Wednesday, March 20, 2013

If Deposit Confiscation Happened In The US, It Wouldn’t Impact 57% Of Americans, Because Most Are BROKE Already

from Zero Hedge:
The average US worker remains concerned about their retirement even as the stock market reaches new all-time highs. The WSJ reports new data that shows the impact of stagnating wage growth and aging demographics is combining to squeeze individuals as a depressing 57% of Americans reported less than $25,000 in household savings and investments. On the bright side, the latest and greatest ‘Cyprus’ tax limit appears to be €20,000, or roughly the $25K threshold in the US, freeing those ‘un’-wealthy citizens to keep their hard-earned private property.
On the dark side, 28% have no confidence they will have enough money to retire comfortably – the highest level in 23 years.
Americans are living longer and their extended life spans are putting additional strains of pension plans as the percentage of workers who have saved enough for retirement plunged to 66% (from 75% in 2009).
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Global Real Estate Stocks—Time to Get Out?

by Eric Franco, AllianceBernstein

Real estate stocks have now rebounded from the crash during the global financial crisis. But we think valuations are still reasonable, especially as property fundamentals continue to improve in key markets.

Since bottoming in early March 2009, global real estate stocks, as measured by the FTSE EPRA/NAREIT Developed Index, have performed strongly, recovering nearly all the losses suffered during the financial crisis. Now, many investors are asking whether global real estate stocks remain a worthwhile investment. We think the answer is yes.

While global real estate stocks may look pricier than other equities, valuations have only just recovered to levels that are average relative to their own history and they are still attractive when compared with bonds. For example, the cash-flow yield spread to 10-year government bonds remains well above normal (Display).

The picture is brighter outside the US. Valuations of US real estate stocks are somewhat rich relative to their own history, but stocks remain attractive relative to bonds. Outside the US, however, real estate stocks still trade below their historical average and also look very appealing versus bonds. (more)

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Global housing bubbles unite: How easy debt has created the first ever worldwide housing boom and bust.

Economic history is a fascinating subject.  Yet in our modern day of instant news and second to second market analysis, it seems like the media is bent on skimming over on only what is going on at the moment.  Even the deepest financial crisis since the Great Depression is now gone into the vortex of cultural amnesia.  What is interesting however, is that many countries around the world being incredibly different culturally, went down into the rabbit hole of housing mania as well.  If you ever think Southern California home prices are outrageous, you need only look at Northern California.  If you live in the Bay Area, all you need to do is look at Canada.  There has never been, from all the history I’ve reviewed, of a universal and unified housing bubble that touched nearly every continent at the same time at such a big magnitude.  Let us take a trip around the world and see what other housing markets are doing.

Those in bust mode
Two countries with giant housing bubbles that are still in the bust phase are Ireland and Spain:
Spain vs Ireland
Home values in Spain are now down by 27 percent from their peak while in Ireland, housing values are down a stunning 55 percent.  It looks like prices in Ireland might be hitting a bottom but in Spain, given that over half of their young are out of work, it might be hard to see this picking up anytime soon at least from domestic demand.  Easy money, fast building, and inflated prices.  (more)
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Chart of the Day - Caesars Entertainment (CZR)

Caesars Entertainment (CZR) is the Chart of the Day after favorable comments by Gov Christie on his view of the future of on-line betting in New Jersey.  The stock advanced 15 times and is up 63.41% in the last month .  The 100% Barchart technical buy signals show momentum in a stock the analysts have panned. The stock is up 262% since the Trend spotter signaled a buy on 12/3.

The Company is a gaming company engaged in providing casino entertainment services. They operate casino resorts on multiple continents and its casino entertainment facilities include land-based casinos, riverboat or dockside casinos, managed casinos, combination greyhound racetrack and casino, combination thoroughbred racetrack and casino, and harness racetrack and casino, hotel and convention space, restaurants, and non-gaming entertainment facilities.

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Gold: The Bottom Is In And We’re Going MUCH Higher / By Dave in Denver / March 19, 2013
Gold is about to take out $1,600…We may never see that $1,600 level ever again. – Jim Sinclair on King World News - Jim Sinclair, King World News interview  LINK
I highly recommend reading all of Jim Sinclair’s recent interview postings on King World News, as he does a great job explaining the significance of the Cyprus crisis, what it means for gold and why the mainstream media is completely missing the mark in reporting the situation.
The way I see the Cyprus situation, it is the trigger we’ve been waiting for to ignite the next big, long-term move in gold:
Based on the current QE program, the Fed’s monetary base projects out to be at $4 trillion by 2014 – a 31% increase from where it is today. If we assume that gold does a “mean reversion” in its correlation with the Fed’s monetary base – a high probability assumption given the high correlation observed since 2008 – a 31% increase in the price of gold as of today – $1610 – would imply that gold has a high probability of going to $2100 by the end of 2013. In fact, I will make that my price prediction for gold for 2013.
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Signal With 71% Accuracy Says This Tech Icon is a Long-Term 'Buy': INTC

Many traders try to make decisions using short-term charts, some looking at charts using bars that update every minute or less. These time frames can be useful but individual traders should normally use longer-term charts. Wall Street powerhouses are competing against high-frequency trading firms for the intraday profits that are available and individual traders probably can't match their advantages. Daily charts could be more useful for individuals, but weekly and monthly charts should also be considered.

Most of the tools normally applied to short-term charts will work well on weekly or monthly charts, although sometimes the indicator setting should be changed. Relative strength (RS), for example, works well using a six-month time frame. On different charts, the look-back period should be about 125 days, 26 weeks or six months. Other indicators like stochastics or Moving Average Convergence/Divergence (MACD) work well using the same parameters in any time frame.
Intel (NASDAQ: INTC) recently gave a stochastic buy signal after becoming oversold on the monthly chart. The chart below shows the results of the last five signals, which include one losing trade in 2002 and four consecutive winners. Since 1981, the system has been right 71% of the time, but there have only been seven signals with five of them coming in the past 10 years. That is because Intel only became oversold twice in the 20-year bull market that topped in 2000.

Intel Stock INTC Chart
To find a larger number of trades, we tested the system using all of the stocks currently in the S&P 100 since 1981, or whenever they began trading, and found that 66.3% of 528 trades were winners. Positions were sold when the stochastics indicator became bearish or after one year, whichever came first. Risk, measured as the largest loss, was reduced by about 40% compared to buy and hold.

It is also important to consider fundamentals when using long-term charts. Intel is a buy based on standard fundamental measures:
Intel Stock Fundamentals
Analysts expect Intel to grow its earnings per share (EPS) at an average rate of 12% a year in the future, so it could be worth $25.20 based on estimated earnings of $2.10 per share in 2014.

Buying INTC at the market price is one way to benefit from the expected stock appreciation. With INTC currently trading at $21.40, if it reached the $25.20 price target by December 2014, traders would have a capital gain of about $3.80 and dividend payments totaling $1.58 (seven quarters) if the current payout remains unchanged. That offers a total return of about 25% in less than two years.

Alternatively, traders could use long-term call options expiring in January 2015. Calls with a strike price of $20 are trading for about $3 and would be worth at least $5.20 if INTC reaches the $25.20 target. The dollar amount of the potential gain ($2.20) is lower than buying the stock but traders need less capital to trade options. Since each call contract controls 100 shares of stock, a trader could enter the options trade for $300 while $2,140 would be needed to purchase 100 shares of stock.
If a trader was willing to risk more than $2,100, they could buy seven call options and potentially earn $1,540 on the trade if INTC reaches $25.20, a potential gain of 73% in less than two years. The maximum loss on the trade is the amount paid for the options although a stop-loss could reduce that amount.

Intel is a buy on the monthly chart and based on the fundamentals. Long-term options offer an aggressive trading strategy for this trade setup. Buying the stock is also recommended and offers the advantage of dividend income, which is not available to option buyers.

Recommended Trade Setups:
-- Buy INTC at $22 or less
-- Set stop-loss at $19
-- Set price target at $25.20 for a potential 22% gain in 21 months, assuming dividend payments remain unchanged

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National planning Cyprus-style solution for New Zealand

The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.

Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.

“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman.

“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.

“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.
“While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions.

“Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.

“If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference.”
Dr Norman questioned the Government’s insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.

“Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people’s deposits up to a maximum ranging from $100,000 – $250,000,” Dr Norman said.

“OBR is not in line with Australia, which protects bank deposits up to $250,000.

“A deposit insurance scheme is a much simpler, well-tested alternative to Open Bank Resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure.

“Deposit insurance will, however, require the Reserve Bank to oversee and regulate our banks more closely – a measure which is ultimately the best protection against bank failure.”

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