Pump and Dump
September 30, 2010
By John R. Taylor, Jr.
Chief Investment Officer
At the Jackson Hole conference near the end of August, Fed Chair Bernanke informed the markets that they should anticipate the Fed’s announcement of a new quantitative easing (QE II) effort in the near future. In response, the global equity markets began a powerful rally, which continues today. In the US, the stock market gave us the strongest September since 1939, and Bernanke is still advertising his future plans to inflate the money supply, stimulate inflation, and reflate the economy. The Fed’s strategy seems to go beyond the famous Greenspan ‘put’ or even the Plunge Protection Team, which is rumored to be on the bid whenever US equities are down sharply. Bernanke is being proactive. In the street vernacular, Bernanke’s words are pumping up the prospects for a future liquidity boom, and a very strong equity market. The next step in this process, as carried out by Wall Street’s more scurrilous denizens, would be to dump their lousy equity positions on the market at inflated prices – hence ‘pump and dump.’
Strange thing, the US Treasury has lots of stock to sell: Citibank, AIG, and General Motors. It seems that the US authorities are very interested in making as large a profit as possible on the TARP program and its other equity positions, perhaps trying to draw our attention away from the Fannie Mae and Freddie Mac messes. General Motors is currently worth somewhere between $60 and $85 billion dollars, up from zero eighteen months ago, and at any valuation over about $67 billion, the US would break even. As the offering will be finalized in a month or so, the pressure to get a good price will last for a while. Prior to that AIA, AIG’s very profitable Asian arm, should be sold for around $40 billion, allowing the repayment of AIG’s line of credit from the NY Fed with some left over. Even Citibank, the last of all the banks still owing money to TARP, looks to be a winner. For the government this Houdinilike escape from the horrifyingly large TARP bailout of almost exactly two years ago is a tremendous success, for those buying out the government’s position: caveat emptor!
Standing on its own, the outlook for the equity market is not rosy. Earnings have been boosted by cost reductions, by productivity, and by absorbing competitors with excess cash. The outlook for future growth can not be good when the mean forecast for GDP growth in the US next year is around 2% and even that is dependent on some optimistic projections for final sales and exports. With those facts weighing on the market, should the US government be out pushing equities to climb higher? It seems that it is the Fed’s and the administration’s highest priority to have the S&P rising every month. A quick review of the correlation tables shows that a climbing S&P has equaled a falling dollar, climbing commodity prices, and higher inflation. As there is no inflation to speak of – and fear of deflation is
rampant in some quarters – this strategy seems to have little risk, at least for the government and the average US family. Bernanke and his friends in the Treasury seem to be pulling a fast one on the world, inflating US assets and deflating US liabilities through a falling dollar, while giving the US companies a chance to fund themselves cheaply. The only ones who are harmed are not voters or, if they are, they don’t have many votes. However, those who own the most US assets and will be financing the US in the future can not be pleased by this. It might be that the Eurozone is short-sighted allowing the euro to rise (see A Race to Two Bottoms, September 23), but the US is not thinking about the long term either. This is a very short term game. If the economy does go into a recession next year, as we expect, equities will decline anyway, and the government’s escape will only be temporary.
TARP II will need to be rolled out alongside QE II and many will be left with a sour taste in their mouths.
h/t Teddy KGB
Cirtas Systems, a cloud storage hardware company, is coming out of stealth mode today and announcing that it has raised a $10 million first round of funding.
The San Jose, Calif.-based company is announcing its Bluejet Cloud Storage Controller, a piece of storage equipment that sits in cloud-based data centers. Cirtas deploys Bluejet controllers in a customer’s data center. Bluejet functions just like an on-site storage array, and our technology is seamlessly connecting to and accelerating the performance of off-site cloud storage services, with fast response to user queries, said Dan Decasper, chief executive.
The startup is attacking a common problem for enterprises. Storage systems are getting so complex that they require the architectural expertise of highly specialized people to solve. The amount of data in corporations is exploding so fast that it’s hard to keep up with storage growth needs. By shifting it to the cloud, or Web-based data centers that can be outside of a company’s physical premises, companies can offload the task to others and reduce costs.
The product is aimed at medium and large enterprises and is available now. By tapping the cloud, the company hopes to solve complex security, performance and compatibility issues that stop companies from using cloud storage. One of the big benefits is that enterprises will be able to move their storage from one cloud service firm to another to get better pricing.
Cirtas said it has completed beta tests at more than a dozen enterprise customers across diverse markets. The company ties together techniques for optimizing networks to work with its virtualized storage arrays so that it can deliver what it calls the world’s first cloud-enabled storage system. The company’s first purchase order has come from beta user Robert Half International.
Cirtas said it can securely encrypt all data in transit to and from the cloud, making sure that only authorized users have access to data. If there is a security breach, the Bluejet technology can prevent data from being read or used, as administrators can control who has access. It can also anticipate storage costs and how they fluctuate. And it can manage data for speedy performance.
Cirtas raised money from New Enterprise Associates; Lightspeed Venture Partners; and Amazon.com, itself a major player in cloud computing through its Amazon Web Services offering. The company plans to use the money to expand its infrastructure and accelerate the adoption of its technology.
Amazon is one of the big advocates of cloud computing, which can give businesses more options and better control over how they purchase data storage. Cirtas’s approach to the cloud is tightly aligned with Amazon’s, said Jeff Blackburn, senior vice president of corporate development at Amazon. He said Amazon was most impressed with the ability of Cirtas to migrate large quantities of data into the cloud in a fast, secure, and cost-effective manner.
Beyond Amazon, Cirtas has also secured a strategic alliance with Iron Mountain, which offers archive services. The Cirtas Bluejet product costs $69,995 per appliance. It is available from a variety of industry resellers. The company said it is making free evaluation systems available to customers.
The company was founded in 2008 by Decasper and Allen Samuels. Its team includes veterans of Citrix, DataDomain, NetApp and Riverbed. Cirtas has 30 employees. Rivals include storage vendors such as EMC and NetApp, Twinstrata, Nasuni, StorSimple and Panzura.
[Pictured at top: Decasper (left) and Josh Goldstein, marketing chief]
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As AOL rushes to local <b>news</b>, Examiner.com is already there <b>...</b>
Dean is lead writer for GamesBeat at VentureBeat. He covers video games, security, chips and a variety of other subjects. ...
ScribbleLive plans to reinvent the <b>news</b> article | VentureBeat
Anthony is VentureBeat's assistant editor, as well as its reporter on media, advertising, and social networks. Before joining VentureBeat in ...
Haley Barbour Defends <b>News</b> Corp's Donations To RGA, Chamber Of <b>...</b>
The reports that News Corp., the parent company of Fox News, has given two separate million-dollar donations to conservative entities has sparked another wave of criticism over the cable company's editorial leanings.
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Pump and Dump
September 30, 2010
By John R. Taylor, Jr.
Chief Investment Officer
At the Jackson Hole conference near the end of August, Fed Chair Bernanke informed the markets that they should anticipate the Fed’s announcement of a new quantitative easing (QE II) effort in the near future. In response, the global equity markets began a powerful rally, which continues today. In the US, the stock market gave us the strongest September since 1939, and Bernanke is still advertising his future plans to inflate the money supply, stimulate inflation, and reflate the economy. The Fed’s strategy seems to go beyond the famous Greenspan ‘put’ or even the Plunge Protection Team, which is rumored to be on the bid whenever US equities are down sharply. Bernanke is being proactive. In the street vernacular, Bernanke’s words are pumping up the prospects for a future liquidity boom, and a very strong equity market. The next step in this process, as carried out by Wall Street’s more scurrilous denizens, would be to dump their lousy equity positions on the market at inflated prices – hence ‘pump and dump.’
Strange thing, the US Treasury has lots of stock to sell: Citibank, AIG, and General Motors. It seems that the US authorities are very interested in making as large a profit as possible on the TARP program and its other equity positions, perhaps trying to draw our attention away from the Fannie Mae and Freddie Mac messes. General Motors is currently worth somewhere between $60 and $85 billion dollars, up from zero eighteen months ago, and at any valuation over about $67 billion, the US would break even. As the offering will be finalized in a month or so, the pressure to get a good price will last for a while. Prior to that AIA, AIG’s very profitable Asian arm, should be sold for around $40 billion, allowing the repayment of AIG’s line of credit from the NY Fed with some left over. Even Citibank, the last of all the banks still owing money to TARP, looks to be a winner. For the government this Houdinilike escape from the horrifyingly large TARP bailout of almost exactly two years ago is a tremendous success, for those buying out the government’s position: caveat emptor!
Standing on its own, the outlook for the equity market is not rosy. Earnings have been boosted by cost reductions, by productivity, and by absorbing competitors with excess cash. The outlook for future growth can not be good when the mean forecast for GDP growth in the US next year is around 2% and even that is dependent on some optimistic projections for final sales and exports. With those facts weighing on the market, should the US government be out pushing equities to climb higher? It seems that it is the Fed’s and the administration’s highest priority to have the S&P rising every month. A quick review of the correlation tables shows that a climbing S&P has equaled a falling dollar, climbing commodity prices, and higher inflation. As there is no inflation to speak of – and fear of deflation is
rampant in some quarters – this strategy seems to have little risk, at least for the government and the average US family. Bernanke and his friends in the Treasury seem to be pulling a fast one on the world, inflating US assets and deflating US liabilities through a falling dollar, while giving the US companies a chance to fund themselves cheaply. The only ones who are harmed are not voters or, if they are, they don’t have many votes. However, those who own the most US assets and will be financing the US in the future can not be pleased by this. It might be that the Eurozone is short-sighted allowing the euro to rise (see A Race to Two Bottoms, September 23), but the US is not thinking about the long term either. This is a very short term game. If the economy does go into a recession next year, as we expect, equities will decline anyway, and the government’s escape will only be temporary.
TARP II will need to be rolled out alongside QE II and many will be left with a sour taste in their mouths.
h/t Teddy KGB
Cirtas Systems, a cloud storage hardware company, is coming out of stealth mode today and announcing that it has raised a $10 million first round of funding.
The San Jose, Calif.-based company is announcing its Bluejet Cloud Storage Controller, a piece of storage equipment that sits in cloud-based data centers. Cirtas deploys Bluejet controllers in a customer’s data center. Bluejet functions just like an on-site storage array, and our technology is seamlessly connecting to and accelerating the performance of off-site cloud storage services, with fast response to user queries, said Dan Decasper, chief executive.
The startup is attacking a common problem for enterprises. Storage systems are getting so complex that they require the architectural expertise of highly specialized people to solve. The amount of data in corporations is exploding so fast that it’s hard to keep up with storage growth needs. By shifting it to the cloud, or Web-based data centers that can be outside of a company’s physical premises, companies can offload the task to others and reduce costs.
The product is aimed at medium and large enterprises and is available now. By tapping the cloud, the company hopes to solve complex security, performance and compatibility issues that stop companies from using cloud storage. One of the big benefits is that enterprises will be able to move their storage from one cloud service firm to another to get better pricing.
Cirtas said it has completed beta tests at more than a dozen enterprise customers across diverse markets. The company ties together techniques for optimizing networks to work with its virtualized storage arrays so that it can deliver what it calls the world’s first cloud-enabled storage system. The company’s first purchase order has come from beta user Robert Half International.
Cirtas said it can securely encrypt all data in transit to and from the cloud, making sure that only authorized users have access to data. If there is a security breach, the Bluejet technology can prevent data from being read or used, as administrators can control who has access. It can also anticipate storage costs and how they fluctuate. And it can manage data for speedy performance.
Cirtas raised money from New Enterprise Associates; Lightspeed Venture Partners; and Amazon.com, itself a major player in cloud computing through its Amazon Web Services offering. The company plans to use the money to expand its infrastructure and accelerate the adoption of its technology.
Amazon is one of the big advocates of cloud computing, which can give businesses more options and better control over how they purchase data storage. Cirtas’s approach to the cloud is tightly aligned with Amazon’s, said Jeff Blackburn, senior vice president of corporate development at Amazon. He said Amazon was most impressed with the ability of Cirtas to migrate large quantities of data into the cloud in a fast, secure, and cost-effective manner.
Beyond Amazon, Cirtas has also secured a strategic alliance with Iron Mountain, which offers archive services. The Cirtas Bluejet product costs $69,995 per appliance. It is available from a variety of industry resellers. The company said it is making free evaluation systems available to customers.
The company was founded in 2008 by Decasper and Allen Samuels. Its team includes veterans of Citrix, DataDomain, NetApp and Riverbed. Cirtas has 30 employees. Rivals include storage vendors such as EMC and NetApp, Twinstrata, Nasuni, StorSimple and Panzura.
[Pictured at top: Decasper (left) and Josh Goldstein, marketing chief]
Next Story: HP launches fancy touch-based desktops and an app store for touch apps Previous Story: Google beefs up Apps security to win cloud customers
As AOL rushes to local <b>news</b>, Examiner.com is already there <b>...</b>
Dean is lead writer for GamesBeat at VentureBeat. He covers video games, security, chips and a variety of other subjects. ...
ScribbleLive plans to reinvent the <b>news</b> article | VentureBeat
Anthony is VentureBeat's assistant editor, as well as its reporter on media, advertising, and social networks. Before joining VentureBeat in ...
Haley Barbour Defends <b>News</b> Corp's Donations To RGA, Chamber Of <b>...</b>
The reports that News Corp., the parent company of Fox News, has given two separate million-dollar donations to conservative entities has sparked another wave of criticism over the cable company's editorial leanings.
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As AOL rushes to local <b>news</b>, Examiner.com is already there <b>...</b>
Dean is lead writer for GamesBeat at VentureBeat. He covers video games, security, chips and a variety of other subjects. ...
ScribbleLive plans to reinvent the <b>news</b> article | VentureBeat
Anthony is VentureBeat's assistant editor, as well as its reporter on media, advertising, and social networks. Before joining VentureBeat in ...
Haley Barbour Defends <b>News</b> Corp's Donations To RGA, Chamber Of <b>...</b>
The reports that News Corp., the parent company of Fox News, has given two separate million-dollar donations to conservative entities has sparked another wave of criticism over the cable company's editorial leanings.
bench craft company rip off bench craft company rip off
As AOL rushes to local <b>news</b>, Examiner.com is already there <b>...</b>
Dean is lead writer for GamesBeat at VentureBeat. He covers video games, security, chips and a variety of other subjects. ...
ScribbleLive plans to reinvent the <b>news</b> article | VentureBeat
Anthony is VentureBeat's assistant editor, as well as its reporter on media, advertising, and social networks. Before joining VentureBeat in ...
Haley Barbour Defends <b>News</b> Corp's Donations To RGA, Chamber Of <b>...</b>
The reports that News Corp., the parent company of Fox News, has given two separate million-dollar donations to conservative entities has sparked another wave of criticism over the cable company's editorial leanings.
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