Guest View
User: Pass: | become a member
Archive for 2011

# Is the Stock Market Cheap?

Courtesy of Doug Short.

Here is a new update of a popular market valuation method using the most recent Standard & Poor’s “as reported” earnings and earnings estimates and the index monthly averages of daily closes for July 2011, which is 1325.18. The ratios in parentheses use the monthly close of 1292.28 (which this month gives the same ratios to the first decimal). For the latest earnings, see the table below created from Standard & Poor’s latest earnings spreadsheet.

● TTM P/E ratio = 15.6 (15.6)
● P/E10 ratio = 22.7 (22.7)

The Valuation Thesis

A standard way to investigate market valuation is to study the historic Price-to-Earnings (P/E) ratio using reported earnings for the trailing twelve months (TTM). Proponents of this approach ignore forward estimates because they are often based on wishful thinking, erroneous assumptions, and analyst bias.

TTM P/E Ratio

The “price” part of the P/E calculation is available in real time on TV and the Internet. The “earnings” part, however, is more difficult to find. The authoritative source is the Standard & Poor’s website, where the latest numbers are posted on the earnings page. (See the footnote below for instructions on accessing the file).

The table here shows the TTM earnings based on “as reported” earnings and a combination of “as reported” earnings and Standard & Poor’s estimates for “as reported” earnings for the next few quarters. The values for the months between are linear interpolations from the quarterly numbers.

The average P/E ratio since the 1870′s has been about 15. But the disconnect between price and TTM earnings during much of 2009 was so extreme that the P/E ratio was in triple digits — as high as the 120s — in the Spring of 2009. In 1999, a few months before the top of the Tech Bubble, the conventional P/E ratio hit 34. It peaked close to 47 two years after the market topped out.

As these examples illustrate, in times of critical importance, the conventional P/E ratio often lags the index to the point of being useless as a value indicator. “Why the lag?” you may wonder. “How can the P/E be at a record high after the price has fallen so far?” The…

# DeBT CeiLiNG CeLeBRaTioN!

Courtesy of ZeroHedge. View original post here.

Submitted by williambanzai7.

DEBT CEILING ELEVATION (CELEBRATION)

(Celebration, Kool and the Gang)

WilliamBanzai7

Yahoo! Yahoo!

Celebrate good times come on !

- Let’s elevate!

Celebrate good times come on !

- Let’s elevate!

There’s a drunken debt party going on right here…a debt ceiling elevation to last throughout our bankrupt years.

So bring your subprime dimes and your taxes too we’re gonna celebrate our new debt ceiling with you !

Come on now people let’s all celebrate and have a debtor’s celebration we go elevate and have a really good time.

It’s time to burn cash together it’s up to you watch you treasure everyone around the world come on…

Yahoo! Yahoo! celebrate good times come on let’s elevate! Repeat

We’re gonna have a good time tonight let’s celebrate it’s alright we’re gonna have a good time tonight

( Celebration ) let’s elevate! ( Celebration ) it’s air tight baby!

Celebrate good times come on let’s clebrate celebrate good times come on it’s a debt ceiling elevation.

Celebrate good times come on let’s celebrate celebrate good times come on it’s a debt ceiling celebration.

Come on and celebrate – tonight ’cause everything’s gonna be alright.

Let’s celebrate celebrate good times come on let’s celebrate celebrate good times come on !

.

.

ROCKEM SOCKEM DEBT DOUCHE BAGS

. .

PLAN O TO CAPITAL HILL

.

.

MR T PARTY

ON THE LOOSE

.

THE SWEEPER

.

BOMBING SOCIAL SECURITY

.

THE VIEW FROM WALL STREET

.

Send it to your Congress Douche

# Swing trading virtual portfolio – week of August 1st, 2011

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.

# Top 8 Cities by GDP: China vs. The U.S.

Courtesy of EconMatters

China SignPost™ did an interesting analysis on the top eight cities of China based on economic output. The study finds China’s eight largest cities still trail the eight largest U.S. cities substantially in terms of economic output.

For instance, Shanghai, the largest Chinese city with the highest economic production, and a fast-growing global financial hub, is far from matching or surpassing New York, the largest city in the U.S. and the economic and financial super center of the world. In fact, Shanghai was trailing the 8th-largest U.S. city--San Francisco--by nearly 50% in 2009 (See Chart). By the way, China SignPost™ picked eight cities because of the number 8’s significance as a sign of good fortune in Mainland China.

As to finding an equivalent GDP counterpart in the U.S., the \$221-billion economic output in 2009 of Shanghai put it on par with Seattle. Beijing, ranked no. 2 in China, is equivalent to Phoenix’s GDP (See Map.) In terms of purchasing power parity adjusted economic output, based on 2009 data from the IMF, Shanghai was worth about \$400 billion—roughly equivalent to Washington DC and larger than Dallas or Houston.

 Source: National Bureau of Statistics, IHS Global Insight, China SignPost™

Social-economically, the analysis found a stark contrast between the U.S. and China in the urban-suburban-rural divide. Chinese cities represent a greater proportional concentration of wealth and consumption, whereas suburbs and satellite cities are often the areas of significant wealth in the U.S. And some areas in the Midwest, West, and Southwest of the U.S. are further boosted by natural resources such as energy and agriculture, and tourism.

Not surprisingly, due to a higher degree of urbanization in the U.S., these 8 largest cities in China accounted for roughly 21% of GDP in 2009, while their U.S. peers accounted for nearly 30% of GDP in 2009. This also illustrates the relatively bigger role that China’s rural economy plays in the nation’s economic growth. China’s large pool of rural consumers and the substantial consumption growth potential is one factor that has attracted foreign investment flows.

By nominal GDP, these major cities of China could be ranked in the global top 65 nation list. A McKinsey Global study estimated that from 2007 to 2025, the China region’s 225 cities included in the study alone will…

# Obama Says Debt Deal Reached, America To Avoid Default, Or “Hank Gave Us A 3 Page Term Sheet; Boehner Gives Us A 7 Slide Powerpoint”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In a much anticipated statement, Obama just announced that he has struck a deal with Boehner on the debt and the deficit, which will allow the US to avoid default. And also, as Reuters adds, Obama said that spending cuts included in deal to raise the debt ceiling will not happen so quickly that they will drag on the fragile U.S. economy. In other words, there will be no cuts for the immediate future. But there will be a single \$2.4 trillion debt ceiling raise (based on a Joint Committee green light, LOL) just as Obama desired. And of course, there will be no tax hikes. Bottom line: there will be about \$40 billion in actual, real spending cuts until the next, \$16.7 trillion debt ceiling limit is hit some time in Q1 2013, at which point it will have to be raised to \$20+ trillion. But no really, they are cutting spending and all that.

Now comes the brief relief rally.

Then comes the hangover.

More from the AP:

Ending a perilous stalemate, President Barack Obama announced agreement Sunday night with Republican congressional leaders on a compromise to avoid the nation’s first-ever financial default. The deal would cut more than \$2 trillion from federal spending over a decade.

Default “would have had a devastating effect on our economy,” Obama said at the White House, relaying the news to the American people and financial markets around the world. He thanked the leaders of both parties.

House Speaker John Boehner telephoned Obama at mid-evening to say the agreement had been struck, officials said.

No votes were expected in either house of Congress until Monday at the earliest, to give rank-and-file lawmakers time to review the package.

In a conference call with his rank and file, Boehner said the agreement “isn’t the greatest deal in the world, but it shows how much we’ve changed the terms of the debate in this town.”

Obama underscored that point. He said that, if enacted, the agreement would mean

# Obama Says Debt Deal Reached, America To Avoid Default

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In a much anticipated statement, Obama just announced that he has struck a deal with Boehner on the debt and the deficit, which will allow the US to avoid default. And also, as Reuters adds, Obama said that spending cuts included in deal to raise the debt ceiling will not happen so quickly that they will drag on the fragile U.S. economy. In other words, there will be no cuts for the immediate future. But there will be a single \$2.4 trillion debt ceiling raise (based on a Joint Committee green light, LOL) just as Obama desired. And of course, there will be no tax hikes. Bottom line: there will be about \$40 billion in actual, real spending cuts until the next, \$16.7 trillion debt ceiling limit is hit some time in Q1 2013, at which point it will have to be raised to \$20+ trillion. But no really, they are cutting spending and all that.

Now comes the brief relief rally.

Then comes the hangover.

More from the AP:

Ending a perilous stalemate, President Barack Obama announced agreement Sunday night with Republican congressional leaders on a compromise to avoid the nation’s first-ever financial default. The deal would cut more than \$2 trillion from federal spending over a decade.

Default "would have had a devastating effect on our economy," Obama said at the White House, relaying the news to the American people and financial markets around the world. He thanked the leaders of both parties.

House Speaker John Boehner telephoned Obama at mid-evening to say the agreement had been struck, officials said.

No votes were expected in either house of Congress until Monday at the earliest, to give rank-and-file lawmakers time to review the package.

In a conference call with his rank and file, Boehner said the agreement "isn’t the greatest deal in the world, but it shows how much we’ve changed the terms of the debate in this town."

Obama underscored that point. He said that, if enacted, the agreement would mean "the lowest level of domestic spending since Dwight Eisenhower was president" more than a half century ago.

# Obama Says Debt Deal Reached, America To Avoid Default

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In a much anticipated statement, Obama just announced that he has struck a deal with Boehner on the debt and the deficit, which will allow the US to avoid default. And also, as Reuters adds, Obama said that spending cuts included in deal to raise the debt ceiling will not happen so quickly that they will drag on the fragile U.S. economy. In other words, there will be no cuts for the immediate future. But there will be a single \$2.4 trillion debt ceiling raise (based on a Joint Committee green light, LOL) just as Obama desired. And of course, there will be no tax hikes.

Now comes the brief relief rally.

Then comes the hangover.

More from the AP:

Ending a perilous stalemate, President Barack Obama announced agreement Sunday night with Republican congressional leaders on a compromise to avoid the nation’s first-ever financial default. The deal would cut more than \$2 trillion from federal spending over a decade.

Default "would have had a devastating effect on our economy," Obama said at the White House, relaying the news to the American people and financial markets around the world. He thanked the leaders of both parties.

House Speaker John Boehner telephoned Obama at mid-evening to say the agreement had been struck, officials said.

No votes were expected in either house of Congress until Monday at the earliest, to give rank-and-file lawmakers time to review the package.

In a conference call with his rank and file, Boehner said the agreement "isn’t the greatest deal in the world, but it shows how much we’ve changed the terms of the debate in this town."

Obama underscored that point. He said that, if enacted, the agreement would mean "the lowest level of domestic spending since Dwight Eisenhower was president" more than a half century ago.

Senate Democratic leader Harry Reid provided the first word of the agreement.

"Sometimes it seems our two sides disagree on almost everything," he said. "But in the end, reasonable people were able to agree on this: The United States could not take

# China’s Answer To Inflation: SkyNet – Foxconn Plans To Replace Workers With Millions Of Robots

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

SkyNet has taken over the market, it now appears poised to make labor and wages redundant (and while we hardly welcome our new robotic overlords, we doubt anyone would shed a tear if the House and Senate replaced its 535 corpulent windbags with a bunch of Johnny 5s engaged in binary colloquies). The world’s biggest non-debt based slave-driver, Taiwanese technology giant Foxconn, also known as the place where all of your iPhones, Pads, etc, are made, has just announced that it will deal with rising wages by doing what US-based quants have figured out years ago: outsource it all to robots. About a million of them. The irony is that the last time we looked at Foxconn, we asked: “what happens when this million realizes it can only buy half a McRib sandwich with the money it makes, courtesy of the primary US export to China, and demands a pay raise. What happens to Apple margins then?” We now have our answer. Per Xinhua: “Taiwanese technology giant Foxconn will replace some of its workers with 1 million robots in three years to cut rising labor expenses and improve efficiency, said Terry Gou, founder and chairman of the company, late Friday. The robots will be used to do simple and routine work such as spraying, welding and assembling which are now mainly conducted by workers, said Gou at a workers’ dance party Friday night.” As a reminder, with over 1 million workers, Foxconn has enough people on its payroll that if mobilized would be the 5th largest army in the world, and just after WalMart in total number of employees, albeit instead of spread out around the world, are all concentrated in one small space.

More:

The company currently has 10,000 robots and the number will be increased to 300,000 next year and 1 million in three years, according to Gou.

Foxconn, the world’s largest maker of computer components which assembles products for Apple, Sony and Nokia, is in the spotlight after a string of suicides of workers at its massive Chinese plants, which some blamed on tough working conditions.

The company currently employs 1.2 million people, with about 1 million of them based on the Chinese mainland.

What happens when other Chinese companies, flush with…

# The Fiat Crack Addict is Convulsing and Headed Straight for The DTs

Courtesy of ZeroHedge. View original post here.

Submitted by Cognitive Dissonance.

The Fiat Crack Addict is Convulsing and Headed Straight for The DTs

By

Cognitive Dissonance

For years I have seen strong parallels between the self destructive gyrations of the terminally addicted and the nation states of today who are all following similar paths to self immolation. I suppose I shouldn’t assume that the reader is in agreement with me that the world’s economic and social systems are in deep trouble and headed for a disastrous fall. On the other hand if you don’t agree with this assessment, it seems odd that you would be reading this in the first place. So for the sake of brevity (something I usually avoid at all costs) let’s agree that the issues we are facing are unprecedented in this so-called modern economic era and move on.

Those who have never been, or are not currently, addicted to drugs, alcohol or any other addictive substance or state of mind, can never quite comprehend what addiction is really all about. Take alcohol for example. If you have never experienced the absolute inability to stop after just two or three beers, or two or three drinks, the idea of being completely and utterly unable to stop drinking until you are thoroughly drunk or passed out is simply beyond comprehension. “Just stop for crying out loud. What the hell’s wrong with you?”

Oh sure, we might be able to ‘understand’ addiction, meaning we can indulge in the intellectual process of imagining what it is like by putting ourselves in their shoes. And no doubt this does bring about a greater understanding. But to truly comprehend the total body, mind and spiritually destructive experience of being thoroughly addicted is simply impossible for those who are not, or have never been, addicted. Period! Full stop! If you were to spend some time talking to people who were at one point or another completely engulfed by their addiction and who now have substantial recovery time under their belt, I would wager most of them would agree with my assessment.

# “It’s Time To Close The National Money Hole”

I’ve posted this before, but it’s totally hilarious.  Courtesy of The Daily Bail (intro) and The Onion (video).

Satirical gold from the Onion.  The Maxine Waters character is off the charts.

• "My father worked 2 jobs so he’d have money to put in the money hole."
• "No reasonable person is advocating that we are going to stop destroying money."

### Zero Hedge

#### The Dollar is Going Up

Courtesy of ZeroHedge. View original post here.

Submitted by Monetary Metals.

Let’s take a look at a few graphs of the dollar, from Feb 1, 2013 through Friday May 17, 2013. Yes, I said graphs of the dollar. I’ve priced the dollar in gold first (of course), then silver, the euro, and even the yen. The pattern is obvious. The dollar is going up.

I did not show copper, lumber, or wheat though they show the same trend. These commodities are not money, of course.

My point is simple. It’s not gold that is going anywhere. In past articles, I’ve used the analogy of measuring a steel ruler using rubber bands. Using the dollar to measure gold is like that. In this article I show that it’s not just gold, but silver, other currencies, and commodities. The dollar is r...

more from Tyler

### Phil's Favorites

#### Merkel Pins Cameron in Corner; Will Cameron Bury His Head in the Sand, Pretending to Not Notice?

Courtesy of Mish.

UK prime minister, David Cameron, promised to hold a referendum on whether Great Britain should remain in the EU, but only on two conditions. The first condition, that Cameron be re-elected as prime minister is iffy enough.

The second condition, that Cameron renegotiate the Lisbon Treaty, I said would never happen. And it won't.

German Chancellor Angela Merkel sealed the fate on that score as Berlin plans to streamline EU but avoid wholesale treaty change.
Berlin is drawing up plans for treaty changes to streamline decision-making in the eurozone, while stopping short of any wholesale renegotiation that would allow the UK to repatriate powers from Brussels.

Although Angela Merkel, German chancellor, has expr...

more from Ilene

### Insider Scoop

#### Benzinga Market Primer: Wednesday, May 15

Courtesy of Benzinga.

Futures Lower on Weak European Growth Data

U.S. equity futures traded lower in early pre-market trade following a weaker than expected GDP report from the eurozone for the first quarter. GDP growth rose to -0.2 percent on a quarterly basis from -0.6 percent but missed forecasts of a 0.1 percent contraction. Weakness was notably seen in Germany, France, and Italy in the report, with the annualized rate of growth for Germany dropping to -1.4 percent vs. 0.2 percent growth forecast.

Top News

In other news around the markets:

• The U.K. had fewer people claim unemployment benefits in April than expected, a positive sign for the labor market as the ...

http://www.insidercow.com/ more from Insider

### Sabrient

#### What the Market Wants: No Easy Answer

So, what did the market want today?  Nothing it appears.  It traded on weak volume and had very little movement.  This morning the market hated commodities especially silver, but by days end, the market liked silver, gold and even oil but not the dollar.  Why?

Last week the economic reports were tough, with bad misses on more than one occasion.  But the market tended to ignore the bad news, probably because money continues to pour into equities from money market funds, long term fixed income, and many struggling foreign economies.  On Thursday, investors finally caved to even more bad news from Initial Jobless Claims and weak Housing Starts.  Then on Friday, when Michigan Sentiment and Leading Indicators posted large positive surprises, the money came pouring back to generate qui...

more from Sabrient

### Chart School

#### Weekly Gasoline Update: Regular Is Up 7 Cents, Premium 4 cents

Courtesy of Doug Short.

It's time again for my weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny, the average for Regular increased seven cents and Premium four cents. This is the third week of price gains after nine weeks of declines, which followed eleven weeks of price rises. Since their interim high in late February, Regular is down 11 cents and Premium 16 cents.

According to GasBuddy.com, eight states are averaging above \$4.00 per gallon, up from four last week. Six states are in the 3.90-4.00 range, up from two last week.

more from Chart School

### Option Review

#### ING US Call Buyers Look For Shares To Extend Post-IPO Rally

Today’s tickers: VOYA, GRPN & SIGM

VOYA - ING US, Inc. – Shares in ING Group’s U.S. retirement, investment and insurance business are up as much as 8.0% today to \$26.98, the highest level since the company’s May 2nd IPO. ING US was rated new ‘buy’ at BTIG LLC with a 12-month target share price of \$31.00 today. The stock has rallied nearly 40% over the IPO price of \$19.50, and some options traders are positioning for the price of the underlying to extend gains during the second half of the year. November expiry options are the most ac...

more from Caitlin

### Market Montage

#### Status Quo Redux…

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

Again, not much to add to this market in terms of analysis – nothing matters other than central banks.  Last Wednesday/Thursday there were some 9 economic reports, 7 of which were disappointing or could be considered as such and all it got was one rare day down, and then new highs Friday.  Markets are up 10 of the past 12 sessions and 17 of 21.   Friday's move to 1666 was an exact 1000 point rally from March 2009's 666 bottom.  Since this most recent leg of the move has been medium fast rather than a huge spike ala 1999, things are not necessarily overbought on the daily chart but we are seeing extremely rare action on the ...

more from Mark

#### Swing trading portfolio - week of May 20th, 2013

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.

...

#### Mid-Day Update

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

more from David

### Stock World Weekly

#### Stock World Weekly

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

...

more from SWW

#### The IRA portfolio

Reminder: Craigzooka is available to chat with Members regarding his virtual portfolio performance, comments are found below each post.

By Craigzooka

I am going to share with you how I manage my IRA and the power of reducing your cost basis.  My goal each year is a 20% return in my IRA.  Sometimes I make it and sometimes I don't, but I believe that all of my success is due to reducing my cost basis.  To illustrate the power of reducing your cost basis here are some trades we did last year.  These trades are taken from an educational portfolio we ran in a paper-trading account for a little more than a year.

• We bought RIG on 5/15/2012 for \$44.13, sold it on 1/18/2013 for \$46 but booked a profit of \$1,154.
• We bought MT on 1/4/2012 for \$19.24, sold it on 12/21/2012 for \$15 but booked a profit of \$454.
• We bought CHK on 1/27/2012 for \$21.93, sold it on 10/19/2012 for \$18 b...

more from Strategies

### ETF Selector

#### Stock Market Gets Big News After Friday’s Close

Stock market posts another record setting week, but the big news came after Friday’s close.

Courtesy of NASA

The stock market put on another record setting show with the Dow Jones Industrial Average (NYSEARCA:DIA) closing at a record high 15,118 and the S&P 500 (NYSEARCA:SPY) closing at 1633.70, another all time closing high.

For the week, the Dow Jones Industrial Average (NYSEARCA:DIA) gained 1%, the S&P 500 (NYSEARCA:SPY) climbed 1.2%, the Nasdaq Composite (NYSEARCA:...

more from John

### Pharmboy

#### Give Them an Inch, They Will Take a Mile

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

Well, well, well....it is good to know that there are others in the scientific arena who believed that YMI Bioscience's data (cough - Gilead) is a better drug than Incyte's Jakafi.  Now, the definitive data are still unknown, but there was enough evidence from a Phase 2 trial to take a small risk for a huge reward.  So, let's forget about Apple (AAPL), and do nothing but biotechs from now until Congress passes universal health care coverage for prescriptions....and drive the prices down so that research and development is no longer feasible to conduct in the US. Even Seattle Genetics (SGEN) has been on a tear as of late...

more from Pharmboy

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...