Archive for 2011

Everything You Wanted To Know About EFSF (But Should Be Afraid To Ask)

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

With the weekend full of on-again-off-again comments from various European, Asian, and US politicians and central bankers with regard the chances of various incarnations of the EFSF solving all of our ills (or not), Nomura’s Fixed Income Research team has what we feel is one of the most definitive analyses of the various options. We have discussed the self-exciting strange attractor nature of the endgame that will be a leveraged EFSF many times recently. The Nomura team, however, does a great job of breaking down various scenarios, such as Structural Weaknesses of EFSF 2.0, Proposals for an EFSF 3.0 (and their variants), Leverage-based options, and EFSF 2.0 as TARP and how these will result in one of three final outcomes: fiscal union, monetization, or major restructurings risking the end of the euro, as everyone searches for a steady state solution to the ‘problem’ of the eurozone.

While the most elegant solutions have no official sanction, we think the necessary political resolve is yet to be forthcoming, and the technical issues are challenging if not insurmountable for many of the legal workarounds, resulting in the need for yet another round of parliamentary approvals. Consequently, we see a significant risk that the market, looking for large headlines and enhanced flexibility, will be disappointed at least in the short run.

The search for a steady state solution

In analyzing the eurozone debt crisis, the key challenge is to assess the likely path towards a steady state solution, defined as the market no longer being concerned about future default risks on government debt – at least over a time-frame that is meaningful to immediate asset allocation decisions. We have highlighted three broad alternative steady state solutions:

1. Full fiscal union and the issuance of Eurobonds with a joint and several liability structure or at least unconditional credit risk transfers to stronger countries for a extensive period of time (for sustainability to be reestablished).

2. Aggressive policy reflation, whereby the ECB significantly expands its balance sheet and its SMP program. (Given the requirement of EU governments to recapitalize the ECB, this option ultimately begins to blend into option 1.

3. Default and debt restructuring in selected non-core countries and possible end of the euro area.

Option 1 is not under consideration at this juncture since all forms


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Secular Bull and Bear Markets

Courtesy of Doug Short.

Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? Without crystal ball, we simply don’t know.

One thing we can do is examine the past to broaden our understanding of the range of possibilities. An obvious feature of this inflation-adjusted is the pattern of long-term alternations between up-and down-trends. Market historians call these “secular” bull and bear markets from the Latin word saeculum “long period of time” (in contrast to aeternus “eternal” — the type of bull market we fantasize about).

 

 

If we study the data underlying the chart, we can extract a number of interesting facts about these secular patterns:

 

 

The annualized rate of growth from 1871 through the end of August is 1.93%. If that seems incredibly low, remember that the chart shows “real” price growth, excluding inflation and dividends. If we factor in the dividend yield, we get an annualized return of 6.58%. Yes, dividends make a difference. Unfortunately that has been less true during the past three decades than in earlier times. When we let Excel draw a regression through the data, the slope is an even lower annualized rate of 1.71% (see the regression section below for further explanation).

If we added in the value lost from inflation, the “nominal” annualized return comes to 8.80% — the number commonly reported in the popular press. But for an accurate view of the purchasing power of the dollar, we’ll stick to “real” numbers.

Since that first trough in 1877 to the March 2009 low:

  • Secular bull gains totaled 2075% for an average of 415%.
  • Secular bear losses totaled -329% for an average of -65%.
  • Secular bull years total 80 versus 52 for the bears, a 60:40 ratio.

This last bullet probably comes as a surprise to many people. The finance industry and media have conditioned us to view every dip as a buying opportunity. If we realize that bear markets have accounted for about 40% of the past 122 years, we can better…
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Bernanke Getting Cold Feet On European Bank Bail Out?

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Two weeks after Bernanke agreed to invest unlimited taxpayer funds in the form of global FX swap lines to prevent a worldwide dollar funding squeeze arising from the Europen financial collapse, the Chairman appears to be getting cold feet. BusinessWeek reports: “The Federal Reserve Bank of New York may ask foreign lenders for more detailed daily reports on liquidity as the U.S. steps up monitoring of risks from Europe’s sovereign debt crisis, according to two people with knowledge of the matter. Regulators held informal talks with some of the largest European lenders about producing a “fourth-generation daily liquidity” or 4G report, according to the people, who asked for anonymity because communications with central bankers are confidential. The reports may cover potential liabilities such as foreign-exchange swaps and credit-default swaps, said one person. The U.S. has already increased the number of examiners embedded in these banks, the person said.” In other words, not only after Bernanke’s pledge to fund as much money as is needed to prevent bank defaults around the world, is he actually going to have enough information to determine if there is any danger of this money not getting repaid. Well, better late than never. But at least we can permanently set aside any latent questions over whether European banks have liquidity problems. When even the Fed no longer believes you, you have far bigger problems than just liquidity (except for Dexia: liquidity there may well be the largest problem, but at least it won’t be for long).

From Business Week:

Concern is growing that European lenders may falter as Greece teeters on the brink of default. U.S. Treasury Secretary Timothy F. Geithner has warned that failure to bolster European backstops would threaten “cascading default, bank runs and catastrophic risk” for the global economy.

 

“The Fed is trying to understand what the pressure points are in terms of liquidity and potential risks that are imposed by foreign banks to domestic institutions in our financial system,” said Kevin Petrasic, an attorney at the Washington- based law firm of Paul, Hastings, Janofsky & Walker LLC. “There is a little bit more sense of urgency as a result of what’s going on in Europe.”

 

“The report requires rapid


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Koch Brothers Flout Law Getting Richer With Secret Iran Sales

Intro by Zeke Miller at Business Insider

 

Koch Brothers Flout Law Getting Richer With Secret Iran Sales

By Asjylyn Loder and David Evans  

In May 2008, a unit of Koch Industries Inc., one of the world’s largest privately held companies, sent Ludmila Egorova-Farines, its newly hired compliance officer and ethics manager, to investigate the management of a subsidiary in Arles in southern France. In less than a week, she discovered that the company had paid bribes to win contracts.

“I uncovered the practices within a few days,” Egorova- Farines says. “They were not hidden at all.”

She immediately notified her supervisors in the U.S. A week later, Wichita, Kansas-based Koch Industries dispatched an investigative team to look into her findings, Bloomberg Markets magazine reports in its November issue.

By September of that year, the researchers had found evidence of improper payments to secure contracts in six countries dating back to 2002, authorized by the business director of the company’s Koch-Glitsch affiliate in France.

“Those activities constitute violations of criminal law,” Koch Industries wrote in a Dec. 8, 2008, letter giving details of its findings. The letter was made public in a civil court ruling in France in September 2010; the document has never before been reported by the media.

Egorova-Farines wasn’t rewarded for bringing the illicit payments to the company’s attention. Her superiors removed her from the inquiry in August 2008 and fired her in June 2009, calling her incompetent, even after Koch’s investigators substantiated her findings. She sued Koch-Glitsch in France for wrongful termination.

Obsessed with Secrecy

Koch-Glitsch is part of a global empire run by billionaire brothers Charles and David Koch, who have taken a small oil company they inherited from their father, Fred, after his death in 1967, and built it into a chemical, textile, trading and refining conglomerate spanning more than 50 countries.

Koch Industries is obsessed with secrecy, to the point that it discloses only an approximation of its annual revenue — $100 billion a year — and says nothing about its profits.

The most visible part of Koch Industries is its consumer brands, including Lycra fiber and Stainmaster carpet. Georgia- Pacific LLC, which Koch owns, makes Dixie cups, Brawny paper towels and Quilted Northern bath tissue.

Charles, 75, and David,


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Timing the Market

Courtesy of Jean-Luc Saillard.

A while back wrote a post about a method for timing the market that I read in an old article of Active Trader (Mebane Faber – April 2009). The author claimed that using a simple moving average on a monthly chart would yield better returns over time and reduce drawdowns. The strategy between 1900 and 2008 returned 10.45% a year versus 9.21% with no timing but the big difference is the 50.31% drawdown as opposed to 83.66% without timing!


Here are some illustrations of the equity curves comparison:

Keep in mind that the vertical axis is a log scale – the difference today is between $1 million for the non-timing system and $5 million with timing!


The next graphic shows the same comparison since 1972, but also adds a curve for a margin portfolio with 2x leverage (non-IRA for example)



Once again, the vertical axis is a log scale. Clearly, the Internet bubble years between 1996 and 2001 were favorable to the non-timing system, but the subsequent crash helped the timing system recover nicely – lower drawdown do help! A leverage portfolio performs much better than its 2x leverage would indicate!


With that in mind, I though that I would refresh my charts to see where we stand. So below is the latest monthly chart with a 10 period SMA as recommended by the author. 

Click to enlarge


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From A Lexington, KY Gas Station Bathroom

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Presented without comment.





Weekly Market Commentary: Weekly Consolidation Break

Courtesy of Declan Fallon

The troubles on the daily timeframe extend into the weekly. The consolidation (‘bear flag’) breaks on the weekly charts have handed impetus back to the bears and created a whole new source of overhead supply to consume any emerging demand. For many of these ‘bear flags’ the most likely outcome is a measured move lower.

Leading down are Small Caps. Friday saw a clear break of the consolidation. The Russell 2000 looks destined to test 593 support. For bulls to have a shot there needs to be a smooth rally-and-break of 760 – anything less will only lead to indecision.

The Nasdaq, like the Russell 2000, is looking for a measured move lower. The immediate target is 2,160 with last ditch support down at 2,100. The weekly chart shows a new ‘sell’ trigger in on-balance-volume.

The Dow was another index to crack. It had already generated a ‘sell’ trigger in its on-balance-volume although stochastics have not confirmed an oversold condition.

The S&P was the only index to perhaps hang on to consolidation support. Like the Dow it has a ‘sell’ trigger in on-balance-volume, but stochastics are no longer oversold.

As for next week. if bulls can prevent the consolidation breakdowns from expanding it will be a job well done. European fundamentals will play a heavy role in next weeks action; Greece hogging 99.9% of news is an all-too obvious “victim” but it’s hard to see where the good news is going to come from. Bulls have their work cut out.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. I offer a range of stock trading strategies for global markets which can be Previewed for Free with delayed trade signals. You can also view the top-10


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Dexia Nationalization Imminent?

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Back on Friday, when we closed out the Dexia long sub CDS trade, we said “We expect a partial or complete nationalization to be announced imminently, which in addition to all other side effects, would lead in a Bear Stearnsing of all accrued profit.” Sure enough, here is the Sunday Times on the very topic… And while a nationalization of Dexia, which now appears a matter of hours if not days, will be bad for anyone still long the bank’s CDS (it should trade down to pari with Belgium tomorrow, just as Bear CDS trades in line with JPM), it is pretty horrifying for SovX and Eurocore CDS in general, now that a bank which holds assets amounting to 180% of Belgium’s GDP, is about to be nationalized by the very same country. Anyone who is still not long Belgium CDS, this is probably your last chance to get on that particular train. Of course, if one is waiting patiently in line at a Dexia ATM machine, one is forgiven.

Source: Sunday Times.






Meltdown – The Conclusion: “After The Fall”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Previously, we brought you parts one, two and three of the Canadian must see documentary “Meltdown.” In this final episode “After the Fall”, we hear about the sheikh who says the crash never happened; a Wall Street king charged with fraud; a congresswoman who wants to jail the bankers; and the world leaders who want a re-think of capitalism. As one world leader handles the crisis through denial, other leaders try to re-think capitalism. Even though the causes of the 2008 meltdown are now clear, there is no magic formula to stop it from happening again. The world has to start planning for the next crisis, even as we recognise that this one is not over yet.

Courtesy of Al Jazeera





 
 
 

Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

J.M. Smucker Sinks 7% As Coffee Prices Slam Top Line (Forbes)

With Folgers and Dunkin Donuts packaged coffee in its brand portfolio, the J.M. Smucker Company is both the biggest coffee roaster in the U.S. and one of the companies that is best-positioned to reap the profits from America’s caffeine addiction.

"It's Gone" - Why Foreign Demand For US Treasu...



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Zero Hedge

Is The EU Volcano About To Erupt?

Courtesy of ZeroHedge. View original post here.

Submitted by Mike Shedlock via MishTalk.com,

I am wondering if the EU volcano is about to erupt.

My rationale is Matteo Renzi, Francois Hollande, and Angela Merkel met on a volcanic island near Naples, specifically chosen as a symbolic mark of their joint resolve to stay the course with the EU after the UK voted to leave.  

Europe is the Solution Says Hollande

Please consider ...



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ValueWalk

A 1977 Warren Buffett Interview From the WSJ Archives

By John Huber. Originally published at ValueWalk.

Someone I’m connected with on Linkedin sent me this old article from 1977 in the Wall Street Journal on Warren Buffett. I thought I’d share it here, along with a few highlights. It’s an article I haven’t seen previously. There isn’t much new here, but I thought it was quick read with a couple passages worth commenting on.

]]> Get The Full Warren Buffett Series in PDF

Get the entire 10-part series on Warren Buffett in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

...

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Phil's Favorites

Now Children, Please Play Nice

Courtesy of Mish.

German Chancellor Angela is telling Turks in Germany to develop a high level of loyalty. The admonishment sounds like a kindergarten teacher preaching to her kids to play nice.

In related news, Jean-Claude Juncker repeated Merkel’s ill-fated message from a year ago, welcoming all refugees. He is seriously out of touch with voter reality given events of the past year.

Please consider Merkel Tells Turks in Germany to ‘Develop a High Level of Loyalty’.

Chancellor Angela Merkel has warned Germany’s Turkish population to “develop a high level of loyalty” to their new homeland, in the latest sign of political concern about divided allegiances in th...



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Chart School

S&P 500 Snapshot: A Modest Gain on Weak Investor Participation

Courtesy of Doug Short's Advisor Perspectives.

The S&P 500 rallied at the open and hit its 0.49% intraday high about 30 minutes into the session. It then slowly sold off to a narrow trading range after the lunch hour and then sold off to its 0.20% closing gain in the close vicinity of its intraday low. The mixed spurt of economic news at 10 AM, strong New Home Sales and weak Richmond Fed Manufacturing didn't seem to be much of a factor in today's trade. The general view among the pundits is that the market mavens (who aren't on vacation) are awaiting the Friday flavor of Fed Chair Yellen's spee...

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Kimble Charting Solutions

Testing- Crude Oil and Natural Gas testing breakout levels

Courtesy of Chris Kimble.

Crude and Natural Gas have stunk it up for the past few years, been a great place to avoid. Could both be creating multi-year trend reversal patterns? CLICK ON CHART TO ENLARGE Crude and Natty are both correlating the past few years and both are near tests of resistance that could send a message that […]Requires Premium Membership - log in or see subscription options

To become a member of Kimble Charting Solutions, click here.

...

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Biotech

Epizyme - A Waiting Game

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

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...



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OpTrader

Swing trading portfolio - week of August 22nd, 2016

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

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Digital Currencies

Man Who Introduced Millions to Bitcoin Says Blockchain Is a Bust

 

Man Who Introduced Millions to Bitcoin Says Blockchain Is a Bust 

By  at Bloomberg

Excerpt:

Stefan Thomas, who introduced millions of people to bitcoin, has had a change of heart.

Blockchain, the ledger software that makes the digital currency possible...



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Mapping The Market

Illusion of Choice

From Jean-Luc:

Looks like we are down to about 10 companies for our consumer goods:

http://www.visualcapitalist.com/illusion-of-choice-consumer-brands/

Just like banks, airlines and cable companies! 

The Illusion of Choice in Consumer Brands

Explore the full-size version of the above graphic in all its glory.

If today’s infographic looks familiar, that’s because it originates from a well-circulated report that Oxfam International puts together to show consolidation i...



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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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We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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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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