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Archive for 2010

More Bonus + Less Lending = The March on Wall Street

Courtesy of Static Chaos

By Static Chaos

According to a Wall Street Journal analysis of Treasury Department data, the biggest recipients of taxpayer aid made or refinanced 23% less in new loans in February, the latest available data, than in October, the month the Treasury kicked off the Troubled Asset Relief Program (TARP). (Chart 1)

Excluding mortgage refinancings, consumer lending dropped by about one-third between October and February. Commercial lending slumped by about 40% over that period, the data indicates.  All but three of the 19 largest TARP recipients originated fewer loans in February than they did at the time they received federal infusions.

Meanwhile, the average Wall Street bonus soared almost 14 times higher (by 2006); the average worker’s salary has essentially been stagnant sine the mid-1980s. (Chart 2) 

Wall Street bonuses paid to New York City securities industry employees rose by 17% to $20.3 billion in 2009, according to an estimate released in February by State Comptroller Thomas P. DiNapoli.  (Click here for a chart showing bonuses paid from 1985-2009.) 

Total compensation at the largest securities firms grew even faster and industry profits could exceed an unprecedented $55 billion in 2009, nearly three times greater than the previous all-time record. In 2008, the industry lost a record $42.6 billion.

Basically, after unloading their toxic assets onto the Fed / taxpayers’ balance sheet, Wall Street is able to increase bonus partly through less lending, because with the free money from the government, banks have discovered that lending to businesses and consumers does not give them as high returns as other activities such as juicing up stock markets and commodities.

A 17% bonus increase in a recession year with a nationwide jobless rate of around 10%, coupled with a reduction in lending while receving TARP money - a sure fire recipe for becoming public enemy number 1.

So, no surprise here -- a video from WSJ.com dated Apr. 30 showing thousands of demonstrators rallied against big banks in New York’s financial district, calling for accountability and job creation.  Wonder if Goldman Sachs employees are still packing guns?  

Static Chaos





ANOTHER GREEK BAILOUT, ANOTHER MONDAY MELT-UP?

ANOTHER GREEK BAILOUT, ANOTHER MONDAY MELT-UP?

Courtesy of The Pragmatic Capitalist 

Traders piled into stocks last Thursday when the news of a Greek bailout hit the wires.  Stocks soared back to near highs as euphoria swept the markets and investors celebrated the austerity based recession that is now a near guarantee in parts of Europe.  The news became official this morning with a fresh bailout of Greece (which seems to be the market moving news just about each Sunday these days).  Greece will receive $145B in what can only be described as a Scott Norwood-like kick of the can down the road – hard but “wide right!”. Traders love the news, of course, just as they have every Sunday night that such reports have been released:

Mon ANOTHER GREEK BAILOUT, ANOTHER MONDAY MELT UP?

The politicians across Europe are playing this bailout as if it is a bailout of the people of Greece and Europe itself.   The truth is, these measures will force Greece into a near guaranteed recession for several more years and possibly to the brink of depression as savage austerity measures are imposed.  The likelihood of further austerity measures in surrounding nations is almost guaranteed as well.  Meanwhile, this bailout will be funneled through Greece and directly into the coffers of the foolish buyers of Greek bonds – primarily the large European banks.  Once again, these foolish politicians bailout Wall Street in favor of Main Street and sell it as a bailout of Main Street.  Hopefully the entire continent of Europe will remember this when they enter the voting booth.

It will be interesting to see how this evolves in the coming months.  My guess is that Greece is not the last domino in this row.  The problems in Italy, Portugal and Spain will continue to build as the Euro economy remains fragile.  Should these countries impose painful austerity measures in an attempt to get ahead of potential Greek-like problems they could actually drive their own economies closer to the brink.  The Euro has been exposed as a fatally flawed currency in its current format.   These measures have done nothing to solve the actual problem in the Euro, but have nearly guaranteed a much weaker economy than most Europeans deserve.

Despite the fact that nothing has actually been resolved here, traders are piling into equity futures overnight in anticipation of a Thursday-like celebration.  I think the following saying is appropriate:


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THE STOCK MARKET VS THE ECONOMY

THE STOCK MARKET VS THE ECONOMY

Courtesy of The Pragmatic Capitalist 

By Boeckh Investments: 

30757422-The-Economy-vs-the-Stock-Market-The-Boeckh-Investment-Letter





Editorial Note

This is a followup to TED’s previous post, American Baby

Editorial Note

Courtesy of The Epicurean Dealmaker 

No good deed goes unpunished.

— Anonymous

My recent exercise in flag-waving seems to have generated some confusion in a few quarters. If I interpret his telegraphic tweets aright1—always a risky business, under the best of circumstances—reader "CorneliusZH" seems to have interpreted my post as an attack on the banking industry qua industry, and that I implied that all its denizens, from lowest recent recruit to highest panjandrum, should be tarred with the brush of anticompetitive, plutocratic misbehavior.

This was not my intent at all.2 Let me be clear: as CorneliusZH wrote, many of the people who work in the investment banking industry are indeed Horatio Alger stories themselves. (For what it is worth, so am I.) Careful readers will recall that I alluded to the current CEO of Goldman Sachs, Lloyd Blankfein, as an admirable exemplar of that very thing.3 I have known very few, if any, colleagues or competitors over the years who have achieved success at (or even entry into) investment banking based on nepotism or anything other, really, than a rare combination of high native intelligence, relentless hard work, and grand ambition. There have been a few people I know who got a start based upon who Daddy was, but they quickly got winnowed out if they couldn’t deliver the goods like their peers. (Most of those were hired with the implicit understanding that Daddy would hand out fee business to the investment bank which hired Junior, anyway. Unless they proved themselves otherwise, such quid pro quos were always viewed as temporary investments in human capital only.)4

There was also nothing in my post which should lead a cautious reader to assume I advocate the dissolution of investment banks, the imposition of punitive taxes on finance industry compensation, or the passage of badly written, excessively repressive legislation on the industry itself. Number one, that just isn’t in my piece. And number two, have you read anything I’ve written in these pages over the past few years? Shit, man, carve out a couple days, pour yourself a few beers, and read it. You will quickly find such impressions to be badly mistaken.…
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Oil Spill: How Bad?

Courtesy of George Washington

Washington’s Blog

The Gulf oil spill is much worse than originally believed.

As the Christian Science Monitor writes:

It’s now likely that the actual amount of the oil spill dwarfs the Coast Guard’s figure of 5,000 barrels, or 210,000 gallons, a day.

Independent scientists estimate that the renegade wellhead at the bottom of the Gulf could be spewing up to 25,000 barrels a day. If chokeholds on the riser pipe break down further, up to 50,000 barrels a day could be released, according to a National Oceanic and Atmospheric Administration memo obtained by the Mobile, Ala., Press-Register.

Indeed, CNN quotes the lead government official responding to the spill – the commandant of the Coast Guard, Admiral Thad Allen – as stating:

If we lost a total well head, it could be 100,000 barrels or more a day.

Best-Case Scenario

The oil company running the oil drilling rig – BP – is trying to perform a difficult task of capping the leak by using robotic submarines to trigger a “blowout preventer” 5,000 feet below the surface of the ocean.

If successful, the leak could be stopped any day. Everyone is rooting for the engineers, so that they may successfully cap the leak.

Already, however, the spill is worse than the Exxon Valdez, and will cause enormous and very costly destruction to the shrimping, fishing and tourism industries along the Gulf Coast of Louisiana and Florida. It will be years before good estimates on the number of dead fish, turtles, birds and other animals can be made.

Worst-Case Scenario

As the Associated Press notes:

Experts warned that an uncontrolled gusher could create a nightmare scenario if the Gulf Stream carries it toward the Atlantic.

This would, in fact, be very bad, as it would carry oil far up the Eastern seaboard.

Specifically, as the red arrows at the left of the following drawing show, the Gulf Stream runs from Florida up the Eastern Coast of the United States:


[Click here for full image.]

In a worst-case scenario – if the oil leak continued for a very long period of time – the oil could conceivably be carried from…
continue reading





Oil Spill: Here’s The Inside Scoop

Courtesy of George Washington

Washington’s Blog

The Gulf oil spill is much worse than originally believed.

As the Christian Science Monitor writes:

It’s now likely that the actual amount of the oil spill dwarfs the Coast Guard’s figure of 5,000 barrels, or 210,000 gallons, a day.

Independent scientists estimate that the renegade wellhead at the bottom of the Gulf could be spewing up to 25,000 barrels a day. If chokeholds on the riser pipe break down further, up to 50,000 barrels a day could be released, according to a National Oceanic and Atmospheric Administration memo obtained by the Mobile, Ala., Press-Register.

CNN quotes the lead government official responding to the spill – the commandant of the Coast Guard, Admiral Thad Allen – as stating:

If we lost a total well head, it could be 100,000 barrels or more a day.

Indeed, an environmental document filed by the company running the oil drilling rig – BP – estimates the maximum as 162,000 barrels a day:

In an exploration plan and environmental impact analysis filed with the federal government in February 2009, BP said it had the capability to handle a “worst-case scenario” at the Deepwater Horizon site, which the document described as a leak of 162,000 barrels per day from an uncontrolled blowout — 6.8 million gallons each day.

Best-Case Scenario

BP is trying to perform a difficult task of capping the leak by using robotic submarines to trigger a “blowout preventer” 5,000 feet below the surface of the ocean. Here’s a photo of the robot trying to activate the switch on April 22nd:

(courtesy of the US Coast Guard)

If successful, the leak could be stopped any day. Everyone is rooting for the engineers, so that they may successfully cap the leak.

Already, however, the spill is worse than the Exxon Valdez, and will cause enormous and very costly destruction to the shrimping, fishing and tourism industries along the Gulf Coast of Louisiana and Florida. It will be years before good estimates on the number of dead fish, turtles, birds and other animals can be made.

The Backup Plan

If the blowout preventer can’t be triggered, the backup plan is…
continue reading





Oil Spill: The Inside Scoop

Courtesy of George Washington

Washington’s Blog

The Gulf oil spill is much worse than originally believed.

As the Christian Science Monitor writes:

It’s now likely that the actual amount of the oil spill dwarfs the Coast Guard’s figure of 5,000 barrels, or 210,000 gallons, a day.

Independent scientists estimate that the renegade wellhead at the bottom of the Gulf could be spewing up to 25,000 barrels a day. If chokeholds on the riser pipe break down further, up to 50,000 barrels a day could be released, according to a National Oceanic and Atmospheric Administration memo obtained by the Mobile, Ala., Press-Register.

CNN quotes the lead government official responding to the spill – the commandant of the Coast Guard, Admiral Thad Allen – as stating:

If we lost a total well head, it could be 100,000 barrels or more a day.

Indeed, an environmental document filed by the company running the oil drilling rig – BP – estimates the maximum as 162,000 barrels a day:

In an exploration plan and environmental impact analysis filed with the federal government in February 2009, BP said it had the capability to handle a “worst-case scenario” at the Deepwater Horizon site, which the document described as a leak of 162,000 barrels per day from an uncontrolled blowout — 6.8 million gallons each day.

Best-Case Scenario

BP is trying to perform a difficult task of capping the leak by using robotic submarines to trigger a “blowout preventer” 5,000 feet below the surface of the ocean. Here’s a photo of the robot trying to activate the switch on April 22nd:

(courtesy of the US Coast Guard)

If successful, the leak could be stopped any day. Everyone is rooting for the engineers, so that they may successfully cap the leak.

Already, however, the spill is worse than the Exxon Valdez, and will cause enormous and very costly destruction to the shrimping, fishing and tourism industries along the Gulf Coast of Louisiana and Florida. It will be years before good estimates on the number of dead fish, turtles, birds and other animals can be made.

The Backup Plan

If the blowout preventer can’t be triggered, the backup plan is…
continue reading





Full, Unabridged And Totally Hilarious G-Pap Speech To Cabinet

Courtesy of Tyler Durden

“Ladies and Gentlemen, I have convened this Cabinet today to an historic meeting. All the citizens of Greece feel the crucial nature of these moments and the burden of historical responsibility. Avoiding bankruptcy is a red line for the Nation.

“I would like to make it absolutely clear to everybody — I have done and will always do whatever it takes for the country not to go bankrupt. We are waging together a difficult and relentless battle dealing with the problems — the dimensions of which one could never have imagined. It is true, we were the first to speak of the crisis — a crisis of politics, a crisis of institutions, a crisis of values which in turn led to the huge economic crisis. “No citizen of Greece could however ever have imagined the size of the debt and the deficit which the former government had caused and hid upon its exit. This is not the time for accusations, however. The people of Greece are fully aware of where they lie. The consequences however are manifold.

“First of all, the lack of trust that Greek citizens have in their institutions and the present political system, the lack of credibility of our political system is so great that citizens even show distrust to us and to this government. From the first day however I personally and all of us here have fought battle after battle trying to finally make those profound changes and create a society where justice prevails, where the money of the Greek people is put to good use and where the democratic state protects the rights of its citizens.

“For the first time in years a government is working with such dedication to the task assigned to it by the citizens of this country.

“In all sincerity, we are a different government. Despite this long battle with the crisis of debt and lending, day by day, we are
making small and even greater reforms to a system which did not serve the interests of this country.

“This is something we will continue to do ceaselessly as we round the cape of economic crisis in order not to find ourselves in this situation again. “Our first concern was to regain credibility with our citizens. We have been honest from the…
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Investor Sentiment: Time To Pay Attention!

Courtesy of thetechnicaltake

After 8 months of indifference to the constant and persistent rise in stock prices, the "smart money" has finally turned bearish. It is time to pay attention.

The "Smart Money" indicator is shown in figure 1. 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 has turned bearish for the first time since January, 2009.


Figure 1. "Smart Money" Indicator/ weekly

*****

The "Dumb Money" indicator (see figure 2) 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 is bullish to an extreme degree, and this implies that a price move is either nearing its end or the ascent of prices is surely to show. This is our expectation 85% of the time.

Figure 2. "Dumb 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: "early signals indicate that insiders are not going to deviate from the path they’ve taken over the past year".

Figure 3. InsiderScore/ weekly "entire market" value
*****

Figure 4 is a weekly chart of the S&P500. The indicator in the lower panel measures all the assets in the Rydex bullish oriented equity funds divided by the sum of assets in the bullish oriented equity funds plus the assets in the bearish oriented equity funds. When the indicator is green, the value is low and there is fear in the market; this is where market bottoms are forged. When the indicator is red, there is complacency in the market. There are too many bulls and this is when market advances stall.

Currently, the value of the indicator is 67.14%. Values greater than 58% (arbitrarily chosen) are associated with market tops, and the red dots over the price bars indicate such.


Figure 4. Rydex Total Bull v. Total Bear/ weekly
*****
Shorter term Rydex measures showed excessive bullishness (i.e, not seen since 2004) earlier in the week.


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Greece Bailed Out To Get In Even More Debt

Courtesy of Tyler Durden

Does anyone have a problem with the attached chart?

Ignore for a second the sheer lunacy of anyone who thinks that the Greek government can grow GDP and decline the budget deficit in a straight line now that the country will see crippling strikes and rolling riots (not to mention blackouts) on a daily basis. But do note the black line, which shows the projected Debt/GDP ratio for the country as part of the bailout package. In essence Greece will go from having “only” a 133% Debt/GDP ratio to an insane 149% in 2013 before presumably dropping to 144% lower in 2014, still a good 11% higher than currently. Greece just got bailed out so it can get into even more debt! What psychopath of the Keynesian school thinks that this unbelievable trajectory is anything but a complete and utter waste of money? German, and US taxpayers, are merely giving Greece money so it can increase it debtor status with French and a few other European banks. To say that this is a viable solution is something that only those who bow at the altar of Alan Greenspan can do.





 
 
 

Phil's Favorites

Hoisington Investment Management Quarterly Review and Outlook

Outside the Box: Hoisington Investment Management Quarterly Review and Outlook, First Quarter 2014

By John Mauldin

In today’s Outside the Box, Lacy Hunt and Van Hoisington of Hoisington Investment have the temerity to point out that since the Great Recession officially ended in 2009, the Federal Open Market Committee (FOMC) has been consistently overoptimistic in its projections of US growth. They simply expected QE to be more stimulative than it has been, to the tune of about 6% over the past four years – a total of about $1 trillion that never materialized.

Given that dismal track record, our authors ask why we should believe the Fed’s prediction of 2.9% real GDP growth for 2014 and 3.4% for 2015 – particularly with QE being tapered into nonexistence. ...



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Zero Hedge

James Clapper Begins Propaganda Tour After Students Identify Edward Snowden As "Personal Hero"

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

Kevin Gosztola over at Firedoglake does some excellent work, and his latest story about the recent activities of perjuring Director of National Intelligence for the U.S., James Clapper, is no exception. To provide a little context, the Washington Post ...



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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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Chart School

Dead-Cat Bounce Over for the Housing Market?

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

I have been saying this for a while: You can't have a housing recovery unless actual home buyers are involved.

We are very far away from seeing the housing market reach its 2005 highs ... and as time passes, it becomes clearer that this generation may never see them again.

How can I say that?

What we have seen in the housing market since then, but mostly since 2012, in my opinion, is nothing more than a dead-cat bounce scenario -- an increase in prices after a massive decline. The chart below shows how far off we are from the housing prices of 2005.


Chart courtesy of www.StockCharts.com

One of the key indicators I follow in ...



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Insider Scoop

GM Said It Has Shipped Thousands of Replacement Ignition Switches

Courtesy of Benzinga.

General Motors on Wednesday said it has shipped "thousands" of kits needed to repair the defective ignition switches linked to at least 13 deaths.

Partner content partner content url:  http://www.foxbusiness.com/industries/2014/04/23/gm-said-it-has-shipped-thousands-replacement-ignition-switches/?cmpid=prn_benz

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

...

http://www.insidercow.com/ more from Insider

Market Shadows

Soy Numero Uno

Soy Numero Uno

By Paul Price of Market Shadows

Bunge Limited (BG) is the world’s largest processor of soybeans. It is also a major producer of vegetable oils, fertilizer, sugar and bioenergy.

When commodities got hot in 2007-08, Bunge’s EPS shot up and the stock followed, rising 185% in 19 months.

The Great Recession took its toll on operations, dropping EPS to a low of $2.22 in 2009.  Since then profits have recovered.  They ranged from $4.62 - $5.90 in the latest three years. 2014 appears poised for a large increase. Consensus views from multiple sources see BG earning $7.04 - $7.10 this year and then $7.83 - $7.94 in 2015.

...



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Option Review

Casino Stocks LVS, WYNN On The Run Ahead of Earnings

Shares in Las Vegas Sands Corp. (Ticker: LVS) are up sharply today, gaining as much as 5.7% to touch $80.12 and the highest level since April 4th, mirroring gains in shares of resort casino operator Wynn Resorts Ltd. (Ticker: WYNN). The move in Wynn shares appears, at least in part, to follow a big increase in target price from analysts at CLSA who upped their target on the ‘buy’ rated stock to $350 from $250 a share. CLSA also has a ‘buy’ rating on Las Vegas Sands with a $100 price target according to a note from reporter, Janet Freund, on Bloomberg. Both companies are scheduled to report first-quarter earnings after the closing bell on Thursday.

...

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Sabrient

What the Market Wants: Market Poised to Head Higher: 3 Stocks to Consider

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

Courtesy of David Brown, Sabrient Systems and Gradient Analytics

Yesterday, the market continued its winning ways for the fifth consecutive day.  The S&P 500 closed within 1% of its all-time high, and the DJI was even closer to its all-time high.  Healthcare, Energy and Technology led the sectors while Financials, Telecom, and Utilities finished slightly in the red.  All three sectors in the red are typically flight-to-safety stocks, so despite lower than average volume, the market appears poised to make new highs.

Mid-cap Growth led the style/caps last week, up 2.87%, and Small-cap Growth trailed, up 2.22%. This week will bring well over 100 S&P 500 stocks reporting their March quarter earn...



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OpTrader

Swing trading portfolio - Week of April 21st, 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 this week's Stock World Weekly. Click here and sign in with your PSW user name and password, or sign up for a free trial.

...

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Digital Currencies

Facebook Takes Life Seriously and Moves To Create Its Own Virtual Currency, Increases UltraCoin Valuation Significantly

Courtesy of ZeroHedge. View original post here.

Submitted by Reggie Middleton.

The Financial Times reports:

[Facebook] The social network is only weeks away from obtaining regulatory approval in Ireland for a service that would allow its users to store money on Facebook and use it to pay and exchange money with others, according to several people involved in the process. 

The authorisation from Ireland’s central bank to become an “e-money” institution would allow ...



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Promotions

See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...



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Pharmboy

Here We Go Again - Pharma & Biotechs 2014

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

Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.

And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference.  Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014?  The Biotech ETF beat the S&P by better than 3 points.

As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...



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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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