Thursday, September 19, 2013

FOMC Decision: No Taper

The short version – we aren’t “tapering” because we think the economy might be weaker than previously expected (more discussion below):

“For immediate release

Information received since the Federal Open Market Committee met in July suggests that economic activity has been expanding at a moderate pace. Some indicators of labor market conditions have shown further improvement in recent months, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen further and fiscal policy is restraining economic growth. Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable.

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Spain Will No Longer Index Pensions to Inflation

by Martin Armstrong
Armstrong Economics

The collapse of Socialism is unfolding before everyone’s eyes – they just ignore it. In the states they manipulate the CPI to render inflation irrelevant and impossible. In Spain, they now will stop indexing pensions altogether because they cannot create a fake CPI as the US does. There will no longer be any automatic link to inflation from 2014 onwards for Spanish Pensions. Thus, the Spanish government wants to save 33 billion euros in ten years. The retirement age for the time being remains at 65 years for now but there are discussions about raising that to 70 in the EU as a whole behind closed doors in Brussels.
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Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR)

Green Mountain Coffee Roasters, Inc. engages in the specialty coffee and coffeemaker businesses in the United States and Canada. It sources, produces, and sells approximately 225 varieties of coffee, cocoa, teas, and other beverages in K-Cup and Vue single serve packs; and coffee in traditional packaging, including whole bean and ground coffee selections in bags, and ground coffee in fractional packs. The company sells these products to supermarkets, club stores, and convenience stores; restaurant and hospitality industries; and office coffee distributors, as well as directly to consumers through its Website. It also sells at-home and away-from-home single cup brewers; accessories; brewing equipment; and coffee, tea, hot cocoa, and other beverages in single serve packs to retailers, department stores, and mass merchandisers, as well as directly to consumers. In addition, the company produces and sells other specialty beverages, including hot apple ciders, hot and iced teas, iced coffees, iced fruit brews, hot cocoa, and other dairy-based beverages in single serve packs. Green Mountain Coffee Roasters, Inc. was founded in 1981 and is based in Waterbury, Vermont.
To review Green Mountain's stock, please take a look at the 1-year chart of GMCR (Green Mountain Coffee Roasters, Inc.) below with my added notations:
1-year chart of GMCR (Green Mountain Coffee Roasters, Inc.) After trading sideways for about (3) months, GMCR formed a solid resistance at $82 (green). That previous resistance was a 52-week high breakout when the stock broke up through it, and now it should act as support if the stock were to pull back down to it. In addition, the stock has been climbing a long trendline of support (blue) since January. If GMCR were to fall below $82, that trendline would be the next major level of support.
The Tale of the Tape: GMCR has a potential $82 level of support and uptrend line to watch. A long trade could be made on a pullback down to $82. A break below that level would bring the up trending support into focus for the next long trade.
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Chris Martinson: What’s Next | McAlvany Commentary

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A road to unsustainable debt

CBO reports that US is on unsustainable budget course as spending exceeds revenues.
A recent CBO report came out with a rather sobering outlook of our governmental spending habits.  The word “unsustainable” is probably not something you want uttered in a report about meeting a budget.  Yet that has been our recent trajectory when it comes to spending.  The massive financial crisis and subsequent bailouts have resulted in a titled economy favoring a small group of people.  The same engine that led us into this problem is still humming along and the too big to fail have now become the way too big to fail banks.  So unsustainability is the spine fueling the current recovery.  Debt upon debt only works until you reach tipping points.  US households hit that point a few years ago as the housing bubble imploded.  To think that this path of acquiring debt upon debt to pay for expenditures is sustainable is going to cause deeper instability into an already shaky system.
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In the steps of John Templeton

By Vaughan Scully, S&P Capital IQ in The Outlook

S&P The OutlookLegendary investor John Templeton died in 2008, leaving behind a set of investing maxims that are still followed by the managers of Templeton funds. As an investor, Templeton was a contrarian by nature.

He moved his office from New York to Nassau, the Bahamas in part to get away from the “groupthink” that prevailed on Wall Street and claimed his performance improved because of it.

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VIVUS, Inc., a biopharmaceutical company, engages in developing and commercializing therapies to address unmet needs in obesity, sleep apnea, diabetes, and sexual health. The company offers Qsymia, a drug for the treatment of obesity as an adjunct to a reduced-calorie diet and increased physical activity for chronic weight management in adult patients with an initial body mass index of 30 or greater, or 27 or greater in the presence of at least one weight-related comorbidity, such as hypertension, type 2 diabetes mellitus, or high cholesterol; and STENDRA for the treatment of erectile dysfunction. It also completed Phase II clinical studies of Qsymia for the treatment of obstructive sleep apnea; and Qsymia for the treatment of type 2 diabetes. The company has an agreement with Mitsubishi Tanabe Pharma Corporation for the development and commercialization of avanafil, a PDE5 inhibitor compound for the oral and local treatment of male and female sexual dysfunction.
To review VIVUS's stock, please take a look at the 1-year chart of VVUS (VIVUS, Inc.) below with my added notations:
1-year chart of VVUS (VIVUS, Inc.) VVUS has basically been trading in a wide range throughout the year. During the last three or four months the stock had been bouncing within a common pattern known as a rectangle. Rectangle patterns form when a stock bounces between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. VVUS's rectangle pattern had formed a $15 resistance (red) and a $12 support (blue). Now that the stock has broken its rectangle support, the next level down would be $10 (navy).
The Tale of the Tape: VVUS has broken the bottom of its rectangle pattern. The possible long positions on the stock would be either on a fall down to $10, or on a break back above $12. The ideal short opportunities would be on a break below $10 or on a rally back up to $12.
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