around 1.6 grams. Most people look at the inverse, the dollar prices of the metals, currently around $1200 and $19.50.

It makes for a great speculation, that the dollar will continue to fall. At least, it did until 2011. The gold price peaked in 2011 at $1900, and has since dropped 37%. The silver price dropped 60%.

One speculation strategy is to buy when something is going up. Today, there is clearly no upward momentum in gold and silver. The other approach is to try to buy when there’s blood in the streets, as the old trader’s saying goes. OK, but is there blood in the gold and silver streets?

I write the Monetary Metals Supply and Demand Report, a free weekly letter that provides data and analysis of the constantly changing fundamentals of the gold and silver markets. The data shows that gold is significantly scarcer to the market than silver; gold has a small backwardation and silver does not.

For months, I have discussed my hunch that there just has not been the final capitulation in silver as in gold. I have seen the comments on my own and other articles, and in other online forums.

I couldn’t prove it, but it kept nagging at me. Then I put together this graph of inventory held in the two big Exchange Traded Funds: GLD and SLV.

 

Tonnes of Metal Held by the ETFs, Jan 2009 through Dec 2013
GLD and SLV tonnes of metal

The picture in gold is what you’d expect. Gold metal begins to move out of the GLD inventories around the start of this year, and it has been almost a straight move down. There is no sign yet of a bottom. Gold inventory is down 40% from its peak one year ago.

Silver violently diverged. As one might expect, silver held by SLV peaked on April 25, 2011, the day the price peaked. Metal began moving out of the ETF the next day. The level quickly dropped by 14%, but then stopped falling. Then, at the end of 2012, inventory began to rise. Though the silver price is down 60%, silver holdings are down only 9%.

The reason for metal to flow in or out of an ETF is counterintuitive. It has nothing to do with price moves. The flow of metal depends entirely on the spread between the prices of the ETF and the metal itself. Arbitrageurs buy metal and sell new shares, whenever the share price is above the metal price. They sell metal and buy back shares when the share price is lower.

The graph shows a one-way flow of gold out of GLD. This means that the price of GLD shares has consistently sagged below the price of gold. This corresponds to negative sentiment regarding this metal. By contrast, more metal has flowing into SLV than out.

In general, I caution against just this sort of analysis. It is easy to focus on a highly visible corner of the market and ignore numerous low-profile corners. Both gold and silver have vast inventories; there is no such thing as a
shortage or a glut. Metal can move from one corner to the other without necessarily impacting price or anything else.

But in this case, the reason to study this chart is to understand sentiment among speculators. I suggest that sentiment in silver has not made its nadir, and that silver speculators yet cling to hope against hope that its price will shoot to the moon.

The irony is that my statement is controversial and contra the accepted wisdom in the silver community. If speculators had turned truly pessimistic about silver, then my statement would be uncontroversial, but advising people to buy silver would spark controversy.

One can never be certain about sentiment changes, but it’s a strong possibility that silver speculator pessimism rises to match that in gold. If this happens, the silver price could drop several more dollars. This is a time to be cautious with silver, though I never advise naked shorting a monetary metal.

 

(C) 2013 Monetary Metals


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/e_r849xUEEk/story01.htm Monetary Metals

Amazon Reveals Its Online Shopping Best Sellers

The Chinese population may be engulfed in a gold-buying spree to take advantage of low precious metal prices, but when it comes to sheer breadth of materialistic interests, they have nothing on the US consumer. And while previously we highlighted the products that filled online buyers’ shopping carts during Walmart’s record-breaking cyber Monday sales, they were, in a word, boring. So to get a sense of just how expansive the imagination of the US consumer is when armed with the trusty old credit card, and an internet connection, we go to Amazon which has just laid out it holiday best sellers. So without further ado, this is what Americans just couldn’t live without this shopping season.

Amazon.com holiday best sellers:

  • Tablets: Kindle Fire HD; Kindle Fire HDX 7”; Kindle Fire HDX 8.9”
  • TVs: Samsung 32” Smart LED HTDV; Samsung 40” LED HDTV; Samsung 22” Slim LED HDTV
  • Laptops: Samsung Chromebook; ASUS Transformer Book; Acer Chromebook
  • Cameras: Canon EOS Rebel T3i; Canon PowerShot A2500; Fujifilm Instax Mini 8 Instant Film Camera
  • Video Games: Call of Duty: Ghosts – Xbox 360; Just Dance 2014 – Nintendo Wii; Grand Theft Auto V – Xbox 360
  • Toys: Snap Circuits Jr. SC-100 Kit; Spot It; LEGO Green Building Plate
  • Baby: Baby Einstein Take Along Tunes; Lamaze Cloth Book; Baby Einstein Bendy Ball
  • Books: “Diary of a Wimpy Kid: Hard Luck, Book 8” by Jeff Kinney; “Things That Matter: Three Decades of Passions, Pastimes and Politics” by Charles Krauthammer; “Rush Revere and the Brave Pilgrims: Time-Travel Adventures with Exceptional Americans” by Rush Limbaugh
  • Kindle Books: “Sycamore Row” by John Grisham; “The Book Thief” by Markus Zusak; “The Goldfinch” by Donna Tartt
  • Music: “Artpop” by Lady Gaga; “Wrapped in Red” by Kelly Clarkson; “The Marshall Mathers LP2 (Deluxe)” by Eminem
  • Amazon MP3: “The Marshall Mathers LP2” by Eminem; “Artpop” by Lady Gaga; “Pure Heroine” by Lorde
  • Movies & TV: “Despicable Me 2” (Blu-ray + DVD + Digital Copy); “Star Trek Into Darkness” (Blu-ray + DVD + Digital Copy); “Man of Steel” (Blu-ray + DVD + Digital Copy)
  • Amazon Instant Video: “We’re the Millers”; “Man of Steel”; “Monsters University”
  • Prime Instant Video: “Alpha House” Season 1; “Downton Abbey” Season 3; “Falling Skies” Season 3
  • Home: Darice 80-Piece Deluxe Art Set; Black & Decker Dustbuster 15.6-Volt Cordless Cyclonic Hand Vacuum; Swarovski 2013 Annual Edition Crystal Star Ornament
  • Kitchen: Tovolo Ice Molds; Artisan Metal Works Silicone Non-Stick Baking Mat Sets; Cuisinart GR-4N 5-in-1 Griddle
  • Jewelry: Sterling Silver and Amethyst Flower Earrings; Sterling Silver “I Love You To The Moon and Back” Two Piece Pendant Necklace; Alex and Ani Bangle Bar “Tree of Life” Russian-Silver Expandable Bracelet
  • Women’s Clothing: Columbia Women’s Benton Springs Full-Zip Fleece Jacket; Carhartt Women’s Sandstone Duck Quilt Flannel Lined Active Jacket; Columbia Women’s Arcadia Rain Jacket
  • Men’s Clothing: Levi’s Men’s 501 Jean; Levi’s Men’s 505 Straight Fit Jean; Levi’s Men’s 550 Relaxed Fit Jean
  • Shoes: Clarks Originals Men’s Desert Boot; Tamarac Men’s Camper Moccasin; Bearpaw Women’s Emma 10″ Shearling Boot
  • Beauty: Infiniti Pro by Conair Curl Secret; D & G Light Blue By Dolce & Gabbana For Women Eau De Toilette Spray; Olay Pro-X Advanced Cleansing System
  • Health & Personal Care: Fitbit Flex Wireless Activity + Sleep Wristband; Philips Sonicare Essence 5600 Rechargeable Electric Toothbrush; Braun Series Pulsonic Shaver System
  • Tools & Home Improvement: Mini CREE Led Flashlight Torch Adjustable Zoom Light Lamp; O’Keeffe’s Working Hands Cream; WBM Himalayan Natural Crystal Salt Lamp with Bulb and Cord
  • Pets: KONG Cozie Marvin the Moose Dog Toy; Nylabone Durable Dental Dinosaur Chew Toy; Greenies Treat-Pak for Dogs, Original
  • Sports & Outdoors: LifeStraw Personal Water Filter; Magnesium Fire Starter; SKLZ Pro Mini Basketball Hoop
  • Grocery: Miracle-Gro AeroGarden 7-Pod Indoor Garden by AeroGrow; Donut Shop K-Cup for Keurig Brewers; Keurig My K-Cup Reusable Coffee Filter Set


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5IujgP6KPRs/story01.htm Tyler Durden

Who Drinks The Most Alcohol?

Whether your tipple of choice is a warm dark ale or a clear cool liquor, the price of alcohol is soaring (but there is still no inflation anywhere remember – especially in Europe) and so is demand.  From watered-down beer in the UK to rubbing-alcohol split scotch in New Jersey, stealth inflation is growing. So who is most responsible for this demand-pull (and cost-push) driven inflation in alcohol? Germany and Czech Republic (beer) and Russia (liquor) are topping the charts in per-capita demand and it seems the Italians, not content with spending less on gifts are also not drinking much…

 

Biggest European Beer drinkers…

 

Heaviest European Liquor consumers…

 

h/t @Amazing_Maps


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/bU_o-YT59iM/story01.htm Tyler Durden

What Chinese Consumers Are Rushing To Buy This Christmas

While the US consumer is rushing to spend what little savings they have left and grab that last for 2013 “X% off” deal from the local inventory-clearance bin on plastic Made in China trinkets or marked-down clothing, Chinese consumers are likewise scrambling to buy products. Only, unlike in the US, the object of China’s affection is not some gizmo that will end up in the local landfill within 3-6 months. China News Network shows what it is.

Google Translated from Chinanews:

Gold price lower and lower end of the Christmas rush of people buying

Taiyuan a gold shop gold prices as low as 287 yuan / gram, people flocked buying gold jewelry. Western Christmas in China has gradually become the “Consumer Day”, much of the gold market on this day after discounts, plus the price of gold hovering cheap Christmas discounts, and more gold has broken 300 yuan / gram mark.

With the recent stumble endlessly international gold prices, gold investment income in 2013 or will be achieved for the first time in 13 years is negative. As for 2014, the price of gold, most institutions are still bearish.

Publicly available data show that this year, gold prices fell more than 25%. The picture shows a gold shop in Taiyuan people flocked to buy.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/IArU3wEidfE/story01.htm Tyler Durden

Turkish Lira Plunges To New Record Low As Government Obstructs "Graft" Probe

Turkish stocks are tumbling, bond yields are soaring, and the Lira is collapsing to new record lows as the prosecutor in charge of investigating the nation’s “Graft” case points out the seemingly obvious (but in public)…

  • *ISTANBUL PROSECUTOR SAYS GOVT INTERFERING IN GRAFT PROBE: NTV
  • *COURT ORDERS FOR SEARCH, DETENTION BEING PREVENTED, AKKAS SAYS
  • *TURKEY PROSECUTOR SAYS OFFICIALS CRIMINALLY DISOBEYING COURTS

Judge Akkas cites clear pressure on the judiciary through the police are affecting his ability to continue the probe into the Turkish government’s potential misdeeds and corruption.

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/g6kqTyPJQ2M/story01.htm Tyler Durden