February 16, 2013

from InvestmentWatchBlog Website




Billionaires Continue to Dump Stocks,

Traders are Betting Against The Economy,

Hedge Funds Preparing for Market Sell-Off,

and Now They Start Betting Against Currencies

as World Plunges Into Recession






Billionaires Dumping Stocks, Economist Knows Why



Despite the 6.5% stock market rally over the last three months, a handful of billionaires are quietly dumping their American stocks... and fast.


Warren Buffett, who has been a cheerleader for U.S. stocks for quite some time, is dumping shares at an alarming rate. He recently complained of “disappointing performance” in dyed-in-the-wool American companies like Johnson & Johnson, Procter & Gamble, and Kraft Foods.


In the latest filing for Buffett’s holding company Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%.


Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.


With 70% of the U.S. economy dependent on consumer spending, Buffett’s apparent lack of faith in these companies’ future prospects is worrisome.

Unfortunately Buffett isn’t alone.


Fellow billionaire John Paulson, who made a fortune betting on the subprime mortgage meltdown, is clearing out of U.S. stocks too. During the second quarter of the year, Paulson’s hedge fund, Paulson & Co., dumped 14 million shares of JPMorgan Chase.


The fund also dumped its entire position in discount retailer Family Dollar and consumer-goods maker Sara Lee.

No investors, let alone billionaires, will want to own stocks with falling profit margins and shrinking dividends.


So if that’s why,

...are dumping stocks, they have decided to cash out early and leave Main Street investors holding the bag.





Google Inc Executive Chairman Eric Schmidt

...is selling roughly 42 percent of his stake in the Internet search


Google Inc. chairman Eric Schmidt plans to sell up to $2.51 billion of his share in the company, according to a Securities and Exchange Commission filing late Friday.


Venezuela devalued its currency, the Bolivar, the country’s Finance Minister Jorge Giordani said Friday. President Hugo Chavez ordered the move from Cuba, the minister said.


Could these be the signs of the upcoming market collapse people have been talking about? I don’t know, but things could start to get interesting.





An ominous contemporary warning



Something happened this week that brings back haunting memories of the 2001 put options of airline stocks, except this “bet” is against the entire U.S. economy.


This week, an anonymous trader bought 100,000 put options on the ETF, which is an acronym for an exchange-traded fund. One commonly traded ETF is XLF, which, in the most unscientific and basic terms, is a group of funds that is like a barometer for the stock market.


Over the last week and a half, high level JP Morgan executives have dumped over $6 million in shares (High-Level Executives Suddenly Dumping JP Morgan Stock En-Masse) in what experts have described as ‘unusual activity’.


Anyone believe JPM’s October 12th earnings report which beat expectations? Looks like accounting BS engineered to dump legacy positions on the general public.


A chorus of high-level executives inside JPMorgan (JPM) are selling down their stakes in the company, in what some experts are citing as “unusual” activity within the nation’s largest bank by deposits.


CNBC reports that JPM execs have dumped $6 million in the past 10 days!





Currency War Fears Threaten Fragile Global Economic Recovery



The world economy faces a new threat. Instead of a banking collapse or too much debt, fears are growing that countries are using their currencies as an economic weapon.


History suggests that’s never a good thing.


If too many countries try to weaken their currencies for economic gain - sparking a so-called “currency war” - then the fragile global economic recovery could be derailed and the international financial system thrown into chaos.


Jim Rickards, Pentagon advisor, investment banker and author of the famous book, Currency Wars, speaks with Jim Puplava on the Financial Sense Newshour to discuss the new age of global financial warfare and its potential outcome on savers and investors around the world:









World Plunges Into Recession






With the disappointing initial GDP releases for 4Q-2012 from Europe out, the “world” as defined by 41 OECD countries across the globe, has plunged into recession.


We define “recession” through two alternative definitions for our comparison, either the presence of a single negative quarter-on-quarter growth or the more traditional two consecutive negative quarterly growths.


Whichever way you look at it, the number of countries in expansion plunged dramatically between 3Q-2013 and 4Q-2012.


Now this is a diffusion index, with each country receiving equal weightings, and so it appears that 60% seems to be a viable threshold for the definition of “global recession” using the single-quarter definition (black) and 70% is probably the appropriate threshold for the 2-quarter definition (blue).