The Big Picture

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• Why There Is So Much Pro-War Reporting
• Succinct Summation of Week’s Event (May 17, 2013)
• Ritholtz: “Give the Market the Benefit of the Doubt”
• De-equitization Juicing Market Gains
• Google and Tesla: Too Late to Touch?
• Wrong Like It’s Their Job
• Gundlach of DoubleLine Goes Prime Time

Why There Is So Much Pro-War Reporting Posted: 17 May 2013 10:30 PM PDT 5 Reasons that Both Mainstream Media – and Gatekeeper "Alternative" Websites – Are Pro-War Why There Is So Much Pro-War Reporting There are five reasons that the mainstream media and the largest alternative media websites are both pro-war. 1. Self-Censorship by Journalists Initially, there is tremendous self-censorship by journalists. A survey by the Pew Research Center and the Columbia Journalism Review in 2000 found: Self-censorship is commonplace in the news media today …. About one-quarter of the local and national journalists say they have purposely avoided newsworthy stories, while nearly as many acknowledge they have softened the tone of stories to benefit the interests of their news organizations. Fully four-in-ten (41%) admit they have engaged in either or both of these practices. Similarly, a 2003 survey reveals that 35% of reporters and news executives themselves admitted that journalists avoid newsworthy stories if "the story would be embarrassing or damaging to the financial interests of a news organization's owners or parent company." Several months after 9/11, Dan Rather told the BBC that American reporters were practicing "a form of self-censorship": There was a time in South Africa that people would put flaming tires around peoples' necks if they dissented. And in some ways the fear is that you will be necklaced here, you will have a flaming tire of lack of patriotism put around your neck. Now it is that fear that keeps journalists from asking the toughest of the tough questions…. And again, I am humbled to say, I do not except myself from this criticism. What we are talking about here – whether one wants to recognise it or not, or call it by its proper name or not – is a form of self-censorship. Rather said in 2008: One of the most pernicious ways in which we do this is through self-censorship, which may be the worst censorship of all. We have seen too much self-censorship in the news in recent years, and as I say this please know that I do not except myself from this criticism. As Mark Twain once said, "We write frankly and freely but then we 'modify' before we print." Why do we modify the free and frank expression of journalistic truth? We do it out of fear: Fear for our jobs. Fear that we'll catch hell for it. Fear that someone will seek to hang a sign around our neck that says, in essence, "Unpatriotic." We modify with euphemisms such as "collateral damage" or "less than truthful statements." We modify with passive-voice constructions such as "mistakes were made." We modify with false equivalencies that provide for bad behavior the ready-made excuse that "everybody's doing it." And sometimes we modify with an eraser—simply removing offending and inconvenient truths from our reporting." Keith Olbermann agreed that there is self-censorship in the American media, and that: You can rock the boat, but you can never say that the entire ocean is in trouble …. You cannot say: By the way, there's something wrong with our …. system. Former Washington Post columnist Dan Froomkin wrote in 2006: Mainstream-media political journalism is in danger of becoming increasingly irrelevant, but not because of the Internet, or even Comedy Central. The threat comes from inside. It comes from journalists being afraid to do what journalists were put on this green earth to do. . . . There's the intense pressure to maintain access to insider sources, even as those sources become ridiculously unrevealing and oversensitive. There's the fear of being labeled partisan if one's bullshit-calling isn't meted out in precisely equal increments along the political spectrum. If mainstream-media political journalists don't start calling bullshit more often, then we do risk losing our primacy — if not to the comedians then to the bloggers. I still believe that no one is fundamentally more capable of first-rate bullshit-calling than a well-informed beat reporter – whatever their beat. We just need to get the editors, or the corporate culture, or the self-censorship – or whatever it is – out of the way. MarketWatch columnist Brett Arends wrote yesterday: Do you want to know what kind of person makes the best reporter? I'll tell you. A borderline sociopath. Someone smart, inquisitive, stubborn, disorganized, chaotic, and in a perpetual state of simmering rage at the failings of the world. Once upon a time you saw people like this in every newsroom in the country. They often had chaotic personal lives and they died early of cirrhosis or a heart attack. But they were tough, angry SOBs and they produced great stories. Do you want to know what kind of people get promoted and succeed in the modern news organization? Social climbers. Networkers. People who are gregarious, who "buy in" to the dominant consensus, who go along to get along and don't ask too many really awkward questions. They are flexible, well-organized, and happy with life. And it shows. This is why, just in the patch of financial and economic journalism, so many reporters are happy to report that U.S. corporations are in great financial shape, even though they also have surging debts, or that a "diversified portfolio" of stocks and bonds will protect you in all circumstances, even though this is not the case, or that defense budgets are being slashed, when they aren't, or that the U.S. economy has massively outperformed rivals such as Japan, when on key metrics it hasn't, or that companies must pay CEOs gazillions of dollars to secure the top "talent," when they don't need to do any such thing, and such pay is just plunder. All of these things are "consensus" opinions, and conventional wisdom, which are repeated over and over again by various commentators and vested interests. Yet none of them are true. If you want to be a glad-handing politician, be a glad-handing politician. If you want to be a reporter, then be angry, ask awkward questions, and absolutely hate it when everyone agrees with you. Self-censorship obviously occurs on the web as well as in old media.  As Wikipedia notes: Self-censorship is the act of censoring or classifying one's own work (blog, book(s), film(s), or other means of expression) … 2. Censorship by Higher-Ups If journalists do want to speak out about an issue, they also are subject to tremendous pressure by their editors or producers to kill the story. The 2000 Pew and Columbia Journalism Review survey notes: Fully half of [the investigative journalists surveyed] say newsworthy stories are often or sometimes ignored because they conflict with a news organization's economic interests. More than six-in-ten (61%) believe that corporate owners exert at least a fair amount of influence on decisions about which stories to cover…. The Pulitzer prize-winning reporter who uncovered the Iraq prison torture scandal and the Mai Lai massacre in Vietnam, Seymour Hersh, said: "All of the institutions we thought would protect us — particularly the press, but also the military, the bureaucracy, the Congress — they have failed. The courts . . . the jury's not in yet on the courts. So all the things that we expect would normally carry us through didn't. The biggest failure, I would argue, is the press, because that's the most glaring…. Q: What can be done to fix the (media) situation? [Long pause] You'd have to fire or execute ninety percent of the editors and executives. You'd actually have to start promoting people from the newsrooms to be editors who you didn't think you could control. And they're not going to do that." In fact many journalists are warning that the true story is not being reported. And see this announcement. A series of interviews with award-winning journalists also documents censorship of certain stories by media editors and owners (and see these samples). It's not just the mainstream media.  The large "alternative" media websites censor as well.   For example: Every year Project Censored [which Walter Cronkite and other ] puts together a list of the top 25 stories censored and ignored by the mainstream media. How many of these stories were you aware of? Even regular consumers of alternative, independent media may be surprised to learn about some of these stories …. There are many reasons for censorship by media higher-ups. One is money. The media has a strong monetary interest to avoid controversial topics in general. It has always been true that advertisers discourage stories which challenge corporate power. In 1969, Federal Communications Commission commissioner Nicholas Johnson noted that tv networks go to great lengths to please their sponsors. Some media companies make a lot of money from the government, and so don't want to rock the boat.  For example, Glenn Greenwald notes: Because these schools [owned by the Washington P0st's parent company, whose profits subsidize the Post] target low-income students, the vast majority of their income is derived from federal loans. Because there have been so many deceptive practices and defaults, the Federal Government has become much more aggressive about regulating these schools and now play a vital role in determining which ones can thrive and which ones fail. Put another way, the company that owns The Washington Post is almost entirely at the mercy of the Federal Government and the Obama administration — the entities which its newspaper ostensibly checks and holds accountable. "By the end of 2010, more than 90 percent of revenue at Kaplan's biggest division and nearly a third of The Post Co.'s revenue overall came from the U.S. government." The Post Co.'s reliance on the Federal Government extends beyond the source of its revenue; because the industry is so heavily regulated, any animosity from the Government could single-handedly doom the Post Co.'s business — a reality of which they are well aware: The Post Co. realized there were risks attached to being dependent on federal dollars for revenue — and that it could lose access to that money if it exceeded federal regulatory limits. "It was understood that if you fell out of grace [with the Education Department], your business might go away," said Tom Might, who as chief executive of Cable One, a cable service provider that is owned by The Post Co., sat in at company-wide board meetings. Beyond being reliant on federal money and not alienating federal regulators, the Post Co. desperately needs favorable treatment from members of Congress, and has been willing to use its newspaper to obtain it: Graham has taken part in a fierce lobbying campaign by the for-profit education industry. He has visited key members of Congress, written an op-ed article for the Wall Street Journal and hired for The Post Co. high-powered lobbying firms including Akin Gump and Elmendorf Ryan, at a cost of $810,000 in 2010. The Post has also published an editorial opposing the new federal rules, while disclosing the interests of its parent company. The Post is hardly alone among major media outlets in being owned by an entity which relies on the Federal Government for its continued profitability. NBC News and MSNBC were long owned by GE, and now by Comcast, both of which desperately need good relations with government officials for their profits. The same is true of CBS (owned by Viacom), ABC (owned by Disney), and CNN (owned by TimeWarner). For each of these large corporations, alienating federal government officials is about the worst possible move it could make — something of which all of its employees, including its media division employees, are well aware. But the Post Co.'s dependence is even more overwhelming than most. How can a company which is almost wholly dependent upon staying in the good graces of the U.S. Government possibly be expected to serve as a journalistic "watchdog" over that same Government? The very idea is absurd. In addition, the government has allowed tremendous consolidation in ownership of the airwaves during the past decade. Dan Rather has slammed media consolidation: Likening media consolidation to that of the banking industry, Rather claimed that "roughly 80 percent" of the media is controlled by no more than six, and possibly as few as four, corporations. This is documented by the following must-see charts prepared by: Media Channel The Nation Free Press And check out this list of interlocking directorates of big media companies from Fairness and Accuracy in Media, and this resource from the Columbia Journalism Review to research a particular company. This image gives a sense of the decline in diversity in media ownership over the last couple of decades: The large media players stand to gain billions of dollars in profits if the Obama administration continues to allow monopoly ownership of the airwaves by a handful of players. The media giants know who butters their bread. So there is a spoken or tacit agreement: if the media cover the administration in a favorable light, the MSM will continue to be the receiver of the government's goodies. The large alternative media websites also censor news which are too passionately anti-war. The biggest social media websites censor the hardest-hitting anti-war stories. And see this. Huffington Post – the largest liberal website – is owned by media giant AOL Time Warner, and censors any implication that a Democratic administration could be waging war for the wrong reasons.   So HuffPost may criticize poor prosecution of the war, but would never say that the entire "War on Terror" as currently waged by the Obama administration is a stupid idea. Similarly, Drudge Report – the largest conservative website – never questions whether the government's engagement in offensive military action around the world is strengthening or weakening our national security. The largest "alternative" websites may weakly criticize minor details of the overall war effort, but would never say that more or less worldwide war-fighting is counterproductive. They may whine about a specific aspect of the war-fighting … but never look at the larger geopolitical factors involved. They all seem to follow Keith Olbermann's advice: You can rock the boat, but you can never say that the entire ocean is in trouble …. You cannot say: By the way, there's something wrong with our …. system. 3. Drumming Up Support for War Anthony Freda: www.AnthonyFreda.com In addition, the owners of American media companies have long actively played a part in drumming up support for war. It is painfully obvious that the large news outlets studiously avoided any real criticism of the government's claims in the run up to the Iraq war. It is painfully obvious that the large American media companies acted as lapdogs and stenographers for the government's war agenda. Veteran reporter Bill Moyers criticized the corporate media for parroting the obviously false link between 9/11 and Iraq (and the false claims that Iraq possessed WMDs) which the administration made in the run up to the Iraq war, and concluded that the false information was not challenged because: The [mainstream] media had been cheerleaders for the White House from the beginning and were simply continuing to rally the public behind the President — no questions asked. As NBC News' David Gregory (later promoted to host Meet the Press) said: I think there are a lot of critics who think that . . . . if we did not stand up [in the run-up to the war] and say 'this is bogus, and you're a liar, and why are you doing this,' that we didn't do our job. I respectfully disagree. It's not our role. But this is nothing new. In fact, the large media companies have drummed up support for all previous wars. For example, Hearst helped drum up support for the Spanish-American War. And an official summary of America's overthrow of the democratically-elected president of Iran in the 1950′s states, "In cooperation with the Department of State, CIA had several articles planted in major American newspapers and magazines which, when reproduced in Iran, had the desired psychological effect in Iran and contributed to the war of nerves against Mossadeq." (page x) The mainstream media also may have played footsie with the U.S. government right before Pearl Harbor. Specifically, a highly-praised historian (Bob Stineet) argues that the Army's Chief of Staff informed the Washington bureau chiefs of the major newspapers and magazines of the impending Pearl Harbor attack BEFORE IT OCCURRED, and swore them to an oath of secrecy, which the media honored (page 361) . And the military-media alliance has continued without a break (as a highly-respected journalist says, "viewers may be taken aback to see the grotesque extent to which US presidents and American news media have jointly shouldered key propaganda chores for war launches during the last five decades.") As the mainstream British paper, the Independent, writes: There is a concerted strategy to manipulate global perception. And the mass media are operating as its compliant assistants, failing both to resist it and to expose it. The sheer ease with which this machinery has been able to do its work reflects a creeping structural weakness which now afflicts the production of our news. The article in the Independent discusses the use of "black propaganda" by the U.S. government, which is then parroted by the media without analysis; for example, the government forged a letter from al Zarqawi to the "inner circle" of al-Qa'ida's leadership, urging them to accept that the best way to beat US forces in Iraq was effectively to start a civil war, which was then publicized without question by the media. So why has the American press has consistently served the elites in disseminating their false justifications for war? One of of the reasons is because the large media companies are owned by those who support the militarist agenda or even directly profit from war and terror (for example, NBC was owned by General Electric, one of the largest defense contractors in the world … which directly profits from war, terrorism and chaos. NBC was subsequently sold to Comcast). Another seems to be an unspoken rule that the media will not criticize the government's imperial war agenda. And the media support isn't just for war: it is also for various other shenanigans by the powerful. For example, a BBC documentary proves: There was "a planned coup in the USA in 1933 by a group of right-wing American businessmen . . . . The coup was aimed at toppling President Franklin D Roosevelt with the help of half-a-million war veterans. The plotters, who were alleged to involve some of the most famous families in America, (owners of Heinz, Birds Eye, Goodtea, Maxwell Hse & George Bush's Grandfather, Prescott) believed that their country should adopt the policies of Hitler and Mussolini to beat the great depression." Moreover, "the tycoons told the general who they asked to carry out the coup that the American people would accept the new government because they controlled all the newspapers." See also this book. Have you ever heard of this scheme before? It was certainly a very large one. And if the conspirators controlled the newspapers then, how much worse is it today with media consolidation? (Kevin Dutton – research psychologist at the University of Cambridge – whose research has been featured in Scientific American Mind, New Scientist, The Guardian, Psychology Today and USA Today – also notes that media personalities and journalists – especially when combined in the same persons – are likely to be psychopaths. Some 12 million Americans are psychopaths or sociopaths, and psychopaths tend to rub each others' backs.) 4. Access Dan Froomkin,  Brett Arends and many other mainstream reporters have noted that "access" is the most prized thing for mainstream journalists … and that they will keep fawning over those in power so that they will keep their prized access. But there is another dynamic related to access at play: direct cash-for-access payments to the media. For example, a 3-time Emmy Award winning CNN journalist says that CNN takes money from foreign dictators to run flattering propaganda. Politico reveals: For $25,000 to $250,000, The Washington Post has offered lobbyists and association executives off-the-record, nonconfrontational access to "those powerful few": Obama administration officials, members of Congress, and — at first — even the paper's own reporters and editors… The offer — which essentially turns a news organization into a facilitator for private lobbyist-official encounters — was a new sign of the lengths to which news organizations will go to find revenue at a time when most newspapers are struggling for survival. That may be one reason that the mainstream news commentators hate bloggers so much. The more people who get their news from blogs instead of mainstream news sources, the smaller their audience, and the less the MSM can charge for the kind of "nonconfrontational access" which leads to puff pieces for the big boys. 5. Censorship by the Government Finally, as if the media's own interest in promoting war is not strong enough, the government has exerted tremendous pressure on the media to report things a certain way. If they criticize those in power, they may be smeared by the government and targeted for arrest (and see this). Indeed, the government treats real reporters as terrorists.  Because the core things which reporters do could be considered terrorism, in modern America, journalists are sometimes targeted under counter-terrorism laws. The government spies on reporters. Not only has the government thrown media owners and reporters in jail if they've been too critical, it also claims the power to indefinitely detain journalists without trial or access to an attorney which chills chills free speech. After Pulitzer Prize winning journalist Chris Hedges, journalist Naomi Wolf, Pentagon Papers whistleblower Daniel Ellsberg and others sued the government to enjoin the NDAA's allowance of the indefinite detention of Americans – the judge asked the government attorneys 5 times whether journalists like Hedges could be indefinitely detained simply for interviewing and then writing about bad guys. The government refused to promise that journalists like Hedges won't be thrown in a dungeon for the rest of their lives without any right to talk to a judge. An al-Jazeera journalist – in no way connected to any terrorist group – was held at Guantánamo for six years … mainly to be interrogated about the Arabic news network. And see this. Wikileaks' head Julian Assange could face the death penalty for his heinous crime of leaking whistleblower information which make those in power uncomfortable … i.e. being a reporter. As constitutional lawyer Glenn Greenwald notes: It seems clear that the US military now deems any leaks of classified information to constitute the capital offense of "aiding the enemy" or "communicating with the enemy" even if no information is passed directly to the "enemy" and there is no intent to aid or communicate with them. Merely informing the public about classified government activities now constitutes this capital crime because it "indirectly" informs the enemy. *** If someone can be charged with "aiding" or "communicating with the enemy" by virtue of leaking to WikiLeaks, then why wouldn't that same crime be committed by someone leaking classified information to any outlet: the New York Times, the Guardian, ABC News or anyone else? *** International Law Professor Kevin Jon Heller made a similar point when the charges against Manning were first revealed: "[I]f Manning has aided the enemy, so has any media organization that published the information he allegedly stole. Nothing in Article 104 requires proof that the defendant illegally acquired the information that aided the enemy. As a result, if the mere act of ensuring that harmful information is published on the internet qualifies either as indirectly 'giving intelligence to the enemy' (if the military can prove an enemy actually accessed the information) or as indirectly 'communicating with the enemy' (because any reasonable person knows that enemies can access information on the internet), there is no relevant factual difference between [Bradley] Manning and a media organization that published the relevant information." *** It is always worth underscoring that the New York Times has published far more government secrets than WikiLeaks ever has, and more importantly, has published far more sensitive secrets than WikiLeaks has (unlike WikiLeaks, which has never published anything that was designated "Top Secret", the New York Times has repeatedly done so: the Pentagon Papers, the Bush NSA wiretapping program, the SWIFT banking surveillance system, and the cyberwarfare program aimed at Iran were all "Top Secret" when the newspaper revealed them, as was the network of CIA secret prisons exposed by the Washington Post). There is simply no way to convert basic leaks to WikiLeaks into capital offenses – as the Obama administration is plainly doing – without sweeping up all leaks into that attack. *** The same [Obama] administration that has prosecuted whistleblowers under espionage charges that threatened to send them to prison for life without any evidence of harm to national security, and has brought double the number of such prosecutions as all prior administrations combined. Converting all leaks into capital offenses would be perfectly consistent with the unprecedented secrecy fixation on the part of the Most Transparent Administration Ever™. The irony from these developments is glaring. The real "enemies" of American "society" are not those who seek to inform the American people about the bad acts engaged in by their government in secret. As Democrats once recognized prior to the age of Obama – in the age of Daniel Ellsberg – people who do that are more aptly referred to as "heroes". The actual "enemies" are those who abuse secrecy powers to conceal government actions and to threaten with life imprisonment or even execution those who blow the whistle on high-level wrongdoing. Former attorney general Mukasey said the U.S. should prosecute Assange because it's "easier" than prosecuting the New York Times. But now Congress is considering a bill which would make even mainstream reporters liable for publishing leaked information (part of an all-out war on whistleblowing). As such, the media companies have felt great pressure from the government to kill any real questioning of the endless wars. For example, Dan Rather said, regarding American media, "What you have is a miniature version of what you have in totalitarian states". Tom Brokaw said "all wars are based on propaganda. And the head of CNN said: There was 'almost a patriotism police' after 9/11 and when the network showed [things critical of the administration's policies] it would get phone calls from advertisers and the administration and "big people in corporations were calling up and saying, 'You're being anti-American here.' Indeed, former military analyst and famed Pentagon Papers whistleblower Daniel Ellsberg said that the government has ordered the media not to cover 9/11: Ellsberg seemed hardly surprised that today's American mainstream broadcast media has so far failed to take [former FBI translator and 9/11 whistleblower Sibel] Edmonds up on her offer, despite the blockbuster nature of her allegations [which Ellsberg calls "far more explosive than the Pentagon Papers"]. As Edmonds has also alluded, Ellsberg pointed to the New York Times, who "sat on the NSA spying story for over a year" when they "could have put it out before the 2004 election, which might have changed the outcome." "There will be phone calls going out to the media saying 'don't even think of touching it, you will be prosecuted for violating national security,'" he told us. * * * "I am confident that there is conversation inside the Government as to 'How do we deal with Sibel?'" contends Ellsberg. "The first line of defense is to ensure that she doesn't get into the media. I think any outlet that thought of using her materials would go to to the government and they would be told 'don't touch this . . . .'" Of course, if the stick approach doesn't work, the government can always just pay off reporters to spread disinformation. Famed Watergate reporter Carl Bernstein says the CIA has already bought and paid for many successful journalists. See also this New York Times piece, this essay by the Independent, this speech by one of the premier writers on journalism, and this and this roundup. Indeed, in the final analysis, the main reason today that the media giants will not cover the real stories or question the government's actions or policies in any meaningful way is that the American government and mainstream media been somewhat blended together. Can We Win the Battle Against Censorship? We cannot just leave governance to our "leaders", as "The price of freedom is eternal vigilance" (Jefferson). Similarly, we cannot leave news to the corporate media. We need to "be the media" ourselves. "To stand in silence when they should be protesting makes cowards out of men." - Abraham Lincoln "Our lives begin to end the day we become silent about things that matter." - Dr. Martin Luther King Jr. "Powerlessness and silence go together. We…should use our privileged positions not as a shelter from the world's reality, but as a platform from which to speak. A voice is a gift. It should be cherished and used." – Margaret Atwood "There is no act too small, no act too bold. The history of social change is the history of millions of actions, small and large, coming together at points in history and creating a power that governments cannot suppress." - Howard Zinn (historian) "All tyranny needs to gain a foothold is for people of good conscience to remain silent" - Thomas Jefferson

Succinct Summation of Week’s Event (May 17, 2013) Posted: 17 May 2013 01:00 PM PDT Succinct Summations week ending May 17, 2013. Positives: 1. The S&P 500 and Dow continue to hit new all-time highs. 2. Nikkei rises above 15,000 for the first time since Jan 2009. 3. U.S. retail sales grow 0.1% v expectations of -0.4%; Excluding autos and gas climbs by 0.6% v expectations of +0.3%. 4. Japan Q1 GDP increases by 3.5% v expectations of 2.7% (Abenomics is working) 5. The Dow has been up for 18 consecutive Tuesdays, something that has never happened before. 6. NFIB small business optimism rises to 92.1 (expectations of 90.5). 7. U.S Import price index for April fell by 0.5%, in line with expectations. 8. PPI M/M -0.7%, EXP -0.6%, PREV -0.6%, ex food and energy +0.1% in line 9. April CPI comes in at -0.4% v expectations of -0.3%. Ex-food and energy 0.1% Negatives: 1. U.S. jobless claims increased by 32k to 360k v expectations of 330k. 2. Housing starts fall to 853k v expectations of 970k. This 16.5% drop is the largest one month decline since 2011 (1994 before that). 3. Multi-family housing starts fell 39%. 4. Empire Fed Manufacturing survey slides to -1.43 v expectations of +4, 3.05 in April 5. Empire manufacturing new orders -12 vs 2.2 and em ployment 5.7 v 6.8 6. April Industrial Production fell by 0.5% v expectations of -0.2%. 7. Philly Fed Manufacturing tumbles to -5.2 v expectations of -2.

Ritholtz: “Give the Market the Benefit of the Doubt” Posted: 17 May 2013 09:00 AM PDT Click for video Source: Yahoo Finance Yahoo Finance: Ritholtz says one major reason stocks will continue to advance is the fact that there is an "enormous amount of professionals who are underinvested." They will be "forced into the market" if they want to keep their jobs, says Ritholtz. Ritholtz advises individual investors to have their own investment plan in order to avoid the pitfalls of an emotional response to market gyrations. Don't "let your own emotions be your worst enemy," Ritholtz warns. He also recommends a diversification strategy that includes "non-correlated" assets so investors can limit their loses and not become a slave to what the market does “tick by tick.” Ritholtz himself is overweight health care and dividend-paying stocks. He discounts concerns about a bubble forming in defensive dividend-payers. "I've been hearing that for two years…the problem is your alternative is 1.8% in the 10-year Treasury,” he notes. Ritholtz's top picks include Berkshire Hathaway (BRK-B), Pfizer (PFE), DuPont (DD) and Visa (V), which has been a "runaway house." He bought Visa between $85 and $120 a share and it's now trading at just under $180. "I wouldn't tell you to jump in now," says Ritholtz.

De-equitization Juicing Market Gains Posted: 17 May 2013 08:30 AM PDT Click to enlarge   Fewer U.S. shares are available to purchase, which is driving prices higher. Repurchases are magnifying gains in U.S. stocks, and are poised to lift prices further, as seen in the Wilshire 5000 Total Market Index. According to Bloomberg, it has risen “more than the market value of all U.S. companies since the current bull market started in March 2009. The gap was about 13 percentage points.” “The difference comes from a reduction in the number of shares. The resulting de-equitization is giving a boost to this stock-market rally," wrote Pierre Lapointe, head of global strategy and research at the Montreal-based Pavilion Global Markets. The S&P 500 now has 2.3% fewer shares than it did in July 2011, when share total reached its high for the bull market. The drop in total stock outstanding accounted for 25% of the past year's earnings-per-share growth for companies in the index.   Source: David Wilson Bloomberg, May 14, 2013

Google and Tesla: Too Late to Touch? Posted: 17 May 2013 05:00 AM PDT click for video Google and Tesla: Buys at Highs?

Wrong Like It’s Their Job Posted: 17 May 2013 04:00 AM PDT @TBPInvictus here. Things have not been going well of late for the ideologues who also wax economic regarding inflation, interest rates, austerity, etc. They’ve been wrong at every turn. Luskin, Ferguson, Bowyer, Laffer, Kudlow, the WSJ editorialists, and so on. Been a bad five or so years. As Barry has repeatedly pointed out, it is not good to mix your politics with your investing. Money loser every time. I continue to be amazed that folks who can be so devastatingly wrong, for so long, on such a broad array of topics, can continue to hold sway. Perhaps some research can be done on that front. Interestingly, these same folks were stunningly wrong about a decade ago about when they banged the drum for war against Iraq. Overthrowing Saddam, of course, was a high priority for the neocons, and they needed to drum up broad support to get folks on board. What better lever to pull than to claim that oil prices would drop through the floor once Saddam was out of the picture and Iraqi oil flowed freely? I was blogging in 2006 at my good friend Don’s site, blah3.com. Very regrettably, he (or his host) had a major meltdown and virtually all of the content was lost (which is a shame, because I had done some really good work there that I’d really like to revisit). I have reviewed some of it from time to time at archive.org, but the site wasn’t crawled enough for me to recover most of my stuff. This piece, however, was picked up at another site and seems relevant to the implosion of a certain way of thinking. Here was the conservative line on what would happen to oil prices after we ousted Saddam (sans the links I had in the original, all emphasis mine): Rand Corp (by recollection): Under a free market [ed. note: The author's article was all about our liberation of Iraq], oil prices would probably fall to between $8 and $12 per barrel over the next 10 years — down dramatically from today’s price of about $25 per barrel. A major decrease in petroleum prices would boost U.S. and global economic activity. Home heating oil prices would drop by at least a third. Gasoline prices would drop to less than $1 a gallon. As a result, people and business in the United States and throughout the world would spend far less for fuel. From an economic perspective, the United States and many nations around the world would clearly win. Fortune: No one knows for sure which way things will go. But if you have to make a bet, the most likely scenario is that a year from now, with a new regime in Baghdad and long-dormant Iraqi wells finally pumping out crude, oil prices will be back in the mid-20s. “All expectations are that prices will come down,” says Kuwait Petroleum’s Sultan. “The only gray area is when.” Deutsche Bank analyst Adam Sieminski is bolder: If the war is short and Saddam doesn’t set fire to his fields, crude will hit $22 a barrel by this summer. Heritage Foundation: An unencumbered flow of Iraqi oil would be likely to provide a more constant supply of oil to the global market, which would dampen price fluctuations, ensuring stable oil prices in the world market in a price range lower than the current $25 to $30 a barrel. Eventually, this will be a win–win game: Iraq will emerge with a more viable oil industry, while the world will benefit from a more stable and abundant oil supply. National Review: “…markets clearly expect lower prices. On the eve of hostilities, oil was selling for about $37 per barrel. At this price, Americans would be paying $270 billion per year for oil. But once it became clear that Iraq's liberation was at hand, the price quickly dropped to about $28 per barrel, cutting our annual oil bill by $70 billion. With full Iraqi production, the price might drop to $20 per barrel or less, giving us the equivalent of an annual tax cut of about $120 billion per year. And this is a tax cut the entire world benefits from.” WSJ: Of course, the largest benefit–a more stable Mideast–is huge but unquantifiable. A second plus, lower oil prices, is somewhat more measurable. The premium on 11.5 million barrels imported every day by the U.S. is a transfer from us to producing countries. Postwar, with Iraqi production back in the pipeline and calmer markets, oil prices will fall even further. If they drop to an average in the low $20s, the U.S. economy will get a boost of $55 billion to $60 billion a year. The Journal went for the Daily Double and vehemently argued that the cost associated with “containment” of Saddam would be multiples of the cost of simply toppling him: But none of this answers the real question: Is the cost reasonable given the goal? To answer that you also have to consider the cost of the main alternative to war–continuing containment of Saddam. Such an examination was done recently by economists at the University of Chicago’s business school. Steven Davis, Kevin Murphy and Robert Topel added up the military expense of containment. The direct costs of troops and equipment come to about $13 billion a year, but they haven’t got Saddam to bend to U.N. mandates. The authors assume, therefore, that efforts to contain Saddam might have to be increased by 50%, raising the cost closer to $19 billion a year. The economists estimate that containment would have to be in place for 33 years–the period that a Saddam-like regime could endure (optimistic considering the lifetimes of the Soviet Union, Eastern Europe, North Korea and Cuba). In sum, when the expected value of containment is discounted to the present, the cost estimate comes to $380 billion. And don’t forget more for homeland security, bringing the total cost to $630 billion. Simply put, containment costs a lot more than war–even if one doubles Mr. Bush’s estimate to $120 billion. Moral of the story: Keep your politics out of your investing.

Gundlach of DoubleLine Goes Prime Time Posted: 17 May 2013 03:00 AM PDT Click for video Source: Hedgeworld

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