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  1. phil

    Good morning!  

    Weather finally got better so we're having a lovely weekend, hope you guys are too.  

    Right now there's a pack of girls sleeping over so this is the only quiet time I get!  

    Obama had a nice meeting with Xi, apparently so we'll see if any new initiatives get announced.  

    President Obama yesterday warned Chinese counterpart Xi Jinping to halt his country's hacking of U.S. businesses, saying that continuing the cyber-theft would be a very difficult problem in the nations' economic relationship. Meanwhile, China wants a "level playing field" for its companies that invest in the U.S. Despite the areas of contention, one Chinese participant called the "shirtsleeves" summit "constructive, strategic and historic."

    Meanwhile, China factory prices fell 2.9% in May, indicating crap demand and that's accelerating from 2.6% down in April.  They're talking about a "weak" Q2 and, don't forget, Chinese companies release earnings too, so it's not just US companies we should be concerned about.  

    "In the corporate sector the overall situation is still bad, especially for small and medium-sized enterprises," said HSBC economist Ma Xiaoping. "Output prices are decreasing, which could reflect deteriorating profit margins for them."

    Meanwhile, the central bank said on Sunday that Chinese financial institutions issued 667.4 billion yuan ($107.6 billion) of new yuan loans in May, down from 792.9 billion yuan in April and below economists' expectations. Total social financing, a broader measurement of credit in the economy, came to 1.19 trillion yuan in May, down from 1.75 trillion in April.

     

    The broad M2 money supply also expanded at a slightly slower pace, climbing 15.8% at the end of May compared with a year earlier, against the 16.1% rise at the end of April.

    15.8%!!!  Holy crap, and we thought our Fed was printing a lot of money!   When this Global House of cars finally goes off the rails – it's going to be look out below (crash) or look out above (hyper-inflation) – that's why things are so tricky to play this year and that's why I like – CASH!!!

    Speaking of discounts:  

    Bargain-basement Buffett: After five years of climbing prices to win the annual "lunch with the Oracle of Omaha" auction – last year's winner paid $3.46M - the winning bid this year was a relatively measly $1,000,100. According to eBay there were 106 bids; the winner bidder is as yet unidentified.

    At the close: Dow +1.36% to 15246. S&P +1.28% to 1643. Nasdaq +1.19% to 3465.

    Treasurys: 30-year -1.17%. 10-yr -0.64%. 5-yr -0.34%.

    Commodities: Crude +1.47% to $96.16. Gold -2.66% to $1378.15.

    Currencies: Euro -0.21% vs. dollar. Yen +0.47%. Pound +0.29%.

    Market recap: Stocks powered up and closed near session highs after the monthly jobs report painted a Goldilocks picture of steady economic growth that's slow enough for the Fed to maintain its stimulus policies. Fund clients added to positions and hedge funds closed out some bearish bets, as some of the calm that had prevailed for much of the year was restored. The dollar nosed higher and Treasury prices fell in choppy trading.

     

    F'ing unbelievable:  HFT Robot Art

    Irrespective of today's strong jobs numbers, Doug Kass is sticking to his bearish thesis that market is headed much lower from here. The problem, Kass says, is that "central bank liquidity blurs the line of demarcation between economic reality and stock market euphoria." The narrative now is whether the Fed is simply "pushing on a string," and Kass thinks many market participants are coming to this 'aha' moment." (Video).

    This is the way Blue-Collar America Ends - Automation, computers, robots, higher skill requirements for workers, out sourcing jobs to cheaper labor markets, bringing in cheaper skilled/trained workers from over seas, all are working against the working people. This appears to be a trend and I don’t see most of it stopping soon. The future is here. So where do middle class workers go, lower paying service jobs, unemployment, or fall off the cliff. I see lots of unemployment/ under employment being a permanent thing with standards of living for the masses continuing to fall.

    It's looking like the June policy meeting when the Fed will officially signal it's set to begin tapering asset purchases, according to Jon Hilsenrath. Yesterday's lukewarm jobs reports removed pressure to act right away, but the prerequisite necessary to cut back QE – an improving economy – has been met.

    Twenty-Year Anniversary of Market Backstops

    The percentage of the stock market now owned by hedge funds (5%) is the highest since Q2 2008, BofA Merrill Lynch finds in its Hedge Fund Quarterly Report. Hedge funds reduced cash holdings to the Q2 2007 trough of 4.3%, and raised net equity exposure to the Q2 2007 peak of 59%. Their largest exposure is to consumer discretionary stocks (XLY) followed by IT (XLK) and financials (XLF).

    The rout in junk bonds over the last 5 weeks is well known, but now leveraged loans (BKLNSNLN) have joined the tumble, notes Barclays. It suggests credit is becoming an issue along with higher rates as leveraged loans are floating rate and would seemingly be unaffected by rising Treasury yields. Also affected are short-term high-yield ETFs: HYSSJNK. 

    Watch out when Cramer makes convoluted arguments about why you should be bullish against bearish signals!  CNBC's Jim Cramer isn't worried so much about Fed tapering anymore. He's watching the 10-year bond. "When the ten-year goes down," Cramer says, "people step in and start buying." Stocks like Whirlpool (WHR), Toll Bros (TOL) banks that are levered to mortgages. If we can get 10-year rates to around 2.01% there, he thinks we could have a big rally. (Video). 

    Construction Improves, Yet Is Still Historically Low

    What does it mean to have “predicted the crisis”? (Noahpinion)

    Boring stocks can bring exciting returns, Mark Hulbert discovers, as his research reveals stocks exhibiting the least historical volatility on average comfortably outperform the most "exciting" (i.e., volatile) issues. One believer in the boring-is-beautiful school, Guggenheim Partners' Nardin Baker, likes these stocks: SODKMB,CLCOST. Too volatile are AAPLGSCMSHPQMET.

    Worried about the dreaded QE taper and the market volatility that will likely accompany it? Consider buying shares of CME Group (CME) and CBOE Holdings (CBOE), Barron's says. CMEshould benefit from ambiguity regarding the direction of interest rates as a quarter of "clearing and transaction-fee revenue [comes from] interest-rate derivatives," and CBOE has seen VIX trading volumes rise 111% Y/Y through May. (Also: Wells Fargo likes CME)

    Japanese Prime Minister Shinzo Abe plans to introduce tax cuts for capital expenditure in the autumn as part of the government's sweeping plan to pull the economy out of deflation. The lack of a nationwide reduction in corporate tax disappointed markets when Abe initially unveiled the program last week. He also wants to scrap regulations that shackle research and investment.

    Chinese industrial production +9.2% on year in May vs +9.3% in April and consensus of +9.3% also. Retail sales +12.9%, as expected, vs +12.8% in April. Fixed-asset investment excluding rural areas +20.4% in January-May vs +20.6% in January-April and +20.5% forecast. New local-currency lending -15.9% to 667.4B yuan ($109B), missing forecasts. Aggregate financing +4.4% to 1.19T yuan. "On balance, this weekend’s data is likely to strengthen the calls for a more expansionary macroeconomic policy stance," says RBS economist Louis Kuijs.

    China's exports +1% on year in May vs +14.7% in April and consensus of +5.6%. Imports -0.3% vs +16.8% and +6.6%. Trade surplus +12.3% to $20.4B vs consensus of $19.3B. The sharp slowdown in exports reflect a crackdown on invoicing, which is thought to have distorted the April data, especially regarding Hong Kong. Imports of copper and copper products -14.5%, indicating stuttering domestic demand

    Jeff Immelt believes China is serious about cleaning up its environment, and the GE CEO says he will "double down" his clean energy investments there. But Immelt worries that western CEOs who throw around terms like "green" and "sustainability" are hurting their own cause: "When a Chinese CEO hears the word sustainability, he thinks they're being lectured to by the U.S. on how to do things in an uneconomical way."

    Six families in Pennsylvania are angry with Chevron (CVX) and claim the company's gas wells have made it impossible to "quietly use and enjoy" their land. The Fayette County group seeks "unspecified compensatory and punitive damages" tied to what they say are the pernicious effects of twelve nearby wells which allegedly leak natural gas, methane, and "other toxic radioactive substances," according to documents reviewed by Bloomberg. The suit has not been verified with court records. 

    Ballard Power (BLDP +16%) soars again today on heavy volume. In an earlier press release, the company noted that recent growth in shipments of its ElectraGenTM Telecom Backup Power systems is being driven by the need for backup power in Asian, African and Latin American regions with regular, even daily, power outages due to unreliable electricity grids, as well as markets with reliable grids yet vulnerable to extended power outages in crisis situations.

    GT Advanced (GTAT-2.8% AH after filing a $50M mixed shelf. The struggling solar/LED equipment maker only says it will use the proceeds for "general corporate purposes." GT had $320.2M in cash and $259.6M in debt on its balance sheet at the end of Q1, or a net cash balance of $60.6M. That's down from a net cash balance of $275.9M a year earlier.

    Several plant scientists are questioning conclusions Monsanto (MON) drew from its investigation of an escaped GMO wheat variety, and say there is still a risk that rogue grain is in the seed supply. “Sure they tested it, but that doesn’t mean it’s all clean,” says one. “It just means it’s not so widespread that it could be detected easily."  - Here's a great quote from the Monsanto Representative

    Tesla's (TSLA) a short says Barron's Bill Alpert in a cover story which rehashes familiar arguments, but notes the shares – recently essentially unborrowable – can now be had for a single-digit interest rate. Perhaps the most interesting part of the story is Elon Musk hanging up on Bill Alpert during an interview for the piece: "I have no interest in an article that debates what we consider to be an obvious point – which is that there is a dramatic reduction in battery costs … I am terminating this interview." 

    GameStop's (GME +6.2%) big rally on the Microsoft Xbox One trade-in news "is a gift to short sellers," says SA Pro's Josh Burwick. "Great entry point here." The entry point was even better 3 weeks ago when Burwick penned a piece arguing negative catalysts were emerging and for investors to "look out below." 

    Maxim's John Tinker thinks shares of Barnes & Noble (BKS) are cheap (does that still apply after today's rally?), but says he wouldn't be surprised "if the quarterly numbers are worse than expected" given the likelihood that Chairman Leonard Riggio will "be looking to pay as little as possible" for the retail division. Tinker notes that the retailer trades at a historically low EV/EBITDA ratio.

    Tech companies may be telling the truth by saying they have not provided the National Security Agency with full access to their servers, but they have reportedly taken steps to make data-sharing with the government easier. For example, Facebook (FB) has built a separate and secure portal to which it can deposit data requested by the NSA. Other companies that negotiated with the government include Google (GOOG) Microsoft (MSFT), AOL (AOL) and Apple (AAPL); Twitter has limited its co-operation as much as possible.

    While Sprint (S -1.3%) slumps on a report SoftBank (SFTBF.PK) is talking with Deutsche Telekom (DTEGY.PK) about buying its 74% stake in T-Mobile USA (TMUS +4.1%) should the Sprint deal falter, Dish (DISH +1.5%) has spiked higher, as investors take the report as a sign SoftBank would rather abandon its Sprint efforts than significantly raise its bid. Sources tell Reuters SoftBank and DT have been talking since last year, but that talks "intensified" following Dish's $25.5B offer for Sprint. Clearwire (CLWR +3.3%) has also moved higher, and is now $0.02 above Dish's $4.40/share offer price. (previous) 





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Phil's Favorites

Renzi's Great Gamble

 

Renzi’s Great Gamble

Courtesy of John Mauldin of Mauldin Economics' Outside the Box

There is an extremely important election coming up, and I am not talking about the US presidential election. The upcoming referendum in either October or November in Italy may have as much or even more macroeconomic impact on the world as the US election, but hardly anyone outside of Italy is paying much attention to it – yet.

I have been saying for some time in interviews around the country that I think the referendum in Italy has even more potential impact than the Brexit vote did in the United Kingdom. And just like the Brexit vote, it is rife with emotion and political turmoil, making the outcome too close to call.

If you are a voter in Italy, your frustr...



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Zero Hedge

Brazil's Banana Scoundrels Will Now Win Their Olympics

Courtesy of ZeroHedge. View original post here.

Authored by Pepe Escobar via Stratgic-Culture.org,

The Rio Olympics are gone – Bolt, Phelps, Neymar, the green pool, the Ugly American Lochte and all – but a global audience may have been spared a shameful last act.

Mediocre incompetent opportunist, corrupt coward traitor, and certified political usurper, interim President Michel Temer, refused to go to the closing ceremony, afraid of being booed out of a packed Maracana stadium...



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Chart School

A Wild Day: Profit Takers Take To The Streets

Courtesy of Declan.

 

Yellen's speech pushed markets both up and down, but probably left more minds stuck in indecision than offered a clear path forward. Markets don't like indecision, which gives bears and weak longs an opportunity to sell. There are still key support levels to break, but recent weeks of tight action could lead to an unraveling.

The S&P finished as registered distribution with new 'sell' triggers in On-Balance-Volume and Directional Indicator. The index has been stuck in a relative downward turn since July (against Small Caps). This index is offering the clearest 'sell' signal.
 

...

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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Japan Pension Giant’s Losses Imply a $53 Billion Stock Splurge (Bloomberg)

The world’s biggest pension fund has room for a Japan stock shopping spree after the value of its investments tumbled last quarter.

U.K.’s May Orders Brexit Plans Ahead of G-20, Newspapers Report (Bloomberg)

U.K. Prime Minister Theresa May asked her cabinet ministers to come up with a blueprint for how their departments may be able to benefit from Britain’s exit from the European Union ahead of the Group of...



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ValueWalk

Meb Faber: The Trinity Portfolio

By Guest Post. Originally published at ValueWalk.

The Trinity Portfolio by Meb Faber

Guest: Episode 15 is just Meb.

Date: 8/10/16

Run-Time: 42:53

Topics: Meb tries something new in Episode 15. In “audio book” style, he walks listeners through his latest research piece: The Trinity Portfolio. “Trinity” reflects the three pillars of this investing approach: globally-diversified assets, weightings toward value and momentum investments, and active trend-following. On one hand, Trinity is broad and sturdy, rooted in respected, wealth-building investment principles. On the other hand, it’s strategic and int...



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Kimble Charting Solutions

Basic Materials attempting breakout says Joe Friday

Courtesy of Chris Kimble.

Basic Materials stocks can often times give a decent snap shot of how an economy is doing from a growth or lack of perspective. Below looks at Basic Materials ETF (IYM) over the past decade.

CLICK ON CHART TO ENLARGE

IYM remains inside of an upward sloping mult-year rising channel (1), since 2009. It hit the bottom of this channel earlier this year and has bounce off support. Currently IYM is testing f...



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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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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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