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Warning: Is Federal Reserve Out Of Ammo?

As the article below indicates, absolutely. There is very little they can do going forward. With real interest rates being in the negative territory and QE losing it’s credit velocity, there very little the FED can do to aid our financial markets and the US Economy. Particularly, with the onset of the bear market of 2014-2017 the FED will be powerless to “re-inflate” our markets and the economy as fast as they did at 2009 bottom. If at all.

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Warning: Is Federal Reserve Out Of Ammo?  Google

The Federal Reserve gets a lot of credit for what passes as an economic recovery. Whether it deserves that credit, going forward the Fed has very little power to influence events because it is essentially out of ammo to further ease. The economy, meanwhile, is still lackluster, despite the central bank’s unjustified optimism.

The Fed cast a warm and fuzzy glow in January, when it predicted a pickup in economic growth, which it cited as its rationale for tapering its bond buying campaign, called quantitative easing (QE). And if that acceleration doesn’t happen in the near future?

Don’t worry: Wall Street will just shift its predictions for a growth resurgence to the second half of the year, as it’s done every year since about 2005 — if memory serves correctly. At this time of year, the Street always says that things will get better in the second half.

The revision of fourth-quarter 2013 gross domestic product growth of 2.8% is not enough of a reason to reverse the Fed’s QE policy, which seems to have less and less effect on the real economy, according to the central bank’s own research. The Fed says it will gradually taper its monthly bond buying, most likely ending it altogether late in the year. But the Fed’s new chief,Janet Yellen, adds that it reserves the right to change course and increase the purchases if the economy dips.

If the current first quarter does end up with say, 1.5% GDP growth, the bad weather in much of the nation will be a factor. But the weather effect is still amorphous enough not to reverse course. Once winter fades, there will inevitably be a rebound effect, so the bank may have to wait until the third quarter before it feels comfortable saying anything about the true core rate of growth (although it probably will cut its 2014 forecast by the June meeting).

Keep in mind that the only easing tools the Fed has left are forward guidance – its practice, through issuing forecasts of its policy intentions, of influencing market behavior – and more QE. It can’t run about ramping up money printing for every bump in the road. Its bond purchases succeeded in raising asset prices by progressively upping the ante each time; that option isn’t available anymore, not when the price tag is the Fed’s bloated balance sheet already on its way to $5 trillion. Also, 2014 is a mid-term election year, and I suspect that the Fed governors would really like to be out of the program entirely come November.

Finally, as dovish as Yellen and the others may want to be, there are a couple of realities confronting the bank. One is the lack of ammunition for any crisis that might pop up before the current QE program is back to zero again. QE is partly a psychological effect, and backing out of tapering it in mid-stream is likely to induce considerable anxiety after the initial euphoria wears off.

The other is the nature of the Fed’s charter. Quantitative easing was predicated from the beginning on improving employment, a goal handed to the bank in the 1970s by the Humphrey-Hawkins Act. The unemployment rate, now 6.6%, is unlikely to rise anytime soon, given that unemployment is a lagging indicator. So far as the business cycle goes, it is one of the last parts to decline. A resumption of QE after a weak GDP report and a Fed prediction that unemployment might worsen would be politically lethal – the central bank is only as independent as Congress says it is.

The economy hasn’t shown any signs whatsoever of accelerating to a sustained 3% growth rate. The recovery from the Great Recession has been choppy, with one quarter’s surge followed by a weaker performance. Fourth-quarter 2012 growth slipped to a mere 0.1%, for example. Temporary growth surges sometimes occur, due to sporadic influences like the inventory-restocking episode from last year, when this sudden and unexpected increase helped propel the third-quarter gain to 4.1%.

I couldn’t believe my ears on Thursday when I saw a fellow on CNBC say with a straight face “well, the economy really is getting better this year.” The economy is only getting better on the same basis it’s gotten better the last five years – somewhere over the rainbow.

The current stock market rebound is getting stretched: The Standard & Poor’s 500 has nearly reclaimed its January peak, while the Nasdaq is making new post-2000 highs. All of that in spite of some pretty weak data recently, such as the housing sector’s downbeat results. The National Association of Realtors says January existing home sales slumped 5.1%, which it ascribed to poor weather, and rising home prices and mortgage rates.

That said, equities could still squeak out mild gains ahead, after a breather here and there. I’ve talked about a first-quarter top for stocks since the beginning of the year, and my prediction is still intact. But it still appears to me to be a top to sell, not to buy.

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Why Russians Love Putin

As predicted on this website, Putin scored a major victory over the weekend in Crimea. While the US and the EU will continue it’s huffing and puffing, pounding the table and threatening sanctions, Putin was able to regain Crimea as Russian territory. The remaining legal stuff is nothing but a  formality now. Yet, most Americans are dumbfounded by the fact that Putin’s approval rating surged to 72% while Obama’s hit a new low at 41%.  Here is why….

  • In Russia, Crimea is seen as a Russian territory and most people (in both Russia and Crimea) believe that it should be part of Russia again. 
  • Most Russians are fed up with the West. Putin is seen as a powerful leader who is able to stand up to powerful Western interests and people eat that stuff up. 
  • Russians are starting to feel as if they are getting their old “Soviet Union” power back. 

 Despite all of the above, Western powers continue with their support of radical elements within Ukraine. Playing right into Putin’s hands.  

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Why Russians Love Putin  Google

 

Putin Is No Mad Man to Russians as Power Play Trumps Economy

Western leaders may think Vladimir Putinis crazy for threatening to annex Crimea and invade other areas of Ukraine. Most Russians, still bitter about the Soviet Union’s demise more than two decades ago, couldn’t be prouder.

Putin’s approval rating, bolstered afterRussia hosted its first Winter Olympics last month, reached a three-year high as he poured troops into Crimea amid the overthrow of the Kremlin-backed government in Kiev. The tensest showdown with the West since the fall of the Berlin Wall has proved to be good for the business of governing in Moscow.

“Putin is just defending his country’s interests,” said Yaroslav Batashev, 32, a manager at a Moscow-based trader of consumer products who says he isn’t necessarily a fan of his president. “Crimea is historically important for Russia and it’s Russian.”

Since overcoming the biggest protests of his 14-year-rule to win a third term in 2012, Putin has reasserted his power at home and abroad. Even at the risk of sanctions that could tip the economy into recession for the second time in five years, Russians see his defiance of the West over Ukraine as a sign of strength, reinforcing his image as a leader who restored his country’s greatness from the post-Communism chaos of the 1990s.

Putin’s Backing

Seventy-two percent of Russians approve of the work Putin is doing as president, the independentLevada Center said March 13, citing a survey of 1,603 people that had a margin of error of 3.4 percentage points. A March 8-9 poll by the state-run All-Russia Center for the Study of Public Opinion, known as VTsIOM, also gave Putin 72 percent.

“The involvement of the U.S. in a situation with which it has nothing to do with is very irritating,” said Ilya Knyazev, a 31-year-old sales director at a food distributor in Moscow. “I support Crimea joining us because otherwise NATO would be in Ukraine, hurting Russia’s security.”

Part of that support has been drummed up by the attacks by Putin’s vast media apparatus on the “fascists” who took power in Ukraine and the portrayal on state-run television of the protests that led to the ouster of President Viktor Yanukovych.

“Russians were deeply astonished by the pictures they saw on TV from Independence Square in Kiev — the shootings, killings, burning tires,” Alexander Oslon, head of the Public Opinion Fund, said by phone yesterday.

‘Overwhelming Support’

“Those pictures created the fear that it may happen in Crimea, where the majority of the population is Russian,” Oslon said. “Now Putin has the overwhelming support of the majority of the population.”

Putin, who came to power in 1999, the year after Boris Yeltsin defaulted on $40 billion of domestic debt, averaged economic growth of 7 percent a year in his first two presidential terms as oil prices and output surged. The former KGB colonel reasserted state control of the economy and media and gained popularity as he reined in the oligarchs — men who became billionaires overnight by acquiring some of the country’s most valuable assets at rigged auctions. He jailed the richest of them, Mikhail Khodorkovsky.

Crimea has been home to Russia’s Black Sea Fleet since its founding by Catherine the Great in 1783, after the Ottoman Empire ceded the peninsula. It was part of Russia until Soviet leaderNikita Khrushchev gave it to the Ukrainian Socialist Republic in 1954, when Putin was 14 months old.

Leaving Ukraine

A total of 96.8 percent of voters in the Black Sea peninsula yesterday backed leaving Ukraine to join Russia, the head of the election commission, Mikhail Malyshev, told reporters. The results exclude one city, Sevastopol. The U.S. and the EU have both called the vote illegal.

Crimea may be incorporated into Russia by the end of this week, Alexander Ageyev, first deputy head of the Russian State Duma lower house of parliament’s committee for constitutional affairs, said in a phone interview today.

Putin’s focus is already shifting to eastern Ukraine, which is also largely Russian-speaking. The Foreign Ministry in Moscow, which called the overthrow ofYanukovych a “coup” by “fascists,” said March 15 people in eastern Ukraine asked for Russian protection after a series of deadly clashes in Donetsk and Kharkiv.

To be sure, many educated Russians are aghast at Putin’s policy over Ukraine. Organizers of a peace march against Russian actions in Ukraine drew tens of thousands of people to central Moscow on March 15, according to organizers and media reports. Police put the number at 3,000.

‘Aggressive Quest’

“Moscow’s aggressive quest for its ‘near abroad’ has become an ideological mission to fight the West, one that has left all rational grounds and that ignores all costs and consequences, including those to Russia itself,” Joerg Forbrig, a senior program officer at the Berlin bureau of the German Marshall Fund of the U.S., said by e-mail.

Ukraine in general and Crimea specifically represent the latest and, for Putin, the most crucial step in his crusade to halt what he sees as the West’s relentless encroachment on Russian interests since the end of the Cold War.

Most of the buffer states between Russia and Germany, where millions of people died during World War II, has been absorbed by the North Atlantic Treaty Organization and the European Union since the Soviet Union disbanded in 1991. Sevastopol, home to the Black Sea Fleet, is a symbol of Russian heroism not unlike the Alamo for Americans. The city was under siege by the British and the French during the Crimean War in the 1850s and then by Nazi forces in 1941-1942.

Syria, Iran

In just the past year, Putin has cemented Russia’s role in the Middle East by brokering a deal that averted U.S. strikes on Syria and kept in power President Bashar al-Assad, a Soviet-era ally and buyer of Russian weapons. He’s also encouraged the West to make concessions to Iran over its nuclear program and struck a multi-billion arms deal with Egypt’s new military rulers after the U.S. suspended aid.

Putin, who once described the breakup of the Soviet Union as the biggest geopolitical catastrophe of the 20th century, was named “Person of the Year” in December by the Times of London for the accord over Syria. That effort “propelled the president back into the front ranks of effective world statesmen,” the Times said.

For now, most Russians are shrugging off Putin’s crackdown on what’s left of independent media, which includes forcing out the longtime head of the country’s biggest talk radio station, Ekho Moskvy, and the editor-in-chief of one of its most popular news sites, Lenta.ru.

‘In Ruins’

“The country was in ruins under Boris Yeltsin,” said Batashev, the Moscow trader. “Despite all of Putin’s disadvantages, he’s a tough and uncompromising leader who managed to transform Russia into a better place than it was a decade ago.”

With the presidential term extended to six years from four, Putin, first elected in 2000, may stay in power until 2024 if he runs and wins again in 2018.

Even within the government, some officials are hoping Putin will moderate his response to the crisis, though they are afraid to speak out against what they see as a course already chosen, according to two people familiar with the situation.

Russia retaliating with sanctions against the West could wipe out 10 years of achievements in financial and monetary policy, one of the people said. Such escalation could erase as much as a third of the ruble’s value, another said.

Ruble, Peso

The ruble has slumped about 10 percent against the dollar this year, the worst-performer after Argentina’s peso among 24 emerging-market currencies tracked by Bloomberg.

“I don’t want Russia to be in isolation again and be in the opposition to the rest of the world,” said Anatoly Kapralov, 29, the founder of an advertising agency in Moscow.

That kind of sentiment isn’t likely to sway Putin, said Nicholas Spiro, the managing director of Spiro Sovereign Strategy in London.

 

 

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Stock Market Weekly Update. March 15th, 2014. InvestWithAlex.com

Daily Chart March 15, 2014 investwithalex

Weekly Update & Summary: March 15th, 2014

The market sold off throughout the week with the Dow Jones being down -387 points (-2.35%) and the Nasdaq being down -91 points (-2.09%) for the week. Structurally, the market closed a giant gap that was left behind on March 4th, which could be considered as bullish. At the same time, it left no holes on the upside, which is bearish.

FUNDAMENTAL & MARKET ANALYSIS: 

As per our timing and mathematical work below, the market will continue to shift gears from bull market to bear market throughout 2014. Longer term, this bear market will last between 2014-2017 as I have indicated many times before. While it’s internal structure will not be as violent and as steep as the 2007-2009 bear market leg, investors should anticipate the market to lose 35-40% when it’s all said and done.

(If you would be interested in learning exactly when this bear market will start and its internal structure, please Click Here) 

In today’s report I would like to concentrate on the best way to approaching this bear market and what you can and should be doing. Based on my calculations, the upcoming bear market will last approximately 625 trading days. At the present “Market Energy Level” the market oscillates at approximately 20 points per day. Further, based on my bear market terminal point calculation, at this energy level the market will reach it’s terminal point within 275 days.

If you are confused, don’t be. This simply means the upcoming bear market will not be directional. It will be volatile with lots of ups and downs. As such, you have a number of options if you would like to make money in this market.

Option #1: Just get out and stay in cash or short-term treasury. You won’t make much money, but you won’t lose any either. When the bear market completes, you will be able to come in at the market bottom and buy some great businesses at cheap prices. Plus, you will get a side benefit of sleeping well for over two years.   

Option #2: Go short and forget about it. Again, this is not for the faint of heart. The market will be very volatile. Yet, if you can hold on to your position you will be able to walk away with a 30% or so gain when it’s all said and done.

Option #3: Based on my calculations the market will offer up a total of 10,000-12,000 points over the next 2.5-3 years. That includes both, bull and bear legs. Theoretically, if one trades in and out of the market at the right spots (what we are trying to do here) one should be able to walk away with a 50-75% return. Yet, this requires a certain skill set and nerves of steel. It is next to impossible to do. With mistakes, I believe a 40% return here is the best case scenario.

Which option is the best one for you? That should depend on your personal investment style and risk profile. If I wasn’t in an active money management and advisory service business, I would most definitely go with option #1 or #2.  Yet, since I am doing what I am doing, I will be concentrating on option #3.

Next week, we will take a look at the best stocks to short in order to maximize returns even more. Plus, some actual short picks. I call them force multipliers.

MACROECONOMIC ANALYSIS:  

Ukraine continues to dominate the news.

It is very difficult to ascertain if the situation is dying down or about to blow up into a full on military conflict between Russia, Ukraine and possibly NATO. There are two possible outcomes here.

Outcome #1:  Crimea will vote to join Russia over the weekend. That is a given and already priced into the market. At this juncture the West huffs, puffs, pounds the table and maybe even implement sanctions. Russia calms down and things will die off over the next couple of weeks.

Outcome #2:  Outcome #1, but Russia decides to continue fighting by “invading” east Ukraine. This opens up a whole another dimension between Russia and the West. Sanctions against Russia at that juncture are almost a guarantee. While the West will not go in, it would be interesting to see if Russia decides to retaliate against the West and where that would lead us thereafter. This scenario is too unpredictable at this stage.

If I had to guess, Russia will walk away with Crimea and call it a day. No sanctions will be implemented. At that juncture, Ukraine will become a proxy playground for the West Vs. Russia where east and west Ukraine continue to clash, possibly escalating into a civil war.  Too bad for the people there. 

TECHNICAL ANALYSIS: 

Long-Term: The trend is still up. Market action in January-February could be viewed as a simple correction in an ongoing bull market. 

Intermediary-Term: Since February 5th, intermediary term picture shifted from negative to positive. Giving us a technical indication that both the intermediary term and the long term trends are up. Yet, that in itself can be misleading as per our timing analysis discussion below.

Short-Term: While the short-term remains bullish as of right now, it might turn bearish if the point discussed in the mathematical & timing section is breached.

Again, with all 3 trends being bullish for the time being, this might be misleading. Please read our Mathematical and Timing Analysis to see what will transpire over the next few weeks.    

MATHEMATICAL & TIMING ANALYSIS:  

(*** Please Note: This time around about 95% of the information contained within this section has been deliberately removed as it contain too much technical information. Particularly, exact dates and prices of the upcoming turning points. As well as trading forecasts associated with them. I deem such information to be too valuable to be released onto the general public.  As such, this information is only available to my premium subscribers. If you are a premium subscriber please Click Here to log in. If  you would be interested in becoming a subscriber and gaining access to the most accurate forecasting service available anywhere, a forecasting service that gives you exact turning points in both price and time, please Click Here to learn more.Don’t forget, we have a risk free 14-day trial).  

XXXX

Hence, I suggest the following positioning over the next few days/weeks to minimize the risk while positioning yourself for a forecasted market action. (This is continuation of our previous positioning).

If You Are A Trader: XXXX 

If No Position: XXXX

If Long: XXXX  

If Short:  XXXX

CONCLUSION: 

An incredibly important week is coming up. Above, I have described two possible scenarios we are working with. I have also described the point force we are looking at and exactly what you should do in each case. With increased volatility, multiple interference patterns and an incredibly important long-term turning point we must be very careful and risk averse here.  Those anticipating the moves and those who can time them properly will be rewarded appropriately.

Please Note: XXXX is available to our premium subscribers in our + Subscriber Section. It’s FREE to start. 

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Stock Market Weekly Update. March 15th, 2014. InvestWithAlex.com Google

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The Extent Of China’s Credit Bubble

The chart below speaks for itself and the extent of Chinese Credit Default time bomb. Please note, this chart doesn’t include China’s so called “Shadow Banking” assets which are estimated to be at an additional $6-10 Trillion. In short, China makes US Credit Infusion by the FED look like child’s play. When China finally blows sky high, it’s defaults will be as massive at the credit expansion below. 

China Bank Assets InvestWithAlex

 

The Extent Of China’s Credit Bubble

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How To Avoid Paying Taxes….Through A Legal Loophole…. Of Course (Part II)

Loopholes investwithalexOn Wednesday I published an important article outlining how multinationals have accumulated over $2 Trillion in untaxed (tax deferred) profits. I then showed you a way how you can structure your own life/company as a multinational to avoid paying taxes as well. Legally of course. Click Here To See The Original Article.  

However, I had a brain fart and forgot to mention one very important fact that should piss you off even more. Guess what the multinationals do with that cash? That’s right, they invest it in the US Treasury and collect interest. 

Apple, Cisco Systems, Google, and Microsoft legally hold $124 billion in US Treasury securities and $39 billion in US government agency debt in accounts overseas, allowing them to avoid the 35 percent (maximum) corporate tax rate in the United States, according to Securities & Exchange Commission reports.

So, while the IRS taxes your Income, Welfare and Social Security, multinationals are able to earn tax free profit, then turn around and invest it in the US Debt to earn interest. Rapping the American citizens twice. The thing is, it’s not their fault. The full responsibility lies with the corrupt US Government full of loopholes. 

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Stock Market Update. March 14th, 2014. InvestWithAlex.com

 Daily Chart March 14, 2014 investwithalex

A down day with the Dow Jones down -43 points (-0.27) and the Nasdaq down -15 points (-0.35%). 

The market bounced around at an important resistance/support level today, without being able to go much lower or higher. With weekend Ukraine developments left overhead, the market closed in a worse possible spot. Should Russia invade Ukraine over the weekend, the market might open up with a large gap down…….. or perhaps up. No matter what happens over the next few days, one thing is certain. 

The US Stock Market is incredibly overpriced. With the 5-Year and the 17-Year cycles now pointing down, this market will have a very difficult time going much higher at this juncture. In fact, the bear market of 2014-2017 might already be here. Ushering in much lower stock prices over the next few months/years. If you would be interested in knowing exactly when this bear market will start or resume, as well as it’s internal short-term composition, please Click Here. 

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Stock Market Update. March 14th, 2014. InvestWithAlex.com Google

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The US Economy Is On Fire….Quiznos Files For Bankruptcy….Oh

I do have to admit that their sandwiches taste like crap, but that’s beside the point. Quiznos filed for bankruptcy protection for its 2,100 stores today. That comes on top of Sbarro Pizza chain filling for bankruptcy just a few days ago. A coincidence? After all, if you are to listen to Perma Bulls, the FED and our Administrations, the US economy is on fire and about to get better.

What they forgot to mention is that most of economic expansion over the last 5 years has been driven by credit expansion and speculation. This pile of debt is what’s keeping this economy afloat while artificially inflating corporate earnings. Take Quiznos for instance. They have had over $400 Million in debt spread out over 2,100 stores. That’s crazy and no company of Quiznos size can sustain such a heavy debt load. And its not just Quiznos. It’s pretty much everyone outside of massive cash cows like Apple, Google or Goldman Sachs.  

When this credit bubble finally pops, and it will, you will see a line of American companies under heave debt burden filling for bankruptcy. Quiznos and Sbaro where just the first to go. If you would be interested in learning when the bear market of 2014-2017 will start, please CLICK HERE. 

quiznos investwithalex

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The US Economy Is On Fire….Quiznos Files For Bankruptcy….Oh Google

First, Sbarro. Now, Quiznos.

Quiznos has filed for bankruptcy protection, five days after theSbarro pizza chain did the same.

Executives at the restaurant chain, known for its toasted sandwiches, agreed to a restructuring plan that will reduce its debt by more than $400 million, the company said in a statement Friday.

All but seven of Quizno’s 2,100 restaurants in the United States and 30 other countries are independently owned franchises, and will remain open and operating as usual.

CEO Stuart Mathis said the company will take action to help increase sales and profits for its franchise owners going forward. It will look to reduce food costs, invest in local advertising and, in some circumstances, make loans available for restaurant improvements.

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IPO Madness Continues

IPO madness continues unabated. Today’s target? Castlight Health (CSLT), went public today at $16, and quickly shot up to $42, giving it a valuation of roughly $4 Billion. Not a big deal, you might think. Until you find out that the company has only $13 Million in revenue and huge net losses. With it’s valuation at 307 times it’s revenue this company better cure cancer and bring world piece to justify its valuation. In case you believe this sort of a valuation is alright, give me a call, I have some Nortell and Pets.com stock to sell you. 

Just another nail into this bull markets casket. If you would be interested in learning when the bear market of 2014-2017 will start and its internal composition, please Click Here.  

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IPO Madness Continues Google

Castlight Health: Most overpriced IPO of the century

In hindsight, it’s kind of funny that the big tech bubble debate this week focused on Candy Crush Saga owner King Digital Entertainment’s IPO filing. It’s funny because, on Thursday night, Wall Street priced the craziest deal since the heights of the Internet bubble and almost no one complained a bit.

 

That deal was for Castlight Health (CSLT), a company that offers health information via the Internet to inform medical choices and reduce insurance costs. Sounds like a pretty good idea, and Castlight says it has helped some of its corporate customers reduce their health costs by more than 10% a year.

Goldman Sachs, Morgan Stanley and other lead underwriters priced Castlight’s shares at $16, above an already raised expected range of $13 to $15, giving the company a valuation of $1.4 billion. That’s billion with a “b.” Last year, Castlight had $13 million of total revenue. That’s million, with an “m.”

Then the stock opened on Friday at almost $40, giving it a valuation of over $3 billion!

Insane valuation

Jay Ritter, a professor at the University of Florida and my go-to source on IPOs for the past few decades, tells me that Castlight’s insane level of valuation – 107 times revenue (not profits, as they had huge losses last year) – of the original IPO pricing hasn’t been seen for a tech deal since the year 2000, the twilight of the 20th century. Of the prior 13 deals priced at 100 times revenue or more and sales of at least $10 million, the average 3-year return was -92%.

Investors have been attracted by the siren song of market potential. With trillions spent on health care and everyone trying to save money, surely there’s a big market for Castlight’s services?

That’s probably true but it’s also obvious to a lot more folks than those at Castlight. Try the numerous private competitors, companies such as Change Healthcare, backed by investors including Blue Cross Blue Shield, and Healthsparq, which recently said it served 60 million consumers. And the big health insurers themselves, Aetna (AET) and UnitedHealth Group (UNH), for example, are already experimenting with similar services and giving them away free to major customers.

To be sure, it’s a great idea. One of the biggest hurdles to controlling healthcare costs is the complexity and obfuscation in the market. It’s hard to be a smart shopper when you can’t compare the quality of different providers or even know how much they’ll end up charging. Castlight and its competitors collect vast amounts of data and display relevant bits in a more clear and simple way to help consumers make smarter choices.

The next Netscape?

But there’s no way to tell who will win this theoretically huge potential market in the future, nor is there any way to predict how profitable it will end up. Castlight seems far more likely to end up as the next Netscape, which got obliterated when Microsoft decided to give away an Internet browser for free and wipe out Netscape’s whole business model of charging.

Investors who agreed to pay $16 a share for Castlight Thursday night seem more focused on the inspiring performance of other cloud-service stocks, such as Benefitfocus (BNFT), which went public at $26.50 a share last September and currently trades at $58, off its all-time high of $77 in January.

It’s pretty clear a bubble is inflating in this sub-sector of Internet stocks and Castlight makes that incredibly obvious. In early trading, Castlight’s $3.5 billion valuation is more than double the value of Benefitfocus though it has about 1/10 the revenue. Next week the bubble may inflate further when a couple more cloud service providers are expected to price their IPOs, including banking specialist Q2 and HR benefits provider Paylocity.

Meanwhile with all the competition for Castlight, the company is spending like crazy on marketing, R&D and the like. On its $13 million revenue base last year, it spent $34 million on sales and marketing, $15 million on R&D and $9 million on administrative costs. Bottom line: a $62 million net loss.

And then there’s the curious case of Castlight’s present business. The company already has 24 corporate customers in the Fortune 500, including Walmart Stores (WMT). The retailing giant, which covers more than 1 million people under its employee health plans, was responsible for 16% of Castlight’s revenue, or about $2 million, under a contract which expires at the end of 2015.

Does that seem like a massive revenue stream from one of the single largest healthcare providers in the nation? Not exactly. Again – they already have one of the biggest clients on the planet and the revenue is peanuts. Yikes.

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Why Putin Doesn’t Care About The Russian Stock Market -or- Russia’s Rich

In another propaganda piece by the Western Media, the WSJ reports (see report below) that Russia’s rich are freaking out. They have already lost billions in the Russia’s stock market collapse and might face margin calls if things continue to deteriorate. Further, if sanctions are implemented, the Oligarchs stand to lose countless billions more. Nice try WSJ, but you don’t get.

Putin, doesn’t give a flying fuck about Russia’s stock market or Russia’s rich at this juncture. He is in full control. I have been saying this since this whole thing started, but no one gets it. Putin is committed to go to war. Against Ukraine, the US or NATO. Whoever decides to intervene into Ukraine will be in a war with Russia. Immediately. There is no way that Putin or Russia will let Ukraine fall into NATO hands. I am not sure why our administration doesn’t understand that.   

western media attack on russia investwithalex

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Why Putin Doesn’t Care About The Russian Stock Market -or- Russia’s Rich  Google

Russian Richest Face Margin Calls With Billions at Stake 

“Russian businessmen are very scared,” the 54-year-old former billionaire, who served in the Soviet embassy in London during the Cold War and owns Russia’s National Reserve Corp., said by phone. “There are risks to the Russian economy. There could be margin calls, reserves might be drawn down, exchange rates may fall and prices will rise. This worries me.”

Billionaires in Russia and Ukraine risk further losses as market volatility and the threat of Iran-style economic sanctions intensify following Russia’s incursion into Crimea. Since Feb. 28, the day unidentified soldiers took control of Simferopol Airport in southern Ukraine, Russia’s 19 richest people have lost $18.3 billion, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 300 richest wealthiest people. 

“The instability caused by the situation in Crimea could be a problem for the oligarchs,” Yulia Bushueva, who helps manage $500 million at Arbat Capital in Moscow, said in a telephone interview. “If a billionaire pledged their stakes in publicly traded companies as collateral for a line of credit, they could face margin calls and have to re-negotiate with banks.”

The U.S. and the European Union are threatening sanctions against Russia if it doesn’t back down from annexing the Black Sea province, which is holding a referendum in two days to join Ukraine’s former Soviet-era master.

‘Negative Consequences’

“All sides now understand each other’s positioning and understand the constraints each other face,” Michael O’Sullivan, chief investment officer of Credit Suisse Private Banking, said in a telephone interview. “It’s now clear as well that an escalation would have negative consequences on pretty much all the players.”

How the Crisis Began, Where It’s Heading

The European Union last week froze the assets of 18 Ukrainians, including “hundreds of millions of euros” in the Netherlands controlled by former President Viktor Yanukovych and his son, Oleksandr, Dutch Finance Minister Jeroen Dijsselbloem said March 6 on the television show Pauw & Witteman.

Dmitry Firtash, a 48-year-old Ukrainian billionaire who made his fortune importing Russian natural gas, was arrested in Vienna Wednesday by an organized-crime unit of the Austrian police on a warrant issued by the U.S. Federal Bureau of Investigation, according to a statement by the country’s Interior Ministry.

Outside Russia

He is alleged to have paid bribes and formed a criminal organization, according to the warrant, issued after an FBI investigation that began in 2006, the ministry said.

One Russian billionaire, who asked not to be identified because of the sensitivity of the situation, said he was concerned about the effect potential sanctions might have on business. He said he’d consider buying assets outside of Russia if sanctions were imposed.

Dmitry Peskov, a Kremlin spokesman, said in a March 11 telephone interview that “there were no consultations” with Russian businessmen and that they “have not expressed any concern” over the situation.

According to a March 13 report in the Wall Street Journal, a spokesman for President Vladimir Putin acknowledged that business leaders in Russia have been in “constant contact,” and that Putin had not met with any of them. The report said a recent meeting between the country’s industrialists and high-ranking government officials turned “tense” when the subject of sanctions came up.

Broken Sanctions

Doing business under sanctions might not be all bad for Russian entrepreneurs, according to South African billionaire Natie Kirsh.

“There are opportunities that come out of sanctions,” the 82-year-old, who started building his $5.9 billion retail and real estate empire during apartheid, said by phone from Johannesburg. “Sanctions can be broken. It always depends on the extent of the sanctions and how they take.”

F.W. de Klerk, South Africa’s last president during the apartheid era, said the country and businessmen were able to work around the sanctions levied by the U.S. beginning in 1986.

“The sanctions delayed change in South Africa because it made us look for ways to evade them,” de Klerk, 77, said in a telephone interview from Cape Town. “We worked with the business community to find ways to keep companies going. In the end, not many factories shut down, they just changed ownership.”

Ukraine’s Richest

Kirsh said the Cold War could reemerge out of Russia’s incursion in Ukraine, and energy suppliers outside of Russia will benefit if sanctions are levied.

“It’s a different story with Putin,” Kirsh said. “South Africa doesn’t supply 30 percent of Europe’soil and gas. There will be some people outside of Russia that will see a huge benefit. Some people who supply oil and gas for Russia will not believe how busy they will be.”

Rinat Akhmetov, Ukraine’s richest person, has lost more than $550 million since Feb. 28. The 47-year-old billionaire, who owns Donetsk, Ukraine-based conglomerate System Capital Management Group, expanded his business with help from Yanukovych. Akhmetov’s DTEK Holdings BV was the only bidder in two of five auctions of state-owned energy assets, which were organized by the former president’s government.

‘Maintain Relations’

The billionaire no longer supports his longtime ally and has committed to rebuilding the government of Ukraine, according to a March 10 report in London’s Telegraph newspaper. Elena Dovzhenko, a spokeswoman for Ahkmetov, said the billionaire wasn’t immediately available to comment.

“He understands that the previous state of things is over,” Ihor Burakovsky, head of the Board of the Institute for Economic Research and Policy Consulting in Kiev, said by phone. “He will try to maintain relations with all the significant players in the country.”

Ahkmetov on March 9 met with Vitali Klitschko, leader of Ukraine’s UDAR party and a potential candidate for Ukraine’s presidency, to discuss the situation, according to a statement from UDAR.

“The use of force and lawless actions from outside are unacceptable,” the billionaire said in a separate statement on March 2. “I state with all due responsibility that SCM Group, which today employs 300,000 people and represents Ukraine from west to east and from north to south, will do everything possible to maintain the integrity of our country.”

State Assets

The 19 Russian billionaires on the Bloomberg ranking have businesses, homes and bank accounts scattered around the globe valued at more than $208 billion. Some of that wealth was accumulated through government ties that enabled them to acquire former state assets during privatization in the 1990s, transactions Putin called “unfair” in 2012. They have since moved control of the assets out of Russia and into the West.

Alisher Usmanov, the country’s richest person, controls his most valuable asset, Metalloinvest Holding Co., Russia’s largest iron ore producer, through three subsidiaries, one of which is located in Cyprus, an EU member nation. The 60-year-old also owns a Victorian mansion in London that he bought in 2008 for $70 million, according to a May 18, 2008, Sunday Times newspaper report.

He’s lost $1.5 billion since the crisis began, according to the Bloomberg ranking.

“We are concerned with the possible sanctions against Russia but don’t see any dramatic repercussions for our business,” Ivan Streshinsky, CEO at USM Advisors LLC, which manages Usmanov’s assets, including stakes in Megafon OAO and Mail.Ru Group Ltd., said in an interview at Bloomberg’s offices in Moscow today.

Greater Compliance

“Mail.Ru and Megafon revenue is coming from Russia and people won’t stop making calls and using the Internet,” he said. “Metalloinvest may face closure in European and American markets, but it can re-direct sales to China and other markets.”

Transferring ownership abroad may prove problematic if sanctions are imposed. The U.S. Securities and Exchange Commission and other regulatory authorities may tell U.S.-based banks to exhibit greater compliance with the existing Foreign Corrupt Practices Act, Standard Bank (STAN) Group Ltd. said in a March 11 report.

The report also said the U.S. might investigate Russia’s compliance with the Financial Actions Task Force on Money Laundering and Terrorism Financing in an effort to push the country onto a black list, a move that would prevent global banks from dealing with Russian lenders.

‘Nuclear Blow’

The third escalation would be actual asset freezes, which perhaps would be “the nuclear blow, as it would risk countermeasures from the Russian authorities,” according to the Standard Bank report.

“Currently, there is no clear link between events taking place in Ukraine and any steps that might be available to freeze assets of wealthy Russian citizens overseas,” Marta Khomyak, a partner of London-based PCB Litigation, said in a telephone interview. “However, given the pace of events and the underlying political tensions, I would not rule out attempts being made to attack various Russian interests overseas.”

Sanctions related to the Crimea crisis so far have been levied on individuals the EU said were responsible for the “misappropriation of state funds” and “human rights violations,” according to the regulation passed by the Council of the European Union on March 5. President Obama echoed the language in a briefing with journalists at the White House the next day.

Lisin’s Steel

“Russians who are making bank transactions and opening new accounts will now be confronted with increased suspicion,” Valery Tutykhin, an attorney with John Tiner & Partners, a Geneva-basedlaw firm that specializes in wealth management, said in an e-mail.

The crisis also threatens to derail the relationship between the West and the Russian businesses the billionaires control. Among the companies potentially affected is OAO Novolipetsk Steel (NLMK), the country’s most-valuable steelmaker, which is controlled by Vladimir Lisin, Russia’s 13th-richest person. The company derived 21 percent of its $12.1 billion in 2012 revenue from Europe, according to data compiled by Bloomberg. Sergey Babichenko, a spokesman for NLMK, declined to comment.

“In the event of a European and U.S. ban on exports of the metal, NLMK’s position would be weakest among Russian steelmakers, because it ships steel slabs to its own mills in Europe,” Kirill Chuyko, head of equity research at BCS Financial Group said. “We see such actions as unlikely for the time being.”

Amicable End

With its stock market falling and interest rates rising, Russia has suffered most of the financial pain the crisis has inflicted.

“To the extent that they can, the businessmen in Moscow will be making their sentiments and voices heard,” said Credit Suisse (CSGN)’s O’Sullivan. “I’m not sure the Kremlin will listen to them.”

Billionaire Naguib Sawiris, Egypt’s second-richest person, who’s done business with North Korea, Russia and Pakistan through his telecommunications companies, said he’s concerned about potential sanctions.

“Putin has proven that toward the end of any crisis, he always goes back to reason and finds compromises,” Sawiris, 59, said in a March 14 e-mail. “Therefore, I bet this crisis will end amicably.”