Archive for August, 2011

Post QE2, Corporate Earnings Outlook Changes On A Decidedly Negative Path

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

As opposed to what many talking Pollyannas have been broadcasting for the last month or two, companies are progressively downplaying their earnings outlooks. It would appear that along with every 401(k) holder, TBTF CEO, and CNBC anchor, even CEO/CFOs are now hoping for more QE.

If earnings are ‘the mother’s milk of stock returns’, then management are increasingly reducing that flow of milk as day after day they guide below (lemming-like sell-side) analyst consensus estimates.

The index is based on the changes that management make to their outlooks judged against sell-side consensus expectations – the significant drop in the index indicates a (still too high) sell-side consensus that remains in a rosy world of its own relative to management expectations.

105 of the S&P500 names (that Bloomberg explicitly tracks) have provided outlook changes during Q3/2011 with 43 down, and only 10 up.

The bottom line is clear – ‘cheap’ valuation chatter based on P/E multiples may just have to rein itself in a little given an increasingly anxious corporatocracy and a still Birinyi-ruler-driven sell-side analyst crowd.

 





WiLLiaMBaNZai7′S QE3 FoR DuMMieS

Courtesy of ZeroHedge. View original post here.

Submitted by williambanzai7.

QE3 FOR DUMMIES

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.

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. MY FRIEND THE BANKER

. MORE BAD NEWS

The Mandate…

THE SECOND MANDATE

The Plan… ROAD WARRIOR

 

The QE Mandate… THE THIRD MANDATE

 

The Road Ahead…

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He is…

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So is he…

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Bailout Hysteria Strikes in Berlin…

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Sector Detector: Financials lead oversold rally in face of natural disasters

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

Courtesy of Scott Martindale, Senior Managing Director, Sabrient

 

With the extreme uncertainty around things like: earthquake, hurricane and wildfires wreaking widespread devastation, future Fed stimulus and QE3, Obama’s jobs plan, European solvency, it’s no wonder that investors are returning to gold this week, even with the oversold rally in stocks that pulled the market from the edge of a mid-August abyss. There are still plenty of market observers who are predicting an imminent panic selloff to keep the proverbial wall of worry intact.

Gold briefly pulled back early last week from its incredible bullish run, mostly due to profit-taking ahead of the Fed statement last Friday, but starting on Thursday through this week it has shown renewed strength. Notably, Comex operator CME Group (CME) raised margin requirements for trading gold futures (by 27%) for the second time this month on Wednesday. But that hasn’t stopped the gold buyers. It’s not so much an inflation hedge, but more about confidence in government and the financial system.

Now we head toward the Labor Day holiday weekend and await President Obama’s speech next week, when he plans to unveil his jobs package. Rather than being a sleepy week, I’ve been surprised that trading volumes have been steadily climbing from Monday’s low levels – but that might change as we head into the end of the week.

Financials, Industrials, and Materials have led the charge this week through Wednesday. But for the full month of August, Financials and Energy were the worst performers. Both sectors finished the month about 10% lower, and despite the S&P 500 finishing the month with seven up days out of eight in which it gained +8.5%, it was down -5.7% for the month – its worst monthly performance since May 2010.

Defensive sector Utilities performed the best during August with an advance of 1.7%. In fact, the more defensive sectors of Utilities and Consumer Goods are the only ones above their 200-day simple moving averages, and only Utilities is above the 50, 100, and 200-day. Investors have been attracted to the relative safety and/or higher yields. Despite the oversold rally, the other U.S. sectors all remain below their major moving averages.

The Federal Reserve printed money in QE1…
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Barclays On Brazil Rate Cut: “Unexpected…Unprecedented”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Feeling like one of the 62 sellside analysts tonight, all of whom had no idea Brazil would cut its overnight rate by 50 bps? Wondering what this “unexpected, unprecedented” move means for Brazil? Curious what the implications of this shocking announcement are? Here is Barclays which while still shellshocked, is the first to try to put lipstick on the pig that the BRIC economy suddenly has become.

From Barclays : Brazil: Shock and awe strategy – Copom unexpectedly cuts Selic rate 50bp.

 

In an unexpected and unprecedented move, Brazil’s central bank not only interrupted its tightening cycle but slashed the Selic rate 50bp, lowering it to 12.0%. The decision was split, with two board members voting for maintaining rates at 12.5%. In a long statement, monetary authorities said the deterioration in the global economic backdrop has created a disinflationary bias over the relevant time horizon. Moreover, the committee believes the unfavorable global backdrop will help intensify the current slowdown in domestic economic activity. And considering the change in the fiscal policy stance, the balance of inflation risks is becoming more favorable. Hence, it is the understanding of the Copom that in order to promptly mitigate the effects of the global environment, a “moderate adjustment” in the level of the base rate is consistent with inflation converging to target in 2012. Finally, the Copom will monitor the global and macroeconomic environments to determine its future steps.

The abrupt shift in gears, swinging from tightening to easing mode without communicating it to the market, will add more volatility to the domestic yield curve. However, the government and the BCB are reacting in a coordinated manner to the global slowdown through a preemptive tight fiscal / loose monetary stance. Finance Minister Mantega’s BRL10bn hike in the primary balance earlier this week was the first move and was followed by the aggressive cut in the Selic rate. The minutes of this meeting will be critical in shedding some light on what the “moderate adjustment” phrasing means in terms of total rate cuts, as well as what guidelines the Copom will use to support future rate decisions. Given that the upcoming decisions will be more data dependent than ever, it is hard to rule out any outcome between 0 and 50bp of cuts for the October Copom.

Considering…
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General Employment Enterprises Announces Definitive Agreement to Acquire Assets of Ashley Ellis

Courtesy of Benzinga.

General Employment Enterprises (NYSE: JOB) today announced that on August 31, 2011, it entered into an asset purchase agreement with Ashley Ellis and Brad Imhoff for the purchase of substantially all of the assets of Ashley Ellis, including properties, rights, powers and privileges of Ashley Ellis.

Ashley Ellis is an Information Technology Recruiting and Staffing firm with offices located in Naperville, Illinois; Atlanta, Georgia and Houston, Texas.

Salvatore J. Zizza, General Employment’s Chief Executive Officer stated, “We are very pleased to announce that we entered into this definitive acquisition agreement with Ashley Ellis. Ashley Ellis will be a complementary addition to our core business and will also strengthen our operation with the addition of two talented Ashley Ellis executives who will join our General Employment staff – Brad Imhoff, former CEO of Ashley Ellis, will serve as the Chief Operating Officer of General Employment and President of the Company’s Professional Staffing Division and Katy Gallagher, former COO of Ashley Ellis, will serve as the Vice President of Operations. Brad and Katy are sure to bring innovative ideas and new perspectives to our organization and they will play an important role in our organic growth. I am very excited about our future and the prospect of our continued growth both organically and through future acquisitions.”





Tri-County Financial Receives Preliminary Approval for Small Business Lending Fund Capital

Courtesy of Benzinga.

Tri-County Financial Corporation (TCFC) today announced that it has received preliminary approval to receive an investment of up to $20.0 million in the Company’s preferred stock from the United States Department of the Treasury under the Small Business Lending Fund. The SBLF is a voluntary program intended to encourage small business lending by providing capital to qualified community banks at favorable rates.

The Company intends to use $16.3 million of the SBLF funds to redeem all of the shares of preferred stock issued to the Treasury under the TARP Capital Purchase Program, with the balance used to increase the Bank’s small business lending. Subject to review of the SBLF documentation and final due diligence by the Treasury, the Company expects to seek the full amount of the approved investment. Closing is expected to occur during September 2011.





Stock Mutual Fund Cash Levels Drop To New All Time Record Low

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

As John Hussman correctly highlighted many moons ago, there is just one problem with the whole “cash on the sidelines” statement – it is completely and utterly wrong. Yet while we agree with it in principle, what is also true is that if you don’t have cash, you can’t buy stuff, period. Or in this case, equities. Yes, one can sell existing holdings to raise cash, but in an environment such as ours, in which underperforming the levered beta tsunami (or, unlike in 2010, the modest wakeboarding wave) means immediate termination, and where margin debt barely moved off its all time highs even as the general market (and especially fixed income) crashed in a repeat of late 2008, it seems nobody is willing to sell anything, come hell, high water or pink slip. Which is why, semantics aside, the fact that the mutual fund space just saw its total Liquid Assets drop to a new all time record low of 3.3% (down from 3.4%), or about $150 billion on $4.54 trillion in stock assets, is not good, no matter how one defines cash or sidelines. And with so little cash to bid up stocks even as they plunged (i.e., contrary to the expectation cash did not go up), the very troubling question arises yet again: just where will the purchasing power come from (and no, it’s not retail: retail is long gone).





Gold Isn’t Buying the QE 3 Hype

Courtesy of ZeroHedge. View original post here.

Submitted by Phoenix Capital Research.

Since the whole world believes QE 3 is just around the corner, I thought it a good idea to see what the markets really thinks of the likelihood of QE 3 coming anytime soon.

 

For starters let’s take a look at Gold. gold caught QE lite and QE 2 a full month before stocks did in 2010:

 

 

As you can see, Gold caught a bid and didn’t look back starting in late July 2010. By way of comparison, stocks corrected hard and didn’t start to rally in earnest until late August/ early September.

 

So Gold lead the markets to the upside in anticipation of QE lite and QE 2. So what’s Gold say about the prospects of QE 3 today?

 

 

This is hardly what I’d call a bullish chart. Gold actually looks to have peaked in mid-August and is now correcting. Indeed, if it doesn’t rally hard now, this pattern could see prices down to $1650 in short order.

 

Meanwhile stocks are exploding higher yet again on no volume as traders game the market on next to no volume. And the whole reason is because QE 3 is coming? The credit markets, bond markets, and Gold certainly don’t think so.

 

Indeed, I fully believe we are about to enter into the next leg down for this Crisis. The financial system is on DEFCON Red Alert (no matter what stocks are doing). And smart investors are taking steps to prepare themselves and their portfolios NOW while the markets are still holing up.

 

If you have yet to prepare yourself for what’s coming, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.

 

Within its nine pages I explain precisely how the Second Round of the Crisis…
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Sorry QEasy Momentum Chasers: The Economy Still Matters (A Lot)

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Watching as the market responds to every piece of bad economic news as if a brand new golden age had just been announced, can sure leave one dazed and confused with nauseating amazement at the success of central planning. Unfortunately for the central planners, and as demonstrated in the previous “Godfather” post, central planning can only do so much (as confirmed holistically by the empirical example of the USSR: no, Benny and the Inkjets are not the first to come up with the brilliant idea of having 13 people run $15 trillion out of a small room). As the following example from John Lohman vividly demonstrates, GDP does and always will impact stocks. Granted it may take them a little longer to respond, especially when prodded by the central printer, but ultimately what has to happen happens. And paritcularly when reaching key inflection points. Such as now. As Lohman notes, “As shown, the growth rate in S&P 500 earnings estimates, and hence expected earnings, has always peaked when the spread between estimates and GDP is more than 1 standard deviation from the mean.  In the most recent cycle the spread between profit expectations and economic reality has gone to all-time highs, but has now reversed.  As further empirical evidence of this phenomenon, the right side of the table at the bottom highlights the change to expectations in subsequent quarters.  Note that they are negative in every instance.” Unfortunately, Bernanke can push stocks by promising the moon and the stars, but unless he succeeds in actually pushing GDP up, all his efforts to create a wealth effect will be very soon undone. And with fiscal stimulus still a kneeslapping joke (we won’t dwell on the topic of the latest fiasco between Obama and Boehner, suffice to say that if the two can’t come up with a decision on how to meet, how on earth will they agree on trillions in fiscal stimulus, especially at a time when America is under “austerity”), we remind readers that according to economists, when using monetary policy to boost GDP, every trillion in LSAPs is equivalent to 0.50% in GDP. Which means a whole lots of LSAPs are coming our way sooner or later.

S&P Earnings Estimates vs GDP, from John Lohman

As is well known, the profits of the…
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Roubini Sees 60% Chance of A Double Dip in 2012, China and Brazil Also at Risk

Courtesy of www.econmatters.com.

By EconMatters

Party heardy NYU economist Nouriel Roubini went on Bloomberg TV on Aug. 31 to give his latest prediction of the global economy:

“We’ve reached a stall speed in the economy, not just in the U.S., but in the euro zone and the UK. We see probably a 60 percent probability of recession next year, and, unfortunately, we’re running out of policy tools…..and sovereigns cannot bail out their own distressed banks because they are distressed themselves.”

Regarding markets and QE3

There’ll be more monetary easing and quantitative easing done by the Fed and other central banks, but the credit channel is broken. …the market is rallying on the expectation of QE3, but I think it will be a short-lived rally. The macro data, ISM, employment, and housing numbers will come out worse and worse, the market will start to correct again.”

The bond market is already expecting a recession, 

“…After the S&P downgrade, bond yields fell from 2.5% to 2% or below. The bond market is telling as a recession is coming and the flattening of the yield curve is telling us that.”  

But since the short-term interest rate is artificially held down low by the Fed, 

“Traditionally, you can have inversion of the yield curve. Right now, we have policy rates at 0……We cannot have an inversion because you can have negative long-term interest rates. That’s the reason we don’t see the inversion.”  

Dr. Doom did not forget about China either,

“I see a hard landing in China as the likely event, not this year or next year, but by 2013 when this over investment move will go bust….. Fixed investment has gone now to 50% of GDP. this over


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Zero Hedge

Visualizing The Possible City Of London 'Brexodus'

Courtesy of ZeroHedge. View original post here.

The EU in Brussels has now given official powers to its top Brexit negotiator, but former French diplomat Michel Barnier is not expected to begin talks until after the UK general election in June. As Statista's Dyfed Loesche notes, Banks and financial institutions are already preparing for the world after Brexit and planning to pull some of their staff from the finance hub in the City of London...

...



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Phil's Favorites

Market Moving News

 

Financial Markets and Economy

A definitive breakdown of the gloomy state on Wall Street (Business Insider)

While Wall Street bank revenues appeared to bounce back in the first quarter of 2017, with banks posting strong results in fixed income trading in particular, industry-wide revenues were still down on the same period from 2012 to 2015. 

Vietnam's Prime Minister Says He's Confident of 6.7% Growth Goal (Bloomberg)

Vietnamese Prime Minister Nguyen Xuan Phuc said he is confident economic growth this year will meet a goal of 6.7 percent without adding ...



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ValueWalk

Jesse Livermore - 21 Investing Rules That Have Stood The Test Of Time For 77 Years

By The Acquirer's Multiple. Originally published at ValueWalk.

Before the modern day tweeter @Jesse_Livermore, there was a famous investing legend also called Jesse Livermore. The original Livermore was born in 1877 and died in 1940. Livermore was famous for making and losing several multimillion-dollar fortunes and short selling during the stock market crashes in 1907 and 1929. Livermore was an investing genius who unfortunately could not stick to his own rules – Which is why one of his rules – “The human side of every person is the greatest enemy of the average investor or speculator”, is so relevant to every investor.

]]> Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in ...



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Chart School

Friday Kept Week's Performance Intact - Semiconductors Strong

Courtesy of Declan.

Memorial weekend brought with it holiday style trading on Friday. It was positive finish for bulls who were able to maintain and in some cases, build on, gains from earlier in the week

Best of the action came in the Semiconductor Index which finished with a new closing high. The rally from April brought with it an acceleration in pace, comparable to the latter part of 2016.  Relative performance against the Nasdaq 100 hasn't breached resistance, but it's very close. Semiconductors spent a long time in the doldrums after the 2000 peak, but they are finding their groove now.

...

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Digital Currencies

Visualizing The Expanding Universe Of Cryptocurrencies

Courtesy of Zero Hedge

Bitcoin is the original cryptocurrency, and its meteoric rise has made it a mainstay of conversation for investors, media, and technologists alike.

In fact, as Visual Capitalist's Jeff Desjardins details, the innovation of the blockchain is changing entire markets, while causing ripples with central banks and the financial industry. At time of publication, the bitcoin price now hovers near US$2,200, a massive increase from this time last year.

But the true impact of Bitcoin is actually far more reaching than this – it’s a...



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Market News

Market Moving News

 

Financial Markets and Economy

Hedge Fund Billionaire Paul Singer: If Trump Agenda Fails, a Recession Could Follow (Fortune)

Market watchers who thought the stock market would drop if Donald Trump were elected were burned following his win: markets rose to new highs instead.

U.S. inflation path since 2012 is worrisome, policymaker says (Reuters)

The current level of U.S. prices is noticeably lower than what it would be if the Federal Reserve had delivered on its 2-percent inflation target, St. Louis Federal Reserve President James Bullard said, calling the trend "worrisome."

...



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Members' Corner

Robert Sapolsky: The biology of our best and worst selves

Interesting discussion of what affects our behavior. 

Description: "How can humans be so compassionate and altruistic — and also so brutal and violent? To understand why we do what we do, neuroscientist Robert Sapolsky looks at extreme context, examining actions on timescales from seconds to millions of years before they occurred. In this fascinating talk, he shares his cutting edge research into the biology that drives our worst and best behaviors."

Robert Sapolsky: The biology of our best and worst selves

Filmed April 2017 at TED 2017

 

p.s. Roger (on Facebook) saw this talk and recommends the book ...



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OpTrader

Swing trading portfolio - week of May 22nd, 2017

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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Biotech

Beyond just promise, CRISPR is delivering in the lab today

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

Beyond just promise, CRISPR is delivering in the lab today

Courtesy of Ian HaydonUniversity of Washington

Precision editing DNA allows for some amazing applications. Ian Haydon, CC BY-ND

There’s a revolution happening in biology, and its name is CRISPR.

CRISPR (pronounced “crisper”) is a powerful technique for editing DNA. It has received an enormous amount of attention in the scientific and popular press, largely based on the promise of what this powerful gene e...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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Mapping The Market

Bombing - Right or Wrong?

Courtesy of Jean-Luc

I am telling you Angel – makes no sense… BTW:

Republicans Love Bombing, But Only When a Republican Does It

By Kevin Drum, Mother Jones

A few days ago I noted that Republican views of the economy changed dramatically when Donald Trump was elected, but Democratic views stayed pretty stable. Apparently Republicans view the economy through a partisan lens but Democrats don't.

Are there other examples of this? Yes indeed. Jeff Stein points to polling data about air strikes against Syria:

Democr...



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Promotions

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In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

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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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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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