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Archive for February, 2011

China Forced To Deny It Will Experience HYPERinflation In 2011, As Russia Unexpectedly Hikes Interest Rates

Courtesy of Tyler Durden

And now for this evening’s stunner, via Dow Jones. “There won’t be hyperinflation in China this year, the state-run China Securities Journal reported Tuesday, citing Yao Jingyuan, the chief economist of the National Bureau of Statistics. The abundant stocks of grains and main agricultural products in China are key factors in stabilizing consumer prices, the newspaper quoted Yao as saying. China’s consumer price index rose 4.9% in January from a year earlier, picking up from December’s 4.6%.” So putting aside what official denial means about the validity of a story, not to mention this utterly bizzare and completely out of left field statement, China’s best and only reason why it won’t have hyperinflation is that it has “abundant stocks of grains and agricultural products.”… We can, at best, hope that this has to be some early version of an April Fool’s joke, or else things are truly far worse than anyone expected.

Also, just where does China put the threshold cut off on “hyper” – 10%? 20%? 50%? Is it at least safe to say that China may well experience mega, turbo, or nitrous inflation (and we generously put all three terms to the left of “hyper” on the X-axis)?

In the meantime, Russia, which will soon come out with comparable warnings, unexpectedly hiked interest rates by 0.25% to 8.00%:rest

The Russian Central Bank unexpectedly raised its key interest rate by 0.25 percent to 8 percent for the first time since the economic crisis over two years ago.

The Bank of Russia said in a statement that the rate hike, effective from Monday, was needed due to the high inflationary pressure and the expected rise of capital inflow into Russia as the world oil prices surge on the unrest in the Middle East.

“There are grounds for capital inflows into Russia due to higher oil prices,” the central bank said in a statement accompanying the decision.

By tightening its monetary policy, Russia is sending a strong signal that it views rising prices as a greater threat than slow economic growth.

Since the start of 2011, according to the Rosstat data, customer inflation in Russia reached 9.7 percent in a yearly term, mostly due to rising food prices. Earlier, in December 2010, central bank Chairman Sergey Ignatiev said monetary policy makers next year will focus on


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China Forced To Deny It Will Experience HYPERinflation In 2011

Courtesy of Tyler Durden

And now for this evening’s stunner, via Dow Jones. “There won’t be hyperinflation in China this year, the state-run China Securities Journal reported Tuesday, citing Yao Jingyuan, the chief economist of the National Bureau of Statistics. The abundant stocks of grains and main agricultural products in China are key factors in stabilizing consumer prices, the newspaper quoted Yao as saying. China’s consumer price index rose 4.9% in January from a year earlier, picking up from December’s 4.6%.” So putting aside what official denial means about the validity of a story, not to mention this utterly bizzare and completely out of left field statement, China’s best and only reason why it won’t have hyperinflation is that it has “abundant stocks of grains and agricultural products.”… We can, at best, hope that this has to be some early version of an April Fool’s joke, or else things are truly far worse than anyone expected.

Also, just where does China put the threshold cut off on “hyper” – 10%? 20%? 50%? Is it at least safe to say that China may well experience mega, turbo, or nitrous inflation (and we generously put all three terms to the left of “hyper” on the X-axis)?

In the meantime, Russia, which will soon come out with comparable warnings, unexpectedly hiked interest rates by 0.25% to 8.00%:rest

The Russian Central Bank unexpectedly raised its key interest rate by 0.25 percent to 8 percent for the first time since the economic crisis over two years ago.

The Bank of Russia said in a statement that the rate hike, effective from Monday, was needed due to the high inflationary pressure and the expected rise of capital inflow into Russia as the world oil prices surge on the unrest in the Middle East.

“There are grounds for capital inflows into Russia due to higher oil prices,” the central bank said in a statement accompanying the decision.

By tightening its monetary policy, Russia is sending a strong signal that it views rising prices as a greater threat than slow economic growth.

Since the start of 2011, according to the Rosstat data, customer inflation in Russia reached 9.7 percent in a yearly term, mostly due to rising food prices. Earlier, in December 2010, central bank Chairman Sergey Ignatiev said monetary policy makers next year will focus on


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American Monster: Excerpts from The Madoff Tapes

Here’s an excerpt from The Madoff Tapes, and Jesse at his best, calling out the fraud and greed characterizing our power structure and offering little hope for the future. – Ilene 

 Pic credit: MTTS (Via Jr. Deputy Accountant)

Courtesy of Jesse’s Cafe Americain 

“It’s unbelievable. Goldman … no one has any criminal convictions—the whole new regulatory reform is a joke. The whole government is a Ponzi scheme.”

Here are some brief excerpts from a story in New York Magazine called The Madoff Tapes. The story runs to nine pages, so consider this just a taste and read the whole thing when you have the time. I thought Steve Fishman did a terrific job of letting Bernie talk and of presenting his thoughts in a orderly manner without a lot of interpretation and editorial intrusion. He has real talent as an interviewer, and seems a natural reporter. 

But while you read this bear in mind that you are seeing reality interpreted through the eyes of Madoff, a master manipulator and pathological liar, an individual perhaps in deep denial, but the question is, to whom. 

His psychiatrist in prison tells him he is not a sociopath because he has remorse. I think his major remorse is that he was caught. The article implies that he is a narcissist. I think he is all of the above, and much, much, more.   

Always full of self-pity and the quick deflections of a classic con man, he seems to blame his corruption on the failure of his father’s business, and a personal vow never to let it happen to him, a resolve that became an obsessive compulsion.   Besides, everyone was doing it.  He just did more of it, more quickly and with an automated efficiency that turned into raw fraud when the easy gains evaporated.   It is a microcosm of the US financial sector today.

Sometime in the future someone is going to do a thorough analysis on what was common in the background of these fellows who were drawn to Wall Street in the 1980′s and beyond, and what made them the way they are. But we can discover what set them free to do their worst, and that was the undermining of regulation,…
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Oxen Group Nightly – Feb. 28 – Stock Market Recap





US Military Counter-Libya Preparation Update: USS Enterprise Now Back In Mediterranean

Courtesy of Tyler Durden

Earlier today, we reported that the US military is in the process of repositioning its forces in the area around Libya “to be able to provide flexibility and options.” And while we have yet to get an updated US naval map for this week (the last one can be found here), it appears that the USS Enterprise which was previously on its way to the Straits of Hormuz has made a 180 and has now backtracked completely through the Red Sea and is now once again north of the Suez, where it has joined the big deck amphibious warfare ship Kearsarge. This means that the USS Vinson is again left alone to protect the highly combustible gulf region, which now includes both Bahrain and Oman, in addition to Yemen and of course Iran and Saudi, on revolutionary watch. It may be time to send Abraham Lincoln, which in turn is patrolling the South China Sea, back to the Persian Gulf as the possibility of a flashpoint escalation there is far greater than around Indonesia (which however would leave all of Korea and China unguarded). Keep an eye out on CVN 74 and 76 – Stennis and Reagan. If those two start making a move west, then next steps can be extrapolated quite easily.

AFP has more:

“We’re studying all options to ensure that Colonel Gaddafi understands that he has to go. I know that people have mentioned military solutions, and these solutions are being examined by the French government,” Fillon said in an interview with RTL radio.

One option on the table was using NATO air power to impose a no-fly zone over Libya to stop Gaddafi from using air strikes against his own people. However, such a step would require UN approval, experts said.

 For any military intervention featuring air power, US commanders could turn to the USS Enterprise aircraft carrier, which is currently in the Red Sea, as well as the amphibious ship the USS Kearsarge, which has a fleet of helicopters and about 2000 Marines on board.

As of Monday, the nuclear-powered USS Enterprise had moved to the north of the Red Sea, near the Suez Canal, according to the US Navy’s website.

As recently as last week, the carrier was in the Gulf of Aden, when it was part of


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…To The Shores Of Tripoli

Courtesy of Jack H Barnes

The Empire is stirring. You may not notice it initially and you may not care yet: in time you will. The US is the only military in the world that can invade a prepared and defensive nation – not only expecting to win; but to dominate the event.  Pax Americana is coming to an end.

Outside of an attack on Hawaii like Japan used in 1941; the US picks its wars.  The only functioning Empire in the known universe, America has the capacity to unilaterally act with overwhelming force.

It normally takes years for a situation to reach a critical boiling point where the US will intervene.  The GW I & II era took 6-9 months of obvious preparation time before occurring.  Kosovo was an aerial war with no real ‘boots on the ground’ until the outcome was in the waning stages.

Afghanistan started out as a special ops cowboy war; it has now slowly grown into the largest armed conflict on the planet currently. The Iraqi war is winding down with combat troop levels dropping to historic low levels since 2003.

Normally, the U.S. is slow to act; however when the Empire does act, under most circumstances it is prepared to handle two individual wars at the same time. The Iraqi war is winding down currently, giving the US the capacity to act unilaterally again.  The US has a military budget that is larger than the rest of the world combined.  This gives it the capacity to act in its own best interest on demand.

World War I & World War II are both prime examples of the US arriving into an ongoing conflict with overwhelming muscle.  The above will provide you with the context of what is next to come.

When an Empire decides to attack another nation, there are a set of dances that both sides normally undertake: it’s akin to a ritual courting, in reverse.  The outcome of this public ritual dance is war, not a peaceful diplomatic outcome.    With the benefit of hindsight, these signs are unmistakable.  The US and England have always had a unique international relationship and is one prime example.

While the US is the current Empire, the US was originally part of the last Great Empire.  Those old relationship bonds run deep and true.  While the media loves to try to highlight the gap…
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Wake Me, Shake Me

Courtesy of James Howard Kunstler   

     A quickening of events pulses through lands where for so long time stood still, and the oil – what’s left of it – lies locked for the moment beneath hot sands – woe upon all ye soccer moms! – while Colonel Gadhafi ponders the Mussolini option – that is, to be hoisted up a lamp-post on a high-C piano wire until his head bursts like a rotten pomegranate. Then the good folk of Libya can fight amongst themselves for the swag, loot, and ka-chingling oil revenues he left behind. Meanwhile, Hillary Clinton scowls on the sidelines knowing how bad it would look if US marines actually hit the shores of Tripoli (and perhaps how fruitless it might turn out to be). And Italian grandmothers across the Mediterranean wonder why there’s no gas to fire up the orecchiette con cime di rapa. 

       The fluxes of springtime run cruelly across the sands of Araby, clear into Persia where the ayatollahs’ vizeers toy with uranium centrifuges and thirty million young people wonder how long they will allow bearded ignoramuses to tell them how to pull their pants on in the morning. Along about now, I wouldn’t feel secure standing next to somebody lighting a cigarette in that part of the world. 

      Pretty soon we’re going to find out just how fragile things are in the Kingdom of Saudi Arabia, there at the heart of things oily. Last week, King Abdullah wobbled out of his intensive care unit to spread a little surplus cash around the surging population, but let’s remember that their share of the oil "welfare" has been going down steadily in recent years – a simple matter of numbers really. Putting aside even the common folk, a thousand princes from dozens of different tribes pace restively in the background awaiting the struggle that must follow King Abdullah’s overdue transmigration to the farther shore. All along the western coast of the Persian Gulf and down toward the Horn of Africa, dark forces stir. Fuses sputter in Kingdoms from Bahrain to the Yemen.

     Also last week, Wikileaks released papers signifying that Saudi Arabia’s oil reserves were quite a bit less than they had claimed. It was basically an old story, one that the late Matthew Simmons had published in 2005 just from poring over reams of production data from…
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Is PIMCO The Fed’s “Agent Provocateur” In Scuttling Billions In Legal Putback Claims Against JP Morgan And Bank Of America?

Come back to this after reading:  What I don’t understand is how, Blackrock, for example, holding "an estimated USD 3.4bn of BofA equity," could make a settlement with BofA that is considered binding to any other party. – Ilene 

Courtesy of Tyler Durden

Perhaps it is time for JP Morgan to revise its estimate for putback liability claims. As a reminder back in October, it was none other than JP Morgan which said: "We estimate putback risk to be approximately $23-$35bn for agency mortgages, $40-80bn in non-agency and roughly $20-30bn for second liens and HELOCs. However, there are a number of reasons why these estimates are on the high end, including losses already taken and loss reserves established."

Well, there appear to be a number of reasons of why these estimates may have been on the very low end as well, the first one being that the bank itself just announced "it faces up to $4.5 billion in legal losses, in excess of its established litigation reserves, should its worst-case legal scenario occur." And if JP Morgan is seeing billion more in putback exposure, then what should Bank of Countrywide Lynch say, which just reported that the amount of debt which is being put against the firm for fraud of various types has just doubled from $46 billion to $84 billion. Luckily, according to a DebtWire report, PIMCO and BlackRock are actively doing the Fed’s bidding in attempting to form a splinter group within the putback litigants and to settle with BofA for a nominal charge. Will the Fed be once again successful at subverting justice?

From the WSJ:

The SEC has requested the additional disclosures on what banks could potentially face on legal losses on top of what they have set aside. The banks all face a rash of lawsuits regarding the financial crisis and collapse of the housing market, particularly from investors who purchased mortgage-backed securities that later tumbled in value.

The bank already accounts for what it considers a reasonable estimate of losses in a litigation reserve, a number it doesn’t make public. The $4.5 billion figure would be a worst-case scenario on top of that number. It said the additional losses could be zero, though it could also go higher as the bank can’t yet make estimates on the more than 10,000 legal proceedings it faces.

To those…
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CNBC On The Case For $130 Silver

Courtesy of Tyler Durden

Nothing new for regulars here. Yet the fact that CNBC, following Cramer’s endorsement of gold, is now apparently pushing silver on retail is very troubling: can’t the fast money crew just stick with pitching Netflix or some other widowmaker to their demographic. That said, since per Nielsen, said demo did not even register in recent surveys, we are not all that concerned. That said, the people still demand Doug Kass to appear with an immediate rebuttal how he is all in short silver, just to neutralize the suddenly disconcerting feng shui.





A Look At The Lawsuit Against Michael Lewis, In Which We Find That Brad Pitt Has Bought The Movie Right To “The Big Short”

Courtesy of Tyler Durden

Earlier today, some hilarious news hit the tape after it was made public that disgraced CDO trader Wing Chau has decided to go nuclear and sue Michael Lewis and Steve Eisman due to their all too honest representation of the Harding Advisory asset manager, in Lewis’ book “The Big Short” (not spared from the lawsuit was even book publisher W.W. Norton). “Michael Lewis was sued by Wing Chau, president and principal of Harding Advisory LLC, who accused the writer of defaming him in his 2010 book. The book “depicts Mr. Chau as someone who ignored his professional responsibilities, made misrepresentations to investors, charged money for work that was not performed, had no stake in the CDOs he managed, was incompetent or reckless in carrying out his responsibilities, and violated his fiduciary duties by putting the interests of ‘Wall Street bond trading desks’ above those of his investors.” It appears that Chau missed at least one additional defendant: Jody Shenn of Bloomberg, who in 2010 wrote a scathing article titled “How Wing Chau Helped Neo Default in Merrill CDOs Under SEC View” which provided just as damning and just as accurate a portrait of the (allegedly) pathologically greedy manager who presided at the “center of an epidemic of conflicts of interest.” And while we present the key highlights from Shenn’s piece which is a must read for anyone interested in what will surely be a recurring drama in the coming months (the Michael Lewis op-ed repartees will be worth the price of admission alone), what appears to have forced Chau to take this career ending step (sorry Wing, no more AUM for you) is that he is about to hit the silver screen. In the full lawsuit we read that “Brad Pitt’s production company, Plan B Entertainment Inc., has bought the movie rights and is working with Paramount Pictures Corporation to produce [The Big Short] film.” Well isn’t that special…

Here are some of the choicest quotes by Jody Shenn from his May 2010 article:

In early 2007, with subprime-mortgage defaults soaring, Wing F. Chau teamed with Merrill Lynch & Co. to create a $300 million pool of assets that shared a name with the main character in The Matrix movies who discovers reality isn’t what it seems.

Neo CDO Ltd. was a complex construction. More than


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Zero Hedge

Did Presidential Candidate, Marco Rubio, Make A Deal With The Devil?

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Thad Beversdorf via FirstRebuttal.com,

Is mainstream media really going to ignore that Marco Rubio’s campaign is named after the late 1990′s think tank called a ‘Project for a New American Century’ (PNAC), founded by Head Neocon – Bill Kristol?  And this is no coincidence.  Guess who’s doing the Sunday talk show circuit campaigning for a Rubio presidency?  You know it...



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Phil's Favorites

Productivity, Robots, China, Growth

Courtesy of Mish.

Congratulations. You are more productive than ever. Just don't expect to be paid more for it. In reality, some machine is doing all that for you.



Japan Times reports Robots Leave Behind Chinese Factory Workers
According to the International Federation of Robotics, an association of academic and business robotics organizations, China bought approximately 56,000 of the 227,000 industrial robots purchased worldwide in 2014 — a 54 percent increase on 2013. And in all likelihood, China is just getting started. Late last month, the go...



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Chart School

World Markets Weekend Update: The Rally Shifts (Mostly) Into Reverse

Courtesy of Doug Short.

Six of the eight indexes on our world watch list traded lower this week, with Germany's DAX down 5.57%. The best performing of the six losers was the S&P 500, down only 0.99%. The big positive outlier was China's Shanghai Composite, up a jaw-dropping 6.27% for the week and now up 32.54% in 2015. Hong Kong's Hang Seng was a less conspicuous outlier with a 1.40% weekly gain.

Here is an overlay of the eight for a sense of their comparative performance so far in 2015.

Here is a table of the 2015 data performance, sorted from high to low, along with the interim highs for the eight indexes. All eight indexes are in the green, with the top five gains ranging 12.62% to 32.54%. Not bad for for the first three-and-a-half months of the year. At the bottom of the list, the S&P 500 is up 1.08%.

...



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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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Kimble Charting Solutions

S&P 500 vulnerable to a decline says Joe Friday!

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

When it comes to investing in the stock market, do you feel leadership can be important. If so, you might want to pay attention to price action from a key global stock index. China has been in the news for hot stock market performance that past couple of months. When it comes to the past couple of years, Germany has been stronger than China and the S&P 500. In the past two years the DAX index has gained 18% more than the S&P 500, which is a 60% greater return.

The chart below looks at conditions in the DAX at this time and what message is coming from this index.

...



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Sabrient

Sector Detector: Earnings and GDP temporarily take investor spotlight off the Fed

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

Courtesy of Sabrient Systems and Gradient Analytics

As we get into the heart of earnings season and anticipate the GDP report for Q1, the investor spotlight has been taken off the Federal Reserve and timing of its first interest rate hike, at least temporarily. Even though Q1 economic growth will undoubtedly look weak, the future remains bright for the U.S economy – even though many multinationals will struggle with top-line growth due to the strong dollar – and any near-term selloff resulting from weak economic or earnings news should be bought yet again in expectation of better results for the balance of the year. High sector correlations remain a concern, reflectin...



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OpTrader

Swing trading portfolio - week of April 13th, 2015

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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Digital Currencies

SkyNet Is Almost Sentient: HFTs To Start Trading Bitcoin

SkyNet Is Almost Sentient: HFTs To Start Trading Bitcoin

Courtesy of ZeroHedge. View original post here.

As noted earlier, with equities now a barren wasteland of volume (and liquidity), the last remaining HFT master (of whale order frontrunning) has been forced to go to those asset classes where organic flow is still abundant such as FX, courtesy of central banks engaged in global currency wars. However, HFTs rea...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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Market Shadows

Kimble Charts: South Korea's EWY

Kimble Charts: South Korea's EWY

By Ilene 

Chris Kimble likes the iShares MSCI South Korea Capped (EWY), but only if it breaks out of a pennant pattern. This South Korean equities ETF has underperformed the S&P 500 by 60% since 2011.

You're probably familiar with its largest holding, Samsung Electronics Co Ltd, and at least several other represented companies such as Hyundai Motor Co and Kia Motors Corp.

...



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Mapping The Market

S&P 500 Leverage and Hedges Options - Part 2

Courtesy of Jean-Luc Saillard.

In my last post (Part 1 of this article), I looked at alternative ETFs that could be used as hedges against the corrections that we have seen during that long 2 year bull run. Looking at the results, it seems that for short (less than a month) corrections, a VIX ETF like VXX could actually be a viable candidate to hedge or speculate on the way down. Another alternative ETF was TMF, a long Treasuries ETF which banks on the fact that when markets go down, money tends to pack into treasuries viewed as safe instruments. In some cases, TMF even outperformed the usual hedging instruments like leveraged ETFs. There could of course be other factors at play since some of 2014 corrections were related to geopolitical events which are certain...

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Pharmboy

2015 - Biotech Fever

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

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...



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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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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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About Ilene:

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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