$POZN Gets FDA Approval for Pozen Inc.'s Pain Drug - Vimovo !...

POZN - US FDA OK's AstraZeneca, Pozen Inc.'s Pain Drug:

Fri Apr 30, 2010 5:19pm EDT

* Agency clears drug for U.S. market

* Vimovo includes naproxen and Nexium ingredient

* Pozen shares up more than 21 percent after-hours

WASHINGTON, April 30 (Reuters) - The U.S. Food and Drug Administration has approved AstraZeneca Plc (AZN.L) and Pozen Inc's (POZN.O) pain drug Vimovo, an agency spokeswoman told Reuters on Friday.

Vimovo is a fixed-dose combination of the anti-inflammatory drug naproxen and an immediate release version of esomeprazole, the active ingredient in AstraZeneca's acid reflux treatment Nexium.

Shares of Pozen were up more than 21 percent, or about $2.30, in after-hours trading on Friday, trading at $13.15, after earlier closing at $10.85. (Reporting by Susan Heavey; additional reporting by Ben Hirschler in London and Vidya Loganathan in Bangalore; editing by Carol Bishopric)

http://www.reuters.com/article/idCNN3015546220100430?rpc=44

POZN is currently halted...Per the Nasdaq.com website:

http://www.nasdaqtrader.com/Trader.aspx?id=TradeHalts

No time is given for resumption of trading...

There was a huge Bear Raid at 12:37 this afternoon, as the MM's took out all of the stop-loss limit orders people had in place:



POZN After-Hours Chart shows it closed at $13.15 when it was halted for "news pending":

$DNDN - Dendreon Gets FDA Approval For Provenge To Treat Prostate Cancer!:

FDA Approves a Cellular Immunotherapy for Men with Advanced Prostate Cancer:

The U.S. Food and Drug Administration today approved Provenge (sipuleucel-T), a new therapy for certain men with advanced prostate cancer that uses their own immune system to fight the disease.

Provenge is indicated for the treatment of asymptomatic or minimally symptomatic prostate cancer that has spread to other parts of the body and is resistant to standard hormone treatment.

Prostate cancer is the second most common type of cancer among men in the United States, behind skin cancer, and usually occurs in older men. In 2009, an estimated 192,000 new cases of prostate cancer were diagnosed and about 27,000 men died from the disease, according to the National Cancer Institute.

“The availability of Provenge provides a new treatment option for men with advanced prostate cancer, who currently have limited effective therapies available,” said Karen Midthun, M.D., acting director of the FDA’s Center for Biologics Evaluation and Research.

Provenge is an autologous cellular immunotherapy, designed to stimulate a patient’s own immune system to respond against the cancer. Each dose of Provenge is manufactured by obtaining a patient’s immune cells from the blood, using a machine in a process known as leukapheresis. To enhance their response against the cancer, the immune cells are then exposed to a protein that is found in most prostate cancers, linked to an immune stimulating substance. After this process, the patient’s own cells are returned to the patient to treat the prostate cancer. Provenge is administered intravenously in a three-dose schedule given at about two-week intervals.

The effectiveness of Provenge was studied in 512 patients with metastatic hormone treatment refractory prostate cancer in a randomized, double-blind, placebo-controlled, multicenter trial, which showed an increase in overall survival of 4.1 months. The median survival for patients receiving Provenge treatments was 25.8 months, as compared to 21.7 months for those who did not receive the treatment.

Almost all of the patients who received Provenge had some type of adverse reaction. Common adverse reactions reported included chills, fatigue, fever, back pain, nausea, joint ache and headache. The majority of adverse reactions were mild or moderate in severity. Serious adverse reactions, reported in approximately one quarter of the patients receiving Provenge, included some acute infusion reactions and stroke. Cerebrovascular events, including hemorrhagic and ischemic strokes, were observed in 3.5 percent of patients in the Provenge group compared with 2.6 percent of patients in the control group.

Provenge is manufactured by Seattle-based Dendreon Corp.

http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm210174.htm

DNDN was halted at 12:34 pm ET, and remains halted at 2:10 pm...Just before the halt, it jumped up almost 15% and up over $7.00 in three minutes from $40. to $47.

$PWRM - The International Congress of Alzheimer's Disease Accepts Four Scientific Presentations by Power3:

Power3 Presents NuroPro® to ICAD for the 2nd Year in a Row:

http://finance.yahoo.com/news/The-International-Congress-of-bw-3938801446.html?x=0&.v=1

Press Release Source: Power3 Medical Products, Inc. On Wednesday April 28, 2010, 1:06 pm EDT



HOUSTON--(BUSINESS WIRE)--Power3 Medical Products, Inc. (OTCBB: PWRM – News) announced that four abstracts were accepted for presentation to the annual meeting of the International Congress of Alzheimer’s Disease on July 12, 2010 in Honolulu, Hawaii. The presentations will cover results from protein biomarker discovery, drug response, test development, and ongoing clinical validation trials of the NuroPro® AD biomarkers and blood test for Alzheimer’s disease. The four studies to be presented involve a total of 154 Alzheimer’s disease patients and 91 Parkinson’s disease patients, as well as 210 age-matched normal control individuals and 173 disease control individuals.

The NuroPro® AD biomarkers and blood test are intended to help clinicians distinguish patients with Alzheimer’s disease from “normal” individuals, i.e., patients with similar, non-Alzheimer’s neurological disorders. They are also intended to solve the critical challenge facing physicians, clinicians, patients and drug developers, who all need tests for early stage accurate and specific diagnosis of this debilitating disease, as well as more guidance for drug therapy, patient selection for drug clinical trials, and better tools to monitor drug treatment response.

The abstracts report the use of combined results from ongoing clinical validation trials of NuroPro® AD. The trials are being conducted by the Power3 scientific team, led by scientific advisory board member Lourdes R. Bosquez, MD and Chief Scientific Officer, Ira L. Goldknopf, Ph.D. in collaboration with Marwan Sabbagh, MD, director of the Banner Sun Health Research Institute. The team is also utilizing previous studies Power3 conducted with Stanley H. Appel, MD during his tenure as Chairman of Neurology at the Baylor College of Medicine and, currently, as Co-Director of the Methodist Neurological Research Institute. Dr. Appel continues to be chairman of the scientific advisory board of Power3.

“These 4 posters represent the culmination of 7 years of hard scientific effort which we have been blessed to pursue with our distinguished collaborators,” said Dr. Goldknopf. “There will be some surprises for our colleagues at ICAD that we are particularly excited about because they have the potential to guide us towards improvements in treatment for this awful illness.” Dr. Goldknopf will present two of the posters at ICAD, one on NuroPro® AD biomarkers for Alzheimer’s specific diagnosis and the other on NuroPro® AD diagnostic clinical validation trials. Dr. Sabbagh will present a third poster on prospective clinical validation of the use of protein biomarkers from newly drawn patient sera for diagnosis of Alzheimer’s disease, and Dr. Bosquez will present a fourth poster on NuroPro® AD protein biomarkers and drug response.

“We are proud that Dr. Goldknopf will be joined this year by two members of our scientific advisory board, Dr. Sabbagh and Dr. Bosquez, in presenting to ICAD 2010,” said Helen R. Park, MS, Chief Executive Officer of Power3. “For us to present four posters at the same time at such a prestigious forum speaks to the depth of our science and our commitment to improving the outcomes for patients with Alzheimer’s disease. This work, in conjunction with the recent filing of our joint patent application with StemTroniX, bodes well for the upcoming acquisition of StemTroniX by Power3.”

Power3 Medical Products:

Power3 Medical Products, Inc. is a leader in bio-medical research and the commercialization of biomarkers, tests, and mechanisms of disease. Power3's patent-pending technologies are being used to develop screening and diagnostic tests for the early detection and prognosis of disease, and to identify protein biomarkers and drug targets, to fulfill critical unmet needs in areas including neurodegenerative disease (NuroPro®) and breast cancer (BC-SeraPro™). Power3 operates a state-of-the-art CLIA certified laboratory in The Woodlands (Houston), Texas and continues to evolve and enhance its IP portfolio, employing sensitive and specific combinations of biomarkers blood-based tests for ALS, Alzheimer's, and Parkinson's diseases, breast cancer, and drug resistance.

For more information, please visit: http://www.power3medical.com

StemTroniX:

StemTroniX, Inc. is a stem cell biotechnology holding and acquisition company that is committed to improving the lives of individuals by using autologous adult stem cell technology to repair tissue damage in patients. Autologous adult stem cell therapy is the process of using an individual's own stem cells for the purpose of repairing and regenerating damaged tissue. StemTroniX also provides a patented system to augment this process in a non-invasive method for in-body monitoring of the stem cells at the site of injury as they are being introduced into the patients.

For more information, please visit: http://www.stemtronix.com

The $SPX Daily Chart had a Major breakdown today...

Today's selloff of the overall market was pretty severe...Today's bad news was about Portugal and Greece getting their credit ratings slashed by Standard and Poors...Plus a GS executive is being grilled by a Senate subcommittee...He's denying all wrong doing...

The $SPX closed below the middle BBand today and took out the previous level of support it had two Fridays ago when the news the SEC was accusing GS of fraud...I see the $SPX heading to the lower BBand at 1168 now...Closing below the intraday low set on the 19th is a breakdown of a double-top chart pattern...

Today it closed below the 15MA for the first time in since mid-February...That's very Bearish IMO...The CCI dropped below zero today, and STO is dropping hard and may blast down thru 50 if we see two more down days in a row...The MACD looks Bearish...Volume was very high on the selloff today...

Tomorrow should be another down day according to the shape of today's candlestick...The $SPX closed only two points above the intraday low...The canldestick is very tall and solid red...Expect a smaller red candle tomorrow, a smaller one the next day, maybe a hammer or a doji the following day...

If this was a stock, that's how it would usually go...Since it is an Index, it's a bit harder to predict what it will do over the next few days because of the massive amount of news it gets every week...There's lots of Earnings and Economic Reports to come out this week...

Overall, this chart just turned very Bearish in only one day...See what bad news can do?...

US HOT STOCKS: Hertz, Thomas Weisel, Whirlpool, Goldman, Citi:

U.S. stocks were mixed Monday, as the Dow Jones Industrial Average rose 24 points to 11228, but the Standard & Poor's 500 index fell 1.3 points to 1216 and the Nasdaq Composite Index declined 2.1 points to 2528. Among the companies whose shares are actively trading in the session are Hertz Global Holdings Inc. (HTZ), Thomas Weisel Partners Group Inc. (TWPG) and Whirlpool Corp. (WHR).

Car-rental company Hertz ($15.13, +$2.25, +17.43%) plans to acquire rival Dollar Thrifty Automotive Group Inc. (DTG, $42.32, +$3.47, +8.93%) for $1.27 billion in cash and stock, giving Hertz a larger foothold in the leisure-rental market when its core business-travel operation remains in the doldrums. Avis Budget Group Inc. (CAR, $16.62, +$1.95, +13.29%) also traded higher.

Stifel Financial Corp. (SF, $53.28, -$2.46, -4.41%) and Thomas Weisel ($7.18, +$2.82, +64.68%) agreed to merge. Each Thomas Weisel share will be exchanged for 0.1364 shares of Stifel stock in a deal valued at over $300 million.

Whirlpool's ($117.64, +$15.42, +15.09%) first-quarter earnings more than doubled, smashing analysts' estimates, as revenue surged and margins increased amid an improving global economy. The appliance maker also raised its 2010 earnings outlook.

Financial stocks slid Monday as proposed regulation from Senate Democrats about sweeping new rules for the derivatives market would likely hurt revenue at most big banks, though many investors think there is little chance of the measure passing in such a stringent form. Goldman Sachs Group Inc. (GS, $152.52, -$4.88, -3.10%), Morgan Stanley (MS, $31.14, -$0.80, -2.50%), J.P. Morgan Chase & Co. (JPM, $43.99, -$0.95, -2.11%) and Bank of America Corp. (BAC, $18.29, -$0.14, -0.76%) all fell.

The Treasury Department said Monday it would sell up to 1.5 billion Citigroup Inc. (C, $4.69, -$0.18, -3.60%) shares, the first round of a plan to divest its entire 7.7 billion share stake in the bank holding company.

Caterpillar Inc. (CAT, $72.21, +$3.43, +4.99%) swung to a sharply higher-than-expected profit in the first quarter following prior-year restructuring charges, though sales fell and taxes rose. The heavy machinery maker also raised its 2010 forecast. Other machinery stocks also rose, with Deere & Co. (DE, $62.95, +$1.16, +1.88%), Terex Corp. (TEX, $28.44, +$0.70, +2.53%), Joy Global Inc. (JOYG, $63.88, +$2.43, +3.95%), Manitowoc Co. (MTW, $16.28, +$0.65, +4.16%) and Bucyrus International Inc. (BUCY, $70.94, +$2.57, +3.76%) all gaining.

Switch & Data Facilities Co. (SDXC, $19.61, +$1.91, +10.79%) said federal regulators raised no antitrust concerns about Equinix Inc.'s (EQIX, $102.12, +$6.38, +6.66%) purchase of the company. The two data-center providers expect the deal to close next Friday.

Digirad Corp. (DRAD, $2.62, +$0.56, +27.18%), which makes medical-imaging products, said it got clearance from the U.S. Food and Drug Administration to market and distribute its ergo large field-of-view, general-purpose portable imaging system.

Mortgage insurer PMI Group Inc.'s (PMI, $6.27, -$0.36, -5.43%) first-quarter loss widened and was worse than analysts expected. In addition, its main mortgage insurance unit may have fallen below a minimum capital threshold. As a result, the unit may be required to stop selling new business in some states, the company said in a regulatory filing Monday.

[b]Other Stocks In Focus:[/b]

Biotechnology company AspenBio Pharma Inc. (APPY, $4.27, +$0.53, +14.17%) shares hit their highest level since January 2009 amid chatter that a partnership or takeover is in the works. AspenBio has been gaining lately as data from a pivotal trial on its blood-based diagnostic test for appendicitis is expected this quarter. ThinkEquity didn't dismiss the chatter, but said a partnership/takeover is more likely after the company gets further down the regulatory pathway. Based on its recent naming of a CEO with sales and marketing experience, it looks like APPY wants to be the one to commercialize the test, ThinkEquity said.

While medical-products company Baxter International Inc.'s (BAX, $47.81, -$1.51, -3.07%) shares have fallen 16% since its 2010 guidance cut last Thursday, JPMorgan thinks they'll be "range-bound" around this level because of lasting uncertainty about the plasma market. The firm lowered Baxter's rating to neutral from overweight. JPMorgan said management lowered the bar enough for 2010, but that isn't the concern. "The underlying issue is the lack of visibility on 2011, an absence of catalysts, and the likelihood that we won't have visibility until December at the earliest or more likely 1Q next year," it said.

BioSante Pharmaceuticals Inc. (BPAX, $2.19, +$0.05, +2.34%) said it entered into a deal which carries an option for "a major pharmaceutical company" to get a non-exclusive license to use BioSante's antibody technology.

BlackRock Inc.'s (BLK, $193.50, -$17.52, -8.30%) first-quarter earnings quintupled as the money-management firm continues its integration of Barclays Global Investors, which it bought late last year. However, the results missed analysts' estimates as the company has run into some trouble with the deal.

Jefferies International lowered British Sky Broadcasting (BSY, $38.07, -$0.92, -2.36%) to hold from buy ahead of the company's fiscal third quarter results, due Thursday, saying it expects "uninspiring" results with net adds below last year. At 18 times calenderized 2010 per-share earnings, the stock is up with events and fully valued, the firm said, adding it thinks the stock is likely to be influenced by the court decision expected imminently relating to a stay of execution on channel wholesale regulation. News Corp. (NWS, $18.64, +$0.14, +0.76%) which owns Dow Jones & Co., publisher of this newswire, has a roughly 39% stake in BSkyB.

Pharmaceutical-research Charles River Laboratories International Inc. (CRL, $34.30, -$5.47, -13.75%) and Chinese drug-research contractor WuXi PharmaTech (Cayman) (WX, $19.44, +$2.87, +17.32%) will merge in a $1.6 billion deal. Charles River also announced first-quarter earnings that slightly missed expectations, while revenue came in ahead of views.

CKE Restaurants Inc. (CKR, $12.37, -$0.48, -3.74%) said Saturday it has agreed to be sold to Apollo Management Group for $694 million, or $12.55 a share, after private-equity firm Thomas H. Lee Partners declined to match Apollo's higher offer for the operator of the Carl's Jr. and Hardee's fast-food chains. CKE shareholders will get $12.55 a share, but shares slipped Monday as it appeared there would be no bidding war.

Dendreon Corp. (DNDN, $41.99, +$1.89, +4.71%) gained after Brean Murray Carret raised its target price on the stock to $50 from $40. Analyst Jonathan Aschoff said the boost emphasizes his confidence Dendreon will get U.S. Food and Drug Administration approval for Provenge, the drug company's prostate cancer candidate. Some of Brean Murray's peers are backing out of the stock at what Aschoff believes is "exactly the wrong time," he wrote.

Eagle Materials Inc.'s (EXP, $34.18, +$1.73, +5.33%) fiscal fourth-quarter profit declined 73% as sales fell and extended plant shutdowns increased operating costs. But results at the maker of concrete, cement and gypsum wallboard for buildings and infrastructure beat analysts' estimates.

BMO Capital Markets adjusted its ratings on several real-estate investment trusts ahead of first-quarter earnings reports. The firm said it believes "management teams are on the verge of becoming collectively more optimistic about the future, and we think this improvement in operating expectations could happen as soon as this coming earnings season." The firm boosted its ratings on Equity Residential (EQR, $45.26, +$0.66, +1.48%) and Mid-America Apartment Communities Inc. (MAA, $54.78, +$0.95, +1.76%) to outperform from market perform and Essex Property Trust Inc. (ESS, $105.98, +$1.99, +1.91%) to market perform from underperform, but it cut its ratings on Apartment Investment & Management Co. (AIV, $22.19, +$0.08, +0.36%) and Colonial Properties Trust (CL, $83.76, +$0.49, +0.59%) to underperform from market perform.

Oppenheimer downgraded regional bank First Midwest Bancorp (FMBI, $16.36, -$1.55, -8.63%) to perform from outperform, saying the stock was strong last week on much better-than-expected results. First Midwest also had an FDIC-assisted transaction last week in which it acquired the assets of a failed bank, and the firm said it is concerned investors might be disappointed with that news, as two other banks had multiple, larger deals.

Guess? Inc. (GES, $50.63, +$1.01, +2.04%) shares have more than doubled in the past year, but they may well rise another 25%, Barron's said. Sales could grow in the double digits this year, and profit margins are strikingly high. The apparel retailer is finding a new edge, updating its trademark jeans and peddling in-the-moment items like jeggings (jeans/leggings) for young women and embroidered, distressed t-shirts for men.

Credit Suisse turned indecisive, downgrading ITT Educational Services Inc. (ESI, $109.51, -$2.28, -2.04%) and DeVry Inc. (DV, $64.69, -$4.77, -6.87%) just two weeks after upgrading them as it says government draft policy on "gainful employment" regulation may not be so generous after all. Other for-profit education companies trading lower included Apollo Group Inc. (APOL, $62.59, -$0.94, -1.48%) and Corinthian Colleges Inc. (COCO, $17.27, -$0.62, -3.47%).

Lorillard Inc.'s (LO, $80.50, +$0.93, +1.17%) first-quarter profit jumped 26% as shipments at the tobacco company increased following prior-year disruptions.

Caris & Co. boosted its price target on Netflix Inc. (NFLX, $107.08, +$7.35, +7.37%) by 25% to $120, saying that the online video-rental company continues to post strong growth and has surpassed its price target for the fourth time this year. The firm said consensus expectations are moving up, but fiscal 2011 numbers still look too low.

Bernstein cut its rating on Nokia Corp. (NOK, $12.44, -$0.32, -2.51%) to market perform from outperform, saying the fate of the world's largest maker of mobile phones is now too dependent on the success of Symbian 3, the delayed revamp of its "smartphone" operating system. The broker also told clients that the first-quarter results showed that the improvement in gross margins witnessed since the second quarter of 2009 has been halted and said Nokia's guidance cut for the second quarter of 2010 shows that "this isn't a temporary weakness but a trend that will stop only with the next product portfolio refresh."

Shares of Office Depot Inc. (ODP, $9.01, +$0.56, +6.63%) traded sharply higher Monday after Credit Suisse upgraded its stock-investment rating on the office supplier, with the positive sentiment also boosting shares of OfficeMax Inc. (OMX, $17.48, +$0.85, +5.11%). Credit Suisse said in a note Monday that channel checks point to a modest but slow improvement in the first quarter at Office Depot. "This sector has not yet seen the pickup other retail sectors have shown," the firm said as it raised its rating on Office Depot to neutral from underperform.

Quaker Chemical Corp. (KWR, $35.53, +$2.26, +6.79%) continued on its bullish April, rising to a new all-time high after gaining by a third this month. Shares have nearly doubled over the past three months and the specialty chemicals maker will report its first-quarter results after the close Tuesday.

Global Hunter Securities cut its stock-investment rating on Perry Ellis International Inc. (PERY, $25.31, -$1.44, -5.38%) to neutral from buy based on valuation. The firm said that while it expects to see strong execution from operations due to gross margin expansion and cost controls, the apparel company's shares have exceeded its price target.

PrivateBancorp Inc. (PVTB, $15.04, -$2.03, -11.89%) swung to a first-quarter loss that was wider than analysts' estimates as provisions for loan losses quadrupled.

Private equity firm GTCR LLC said Monday it is acquiring security systems firm Protection One Inc. (PONE, $15.40, +$1.64, +11.92%) from a group including Quadrangle Group LLC and Monarch Capital Partners.

SPX Corp. (SPW, $69.97, +$3.07, +4.59%) was boosted to buy from neutral by Bank of America Merrill Lynch analysts who said the diversified industrial company should see improvements to its businesses, particularly its flow and test measurement segments, while the industrial and thermal markets remain muted.

Thoratec Corp. (THOR, $35.07, +$0.72, +2.10%) agreed to sell its International Technidyne division, which makes a wide range of equipment for hemostasis management and point-of-care testing, to manufacturing company Danaher Corp. (DHR, $84.80, -$0.61, -0.71%) for at least $110 million.

Titan International Inc.'s (TWI, $12.05, +$0.58, +5.06%) first-quarter profit fell by 70% but at 6 cents a share was still twice the Street's consensus as revenue also slightly topped views as well. The maker of wheels and tires used for off-highway machinery, such as tractors, which said agriculture demand should remain strong in the second quarter. It also said mining looks bright and added it was increasing prices.

Travelzoo Inc. (TZOO, $19.00, +$2.50, +15.17%) reported first-quarter results better than the one analyst covering the stock expected. The company, which is paid by travel companies to advertise their offers, said the number of subscribers to its newsletter in North America and Europe jumped 25% from the previous year.

Keefe, Bruyette & Woods cut bank holding company Trustmark Corp. (TRMK, $26.06, -$0.77, -2.87%) to market perform from outperform on valuation, saying the shares have been strong since its exit from TARP in December, and there's limited upside left to its 12-month target price. "We continue to like TRMK's strong core profitability," the firm said.

Tuesday Morning Corp. (TUES, $7.56, -$1.03, -11.99%) shares fell after the home decoration close-out retailer posted third-quarter earnings just shy of expectations. The shortfall comes two weeks after the company raised its full-year earnings guidance to reflect a bump-up in sales on improved traffic.

-By Dow Jones Newswires; write to hotstocks@dowjones.com

http://online.wsj.com/article/BT-CO-20100426-711600.html?mod=WSJ_Banking_middleHeadlines

The Sickening Abuse Of Power At The Heart of Wall Street:

Written by Simon Johnson
April 24, 2010 at 3:02 pm

http://baselinescenario.com/2010/04/24/the-sickening-abuse-of-power-at-the-heart-of-wall-street/

Here’s where we stand with regard to democratic discourse on the future our financial system: leading bankers will not come out to debate the issues in the open (despite being approached by reputable intermediaries after our polite challenge was issued) – sending instead their “astro turf” proxies to spread KGB-type disinformation.

Even Larry Summers, who has shifted publicly onto the side the angels (surprising and rather late, but welcome anyway), cannot – for whatever reason – bring himself to recognize the dangers inherent in our unstable and too-big-to-manage banks. Or perhaps he is just generating excuses that will justify not bringing the Brown-Kaufman amendment to the floor of Senate?

So let’s take it up a notch.

I strongly recommend that the responsible congressional committees request and require all assistant secretaries at the US Treasury (and other relevant political appointees over whom they have jurisdiction) to appear before them early next week.

The question will be simple: Please share your calendar of meetings this weekend, and provide us with a complete accounting of people with whom you met and conversed formally and informally.

The finance ministers and central bank governors of the world are in Washington this weekend for the spring meetings of the International Monetary Fund. As is usual, the world’s megabanks are also in town in force, organizing big meetings and small dinners.

Through these meetings dutifully troop US treasury officials, providing in-depth and off-the-record briefings to investors.

Banks such as JP Morgan Chase and the other top tier financial players thus peddle influence, leverage their access, and generally show off. They accumulate information from a host of official contacts and discern which way policymakers – their “good friends” – are leaning.

And what is the megabank whisper mill working on? Ignore the “economic research” papers these banks put out; that is pure pantomime for clients-to-be-duped-later. I’m talking about what they are telling the market – communicated in specific, personal conversations this weekend.

They are telling people that, based on their inside knowledge, Greece and potentially other eurozone countries will default on their debt. Perhaps they are telling the truth and perhaps they are lying. Most likely they are – as always – talking their book.

But the question is not the substance of their whisper campaign this weekend, it is the flow of information. Have they received material non-public information from US government officials? Show me the calendar of the top 10 treasury people involved, and then we can talk about whom to summon from the private sector to testify – under oath – about what they were told or not told.

There is no question that the megabanks derive great power and enormous profit from their web of official contacts. We should reflect carefully on whether such private flows of information between governments and “too big to fail” banks are entirely suitable in today’s unstable financial world.

Large global banks make money, in part, through nontransparent manipulation of information – this is the heart of the SEC charges against Goldman Sachs. But the problem is much broader: the Wall Street-Washington corridor is alive and well on its way to another crisis that will empower, enrich, and embolden insiders (public and private) while impoverishing the rest of us.

The big players on Wall Street are powerful like never before – and they use this power to press for information and favors from sympathetic (or scared) government officials. The big banks also appear hell-bent on abusing that power. One consequence will be further destabilizing global financial markets – watch carefully what happens to Greece, Portugal, Ireland, and Spain at the beginning of next week.

It is time for Congress to step in with a full investigation of the exact flow of information and advice between our major megabanks and key treasury officials. Start by asking tough questions about exactly who exchanged what kind of specific, material, market-moving information with whom this weekend in Washington.

More News Relating To Goldman Sachs:

Here are a number of articles related to the SEC fraud charges against Goldman Sachs:

Goldman Loses German Bank's Business—Are Bonds Next?

http://www.cnbc.com/id/36694793

Along with SEC, other investigators and suits may target Goldman Sachs:

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/21/AR2010042105394.html

AIG Considering Potential Claims Against Goldman Sachs:

http://online.wsj.com/article/SB10001424052748704671904575195010771947900.html?mod=WSJ_hpp_MIDDLETopStories

Meet The New Goldman Derivatives Business:

http://www.marketwatch.com/story/meet-the-new-goldman-derivatives-business-2010-04-22

Michael Lewis: Must Read Today by Karl Denninger:

http://market-ticker.org/archives/2230-Michael-Lewis-Must-Read-Today.html

Goldman Suit Exposes Big Banks to Firestorm:

http://news.goldseek.com/RickAckerman/1271829600.php

By: Rick Ackerman
Wednesday, April 21, 2010

Now we learn that the SEC split 3-2 over whether to go after Goldman Sachs in court. Supposedly, the regulatory agency prefers unanimous votes when bringing enforcement actions against the firms it regulates. Why the exception this time? The Wall Street Journal made it sound like it was simply partisan politics that carried the day – i.e., the SEC’s two Republicans voted against suing Goldman for civil fraud, but the three Democrats prevailed. That is superficially what happened, and it is as much of the story as the SEC is willing to divulge right now. But it’s bound to leave many observers, particularly Obama-ites in Congress who are out to pillory the bankers, with the impression that the two Republicans were merely looking out for their fat-cat buddies on Wall Street. This thought occurred to us as well, so we’d have to concede it is at least possible.

But might there have been another reason why the Republicans backed away from bringing formal charges against Goldman? We think there is and that it goes to the heart of the corruption in which the world’s largest banks have inextricably trapped themselves. For if you assert in a of court law that Goldman defrauded its customers, you have implicated every bank in the big leagues. Enabled by their respective central banks, they all – even the ones run by otherwise spotless Swiss Burghers -- play the same Ponzi game. Moreover, regardless of whether the charges brought against Goldman are civil or criminal, they will open the door to an endless flood of litigation with the potential to bring down the entire banking system. From this point forward, Goldman will be fair game for every aggrieved city, county, state, sovereign fund and class of investor they have done business with for the last decade. The same goes for Bank of America, J.P. Morgan, Morgan Stanley, Deutsche Bank et al.

Lynch Mob:

So it’s just possible the Republicans put politics aside when they voted, in effect, to quietly sanction Goldman behind the scenes. It must also have occurred to them that it would ultimately be impossible to mask the overwhelming stench of Goldman’s actions. The firm, after all, did sell an investment to the public that had secretly been created by someone betting on the portfolio to fail. There is no way Goldman can talk its way out of this, although that hasn’t stopped CEO Lloyd Blankfein from trying. With Goldman reporting a spectacular $3.4 billion quarter yesterday, he might as well be trying to explain to a lynch mob that he has never, ever kicked his cat and that he always helps little old ladies cross the street.

Some see the charge of civil, as opposed to criminal, fraud as reflecting a compromise engineered by Mr. Obama to help expedite his takeover of the financial sector. “He stirs up the masses with yet another example of Wall Street greed and fraud,” wrote one contributor to the Rick’s Picks forum, “but offers nothing more than what amounts to a fine to his friends at Goldman. We all know how deep their pockets are. They are quietly happy that this is the extent of the fallout.” While this seems plausible, it doesn’t reckon with the fact that just one civil suit could conceivably put the world’s largest banks in mortal jeopardy for years to come. Indeed, if they should somehow dodge the bullet, it would be evidence that the corruption that permeates the banking system has engulfed our judicial and political systems as well.

VIDEO - Fundamental & Technical Analysis of the S&P 500's Daily & Weekly Charts:

Here is the end of the week analysis of the S&P 500's daily and weekly charts, with comments on important reports due out next week.

Happy Trading this week,
zigzagman

US Bank Accounting 'Masks True Debt Levels’:

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7572887/US-bank-accounting-masks-true-debt-levels.html

US bank accounting 'masks true debt levels’

By James Quinn, US Business Editor
Published: 6:00AM BST 10 Apr 2010

Major Wall Street banks are using accounting techniques similar to those utilised by Lehman Brothers in its final days to mask the size of their balance sheets at the end of reporting periods.

The banks – which include Goldman Sachs – use complex but perfectly legitimate transactions in order to present investors and the wider market with a brighter assessment of their financial health.

Data analysed by the Wall Street Journal found that 18 major banks were, on average, able to reduce debt levels used to fund securities tradesby 42pc over the last five quarters using repurchase agreements, also known as “repo” trades. Under certain circumstances, some repurchase trades can be booked as “sales” and used to reduce debt.

The assessment, based on data from the Federal Reserve Bank of New York, highlights the extent to which advanced accounting is still in use, even in the wake of the crippling financial crisis.

In Lehman’s case, the court-appointed investigator’s report into the bank’s September 2008 downfall found that the bank had used “Repo 105” – the name given to the technique within the bank – to significantly mask its borrowing, so decreasing its apparent risk profile.

According to the report, the ruse allowed Lehman to claim its liabilities were $50bn (£33bn) lower than they actually were by May 2008, just months before the bank collapsed.

The US Securities and Exchange Commission (SEC) is now looking into how widespread the use of such techniques actually is.

At the end of March, the US financial regulator dispatched letters giving America’s24 largest banking and insurance firms two weeks to hand over detailed information on how the repurchase agreements are used, as well as how such agreements are accounted for and disclosed to investors.

It is not known what the SEC intends to do with the data once it has received it, or indeed whether it will ever be made public.

Whatever the outcome, the latest revelations about the extent of the use of repo-financing should worry investors in the financial sector, as it suggests that banks are continuing to take pre-crisis level risks in spite of the events of the last two years.

A Goldman Sachs spokesman said: “Normal fluctuations in the size of our balance sheet… as well as fluctuations in specific line items, are fully disclosed in our quarterly and annual SEC filings.”

"Employment Will Come Back In America, It's Just Pay That Won't"

http://www.businessinsider.com/robert-reich-the-future-of-american-jobs-2010-4

Robert Reich | Apr. 12, 2010, 11:18 AM

Many of my students at Berkeley who will be graduating in June are worried about the job market. I understand their worries. But they and other new college grads have less cause for concern than most American workers. Let me explain.

Since the start of the Great Recession in December 2007, the U.S. economy has shed 8.4 million jobs and failed to create another 2.7 million required by an ever-larger pool of potential workers. That leaves us more than 11 million jobs behind. (The number is worse if you include everyone working part-time who’d rather it be full-time, those working full-time at fewer hours, and people who are overqualified for the jobs they’re in.)

This means even if we enjoy a vigorous recovery that produces, say, 300,000 net new jobs a month, we could be looking at five to eight years before catching up to where we were before the recession began.

Given how many Americans are unemployed or underemployed, it’s hard to see where we get sufficient demand to support a vigorous recovery. Outlays from the federal stimulus have already passed their peak, and the Federal Reserve won’t keep interest rates near zero for very long. Although consumers are beginning to come out of their holes, it will be many years before they can return to their pre-recession levels of spending. Most households rely on two wage earners, of whom at least one is now likely to be unemployed, underemployed or in danger of losing a job. And even households whose incomes have returned are likely to be residing in houses whose values haven’t—which means they can’t turn their homes into cash machines as they did before the recession.

While consumers have been shedding their debts like mad—often simply by defaulting on loans—their remaining burdens are still heavy. At the end of last year, debt averaged $43,874 per American, or about 122% of annual disposable income. Most analysts believe a sustainable debt load is around 100% of disposable income, assuming a normal level of employment and normal access to credit—neither of which we are likely to have for some time.

Some economic cheerleaders say rising stock prices are making consumers feel wealthier and therefore readier to spend. But most Americans’ biggest asset is their homes. The “wealth effect” is felt mainly by the richest 10%, whose net worth is largely stocks and bonds. The top 10% accounted for about half of total national income in 2007. But they were only about 40% of total spending. A vigorous jobs recovery can’t be based on 40% of what was spent before the economy collapsed.

What’s likely to slow the jobs recovery most, however, is the indubitable reality that many of the jobs that have been lost will never return.

The Great Recession has accelerated a structural shift in the economy that had been slowly building for years. Companies have used the downturn to aggressively trim payrolls, making cuts they’ve been reluctant to make before. Outsourcing abroad has increased dramatically. Companies have discovered that new software and computer technologies have made many workers in Asia and Latin America almost as productive as Americans, and that the Internet allows far more work to be efficiently moved to another country without loss of control.

Companies have also cut costs by substituting more computerized equipment for labor. They’ve made greater use of numerically controlled machine tools, robotics and a wide range of office software.

These cost-cutting moves have allowed many companies to show profits notwithstanding relatively poor sales. Alcoa, for example, had $1.5 billion in cash at the end of last year, double what it had on hand at the end of 2008. It managed this largely by cutting 28,000 jobs, 32% of its work force. But for workers, there’s no return. Those who have lost their jobs to foreign outsourcing or labor-replacing technologies are unlikely ever to get them back. And they have little hope of finding new jobs that pay as well. More than 40% of today’s unemployed have been without work for over six months, a higher proportion than at any time in 60 years.

The only way many of today’s jobless are likely to retain their jobs or get new ones is by settling for much lower wages and benefits. The official unemployment numbers hide the extent to which American workers are already on this downward path. But if you look at income data you’ll see the drop.

Among those with jobs, more and more have accepted lower pay and benefits as a condition for keeping them. Or they have lost higher-paying jobs and are now in new ones that pay less. Or new hires are paid far lower wages than the old. (In January, Ford Motor Co. announced that it would add 1,200 jobs at its Chicago assembly plant but didn’t trumpet that the new workers will be paid half of what current workers were paid when they began.) Or they have become consultants or temporary workers whose pay is unsteady and benefits nonexistent.

This shift also helps explain why the unemployment rate for Americans with college degrees is now only 5%, while it is 10.5% for those with only a high-school degree, and 15.6% for Americans with less than a high-school diploma. The jobs of well-educated Americans, although hardly immune to foreign outsourcing and technological displacement, have been less vulnerable to these trends than the jobs of Americans with fewer years of education.

The likelihood, therefore, is that as the economy struggles to recover and today’s jobless begin to find work, the median wage will continue to fall—as it did between 2001 and 2007, during the last so-called recovery.

More Americans will be working, but for pay they consider inadequate. The approaching recovery will be tepid because so many people will lack the money needed to buy all the goods and services the economy can produce.

Americans will once again be employed, but they will also be back on the downward escalator of declining pay they rode before the Great Recession.

VLNC - Valence Technology Brings Intelligent Batteries to "Smart Grid Community of the Future":

http://finance.yahoo.com/news/Valence-Technology-Brings-bw-2494091485.html?x=0&.v=1

$13.5 Million DOE Grant to Help Fund a $27.4 Million Regional Demonstration Project: “Technology Solutions for Wind Integration in the Electric Reliability Council of Texas”

Press Release Source: Valence Technology, Inc.
Thursday April 8, 2010, 9:03 am EDT

AUSTIN, Texas--(BUSINESS WIRE)--Valence Technology (NASDAQ: VLNC) today announced it has been selected as the preferred residential/community battery technology provider for the “Smart Grid Community of the Future,” the first smart grid solar powered residential development in Texas, the Houston-area master planned community of Discovery at Spring Trails. Utilizing its lithium phosphate battery design, including intelligent Command & Control logic, Valence Technology will supply dynamic energy systems for the individual smart grid residences containing electric vehicle charging stations and smart appliances. Valence Technology’s energy solutions will be used to support a smart-energy practice known as “peak shaving,” whereby smart appliances like dishwashers and washing machines are efficiently utilized during peak demand hours.

This smart grid project will demonstrate how community battery systems can enhance grid stability and decrease overall electricity costs by practicing “peak shaving.” Homeowners can avoid higher peak power costs during evening hours when multiple appliances are typically running after Valence Technology dynamic energy systems kick-in to power the smart appliances.

“Valence Technology is proud to be involved with a project as pioneering as the Discovery at Spring Trails smart grid community,” said Robert L. Kanode, president and CEO, Valence Technology. “By significantly reducing homeowners' energy costs through peak shaving, community storage applications will gain acceptance in the marketplace. Valence Technology is well-positioned to provide proven, field-tested dynamic energy systems that will enable greener, smarter and more efficient energy use.”

As part of the regional demonstration project entitled “Technology Solutions for Wind Integration in the Electric Reliability Council of Texas (ERCOT),” the “Smart Grid Community of the Future” will serve as a test model for the development of future distributed energy-generation communities utilizing clean technologies. The project includes improved technologies to monitor the ERCOT electric grid and expanded smart portal capability to support demand response in the new development, Discovery at Spring Trails. With $13.5 million in funding from the U.S. Department of Energy, the $27.4 million project is scheduled to break ground this year.

The team for this “Smart Grid” project includes CCET, Valence Technology, Southwest Research Institute, Electric Power Group, EcoEdge, CenterPoint Energy, Oncor, American Electric Power, Sharyland Utilities, Land Tejas Developers, Montgomery County Municipal Utility District 119, Xtreme Power/Energy Xtreme, General Electric, GridPoint, Direct Energy, Drummond Group and Frontier Associates.

Valence Technology stationary energy storage systems are designed for use in frequency regulation, community energy storage, telecommunications back-up power, auxiliary power units and uninterruptible power supply projects around the globe.

About Valence Technology, Inc.

Valence Technology is an international leader in the development of safe, long-life lithium iron magnesium phosphate energy storage solutions and provides the enabling technology behind some of the world’s most innovative and environmentally friendly applications. Founded in 1989, Valence today offers a proven technology and manufacturing infrastructure that delivers ISO-certified products and processes that are protected by an extensive global patent portfolio. Headquartered in Austin, Texas, Valence Technology is strategically aligned by five business segments: Motive, Marine, Stationary, Industrial and Military. In addition to the corporate headquarters in Texas, Valence Technology has its Research & Development Center in Nevada, its Europe/Asia Pacific Sales office in Northern Ireland and global fulfillment centers in North America and Europe. Valence Technology is traded on the NASDAQ Capital Market under the ticker symbol VLNC. For more information, visit www.valence.com.

About CCET

The Center for the Commercialization of Electric Technologies (CCET) recently received the $13.5 million grant from U.S. Department of Energy aimed at better integrating the vast Texas wind energy resources into the state’s electric transmission, distribution and metering system. The project represents a multi-faceted synergistic approach to managing fluctuations in wind power in the large Electric Reliability Council of Texas (ERCOT) transmission grid through better system monitoring capabilities, enhanced operator visualization and improved load management. CCET is leading a coalition of Texas electricity market participants, including Valence Technology, in carrying out the demonstration project. For more information, visit:

http://www.electrictechnologycenter.com

A Shout Out for Scruffy...

GATA Bill Murphy's Lemetropole Cafe market letter...

http://agoracom.com/ir/ECU/forums/discussion/topics/412960-a-shout-out-for-scruffy/messages/1360171#message

Good morning Bill. As I read through the morning (non-mainstream) news I see a huge pervasive rot threatening all aspects of our financial lives.

Here is a short list of what we are up against:

1 A network of elitists bankers who have a get out of jail free card, who contribute to both sides of political campaigns, who migrate employees to key positions in the administration and in the regulatory agencies that are supposed to assure fair market practices.

2 A history of million dollar fines (if any) for billion dollar crimes and no jail time for the biggest crooks.

3 Total control of mainstream media to the point of effective propaganda. Has anyone read or heard anything re the recent CFTC bombshells on MSNBC?

4 Regulations that destroy any transparency in our markets. The big bankers are protected by the regulators that are commissioned to protect us against them.

5 Naked shorting by the elite insiders to the detriment of all of us investors. Every naked short sale recorded and is identifiable, yet I have never heard of a single person, or clearing house, or brokerage receiving as much as a fine let alone jail time.

6 Evidence repeatedly provided to regulators and compliance agencies of the US that is NEVER acted on. Not one of the exposures leads to cleaning up of the markets, to firing of the idiots in charge, to jail time for those obviously complicit graft enablers, nor intervening in the crimes in progress.

7 A strong $ policy based on propaganda and manipulation. Does anyone with one eye and two brain cells believe the inflation #s? ... the unemployment numbers? ..that we have "turned the corner" or have begun the recovery? ..that the ObamaCare will cut the deficit? .. that the treasury is not the biggest buyer of treasuries via buy-backs?

8 Gambling casinos (crimex/nymex/lbma) that set the prices on physical commodities.

9 "Physical Markets" that have no physical.

10 Bribes offered to keep options holders from demanding physical delivery.

11 ETF’s that can’t be audited. Anyone who has read the prospectus and thinks that he/she is investing in physical should not be allowed to wield a check book.

12 Rules that allow options to be settled with (fraudulent) ETF shares.

13 A Fed that can keep its books hidden from the public. I was going to say from congress, but congress is part of the problem and we cannot count on them to act responsibly.

14 A government backed stock market manager (PPT) to get people to continue to "invest" in a stock market balloon while savings returns are miniscule to nonexistent.

15 A steady move to shun new purchases of US treasuries by the rest of the world.

16 Most moves up recently in the US $ have not been because of anything that indicates the $ is healthy, but because the currencies of the rest of the world are down graded by US based rating agencies. This while ALL currencies are pushed around by markets dominated by US and UK bankers.

17 Assassination attempts on whistle blowers.

18 And not the last, not the least, but one of the most egregious, a congress and administration that panders to special interests and totally disrespects, ignores, and denigrates the citizens, as it shoves this nation down the socialistic toilet.

And once again, as has often been repeated throughout history, gold and silver are the last shelter and protection one can have against corrupt public and financial institutions.

Thanks Bill and all the GATA organization. Many people are now in a better position to see what is going on and to protect themselves.

Scruffy

AIG Gets Away With It:

http://jessescrossroadscafe.blogspot.com/2010/04/aig-gets-away-with-it.html

Posted by Jesse at 10:09 AM
06 April 2010

Do you think the paper shredders and 'delete keys' were working overtime?

Do you think the Justice Department was highly motivated to nail the guy who could probably implicate the biggest of the TBTF banks and their enablers in the government?

Do you think the American President was just playing you when he said, "I did not run for office to be helping out a bunch of fat cat bankers on Wall Street."

Do you think Joe knows where a lot of the bodies are buried - on Wall Street and in London and Washington?

Do you think it pays to be a 'Friend of Lloyd' and a feeder source of campaign contributions to most of the Congress?

Do you think the people are just itching to vote out every incumbent in November?

Do you think the spineless lack of serious investigation and reform is setting the US up again for another, even bigger, fianncial scandal and crisis?

You might be right.

******************************************

No Criminal Charges Likely in AIG Collapse

By Armen Keteyian
CBS News
April 2, 2010 6:43 PM

CBS NEWS has learned that former AIG executive Joseph Cassano - the prime focus of the investigation into its collapse - will meet with Department of Justice attorneys next week in what will likely be an end to the two year criminal investigation into the company.

Sources tell CBS News that the criminal case against Cassano - once called "the Man who Crashed the World" - has "hit a brick wall" - meaning that it is likely no one will be held criminally liable for the downfall of the company that triggered a $182 billion dollar federal bailout.

Sources tell CBS News federal investigators have been unable to uncover any evidence that Cassano lied to his bosses or shareholders about financial problems at AIG.

In recent months, Cassano's lawyers - citing internal documents - argued that he never broke the law. Instead, he simply got caught up in a financial tsunami that engulfed Wall Street.

http://tiny.cc/ynryn

Posted by Jesse April 6, 2010
http://jessescrossroadscafe.blogspot.com/2010/04/aig-gets-away-with-it.html

Senior SEC Employee Warns of Potential Municipal Bond Market Collapse:

Sunday, April 4, 2010
By Rick Bookstaber

http://rick.bookstaber.com/2010/04/municipal-market.html

This represents my personal opinion, not the views of the SEC or its staff.

My first blog post was in June, 2007. It was titled “What sorts of crises am I worried about now”. My answer was housing and credit. With the benefit of hindsight, this might be considered a no-brainer, although at the time it was not so clear where things would go.

Now as the dust settles from the crisis that emerged in 2008, we can start to think about what might come next. And yes, the crisis really is settling down, despite the alarmists who, thinking we were in a 1930’s style depression, pushed the panic button and stuffed their mattresses (or portfolios) with cash. For whatever reason, be it astute government intervention or the natural healing process, we are looking back at something along the lines of a bad, credit-driven recession.

I don’t think we will see a big crisis emerging for some time in banks, hedge funds or derivatives, mostly because, like with a knockout punch, the risks that matter don’t come from where you are looking. Unless the current push for legislation is a failure, which, of course, still remains to be seen, we will have steely eyes hovering over these sources of crisis. It will be awhile before the guards start dozing off at their posts.

So, where to look next. To see other potential sources of crisis, let’s first recount the lessons learned from this crisis:

1. Problems occur when things get leveraged and complex (and thus opaque).

2. If the problems occur in a very big market, especially in a very big market like housing that is tied to the credit markets, things can go systemic.

3. The notion that you can diversify by holding a geographically broad-based portfolio, (“there has never been a nation-wide housing recession”), works fine – until it doesn’t.

4. A portfolio that is apparently hedged can blow apart. So we have to look at the gross value of positions, even if they are thought to be hedged.

5. Don’t bet on ratings, because rating agencies are conflicted and might not be all too dependable at their job.

6. Defaults are never easy to manage, but it gets worse when there are a lot of them happening at the same time. It is harder to manage the mess, and there is less of a stigma in defaulting. And it is all the worse when, as is the case in the housing markets, those defaulting are not businessmen. As an added complication, with housing the revenue that we thought was there really wasn’t. Income that was supposed to be there to finance the mortgages – even when that income was fairly stated – became committed to other areas (like second mortgages). .

Well, guess where we have a market that is (1) leveraged and opaque, that is (2) very big and tied to the credit markets; and is (3) viewed by investors as being diversifiable by holding a geographically broad-based portfolio; with (4) huge portfolios where assets and liabilities are apparently matched; and with (5) questionable analysis by rating agencies; and where (6) there are many entities, entities that may not approach default with business-like dispatch, and that have already mortgaged sources of revenue that are thought to support their liabilities?

Answer: The municipal market.

Leverage and Opacity. Leverage in the municipal market comes from making future obligations to employees in order to pay them less now. This is borrowing in the form of high pension benefits and post-retirement health care, but borrowing nonetheless. Put another way, in taking lower pay today, the employees have lent money to the municipality, with that money to be repaid via their retirement benefits. The opaqueness comes from the methods of reporting. For example, municipalities are not held to the same standards as corporations in their disclosure.

Size and potential systemic effects. That this is a big market in the credit space goes without saying.

Diversification. Geographic diversification would give a lot more comfort for municipals if it hadn’t just failed for the housing market. Think of why housing breached the regional barriers. It was because similar methods of leveraging were being employed through the country. So the question to ask is: Are there common sorts of strategies being applied in municipalities across the nation?

Gross versus net exposure. The leverage for municipals is not easy to see. It might appear to be lower than it really is because many, including rating agencies, look at the unfunded portion of these liabilities. They ignore the fact that these promised payments are covered using risky portfolios. And not just risky -- the portfolio might apply hefty (a.k.a. unrealistic) actuarial assumptions of asset growth.

Rating agencies. In terms of the work of the rating agencies, here are two questions to ask. First, list the last time they did an on-site exam of the municipalities they are rating. Second, are they looking at the potential mismatch between assets and liabilities, or simply at the net – the under funded portion of the portfolio.

Defaults. Municipalities are not quite as numerous as homeowners, but there certainly are a lot of them. And they have the same issues as homeowners. Granted, they will not pour cement down the toilet before walking away. But they have a potentially equally irrational group – the local taxpayers – to deal with.

Oh, and just as homeowners took their income and locked it up via secondary loans, much of the tax base for municipalities is already mortgaged, through the sale of tax-related revenues streams like tolls and parking fees. Indeed, although general obligation bonds are considered the cream of the crop, they might just as well be regarded as the residual claim after anything with solid fee streams has been sold off.

Once a few municipalities default, there is a risk of a widespread cascade in defaults because the opprobrium will be lessened, all the more so if the defaults are spurred along by a taxpayer revolt – democracy at work.

Red Flags and Scary Charts:

Posted on 04/03/10 at 2:40pm by John Nyaradi

This week we went to “Red Flag Flying” status, expecting lower prices ahead. Aside from our primary technical indicator shifting to a bearish posture, numerous technical indicators and fundamental elements are flashing red in spite of the euphoria in the general financial press.

On March 31st, we entered a couple of inverse ETF positions in our Standard Portfolio, one inverse ETF in our leveraged portfolio and bought an S&P put option in a new options trading system that I am sending to Standard and Pro members.

To better understand why we shifted to a “short” posture let’s look at some of the factors going into that decision.

Our primary indicator is a proprietary long/short momentum indicator that went to a “sell” signal this week.

To confirm that indicator, I also look at a number of other technical and fundamental indicators to give us the highest probability of success. Some of these are widely followed indicators and some are exclusive to Wall Street Sector Selector.



Chart courtesy of stockcharts.com

In the S&P chart, we see the RSI at highly overbought levels in the top display, with above 70 becoming overbought and subject to a correction. At some point, these conditions generally will correct themselves with a substantial price decline which you can see occurring recently in November, 2009, and again in January, 2010.

In the bottom display, one of the most reliable indicators I know of, MACD, has just shifted to a “sell” signal, indicating declining momentum and the possibility of a decline ahead, just as previously occurred in November and January.

Also, a glance at the Russell, Wilshire and NASDAQ indexes all present similar pictures and confirm substantial weakening and what very well could be a topping out of the current rally.

We also look at various market breadth indicators and investor sentiment indicators as well as the VIX and find extreme complacency and bullishness on all fronts which supports and adds validity to our primary thesis of lower prices ahead.

And then as a final step, I look at macro conditions and fundamental trends that could confirm or weaken our overall view of market conditions. These include but are not limited to interest rate movements, economic reports, news and corporate earnings as well as oncoming events that are just around the bend but could impact market prices over the next few weeks.

After all that analysis is complete, I look at and choose the particular Exchange Traded funds and now option positions that could offer us the highest likelihood of success and potential profitability.

Looking At My Screens

Regarding fundamentals, two charts are particularly scary. One is from Credit Suisse and is reprinted below.



This chart depicts the monthly mortgage rate resets and you can see how these peaked in 2007-2008 in the red box on the left and set off the sub prime debacle that eventually led to the worldwide financial crisis that still bedevils us.

What’s scary about this is that after a lull in 2009, we see another spike in mortgage resets coming in 2011 and 2012 framed by the red box on the right. This time the culprits are not sub prime loans but Option Adjustable and Alt A loans resetting that could easily trigger another round of foreclosures, bank failures or “too big to fail” actions by the U.S. government.

Judging from the carnage we saw the last time the graphs on this chart were this high, a return to these levels could easily be the catalyst for a double dip recession which would almost be certainly worse than the one we’ve just been through because unemployment is worse, more national debt, etc, etc. Finally, to make matters worse, the Fed terminated their $1.25 Trillion mortgage buying program on April 1st which will create a further drag on this market.

The second scary chart is what’s going on in the U.S. Treasury market as evidenced in the chart of the U.S. 30 Year Treasury Bond below.



Chart courtesy of stockcharts.com

This frankly is a truly terrifying chart because, as you know, Treasury prices move inversely to interest rates and so as interest rates rise, Treasuries drop in price. In late March you can see the huge gap down in Treasury bond prices as interest rates rose sharply and that trend continued this week and even on Friday in response to Friday’s unemployment report.

As you know, rising interest rates usually spell lower stock prices and this sharp reversal in the direction of interest rates is a serious development as this could easily affect the fragile recovery underway, not to mention the real estate market, both commercial and residential, both of which are still in critical condition.

Last week’s Treasury bond auctions were weakly received and started the jump in interest rates. Further problems lie in supply/demand metrics as we’re issuing record amounts of debt this year including more than $40 billion this coming week starting April 5th. With the Fed out of the mortgage market and China scaling back its holdings of U.S. debt for three months straight, interest rates could continue to rise as the “bond vigilantes” look like they’re about to take control of this critical game.

So, adding it all up, these are treacherous times in spite of all the happy talk we get from the general financial media.

The View from 35,000 Feet

This week the news was mixed again as the bulls and bears struggled for domination of the markets. On the upside, the Case/Shiller housing price index showed improvement along with an improving consumer confidence report and the much ballyhooed employment report on Friday indicated that north of 150,000 jobs had been created in March.

On the negative side of the ledger was the fact that nobody mentioned that we need 100,000 plus monthly new jobs just to hold even and so unemployment remained steady at 9.7%, that the jobs created fell far short of consensus estimates and that U6 unemployment, the “full” unemployment reading of unemployed plus underemployed rose to 16.9% or about one in six people not employed or not working as much as they want.

But probably most dismal of all was the fact that long term unemployed ranks swelled to 6.5 million, that is people who are jobless 27 weeks or beyond, and a gain of more than 400,000 for the month or 44% of all unemployed, an all time record.

No matter how you slice it, these are not pretty numbers.

Other negative news focused on the Chicago Purchasing Managers Index declining, factory orders dropping and construction spending declining.

Finally, let’s throw in some dribs and drabs like commercial real estate loan losses kicking in to the tune of a half trillion in 2011, the ongoing Greek tragedy and drama that will return to center stage in mid April when 15 billion worth of Euros will have to be refinanced and a new national health care plan that will be “fully funded.” (When was the last time the Federal government fully funded anything?)

Sadly the litany goes on with greater numbers of Americans filing for bankruptcy protection in March than at any time since October, 2005, when the bankruptcy codes were tightened, a total of more than 158,000 filings in March alone, or nearly 7,000 per day, and states and municipalities edge closer to the brink of default as tax revenues continue to shrivel.

Where is the Easter Bunny when we really need him?

What It All Means

What it all means is that, in my opinion, all the happy talk about “happy days are hear again” (the theme song from the Great Depression) is based on a foundation of skating on very thin ice and that we are traveling through very dangerous days with the very likely possibility of a double dip recession lurking like an iceberg in the path of the U.S. Titanic.

However, no matter what happens or what we read, we will stick with our indicators and go with the flow of the market in whatever direction it takes us. One can never underestimate the madness of crowds and the power of the Federal Reserve.

The Week Ahead

The week brings some important economic reports including:

Monday: March ISM Services, February Pending Home Sales

Tuesday: FOMC Meeting Minutes, February Consumer Credit

Thursday: Initial Unemployment Claims, Continuing Unemployment Claims

Friday: February Wholesale Inventories

Sector Spotlight:

Leaders: Gold Miners, China, Russia

Laggards: Biotech, EAFE (Europe, Asia, Far East)

I was in Germany this week where the soccer playoffs were filling the bars and restaurants with cheering fans and where patience is growing thin with the Euro and European Union and their troublesome friends in the Club Med countries.

Now I’m home for the holiday weekend and wish you peaceful days and happy times with your families and friends. Spring is here (although it snowed in Bend today) and I look forward to continuing our work together through these interesting times.

Wishing you a great weekend wherever you may be,

John

http://www.benzinga.com/205571/red-flags-and-scary-charts

All’s Well?...

Here are a couple of uplifting titles to stories in today’s mainstream media:

From MSNBC: “Stocks boosted by upbeat economic reports”

From CNNMoney.com: “Stocks pop on jobless claims”

Wow. I don’t know about you, but I’m optimistic.

But wait. Could these titles be misleading? I don’t think I need to answer that.

Apparently the good news was 439,000 new people filed jobless claims in the week ended March 27, down 6,000 from an upwardly revised 445,000 the previous week. And outplacement firm Challenger, Gray & Christmas Inc. showed that planned job cuts accelerated substantially in March.

So, almost half a million people file new jobless claims in a week and employers accelerate layoffs and that’s considered good news these days. I’d really hate to hear some bad news.

In addition to this “good” news, we have a new national employment report published by payroll giant Automatic Data Processing Inc. that indicates private employers unexpectedly shed 23,000 jobs in March despite concensus analysis calling for an increase in jobs. And the Commerce Department reports that U.S. construction spending fell to a seasonally adjusted annual rate of $846.23 billion, the slowest rate in over seven years, as activity softened in every major sector from homebuilding to public construction projects. Meanwhile, personal consumption expenditures increased 21.7 times more than personal income over the most recently reported month according to the Bureau of Economic Analysis.

That’s not to say that every bit of news that comes out is completely negative. The Commerce Department reported yesterday that a barometer of capital spending by businesses climbed. Non-defense capital goods orders, excluding airplanes, rose 2.0% in February. But that followed a big drop in January of 4.4%, suggesting businesses uncertain about the economy remain cautious about spending plans.

And there’s even some actual good news out there. The Institute for Supply Management’s manufacturing index rose to 59.6 in March from 56.5 in February, marking eight straight months of expansion in the sector.

All in all, however, we still firmly believe that the bad seriously outweighs the good. None of the real issues that brought us into the 2008 financial meltdown have been addressed. Banks’ balance sheets are still terrible, especially if you take out the impact of accounting changes that were allowed last year. The overhang of derivatives continues to grow. And as bad as the real estate situation is, it’s about to get a lot worse.

Look, we don’t like to be the bearer of bad news all time. But we have to tell you what we really think based on all the research and analysis that goes on over here. And what we think is that the far wall of the hurricane is still heading toward the economy. When it’s going to hit we really can’t say, though it will probably be sooner rather than later. The catalyst will likely be fear caused by one single and unforeseen or known but ignored event (a black swan). The event will create a panic in the markets that will then create a chain reaction like a house of cards falling. So as painful as it may be for your psyche, it’s prudent for you to remain wary of this “recovery.” All is certainly not well.

http://www.caseyresearch.com/displayCdd.php?id=389