Roubini and Bremmer Warn of ‘New Abnormal’

Is a new economic crisis that makes 2008 look mild in the offing?

Nouriel Roubini and Ian Bremmer argue in a lengthy survey of world gloom that the possibility of such a crisis is ever present unless world leaders find a way to restore order to a world that is teeming with political and economic risk.

Bremmer (left), the principal of the Eurasia Group of political risk consultants, and Roubini, an NYU professor and economist whose “Dr. Doom” appellation was freshly earned in this eight-page article in Institutional Investor, warn against a growing complacency that might mislead investors into thinking the “New Normal” economy is fading away.

Rather they argue that what they term “The New Abnormal” is ongoing, and may produce in the years ahead extreme levels of upheaval that we’ve seen in the past five years: instability that has brought about the worst economy since the Great Depression, challenges to viability of the Eurozone, the Arab Spring and the attendant Syrian civil war.

What makes our times abnormal is the lack of world order, which Bremmer and Roubini term the G-Zero—a period during which there is no big power with the ability or desire to impose geopolitical order amid crises or write the big checks that underwrite stability.

“The uncertainty and volatility of the past half-decade is far from finished—and is almost sure to trigger new crises,” the high-profile consultants write.

A key reason is that the world has failed to address structural issues that continue to fester and indeed ensure the resources to solve future problems may be absent when needed. Bremmer and Roubini (right) take readers on a world gloom and doom tour:

The United States, they say, has been lulled into complacency by greater volatility elsewhere, which has had the effect of making the U.S. and its dollar seem the “safest port in the storm.” As such, Democrats and Republicans have not felt the pressure to produce a grand bargain on spending, entitlement and taxes.

Similarly in Europe, the European Central Bank has used its monetary tools to take pressure off currencies in the periphery where there is austerity fatigue even as bailout fatigue takes root in Europe’s core.

On the BRICS front, China and India are avoiding crucial reforms to avoid short-term pain, and Brazil is not making the most of its current advantages, while authoritarianism runs rampant in Russia, and social cleavages threaten South Africa.

Compounding this increased level of volatility, the authors warn of a general disengagement in foreign policy: a post-Libya retreat by European powers, a Chinese politiburo with little interest in foreign affairs and a G-20 that only coordinates meaningful action under shared sense of severe threat, as last occurred in 2008 and 2009.

On the economic front, Bremmer and Roubini argue there has been no serious attempt to respond to the challenges of how to deleverage from high debt, deal with aging populations, impose structural reforms and step back from bloated welfare states.

“Advanced economies continue to face complicated challenges, but the policy responses that political officials have used so far—monetary and quantitative easing and fiscal stimulus that is now constrained by high debt levels—are Band-Aids applied to avert a near-term slide back into recession rather than a genuine effort to resolve long-term structural questions.”

Fiscally, the world is moving in the wrong direction, they warn, in not reducing liabilities and back-ending austerity. In monetary policy, central bank strategies are nationally oriented with a focus on depreciating currencies to boost exports—a trend that could make full-blown currency wars more likely.

“Advanced economies are now running out of policy bullets,” while at the same time setting the stage for new crises by creating asset inflation rather than real growth (through quantitative easing) amidst high debt that will leave no room for stimulus as a viable future policy.

Bremmer and Roubini regard emerging economies as prime potential trigger of future problems.

China is a case in point, they say. When it overtakes the U.S. in GDP, it will still be a developing country whose many problems—a shrinking labor force, aging population and degraded environment—will make its economic course volatile and thus roil the world economy.

Given the investor audience, the consultant duo launch into a macro view of winners and losers in the new abnormal.

Outperformers are countries that can make politically unpopular decisions and those with diversified economic partners. They rate Brazil, Chile, Colombia, Malaysia, Mexico, the Philippines and Turkey as having the best prospects, and India, Peru, South Africa and Thailand as having the worst.

They cite Canada favorably for its success at lessening its dependence on the U.S.

In the corporate sphere, the authors warn today’s environment is tougher for banks and investment banks: “Higher capital and liquidity ratios will reduce returns but will also slow credit creation and hamper growth,” adding that if economic tail risks materialize, there no longer exists the political capital for bailouts nor fiscal resources to rescue banks.

Ironically, the world’s best chance of coping with the New Abnormal would be an emergency that can induce world powers to cooperate on global problems.

While Bremmer and Roubini call out the usual suspects as crisis trigger—a new European financial meltdown or Mideast instability—they also speculate that the current credit and equity bubbles now in the making in the U.S. could be its source.

How the U.S. transitions from its current loose monetary policy will be key:

“Exiting too fast will crash the real economy, while exiting too slowly will first create a huge bubble and then crash the financial system,” they warn.

Bremmer and Roubini conlude that U.S.-China cooperation will be of paramount importance in coordinating a soft landing from the New Abnormal to the emerging world order.

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Bull of the Day: Krispy Kreme (KKD) - Bull of the Day

It is one of the biggest company turnarounds since the end of the Great Recession. Krispy Kreme Doughnuts, Inc. (KKD) was left for dead but defied naysayers and is expected to see double digit earnings growth in Fiscal 2014. Krispy Kreme makes donuts and sells coffee in over 770 locations in 22 countries. It has an extremely loyal fan base for its signature product: the Original Glazed donut which is usually served warm, directly out of the oven.Over-expansion early last decade tarnished the brand but it has slowly been able to turn it around. On July 15, as testimony to the strength of the company, it announced that it had refinanced its secured credit facilities and retired the entire $22 million outstanding balance of its term loan. The retiring of the loan and the refinanced facilities was expected to save about $1 million in the first 12 months.As of July 12, it had a cash balance of $55 million and an unused borrowing capacity on its revolving credit facility of $31 million.It will also begin a new $50 million share repurchase program. That's significantly higher than the previous $20 million program that was completed in 2012.Zacks Consensus Estimate RisesAnalysts like what they see. In the last 60 days, 3 estimates have risen for fiscal 2014 while only 1 has been lowered. The 2014 Zacks Consensus has risen to $0.62 from $0.57 in that time.That is earnings growth of 31.9%.But the analysts don't expect that to be the end of it. They also forecast another 13.4% earnings growth in fiscal 2015.Big Earnings BeatsKrispy Kreme isn't expected to report earnings until Aug 28. It has really turned around its earnings track record as well. After a history of misses, the company recently started posting big beats.It has surprised 3 out of the last 4 quarters by an average of 38%.This Zacks Rank #1 (Strong Buy) isn't cheap. It has a forward P/E of 31. But an investor is paying for the big EPS growth and is! not looking for value. The consumer is still splurging on food and Krispy Kreme has a loyal following. It has over 4 million likes on Facebook and 61,000 followers on Twitter, many of which share their tales of driving for miles just to indulge in one of its donuts. That's the power of the Krispy Kreme brand. For investors looking for a restaurant chain which still has its mystique, look no further than Krispy Kreme.Want More of Our Best Recommendations? Zacks' Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Then each week he hand-selects the most compelling trades and serves them up to you in a new program called Zacks Confidential. Learn More>>Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

Joe Granville, Whose Bearish Calls Moved Stocks, Dies at 90

Joseph Granville, a newsletter writer and technical analyst who moved stock markets with bearish calls in the 1970s and '80s, has died. He was 90.

Granville died in Saint Luke's Hospice House in Kansas City, Missouri, said Laurel Gifford, a spokeswoman for Saint Luke's Health System. He died on Sept. 7, his wife, Karen Granville, said today. The cause of death isn't known, she said.

The publisher of the Granville Market Letter since 1963, Granville predicted the Dow Jones Industrial Average (INDU)'s slide in 1977 to 1978 and the end to the surge in computer-related shares in 2000. He was wrong in 1982 and 1995 when he called for losses before stocks rallied.

In his forecasts, Granville used criteria such as trading and price patterns rather than more commonly analyzed economic data and earnings growth. He started developing his own stock-market theories at what was then E.F. Hutton & Co., a New York-based brokerage, from 1957 to 1963.

By 1981, Granville was influential enough to spur a market slump. That January, he sparked a 2.4 percent one-day decline in the Dow average by advising his subscribers, "Sell Everything!"

His stock-pundit fame brought invitations to play in the Bob Hope Desert Classic golf tournament, perform with a chimpanzee at Caesar's Palace in Las Vegas, and play the piano at Carnegie Hall.

'Extremely Powerful'

"Joe was extremely powerful a generation ago," said Robert Stovall, a global strategist at Wood Asset Management Inc. in Sarasota, Florida, who worked with Granville at E.F. Hutton. "If he gave the thumbs down to a market, it was like the emperor in the coliseum. The market would go down."

In addition to writing about stocks, Granville produced books on subjects such as stamp investing and winning at bingo.

Joseph Ensign Granville was born on Aug. 20, 1923, in Yonkers, New York. His father, W. Irving Granville, "lost $30,000 of his own money and at least twice as much more that he borrowed from Grandma Buck and Auntie Blanche" in the stock-market crash of 1929, according to "The Book of Granville" (1984).

"The family survived only because our relatives were comfortable enough to write off their losses and aid us in recovering," Granville said. "It was my father's devastating experience with the stock market that made me so sensitive to the economic realities that lay behind every human pursuit."

Schoolboy Author

He attended the Todd School for Boys in Woodstock, Illinois, on a music scholarship, according to the Granville Market Letter's website.

A school tour to Mexico inspired Granville to write his first book, "A Schoolboy's Faith" (1941).

In 1948, he graduated from Duke University in Durham, North Carolina, where he studied economics. His studies were interrupted in 1945, when he joined the U.S. Navy and was sent to the Marshall Islands.

While there, he wrote "Price Predictions," a book about pricing U.S. commemorative stamps aimed at speculators. "Everybody's Guide to Stamp Investment" followed in 1952.

Granville was hired by E.F. Hutton & Co. in 1957 to write its daily stock-market letter and worked there until 1963, when he started the Granville Market Letter, a newsletter with a subscription price of $250.

Granville's main stock indicator was called on-balance volume, or OBV, which he developed.

Stock Momentum

The idea "caught me, quite literally with my pants down," he wrote. "One August morning in 1961 I sat on the toilet in the men's room, away from the hubbub of the research department, musing about the stock market."

OBV gauges a stock's momentum. If a stock rises, the day's volume will be added to a cumulative OBV figure. If the share price falls, the total will be subtracted.

Granville also followed charts that tracked investor sentiment, the number of stocks reaching 52-week highs and lows, and the daily number of advancing and declining stocks. He compiled the measures into what he called his "Net Field Trend Indicator," used to predict the market's direction.

"Everyone is following the economy. I'm following the market," Granville said in an October 2006 interview. "I'm the exact opposite of Wall Street."

In "Granville's New Strategy of Daily Stock Market Timing for Maximum Profit" (1976), he said a bear market would occur in 1977-1978. The Dow slid 26 percent from the beginning of 1977 through February 1978 after a two-year rally.

Fame Soars

"His fame rapidly grew following hundreds of seminars starting in 1978," according to the Granville's website.

His influence waned after he missed the surge in stocks that began in August 1982.

Granville was bearish from 1982 until early 1986, according to the Hulbert Financial Digest, a monthly publication edited by Mark Hulbert that ranks market newsletters. Over that period, the Dow average had a 17 percent annualized return. He had turned bullish by the time the stock market crashed in October 1987.

Granville was also incorrect in predicting a stock-market slide in October 1995. He turned bullish in July 1996, after the Dow industrials had climbed about 20 percent.

Not all of Granville's best calls were in the distant past. On March 11, 2000, the day after the Nasdaq Composite Index (CCMP) jumped to a record 5048.62, Granville wrote that investors in technology stocks "will soon be burned." The index, heavy on computer-related companies, tumbled about 78 percent before bottoming on Oct. 9, 2002.

Learning Experience

"When I make a prediction or a statement, it's coming from somebody who's gone through 50 years of markets," Granville said. "It's not like one of these 28-year-old or 30-year-old or 31-year-old kids that come in and think they know all of the answers. They don't. They have to live through their mistakes. I had to live through my mistakes."

Granville's marriage to his first wife, Katherine, in 1945, was "a hysterical reaction to war," as he described it in "The Book of Granville." He had eight children with his second wife, the former Paulina "Polly" Delp, whom he married in 1950 and divorced in 1980. She died in 2012, at 84.

Granville was still making market predictions well into his 80s. He drew parallels between the Dow's climb above 12,000 for the first time in October 2006 to the 1929 stock-market crash and the bursting of the Internet bubble in 2000.

'Market Lessons'

"How quickly forgotten are the market lessons of yesteryear," he said. "Crossing Dow 12,000 will catch the Street buying at the top, as was done in early 2000. Hating technical analysis, the Street will be deaf to the technical message, which is currently screaming 'sell!'"

Granville wanted to be best known for "his major contributions to technical analysis and what he has taught to his followers all over the world," according to his website.

Granville's third marriage was to the former Karen Erickson. The children he had with Paulina included Leslie Joan Granville, Blanchard Irving Granville, Leona Granville Weissman, Mary Beth Granville, Johanna Cushing Granville and John Hallock Granville. Their son Paul Granville died in 1979, and daughter Sara Granville Smith died in 1982.

Lloyds Raises £3.3bn From U.S. Mortgage Portfolio Sale

LONDON -- Lloyds Banking Group  (LSE: LLOY  ) (NYSE: LYG  )  this morning announced the latest disposal in its continued "non-core asset reduction," in the form of selling a portfolio of US residential mortgage-backed securities to a number of different institutions for a cash consideration of £3.3 billion.

With a book value of £2.7 billion, the transaction will gift Lloyds around £540 million prior to tax, which will be reinvested into the company for "general corporate purposes."

As part of the sale, Lloyds' pension trust also sold its £805 million (book value) share of the portfolio, to realize a pre-tax gain of £360 million. Management said that this will go toward reducing the deficit in the scheme.

Representing further reduction in its risk-weighted assets, this morning's statement from the 39%-taxpayer-owned bank claimed that the sale will lift the group's core tier 1 capital by around 47 points (£1.4 billion capital equivalent).

Today's news follows last week's disposal of 77 million shares in St. James's Place for £450 million, while Lloyds also reassured investors by saying that it is unlikely to need to raise further funds from shareholders, instead using cash generated from its business and disposals like today's to raise capital needed to absorb future losses on loans.

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The Great Undoing of Bank of America

The StressTest column appears every Thursday on Fool.com. Check back weekly, and follow @TMFStressTest on Twitter.

Bank of America  (NYSE: BAC  ) has been near-mortally wounded. But that may be good news.

B of A's evisceration came by its own hand. An unintentional seppuku attempt, if you will. You may have heard a bit about this already, but this all went down in January 2008, when the bank agreed to buy a little mortgage outfit known as Countrywide Financial. 

Believe it or not, at the time, there was optimism around the deal. One asset manager at the time was quoted as saying, "Buying Countrywide was a gutty move ... The whole concern about housing and the economy has been greatly exaggerated." Bank analyst Dick Bove was on the same page, claiming that an ugly quarterly report around the time of the deal was a "clean-up" quarter for Countrywide, continuing, "Bank of America is asking them to look into every place they can find to take losses, so when they become Bank of America, we don't see similar impacts."

But it wasn't to be. The "whole concern about housing and the economy" wasn't, in fact, overblown, and the decision to buy Countrywide was an abysmal one.

Of course, I'm far from the first to say that Countrywide was essentially a bought-and-paid-for cancer for Bank of America. This has been said to such an extent that some investors may wonder if Countrywide is simply the scapegoat for an overall ailing bank. But, rest assured, that's not the case -- the Countrywide acquisition was every bit as bad as billed.

Countrywide... What a drag! | Create infographics

If you actually dig through B of A's annual report, you can find a helpful little table that shows the performance of the loan originations that were sold to the GSEs -- primarily Fannie Mae  (NASDAQOTCBB: FNMA  ) and Freddie Mac -- between 2004 and 2008. What's even more helpful is that the table breaks out the Countrywide originations versus the "other" originations -- principally, legacy Bank of America production.

As shown above, the numbers are pretty stark. On a percentage basis, 8.1% of "other" originations during that period have defaulted or are severely delinquent. It's 13.1% among the Countrywide originations. But the sheer size of the origination machine at Countrywide makes this gap even worse, because the total GSE originations from Countrywide during that period was nearly $850 billion versus just $272 billion at legacy Bank of America.

The felt impact of this at Bank of America was repurchase claims, lawsuits, multi-billion dollar settlements, and the like. Maybe, even more painfully, it was the growing perception that Bank of America itself was, and is, a terrible lender.

It's with that latter point that there's some silver lining in this sad story. The Countrywide acquisition highlights just how disastrous the wrong deal can be for a company. There's a solid argument to be made that the B of A-Countrywide tie-up was one of the worst in corporate history. But the recognition of the fact that a good deal of B of A's post-crisis troubles have been driven by the Countrywide cancer should give investors some hope that, as that mess continues to get cleaned up, there's a good, solid bank hiding out in there somewhere.

Many investors are scared about investing in big banking stocks after the crash, but the sector has one notable stand out. In a sea of mismanaged and dangerous peers, it stands out as The Only Big Bank Built To Last. You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.

This 10-Stock Dividend Strategy Is Trouncing the Dow

The "Dogs of the Dow" strategy is one of the simplest for beating the market. Over the coming year, I'll track the Dogs' performance and keep you abreast of news affecting these companies.

The strategy
The Dogs strategy involves buying and holding equal dollar amounts of the 10 best-yielding dividend stocks of the Dow Jones Industrial Average (DJINDICES: ^DJI  ) . The strategy banks on the idea that blue-chip stocks with high yields are near the bottom of their business cycle and should do much better going forward. Investors in the strategy then would get not only large dividends but also gains in the stocks underlying those dividends.

High-yield dividends
High-yield portfolios are often dismissed as inferior to their growth counterparts for various reasons:

Many people fear that increasing dividend yields mean lower portfolio returns. Others believe that dividend payments mean that management believes the business is done growing.

Evidence from Tweedy, Browne refutes these falsehoods. Research shows that portfolios of high-yield dividend stocks outperform lower-yielding portfolios and the market in general. In fact, a study by noted finance professor Jeremy Siegel found that over 45 years, the highest-yielding 20% of S&P 500 stocks outperformed the S&P 500 by three times! The highest-yielding stocks turned a $1,000 investment in 1957 into $462,750 by 2002, compared with $130,768 if the same money was invested in the index.

Performance
After beating the Dow by 6.8% in 2011, the Dogs underperformed the Dow by 0.2% in 2012.

Check out the Dogs' performance in 2013 so far:

Company

Initial Yield

Initial Price

YTD Performance

AT&T	5.34%	$33.71	12.50%
Verizon	4.76%	$43.27	24.74%
Intel (NASDAQ: INTC  )	4.36%	$20.62	17.84%
Merck	4.20%	$40.94	13.42%
Pfizer	3.83%	$25.08	16.49%
DuPont	3.82%	$44.98	25.37%
Hewlett-Packard	3.72%	$14.25	50.21%
General Electric	3.62%	$20.99	12.68%
McDonald's	3.49%	$88.21	16.05%
Johnson & Johnson (NYSE: JNJ  )	3.48%	$70.10	26.68%
Dow Jones Industrial Average		13,104	17.17%
Dogs of the Dow			21.60%
Dogs Return vs. Dow (Percentage Points)			+4.43%

Source: S&P Capital IQ as of April 18.

This week, the Dow Jones Industrial Average was up 1.58%. The Dogs rose less than the Dow, moving down 0.87 percentage points. That brings the Dogs' outperformance down to 4.3 percentage points better than the Dow.

There were a bunch of economic reports and some other extraneous factors boosting the Dow this week. The Dow's momentum continues to carry it up and was boosted this week by better-than-expected retail sales on Monday. Later in the week, inflation reports for both consumers and producers were below the Federal Reserve's target of 2%, which bodes well for the government's continuing of its bond buying.

US Producer Price Index data by YCharts

Then on Thursday, the Department of Commerce reported that building permits rose to 1.02 million in May, their highest level in nearly five years, which bodes well for the housing market. The final positive factor was on Friday, as consumer sentiment rose far above expectations to a six-year high.

Movers and shakers
The biggest mover this past week among the Dogs of the Dow was Johnson & Johnson, which rose 2.72%. On Monday, the FDA gave priority review status to the company's hepatitis-C drug, simeprevir. That's a good sign, as it puts Johnson & Johnson's drug in the lead to be first to market, ahead of Gilead Sciences' competing drug sofosbuvir. If you don't have time to read the company's annual report, Fool analyst Morgan Housel recently went through it and pointed out five things he learned from reading the annual report.

The biggest loser among the Dogs was Intel, which fell 1.88%. On Tuesday, research firm IDC said it expects global IT spending to slow in 2013 to 4.9% growth, down from last year's 5.6%. While Intel is up 16.5% so far this year, over the past 12 months the stock is down 13%. Fool analyst Chris Neiger recently laid out three must-watch areas for Intel investors, which you can read about here.

More dividend stocks
If you're looking for some long-term investing ideas, you're invited to check out The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.

Credit Suisse to Stop Relaying Dark-Pool Data, Tabb Says

Credit Suisse Group AG (CSGN), operator of the largest U.S. dark pool, said it will no longer publicly disseminate monthly volume data for the private stock-trading venue, according to an executive at Tabb Group LLC.

Credit Suisse will end its practice of voluntarily relaying information about its Crossfinder pool to research firm Tabb and Rosenblatt Securities Inc., which publish monthly statistics. The Zurich-based bank will stop disclosing volume, Adam Sussman, director of research at Tabb, said in a posting on the New York firm's website. Rosenblatt also won't get the data, Justin Schack, a managing director at the New York-based broker, said.

The move comes 10 days after chief executive officers of the biggest U.S. exchange operators urged regulators to follow policy makers in Canada and Australia and curb trading that occurs away from public venues. U.S. off-exchange volume reached 36.2 percent of all trading in the first quarter, compared with 32.8 percent last year, according data compiled by Bloomberg.

"Every month since March 2007, a wide swath of dark pool operators have voluntarily disclosed various execution statistics," Sussman wrote. "Now these reports are in the danger of becoming inaccurate, as Credit Suisse has decided to stop reporting."

Trading away from exchanges included 14.3 percent in dark pools in February, with Crossfinder accounting for 1.9 percent of overall equities volume, data compiled by Rosenblatt show.

Off Exchange

Brokers in the past have decided against supplying data because they didn't have enough volume or worried about disclosing too much information, Sussman said in the posting. They may also have disagreed with the methodology other dark pools used to count volume since there's no standard. Another reason is that the company may be "inherently secretive," Sussman said. Now there may be a new reason.

"As the controversy over dark trading has erupted over the past year, fueled by the rise in off-exchange trading in the U.S. and the changes occurring in Canada and Australia, the industry has focused more on the gross amount of shares traded off-exchange, rather than the performance of any specific dark pool," Sussman wrote. A broker must decide "whether all of this visibility is good for the rest of the company," he wrote. "What is it actually accomplishing? When you realize 'going out loud' is only getting you burned, you go dark."

Katherine Herring, a spokeswoman for Credit Suisse, declined to comment.

Alternative Trading

Schack said earlier this month that exchanges have stepped up their criticism of trading away from their venues as overall volume has declined, giving them a "smaller share of a shrinking pie." U.S. equities volume has fallen three years in a row, to 6.42 billion shares a day last year from 9.77 billion daily in 2009, data compiled by Bloomberg show.

Dark pools are broker-run alternative trading systems that don't publish bid and offer prices. They report trades immediately, as do exchanges, and must execute orders at the best price available nationally or better. They're used by brokers, asset managers and algorithms in an effort to trade without pushing prices higher or lower.

The venues aren't required by the Securities and Exchange Commission to report volume publicly. While Tabb tracks data from 16 brokers and Rosenblatt covers 19 venues, JPMorgan Chase & Co., Bank of America Corp., Fidelity Investments and Citadel LLC don't report activity to either firm.

Dark Volume

"We're disappointed with Credit Suisse's decision, but respect that the firm must ultimately do what it believes is best for its business," Schack said in an e-mailed statement. "We're confident that we will continue to deliver the highest- quality intelligence on dark-pool volumes and trends to our institutional customers."

The SEC proposed a rule requiring more transparency around dark-pool trading in 2009. It never acted on that initiative.

Some dark pools may reconsider whether they want to continue disseminating trade data after Credit Suisse's decision, Sussman said.

CEOs of the three largest U.S. stock market operators told the SEC on April 9 that it's time to drive more trading back toward exchanges and away from brokers. NYSE Euronext (NYX)'s Duncan Niederauer, along with Bob Greifeld of Nasdaq OMX Group Inc. (NDAQ) and Joe Ratterman of Bats Global Markets Inc., said too much off- exchange activity hurts the so-called price discovery process, making prices less reflective of buy and sell interest, according to a presentation published on the SEC website in connecting with the meeting.

Public Venues

The exchange CEOs told the SEC that trades should occur on public venues unless brokers provide better prices or execute large orders. An exception would be allowed for brokers quoting at the best price on public markets, they said. Brokers currently can match the best price available on exchanges or trade between a stock's national best bid and offer.

The total share of U.S. equities trading through hidden or non-displayed orders was 18.9 percent in February, with 14.3 percent from dark pools and 4.6 percent from exchanges, according to Rosenblatt. About 11.5 percent of trading on the main exchange owned by Bats took place through hidden orders. Nasdaq's orders that aren't displayed publicly accounted for 9 percent of its volume and NYSE Arca's were 6.6 percent of its February trading, the data showed.

Nasdaq's dark orders amounted to 1.44 percent of overall volume in the industry, surpassing trading on alternative venues except Crossfinder, according to the Rosenblatt data. Hidden bids and offers on exchanges can trade with incoming orders that aren't meant to be dark and must cede priority to publicly displayed buy and sell requests at the same price, according to Schack.

Rosenblatt began publishing a report with statistics and analysis called "Let There Be Light" in March 2008, according to Schack. Tabb began supplying data from brokers in March 2007, Sussman said.

Lands' End, Inc. (LE): Insider Buying at Full Value?

Consumer confidence might be riding a six-year high, but boardroom confidence appears to be slipping. (Joe and Jane sixpacks are always lagging indicators) The number of companies reporting insider purchases dropped to just 31 last week. It's the skinniest list iStock has seen in months and months.

We hope the lack of buying is not a sign that main street confidence is not misplaced.

Finding an insider buying idea was difficult this week. So, we'll highlight the name that makes us the least uncomfortable.

Two directors and a beneficial owner (10% or more) of Lands' End, Inc. (LE) opened their checkbooks and signed on the bottom line last week.

[Related -Sears Holdings Corp (SHLD): Speculating on a Huge Insider Bet]

Lands' End operates as a multi-channel retailer primarily in the United States, Europe, and Asia. The company operates through two segments, Direct and Retail. It offers men's, women's, and kids? apparel, outerwear, and swimwear; specialty apparel; accessories; footwear; and home products. The company sells its products through e-commerce Websites, direct mail catalogs, phone, or in-store computer kiosks, as well as standalone and dedicated stores.

Directors, Jonah Staw and Josephine Linden purchased 1,500 and 3,000 shares, respectively. Staw bought at $32.83 for an investment of $49,245, and Linden at $30.83 for $92,490.

Meanwhile, beneficial owner, Edward Lampert bought 187,534 shares, reported on June 16th. The day low was $30.83, which would equal $5,781,673; a substantial buy. It's called cluster buying when multiple insiders purchase simultaneously.

[Related -Macy's, Inc. (M): The One Department Store Stock You Can Trust]

Because LE is recent spinoff from Sears Holdings Corporation (SHLD), a previous history of "getting right" is not available, but Lampert's insider record consists of sale after sale after sale after… so, the buy stands in stark contrast to his typical trading action.

One analyst forecasts earnings per share of $2.29 on $1.59 billion in sales. The average retailer trades at 12.69 times profits and 0.66 times sales. Apply those valuations to Lands' End, and price targets of $29.06 and $32.84emerge, which makes one wonder why the triplet of insiders bought?

Overall: Cluster buying at Lands' End, Inc. (LE) is an encouraging sign, but shares appear fully-valued based on the industry average price-to-earnings and price-to-sales ratios.