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No Easy Way Out

Courtesy of ilene

Here’s the latest Stock World Weekly: No Easy Way Out. Enjoy!

Archives here >

Excerpt: 

Inflation continues to be a major problem around the globe. Food price inflation has been one of the primary triggers for the protests and riots across the Middle East and North Africa. China has been struggling with rampant inflation for months now. And price inflation has been cited as one of the primary complaints among participants in this week’s massive protests in Spain. 

Inflation is also causing problems closer to home. The Senior Citizens League (TSCL) released a report on May 19 showing that seniors have lost almost one-third of their buying power since 2000, according to the Annual Survey of Senior Costs. “In most years, seniors receive a small increase in their Social Security checks, intended to help them keep up with the costs of inflation. But since 2000, the Social Security Cost of Living Adjustment (COLA) has increased just 31 percent, while typical senior expenses have jumped 73 percent, more than twice as fast.” (Seniors Have Lost 32 Percent of Their Buying Power Since 2000)

Lee Adler discussed last week’s market action and the impending end of QE2: “The markets responded as expected to this week’s light Treasury supply, which included a hefty paydown on Thursday along with the usual dose of POMO. Stocks sold off Monday under the pressure of settling $72 billion in new notes and bonds, but then they recovered as POMO and $10 billion in Treasury paydowns put cash back in the pockets of the market’s movers and shakers. As usual, they deployed some of it into stocks.

“However, there was a fly in the ointment of this week’s light Treasury schedule. The evidence suggests that the foreign central banks ran away from the auctions. If this is the reversal of their short term buying cycle, it should depress the performance of the markets in the weeks ahead…

“The supply bogeyman will return at the end of the month, with $61 billion of new notes and TIPS settling on May 31. That will be an interesting challenge for the market. Once again, how that is handled should give us a preview of things to come when the Fed’s POMO pause begins in July. I have a hunch it won’t be pretty. (Lee Adler at Wall Street Examiner,
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“There is Something Very Wrong with This Picture”

Courtesy of Mark Thoma, Economist’s View

I’ve been meaning to highlight this paper by Levy and Kochan, and still hope to do a bit more with it, but for now here’s Dani Rodrik:

There is something very wrong with this picture, by Dani Rodrik: This graph is from a new paper by Frank Levy and Tom Kochan, showing trends in labor productivity and compensation since 1980:

Labor productivity increased by 78 percent between 1980 and 2009, but the median compensation (including fringe benefits) of 35-44 year-old males with high school (and no college) education declined by 10 percent in real terms.

Women have done in general better, but two-thirds of women still have seen their pay lag behind productivity.

Levy and Kochan call for a Social Compact to reverse these trends, and outline some of the steps necessary to get there. The paper is very well worth reading.

Policymakers need to focus on job creation much more than they are, but as this graph shows creating more jobs is only part of the solution to the problems that middle and lower class households have been experiencing. We also need to ensure that income is equitably shared, and the paper outlines the steps needed to move in this direction:

The broken link between productivity and wage growth reflects changes in markets, policies, and their enforcement, institutions, and organizational norms and practices that have been evolving for a long time (circa 1980). Given this history, it is clear that the solutions will also need to be multiple and systemic and sustained for a long time. They also will need to match the features of the contemporary economy. The prior Social Compact was well-suited to a production-based economy in which wage increases in manufacturing set the norm for other parts of the economy.

Today, manufacturing can no longer play this catalytic role. Instead, norms and institutions need to support an innovation-knowledge based economy. We outline below a potential combination of actions suited to this task. If the list seems formidable, recall that we are now facing a situation where the economy has stopped working for something between one-half and two-thirds of all American workers.

Many of us have been calling for a New New Deal. I’ve done so many times over the last several years and I’m far from alone. Unfortunately, there’s very little evidence that this is anywhere near…
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It’s Official: Ruling Spanish Socialist Party Is Getting Trounced In Regional Elections

Courtesy of Joe Weisenthal of the Business Insider

Jose Luis Rodriquez Zapatero

A said day for Zapatero

Continuing the gigantic, anti-incumbency wave that’s sweeping the globe, Spain’s ruling socialist party is getting trounced across the country in municipal elections.

Early results show the conservative People’s Party garnering 35% of votes vs. 28% for the socialists.

The election comes amid economic woe, and a shocking rise of youth protests in Madrid that have turned it into the new Tahrir Square.

Rising political anger — combined with the fact that new elections will probably reveal untolds more in debt than had previously been reported -- have sent Spanish bond yields soaring again, just as Greece looks like it’s about to crack up the eurozone all over again.

The incredible failure of incumbent governments has been on display everywhere from Democrats in 2010, to Finnish rulers this year, and even a shockingly weak result for the ruling party in Singapore just recently.





Things That Make You Go Hmmm…. Such As The CFTC’s “Endless” Investigation Of Silver Manipulation

Courtesy of Tyler Durden

From Grant Williams’ “Things That Make You Go Hmmm

…The CFTC proposals stipulate the following: “Spot-month position limit levels set at 25% of deliverable supply for a given commodity, with a conditional spot month limit of five times that amount for entities with positions exclusively in cash-settled contracts What this essentially means is that anybody that has no intention of taking physical delivery of a commodity will NOT be allowed to build a position that is greater then 125% of the total deliverable supply while anybody looking to buy physical metal can only buy 25% of that same supply. They also threw in this little grenade: “Exemptions for bona fide hedging transactions (based on the Dodd-Frank Act’s new requirements for such transactions) and for positions that are established in good faith prior to the effective date of specific limits adopted pursuant to the proposed regulations.” In other words, the existing short positions allegedly held by JPMorgan and HSBC amongst others about which the complaints were made, are unaffected by the new rules as they were already established. The WHAT?? Far from being the dog that didn’t bark, the CFTC have become the dog that held the door open for the burglars while they ransacked the house. Elsewhere though, there is another type of barking to be heard as the physical stocks of silver on the COMEX continue to dwindle – from 87,000,000 ounces in 2009 to a little over 32,000,000 ounces a mere 2 years later and sooner or later, if the volatility in silver continues, the answer to the CFTC’s investigation will be discovered not behind closed doors, but in the full glare of the spotlight as the amount of silver available to settle futures expiry gets dangerously close to a shortfall. The  more demand we see for physical silver from the likes of China, the more dangerous it gets to allow huge structural shorts to persist. Perhaps that’s why Commissioner Bart Chilton spoke this week in urgent tones about the need to address the issue of position limits? Silver now seems to have stabilized and, with first day notice for the July contract rapidly approaching, it looks as though the battle will once again be joined as silver continues to build a base between $33 and $35. One thing is for certain, the current trend


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Goldman Aligns Itself Against US, UK, And Europe, Alongside China In Choice For Next IMF Head

Courtesy of Tyler Durden

Christine Lagarde’s chances of heading the IMF just took a another step back. Why? Because the firm whose alumni are about to be or already are in key posts at the Fed, the ECB and the BOC, has said (through its moutpiece Jim O’Neill who “can’t see how the EUR should be above 1.40” even as Thomas Stolper et al see it going to 1.55 in a year) that it is not too crazy about having a European replacement for DSK, and that “it might be better if some leadership and authority came from outside of Europe with a fresh set of independent eyes” (supposedly the fact that Lagarde has had no formaly economic academic brainwashing is not a factor). In other words, Goldman has aligned itself with China, which has made it clear that it may be wise if the next IMF leadership “reflected the New World Order.” As such, the largely symbolic IMF conclave just became very interesting: while the IMF is largely a figurehead with the real backstop organization always being the Federal Reserve, Goldman appears to have just voted alongside China… and thus against Europe and the US.

From Goldman’s Jim O’Neill:

IMF LEADERSHIP.

Two weeks ago at a conference in Singapore, when asked to make some bold predictions about the future, I joked that the next head of the IMF would be Sir Alex Ferguson. Little did I know that within a week of that joke, the Fund would need a new leader.

I have been discussing the possible candidates for the new Head with many people this week, as have many others. The new leader should satisfy two broad criteria. One, he or she must be well versed in the many economic and policy issues that the IMF must handle and lead. Two, he or she must have a personality that can engage successfully with the many different members to orchestrate change as well as a better and more balanced world economy.  What the leader mustn’t be is simply a figurehead of a pure European and US “deal” to sustain the historic arrangement that the IMF always has a European leader and the World Bank has an American leader. If the IMF ends up with European leader, that person will have to face the additional burden of being regarded as such a product, adding…
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America’s Student Loan Racket: Soaring Default Rates

by Stephen Lendman

An earlier article discussed Permanent Debt Bondage from America’s Student Loan Racket:

It explained government/corporate complicity to rip off students for profit, a racket continuing under Obama. His July 2010 Student Aid and Fiscal Responsibility Act perpetuated the scam. It enriches providers, entrapping millions of students permanently in debt, because rising tuition and fee amounts plus interest, service charges, and late payment or collection agency penalties are too onerous to repay.

It’s part of the grand scheme, of course, to transfer maximum public wealth to America’s super-rich already with too much. Ongoing for over three decades, it accelerated under Obama, a corrupted Wall Street/war profiteer tool, destroying America for power and profit.

Millions of Students Permanently Entrapped in Debt

Many students, whether or not they graduate, have debt burdens approaching or exceeding $100,000. If repaid over 30 years, it’s a $500,000 obligation, and if default, much more because debts aren’t forgiven. As a result, once entrapped, escape is impossible. Bondage is permanent, and future lives and careers are impaired or ruined.

Continue here: America’s Student Loan Racket: Soaring Default Rates | Veterans Today.





Monday Market Movement – The Low Ranger

What a wild month this has been.  

As of Friday’s close, all of our US indices were off at least 2.5% from the end of April with a week to go in May.  We got the pattern we anticipated for the month but we’re only as good as our last call so now what?  

Well, to a large extent that will depend on how we handle those 2.5% lines but that is just going to be a measure of how well (if at all) we are staving off a major correction.  There is plenty of POMO power left in the Fed’s gun with Stock World Weekly reporting $28Bn in the first 4 days of the week to be showered on our Bankster buddies.  

Also on the schedule for next week are New Home Sales on Tuesday, Durable Goods and Home Prices on Wednesday, GDP (2nd Estimate) along with the usual Jobless Claims on Thursday and Friday, in case anyone hasn’t left early for the long weekend – it’s Personal Income and Spending along with PCE Prices AND Pending Home Sales.  

So Friday could be a REALLY depressing day on the data front, where we see Incomes dropping, prices inflating and home sales dropping off a cliff – all ahead of a holiday weekend that will make or break the retail season with gas still around $4 a gallon (35% more than last year). 

None of that matters though, as long as the Dollar behaves itself and refrains from showing any signs of life.   We tested 76 in early futures trading this evening (I am writing this post early as I won’t be around in the morning) but NO ONE wants to see the Dollar that strong – especially the guys who are in charge of it in America so it was quickly and firmly slapped back (so far). It’s really all about Europe but first, let’s take a closer look at the big picture on the S&P:  

Note how we are forming a similar pattern coming into a similar holiday weekend to the one we had for Martin Luther King weekend, 2010.  At the time, on January 19th, with the S&P at 1,150 – I asked the question "Have the Markets Become Comfortably Numb" where I summed up the apparent indifference to bad news by saying: "I have a
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Q&A With Jim Grant: Look For “QE 3 Through QE N”

Courtesy of Tyler Durden

By now it has been made very clear that Jim Grant is firmly in the (correct, at least according to us) camp that no matter what, the Fed will be forced to proceed with at least one more (and likely many) round of quantitative easing. In his latest must read interview, the author of Grant’s Interest Rate Observer further explains, in simple terms, not only why the Fed is boxed in when it comes to monetary policy (an assessment comparable to that by Marc Faber back in March: "We may drop 10 to 15 percent. Then QE 2 will come, (then) QE 4, QE 5, QE 6, QE 7—whatever you want. The money printer will continue to print, that I’m sure. Actually I made a mistake. I meant to say QE 18."),  but also refutes the fallacy of counterfactual statements that the world would end if the Fed had not intervened to prevent a systemic collapse in 2008, why a gold standard in our lifetimes is coming, on whether he is buying gold currently, on inflation, on corporate valuation, and where (and more importantly when) investors should be putting money to work.

From AP:

A graduate of Indiana University, Grant, 64, was a Navy gunner’s mate before starting his journalism career at the Baltimore Sun in 1972. He then joined the financial weekly Barron’s before starting Grant’s Interest Rate Observer in 1983. He’s also written seven books, mostly financial histories and profiles. His first book was on Bernard Baruch, the pre-WWI financier and advisor to presidents. His latest is a profile of Thomas Reed, an acerbic and witty Speaker of House over 100 years ago.

As stocks were falling last week, Grant visited The Associated Press in New York to talk about why it’s not just stock investors who should be worried. Below are excerpts, edited for clarity, from a wide-ranging conversation in which he lit into the Federal Reserve for our current troubles, warned of 10 percent inflation and waxed nostalgic for a time when Washington had the courage to let prices fall in crises rather than goose them up and prolong our agony.

Q: What’s your view of the stock market?

A: The Federal Reserve has unilaterally taken it upon itself to levitate asset prices. It is suppressing interest rates. When you’re not getting anything on your savings, you are…
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Wall Street Accountability is Still Missing

It has always been a mystery to me why the American people’s reaction to this lack of accountability has been so consistently passive. Why is it that thousands will protest, for weeks, the efforts by the Republican governor of Wisconsin and his Republican allies in the state legislature to strip Wisconsin’s public employees of hard-won benefits and contractual rights, but there is barely a peep uttered — save from a handful of Code Pink activists — in the face of trillions of dollars of American treasure used to bail out the very banks and securities firms that caused the Great Recession in the first place? Nor is there a whisper of collective protest when the very banks we bailed out turn around and pay their thousands of employees nearly $150 billion in compensation and bonuses in 2010 — as if they were deserving — while the rest of us continue to suffer from stubbornly high unemployment, miniscule interest rates on our savings and fast-rising commodity prices (as on oil and food) that Wall Street speculators, in part, drive higher and higher.

Full article here: Wall Street Accountability is Still Missing – NYTimes.com.





 
 
 

Zero Hedge

The Annotated History Of Russian Crises Since 1860

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

While the current episode of Russian geopolitical and economic turmoil may seem significant, the following chart from Goldman Sachs shows the tempestuous time the nation has had over the past 150 years...

 

click image for large legible version

 

And here are Goldman's thoughts on Russia and The West now and into 2015...

Where we stand now:

Currency distress has taken center stage in Russia, with the ruble down 40%+ against the US dollar since early August. Already under fundamental pressure from sanctions an...



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Phil's Favorites

Phil on Oil, Russia, the Fed, and the Trade of the Year

Must see: Phil visits with Money Talk's Kim Parlee on Business News Network. In this great interview, Phil talks about his target price range for oil and presents an options trade idea that he is calling the "Trade of 2015."    

?

Click on the links:

Segment 1 (Oil, Russia, and the Fed) : http://www.bnn.ca/Shows/Money-Talk.aspx?vid=515921

Segment 2 (Trade of the Year 2015) : http://www.bnn.ca/Shows/Money-Talk.aspx?vid=516607

In segment 2, Phil introduces the trade of the year for 2015 and discusses the s...



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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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Insider Scoop

Oppenheimer Initiates Coverage On Twitter, Believes Stock Is Appropriately Priced At Current Levels

Courtesy of Benzinga.

Analysts at Oppenheimer initiated coverage of Twitter Inc (NYSE: TWTR) Friday by issuing a Perform rating and setting a $36.00 price target. Twitter is a global social networking platform with over 280 million active users.

The Numbers

While Oppenheimer analysts fully recognize the strength in Twitter as a company, they believe that Twitter’s stock is appropriately priced at current levels. “While TWTR is the best Internet platform for real-time content discovery, we believe that the stock’s current valuation of 10x 2015E sales, a 52% premium to peers, fully reflects future prospects based on current growth rates.”

Insider Dumping

Between November and December 2014, Twitter insiders have sold more than $...



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Chart School

Relief Bounce in Markets

Courtesy of Declan.

Those who took advantage of markets at Fib levels were rewarded.  However, this looked more a 'dead cat' style bounce than a genuine bottom forming low.  This can of course change, and one thing I will want to see is narrow action near today's high. Volume was a little light, but with Christmas fast approaching I would expect this trend to continue.

The S&P inched above 2,009, but I would like to see any subsequent weakness hold the 38.2% Fib level at 1,989.


The Nasdaq offered itself more as a support bounce, with a picture perfect play off its 38.2% Fib level. Unlike the S&P, volume did climb in confirmed accumulation. The next upside c...

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Digital Currencies

Chart o' the Day: Don't "Invest" in Stupid Sh*t

Joshua commented on the QZ article I posted a couple days ago and perfectly summarized the take-home message into an Investing Lesson. 

Chart o’ the Day: Don’t “Invest” in Stupid Sh*t

Courtesy of 

The chart above comes from Matt Phillips at Quartz and is a good reminder of why you shouldn’t invest in s...



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OpTrader

Swing trading portfolio - week of December 15th, 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: Energy sector rains on bulls' parade, but skies may clear soon

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

Courtesy of Scott Martindale of Sabrient Systems and Gradient Analytics

Stocks have needed a reason to take a breather and pull back in this long-standing ultra-bullish climate, with strong economic data and seasonality providing impressive tailwinds -- and plummeting oil prices certainly have given it to them. But this minor pullback was fully expected and indeed desirable for market health. The future remains bright for the U.S. economy and corporate profits despite the collapse in oil, and now the overbought technical condition has been relieved. While most sectors are gathering fundamental support and our sector rotation model remains bullish, the Energy sector looks fundamentally weak and continues to ran...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly.

Click here and sign in with your user name and password. 

 

...

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Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...



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Market Shadows

Official Moves in the Market Shadows' Virtual Portfolio

By Ilene 

I officially bought 250 shares of EZCH at $18.76 and sold 300 shares of IGT at $17.09 in Market Shadows' Virtual Portfolio yesterday (Fri. 11-21).

Click here for Thursday's post where I was thinking about buying EZCH. After further reading, I decided to add it to the virtual portfolio and to sell IGT and several other stocks, which we'll be saying goodbye to next week.

Notes

1. th...



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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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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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