Yahoo! Japan CFO Says Talks Ongoing, Per WSJ

Following a Yahoo! (YHOO) conference call last night to discuss Q4 results, during which management said it was looking to restructure its assets in Asia, a report today by The Wall Street Journal’s Juro Osawa states the head of finance of the Japanese joint venture confirmed Yahoo! is discussing amending its stakes.

Osaw quotes the CFO of Yahoo! Japan, Akira Kajikawa, as saying,
“Yahoo Inc. is still trying to finalize the mechanism [for selling its stake] and we are cooperating with them.”

Yahoo! has a 35% stake in Yahoo! Japan. The company also has a 42% stake in China’s Alibaba Group Holdings Ltd.

On last night’s call, Yahoo! CFO Tim Morse remarked regarding the Asian assets,

We’re in active discussions with our Asian partners to significantly restructure our holdings in Alibaba Group and Yahoo! Japan in order to unlock value for our shareholders. While we’re pursuing these discussions with enthusiasm, given the complex, unproven, and multifaceted nature of the restructuring, we’re not in a position to provide further detail or certainty on today’s call.

Yahoo! shares today are down 15 cents, or 1%, at $15.53.

The most important question in the world

"Fear defeats more people than any other one thing in the world." -- Ralph Waldo Emerson

I co-hosted Bloomberg Rewind with my colleague Ed Dempsey on Monday ( click here) and a number of topics were covered, especially relating to Europe and the deflation pulse which has been beating ever since my April 6 article here on MarketWatch.

In that piece, I argued a mini-correction was likely. Early April was also around the time my company's ATAC (Accelerated Time And Capital) models we use for managing client accounts signaled that it was a better time to buy bonds than stocks, as we sold off the bulk of our equity positions and repositioned largely into Treasuries. I even had the honor of making the case alongside Gary Shilling on April 11 that a deflation pulse was beating.

I have since then consistently argued that this is the exact test for the "Spring Switch" thesis out of bonds and into stocks (the "Great Re-Allocation"), such that if the stock market was able to act resiliently in the face of the negative narrative, it only furthers the case for 2012 being a year of reflation similar to 2003 and 2009 within the context of a 40+% like move for equities (the Rocky Balboa analogy is appropriate here).

On April 23, in an article titled "Is the Mini-Correction Over?", I specifically said that "the mini-correction may not be over just yet." So far, despite world-wide equity averages having largely given back their gains made for the year, the "mini-correction" in the U.S. has played out as I believed it would given that we are (as of writing) roughly only 6% off the recovery highs of 2012.

Our ATAC models, which are run weekly and have the flexibility to go long bonds or long stocks depending on market conditions, remain negative given that some dramatic intermarket changes have occurred following elections in Europe. Bonds have performed strongly since April, but stocks in the U.S. have not declined in a panic way. The volatility characteristics are completely different now than they were in the midst of the Summer Crash of 2011.

I believe much of this has to do with the "bear paradox"�the more bearish you are on stocks, the more bullish you are on bonds in the face of panic-low Treasury yields that are far below the Fed's stated inflation target, and in the face of companies raising dividends making their yields comparatively more attractive than what can be found in "risk-free" government debt.

I very much stand by my initial analysis of how the conditions are playing themselves out, but there was a segment during Bloomberg Rewind which I want to address in honor of the much more bearish camp out there. The segment was titled "What's Keeping You Up At Night?"

What is the "nightmare scenario" that makes me most afraid? This can be answered with a simple question which I believe now is the most important question in the world: �Is the bond market right?"

Bond yields in the U.S., Germany, and a number of other countries are nearing all-time lows. Are these bond yields indicative of a weak economy and depressionary environment, or will it cause reflation to occur? The reason this question keeps me up at night is because the longer-term implications of the bond market being right means we are in a global depressionary environment, which in a highly leveraged world, likely means economic malaise transforms into societal upheaval. If the bond market is right, we all have much bigger things to worry about than what the Dow Jones Industrial Average DIA �is doing.

Yet, this very fear that I think is shared among many investors is precisely why 2012 could still play out like 2009. When the Dow was collapsing under 7,000, the same kind of "end of the world" message was being signaled by the stock market. At the time, I recall speaking to a knowledgeable investor about whether it was worth taking the risk to buy stocks. To me, it was a meaningless question because if the stock market was right back then, our money would all be worthless as the implication would be a collapse of the economic system.

My argument at the time was that you might as well bet that such a scenario won't happen, because if it did, we might as well all learn to farm and hunt in an effort to survive a very different world. This was within weeks of the March low.

A similar message is being expressed now, but this time in the bond market through these low yields. My mentality is very much the same now as it was in early 2009 before the March low�if the bond market is right and a collapse is coming, then we should all take lessons on how to survive outside of the economic and societal framework we are used to. Sure, we may be headed to that, but its not the way to bet because the implications go far beyond invested assets and more toward us as a people functioning together on this earth.

With yields this low, the bond market is indeed saying deflationary fears are growing. Take a look below at the SPDR Barclays TIPS ETF IPE relative to the nominal iShares Barclays 7-10 Year Treasury Bond Fund ETF IEF . As a reminder, a rising price ratio means the numerator/IPE is outperforming (up more/down less) the denominator/IEF. For a larger chart, visit http://www.pensionpartners.com/marketwatch/ipeief051512large.PNG.

An uptrend in the ratio means inflation expectations are rising, while a downtrend means a deflation pulse is beating. As you can tell on the far right of the chart, the ratio is heading lower, but doing so in the face of already panic low yielding absolute rate levels. Much of this is attributable to the post-European elections which have reawakened the bears. The implication is that the "mini-correction" environment is getting harsher.

I remain optimistic on the stock market for 2012 despite our ATAC models keeping our clients largely in bonds now, which has so far been the right move since April, all with the knowledge that our ATAC models are designed to quickly reallocate back into stocks as conditions improve.

However, should the deflation pulse beat faster and the trend in the ratio chart further break down, then we could be in for a much more serious scenario than anyone is prepared for. I simply don't believe this will happen�the negative narrative that is regurgitated today could also have been said in the lead-up to the Fall Melt-Up/October low of last year. That negative narrative could be entirely overestimated as I stated in an interview going over the idea at http://www.youtube.com/watch?v=17-TYGPawZY.

Time will tell if I am wrong of course, but if I am not, and it is indeed the bond market that is incorrect about the future, then the Spring Switch likely gets flipped after all.

This writing is for informational purposes only and doesn't constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Pension Partners, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Pension Partners, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

Merrimack IPO Falls Out Of The Gate

By Marie Daghlian

Merrimack Pharmaceuticals (MACK) raised $100 million in the only U.S. life sciences IPO in March. But its shares had fallen 13.7 percent at the close of trading on March 28. The Cambridge, Massachusetts-based biotech sold 14.3 million shares at $7 per share, valuing the biotech at $647 million. It was a long struggle for the targeted cancer drug developer. It postponed an IPO attempt in February through an offering of 16.7 million shares at a range of $8 to $10 a share, which if it had been successful would have raised as much as $150 million and valued the company at $853 million.

Merrimack has four targeted investigational cancer compounds in clinical development, two of which are in late stage development: MM-398, a nano-encapsulated formulation of the chemotherapy drug irinotecan being studied as a treatment for metastatic pancreatic cancer in patients who have failed treatment with gemcitabine; and MM-121, a fully human monoclonal antibody that targets the ErbB3 cell surface receptor, known to mediate communication inside and outside cells. MM-121 is being developed in collaboration with Sanofi-Aventis (SNY) which holds exclusive global rights. Merrimack is developing MM-398 with PharmEngine, which holds commercialization rights in Taiwan.

Merrimack joins six other life sciences companies that went public during the first quarter of 2012. All but one lowered their expectations to become public companies. Except for Merrimack, the life sciences IPO class of 2012 is trading an average of 20 percent above the initial offering price, a reflection of the Nasdaq Composite Index, which is up 18.7 percent since the beginning of the year.

Although aftermarket performance has improved, capital raised through U.S. IPOs is down 7.9 percent in the first quarter of 2012 compared to the same period last year, with seven companies raising $480 million in 2012 and eight companies raising $521 million in 2011. Outside the United States, there have been six IPOs so far this year, three in China and three in France, which raised a total of $404 million. This is a 50 percent drop in activity from the same period in 2011 when 12 companies raised $1.3 billion.

French biotech DBV Technologies made its public debut just before the end of the month through an IPO on the Euronext Paris exchange and a concurrent private placement. The company raised $53.6 million through the sale of 4.6 million shares at $11.80 a share, the low end of its target range, valuing the company at $157.1 million. DBV is developing allergy treatments that are delivered through the skin. Its investigational treatment for peanut allergies is in mid-stage testing in children and adults.

(CRWE, VSBN, BRID, STX) Stock Updates by DrStockPick.com

Crown Equity Holdings, Inc. (CRWE)

Crown Equity Holdings Inc. (CRWE) recently announced that it has entered into a joint venture to deploy VoIP (Voice over Internet Protocol) technology delivering voice, video and data services to residential and commercial customers. The joint venture company is Crown Tele Services Inc. which was a wholly-owned subsidiary of Crown Equity Holdings Inc. Crown Equity Holdings Inc. will own fifty percent (50%) interest in the joint venture.

Commenting on the joint venture, Kenneth Bosket, President of Crown Equity Holdings Inc., said: “We are excited to deliver VoIP communications solutions specifically designed to meet the business and residential market needs in this fast-growing global market.”

Crown Equity Holdings Inc’s selection of Core Link reflects recent diversification beyond CRWE’s original charter as a provider of services and knowledge to small business owners taking their own companies public. In addition to these services, Crown Equity Holdings Inc has transitioned into a multifaceted media organization that publishes clients’ news online; sells advertising adjacent with its digital network targeted at a high-income audience; designs, hosts and maintains websites; produces marketing videos from concept to final product; crafts press releases and articles for maximum SEO; develops email campaigns; and forges branding campaigns to bolster client company images.

Internet marketing is inexpensive when examining the ratio of cost to the reach of the target audience. Companies can reach a wide audience for a small fraction of traditional advertising budgets. The nature of the medium allows consumers to research and to purchase products and services conveniently. Therefore, businesses have the advantage of appealing to consumers in a medium that can bring results quickly. The strategy and overall effectiveness of marketing campaigns depend on business goals and cost-volume-profit (CVP) analysis.

Crown Equity Holdings Inc. together with its digital network currently provides electronic media services specializing in online publishing, which brings together targeted audiences and advertisers. Crown Equity Holdings Inc. offers internet media-driven advertising services, which covers and connects a range of marketing specialties, as well as search engine optimization for clients interested in online media awareness.

For more information, visit http://www.crownequityholdings.com

VSB Bancorp Inc. (Nasdaq:VSBN) reported net income of $422,288 for the third quarter of 2011, a decrease of $84,573, or 16.7%, from the third quarter of 2010. The following unaudited figures were released today. Pre-tax income was $778,533 in the third quarter of 2011, compared to $934,390 for the third quarter of 2010. Net income for the quarter was $422,288, or basic income of $0.23 per common share, compared to a net income of $506,861, or $0.28 basic income per common share, for the quarter ended September 30, 2010.

VSB Bancorp, Inc. operates as the holding company for Victory State Bank that provides commercial and retail banking services to individuals and businesses primarily in Staten Island, New York.

Bridgford Foods Corp. (Nasdaq:BRID) announced the election of Allan Bridgford Jr. to the Board of Directors of Bridgford Foods Corporation (the “Company) to fill the vacancy created by the retirement of Senior Chairman Allan Bridgford from the Board of Directors. Mr. Bridgford has reached the maximum allowed service age stipulated in the Company bylaws, and will continue to work at the Company at 60% of a full time schedule.

Bridgford Foods Corporation, together with its subsidiaries, engages in the manufacture, marketing, and distribution of frozen, refrigerated, and snack food products in the United States and Canada.

Seagate Technology PLC (Nasdaq:STX) reported financial results for the quarter ended September 30, 2011. The company shipped 51 million disk drives and reported revenue of $2.8 billion, gross margin of 19.5%, net income of $140 million and diluted earnings per share of $0.32. On a non-GAAP basis, which excludes the net impact of certain items, Seagate reported net income of $146 million and diluted earnings per share of $0.34 for the quarter ended September 30, 2011.

Seagate Technology Public Limited Company designs, manufactures, markets, and sells hard disk drives for enterprise, client compute, and client non-compute market applications worldwide.