John Ransom - Robots Take Over the Market
Posted: 12/17/2013 2:19:00 PM EST

Welcome to John Ransom’s Stocks in the News where the headlines meet the trendlines:

Stock number one: Adept Technology.

And the headline says: Adept Technology joins rally in robot space, shares up 6% - Yahoo Finance

Shares of intelligent robot maker Adept Technology (ADEP) are benefiting from increased interest in the space following Raymond James upgrade of peer iRobot (IRBT) and Google's (GOOG) purchase yesterday of Boston Dynamics, an engineering company that has designed mobile research robots for the Pentagon. Shares of Adept are up 6%, or 76c, to $12.45 in late morning trading.

Note: The stock has had a really good run since rallying in August 2012. If you have profits take them. Small market-cap; lack of earnings visibility are problems

Symbol: ADEP

Dividend: N/A

Forward PE:NA; Trailing PE NA;

PEG: 0

Estimate Trend: UP

Ransom Note Trendline: Sell Adept Technology

ADEP Chart

ADEP data by YCharts

Stock number two: iRobot Corporation.

iRobot surges after analyst upgrades to Strong Buy Fly on the Wall

Shares of robot maker iRobot (IRBT) are climbing after research firm Raymond James upgraded the stock in a note to investors earlier today. WHAT’S NEW: iRobot’s new vacuum robot, the Roomba 800, should boost iRobot’s sales in 2014, Raymond James analyst Brian Gesuale wrote in a note to investors. Also likely to boost the company in 2014 are the expansion of the company’s mopping robot, the Braava, into new markets and the higher gross profits that the additional Braava sales will generate, the analyst added.

Note: Gesuale’s price target is $39 and the stock has printed today at $37.10

Symbol: IRBT

Dividend: NA

Forward PE: 58; Trailing PE: 32

PEG: 3.66

Estimate Trend: Up

Ransom Note Trendline: Hold iRobot

IRBT Chart

IRBT data by YCharts

Stock number three: Gogo Inc.

5 of Last Week's Biggest Losers — Motley Fool

Gogo soared 23% a week earlier after announcing certification for deploying its Ku-satellite technology in Boeing 747-400 aircraft. The move allows the in-flight Wi-Fi provider to make an international push. Gogo gave back roughly half of those gains this past week. There was legislation introduced in Congress to block voice calls -- something that could be seen as detrimental to the value of Gogo's airborne connectivity -- but the sell-off was probably more a case of profit-taking after the prior week's rally.

Symbol: GOGO

Dividend: NA

Forward PE: NA; Trailing PE: NA


Estimate Trend: Flat

Ransom Note Trendline: Sell GOGO

GOGO Chart

GOGO data by YCharts

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John Ransom - How Obama Peeled $15 Bilion Off Coal Company Since 2008
Posted: 12/16/2013 12:13:00 PM EST

Welcome to John Ransom’s Stocks in the News where the headlines meet the trendlines:

Stock number one: Himax Technologies.

And the headline says: Himax Technologies is a top pick for 2014 at Northland Securities- Fly On the Wall

Northland recommends buying Himax aggressively and raised estimates given stronger near-term momentum in the small/medium display business and increased activity in the new LCOS display business. The firm expects momentum to carry in 2014 and named it a top pick and raised its price target to $15 from $12. Shares are Outperform rated.

Symbol: OSTK

Dividend: N/A

Forward PE: 34; Trailing PE 20;

PEG: 1.04

Estimate Trend: UP

Ransom Note Trendline: Buy Himax for speculative accounts

HIMX Chart

HIMX data by YCharts

Stock number two: Carnival Corporation.

And the headline says: People Want to Take Cruises Again! How Should You Play It? - Motley Fool

Although it has been plagued with a string of mishaps, the cruise industry seems to be moving forward nicely. Carnival (NYSE: CCL) in particular was affected more than its competitors with the Costa Concordia accident as well as the "cruise from hell" on the Triumph, in addition to several other minor incidents. So now that peak vacation season is upon us, it seems like a good time to take another look and see how Carnival and the rest of the industry is moving forward.

Symbol: CCL

Dividend: 0.90

Forward PE: 23; Trailing PE: 26

PEG: 1.90

Estimate Trend: Down

Ransom Note Trendline: Avoid Carnival Corppration.

CCL Chart

CCL data by YCharts

Stock number three: Arch Coal

And the headline says:Arch Coal Completes Consent Solicitation for Its 8.750% Senior Notes due 2016—Company release

Arch Coal today announced that it has successfully completed its consent solicitation with respect to its 8.750% Senior Notes due 2016. On December 2, 2013, Arch commenced a cash tender offer for any and all of its outstanding 600 million aggregate principal amount of Notes. In connection with the Tender Offer, Arch solicited consents from the holders of the Notes for certain proposed amendments to the indenture governing the Notes.

Note: Market cap for ACI has shrunk from about $16 billion (2008) rallied to $8 billion (2011) and now is less than one billion dollars under Obama. Obama has waged a "war" on coal, if you didn't notice.

Symbol: ACI

Dividend: NA

Forward PE: NA; Trailing PE: NA


Estimate Trend: Down

Ransom Note Trendline: Sell Arch Coal

ACI Chart

ACI data by YCharts

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Nick Sorrentino - More Crony Media: Unions Paid MSNBC’s Schultz $177,000 in 2012, $75,000 in 2013
Posted: 12/12/2013 2:42:00 PM EST

As we have said in the pastMSNBC is what modern propaganda looks like. Media Matters issues talking points (often with the input of the Obama White House) and MSNBC spits them back out. (To a smaller and smaller audience it should be added.)

I’d call most of what MSNBC does infotainment if it was either informative or entertaining, but it’s neither. It is a mouthpiece.

(And yes Fox is often a mouthpiece too. Though as of late much less so. During the Iraq War it was ridiculous and was nearly as bad as MSNBC, at times arguably worse.)

Click here for the article.

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Mike Shedlock - Moody's Puts Puerto Rico on Downgrade to Junk Review Citing Very High Debt, Pension Obligations, Chronic Deficits; Exodus Underway
Posted: 12/12/2013 2:03:00 PM EST

Deficit spending and untenable pension obligations frequently go together, and always cause problems when they do.

Coupled with a buildup of debt, and a very bloated public sector (which also go hand-in-hand) Puerto Rico is about to fall to junk level.

Please consider Moody's puts Puerto Rico on review for downgrade.

Citing Puerto Rico's weak finances and economy, Moody's Investors Service put the commonwealth's general obligation rating of Baa3, the company's lowest investment grade rating, on review for downgrade on Wednesday.

Moody's also placed ratings capped by or linked to Puerto Rico's general obligation rating on review, including the Puerto Rico Sales Tax Financing Corporation's senior and junior lien bonds.

The moves affect approximately $52 billion of rated debt, the rating agency said in a statement.

Moody's said it is concerned about Puerto Rico's "weakening liquidity, increasing reliance on external short-term debt, and constrained market access, within the context of a weakened and now sluggish economy."

"These developments exacerbate the longstanding financial strain brought by the commonwealth's very high debt load and pension obligations, as well as its chronic budget deficits," Moody's said.

A major issuer of municipal bonds, Puerto Rico has been in or near recession for eight years. It has suffered from a loss of U.S. federal government economic support, spending cuts by its own government, high oil prices and population decline.

Exodus Underway

The Washington Post reports Puerto Rico confronts a rising economic misery.

Boxes and wooden crates filled with household items bound for the U.S. mainland are stacked high in the Rosa del Monte moving company’s cavernous warehouse, evidence of the historic rush of people abandoning this beautiful island.

Puerto Rico lost 54,000 residents — 1.5 percent of its population — between 2010 and 2012 alone. Since recession struck in 2006, the population has shrunk by more than 138,000 to 3.7 million, with the vast majority of the outflow headed to the mainland.

And while government workers make up about a quarter of the commonwealth’s workforce — much higher than the U.S. average of 16 percent — their ranks are shrinking as the pervasive debt and economic problems careen toward a reckoning. Now, just over 41 percent of working-age Puerto Ricans are in a job or even looking for one.

As work has disappeared, more Puerto Ricans have relied on the government to survive: About a third of the commonwealth’s population relies on food stamps, and residents of the island are twice as likely as those on the mainland to receive Social Security disability benefits, according to researchers.

Puerto Rico Unemployment Rate

Expect Default

On December 1, in Puerto Rico the Next Detroit? I said ...

Puerto Rico has been in recession for 8 years. The unemployment rate is 15% and debt has piled up to the tune of $70 billion. How did Puerto Rico get into trouble? The short answer is the same way as Detroit: loss of industry coupled with lavish pensions.

Job flight, high crime rates, and huge pension woes in Puerto Rico seem similar to the problems in Detroit. However, there is no constitutional provision that allows US states and Commonwealths to declare bankruptcy.

Compounding the problem, Puerto Rico passed a massive set of tax hikes including corporate taxes, a broadened sales tax and a new gross receipts levy, hoping to get its budget under control. Given that tax hikes in the middle of a recession are about the worst possible choice, the situation is ominous.

So how is Puerto Rico's debt going to be paid back? The answer is it won't. Although, bankruptcy is out of the question, nothing can stop a default except a bailout by the US. Given that handouts from this Republican Congress are unlikely, look for Puerto Rico to default.

Puerto Rico is Toast

Of $70 billion in debt, $52 billion is subject to a downgrade to junk status. The rest may not even be rated.

A close friend with ties to the region writes ...

Those leaving are predominantly from the upper end of society, as they see opportunity melting away and fear a dead end for their children. Upper middle class Puerto Ricans are educated, speak English, and are absolutely free to move to the US and find jobs. As you noted, the upper 40% pay 106% of the taxes. So the exodus is obliterating the tax base. The feds don't want a run out of Puerto Rico.

But ultimately, the feds will have to step in, Republican Congress or not. The same policy that makes it completely easy for Puerto Ricans to move to the US means that if a panicked "run out of Puerto Rico" starts, it will be a smoking ruin. That would be extremely harmful to US foreign policy.

Mike "Mish" Shedlock

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Phillip  Bartling - Janet "Speed Bump" Yellen We Hardly Know Ye
Posted: 12/12/2013 1:54:00 PM EST

It’s time to get to know the person who is virtually assured to be the new Chair of The Federal Reserve, Janet Yellen, and tag her with her new nickname.

This distinguished Economist hails from Brooklyn New York. The 67 year old Jewish Democrat and former Harvard professor has been working with The Federal Reserve for about 35 years—no fresh blood here.

Critics claim that in addition to being a bit too much on the “dovish” side of the spectrum, she also favors Quantitative easing too much and will continue to direct the Federal Reserve along its current trajectory, which will basically constitute more interventions into the free markets and a continuation of the Keynesian boom-bust cycle.

Let us look to her record of public speeches for clues for what to expect—and what her new nickname should be.

First, back in 2005 in a speech titled "Housing Bubbles and Monetary Policy" Yellen clearly recognized the looming housing bubble/crisis—and just as clearly completely underestimated its impact

"How, then, should monetary policy react to unusually high prices of houses? my view, it makes sense to organize one’s thinking around...questions. First, if the bubble were to deflate on its own, would the effect on the economy be exceedingly large? (My answer) in the shortest possible form is could be large enough to feel like a good-sized bump in the road, but the economy would likely to be able to absorb the shock."

Strike one for "Speed-Bump Janet"

The next year in a speech entitled "Economic Inequality in the United States" it's not the housing bubble she focuses on, but rather the growing gap between the wealthy and the workers.

"None of these factors provides a complete and compelling explanation for the rapid growth of real wages at the very top of the distribution, the top 1 percent, which, according to IRS data, doubled between 1972 and 2001”

Could it be possible that Yellen herself is the source of the incessant railing against the ‘one percent’ that exploded during the so-called ‘occupy Wall Street’ movement?

In this speech Yellen also cements her credentials as a master of the obvious;

“It’s clear that periods without earnings can be quite...costly for job losers.”

She concluded this speech with the highly disturbing statement “There are signs that rising inequality is intensifying resistance to globalization, impairing social cohesion, and could, ultimately, undermine American democracy.

Inequality has risen to the point that it seems to me worthwhile for the U.S. to seriously consider taking the risk of making our economy more rewarding for more of the people.”

Can anybody explain to me how it's "risky" to make our economy more rewarding for more of the people?

Strike two for Janet "One Percent" Yellen.

Having failed to foresee the effect of the housing bubble or help anticipate The Great Recession, three years later Yellen gives a speech titled "Linkages between Monetary and Regulatory Policy: Lessons from the Crisis where she argues that The Fed should expand its role beyond traditional influences on inflation and employment to check asset bubbles.

"These results suggest that monetary policy could play a role in restraining undesirable swings in leverage and, by extension, reduce systemic risk. In particular, interest rate cuts in a time of market disruption can be effective at stopping a deleveraging cycle from turning into an uncontrolled crash…This raises the broader—and very contentious—issue of whether monetary policy should seek to lean against potentially dangerous swings in asset prices. The answer is far from clear...(however) the crisis of the past two years has prompted many of us to reexamine the widely held view that monetary policy should respond to asset prices only to the extent that they influence the anticipated trajectories of inflation and unemployment."

In other words, having failed to anticipate the full negative effects of the last asset bubble, she doesn't like such bubbles, and favors a proactive central management approach to dealing with market cycles.

Strike three for "Bubble Buster” Jan

Of the three potential handles revealed by these speeches, I favor "Speed Bump" Janet. It has a nice ring to it, and will serve as a useful reminder of how badly she misjudged the consequences of the housing bubble prior to The Great Recession.

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Nick Sorrentino - Radical Capitalism: A remote Indonesian village runs its own telecommunications company. (From a laptop and a tree)
Posted: 12/12/2013 12:33:00 PM EST

We at ACC are for capitalism because it is a liberating force. It makes lives better. It provides opportunity. It offers escape from despair.

The big government Marxist critique of the 20th Century is death. Centrally planned projects, with an emphasis on state approved “experts” is a dead end.

That is actually kind. Perhaps “societally and intellectually suicidal” would be more accurate than “dead end.”

If one wants people to live poorly, to die early, to feel more pain than need be, to live below their potential spiritually, intellectually, and economically with a longing always in their heart for something better but which can not be obtained, then by all means support socialism.

If on the other hand one believes in the human spirit and the dignity of all humankind, I’d suggest learning about how real capitalism, free voluntary markets, make the world a better place.

If one does this however one may have a sudden urge to feed one’s Che Guevara t-shirt into the garbage disposal. So be warned.

One other thing. Before one becomes too enamored with the “noble savage” idea. That cellular communication makes the rain forest of New Guinea less “real.” I say tell that to the mother who can now treat her daughter who suffers with typhoid, or the village chief who can now upload illegal logging around his home to the world.

(From Technology Review)

The project was set up by a team from the University of California, Berkeley. The resulting network is now operated by a tiny stand-alone telecommunications company run by a local NGO, with a laptop for local billing and a satellite connection to the rest of the world. The network relies on Swedish phone numbers because no local telecommunications company would provide them.

“It’s a telco-in-a-box that we put in a tree,” says Kurtis Heimerl, a developer at Range Networks and grad student at UC Berkeley who led the project

Click here for the article.

Read more at Against Crony Capitalism

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John Ransom - Mastercard has room to grow as consumers come back to credit
Posted: 12/12/2013 9:17:00 AM EST

Welcome to John Ransom’s Stocks in the News where the headlines meet the trendlines:

Stock number one: NorthStar Realty Finance.

And the headline says: NorthStar Realty Finance- Associated Press:

Shares of NorthStar Realty Finance rose to a multiyear high on Wednesday as the commercial real estate investment firm announced plans to spin off its asset management business into a separate publicly traded company.

On Tuesday NorthStar Realty Finance Corp. said that NorthStar Asset Management Corp. is expected to list on the New York Stock Exchange during the second quarter next year.

Symbol: NRF

Dividend: 8.6%

Forward PE: 9; Trailing PE N/A-

Estimate Trend: NA

Ransom Note Trendline: Buy Northstar for income.

NRF Chart

NRF data by YCharts

Stock number two: Burlington Stores.

Jim Cramer's 6 Stocks in 60 Seconds - The

Here's what Jim Cramer had to say on CNBC's "Squawk on the Street" Wednesday….

Shares of Burlington Stores (BURL_) got hit Tuesday on poor company guidance. Cramer suggested investors "buy G-III Apparel Group (GIII_)."

Note: On Tuesday Motley Fool wrote:

The off-price retailer posted a loss of $0.05, in line with estimates, while revenue grew 10% to $1.06 billion. Comparable sales in the quarter improved 3.9% in what was the company's first report as a publicly traded company. The market seemed to be disappointed by same-store sales, projected to be just 2%-3% in the fourth quarter. CEO Tom Kingsbury said the company was "focused on executing growth drivers, expanding retail store base, and enhancing our operating margins in the future."

HOT IPO! Cooled off.

Symbol: BURL

Dividend: N/A

Forward PE: 28; Trailing PE: 47

Estimate Trend: None

Ransom Note Trendline: Sell Burlington Stores.

<BURL Chart

BURL data by YCharts


MasterCard Pays Shareholders—Seeking Alpha

After rallying more than 55% so far in 2013, shares of MasterCard (MA) picked up another 3% after hours thanks to several shareholder friendly announcement (available here). While the march to $1,000 has been delayed, perhaps indefinitely, should investors buy MA after its buyback, dividend, and stock split announcement?

Symbol: MA

Dividend: 2.4

Forward PE: 26; Trailing PE: 31

Estimate Trend: Upish

Ransom Note Trendline: Buy MasterCard

MA Chart

MA data by YCharts

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Nick Sorrentino - Open Letter to Obama and Congress From Internet Giants Calls For Reining In Government Surveillance
Posted: 12/9/2013 1:49:00 PM EST

These companies probably legitimately care about Internet freedom, and they are probably sick of being pushed around by the Feds, but this letter has everything to do with business. If people can’t trust that their Gmail is secure (and boy is it not) this will eventually affect Google’s bottom line. If people think that doing business with Microsoft also means giving the NSA a back door into the heart of their enterprise, people will stop buying Microsoft.

Tech is arguably the most important industry in the United States. It would be a shame to flush the Silicon Valley down the toilet, or turn it into some wing of the global security apparatus (which is pretty much the same as flushing it down the toilet.)

We are very pleased to see this open letter.


The companies behind the letter are AOL, Apple, Facebook, Google, LinkedIn, Microsoft, Twitter, and Yahoo. They set out a list of five principles at the website including (1) no bulk collection of user data; (2) independent judicial review of intelligence agency demands, (3) transparent reports on what is being compelled; (4) no country firewalls against cross border data; and (5) a mutual legal assistance treaty (MLAT) among countries to prevent conflicts.

Click here for the article.

Read more at Against Crony

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Mike Shedlock - US Spends $1 Billion on Russian Helicopters for Afghan Military: Why?
Posted: 12/9/2013 12:58:00 PM EST

According to a top secret 2010 report the Russian-made Mi-17 helicopter is better then the US-made Chinook helicopter built by Boeing in Pennsylvania. Army Secretary John McHugh wrote in a 2011 memo "that the Mi-17 stands apart" when compared with other helicopters.

Another study shows the Chinook was found to be "the most cost-effective single platform type fleet for the Afghan Air Force over a twenty year" period.

This has the Christian Science Monitor and many others asking Why is US buying Russian helicopters for Afghan military?

Higher Quality Questions

I am not qualified to comment on which helicopter is better. Instead I want to ask a higher quality question:

What the hell are we still doing in Afghanistan?

We should have declared the war won 10 years ago and left. Better yet, we should not have gone there at all in the first place.

Based on that simple logic, we should buy neither the Russian-made Mi-17 helicopters nor the Boeing Chinook for Afghanistan.

Either way, I wonder if the real reason we bought Russian helicopters is fear for what happens to Chinook technology once we leave Afghanistan and the country falls to the Taliban once again.

Regardless of "why" many important high-level questions remain.

Open Questions

  1. In what ways does the top secret report show the Russian-made Mi-17 to be superior?
  2. If the Mi-17 is superior, how much money are we wasting on the Boeing Chinook program?
  3. How much money did we waste in Afghanistan?
  4. 13 years! Why?
  5. When, if ever, are we going to learn from such stupidity?

Addendum: Here is the rationale for the Mi-17
There is no reasonable rationale for being in Afghanistan for 13 years

Mike "Mish" Shedlock

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John Ransom - Cure for Cancer? Pretty Close
Posted: 12/9/2013 12:52:00 PM EST

Welcome to John Ransom’s Stocks in the News where the headlines meet the trendlines:

Stock number one: Twitter

And the headline says: Twitter gains as tech leaders call for curbs on spying - MarketWatch:

Tech stocks held a mild positive edge Monday, with Twitter Inc. among the advancers as the microblogging company joined with several tech leaders to call upon President Obama to push for tighter controls on government efforts to spy online.

In a letter published Monday , Twitter, along with Apple Inc., Microsoft Corp., Facebook Inc., Google Inc., Yahoo Inc., AOL Inc. and LinkedIn Corp. took a unified front to urge President Obama and the U.S. Congress to take steps to reform how governmental agencies are able to access data from online services.

Note: Twitter is trading about 26 times next year’s sales in the best-case scenario. It has a very limited trading history. Just to repeat: I rarely like IPOs unless I own them at pricing.

Symbol: TWTR

Dividend: NA

Forward PE: NA; Trailing PE: NA

Estimate Trend: Up

Ransom Note Trendline: Avoid Twitter

TWTR Chart

TWTR data by YCharts

Stock number two: J. C. Penney Company, Inc

Today's Dead Cat Bounce Stock Is J.C. Penney - The

Trade-Ideas LLC identified J.C. Penney (JCP) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified J.C. Penney as such a stock due to the following factors:

JCP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $390.4 million.

JCP has traded 48.4 million shares today.

JCP is up 3.2% today.

JCP was down 8.7% yesterday.

Symbol: JCP

Dividend: NA

Forward PE: NA; Trailing PE: NA

Estimate Trend: Whatever

Ransom Note Trendline: Avoid JC Penny

JCP Chart

JCP data by YCharts

Pharmacyclics Inc.

Market Action: Taper Concern Still J&J, Pharmacyclics leukemia drug effective long term –study—Reuters:

A closely watched leukemia drug developedby Johnson & Johnson and Pharmacyclics Inc maintained its effectiveness in keeping the disease at bay formost patients, according to long-term follow-up data from amidstage study being presented at a major medical meeting.

The oral drug, ibrutinib, last month won U.S. approval totreat a rare and aggressive form of non-Hodgkin lymphoma knownas mantle cell lymphoma. It is awaiting a Food and DrugAdministration decision on treating chronic lymphocytic leukemia(CLL), a slowly progressing form of blood cancer that primarilyaffects people aged 65 and older.

Note: Analysts say that this is almost a $5 billion global market. Says Bloomberg: “Ibrutinib was approved by the U.S. Food and Drug Administration last month for mantle cell lymphoma, with a decision expected for CLL by the end of February. A study presented at last year’s hematology meeting and published in June in the New England Journal of Medicine showed that 71 percent of patients responded to the drug. Further data are being presented at this year’s meeting.”

Symbol: PCYC

Dividend: N/A

Forward PE: 848; Trailing PE: 201

Estimate Trend: Up

Ransom Note Trendline: Buy Pharmacyclics

PCYC Chart

PCYC data by YCharts

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