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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

. WALL STREET APOCALYPSE

 

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.

MEET THE PARENTS . THE NEW PARADIGM . A PLAUSIBLE EXPLANATION

. 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…

. KRUEGER

So is he…

. KRUGMAN BOOK

So are they…

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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 and QE2 to effectively bail out the stock market and provide the psychological “wealth effect” that housing…
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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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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!

 
 

Zero Hedge

Public Health Expert Explains How to Prevent a Panic About Ebola: Tell the Truth!

Courtesy of ZeroHedge. View original post here.

Submitted by George Washington.

The head of the Center for Infectious Disease Research and Policy at the University of Minnesota – Dr. Michael Osterholm – is one of the world’s top infectious disease experts and a prominent public health scientist.

Dr. Osterholm just gave a talk shown on C-Span, explaining how to prevent the public from panicking about Ebola:

I categorically reject the idea that you can’t tell people you “don’t know” … because you’re afraid you’ll scare them.

 

There is a complete [scientific] literature on risk communications that says people are never frightened if you tell them you don’t ...



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Phil's Favorites

Challenge to Keynesians "Prove Rising Prices Provide an Overall Economic Benefit"

Courtesy of Mish.

The ECB has been concerned about falling consumer prices. I propose that's 100% stupid, yet that's the concern.

When the euro declined vs. the US dollar, the ECB was happy that inflation would inch back up. The fear now is that falling oil prices will take away the alleged gain of a falling euro.

With that backdrop, credit the Financial Times for the absurd headline of the week: Eurozone Fails to Benefit from Weak Currency as Oil Price Slides.
Pity the policy makers given the job of rescuing the eurozone from deflation.

The unorthodox steps the European Central Bank has taken since June – including a programme of private-sector asset purchases – have caused a steep fall in the eu...



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Market Shadows

Falling Energy Prices: Sober Look takes a Sober Look

Falling Energy Prices: Sober Look takes a Sober Look

What do falling energy prices mean for the US consumer? Sober Look writes a brief yet thorough overview of the consequences of the correction in the price of crude oil. There are good aspects, particularly for the consumer, bad aspects, and out-right ugly possibilities. For more on this subject, read James Hamilton's How will Saudi Arabia respond to lower oil prices?  In previous eras, Saudi Arabia would tighten the supply to help increase prices, but in this "game of chicken," the rules m...



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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. Just sign in with your PSW user name and password. (Or take a free trial.)

#457319216 / gettyimages.com

 

...

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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

World Markets Weekend Update: The Selloff Moderates ... Except for Japan

Courtesy of Doug Short.

The world market selloff moderated over the past week, except for Japan's Nikkei 225. The top performer in my gang of eight world indexes (and the sole gainer) was Germany's DAX, which rose 0.70%. At the bottom of the heap, the Nikkei plunged 5.02%. The S&P 500, like most of the others on the list, posted its 4th weekly loss, down 1.02%

Despite its 10.64% year-to-date advance, the Shanghai Composite remains the only index on the watch list in bear territory -- the traditional designation for a 20% decline from an interim high. The index is down 32.56% from its August 2009 peak. See the table inset (lower right) in the chart below.

Here is a look at 2014 so far.

...

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OpTrader

Swing trading portfolio - week of October 14th, 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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Sabrient

Sector Detector: Semiconductors get slammed as investors scramble to protect profits

Courtesy of Sabrient Systems and Gradient Analytics

Volatility continues to increase in the stock market and many of the leaders are breaking down. In particular, semiconductors took a rather big hit when one of the bellwethers warned of weakening global demand. Nevertheless, despite the significant headwinds, I do not think this spells the end of the bull market. But the technical damage to the charts is severe, particularly to the small caps, which are in full-blown correction mode. The large caps must show leadership and rally immediately -- or it will put at risk the critical and widely-anticipated year-end rally.

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



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Option Review

Release Of Fed Minutes, Icahn Tweet Boost Shares In Apple

Shares in Apple (Ticker: AAPL) are near their highs of the session in the final hour of trading on Wednesday, adding to the muted gains seen earlier in the day, following the release of the September FOMC meeting minutes and after activist investor and Apple shareholder Carl Icahn tweeted, “Tmrw we’ll be sending an open letter to @tim_cook. Believe it will be interesting.” Icahn’s tweet hit the ether at 2:33 pm ET and was met with a spike in volume in Apple shares. The stock is currently up 2.0% on the day at $100.75 as of 3:15 pm ET.

Chart – Apple rally accelerate...



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Digital Currencies

Bitcoin Has Been Getting Obliterated

Joe has found a place for Bitcoins, and if you hold a lot of them, you won't like it.

Bitcoin Has Been Getting Obliterated

Courtesy of 

Remember Bitcoin?

There's not much to say about it, except that it's doing TERRIBLY.

Here's a chart going back to earlier this summer. Charts don't get uglier than this.

Bitcoinwisdom

Interestingly, the Bitcoin industry continues to be quite excited about the prospects for the digital currency, and there continue to be announcements about expand...



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Promotions

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Pharmboy

Biotechs & Bubbles

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

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

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



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