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: 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





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





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.





 
 
 

Zero Hedge

This Is What Draghi Said To Spark Speculation Of Another Global Central Bank Bailout

Courtesy of ZeroHedge. View original post here.

Both Janet Yellen and Mark Carney may have previously announced they would withdraw from the ECB's Forum in Sintra, Portugal (due to pressing market stabilization issues), but it was what Mario Draghi said here that has captured the market's attention this morning. The head of the ECB avoided mentioning the U.K.’s vote to leave the European Union but instead called for greater alignment of policies globally to mitigate the spillover risks from ultra-loose monetary measures

“We can benefit from alignment of policies,” Draghi said a...



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ValueWalk

Bill Gross on 'What'd You Miss'

By Jacob Wolinsky. Originally published at ValueWalk.

Bill Gross on ‘What’d You Miss'”>Bill Gross on ‘What’d You Miss’

Streamed live 5 hours ago
Today on ‘What’d You Miss,’ co-hosts Scarlet Fu & Alix Steel bring you live coverage of the market close and talk to Standard & Poor’s Chief Global Economist Paul Sheard about the G7 meeting. We’ll also bring you Erik Schatzker’s interview with Bill Gross, live from FI16 in Los Angeles (http://la.bbgfi16.com/). We’ll hear from the bond king on central bank policy and his outlook for global growth.

‘What’d You Miss’ with Alix Steel, Scarlet Fu, and Joe Weisenthal airs every weekday on Bloomberg TV from 4 – 5 pm ET:

The post ...



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Phil's Favorites

Australia Central Bank Worried About Deflation - Does Study, Blames Aldi

Courtesy of Mish.

The Reserve Bank of Australia is so concerned about deflation that it did a study on why prices are so low despite a 33% collapse in the Australian dollar vs. the US dollar since June 2011.

The RBA blamed competition and discounters like Aldi.

Australian Dollar vs. US Dollar

Worrying Trend

Lower prices are precisely what consumers want and need. Nonetheless, this headline from “down under” reflects prevailing silliness: ...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Worlds Top Fortunes Fall $196.2 Billion Since Brexit Bombshell (Bloomberg)

Global markets erased another $69.2 billion from the combined net worth of the worlds 400 richest people Monday, bringing the total since the U.K. shocked investors with a vote to leave the European Union to $196.2 billion in the last two trading days.

Global stocks extend l...



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Chart School

S&P 500 Snapshot: Brexit Selloff Continues

Courtesy of Doug Short's Advisor Perspectives.

Friday's global selloff continued today as the S&P 500 plunged at open and continued through the morning. The sell-off recovered slightly over the following hours, but hit its -2.24% intraday low in the final hour. The index continues in the red at -2.12% year-to-date.

The flight to treasuries continued today. The 10-year note closed at 1.46%, down 11 basis points from the previous session.

Here is a snapshot of past five sessions in the S&P 500.

Here is a daily chart of the index, which has dropped below its 50-day moving average. Volume, as we mentioned above, increased dramatically.

Here's a look at the VIX volatility index, the celebrated "fear gauge" market indicator. Today's selloff continued well...



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OpTrader

Swing trading portfolio - Week of June 27th, 2016

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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Kimble Charting Solutions

Global Leading Indicators, testing 6-year rising support channels

Courtesy of Chris Kimble.

Long before last weeks Brexit vote, Germany’s DAX index has been an upside and downside global stock market leader, over the past few years. Below looks at the pattern the DAX has created over the past decade.

CLICK ON CHART TO ENLARGE

Since mid 2009 the DAX has remained inside of rising channel (A). The top of this channel was hit in April of 2015. Since hitting rising channel resistance, the DAX has ...



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Mapping The Market

Thoughts on Brexit

I have mixed feelings about Brexit today. Clearly the European institution need reforming. The addition of so many countries in the last 20 years has created a top heavy administration. The Euro adds more complexities to the equation as the ECB policies cannot fit every country's problem. On the other hand, a unified Europe has advantages as well – some countries have benefited from the integration.

For Britain, it's hard to say what the final price will be. My guess is that Scotland might now vote for independence as they supported staying in Europe overwhelmingly. Northern Ireland might be tempted to leave as well so possibly RIP UK in the long run. I was talking to some French people and they were saying that now there might be no incentive for France to stop immigrants from crossing over to the UK like they do now and simply allow for travel there and let the UK deal with them. The end game is not clear to anyone at the moment....



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Digital Currencies

Bitcoin Tumbles 10%

Courtesy of ZeroHedge. View original post here.

One week ago, when bitcoin first crossed above $700 on the seemingly insatiable Chinese buying which we forecast last September (when bitcoin was trading at $230) would take place as a result of China's capital controls (to much pushback by the "mainstream" financial media), we tried to predict what may happen next. We said that "it could go much higher. That said, anyone who bought last September when the digital currency was trading at $230 may be advised to take some profits, and at least make...



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All About Trends

Mid-Day Update

Reminder: Harlan 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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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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Promotions

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We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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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!




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