Going Down

The end of the big store era may soon be here.

That’s the message of a research note published by Goldman Sachs analysts on Tuesday cutting their investment rating on shares of Walmart. Shoppers are increasingly turning to the web or to smaller, more conveniently located stores, cutting into the market share of big-box retailers like Walmart and Target, the analysts wrote.

Big stores like Walmart and Target for several quarters now, the analysts wrote. That suggests shoppers are interested more in convenience than in having access to the kind of product variety Walmart and Target offer.

That's partly because online shopping has made it much easier for people to find whatever they want at a cheap price, so they're less likely to schlep to a store just for its vast selection, the analysts wrote.

Sure enough, both Walmart and Target have struggled lately. Target's profit fell 16 percent in the first quarter from a year earlier, and U.S. same-store sales -- a metric of retail health that tracks sales at stores open at least a year -- fell 0.3 percent. Same-store sales have fallen in 12 of the past 20 quarters at Walmart's U.S. stores, according to data-tracking firm Retail Metrics.

Walmart might already see the writing on the wall. The company announced last week that its U.S. CEO Bill Simon would step down after years of poor store performance. WalmartLabs, the retailer’s tech-development arm, has bought at least 14 companies in the past few years -- largely to get the tech talent it needs to build up its online offerings, according to TechCrunch. 

It has been aggressively touting its site and apps that help customers use their phones and computers to shop.

Walmart hasn't kept up with the online juggernaut, Amazon. Walmart did about $10 billion in web sales sales last year, compared to Amazon’s nearly $68 billion. 

Walmart’s global internet sales grew faster than Amazon’s last year, but that was after a decade of struggle, according to Charles Fishman, the author of “The Wal-Mart Effect.”

Worse Than Expected

There is often speculation, a rumor or even tip shared, before many big mergers and acquisitions, word leaks out to select investors who seek to covertly trade on the information. Stocks and options move in unusual ways that aren't immediately clear.

Now, a groundbreaking new study finally puts what we've instinctively thought into hard numbers — and the truth is worse than we imagined.

A quarter of all public company deals may involve some kind of insider trading, according to the study by two professors at the Stern School of Business at New York University and one professor from McGill University.

The study, perhaps the most detailed and exhaustive of its kind, examined hundreds of transactions from 1996 through the end of 2012.

The professors examined stock option movements — when an investor buys an option to acquire a stock in the future at a set price — as a way of determining whether unusual activity took place in the 30 days before a deal's announcement.

The results are persuasive and disturbing, suggesting that law enforcement is woefully behind — or perhaps is so overwhelmed that it simply looks for the most egregious examples of insider trading, or for prominent targets who can attract headlines.

The professors are so confident in their findings of pervasive insider trading that they determined statistically that the odds of the trading "arising out of chance" were "about three in a trillion." (It's easier, in other words, to hit the lottery.)

But, the professors conclude, the Securities and Exchange Commission litigated only "about 4.7 percent of the 1,859 M.&A. deals included in our sample."

The S.E.C. and the Justice Department have publicly made prosecuting insider trading a priority. Judging from the headlines about traders at Steven A. Cohen's hedge fund or the hedge fund manager Raj Rajaratnam or the investigation involving the activist investor Carl C. Icahn, they do appear to be focused on it.

Yet if history is any guide, based on the results of the study over 16 years, the government has a lot of catching up to do.

Nice to See at Least One Wall St Banker Facing Criminal Charges

From the New York Post:

A mild-mannered, hardworking New York City cabby lamented to The Post yesterday that he was insulted, demeaned and threatened by a boozy bigwig who refused to pay him, screaming: “Go back to your own country . . . I’m going to kill you.”
Mohamed Ammar said investment banker W. Bryan Jennings — a $2-million-a-year fat cat for Morgan Stanley — went from being a sweet gentleman he picked up in Midtown to a surly, knife-wielding “drunk” who stiffed him on the $204 fare when they got to Jennings’ Darien, Conn., home.
“I said, ‘You have to pay me. It’s the law,’ ” Ammar recalled at his Queens home yesterday, where he lives with his wife and three children. “He says, ‘What law? You should go back to your own f--king country.’
“I say, ‘This is my f--king country, excuse my language. I’m an American citizen!’ ” said the driver, who is originally from Egypt.
“That’s when he pulled out the penknife . . . He leaned forward and yelled, ‘I’m gonna kill you, motherf--ker!” Ammar said.
“I saw his hand balled up into a fist and I thought he was going to punch me,” the cabby said.
“I put my hand out to protect, and that is when I saw the penknife. He went for my neck first but ended up slashing my hand many times as I was fighting him off . . . My hand was bleeding pretty bad” as Jennings fled on foot, Ammar said.
“He was drunk and out of control, and he could have killed me. That was one of the scariest moments of my life.”
Ammar needed six stitches to close his wounds.

HIGH ROLLERS LIE, CHEAT . . . NO KIDDING

(Health.com) -- Since the economic implosion of 2008, the news has been littered with accounts of questionable behavior in boardrooms, corner offices, and other gold-plated spaces. What's not clear from the headlines, however, is whether white-collar criminals like Bernard Madoff are bad apples or extreme examples of a widespread trend.

A new study may offer a clue to answering that question: A series of experiments conducted by psychologists at the University of California, Berkeley, suggests that people who are socially and financially better-off are more likely to lie, cheat, and otherwise behave unethically compared to individuals who occupy lower rungs of the socioeconomic ladder.

"Elevated wealth status seems to make you want even more, and that increased want leads you to bend the rules or break the rules to serve your self-interest," says Paul Piff, the lead author of the study and a doctoral candidate in psychology at the university.

CNN

ENOUGH BLAME TO GO AROUND

Trying to Explain the Housing Crisis
by Victor M Adamus

I was wondering a lot about the AP story that quotes the Feds on the real estate bubble and lays a good portion of the blame for the housing crisis on local investors.  They singled out states like Nevada, California, Arizona and my state of Florida.  The report shows that greedy investors made multiple buys, using their credit at major banks, to purchase a host of properties with the intention of flipping them for more money if the bubble had kept expanding and prices increased.  It was a way to make big dollar returns fast and they were using other people’s money to do it.

The research was done by the Federal Reserve Bank of New York.  They blame investors for scheming to inflate already inflated prices which led to the recession.  The investors lost their investments in multiple properties which led to the recession.  Typically banks work to deal with how to get out of the recession, not what caused it.  This is why a stunning report, like the one the AP filed, got me to wondering if, in fact, there was greed on both ends: Wall Street selling off junk as AAA rated certificates knowing the junk was backed by undocumented loans; and greedy investors who saw an opportunity to run out their credit limit with local banks who verified they were good for it.  At both ends of the real estate crash there is enough blame to go around both from an investment standpoint and then batching these loans to sell overseas as a quality product.

The house of cards came crashing down.

Prior to the bubble burst a huge segment of our population owned more than three properties.  They would buy fixers and fix them; buy land at rock bottom prices; apartment buildings that needed rehab; anything in the single family market at appraised value and then wait for a 10% bump in equity to sell out for twice what a Realtor would make on a commission.

When the bubble burst and the house or property was worth less than they borrowed against it, foreclosures skyrocketed.  The people who bought at the same time, a home to come home to person, found themselves underwater too and it didn’t take long for a segment of that group to drop out because of anything from job relocation to health issues.

“Investors defaulted in large numbers after home values began to drop in 2006. They accounted for more than 25 percent of seriously delinquent mortgage balances nationwide, and more than a third in Arizona, California, Florida and Nevada from 2007 to 2009”.

Those are huge numbers. The false economy wasn’t realized until banks were heading into default and had to be bailed out by taxpayer funds, an unlikely resource since businesses go broke all the time in a Capitalist type economy but of course, these banks were too big to fail.  By a lack of regulations, controlling these no doc loans, the people on Wall Street went crazy, as did the greedy investors who thought they had struck gold.

A check at my local courthouse shows that people with multiple foreclosures are 31% of our foreclosure population.  This is similar to the numbers reported by the AP.

HOW COULD SOMEONE LOSE $2.1 BILLION DOLLARS? AND CALL IT "CHAOTIC"

Well John Corzine did.
by Victor M Adamus

Is this some kind of a joke? When CEO John Corzine of MF Global can't find $2.1 Billion of customer's money and takes the company into bankruptcy telling a Congressional Committee that it was "chaotic" and "I never intended to break any rules".  ??

Well did he check his car glove compartment?  Look on the boardroom floor in case the money fell from his pockets?  How 'bout his couch cushions?  This one stinks.  And I suppose his crew of asset managers don't have any answers either.  I sincerely doubt his testimony given yesterday was worth the time.  What is worth the time is a call for a complete FBI audit of the company's records. 

The mainstream media may milk this one for what it is--more corruption on Wall Street.  Covering bad bets in the European sovereign debt or wherever a paper trail leads to.  Lack of regulating the Robber Barrons is at the core of this swindle.

READ MORE HERE

INSIDE JOB

All I can say right now is, go see this gripping movie.
It's about the global financial crisis,
but it's like a crime thriller : it IS a crime thriller!

It explains the global financial crisis meticulously.
And explores the love nest that is Wall St and govt, 
& now the universities,
which have organized their economics departments to perpetuate
what one interviewee calls America's "Wall St Government".

It reveals the buzzing hives of sleaze and greed
behind the shiny facade of institutional legitimacy
(govt, universities, corporations),
how they scratch each others' backs to steal our money, the lot.

These are our lives these people are messing with.
Watch how they play god.

Olivia