Biderman On The Market's 'A-Ha' Moment And Obama's (Apparent) Omnipotence

TrimTabs’ CEO Charles Biderman finds it hard to hide his disdain for the omnipotent reality that President Obama espoused of a non-deficit increasing State of the Union solution to all our ills (from climate, income inequality, opportunity, and health) as he notes the politicians “do not seem to understand is that big government is, in fact, the problem, not the solution.”

The problem is it is hard to find one service the government provides that is effective, other then writing checks. We have not won the federal wars on poverty, or drugs, nor overseas wars in Iraq, and Afghanistan – so although governments have rarely successfully provided services, we have a government committed to doing just that.

This faith in government omnipotence is now bleeding over into stocks, as Biderman notes “since January 1, investors are pouring billions into the markets in the mistaken belief that the “fake” money created by central banks is just as good as previously existing money, and the markets will keep soaring. But for how long?”

He is clear on the implication of this “magical thinking” At some point “the markets will have an “aha” moment and stop allowing central banks to use newly created money with which to pay government bills. When that happens the markets will crash.”


Guest Post: Five Tools To Protect Your Privacy Online

Submitted by Simon Black of <a href="”>Sovereign Man blog,

We’ve discussed many times before – hardly a month goes by without some major action against Internet users… from Obama’s ‘kill switch’, to ACTA, SOPA and PIPA, to stasi tactics against people like Kim Dotcom.

Online is becoming more important by the day. And nobody is going to give it to you, you have to take steps yourself to secure it.

Below are five different tools and services that will get you started:

1. Tor Browser

Tor is a great weapon in the fight for online anonymity as it allows you to surf the web without giving up your location and other personal data to the websites you visit.

The Tor Browser Bundle is the easiest and most secure way to get started; simply download it, and start surfing the web with the Tor Browser. It’s available for Windows, Mac, and Linux.

Learn more about and download the Tor Browser Bundle here

2. Duck Duck Go

If you want , don’t search with Google.

Google store all of your searches to customize ads for you, but even worse, they can hand over the whole list of searches to any government agency that are curious about what you’ve been looking at for the last couple years.

A better alternative is Duck Duck Go, a completely anonymous search engine that does not store any information about you or your searches. The search results are essentially identical to Google’s, so there’s no loss of quality.

Search with Duck Duck Go here

3. HTTPS Everywhere

HTTPS Everywhere is a plug-in for Firefox and Google Chrome that tries to force a website to connect in secure mode, thus encrypting your traffic with the website you are visiting. This makes your browsing more secure because it prevents eavesdropping thieves or state-mafia from intercepting your unencrypted Internet traffic.

Download HTTPS Everywhere here

4. Cryptocat

Cryptocat is an encrypted chat that beats Facebook and Skype when it comes to security and . If you want to chat in private then this is one simple solution. It’s also open source, which means you can see the full code and be sure there are no government “backdoors” built in.

Read more about and download Cryptocat here

5. Silent Circle

Silent Circle is a new player on the market, but it is founded by “old” players in the security and encryption industry. One of the founders, Phil Zimmerman, is also the creator of PGP, one of the most-used encryption platforms in the world.

Silent Circle is a suite of products offering:

  • Encrypted email
  • Encrypted video chat
  • Encrypted phone calls
  • Encrypted text messaging

Silent Circle is the only service on this list that is not free. But having the gold standard of encryption may be worth it for you. It is for me.

Read more about Silent Circle here

Bottom Line

You can set up most of the tools we discussed in 5 minutes. Each of them will go a long way in securing your online.

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El-Erian On Stocks: "Prices Are Artificially High – It’s Time to Take Profits"

“It’s not going away, it’s going to get worse,” is how PIMCO’s Mohamed El-Erian warns Yahoo’s Lauren Lyster about central bank policy and the currency wars that are so much in discussion currently. Central banks have been compelled to undertake unconventional measures, things they haven’t done before, because other policymakers are not stepping up to take responsibility on the fiscal side. These implicit devaluations and beggar-thy-neighbor policies force a lot of liquidity into the system and by pushing up asset prices, central banks believe, create a ‘weath effect’. It can also trigger “animal spirits” – we get all excited and invest more.

The hitch, El-Erian says, is that in the process, central banks may “break” something. A currency war would fall into this camp. So it’s “high-risk, high-reward and no one can tell for sure which way it’s going to tip,” he says.

In terms of equity markets, El-Erian says investors are split into two camps.

  1. One camp believes that everything will go higher and central banks will succeed in their efforts.
  2. The other camp believes asset prices are going to come down to meet the fundamentals.

El-Erian puts himself in the second camp.

We think that prices are artificially high, that maintaining them here is going to be hard as central banks become less effective, and that it’s time to book some profits and to wait for some better entry points,” he explains.

He clarifies that this is not a “Lehman moment.” But “prices that have gotten way ahead of what policy can deliver,”


Click image for full clip:

The New Buffett Rule: Equities Are Overvalued

Based on Heinz’ new best friend from Omaha’s “best single measure of where valuations stand at any given momen,” US equities are now over-valued for the first time since 2007. Buffett’s measure – the percentage of total market cap (TMC) relative to the US GNP – as Cullen Roche indicates on Bloomberg’s Chart of the Day, crossed 100% this week into stretched territory. As Gurufocus notes, this implies a mere return of around 3.3% annualized (including dividends) ove rthe folowing years – though as is clear from the chart below – the ride is extremely bumpy…


SEC Charges Heinz Call Buyers With Insider Trading

Yesterday, after the news of the Heinz acquisition hit the market just in time to wipe away the bitter aftertaste of the biggest GDP drop in Europe since 2009, we brought you the undisputed fact that someone made nearly $2 million in call options, which soared 1700% overnight and was bought the day before. It appears even the SEC finally is back to doing what its historic task was before it discovered internet porn, and one day after the report, has charged unidentified traders operating or trading out of Zurich, Switzerland with generating some $1.8 million in profits. Notably, the trade occurred through an “omnibus account located in Zurich, Switzerland in the name of GS Bank IC Buy Open List Options GS & Co c/o Zurich Office (the “GS Account”).” Does GS stand for Goldman Sachs one wonders? And while we commend the SEC on finally doing its job, our original question still stands: who leaked the details of the transaction one day before its formal announcement?

The details:

On February 14, 2013, Heinz announced that it had entered into a merger agreement to be acquired by an investment consortium comprised of Berkshire Hathaway and 3G Capital. The deal price of $72.50 per share represented nearly a 20% premium to Heinz’s closing price of $60.48 on February 13.


In reaction to the Announcement, on February 14, Heinz’s stock closed at $72.50 – an increase of $12.05 per share, or approximately 20%, over the previous trading day’s closing price of $60.48. The trading volume in Heinz also skyrocketed on February 14, reaching over 64 million shares, an increase of over 1,700%. Prior to the Announcement, Heinz’s stock had consistently traded at just around or below $60 per share since November 2012.


On February 13, the last trading day before the Announcement, one or more unknown traders, using the GS Account, purchased 2,533 out-of-the-money June $65 calls. This was effectively a wager that Heinz’s stock, which had consistently traded around $60 per share for the last four months, would increase in value by approximately $5, or nearly 7.5%, over the next four months.


Equity call options,like the ones traded by Defendants, give the buyer the right, but not the obligation, to purchase a company’s stock at a set price (the “strike price”) for a certain periodof time (through “expiration”). In general, one buys a call option, or call,when the stockprice is expected to rise, or sells a call whenthe stockprice is expected to fall. For example, one “June 2013 $65” call on Heinz stockwouldgive the purchaser the right to buy 100 shares of that stock for $65 per share before the call expired on the Saturday following the third Friday of the referenced month, or, in this case, June 22, 2013. If at the time of purchase the call strike price is above the price at whichthe stock is then trading, the call is “out-of-the-money” because it would be unprofitable to exercise the call and pay more for the stock than if it were purchased on a stock market.


The purchase of 2,533 Heinzcalls with a strikeprice of $65 on February 13 was unusual giventhe historical options data for those calls. For example, on February 12 only 14 June $65 calls were purchasedand on February 11 no June $65 calls were purchased. In fact, since November 14, 2012, not more than 61 of these contracts had been purchased on any other single day.


As a result of the Announcement, the price of June $65 calls shot up from a close of $0.40on February 13 to a close of $7.33 on February 14, an increase of over 1,700%.


Between September 1, 2012 and February 13, 2013, the GS Accounthad no prior trading history in Heinz.


The timing, size and profitability of the Defendants’ trades, as well as the lack of prior history of significant trading in Heinz in the GS Account, make  these trades highly suspicious. In particular, after not trading Heinz securities in the GS Account for at least six months, Defendants invested nearly $90,000 in risky option positions the day prior to the Announcement. As a result of this well-timed trade, the Defendants’ Heinz position increased from  approximately $90,000 to over $1.8 million, an increase of nearly 2,000%) in just one day.


On information and belief, the unknown traders of Heinz securities were in possession of material, nonpublic information about the proposed acquisition of Heinz at the time they made the purchases alleged in this Complaint.

Filing below


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