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Archive for 2009

Illusion of Prosperity?

Courtesy of Leo Kolivakis


Submitted by Leo Kolivakis, publisher of Pension Pulse.

Peter Boockvar, equity strategist at Miller Tabak. recently appeared on Tech Ticker claiming “it’s dangerous to short this market”:

Despite a penchant for bearishness, Boockvar says the rally can continue as long as the Fed keeps rates at zero.

 

“When you cut rates to nothing you’re encouraging people to take risk,” Boockvar says. “As long as asset inflation is [the Fed's] goal, the market could go higher but there are obvious consequences,” including inflation, as discussed here.

 

The Fed is trying to create “the illusion of prosperity” by fueling asset price appreciation, Boockvar says, staying true to his reputation as a deficit hawk. Even if the U.S. stock market keeps rallying, “non-dollar assets” like commodities and emerging markets will continue to outperform, he says.

 

Unlike the U.S., emerging markets are “not weighed down by enormous debt levels” and local consumers are “much better off” than their American counterparts, the strategist says, expressing a strong preference for China.

 

“If you want exposure to global growth, it’s going to be outside of the U.S.,” he says, recommending the following:

  • Follow the Money: Buy China-specific and Asian ETFs or mutual funds.
  • Go for Gold: A longtime gold bull, Boockvar says a correction could be coming because “the trade has gotten crowded” and Ben Bernnake’s recent comments about the dollar could spur a reversal. But “buy on any sharp pullback,” he recommends, suggesting gold is very likely to revisit its inflation-adjust high of $2300 “in the next few years.”
  • Reject Domesticity: Avoid U.S. retailers, REITs and consumer-focused financials, Boockvar says, suggesting the U.S. economy and consumers will be under pressure for the foreseeable future. “If you want to invest in US, invest in companies with big exposures overseas,” he says. “The growth is not going to be there in the U.S. “

As it turns out, last Tuesday I was in Toronto for a Global Insights conference where I got to listen to a senior economist for the IMF. She was excellent and she highlighted a few themes that that I outline below:

  • The IMF is acutely aware that excess liquidity is bidding up risk assets globally. They are particularly watching developments in China where a


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New York State's Toxic Spiral: Preparing For The Moody's Axe, As Cash Flow "Crunch" Accelerates

Courtesy of Leo Kolivakis


Submitted by Leo Kolivakis, publisher of Pension Pulse.

Peter Boockvar, equity strategist at Miller Tabak. recently appeared on Tech Ticker claiming “it’s dangerous to short this market”:

Despite a penchant for bearishness, Boockvar says the rally can continue as long as the Fed keeps rates at zero.

 

“When you cut rates to nothing you’re encouraging people to take risk,” Boockvar says. “As long as asset inflation is [the Fed's] goal, the market could go higher but there are obvious consequences,” including inflation, as discussed here.

 

The Fed is trying to create “the illusion of prosperity” by fueling asset price appreciation, Boockvar says, staying true to his reputation as a deficit hawk. Even if the U.S. stock market keeps rallying, “non-dollar assets” like commodities and emerging markets will continue to outperform, he says.

 

Unlike the U.S., emerging markets are “not weighed down by enormous debt levels” and local consumers are “much better off” than their American counterparts, the strategist says, expressing a strong preference for China.

 

“If you want exposure to global growth, it’s going to be outside of the U.S.,” he says, recommending the following:

  • Follow the Money: Buy China-specific and Asian ETFs or mutual funds.
  • Go for Gold: A longtime gold bull, Boockvar says a correction could be coming because “the trade has gotten crowded” and Ben Bernnake’s recent comments about the dollar could spur a reversal. But “buy on any sharp pullback,” he recommends, suggesting gold is very likely to revisit its inflation-adjust high of $2300 “in the next few years.”
  • Reject Domesticity: Avoid U.S. retailers, REITs and consumer-focused financials, Boockvar says, suggesting the U.S. economy and consumers will be under pressure for the foreseeable future. “If you want to invest in US, invest in companies with big exposures overseas,” he says. “The growth is not going to be there in the U.S. “

As it turns out, last Tuesday i was in Toronto for a Global Insights conference where I got to listen to a senior economist fo the IMF. She was excellent and she highlighted a few themes that that I outline below:

  • The IMF is acutely aware that excess liquidity is bidding up risk assets globally. They are particularly watching developments in China where a


continue reading





New York State’s Toxic Spiral: Preparing For The Moody’s Axe, As Cash Flow “Crunch” Accelerates

Courtesy of Tyler Durden

And somehow declaring that a bankrupt state is, gasp, bankrupt is expected to be surprising? At least that is the read of Bloomberg’s piece highlighting that the idiots over at Moody’s may cut New York’s Aa3 rating. What next: a $10 trillion deficit financed exclusively with new debt may force an upgrade of America’s AAA rating? Quote Moody’s: “The next three months will be critical to the state’s credit rating. The rating and outlook reflect the state’s current-year projected gap of approximately $3 billion and the deteriorating liquidity in the state’s General Fund, and also reflects our expectation that legislature will enact solutions to the budget gap and that revenue collections based on bonus payouts will exceed the state’s conservative projections. If there is no action taken by the state to close the gap, or if action is taken but is largely-one-time in nature (therefore increasing the structural imbalance in the outyears), and revenue collections in January are close to or below state projections, the state’s situation at that time would likely not be consistent with a Aa3 rating and stable outlook.” Which is why NY State comptroller’s earlier released report “New York State’s Cash Flow Crunch” will likely do little to improve Moody’s skepticism that New York can escape the fiscal abyss so well shown by Arnold to be inescapable. “[B]borrowing to address the State’s deficit would be irresponsible, incurring additional costs and adding to the State’s already high debt burden. As more time goes by without meaningful effort to address the State’s budget problem, the cost of inaction will grow and the consequences will be significantly more severe.” So sooner or later New York will also likely end up bankrupt, but at least Goldman et al. have massive NOL carryforwards that will prevent them from paying any state taxes for a considerable amount of time. That and one-way private jet tickets to any non-extradition venue of their choosing.

Full Moody’s report:

 

And an even more dire warning from the comptroller of the state:

 





Ukraine Flu Death Toll Hits 400

Flu News

Ukraine Flu Death Toll Hits 400

ukraine swine flu yuliaCourtesy of Joe Weisenthal at Clusterstock

The flu outbreak in the Ukraine, which is possibly the result of some virulent H1N1 mutation, continues to grow more alarming.

The Guardian: A flu pandemic in Ukraine that has triggered a nationwide panic is worsening this weekend with up to 400 deaths already reported.

The arrival of the virus, suspected by the World Health Organisation to be swine flu but possibly a combination of the H1N1 strain and a respiratory illness, has paralysed the country’s fragile health system and could even lead to the postponement of the general election which is scheduled for 17 January.

Seven people died and 35,000 new cases were reported on Friday, said the health minister, bringing the total number of people infected to 1.6 million out of a population of 46 million.

Meanwhile, the issue of H1N1 mutations is not just confined to The Ukraine. A new cluster of Tamiflu-resistant cases showed up at the Duke University Medical Center in North Carolina.

Also another virulent strain is showing up in Norway.

*****

Source: additional excerpt, with my yellow highlighting – Ilene  

Panic over hundreds of flu deaths exploited by Ukraine’s politicians
The Guardian

The onslaught of the virus has seen all the major political figures eagerly exploiting the outbreak. Prime minister Yulia Tymoshenko announced the arrival of an epidemic on 30 October, when only one case had been reported, and has closed all schools and banned public gatherings – including campaigning political rallies – for the past three weeks…

"This is very dangerous,’ said Igor Shkrobanets, chief of the health ministry in the western district of Chernivtsi. "One or another politician will gain from this situation, but the doctors and their patients certainly will not."

He said the level of fear was such that people were calling out ambulances when they felt the first touch of a fever and hospitals were "overloaded".

In such uneasy times, bloggers and conspiracy theorists have whipped up fears by suggesting that bubonic plague, or a new, more lethal strain of the flu, was sweeping Ukraine and that there was a massive cover-up of the numbers of deaths.

"We are seeing reports of bodies lying in the streets," said one. Others claim


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Is Gold Set To Hit $1,200 Within 24 Hours?

Courtesy of Tyler Durden

Early spot gold action indicates something is afoot in the gold market. Hitting an absolute record of $1,164 mere minutes ago, the momentum chasing algo funds are now in the picture, set to do to gold what they have been doing to the S&P futures and the SPY day after day for months now: if little volume will cause a move, look for the momentum chasers to crawl out of the woodwork. Yet the key factor determining today’s gold price: Comex gold option expiration later today. Over the past several weeks, speculators have accumulated a 3 million ounce option position with a $1,200 strike. With gold flying on the tiniest gust of speculative mania, the possibility that we may see a 1,200 handle on gold seems less and less improbable.





Swing trading virtual portfolio – Week of November 23rd 2009

This post is for live trades and daily comments. 

To learn more about the swing trading virtual portfolio (strategy, membership etc.), please click here

- Optrader





Investor Sentiment: Happy Thanksgiving!

Courtesy of thetechnicaltake

In this holiday shortened week, there won’t be much to gleam from market action.

Over the past couple of months, Mondays have been kind to the bulls. Wednesday will be light as traders ready for Turkey Day on Thursday. Friday is another snooze fest that seems to go to the bulls --why spoil a great American holiday?

Will this week be another repeat of the last two where the best gains are on Monday and then the market struggled all week long? It seems plausible. Stock sponsorship (i.e., volume) has been pathetic, and I can’t see that improving this week either.

Over the longer term or beyond next week we say what we said last week:

“The major equity indices are in a topping process. This implies a trading range at best. There is risk of a down draft as markets “fueled” by the proverbial “liquidity” are prone to quick sell offs. The outlier trade is a market blow off or a spike in prices, and I do not rule this possibility out because of the ongoing downtrend in the Dollar Index. It is possible but it is not the high odds play. This is not the market environment that will take you from here to there.”

Have a Happy Thanksgiving!!

The “Dumb Money” indicator, which is shown in figure 1, looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investor Intelligence; 2) Market Vane; 3) American Association of Individual Investors; and 4) the put call ratio. The “Dumb Money” indicator shows that investors are extremely bullish.

Figure 1. “Dumb Money” Indicator/ weekly
*****

The “Smart Money” indicator is shown in figure 2. The “smart money” indicator is a composite of the following data: 1) public to specialist short ratio; 2) specialist short to total short ratio; 3) SP100 option traders. The Smart Money indicator is neutral.

Figure 2. “Smart Money” Indicator/ weekly
*****

Figure 3 is a weekly chart of the S&P500 with the InsiderScore ”entire market” value in the lower panel. From the InsiderScore weekly report we get the following three insights: 1) after stripping out the buying in the financial sector from Regional Bank insiders, the “entire market” score was the second worst weekly


continue reading





The Most Recent Recipient Of Obama's Middle Class-Funded Generosity: Key Largo's Ocean Reef Club For The Mega Wealthy

Courtesy of thetechnicaltake

In this holiday shortened week, there won’t be much to gleam from market action.

Over the past couple of months, Mondays have been kind to the bulls. Wednesday will be light as traders ready for Turkey Day on Thursday. Friday is another snooze fest that seems to go to the bulls --why spoil a great American holiday?

Will this week be another repeat of the last two where the best gains are on Monday and then the market struggled all week long? It seems plausible. Stock sponsorship (i.e., volume) has been pathetic, and I can’t see that improving this week either.

Over the longer term or beyond next week we say what we said last week:

“The major equity indices are in a topping process. This implies a trading range at best. There is risk of a down draft as markets “fueled” by the proverbial “liquidity” are prone to quick sell offs. The outlier trade is a market blow off or a spike in prices, and I do not rule this possibility out because of the ongoing downtrend in the Dollar Index. It is possible but it is not the high odds play. This is not the market environment that will take you from here to there.”

Have a Happy Thanksgiving!!

The “Dumb Money” indicator, which is shown in figure 1, looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investor Intelligence; 2) Market Vane; 3) American Association of Individual Investors; and 4) the put call ratio. The “Dumb Money” indicator shows that investors are extremely bullish.

Figure 1. “Dumb Money” Indicator/ weekly
*****

The “Smart Money” indicator is shown in figure 2. The “smart money” indicator is a composite of the following data: 1) public to specialist short ratio; 2) specialist short to total short ratio; 3) SP100 option traders. The Smart Money indicator is neutral.

Figure 2. “Smart Money” Indicator/ weekly
*****

Figure 3 is a weekly chart of the S&P500 with the InsiderScore ”entire market” value in the lower panel. From the InsiderScore weekly report we get the following three insights: 1) after stripping out the buying in the financial sector from Regional Bank insiders, the “entire market” score was the second worst weekly


continue reading





The Most Recent Recipient Of Obama’s Middle Class-Funded Generosity: Key Largo’s Ocean Reef Club For The Mega Wealthy

Courtesy of Tyler Durden

A reader submits the following disclosure released by Ocean Reef Club, a country club, which very much unlike America’s 35 million food-stamp recipients, has roughly a $35 million net worth cutoff for members, who enjoy such amenities as 100 foot yachts, a private airport, and two golf courses. It is precisely in connection with golf that we see these very needy multi-millionaires follow in Wall Street’s footsteps and proceed to redistribute wealth away from those who actually work for their money, to those who merely use the dollar as a temporary (or otherwise) replacement for one-ply Cottonelle.

As a reminder, here is how one gets to become a member of ORC: in short, one doesn’t. Just like the Centurion, one is either invited, or not.

On the northern tip of the Florida Keys, sophistication and simplicity live in perfect harmony at Ocean Reef Club. Our members treasure a balance of luxurious lifestyle and uncomplicated pleasures. They enjoy The Reef’s exceptional recreation choices, its abundant natural beauty and the opportunities to relax in privacy with family and friends. In equal measure they value what they don’t find. Undisturbed by crowds and clamor, this is a peaceful place.

Above all, our members cherish their sense of connection to The Reef. More than a club, this is a community of individuals who share an affinity for the rewarding lifestyle here. Over the decades, Ocean Reef Club has quietly acquired international acclaim for its privacy and pristine nature. The prestigious Robb Report has described it as “one of America’s most exclusive club communities.”

To preserve the special nature of The Reef, membership is by invitation only. Invitations are extended to individuals who value a community that rewards their success and satisfies their quest for a rich and meaningful lifestyle.

For further information about Ocean Reef membership, please contact Executive Director of Membership, Michelle Simpson, at msimpson@oceanreef.com or 305.367.5921.

Yet it appears those who value a community that rewards their success and demand a rich and meaningful lifestyle, are just as interested in a lifestyle that is subsidized as much as possible by the US taxpayer. And lest these multi-millionaires actually have to pay to avoid walking on the club’s numerous golf clubs, here…
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Top 100 Most Active Cash Bonds

Courtesy of Tyler Durden

With volume in equities on collision course with singularity, courtesy of HFT’s vol lim->0 series, Zero Hedge is launching a new daily segment which will indicate the volume and number of trades per any given issue according to TRACE. As we believe the vast majority of human traders have largely shunned equities, the impact of credit treding will only get larger and larger. And while CDS has yet to get the "TRACE" treatment, the availability of this data in cash bonds is the main reason why we will bring it to public scrutiny. Furthermore, we will commence correlating this data with which desk has the most active axes in any given name, and implicitly determining whose Fixed Income division is making the most money on the bid/ask spreads and on traded cash volumes.

Our first report demonstrates the top 5 bonds traded, with volume and trade count data courtesy of TRACE:

  1. NRG: 51.1 million, 24 trades
  2. BONT: 40.3 million, 29 trades
  3. LVLT: 39.8 million, 15 trades
  4. AES: 38.7 million, 9 trades
  5. AMD: 36.5 million, 42 trades

Full list below.

TRACE 11.20.09 top 100

Attachment Size
TRACE 11.20.09 top 100.pdf 495 KB

 





 

Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!

 
 

Phil's Favorites

When one door closes...

When one door closes…

Courtesy of 

“When one door closes, another opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us.”
– Alexander Graham Bell

The prevailing wisdom on QE in Policy Bear circles has been that the Fed was” trapped” and could never exit QE without sending the US economy into a tailspin.

This week the Fed ended QE and the stock market has exploded to the upside. The one thing the policy bears may not have counted on was that someone else would cover the Fed’s back as it walked away. That someone else is the Bank of Japan, which shocked the ...



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Zero Hedge

The "Carry Trade" For The Working Man

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

What today's JPY-carry-trade-enabling Bank of Japan exuberance means to the 'average joe'...

 

 

h/t @PdaCosta

...

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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Insider Scoop

Euro Continues Lower On Encouraging US GDP

Courtesy of Benzinga.

Related EWI Euro Responds To Federal Reserve Conclusion Euro Steady Above $1.27 Ahead Of Fed Meeting Conclusion

The euro fell further below the dollar on Friday morning as poor economic data from the region weighed on investors’ confidence.

The common currency also lost some ground after U.S. GDP data came in better than expected on Thursday...



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Sabrient

Sector Detector: Bullish conviction returns, but market likely to consolidate its V-bottom

Courtesy of Sabrient Systems and Gradient Analytics

Bulls showed renewed backbone last week and drew a line in the sand for the bears, buying with gusto into weakness as I suggested they would. After all, this was the buying opportunity they had been waiting for. As if on cue, the start of the World Series launched the rapid market reversal and recovery. However, there is little chance that the rally will go straight up. Volatility is back, and I would look for prices to consolidate at this level before making an attempt to go higher. I still question whether the S&P 500 will ultimately achieve a new high before year end.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then o...



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OpTrader

Swing trading portfolio - week of October 27th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's the latest Stock World Weekly. Enjoy!

(As usual, use your PSW user name and password to sign in. You may also take a free trial.) 

 

#455292918 / gettyimages.com

 

...

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Market Shadows

Bill Ackman's Big Pharma Trade Is Making Wall Street A Super Awkward Place

 

#452525522 / gettyimages.com

Intro by Ilene

If you're following Valeant's proposed takeover (or merger) of Allergan and the lawsuit by Allergan against Valeant and notorious hedge fund manager William Ackman, for insider trading this is a must-read article. 

Linette Lopez describes the roles played by key Wall Street hedge fund owners--Jim Chanos, John Paulson, and Mason Morfit, a major shareholder in Valeant. Linette goes through the con...



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Option Review

LUV Options Active Ahead Of Earnings

There is lots of action in Southwest Airlines Co. November expiry call options today ahead of the air carrier’s third-quarter earnings report prior to the opening bell on Thursday. Among the large block trades initiated throughout the trading session, there appears to be at least one options market participant establishing a call spread in far out of the money options. It looks like the trader purchased a 4,000-lot Nov 37/39 call spread at a net premium of $0.40 apiece. The trade makes money if shares in Southwest rally 9.0% over the current price of $34.32 to exceed the effective breakeven point at $37.40, with maximum potential profits of $1.60 per contract available in the event that shares jump more than 13% to $39.00 by expiration. In September, the stock tou...



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Digital Currencies

Goodbye War On Drugs, Hello Libertarian Utopia. Dominic Frisby's Bitcoin: The Future of Money?

Courtesy of John Rubino.

Now that bitcoin has subsided from speculative bubble to functioning currency (see the price chart below), it’s safe for non-speculators to explore the whole “cryptocurrency” thing. So…is bitcoin or one of its growing list of competitors a useful addition to the average person’s array of bank accounts and credit cards — or is it a replacement for most of those things? And how does one make this transition?

With his usual excellent timing, London-based financial writer/actor/stand-up comic Dominic Frisby has just released Bitcoin: The Future of Money? in which he explains all this in terms most readers will have no tr...



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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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