Archive for 2011

Key Events In The Week Ahead

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

You mean, aside from the relentless headline barrage? Why yes, in a vivid reminder of what used to happen when actual fact-based events mattered, here is a complete summary of the key events in the coming week.

From Goldman Sachs:

Last week was a week of consolidation after the short-covering rally in the two previous weeks. Range-bound price action dominated across asset classes as investors were being kept busy following the European news, while macro data continued to stabilise at low levels.

In the week ahead, this pattern of stabilising macro data and Eurozone policy meetings will continue. Of course, the focus is on the EU summit on Wednesday, though expectations are not particularly high after weeks of continued negotiations and repeat summits. After the latest meetings this weekend, the details on bank recapitalisation, PSI involvement in the Greek bailout and a leverage scheme for the EFSF remain vague. While Eurozone leaders continue their debate, the week will also deliver a batch of interesting macro data in the Eurozone. Starting with the preliminary Eurozone PMI, we also get German consumer confidence and CPI data. Italy publishes consumer confidence as well and retail sales. Finally, Italy will try to issue EUR5-6bn in bonds on Thursday and Friday, possibly the first serious test of market confidence after the Summit on Wednesday.

The potential for a substantial Dollar sell-off and notable Euro rally is clearly there. Positioning data suggests continued stretched Dollar shorts against pretty much any currency, including the Euro. A quick and convincing solution to the Eurozone crisis could therefore lead to a sharp reduction in the Eurozone risk premium. Having said this, uncertainty remains high and our base case is for “muddling through” rather than a quick and convincing Eurozone solution. Last week’s modest strengthening of the CHF and the JPY may have been a warning sign that currency markets also remain skeptical. It may therefore take a bit longer before the September risk aversion moves can be unwound further.

Beyond the focus on the Eurozone, there are a number of central bank meetings this week (HUF, CAD, NZD, SEK, JPY, INR, ILS, RUB), with only the RBI expected to tighten monetary policy in India, as inflation pressures remain high.

Finally, in the US, third-quarter GDP and durable goods orders will likely be…
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Hi, My Name Is Europe…And This Is What Happens When My 12-Step Program Fails

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Unaccustomed as we are to discussing the American Psychological Association’s 12-Steps to recovery, Credit Suisse have produced a clarifying reduced set that enables us to better judge the road being taken by the heterogeneous set of deaf-dumb-and-blind monkeys currently ‘solving’ the European addiction issues. The critical underpinning, that we have tirelessly brought to the public’s attention, is a fear that the illustrious leadership of our world are not even grappling with the real issues. CS tries to answer the following deeper questions: Are we recognizing the cost that is coming to the core, multiplying as we wait? Are we building credibility and starting to stem this overwhelming tide, or are we pretending, taking the target of our addiction from whatever source we can find it (latest target: the IMF) in the interests of a brief respite?

Policymakers, led by Chancellor Merkel, have started to recognize the existence and nature of the problem. We are irresistibly reminded of the steps towards recovery from addiction; the addiction in question being the par pretense and curing debt with debt.

 

Chancellor Merkel said last week, “The summit won’t be the final point where we regain the confidence of others, but it will be a stepping stone, a marker on the road. All of the sins of omission and commission of the past cannot be undone by waving a magic wand.”

 

This reduced set of ‘steps’ is required for investors to be confident that leadership are moving forward positively as opposed to hiding their stash in a top cupboard for later – or addressing the wrong issues.

Steps 0 to 2 seem most critical for now with Credit Suisse pointing to the following for Step 1:

…an acid test for any discussions, and the reason we expect disappointment, is whether the proposals:

 

1) Seek to cure debt with debt / confuse the markets into seeing solvency created for free / maintain the bezzle / damage credibility; or

 

2) The opposite and provide a visible mechanism for bringing costs of the order of a large fraction of a trillion euro or more to the core.

And Step 2 – acceptance that the market can help – is also very…
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WSJ Economists’ Q3 GDP Forecasts: 2.1 in Q3 and 2.0 in Q4

Courtesy of Doug Short.

One of the big economic announcements in the week ahead will be the Advance Estimate for Q3 GDP, published on Thursday, the 27th, at 8:30 AM EST by the Bureau of Economic Analysis. The final number for Q2 GDP was 1.3%. Economists in general are optimistic that Q3 will show an improvement in this broad measure of the economy. According to Briefing.com, the consensus for Q3 is 2.2%, which is a bit more optimistic than Briefing.com’s own estimate of 2.0%.

But what sort of distribution of opinions do we find among the economists? Is the range of opinions wide or narrow? Let’s review the data in the Wall Street Journal’s October survey of economists, which is available in Excel format here. Fifty of the 56 economists solicited for survey responded. The chart below arranges the Q3 GDP forecasts horizontally from low-to-high to give us a clear idea of the distribution of responses and any outliers.

 

 

As the chart suggests, the majority of professionals fall into a fairly narrow range around the 2.1 mean (standard deviation of 0.56).

What do the economists see for Q4? The median and the mean are fractionally lower, but the range is considerably wider with a definite outlier at the bottom and a pair of outliers at the top.

 

 

We’ll find out later in the week how close the WSJ survey Q3 GDP consensus is to the Advance Estimate.

 

 

 

 





Watch Merkozy Cracking Up Following Question If Italy Can Implement Reforms

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Even our non-polyglot readers will have zero problems understanding the response (in French) by Merkozy, when asked during the press conference, whether Italy, which has the second largest debt load in Europe at $2.2 trillion and inches behind German, will succeed in implementing promised ‘reforms.’ The wholesale laughter 19 seconds in the the clip, by not only the entire audience, but by Merkel and Sarkozy pretty much explains what the “next steps” in Europe are as the continent has now given up any pretense it is even trying to keep a serious facade on the upcoming serial defaults… and why 10 Year BTPs will need much more than just the SMP, EFSF and the hand of god to stay above 90 in the coming week.

Source: La Repubblica

As for the question of why Italy provokes laughter, we are not too sure. After all, as Italy goes, so does the world.

As a reminder…

And…The truth about Italy:

  • Morgan Stanley estimates net issuance should total 35 billion euros per year in 2012-2013, less than expect annual coupon payments of around €45 billion per year
  • A total of €157 billion in Italian government paper will fall due by the end of the year. Redemptions will peak in September, when €46 billion of BTP CTX bonds mature
  • Italy has raised €277.4 billion euros in debt so far in 2011, or 65.3% of its full-year target, the Treasury said – suggesting further issuance of €147.4 billion, according to Reuters calculations
  • Italy’s public debt stood at €1,890 billion at the end of April, according to Bank of Italy figures. The public debt figure includes postal savings
  • Italian government bonds and short-term bills totaled €1,583 billion at the end of June according to Italian Treasury data. Their average term was 7.09 years
  • A one percentage point increase in Italy’s debt yields adds about €3 billion euros to interest payments in the first year, and twice that in the second, the Bank of Italy has said
  • Italy forecast in April that 2011 debt servicing costs would total 4.8% of GDP, or about €77 billion
  • The International Monetary Fund estimated in April that 47% of Italian 2010 government debt was held abroad. Morgan Stanley last week estimated foreign holdings at 44%
  • Banks domiciled in Italy held €192


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Weekly Market Commentary: Bulls Maintain Control

Courtesy of Declan Fallon

Markets closed the week at or near their highs, although the ‘bear flags’ on the weekly timeframes were not breached (to the upside).

The Russell 2000 continued its advance towards 760 resistance with technicals improving and a long way from overbought territory. Plenty of room for upside.

The Dow enjoyed a stronger accumulation as technicals finished the week net bullish. However, it was an index which finished on ‘bear flag’ resistance, so despite the bullish technical setup the preference is for a move down Monday.

The S&P was able to go a step better and edged over ‘bear flag’ resistance and put some distance on what had been a resistance around 1,209. Technicals also turned net bullish for the week.

The Nasdaq closed the week slightly lower, but technicals did enough to turn net bullish.

But helping the Nasdaq is the continued improvement in market breadth. The Percentage of Nasdaq Stocks on Point-n-Figure ‘Buys’ improved to turn technically net bullish.

So while the technical picture is net bullish across indices on the weekly timeframe, the presence of indices at ‘bear flag’ resistance suggests next week will be a downward one – starting Monday.

——

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Europe Goes Full Bailout Retard: EFSF Rescue Capital To Be Officially Double-Counted

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Europe has officially entered the Tropic Thunder zone, where one, forget one thousand , monkeys armed with one simple solar-powered calculator, can come up with a better plan than (JP Morgan-advised) Europe. Because as we pointed out on Thursday, “nothing changes the fact that with €100 billion set aside for bank recaps, a woefully low number and one which will do nothing to assure investors that banks have sufficient capital, there is still not enough cash to “guarantee” all future issuance” – well it appears that Europe finally did the math which led us to conclude that the EFSF is DOA. So what is Europe’s solution? Why double counting aid already pledged of course: “EU bank plan may include aid already pledged to bailout states-sources.” Uh, what? “A drive to lift bank capital across Europe by up to 110 billion euros ($153 billion) is expected to include the roughly 46 billion euros already pledged to Ireland, Greece and Portugal to help their lenders, EU sources told Reuters….Another official confirmed the intention to count money already earmarked for banks in Ireland, Greece and Portugal in any recapitalisation plan. “The problem with shock and awe numbers is that it implies that the money is there,” said one official, reflecting on ministers’ reluctance to set public goals for recapitalisation. “But governments don’t have the money.“… Just as was repeated here over and over and over and over… And yes, that red stuff shooting out of the place where your head was a few second ago, is blood. It is now Europe’s official “plan” (for at least the next 2-3 hours) to use mystical, magical money, which is somehow double-counted to bail out both a bank and a country at the same time…

Ugh:

If over a third of the EU’s bank recapitalisation drive, which investors hoped would inject more than 100 billion euros of fresh money, is accounted for under old bailout programmes markets are likely to react with disappointment.

 

It would effectively shrink the overall package, designed to protect EU banks from the fallout of a Greek default and ease their borrowing difficulties amid a creeping credit freeze, from more than 100 billion euros to something around 60 billion.

 

It would also rest the burden for EU bank recapitalisation in large part on Spain,


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Chaos in the Land of Oz, Part 2

Courtesy of ZeroHedge. View original post here.

Submitted by ilene.

Elliott and I interview Russ Winter of Winter Watch at Wall Street Examiner. ~  Ilene

In part 1 of Chaos in the Land of Oz, we established that the Fed is the Wizard and we are living in an economic Land of Oz. In part 2 we discuss whether there is a pathway back to Kansas.

wizard-of-oz

“My people have been wearing green glasses on their eyes for so long that most of them think this really is an Emerald City.” 

L. Frank BaumThe Wonderful Wizard Of Oz

Chaos in the Land of Oz, Part 2

Elliott: In Part 1 of our interview, we agreed that by not allowing the too-big-to-fail (TBTF) banks to fail, the federal government is continuing its environment of corruption and moral hazard. Case in point – the scheme to force taxpayers to insure Bank of America’s worthless debt via the FDIC. 

So, Russ, it will get worse, until TBTF banks get decapitalized?

(Note: “Recapitalize” banks is code for pulling it out of the hide of German (and other) taxpayers and future generations. “Decapitalize” means: do the crime, do the time – take the losses.) 

Russ: Right. Take the investors out, the bondholders, and shrink the sector.  Banking globally should be cut in half. That means the capital backing these institutions needs to go to money heaven. The word for it is “losses.” Right now we have “too big to let lose” because of fear of a bad hair day. 

I was very disappointed last week when they started shilling for more bailouts. The bankers resist the restructuring, and the market rallies on that news. The market is hooked on bailouts and socializing losses. That was the basis of the 2009-2011 bull market. That can’t go on forever. All these money managers are chasing stocks because they expect another bailout. It’s nonsense! 

Elliott: As an investor, I like to look for value. But it’s so hard to find real value when so much has been gimmicked by the Fed. 

Russ: That’s my view entirely. 

Ilene: What do you expect the outcome will be? 

Russ: I’m highly cynical. We’re like deer in the headlights, but we have to protect ourselves from the pump-and-dumps and avoid the herd mentality of jumping on
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Summarizing The Sheer Chaos In Europe: 9 Meetings In 5 Days

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

For over a year, our premise #1 in interpreting the newsflow out of Europe has been that in the absence of actual practical ideas, and the continent’s glaring inability to do simple math, the only option left to bEURaucrats has been to literally baffle people with so much endless bullshit that the general audience would be simply stunned by the possibility of an alternative that the union’s leaders were all talk and absolutely no action, let alone analysis. As of today, we now know that that is precisely the case: for over a year Europe has been mouthing off hollow rhetoric in hopes that the market would just leave it alone, and that promises of promises and plans of plans would be sufficient. That plan (pardon the pun) has now failed. And so behind the scenes chaos turns into fully public panic. As the FT’s Brussels blog summarizes, the only game left in town for Europe now is to push off D-Day, but not to some indefinite point in the future, like the US, but to tomorrow, and tomorrow and tomorrow, to channel the bard here. And nothing confirms better that it is all over for Europe, than the following summation of the terror and utter cluelessness gripping Europe, than the following sentence from the FT: “Just to recap, by Wednesday night there will have been nine meetings of ministers or national leaders in five days.

Specifically:

  • Friday afternoon: Eurozone finance ministers
  • Saturday: EU finance ministers
  • Saturday: EU foreign ministers (general affairs council)
  • Sunday morning: EU national leaders
  • Sunday afternoon: Eurozone national leaders
  • Wednesday: EU finance ministers
  • Wednesday (tbc): Eurozone finance ministers
  • Wednesday: EU national leaders
  • Wednesday: Eurozone leaders

This excludes some pretty major conferences, such as the impromptu pow-wow for Jean-Claude Trichet’s retirement in Frankfurt last Wednesday, and a bilateral summit between Angela Merkel and Nicolas Sarkozy on Saturday.

Simply said, Europe has telegraphed that it has failed to even plan for a plan.

But for those curious about the largely irrelevant details, here they are again from the FT:

After a two hour overrun, the meeting of the EU 27 has broken up here in Brussels, to be followed by a pow-wow of


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EURUSD Opens Lower

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Hardly the apocalypse scenario that the G20 and Nicholas Sarkozy predicted, but certainly not a ringing endorsement of European cohesion and stability. If this melts up in the Sunday futures session, we fully expect it to be due to ongoing FX repatriation by French banks.

Drifting lower:





 
 
 

Chart School

March Trade Deficit Down 6.5B from Revised February

Courtesy of Doug Short's Advisor Perspectives.

The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services.

The Bretton Woods agreement, which established a stable foreign currency exchange system collapsed in 1971 and as a result, currency values began to float freely and the US dollar was no longer tied to gold values. Since 1976, the United States has had an annual negative trade deficit. The International Monetary Fund and the International Bank for Reconstr...



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Zero Hedge

"Bankers Will Choose To Fly Instead Of Die" - Why Bill Gross Thinks Helicopter Money Is Imminent

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

By Bill Gross Of Janus Capital

Culture Clash

A respected reporter recently asked me what were a few important things I had learned from all this and all of that during the past decade and I surprised myself and perhaps him by answering that I now realized that younger generations &#...



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Phil's Favorites

China Warns Economists, Analysts, Reporters About "Overly bearish" Remarks

Courtesy of Mish.

I remain in “awe” of China-loving proponents who believe the Yuan will soon supplant the US dollar as the world’s reserve currency on the way to becoming the world’s top economic power.

By soon I mean a “decade” or less. It’s not going to happen.

Centrally planned bogus economies, with tiny illiquid bond markets, huge capital controls, pegged currencies, and no freedom of speech are no way suitable for such lofty expectations.

One can make such comments here, in China, you are in trouble.

Please consider China Presses Economists to Brighten Their Outlooks.

...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Seven big banks settle U.S. rate-rigging lawsuit for $324 million (Reuters)

Seven of the world's biggest banks have agreed to pay $324 million to settle a private U.S. lawsuit accusing them of rigging an interest rate benchmark used in the $553 trillion derivatives market.

Here's What Usually Happens to Stocks in Years Like 2016 (Bloomberg)

Despite the huge comeback in the S&P 500, investors remain skeptical of...



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ValueWalk

2016 Sohn Conference: Schreiber, Robbins, Einhorn, Druckenmiller, And More [LIVE]

By Jacob Wolinsky. Originally published at ValueWalk.

The 2016 Sohn Conference starts on Wednesday (May 4th) at David Geffen Hall, Lincoln Center 10 Lincoln Center Plaza New York City. As is our custom at ValueWalk we will be providing in-depth coverage of the most anticipated event of the year. The line up this year once again does not disappoint.

Note – we will post all links to our coverage on this page so just bookmark it or sign up for our free newsletter– also we will post the schedule once it is up

Sohn Investment Conference 12:00PM – 5:30PM

Here are the speakers

  • Larry Robbins, Glenview capital
  • David Einhorn, Greenlight Capital
  • Zach Schreiber, Poinstate Capital
  • ...


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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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Kimble Charting Solutions

DAX Index (Germany) - Leading indicator pulling S&P down with it?

Courtesy of Chris Kimble.

Over the past 12-15 months, the majority of global stock markets have been in a down trend, creating a series of lower highs and lower lows. The German Stock market peaked around 6-weeks ahead of the S&P 500 last year and could be considered a global trend leader, creating a domino effect.

Below updates the pattern in the DAX index-

CLICK ON CHART TO ENLARGE

The DAX index remains inside of long-term rising channel (A), no doubt ...



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Digital Currencies

Is Craig Wright The Creator Of Bitcoin? Frisby and Matonis On 'Satoshi Nakamoto'

Courtesy of ZeroHedge. View original post here.

Is Craig Wright The Creator Of Bitcoin? Frisby and Matonis On ‘Satoshi Nakamoto’

By Mark O'Byrnewww.GoldCore.com 

Craig Wright, an Australian computer scientist, self-declared cyber security expert and entrepreneur, has claimed to be the creator of Bitcoin, the elusive &l...



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OpTrader

Swing trading portfolio - week of May 2nd, 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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Biotech

PRGO, VRX and an Overpriced Papa

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

By Ilene 

Remember this? It was Monday. PRGO is down from around $130 to under $100 since I started following it LAST WEEK. That's down almost 25% in a week, and almost 50% in the last year. So I wrote, 

"Perrigo CEO Joseph Papa leaves Perrigo (PRGO) to lead Valeant (VRX) while PRGO issues a warning about missing earnings expectations. Not surprisingly, PRGO stock plummeted today. 

Robert Ingram, Chairman of the [Valeant] Board, stated, "The Board has conducted a thorough search process and believes that Joe is the ideal leader for Valeant at this time. He has a strong shareholder orientation,...



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Mapping The Market

About that debate last night

Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,

The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now. 

And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now. 

Phil writes back,

I was expecting them to start throwing poop at each other &n...



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Promotions

PSW is more than just stock talk!

 

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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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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