Archive for April, 2014

Your mind will be blown when you find out the world’s deadliest animal

When you think of a dangerous animal… you may conjure a ravenous beast with sharp fangs and claws that can tear into flesh. That’s not the case here.

Bill Gates posted this to his blog last week. It highlights the world’s deadliest animal… the mosquito.

When a mosquito “bites” you… it injects your body with its saliva. It can also transfer foreign disease organisms with its saliva. It injects disease directly into your blood stream.  It’s a very efficient method to bypass your immune system… leaving your body ill-defended.

Each year mosquitoes kill more than 725,000 people. They carry devastating diseases like malaria. Each year, 600,000 people die from malaria… another 200 million people are incapacitated. The worst part is… mosquitoes are found in every region of the world except Antarctica.

Check it out below…



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More Cruxellaneous:

Seven quick and simple life hacks… camping survival edition

Five medical “myth busters” that could save your life

Unbelievable but true: Four simple tests can predict if you’re likely to die in the next five years

Wednesday, April 30th, 2014 Invest, News, Wealth Comments Off on Your mind will be blown when you find out the world’s deadliest animal

A must-see update on Detroit’s bankrupt "socialist nightmare"

From Bloomberg:

Even as bankrupt Detroit’s residents have resorted to gunning down neighborhood burglars, its police await money for patrol cars, radios, armored vests, and modern computers.

Emergency Manager Kevyn Orr last month pledged $36.2 million for police from a $120 million loan from Barclays Plc approved by U.S. Bankruptcy Judge Stephen Rhodes. Department officials wouldn’t discuss plans for the money, though Orr’s shopping list includes vehicles, station houses, and a training facility for the city, which piled up $18 billion of debt by the time it filed for bankruptcy in July.

The money can’t come soon enough for a shrunken department that patrols 139 square miles (360 square kilometers) scarred by blight and poverty with decade-old cruisers. Although crime is down under new Police Chief James Craig, attacks in recent months have residents on edge and reinforced the city’s image as a danger zone.

“People don’t feel safe,” said Barry Ross, co-founder of Detroit Coalition Against Violence. “The new chief is trying, but the odds seem insurmountable.”

“I’m not saying it’s not possible, but it’s like climbing Mount Kilimanjaro without equipment.”

Neighborhood Mayhem

The loan was obtained this month and will be spent as purchases and bids are processed, said city Chief Financial Officer John Hill in an interview. He said police vehicles must be ordered from manufacturers and outfitted with special equipment. In the meantime, many Detroit residents are fending for themselves.

Craig last month defended citizens’ right to shoot if attacked. Indeed, eight times this year residents killed intruders. In the most recent incident, gunshots from a homeowner April 17 interrupted a break-in and mortally wounded the driver of a getaway SUV that crashed into a house across the street, according to police. Two suspects fled on foot.

The SUV pinned Raymond Bradley’s 29-year-old daughter, Kyle, in the bathroom, though she escaped serious injury.

“It lets you know of your own vulnerability,” said Bradley, 60, a community-college library specialist.

Shortly after 1 a.m. today, a 50-year-old woman shot a 24-year-old man who’d broken into her home through a window, according to Officer Dan Donakowski. The suspect was taken to a hospital and was listed in serious condition, while a 15-year-old girl in a car near the home was arrested, he said.

Nurse’s Aid

On April 2, the day Rhodes approved the city’s loan, a 54-year-old suburbanite was beaten into a coma by a mob after his truck accidentally struck a 10-year-old and he tended to the injured child. The attack was stopped by a retired nurse who lives nearby.

Such headline-grabbing incidents belie a 25 percent drop in crime during the first three months of this year compared with the same period a year ago, according to police. Homicides fell to 45 from 68.

In 2012, Detroit was the third-most-dangerous U.S. city behind Camden, New Jersey and Flint, Michigan, according to an analysis of Federal Bureau of Investigation data by CQ Press.

The uniformed police force fell to about 2,300 from 3,350 in the past five years. Orr reported last year that response time averaged about one hour, though department officials said that counts nonemergency calls.

The laggardly pace was lampooned in a WJBK television segment by reporter Charlie LeDuff, who stayed with a resident as she waited four hours for officers to answer her call about a break-in. He had time to order a carryout meal. He had time for a bubble bath in her tub.

Flagging Fleet

Detroit police have 1,200 vehicles including motorcycles, and many “are held together with tape and chewing gum,” said Chris Gannon, a restructuring consultant to Orr. The city last year received 100 patrol cars as a gift from companies, including General Motors Co., Ford Motor Co. and Chrysler Group LLC, and needs about 800 more, Gannon said.

Replacing decrepit units would improve response times and morale, said Sergeant Michael Woody, a department spokesman. He said vehicles should be replaced every three to five years — and that the department wants to hire 600 more officers to drive them during the next three years.

Orr said the funds from the loan will make a difference.

“We’re already driving crime down,” he said in an April 9 interview in New York. “The chief is as motivated as anybody to deal with issues in the department that have not been dealt with for a long time.”

Fast Action

Craig has held raids of apartment complexes and neighborhoods infested with drugs, guns, and fugitives. His statements about self-defense caused a stir.

“If you’re confronted with an immediate threat to your safety, you’re not going to have time to dial 911,” Craig said in a televised interview on WDIV in March.

His remarks only emphasized that a legally armed citizenry can deter crime, Woody said. Twelve justifiable homicides through mid-April — including home invasion shootings — compare with 10 during the same period last year.

“We’re not talking about this big, huge sweeping number,” Woody said. “It’s really a matter of people defending their homes just as they did last year and the year before that, before he got here.”

More than 29,000 Detroiters are legally armed and more are packing every day. The 6,974 concealed-pistol licenses issued to residents in 2013 were more than double those in 2009. Even more — 7,584 — were issued in 2012, according to the Michigan State Police. The number of unregistered guns is unknown.

Armed Academic

“I’m very concerned a public official, a police chief, would raise the flag to shoot when you see the whites of their eyes,” said Carl Taylor, a sociology professor at Michigan State University in East Lansing who specializes in violence and gangs.

The 64-year-old Detroit native carries a gun when doing research in the city, though he said what’s really needed is a “Peace Corps-style” intervention. He said he has watched once-vibrant neighborhoods descend into lawlessness caused by poverty, bad parenting, and poor education.

“The badlands are much larger in Detroit than other urban centers,” he said.

Silent Sufferers

Many crimes are not reported, especially rape, nonfatal shootings, domestic assault and child abuse, said Wayne County Prosecutor Kym Worthy.

“A lot of people I know who’ve had their homes broken into don’t report it,” Worthy said in an interview. “Once people gain more trust in the police department, they’ll report what happens to them more frequently. I think that may be beginning to happen.”

At Bradley’s house, a contractor assessed the damage where plywood covered a brick wall smashed by the getaway car. Bradley said he hopes he never has to use his gun, though he said Detroiters are fed up.

“People are taking a stand, they’re just not going to put up with it any longer,” he said. “If you can’t be safe in your own home, where can you be safe?”


More on Detroit:

Stansberry: Detroit’s socialist nightmare is America’s future

Porter Stansberry: What you need to know about Detroit and the “End of America” now

“Post-apocalyptic”: A dispatch from Detroit you have to see to believe

Wednesday, April 30th, 2014 Invest, News, Wealth Comments Off on A must-see update on Detroit’s bankrupt "socialist nightmare"

New poll: These are America’s greatest financial concerns

If you’re worried about not having enough money… you’re not alone.

Gallup just released its poll on America’s top financial concerns. The greatest financial concern of over 59% of Americans… is not having enough money for retirement. The next greatest concern for 53% of Americans is unexpected medical costs. This is followed by 48% of Americans concerned with maintaining their standard of living.

These are all valid concerns…

After five years of the Federal Reserve printing money, the top 1% has done very well for itself. Unfortunately, the rest of America hasn’t fared as well. The U.S. dollar isn’t worth the paper it’s printed on… and this is the first time in American history the current generation will not be better off than their parents.

It seems Obama has heard these concerns…

Maybe he has heard Americans are concerned about not having enough money for retirement. His answer… MyRA.

Maybe he has heard Americans are worried about unexpected medical costs. His answer… Obamacare.

The problem with this is Obama will need to print more money to fund these programs… and it’s this printing that got us into this mess in the first place.

Click on the image to see the other top financial concerns…



More on the Bernanke Asset Bubble:

This little-noticed development could mean the end of the Fed’s super-low interest rates

Janet Yellen finally admits: The “Bernanke Asset Bubble” is here to stay

The Federal Reserve just released its latest “minutes” and stocks surged higher. Here’s what they said.

Wednesday, April 30th, 2014 Invest, News, Wealth Comments Off on New poll: These are America’s greatest financial concerns

Must-see: What you haven’t heard about Obama’s "secret" oil pipeline

From Marin Katusa, Chief Energy Investment Strategist, Casey Research:

Isn’t it odd that an 800-mile pipeline that runs across environmentally-sensitive land has been permitted without any mention in the media? Not a word about it from President Obama either.

Obama’s Secret Pipeline will be built over land that’s much more sensitive than that of the Keystone XL pipeline, which gets nothing but front-page coverage. It will actually be 17% (six inches) larger in diameter than Keystone XL (36 inches) and it will transport natural gas, not oil.

Bill 138

The Senate of Alaska, the state in which the pipeline will be built, has just passed Bill 138, which makes the state a partner of three of the world’s largest oil companies, including one that has a horrible environmental track record on U.S. soil. In a nutshell, Alaska’s government is now partners with BP, ExxonMobil, and ConocoPhillips.

Only one more signature is required – Governor Sean Parnell’s – and it’s expected that he will sign the deal.

Not Even the U.S. Government Wants U.S. Dollars

For more than 100 years, the U.S. government has been receiving a royalty and tax revenue paid on the amount of oil or natural gas produced on American soil – a fee that is paid in U.S. dollars. Bill 138 has changed this forever.

Instead of Alaska receiving its dues in U.S. dollars, the state legislature has decreed through Bill 138 that the state will be paid “in kind.” In other words, the state will be getting its share of royalty and tax revenue in natural gas instead of U.S. dollars.

For the record, this is the first time ever that a U.S. state has entered into a partnership like this. Essentially, Alaska is now a 25% equity partner with BP, ExxonMobil, and ConocoPhillips – which also requires the state to cough up cold, hard cash to build the entire project, including the 800-mile-long, 42-inch-wide pipeline.

Overall, the project is currently estimated to cost north of U.S. $50 billion, and we expect that when all the capital expense overruns and government inefficiencies are accounted for, the whole project will come in at more than U.S. $75 billion, using the total costs of similar projects for comparison.

But it will be 2015 before the final negotiations and the specific details of the partnership are agreed on, and remember, the devil is in the details. Who do you think will get the better end of the deal – a bunch of government bureaucrats with zero oil and gas experience, or the world’s top oil- and gas-producing companies? I know whom I’m betting on.

Which leads us to the point of this weekly missive.

And the Winner of Obama’s Secret Pipeline Is…

We already know which company will be building and operating Obama’s Secret Pipeline. The company I’m talking about has a lower price-to-earnings (P/E) ratio and a better yield than all of its peers. That’s good, because shareholders get paid a monthly yield for owning the stock while sitting back and watching the share price rise as well.

The Ultimate Oil Toll Booth

Think of it this way: this company charges the world’s most powerful oil and gas producers for every barrel of oil that passes through its “road network,” and now it can also charge the state of Alaska. Regardless of the price of oil or natural gas, this company gets its fee.

It’s a low-risk way to benefit from a high-risk enterprise. This company is a current Buy in our Casey Energy Dividends portfolio. The Energy team is currently working hard on the upcoming issue, which will in detail cover the company that’s bound to gain big from Obama’s Secret Pipeline.

I know you haven’t heard about this pipeline yet, but you will soon enough.

That’s what we do here at the Energy Division of Casey Research: We’re the first to uncover breakthrough stories, and the first to uncover the best energy investment opportunities in the world. Doug Casey and I just got back from a whirlwind European tour, where we visited many of Europe’s most promising energy projects.

Here’s a picture of Doug Casey and me at Europe’s largest onshore drill site. This drill rig is 15 stories high and uses about 16,000 liters of diesel a day to turn the drills – which Doug and I are holding in this picture. As a side note, just the crank shaft that we’re holding costs U.S. $2 million – this rig is expensive and gigantic.

For you to get a better perspective on the true size of Europe’s largest onshore drill rig, here is a picture of Doug Casey and me with our friends Frank Holmes, Frank Giustra, and Matt Smith.

(From far left to right: Frank Holmes, Doug Casey, Marin Katusa, Frank Giustra, Matt Smith)

Do Your Portfolio a Favor and Try Out the Casey Energy Report

Doug Casey and I have done all the hard work for you. The current issue of the Casey Energy Report is a compilation of our Europe trip, including in-depth descriptions of our site visits and a new recommendation with a hugely promising project in an out-of-the-way European country that we personally checked out. The company is backed by mining giant Frank Giustra, and you bet he knows what he’s doing.

The Casey Energy Report comes with a free one-year subscription to Casey Energy Dividends (a $79 value), including, of course, the upcoming May issue with our “Obama’s Secret Pipeline” pick.

There’s no risk in trying it: You have 90 days to find out if it’s right for you – love it or cancel for a full refund. You don’t have to travel 300+ days a year (as we do) to discover the best energy investments in the world – we do it for you.

If you don’t like the Casey Energy Report or don’t make any money within your first three months, just cancel within that time for a full, prompt refund. Even if you miss the cutoff, you can cancel anytime for a prorated refund on the unused part of your subscription. Click here to get started.


More on the oil sector:

What you need to know about oil and gas dividends

The new shale oil boom sent this stock 300% higher. These could be the next to soar.

Matt Badiali: This “evolution” could take the shale oil boom to a whole new level

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Crux subscriber exclusive sneak peek: The Obstacle Is the Way

“A book for the bedside of every future–and current–leader in the world…”


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Wednesday, April 30th, 2014 Invest, News, Wealth Comments Off on Crux subscriber exclusive sneak peek: The Obstacle Is the Way

James Altucher: Once again, I’m scared…

I have to give two talks in the next few weeks that are scaring the hell out of me because I have no clue what I will say. There’s a good chance I’m going to make a fool of myself.

At first glance, these seem like pleasant problems… problems of privilege.

But I’ve worked hard to be scared to death. I’ve been writing and investing and starting companies and failing at them for 20 years. I’ve caressed fear more than I have anyone I’ve loved.

Twenty years of waking up at night wondering not only how I am going to pay my own bills but, in many cases, how I am going to pay everyone else’s bills… the 30, 50, even 1000 people who have depended on me at different times.

And for 15 years, almost all the people I dealt with, begged with, tried to please, kissed ass with, were all people who I really didn’t like at all. (Everyone wearing the “Scream” mask at the costume ball.)

I gave up my initial dreams about 20 years ago. What they were is no longer important. They are long dead.

But then I thought it was better to make money and to sacrifice the dreams at the altar of reality. But I wandered into someone else’s church and prayed to someone else’s gods at someone else’s altar.

I gave up everything in order to start a business making websites for other entertainment companies.

I took bribes, I gave bribes, I got ripped off, screwed, I had to hire/fire, I had arguments with family, I had to fool people, I had to scare people. I had to run, Run, RUN!

And from there it got worse. I sold the business, went broke, and then went into a business I had no interest in but thought would make money: the hedge fund business. I went from writing about hookers to being one.

A hedge fund business means: raise money from rich people who love lording and hoarding it over you and then you pray you don’t lose it because they are as quick to stab as they are to kiss.

I have nothing against these people. They are in their own deserts. When I asked Bernie Madoff for a few dollars to invest in my fund he was probably the kindest of all the people I asked for money.

Another guy, who is also now in jail for having a Ponzi scheme, laughed me out of his office so loudly that his secretaries (three of them) were too embarrassed to even look at me as I left.

Our ultimate teacher is the mystery that fills the universe, the one that we’ll never figure out. Eventually we all realize that the sun shines down on everything, good or bad.

But sometimes, as a human in struggle, I would just stare down on the ground, ignore the light, and try to figure things out on my own without really seeing the beauty and secrets around me.

And when you push away the beauty, you become the ugly.

I paid people with inventories of inspiration that were quickly depleting.

I replaced “happiness” with “goals.” I let my creativity and energy atrophy.

Around mid-2010, I was so depressed, so anxious, so worried about my family, money, career, happiness, health, age, that I finally gave up.

“I can’t do it anymore,” I said to Claudia. I went to a psychologist, a psychiatrist, a psycho-pharmacologist. And even a dentist and a gastroenterologist. Nobody helped. I had pains in my stomach and head and I had bad breath.

So I started writing at I started writing whatever I wanted to. I started to write embarrassing stuff. And I focused on my health – my health in every way, my mental health and my spiritual health. These are the only things we ever truly “own.”

The first people who wrote me said, “You’re crazy!”

The second wave of people wrote, “This is like watching a train wreck in action.”

The third wave wrote, “I am never speaking to you again!”

Two things: I refused to do anything I didn’t want to do. I stopped dealing with the people I didn’t want to deal with.

Would this be the end of me? “I can’t do this!” I thought. I had to surrender.

But every six months since then it has just gotten better. Fortunately the universe is bigger than my fat head.

Fortunately I looked up from the ground. Fortunately I really looked at what was being offered me.

Well… I was going to write today about how I was going to prepare for these two talks.

I was going to write all about my fear and how I will hope to conquer it, because this afternoon I will start my “training period” for the next month.

But I’ll do that another time.

Instead, I just want to be thankful. It’s my page. I can do what I want.

I ended that 15 year period in the desert. The addictions (drugs, sex, alcohol, money, people-pleasing), the fears, the roller-coaster, the ass-kissing, and the ice touch of 3 a.m. worries that electrocuted me.

Every word I write now is a thank you.

Not a thank you to you, or to “life” or to my kids or family or anything.

Not even a thank you to me. I’ve done nothing worth being thankful for. I’m thankful I’m not dead or I haven’t killed anyone.

Ah, screw it; I have no clue who I’m thanking. But thanks.

Crux note: Can’t get enough of James Altucher? You’re in luck. Stansberry Radio hosts the most exciting podcast in the world, The James Altucher Show. This week, James talks with Chris Brogan, editor of Owner Magazine. To listen to James for FREE, click here.


More from James Altucher:

James Altucher: Use this simple “magic trick” to instantly change your world for the better

James Altucher: 10 reasons you have to quit your job in 2014.

Altucher: The “Wolf of Wall Street,” the mob, and the stock market…

Wednesday, April 30th, 2014 Invest, News, Wealth Comments Off on James Altucher: Once again, I’m scared…

Why it’s so easy to get rich in stocks… and why so few people do it

From Dan Ferris, editor, Extreme Value:

Albert Einstein called it “the greatest mathematical discovery of all time,” and, “the greatest creator of wealth known to mankind.”

Baron Nathan Rothschild called it “the eighth wonder of the world.”

Both men were talking about the power of compounding. It’s easy to understand how compounding works. Just look at this simple example.

Say you invest $100,000 for 40 years. During that time, you make 12% per year. At 12%, it’ll take you until year 22 before you have $1 million, but only another six years until you cross the $2 million mark. If you can hold on until year 40, you’ll wind up with more than $9 million…


YEAR 0 – $100,000                 YEAR 21 – $1,080,385

YEAR 1 – $112,000                  YEAR 22 – $1,210,031

YEAR 2 – $125,440                  YEAR 23 – $1,355,235

YEAR 3 – $140,493                  YEAR 24 – $1,517,863

YEAR 4 – $157,352                  YEAR 25 – $1,700,006

YEAR 5 – $176,234                  YEAR 26 – $1,904,007

YEAR 6 – $197,382                  YEAR 27 – $2,132,488

YEAR 7 – $221,068                  YEAR 28 – $2,388,387

YEAR 8 – $247,596                  YEAR 29 – $2,674,993

YEAR 9 – $277,308                  YEAR 30 – $2,995,992

YEAR 10 – $310,585                 YEAR 31 – $3,355,511

YEAR 11 – $347,855                 YEAR 32 – $3,758,173

YEAR 12 – $389,598                 YEAR 33 – $4,209,153

YEAR 13 – $436,349                 YEAR 34 – $4,714,252

YEAR 14 – $488,711                 YEAR 35 – $5,279,962

YEAR 15 – $547,357                 YEAR 36 – $5,913,557

YEAR 16 – $613,039                 YEAR 37 – $6,623,184

YEAR 17 – $686,604                 YEAR 38 – $7,417,966

YEAR 18 – $768,997                 YEAR 39 – $8,308,122

YEAR 19 – $861,276                 YEAR 40 – $9,305,097

YEAR 20 – $964,629


The numbers above show what 40 years of compounding at 12% looks like. In year one, you make $12,000. In year 22, you make about $130,000 – more than 10 times what you made in year one.

Of course, there’s one little problem here. Nobody – but nobody – wants to hold on and wait for 40 years. (I know I don’t!) Everybody wants fast action. Everybody wants to buy a 50-cent stock on Monday and sell it for $5 on Friday. Unfortunately, most people are mathematically illiterate, so they don’t understand that the odds are way against big, fast gains in stocks. That ignorance, in turn, makes it easy to be overcome by our natural tendency toward impatience. And that is why an understanding of the great power of compounding – the single greatest tool an investor can possess – remains, and is likely to remain, unexploited by the vast majority of investors.

Proof that impatience is why nobody exploits the power of compounding is easy to come by. In the early 1960s, the average holding period for an NYSE stock was at its peak, about eight years.

Today, the average holding period for an NYSE stock is about 6 months. Less than 12 months. That means the average company could hold two shareholder meetings a year, and the CEO would never see the same people twice.

These people aren’t investing. They’re looking to hit the lottery. By the way, the mathematics of the lottery dictate you’ll lose about 50 cents of every $1 invested over the long haul. If you don’t overcome odds of more than 1 million-to-one very quickly, you’re virtually guaranteed to lose half your money playing the lottery over many years.

For the insightful and patient investors, the short average holding period for NYSE stocks is wonderful news. Once you know nobody wants to hold stocks for 12 months, it’s incredibly easy to gain an advantage over nearly every other player in the market. All you have to do is find an undervalued stock and hold it for at least one year, and you instantly put the odds of success in your favor.

I imagine this insight doesn’t get you very excited. After all, excitement is usually accompanied by a sense of urgency, some impending peril or reward. And this reward is decades away.

I’m the one who’s telling you about time and compounding and even I have to admit that, while I’m happy to know about it, it can’t hold my attention for very long. I have to constantly remind myself, for example, not to sell a stock that has gone up 70% in a few months… and there’s the rub.

It’s human nature to want results right away. It’s human nature to want to put your hands on something and affect it immediately. It’s not human nature to delay gratification. Nor is it human nature to want to spend time studying material so impenetrably boring that it puts you to sleep, like SEC filings, generally accepted accounting principles, income tax rules, and securities laws.

I remember when I was in my 20s, looking for the meaning of life in every nook and cranny of existence, reading all of kinds of stuff, including all of Nathaniel Branden’s self-help books. Branden said something to the effect that human beings are the only creatures that can persevere in their quest to discover the right thing to do, succeed in that quest to find the right thing, believe it’s the right thing, tell everyone it’s the right thing – and then go and do the opposite.

Well, once you know what we’ve learned today about compounding and time, you can use Branden’s insight to get rich. Once you realize that doing your own research on accounting, securities laws, and income taxes, combined with a bias toward holding good stocks for the longer term, won’t give you the instant gratification of lottery tickets and slot machines – you can still decide to go ahead and do the right thing.

Crux note: Dan is always uncovering undervalued companies poised to soar. In fact, he recently discovered a little-known resource company ready to finalize a very lucrative deal. Dan says this transaction could help you “make the safest 400% of your lifetime.” To get immediate access to this time-sensitive material, click here now.


More from Dan Ferris:

You’ve heard all about China’s “ghost towns”… but you haven’t heard the real story

Wednesday, April 30th, 2014 Invest, News, Wealth Comments Off on Why it’s so easy to get rich in stocks… and why so few people do it

Must see: Ukrainian and pro-Russian tensions have just catapulted into riots

As Ukraine’s military mobilizes… so do its citizens.

Ukrainian nationalists attack riot police in Donetsk, Ukraine. It’s not just the pro-Russian Ukrainians causing a stir… it’s now happening on both sides.

The pictures and video below show a peaceful demonstration by Ukrainian nationalists… but this doesn’t last long. Riot police are called out… and tensions increase… just before a few masked nationalists with clubs standoff with the riot police. Then violence erupts.


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More on Ukraine:

That was fast: Reports say last week’s Ukraine accord is already “near collapse”

Ukraine reports: Russia is preparing for all-out “invasion”

Must see photos of Ukraine’s and Russia’s massive military buildup

Wednesday, April 30th, 2014 Invest, News, Wealth Comments Off on Must see: Ukrainian and pro-Russian tensions have just catapulted into riots

Why Apple has to borrow $17 billion

From Bloomberg:

A company sitting on a $150 billion cash pile planning a $17 billion bond issue to buy back its shares? It sounds like a bad joke, and Apple, the company in question, is keenly aware of it.

“We very much appreciate all of the input that so many of our shareholders have provided us on how best to deploy our cash,” Apple chief executive Tim Cook said during the recent earnings call, trying hard not to sound sarcastic. He was just about to reveal the expansion of the company’s $100 billion buyback program to $130 billion, but, as it later transpired, the cash pile was not to be depleted: Apple would use borrowed funds instead.

Luca Maestri, who will soon take over as Apple’s chief financial officer, explained the reason for this strange behavior during the same earnings call. “Thanks to Apple’s strong growth and international expansion in recent years we’ve built substantial offshore cash balances,” he said. “To repatriate our foreign cash under current U.S. tax law, we would incur significant tax consequences and we don’t believe this would be in the best interest of our shareholders.

Specifically, 88 percent of Apple’s cash, or $130 billion, is overseas, and were the company to bring it home, the taxman would claim about a third of it. Last year, when the Securities and Exchange Commission asked Apple about its foreign earnings, the iPhone maker replied that most of it was generated by Irish subsidiaries and “intended to be indefinitely reinvested in operations outside the U.S.” If Apple issues debt in Europe, the proceeds could be used for the buyback, while the interest and principal owed to debt investors would be paid out of the Irish cash pile.

Apple’s planned mammoth bond issue is not the only large deal motivated at least in part by the overseas cash accumulated by U.S. companies. There’s also Pfizer’s $98.7 billion bid for U.K.-based AstraZeneca, which would help the U.S. drugmaker put to work the $69 billion accumulated in its foreign subsidiaries. GE’s foreign cash, $57 billion, may soon go towards the purchase of the energy business of France’s Alstom, unless that deal falls apart.

A year ago, the Wall Street Journal calculated that 60 large U.S. companies, each of which held at least $5 billion offshore in 2011, piled up $166 billion of cash overseas in 2012. GE and Pfizer were at the top of that list. Microsoft, which is acquiring the mobile handset business of Finland’s Nokia, was third. That makes it logical to expect large non-U.S. takeover bids from Merck and Johnson & Johnson, fourth and fifth on the list, respectively.

Bloomberg News puts the amount accumulated by multinationals outside the U.S. at $1.95 trillion, up 11.8 percent from a year ago. Moody’s, the credit rating agency, has a lower estimate of a mere $947 billion. That money is burning holes in companies’ pockets and spurring mergers and acquisitions activity at levels unseen since before the financial crisis. The global M&A market has reached $1.2 trillion in the year to date, with 47 percent of transactions coming in cash.

It is, perhaps, not entirely unwise for the U.S. to have tax rules that force American companies to globalize. It adds to their financial stability, speeds up their growth and increases their access to innovative technology and is, in the end, good for both these companies’ U.S. shareholders and for the government. Europe, too, is happy to see the U.S. investment – with the possible exception of Francois Hollande’s socialist government in France, which is grappling with the political unseemliness of letting a company saved from bankruptcy under ex-president Nicolas Sarkozy pass into American hands.

It would, however, be interesting to see where U.S. companies’ cash would flow if the U.S. adopted Ireland’s 12.5 percent corporate tax rate. Some, including many of the tech leaders such as Google and Facebook, might cling to their “double Irish” and “Dutch sandwich” schemes; others might be tempted to expand at home. As Richard Burton, Ireland’s minister for enterprise, once said, “we make no apologies for having a regime that’s designed to promote employment in this economy.” While the U.S. does have a more global role to play, perhaps it should also be less apologetic about promoting its own growth.

To contact the writer of this article: Leonid Bershidsky at

To contact the editor responsible for this article: Mark Gilbert at


More on Apple:

How to earn double-digit income from Apple. It’s easier than you think.

Incredible chart suggests an unexpected stock could be “the next Apple”

This former “high-flyer” just shocked Wall Street

Wednesday, April 30th, 2014 Invest, News, Wealth Comments Off on Why Apple has to borrow $17 billion

Master trader Clark: These two sectors could get crushed in the next correction

From Jeff Clark in Growth Stock Wire:

The stock market fired a warning shot earlier this month.

After setting a new all-time high above 1,894, the S&P 500 dropped 80 points – roughly 4.2% – in just two weeks. This fast downside action is just a small sample of what may happen when the stock market finally enters a correction phase.

But we’re not there yet. As I said last week, the old bull market still has one more kick left in it. And the recent bounce is giving traders a chance to cash out on some long positions and make a short trade or two.

You see, the bounce is ending. As I told you on Tuesday, we’re coming up on a seasonally weak period for stock prices. And there are two sectors in particular that look vulnerable for a decline…

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Let’s start with real estate. Here’s a chart of the iShares U.S. Real Estate Fund (IYR)…

For the past six months, IYR has been trading in a bearish rising-wedge formation. In this pattern, a stock makes consistently higher highs and higher lows but the distance between each new high and low is smaller. Eventually, the stock has to break out of the pattern one way or another. When that happens, it usually results in a big move.

Most of the time, a rising wedge breaks to the downside. We saw this happen recently with the financial sector. The Financial Select Sector Fund (XLF) broke its rising-wedge pattern to the downside and lost more than 5% in just a few days. The chart of IYR shows similar potential.

Right now, IYR is bumping into the resistance line of the rising-wedge pattern. Aggressive traders can put on a short trade here in anticipation of the resistance line holding and turning IYR back down. A minor move down that takes back half the height of the wedge gives us a downside target of about $64 per share. A strong move lower will reverse the entire wedge pattern and target $61 per share.

The other sector that looks like a low-risk short sale is health care. Here’s the chart of the Health Care Select Sector Fund (XLV)…

XLV broke down from a rising-channel pattern earlier this month. It also broke below its 50-day moving average (DMA). Over the past two weeks, though, XLV has bounced back up and is now testing the former support line of the rising channel. It’s also testing its 50-DMA.

XLV is unlikely to overcome this “double resistance” on its first attempt. So aggressive traders can look to short the health care sector here in anticipation of the resistance lines holding and turning XLV lower again. The immediate downside target for XLV is the February low at about $55 per share.

The real estate and health care sectors have both benefited from the recent bounce in the stock market. But as we come to an end of the seasonally strong second half of April and roll into the seasonally weak period that starts in May, traders should take advantage of the chance to profit on the potential downside of these two sectors.


More from Jeff Clark:

Top trader Clark: Watch for this sign the rally in stocks is over

Master trader Clark: A must-see update on silver

Master trader Clark: How I’m trading silver now

Wednesday, April 30th, 2014 Invest, News, Wealth Comments Off on Master trader Clark: These two sectors could get crushed in the next correction