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Welcome to the "Wolf Creek Pass" School of Monetary Policy

I don’t know if you folks remember that hit ditty: a humorous tune about two truckers attempting to manhandle an out-of-control 1948 Peterbilt down the “other side” of Wolf Creek Pass – a death-taunting section of U.S. Highway 160 where the elevation drops a hefty 5,000 feet in a relatively short distance.

The song’s two characters – a truck driver named Earl and his brother, who’s his partner as well as the song’s narrator – are taking a flatbed load of chickens on a speedy trip down this winding, two-lane Colorado highway. After the narrator gives Earl the above-mentioned warning, the ancient semi’s brakes fail.

From there on down, the narrator tells us that the brothers’ trip “just wasn’t real pretty.” The truck careened around hairpins and switchbacks, and then raced at an uncontrolled 110 mph toward a tunnel with “clearance to the 12-foot line” – with chicken crates sadly “stacked to 13-9.”

The drivers and the runaway Peterbilt “went down and around and around and down ’til we run outta ground at the edge of town… and bashed into the side of the feed store – in downtown Pagosa Springs.”

Believe it or not, I started thinking about this funny old country tune the other night – right after I’d read a piece about QE3 and the U.S. Federal Reserve.

As zany as it first sounds, the parallels are striking.

  • Facebook (Nasdaq: FB) Steals PayPal President; Is Facebook Payments Next? Facebook

    Of all the problems plaguing Facebook Inc. (Nasdaq: FB), rival messaging services is a big one.

    In a move aimed at tackling that growing issue, the world's largest social media company announced Monday it has hired PayPal executive David Marcus.

    But that hire is really move into this other profitable industry...
  • Facebook Stock Price Gets Small Bump in Lackluster Debut In what was one of the most highly anticipated initial public offerings in history, Facebook (Nasdaq: FB) finally made its debut among much fanfare and frenzy Friday.

    But the Facebook stock price failed to soar as high as the hype. While not exactly a dud, the intro was definitely subdued.

    Shares opened around 11:30 a.m. in New York at $42.05, up about 11% from Facebook's IPO price. Momentum quickly ebbed, and shares dropped as low at the $38 IPO price in the first half hour of trading.

    By 3 p.m. shares were hovering just above $38. But with an hour of trading still to go, investors shouldn't get complacent.

    "The day isn't over," cautioned Money Morning Chief Investment Strategist Keith Fitz-Gerald. But regarding Facebook's debut, "initial trading has not been impressive."

    Read More...
  • Facebook Stock Ready to Roll – But Where Will it Go? The Facebook IPO price was set and the stock is ready to start trading - but will it live up to its hype or sharply sell-off?

    The social media giant priced at $38 a share, the company announced after market close yesterday (Thursday).

    That makes Facebook the largest tech IPO in history, valued at $16 billion.

    It's the third largest U.S. IPO ever, behind first place Visa at $19.7 billion and then General Motors, which raised $18.1 billion.

    While the stock has created unrivaled investor frenzy, there is a wide range of predictions for how Facebook will do in its first trading day - and who the real winners will be.

    "The ones who make out on IPOs are the early investors, venture capitalists, founders, and underwriters," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "The public almost always goes along for the ride...whether or not they get taken for a ride remains to be seen." The Facebook stock price will be determined when it starts trading today at 11 a.m.

    Where the cutoff is for considering the IPO a success varies - with many thinking anything below 50% would be a disappointment.

    "I think anything over 50 percent will be considered a successful offering - anything under that would be underwhelming, Jim Krapfel, an analyst at Morningstar, told Reuters. "A lot of retail investors are not concerned about valuation. That's what is going to drive the first day pop."

    Read More...
  • Facebook IPO Size Hits 421 Million Shares As it approaches, the Facebook IPO just got bigger as more early investors look to cash out.

    Just after the Facebook IPO price range got a boost, Facebook investors raised the number of shares they are selling in the social network giant's initial public offering. While the company isn't selling any more, individual investors like Accel Partners, Goldman Sachs Group Inc. (NYSE: GS) and others will sell an additional 83.8 million shares.

    That brings that total number of shares to be sold to 421.2 million, according to a new regulatory filing, and lifts the sale to as much as $16 billion.

    While the news was welcomed by ordinary investors clamoring for shares as Facebook debuts, it's curious why more and more insiders are racing to sell part of their stake. The move may just be a signal of the IPO's astronomical demand - but could make some investors wary.

    "If the demand wasn't there, they wouldn't have upsized the deal," Greenwood Capital's Walter Todd told Bloomberg News. "On the other hand, when you see insiders unloading their stakes, you start to wonder why. I could see it turning some institutional investors off."

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  • Five with Fitz: What I See When I Look Over the Horizon When you've been working the markets as long as I have, you learn that the biggest dangers are always found in a place just over the horizon.

    It's why I spend my time hunting for stories, news items and opinions that in the old days were considered far "below the fold."

    Invariably, what I am looking for is the stuff that everybody else has missed.

    Because I believe that's where the real information is -- especially when it comes to uncovering profitable opportunities others don't yet see or understand.

    It's the story behind the story that interests me. To find it, you need to go beyond the headline news.

    In that spirit, here's my take on five things that I'm thinking about right now.

    To continue reading, please, click here... Read More...