It’s Official: Gold Is Now The Most Hated Asset Class

Submitted by Pater Tenebrarum of Acting-Man blog,

Full Court Press

Not a day passes without the financial media denouncing gold as an investment option and hailing the bureaucrats heading the world's monopolist monetary central planning agencies as superheroes. It began prior to gold's recent breakdown, with widely cited bearish reports on gold published by Credit Suisse and Goldman Sachs, among others. Never mind that most of their arguments were easily unmasked as spurious. It should be no wonder though: gold's rise was the most conspicuous evidence of faith in central banking being slowly but surely undermined. The banking cartel relies on the fiat money system remaining intact; the legal privilege of fractional reserve banking provides it with what is an essentially fraudulent profit center unparalleled by any other in the world (fraudulent in terms of traditional legal principles, but not in terms of the current law of course). Not surprisingly, ever since the completely unrestrained fiat money system became operational in the early 1970s, the financial sector's share of corporate profits has inexorably risen and finally eclipsed all other sectors of the economy.

 

The share of financial profits of total corporate profits – a direct result of the fractional reserve banking privilege and the central bank monopoly on money (via Ed Yardeni) – click to enlarge.

In other words, the banks have to protect a major franchise. It is a good bet that if gold had continued to rise in the face of money printing being accelerated all over the world, the inevitable loss of faith in central banks would have happened sooner rather than later. That it will eventually happen is unavoidable – the modern monetary system was fated to self-destruct the moment it was conceived. This is so because central planning and price controls cannot work in the long run, even though central banks are socialistic institutions adrift in a capitalist sea, so to speak. They can to some extent observe prices in the market, but the problem is that the market price most relevant to them – namely the ratio of future against present goods as expressed in interest rates on the credit markets – is not independent of their actions. There is therefore nothing that can tell them whether their administered interest rates are too high or too low. It is a system that is condemned to fail at some point (unfortunately with grave consequences for the economy at large).

The fact that a great many people ostensibly believe in its viability is not proof that it is viable; most of those who are most vocal about retaining the central bank money monopoly are directly profiting from its existence after all. That the commercial banks only want to protect a source of large profits and an invaluable backstop in case their speculations go wrong is clear, but the same is true of most academics in the economics profession. The great bulk of them derives its income from the State, and the central bank is at the forefront of supporting the livelihood of its apologists.

Among commercial banks, Credit Suisse has been a leader in the recent rhetorical onslaught against gold, and has just published a follow-up, duly repeated by Bloomberg under the non-too-subtle title: 'Gold Seen Crushed'.

“Gold, down 17 percent since January, is poised to lose 20 percent in a year as inflation fails to accelerate and with the worst risks to the global economy waning, Credit Suisse Group AG said.

 

Gold will trade at ,100 an ounce in a year and below ,000 in five years, according to Ric Deverell, head of commodities research at the bank. Lower prices are unlikely to lure more central-bank buying, said Deverell, who worked at the Reserve Bank of Australia for 10 years before joining Credit Suisse in 2010.

 

“Gold is going to get crushed,” Deverell told reporters in London today. “The need to buy gold for wealth preservation fell down and the probability of inflation on a one- to three-year horizon is significantly diminished.”

 

Investors are losing faith in the world’s traditional store of value even as central banks continue to print money on an unprecedented scale. Bullion slumped into the bear market last month after a 12-year bull market that saw prices rise as much as sevenfold. Gold is a “wounded bull,” Credit Suisse said in a Jan. 3 report.

(emphasis added)

Color us unsurprised that the main author of the report is an ex-central banker. As regards inflation, below is a chart we have recently shown, US money TMS-2. The good people at Credit Suisse neglect to mention in their report that official 'CPI inflation' has rarely risen beyond the central bank's 'target' of 2% during the entire gold bull market to date. It was completely irrelevant to the gold market thus far, so why should the outlook for the government's 'inflation' data suddenly become relevant now? Monetary inflation has been higher over the past five, 10 and 15 years than at any time since the end of WW2 in a comparable period – and it continues to accelerate.

It is therefore erroneous to claim that 'the probability of inflation on a one to three year horizon is diminished' – the exact opposite is the case. As noted above, Credit Suisse's argumentation has been spurious in its first bearish gold report already and it continues to be so. It seems more likely that a concerted public relations campaign against gold is underway, while parallel to that, a pro-central banking campaign is in full swing. We're not really big fans of conspiracy theories, but in this case, everything points to this being the case; it is just as transparent as the pro-war campaign prior to the Iraq war was.

 

Monetary inflation in the US since the year 2000. Money TMS-2 has more than tripled – click to enlarge.

 

Success! Gold Now Seen as 'Worst Performing Asset' by Investors

The gold market is of course complying so far, as the clients of the banks issuing bearish reports are bailing from their gold positions. Skeptical voices like Elliott Capital Management's Paul Singer have been drowned out by the incessant barrage of propaganda. Gold continues to decline in the near term and its chart has begun to look rather ominous.

 

Gold over the past week (most active futures contract) – down every day of the week – click to enlarge.

As Credit Suisse incidentally also reported, its campaign has been crowned with success: not only has the gold price declined sharply, gold has now become the 'most hated asset class' with the 'worst outlook among commodities' according to a recent CS survey among institutional investors:

“Gold has the worst 12-month outlook among commodities and will trade below ,400 an ounce in a year, according to an investor poll by Credit Suisse Group AG.

 

Sixty percent of respondents named bullion as having the worst outlook, 18 percent picked copper and 16 percent selected corn, the bank said in an e-mailed report today. Fifty-one percent predicted gold will fall under ,400 in 12 months, it said. The bank polled 185 investors including hedge funds, pension funds and family offices on May 15 in London.

 

“Bearishness for gold was a very clear consensus,” said Kamal Naqvi, the head of commodities sales for Europe, Middle East and Africa at Credit Suisse. “It’s not about just not buying gold, it’s about shorting it,” or wagering on a drop.

 

Gold slumped into a bear market last month as investors lost faith in the metal as a store of value. Bullion is down 17 percent this year, compared with the 2.9 percent drop for the Standard & Poor’s GSCI gauge of raw materials.

 

Fifty-three percent of investors expect commodity prices to stay near current levels, Credit Suisse said. Most were underweight raw materials or had zero exposure, while they expected to be overweight or neutral in 12 months, the bank said. Investors named relative value trades, fundamentally based directional trades and volatility as the best ways to extract value from commodities.”

(emphasis added)

The general bearishness on commodities jibes with what we have seen in the recent Merrill Lynch fund manager survey. The bearishness on gold is in keeping with what we have seen in the Barron's 'Big Money' survey and other polls. Apparently though the people who write the gold reports at Credit Suisse are oblivious to the contrarian implications of their own survey.

As we have recently pointed out, just before Japan's stock market embarked on a 75% rally in the space of a few months, fund managers absolutely hated Japan (they love it now!). As we wrote in our October 30 review of the Barron's Big Money poll:

“However, what we really love is that they hate Japanese stocks even more! As it were, we are busy writing an article on Japan that will be entitled 'Reconsidering Japan' and should be published sometime this week. There are quite a few reasons to believe that Japanese stocks will finally do the unexpected and come back to life.”

At the time, a full 76% of the 'big money' fund managers surveyed declared themselves bearish on Japan. Currently, 69% of the managers surveyed in the most recent Barron's poll are bearish on gold. One must of course admit that from a technical perspective gold currently looks weak. That is undeniably the case and there could therefore be more near to medium term downside. However, the most important fundamental data as well as the sentiment backdrop clearly remain bullish. In fact, the skepticism of investors regarding commodities in general and gold in particular in the face of the biggest money printing orgy of the modern age is what we would call an 'extreme long term bullish dichotomy'. It seems highly likely to us that a year from now or maybe even earlier,  the conversation will have profoundly changed.

Zero Hedge

Build Your High-Yield Portfolio With 1 Easy Investment

As any trader knows, investing in the stock market can be tricky.

Many investors study past price charts and imagine how much money could have been made had they only bought here and sold there. This type of investing based solely on hindsight and past price movements can be dangerous to your portfolio.

This is because money is not made by looking at a chart of what once was. It's made after you enter the investment, and the entry point is always on the far-right edge of the where the chart ends.

We would all be stock market multimillionaires if success could be found by looking at what has happened. The truth is, no one knows for sure what is going to happen after you buy or sell a particular stock.

This is why success in the stock market is built upon increasing the odds of profiting by utilizing time-tested investment strategies, diversification and a long-term horizon.

Believe it or not, dividends make up the majority of the stock market gains over the past several decades. Investing in a portfolio of high-yielding, dividend-producing stocks is a proven wealth-building strategy.

But not just any high-yielding stock should be in your portfolio. Sometimes high yields are a signal that something is wrong with the company or are simply dividend traps to draw in more investors prior to the dividend being slashed.

Carla Pasternak, the brains behind StreetAuthority's High-Yield Investing newsletter, teaches that investors should look for companies that have steadily increased their dividends over time. In addition, companies that are yielding 5% to 7% make up the majority of outperforming stocks.

This is not to say that the ultra-high-dividend payers that yield 10% and more don't have a place in your portfolio — it's just that they are the most risky. Companies in the 5% to 7% yield range, combined with a 10% annual dividend growth rate, are the crème de la crème of the high-yield universe.

You could painstakingly search for these perfect high-yielding stocks to build your dividend portfolio — but there is an easier way.

The stock I've come across is the SPDR S&P Dividend ETF (NYSE: SDY).

This exchange-traded fund (ETF) does all the work for you when it comes to building a diversified portfolio of high-yielding names. It is designed to track and mirror the returns of the S&P High-Yield Dividend Aristocrat Index. This index comprises only the 50 highest-yielding companies in the S&P 1500 index that have steadily increased their quarterly distribution each of the last 25 years.

As you can imagine, SDY has handily beat the major indexes in recent years. In the past five years, SDY has beaten the Dow Jones industrial average by 23%, the Russell 3000 by 21%, and the S&P 500 by 11%. It is up by more than 14% this year and boasts nearly billion in assets.

Here are the top 10 holdings of the High-Yield Dividend Aristocrats Index.

Risks to Consider: The stock market has been in a super-bull phase this year. Buying into this ETF is a vote of confidence that the bull market will continue. It appears that the market will continue higher until the Federal Reserve begins to tighten its policies. No one knows for sure when this will occur. Be certain to always use stops and position size properly when investing.

Action to Take –> Buying into the strong uptrend right now makes good sense. My 12-month target on the shares of SDY is .

– David Goodboy

P.S. — The Dividend Aristocrats are perfect for investors who are near or at retirement age and are seeking a second income. We call these "Retirement Savings Stocks"… they can hand you a "second income" as much as 14 times what you can get with CDs, seven times higher than bonds, and as much as three times higher than brand-name Dow stocks. To learn more about them, go here.

This article originally appeared on StreetAuthority
Author: David Goodboy
Build Your High-Yield Portfolio With 1 Easy Investment

StreetAuthority Articles

What Did Obama Know About The IRS (And When)?

Amid the sound and fury of yesterday’s IRS hearing were a few small tidbits which raise significant questions about who knew what and when within the Obama administration. While getting the answer (the real honest truth) is highly unlikely, as the Wall Street Journal notes, the IRS’s watchdog told top Treasury officials around June 2012 (when Republican lawmakers were complaining publicly about alleged IRS targeting of tea-party groups) he was investigating allegations the tax agency had targeted conservative groups, for the first time indicating that Obama administration officials were aware of the explosive matter in the midst of the president’s re-election campaign. The revelation nonetheless raised a fresh set of questions about who was aware of the problem within the Obama administration. However, the hearing left numerous other fundamental questions unanswered, including who ordered the targeting and why it continued so long, pointing to a protracted investigation ahead as Rep. Paul Ryan exclaimed, “how can we not conclude that you misled this committee?” As Doug Ross’ full timeline below suggests, this is fascism on the part of the IRS and White House…

 

Via Doug Ross of Director Blue blog,

Reading this timeline, I have come to three conclusions:

 

  1. Steve Miller lied to Congress
  2. Lois Lerner lied to Congress
  3. Barack Obama lied to the American people

This scandal has the fingerprints of Axelrod, Jarrett and/or the Chicago Machine all over it.

This is fascism on the part of the IRS and the White House. It is fascism, straight up.

Or, as I call the IRS: Organizing for Revenue.

 

Via The Wall Street Journal,

The Internal Revenue Service’s watchdog told top Treasury officials around June 2012 he was investigating allegations the tax agency had targeted conservative groups…

 

…

 

The revelation nonetheless raised a fresh set of questions about who was aware of the problem within the Obama administration.

 

…

 

the agency had taken “absolutely inappropriate” actions in targeting conservative groups seeking tax-exempt status for often heavy-handed scrutiny.

 

…

 

The hearing left numerous other fundamental questions unanswered, however, including who ordered the targeting and why it continued so long, pointing to a protracted investigation ahead. Mr. Miller conceded the agency likely disciplined the wrong employee in one effort to address the problem.

 

…

 

House Ways and Means Committee Chairman Dave Camp (R., Mich.), “I think the most interesting revelation was the overall arrogance of the IRS and the lack of information from somebody who was in charge,”

 

…

 

White House officials say they learned about the targeting of conservative groups from the report, and not before. President Barack Obama on Thursday said, “I can assure you that I certainly did not know anything about the IG report before the IG report had been leaked through the press.”

 

…

 

At the hearing, lawmakers of both parties expressed anger that IRS officials didn’t reveal the problems to them in 2012.

 

…

 

then-commissioner Douglas Shulman about that in March 2012. He testified before the Ways and Means committee then that there was “absolutely no targeting,”…

 

…

 

“Throughout this time, the IRS leadership has demonstrated a total disregard for the oversight role of the Congress and this committee,” said Rep. Sander Levin

 

…

 

“How was that not misleading this committee?” said Rep. Paul Ryan (R., Wis.) to Mr. Miller. “How can we not conclude that you misled this committee?”

 

…

Zero Hedge

US Dollar Consolidates with Inside Days against Euro, Sterling, and Yen

Meanwhile, the fourth component of the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR), the Australian Dollar, continued its slide.

DailyFX – Technical Articles

These Stocks Just Crushed Earnings — Can They Do It Again?

The first-quarter earnings season is almost over, with more than 90% of the S&P 500 reporting. Although the results have been far from terrible, there hasn't been a lot to get excited about.

Earnings are up 3.3% from last year, while revenue is down 1%. Those numbers have 65% of the S&P 500 beating expectations, below the average beat rate of 70% in the past four quarters. In spite of those lackluster results, some companies still managed to deliver positive earnings surprises.

For example, take Netflix (Nasdaq: NFLX). With the successfully execution of a broad-based turnaround strategy, Netflix sneaked up on the Street and delivered a huge earnings surprise that sent shares soaring for the second quarter in a row.

But if you missed out on those big gains, don't worry — there is a little-known market phenomenon that should continue to support Netflix's stock. In the pattern known as post-earnings drift, a stock is likely to continue rising for weeks and sometimes even months after reporting an earnings surprise.

When a company reports an earnings surprise, that new information is quickly absorbed by the market and usually gives shares a big boost. But according to research on post-earnings drift, firms with good quarterly earnings reports tend to see returns drift upward for at least 60 days after their announcements. Similarly, firms that report disappointing earnings tend to drift lower for a similar period.

This phenomenon is on display in Netflix's chart. After the company's huge earnings surprise from late January lifted the company from below 0 to 9, shares continued to drift higher to 6 in the next month, an additional 18% gain.

The post-earnings drift means investors don't have to search for a needle in a haystack and identify companies on the cusp of a big earnings surprise. They can instead focus on companies that have already reported great quarters and jump on the momentum bandwagon.

With the post-earnings drift in clear focus, here is a list of the seven S&P 500 companies that most exceeded analysts' first-quarter estimates.

From the group, I have chosen to highlight Netflix for its upward momentum and homebuilder Lennar (NYSE: LEN) because of its exposure to the ongoing housing market recovery.

Netflix
Netflix has been one of the best turnaround stories of 2013, logging an eye-popping gain of 154% as the top performing stock in the S&P 500.

That upward momentum has been driven by two things. The first is two huge earnings surprises, beating expectations by 208% in the fourth quarter of 2012 and then following that up with a 72% surprise in the first quarter. The second is massive upward revisions in earnings estimates, with the current-year estimate jumping from per share 90 days ago to .60, a 451% growth projection from last year.

Looking forward, analysts expect Netflix's earnings to grow another 93% in 2014, with earnings per share (EPS) of .09. But though Netflix has already seen huge gains, the upward momentum of the post-earnings drift should keep shares on the move.

Lennar
Lennar has also been burning up the charts, gaining 50% in the past year and 150% in the past two. Much like Netflix, those gains have been fueled by big earnings surprises: an average beat of 46% in the past four quarters, with the most recent results beating expectations by 100%.

Analysts have been quick to revise earnings estimates higher, calling for EPS this year of .76, which would amount to a 105% increase from 2012. Analysts are calling for earnings growth of 40% in 2014.

With clear earnings momentum in hand, this homebuilder continues to benefit from the housing recovery and the post-earnings drift.

Risks to Consider: Stocks with large gains from an earnings surprise are susceptible to abnormal volatility as "fast money" flows in and out of shares looking for a quick gain.

Action to Take –> In spite of a lackluster earnings season, these seven stocks reported huge earnings surprises and are in position to benefit from the post-earnings drift.

–Michael Vodicka

P.S. — Have you read our latest report — Top 10 Stocks for 2013? One stock has raised its dividend 33 consecutive quarters. Another dominates its market… pays .40 in dividends per share each year… and has returned 117% since it went public just over four years ago. In this special presentation, I'll tell you about all of our just-released picks for 2013 — including several names and ticker symbols — so that you can start profiting today. Click here to learn more.

This article originally appeared on StreetAuthority
Author: Michael Vodicka
These Stocks Just Crushed Earnings — Can They Do It Again?

StreetAuthority Articles

CBO – US Economy Set to Soar On Obamacare?

 

The Congressional Budget Office put conservative economic thinkers on their ass this week. In this Report (pdf), the CBO concluded that the US budget deficit is about to collapse to insignificance. The improvement in the deficit outlook is so large that it has lead liberal thinkers to start calling for more stimulus spending. If it were not for the three scandals brewing for Obama (Benghazigate, IRSgate and APgate) I think there would be calls to spend some more government money.

The CBO assessment of the deficit profile relies on every trick in the book. The assumption is that all of the variables that weigh on the deficit will be improving over the next few years. Tax collections will remain at historically high levels. Government spending will decline as the economy improves. Fannie Mae and Freddie Mac will be kicking Bn into the coffers. Social Security will cost less than previously thought, the same favorable result is assumed for both Medicare and Medicaid. And of course, there will be no wars or military incursions that have to be paid for. But, by far, the biggest driver of the reduced deficits will come from a robust economic recovery that is set to occur. This is the CBO forecast for top line GDP growth:

 

 

Wow! 6.5% growth is coming our way! Don't worry at all about the endless recession in Europe. Don't consider the rapid slowdown in China either. And please don't worry about the fact that the Fed is going to be taking its foot off the gas over the next 24 months – all that won't make any difference. The USA is set for a spurt of growth not seen for years.

What could the CBO be hanging its hat on when making this bold predictions of rapid economic expansion? I wonder if the CBO is relying on Obamacare to provide the big boost. This is the only significant economic development on the horizon. It will change everything when it's finally implemented. It will result in 32 odd million more people having access to healthcare. And when those people do have health insurance, they will be going to Doctors, getting treatments and medicines. And with those visits and related spending, the economy will get a lift – at least that is the thinking.

 

There is some evidence that Obamacare is going to ratchet up health spending. The New England Journal of Medicine has done a study on the results of an experiment in Oregon. Some 6,000 people were given access to Medicaid for two years. There was a control group of another 5,000 people who did not get access to health insurance. What did those who won the lottery for the free health benefits do? They went to Doctors of course. The study showed that those with insurance were 2Xs more likely to visit a doctor, and would take twice as many prescription drugs. Obamacare will result in an increase in medical diagnostics; the number of MRI's, X-rays, blood test etc. will increase markedly when free health insurance is available. The cost of all these new medical services will add to GDP, and increase employment in healthcare.

The Oregon study showed that healthcare spending rose by ,750 for those who had access to Medicaid versus the control group. If these results are applied to all of the 32m people who have no insurance today, it would result in an increase in spending of Bn – that comes to 5.5% of GDP. While not all of that spending is going to happen, its pretty clear that Obamacare is going to ramp up the economy by a meaningful amount – a 2% net increase in economic activity is possible.

 

To the extent that Obamacare is measured as a jobs program it may be considered a "success". More medical spending will be the result. The larger question of what it will do for the health profile of Americans is not at all a sure thing. I was surprised by the conclusions drawn by the Oregon study:

 

This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first two years

 

The reason why overall health results were not improved for those with insurance was interesting. People who have healthcare available to them often adopt risky behavior. For example, those who had health insurance in the Oregon study were much much more likely to smoke. (10% increase over those that did not have health insurance) This conclusion confirms what has been observed in other situations. When people have seat belts, they think they are safe, so they drive faster. It appears that the same holds true on health related matters.

The pessimist in me says that the roll-out of Obamacare is going to be anything but a success. The state insurance exchanges will not be up and running on time. Getting those 32m people to sign up for Medicaid will not happen at the pace that is currently anticipated. Obamacare will not be the economic stimulus that is hoped for, it won't improve the nations health levels by much, and it's going to cost an absolute bundle in the form of increased taxes. My guess is that in 2-3 years most folks in the country are going to hate Obamacare, but it it will be impossible to get rid of by then.

 

Zero Hedge

CBO – US Economy Set to Soar On Obamacare?

 

The Congressional Budget Office put conservative economic thinkers on their ass this week. In this Report (pdf), the CBO concluded that the US budget deficit is about to collapse to insignificance. The improvement in the deficit outlook is so large that it has lead liberal thinkers to start calling for more stimulus spending. If it were not for the three scandals brewing for Obama (Benghazigate, IRSgate and APgate) I think there would be calls to spend some more government money.

The CBO assessment of the deficit profile relies on every trick in the book. The assumption is that all of the variables that weigh on the deficit will be improving over the next few years. Tax collections will remain at historically high levels. Government spending will decline as the economy improves. Fannie Mae and Freddie Mac will be kicking Bn into the coffers. Social Security will cost less than previously thought, the same favorable result is assumed for both Medicare and Medicaid. And of course, there will be no wars or military incursions that have to be paid for. But, by far, the biggest driver of the reduced deficits will come from a robust economic recovery that is set to occur. This is the CBO forecast for top line GDP growth:

 

 

Wow! 6.5% growth is coming our way! Don't worry at all about the endless recession in Europe. Don't consider the rapid slowdown in China either. And please don't worry about the fact that the Fed is going to be taking its foot off the gas over the next 24 months – all that won't make any difference. The USA is set for a spurt of growth not seen for years.

What could the CBO be hanging its hat on when making this bold predictions of rapid economic expansion? I wonder if the CBO is relying on Obamacare to provide the big boost. This is the only significant economic development on the horizon. It will change everything when it's finally implemented. It will result in 32 odd million more people having access to healthcare. And when those people do have health insurance, they will be going to Doctors, getting treatments and medicines. And with those visits and related spending, the economy will get a lift – at least that is the thinking.

 

There is some evidence that Obamacare is going to ratchet up health spending. The New England Journal of Medicine has done a study on the results of an experiment in Oregon. Some 6,000 people were given access to Medicaid for two years. There was a control group of another 5,000 people who did not get access to health insurance. What did those who won the lottery for the free health benefits do? They went to Doctors of course. The study showed that those with insurance were 2Xs more likely to visit a doctor, and would take twice as many prescription drugs. Obamacare will result in an increase in medical diagnostics; the number of MRI's, X-rays, blood test etc. will increase markedly when free health insurance is available. The cost of all these new medical services will add to GDP, and increase employment in healthcare.

The Oregon study showed that healthcare spending rose by ,750 for those who had access to Medicaid versus the control group. If these results are applied to all of the 32m people who have no insurance today, it would result in an increase in spending of Bn – that comes to 5.5% of GDP. While not all of that spending is going to happen, its pretty clear that Obamacare is going to ramp up the economy by a meaningful amount – a 2% net increase in economic activity is possible.

 

To the extent that Obamacare is measured as a jobs program it may be considered a "success". More medical spending will be the result. The larger question of what it will do for the health profile of Americans is not at all a sure thing. I was surprised by the conclusions drawn by the Oregon study:

 

This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first two years

 

The reason why overall health results were not improved for those with insurance was interesting. People who have healthcare available to them often adopt risky behavior. For example, those who had health insurance in the Oregon study were much much more likely to smoke. (10% increase over those that did not have health insurance) This conclusion confirms what has been observed in other situations. When people have seat belts, they think they are safe, so they drive faster. It appears that the same holds true on health related matters.

The pessimist in me says that the roll-out of Obamacare is going to be anything but a success. The state insurance exchanges will not be up and running on time. Getting those 32m people to sign up for Medicaid will not happen at the pace that is currently anticipated. Obamacare will not be the economic stimulus that is hoped for, it won't improve the nations health levels by much, and it's going to cost an absolute bundle in the form of increased taxes. My guess is that in 2-3 years most folks in the country are going to hate Obamacare, but it it will be impossible to get rid of by then.

 

Zero Hedge

Price & Time: In Search of the Next Cyclical Stopping Point in USD/JPY

Instruments covered today: USD/JPY, GBP/USD & NZD/USD

DailyFX – Technical Articles

Is It Time To Profit From This Billion-Dollar Energy Trend?

Did you know that the United States accounts for just 5% of the world's population, but 20% of global energy demand? The massive amount of power we use every day has a major effect on U.S. trade balances and the global climate. Indeed, the amount of carbon dioxide in the atmosphere recently surpassed 400 parts per million, bringing the climate change issue back in the spotlight as well.

The United States may be poised to curb its growing appetite for power. The Energy Savings and Industrial Competitiveness Act, which is wending its way through Congress, would encourage industrial energy-efficiency upgrades through tax credits and state grant programs, research and development funding and more stringent efficiency standards for new building codes.

Much of this dovetails with President Barack Obama's mid-winter proposal for a 0 million competitive state grant program designed to spur energy-efficiency upgrades at industrial facilities. In fact, a lot of interested parties support the legislation: The U.S. Chamber of Commerce, the National Association of Manufacturers and the Alliance to Save Energy have each expressed their support. Consumer interest groups clearly love the idea. An earlier version of this bill, brought to a Senate sub-committee in 2011, noted the possibility of billion in annual consumer savings by 2030 from the legislation.

Inevitable Change
The move to greater energy efficiency is set to become a worldwide phenomenon.

Merrill Lynch's Sarbjit Nahal, who has been analyzing the issue for a half decade at Merrill Lynch, recently noted that an expansion of the middle class in countries such as China, India and Brazil will boost power demand 30% by 2035, compared to today's levels.

He added that "End-use energy efficiency offers the greatest potential to lower both energy demand and CO2 emissions. It offers considerable low-hanging fruit given that two-thirds of the economic potential to improve energy efficiency remains untapped," citing the International Energy Agency. Nahal concludes that every dollar spent on energy-efficiency enhancements yield to in lifetime annual savings.

As an added bonus, there are ample ways for investors to profit from energy efficiency gains. A wide range of companies would see a spike in demand for their products and services, which explains the bullish view of the legislation from the Business Roundtable.

Investors are already quite familiar with the leading companies in the field of energy-efficiency equipment. For example, take Johnson Controls (NYSE: JCI). The company, which was already a strong player in the automotive battery market, has made a push into advanced batteries that can power electric cars and hybrid vehicles.

Yet a clear area of focus for HCI is its "building efficiency" segment, which comprises a range of products and services that lower energy costs. For example, the company's new air-conditioning and heating units consume far less power than models just five or 10 years old, leading to a steady aftermarket upgrade business in the commercial construction sector.

In fact, improving the energy efficiency of buildings would be a huge step forward. "Energy consumption within buildings is the single largest component of global energy use and CO2 emissions, at c.40% and c.30%, respectively," noted Nahal. Yet he adds that "little of this has been captured – with 80% of the economic potential of energy efficiency in buildings remaining untapped."

The growth prospects for HCI and other companies will surely strengthen as spending on efficiency continues to ramp up. According to Pike Research, spending on energy efficiency technology in the United States has risen 750% from 2005 to billion in 2012, and is expected to exceed 0 billion by 2016.

In addition to Johnson Controls, both Honeywell (NYSE: HON) and Ingersoll-Rand (NYSE: IR) stand to generate modest gains from energy-efficiency spending, as the niche represents a portion of their overall sales base. They are surely candidates for further research if you are looking for companies that could profit from rising efficiency spending.

In the next part of this two-part piece, I'll be focusing on companies that can more squarely benefit from the expected spike in energy-efficiency spending.

Risks to Consider: Thanks to fresh scandals involving the Internal Revenue Service, the State Department and snooping around of The Associated Press' phone records, the mood for a bipartisan agreement is again at afresh low, which could imperil this legislation.

Action to Take –> If and when this legislation gets signed into law, look for analysts to boost their sales and profit forecasts for many of these companies. However, treat this as a trading window instead of a long-term investment opportunity, as share prices might quickly capture all of the long-term gains inherent in the legislation.

– David Sterman

This article originally appeared on StreetAuthority
Author: David Sterman
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