Thursday, October 3, 2013

We are in the Weakest Part of Presidential Cycle

Market risk: Weakest part of Presidential Cycle starts in mid 2013 (Jul/Aug peak)
Weakest part of Presidential Cycle
 From Merrill:
2013 is the first year of a new Presidential Cycle. The first quarter of the first year of the cycle is down 1.33% on average (1Q in 2013 bucked this trend), but the weakest period of the Presidential Cycle is from a July/August Year 1 peak to a September Year 2 (mid-term election year) low. The average decline over this period is 4.31%. With the rally in September, 2013 is bucking this weaker Presidential Cycle period so far.
Source: Merrill Lynch, TBP

President Obama, the complete CNBC interview (video)

CNBC's John Harwood sits down with President Obama to discuss the government shutdown, why Wall Street should be worried, and his feeling about the next Fed Chairman.


Wednesday, October 2, 2013

Twitter IPO filing: Big focus will be revenue growth

Twitter is reportedly set to soon unveil the filing for its initial public offering, a document that will give investors their first in-depth look at the social network’s financial health.
Much of the attention will likely be on revenue growth, which some analysts speculate has been strong.
“I’m pretty confident that revenues more than doubled from 2012 to 2013, so investors will like that,” Wedbush analyst Michael Pachter told MarketWatch. “More important is the rate of growth the last couple of quarters, and I suspect it is really high.”
Twitter’s annual revenue has skyrocketed since 2011 as its user base has expanded, according to estimates from eMarketer.
The San Francisco-based company’s revenue soared more than 200% to $288 million last year, is projected to more than double to $583 million this year, reach nearly $1 billion next year and to top $1.3 billion in 2015, according to the market research company.
Twitter is also seen posting steady growth outside the U.S. The company’s non-U.S. ad revenue is expected to make up nearly a quarter of total sales by 2015, according to eMarketer. The company’s mobile ad revenue is also projected to exceed $300 million this year, and top $500 million this year.
The market research company based its estimates on data from “other research firms, investment banks, analysts and other sources,” as well as interviews with executives at ad agencies, brands, online ad publishers and other industry leaders, eMarketer Vice President Clark Fredricksen told MarketWatch.

source:  thetell

Gold Selloff Catches Some Off Guard

Gold could be losing its label as a safe-haven asset.

Considered a good bet during times of political and economic uncertainty, gold caught some analysts and traders off guard when prices in the spot market slumped over 3% on Tuesday, posting only a small rebound in European trading on Wednesday
“I find that surprising given the timing as we move into an extremely uncertain period over the next two or three weeks,” said Robert Rennie, chief currency strategist at Westpac Bank in Sydney. “There are certainly rumors of fund liquidation in the market.”
Some traders had anticipated gold to benefit from higher demand for traditional safe-haven assets. Market reaction to the U.S. government shutdown on Tuesday was muted, with stocks there rising slightly. Investors pointed to more uncertainty around the chances of a prolonged shutdown hurting the wider economy, or if it threatens a solution on the U.S. debt limit.
Others say the sell off is in line with history, finding a correlation between the length of the shutdown and how much the gold price goes up.
Spot gold prices had touched a record $1,920.94 a troy ounce in September 2011 after Standard & Poor’s had cut the U.S. credit rating following months of debate over raising the country’s debt ceiling.
As of 0815 GMT, spot gold was trading at $1,292 a troy ounce, up $4.50, or 0.3%, from its previous close.
Some analysts said that the current selling in gold has more to do with technical indicators than fundamental issues. Traders usually have predetermined levels programmed in their computers that triggers sell orders when the price reaches a particular level.
The fall in gold prices below the $1,300 a troy ounce mark is “never really good for confidence,” said Stan Shamu, a strategist with IG in Melbourne.
Besides, Mr. Shamu says physical demand, which had helped to prop up prices at times, is missing with the world’s two biggest buyers—India and China—on holiday.
Analysts expect prices could fall, before starting to rise as the Oct.17 deadline to raise U.S. debt ceiling approaches.
source:  wsj


List of Economic Releases During A Government Shutdown

The U.S. government shutdown will halt releases of most official gauges of the economy. Private organizations produce some measures that could be used to track the economy, such as gauges from the Institute for Supply Management. Government organizations that operate outside of the federal appropriations process, such as state unemployment agencies and the Federal Reserve, also will release their data.
Here’s what we will learn and won’t learn, through reports from the public and private sectors, over the next month:
10 AM—Construction spending (Commerce Dept.) — POSTPONED
10 AM – ISM manufacturing ( — RELEASED
10 AM—Light-vehicle sales (various companies) — RELEASED

8:15 AM –ADP Employment ( — STILL ON

7:30 AM—Job cuts ( — STILL ON
8:30 AM—Initial jobless claims (Labor Dept) — STILL ON
10 AM—ISM nonmanufacturing ( — STILL ON
10 AM—Factory orders (Commerce) — POSTPONED IN SHUTDOWN

FRIDAY, Oct. 4
8:30 AM—Employment report (Labor) — POSTPONED IN SHUTDOWN

MONDAY, Oct. 7
3 PM–Consumer credit (Federal Reserve) — STILL ON

7:30 AM—NFIB survey ( – STILL ON
8:30 AM—International trade (Commerce) — POSTPONED IN SHUTDOWN
10 AM—Job openings and labor turnover (Labor) — POSTPONED IN SHUTDOWN

10 AM—Wholesale trade (Commerce) — POSTPONED IN SHUTDOWN

8:30 AM—Initial jobless claims (Labor) — STILL ON
8:30 AM—Import prices (Labor) — POSTPONED IN SHUTDOWN
2 pm—Federal budget (Treasury Dept) — POSTPONED IN SHUTDOWN

FRIDAY, Oct. 11
8:30 AM—Retail sales (Commerce) — POSTPONED IN SHUTDOWN
8:30 AM—Producer-price index (Labor) — POSTPONED IN SHUTDOWN
9:55 AM—Consumer sentiment (University of Michigan) — STILL ON
10 AM—Business inventories (Commerce) POSTPONED IN SHUTDOWN

MONDAY, Oct. 14
Columbus Day

TUESDAY, Oct. 15
8:30 AM—Empire State Survey — STILL ON

8:30 AM—Consumer-price index (Labor) — POSTPONED IN SHUTDOWN
10:00 AM—National Association of Home Builders survey — STILL ON
2:00 PM—Beige Book (Federal Reserve) – STILL ON

8:30 AM—Initial jobless claims (Labor) — STILL ON
8:30 AM—Housing starts (Commerce) — POSTPONED IN SHUTDOWN
9:15 AM—Industrial production (Federal Reserve) — STILL ON
10:00 AM—Philadelphia Fed survey — STILL ON

FRIDAY, Oct. 18
10:00 AM-Leading indicators (Conference Board) — STILL ON

MONDAY, Oct. 21
10:00 AM—Existing-home sales (National Association of Realtors) — STILL ON

TUESDAY, Oct. 22
10:00 AM—Richmond Fed survey — STILL ON

9:30 AM-Federal Housing Finance Agency House Price Index — POSTPONED IN SHUTDOWN

8:30 AM—Initial jobless claims (Labor) — STILL ON
10:00 AM—New-home sales (Commerce) — POSTPONED IN SHUTDOWN
11:00 AM—Kansas City Fed survey — STILL ON

FRIDAY, Oct. 25
8:30 AM—Durable goods (Commerce) — POSTPONED IN SHUTDOWN
9:55 AM-Consumer sentiment (University of Michigan) — STILL ON

MONDAY, Oct. 28
10:00 AM—Pending home sales (National Association of Realtors) — STILL ON
10:30 AM—Dallas Fed survey — STILL ON

TUESDAY, Oct. 29
9:00 AM–S&P/Case Shiller Home Price Index — STILL ON
10:00 AM-Consumer Confidence (Conference Board) — STILL ON
10:00 AM-Housing vacancies (Commerce) — POSTPONED IN SHUTDOWN

8:15 AM –ADP Employment ( — STILL ON
8:30 AM—Gross Domestic Product (3Q) (Commerce) — POSTPONED IN SHUTDOWN
2:00 PM-Federal Open Market Committee statement (Federal Reserve) — STILL ON

8:30 AM—Initial jobless claims (Labor) — STILL ON
8:30 AM—Personal income (Commerce) — POSTPONED IN SHUTDOWN
8:30 AM—Employment Cost Index—Labor Dept — POSTPONED IN SHUTDOWN

9:45 AM—Chicago PMI — STILL ON
source: wsj

Tuesday, October 1, 2013

Here's Why ESPN Has A Huge Ad On SI's Website Today (video)

It's been a rough stretch for ESPN and SportsCenter. Ratings for ESPN's flagship show have been sagging, bringing in about 828,000 viewers this year, down from about 1 million last year.

Primetime ratings for ESPN and ESPN2 have seen declines too. ESPN's gotten really defensive about it, especially in the run-up to Fox Sports 1's launch.

So how do you fight the downward trends? With money! ESPN is introducing a new SportsCenter spot—you probably saw at some point this weekend—and what's unique is that it won't be on ESPN alone. 

The Wall Street Journal reports that this is the first time in nearly a decade that ESPN will advertise SportsCenter on other channels. (Maybe you saw the spot during NBC's Sunday Night Football.)

The Journal reports:

"Shoring up SportsCenter is key for ESPN. Such studio programming accounted for 43% of the $2.8 billion in ad spending ESPN attracted in 2012 to its flagship and sister networks, according to WPP PLC's Kantar Media, an ad-tracking research firm. Needham Insights estimates that ESPN has more than $10 billion in annual revenue.
The SportsCenter ads will run on DirecTV, Time Warner Inc.'s Adult Swim and channels owned by Viacom Inc. such as Spike and Comedy Central, ESPN said.

The network's ad outlays have been declining over the past few years. ESPN spent $57.2 million in 2012, down from $138.8 million in 2010, according to Kantar. ESPN declined to comment on ad-spending totals, but added that in 2010 it heavily promoted the World Cup."

source:  Deadspin

Jon Stewart skewers DC politicians over shutdown (video)

Politics aside, Jon Stewart is pretty funny when he gets a mean streak in him and lights people up.

September, Q3 and YTD Asset Class Performance

September and the third quarter have now come and gone, and below is our key ETF matrix highlighting the performance of various asset classes during the month and quarter (and YTD).  While September ended on a bad note, US equities posted nice gains during the month.  Midcaps (IJH) and smallcaps (IJR and IWM) did especially well, more than doubling the performance of the largecap S&P 500 (SPY) and Dow Jones Industrial Average (DIA).  For the quarter, the Nasdaq 100 (QQQ) and S&P Smallcap 600 (IJR) were up more than 10%, while the Dow ETF (DIA) was up just 1.65%.
Looking at the ten S&P 500 sectors, Consumer Discretionary (XLY) and Industrials (XLI) were up the most in September with gains of more than 5%.  Consumer Staples (XLP) and Utilities (XLU) were up the least with gains of less than 1%.
While September was a good month for US stocks, it was even better international markets.  Countries like Brazil (EWZ), India (INP) and Spain (EWP) were up more than 10%, and the BRIC emerging market ETF (EEB) was up 10.43%.
The commodities asset class was the one area that didn't have a good September.  As shown, the energy and metals commodity ETFs were all down more than 3%.  Fixed income ETF saw a rebound in September, although they were still mostly negative for the third quarter.
Looking at year-to-date performance, US equities are still leading the way with double-digit percentage gains across the board.  Through three quarters, the S&P Smallcap 600 Growth ETF (IJT) has been the best performing ETF in our matrix with a gain of 28.94%.

source:  Bespoke

Absolutely everything you need to know about how the government shutdown will work

So... it's shutdown time. Let's take a look at how this will work.

Not all government functions will simply evaporate come Oct. 1 — Social Security checks will still get mailed, and veterans' hospitals will stay open. But many federal agencies will shut their doors and send their employees home, from the Environmental Protection Agency to hundreds of national parks.

Here's a look at how a shutdown will work, which parts of the government will close, and which parts of the economy might be affected.

Wait, what? Why is the federal government on the verge of shutting down?

Short answer: There are wide swaths of the federal government that need to be funded each year in order to operate. If Congress can't agree on how to fund them, they have to close down. And, right now, Congress can't agree on how to fund them.

To get a bit more specific: Each year, the House and Senate are supposed to agree on 12 appropriations bills to fund the federal agencies and set spending priorities. Congress has become really bad at passing these bills, so in recent years they've resorted to stopgap budgets to keep the government funded (known as "continuing resolutions"). The last stopgap passed on March 28, 2013, and ends on Sept. 30.

In theory, Congress could pass another stopgap before Tuesday. But the Democratic-controlled Senate and Republican-controlled House are at odds over what that stopgap should look like.

The House passed a funding bill over the weekend that delayed Obamacare for one year and repealed a tax on medical devices. The Senate rejected that measure. They voted a few more times and still no agreement. So... we're getting a shutdown.

Does a shutdown mean everyone who works for the federal government has to go home?

Click here to continue:  wonkblog

Noah Smith: The 10 Stealth Economic Trends That Rule the World Today

What’s going on in the world today? It’s hard to keep up. Some facts are familiar to anyone who reads the news. Unemployment is high. Growth is slow. Shale gas is a big deal. But beyond the caps-lock headlines, subtler, but no less significant, shifts are changing the U.S. economy and reshaping the global financial order. Here are ten that have surprised—and might surprise.

1) Old Trend: Expensive solar, surviving only on subsidies.
New Trend: Cheap solar, disrupting old industries.

Since the 1970s, it has become a cliché that solar power is an expensive boondoggle, kept alive only by government subsidies. But every cliché is right until the day it’s suddenly wrong. And for solar, that day is today. Since Jimmy Carter was sworn in as president, the price of solar cells has fallen over 99 percent. No, that’s not a typo. And the exponential cost-drop shows no sign of slowing down, with dozens of new technologies in the pipeline. Installation and land costs are falling too. What this means is that in sunny states like Arizona, solar can already compete with fossil fuel electricity even with zero government subsidies. In fact, rooftop solar panels are becoming so popular that utility companies are trying to tax solar power in order to pay for grid maintenance! The technology that was a punch line for decades is about to launch an energy revolution, and most people aren’t even paying attention.

2. Old Trend: The Latinization of America.
New Trend: The Asiafication of America.

“The huge boom in Mexican immigration is over.” The improving Mexican economy, lower Mexican fertility, the U.S. construction bust, and increased enforcement have combined to bring net Mexican immigration to zero or negative since 2008. That bears repeating: On net, Mexicans are no longer moving to the United States at all. So who is? Lots of people, but Asians more than anyone. Asians are moving here at a rate of about half a million a year, and the Asian-American percentage of the population has already reached 6%. Most studies say immigration is good for the economy, so this is good news, especially because many of the new Asian arrivals are high-skilled, entrepreneurial types who will start businesses and hire the rest of us.

3. Old Trend: The Chinese population bomb.
New Trend: The Chinese population bust.

In 2012, the working-age population of China fell by 3.45 million. In other words, last year China lost a number of workers approximately equal to the entire population of Lebanon. This year the drop will be bigger, and the drops will accelerate through the 2030s. That means that China’s inexhaustible supply of cheap labor is going to be exhausted a lot faster than most people expected. Nor will repealing the infamous one-child policy cause a Chinese baby boom – in some small areas where it was repealed, fertility rates remain below the national average. This population crunch won’t put that huge of a dent in China’s billion-strong workforce, but it will boost investment in a lot of other poor countries and will force China’s industries to move up the value chain very quickly or risk the “middle-income trap”.

4. Old Trend: Soaring U.S. CO2 emissions.
New Trend: Plummeting U.S. CO2 emissions.

Thanks a little bit to economic stagnation, but mostly to the boom in natural gas, the U.S. – the only large rich country not to sign the Kyoto Protocol – has seen its CO2 emissions tumble to levels not seen since the early 1990s. More drops are expected to follow. Global emissions (that's what really matters) continue to soar, but China is the main driver now. The U.S. is subtracting from total emissions growth now. Of course, that doesn’t count methane emissions, which are released when natural gas is fracked. But the United States is no longer the global carbon bad-boy it was in the '90s.

5. Old Trend: College is becoming more and more important.
New Trend: College is no more important than before.

If you want a good job, go to college. This has been a maxim of American life since the 1980s, when the “college premium” – the extra income boost from going to college – truly soared into the stratosphere. But an interesting thing has happened in the last decade and a half – the college premium has stagnated. College is still valuable, but by at least one measure, it's not getting more valuable each year. Perhaps that's why American college enrollment declined last year. Expect that to put a damper on skyrocketing college tuition and soaring student loans.

6. Old Trend: Americans drive more and more.
New Trend: Americans drive less and less.

Remember when gas cost a buck a gallon? If so: Congratulations, you’re old. With gasoline more-or-less permanently at $4, Americans are finally adjusting their lifestyles, driving less and less even as unemployment falls. Meanwhile, rail traffic is up, with Amtrak logging a 55% gain since 1997. As we ditch our cars and hop on trains, buses, and bikes, expect an increasing number of Americans to discover the freedom that rail and public transit offers.

7. Old Trend: Skyrocketing health care costs, skyrocketing deficits.
New Trend: Creeping health care costs, creeping deficits.

Health-care costs and the national debt are drowning the nation, right? Well, maybe. But the water isn’t rising nearly as fast as we thought it would. Health-care costs are still outpacing economic growth, but they are doing so at a slower pace, thanks perhaps to the imminent start of Obamacare, medical innovation, or the recession. Meanwhile, the percentage of health sector jobs is finally falling as a percent of the total. As for that big, bad deficit, it’s fallen by more than half since 2009, and this quarter the federal government actually intends to pay back a tiny bit of the debt. Of course, for those who think that austerity is bad for the economy, this is bad news, but Americans who are worried about the national debt can breathe a little easier.

8. Old Trend: The BRICs are conquering the world.
New Trend: China is the only BRIC in the wall.

Remember the BRICs? Those new rising super-economies that were going to eclipse the old guard of America, Europe, and Japan? Well, they hit a BRIC wall. Russia, Brazil, and India, tigers of the 2000s, have slowed to 2 or 3% growth – about the same rate as the rich countries. China is the last BRIC standing. Although it has experienced a mild slowdown, too, it is still powering ahead at a robust 7.5% rate. Instead of the rise of a new economic order, we should be talking only about the rise of China.

9. Old Trend: Active management rules the finance universe.
New Trend: Passive investment rules the finance universe.

The number-one way that the finance industry makes its money is by collecting fees from people in order to manage their money. Pension funds, mutual funds, hedge funds, endowment funds…it seems like every dollar you save gets a hefty cut as it passes through the hands of middleman after middleman. And they can’t all beat the market, can they? But America’s love affair with money managers may be going lukewarm, as more and more investors move their wealth into passive management. Passive management means piggybacking on the wisdom of the market instead of paying one pro big bucks to try to out-guess the other pros. Exchange Traded Funds, offered by companies such as BlackRock and Vanguard, are one of the main passive investment vehicles that have emerged in recent years. Meanwhile, some big pension funds are turning to passive management. This could be the dawn of a new, laid-back financial age.

 10) Old Trend: China is buying up all our debt.
New Trend: China is selling off our debt.

America has mortgaged ourselves to the Chinese! …Or have we? Our biggest foreign creditor, the Chinese government, is now selling U.S. bonds instead of buying them. Actually, so is our second-biggest foreign creditor, Japan. So who is buying Uncle Sam’s debt? Regular Americans like you and me. Most of the national debt is money we Americans owe to each other, not to foreigners, and this is becoming more true, not less.

source:  theatlantic