Author Archive for ilene

US Election: What’s in Store for Equities and Gold?

Courtesy of Mish.

As we head into the final stages of the the US 2016 presidential election, one has to wonder: Does it matter at all who wins? And what are the implications for equities and gold?

James Grant

James Grant discusses election and equity questions Fed is Now Hostage to Wall Street.

James Grant, Wall Street expert and editor of the investment newsletter Grant’s Interest Rate Observer, warns of a crash in sovereign debt, is puzzled over the actions of the Swiss National Bank and bets on gold.

Mr. Grant warns of today’s reckless hunt for yield and spots one of the biggest risks in government debt. He’s also scratching his head over the massive investments which the Swiss National Bank undertakes in the US stock market.

Interview Snips

Question: For more than three decades Grant’s has been observing interest rates. Is there anything left to be observed with rates this low?

Grant: Interest rates may be almost invisible but there is still plenty to observe. I observe that they are shrinking and that the shrinkage is causing a lot of turmoil because people in need of income are in full hot pursuit of what little of yields remains.

Question: What are the consequences of that?

Grant: It reminds me of the great Victorian English journalist Walter Bagehot. He once said that John Law can stand anything but he can’t stand 2%, meaning that very low interest rates induced speculation and reckless investing and misallocation of capital. So I think Bagehot’s epigraph is very timely today.

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Buy When There’s Blood In The Streets – Part 2 of Not The Best Time In History To Invest In Real Estate

Courtesy of Lee Adler of the Wall Street Examiner

Yesterday I began to show  why now is not the best time in history to invest in real estate, rebutting a column posted August 22 at Dow Jones Marketwatch. In fact, the headline

This is the best time in history to invest in real estate

reminds me of the times when extreme headlines like this have marked major turning points in markets. Perhaps the most famous was Business Week’s cover story, “The Death of Equities,” in 1979. That was near the best time to buy stocks in my lifetime.

More recently and at a lesser scale, we have the example of the widely publicized piece by Jason Zweig of the Wall Street Journal proclaiming “Let’s Be Honest About Gold: It’s a Pet Rock.” That was in July of 2015 when gold was near its bottom in the $1100 range. It has been among the best performing asset classes since then.

The headline on the Marketwatch piece has a similar feel. It may well mark a major turning point in the multifamily rental investment market.

But I’m not here to argue that. I simply want to show that the headline and the arguments that Reeves puts forth in support of it, are just wrong. Far from being the best time ever to invest in rental property, the fundamentals are atrocious. It’s a market that has been rigged by the world’s central banks.Ever cheaper financing has pushed multifamily housing prices into the stratosphere, and pushed capitalization rates into the sub-basement of history. This is where the real estate bogeymen live and thrive. If you go there, they will eat you alive.

Mortgage Rates, Rents, and Multifamily Housing Prices- Click to enlarge

The uptrend in multifamily housing prices isn’t about improving fundamentals. It’s about central banks constantly making real estate financing cheaper and cheaper, not to mention easier. The chart above shows that as money has gotten cheaper, virtually all of the gains in real estate prices can be attributed to the value of the financing. The market is completely at the mercy of a rise in mortgage rates. Certainly there’s an argument to be made that the Fed would never allow that, but would the assumption that mortgage rates would never rise be a prudent basis for investing today?

If the day ever…
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Top Ten Videos – August 24

Courtesy of John Rubino.

Noland, Icahn, Keen, Maloney, many more on gold, silver, inflation and the coming crisis.

Visit John’s Dollar Collapse blog here

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 the Turkish community.

She also warned both supporters and opponents of the authoritarian Turkish president to avoid stirring political violence. “The freedom of thought and of holding demonstrations is valid in Germany for everybody who lives here, but of course all their differences of opinion must be argued out peacefully.”

Ms Merkel’s unusually tough message is clearly designed to give her conservative CDU party a boost in two regional elections next month — in rural Mecklenburg-Vorpommern and Berlin — where the rightwing anti-migration, anti-Islam Alternative for Germany is gaining ground.

But it also reflects government fears about political radicalisation among the country’s 3m ethnic Turks, who are split roughly 50-50 between German and Turkish citizens. The political controversy could complicate Ms Merkel’s efforts to keep in place the EU-Turkey refugee pact, which is under growing criticism in Germany for the concessions made to Mr Erdogan, including the soft-pedalling of criticism of his post-coup crackdown.

Unusually Tough?

I fail to see how message telling kids or adults to play nice is tough at all. Then again we are talking about someone who welcomed refugees with open arms.

Arms Open Wide

Meanwhile Jean-Claude Juncker goes out his his way at every opportunity to prove what an idiot he is. Juncker says “Borders Are The Worst Invention Ever Made By Politicians”

ZeroHedge notes the border BS starts near the 10 minute mark.

Continue reading here…

Applying the lessons of history to your portfolio


Applying the lessons of history to your portfolio

Courtesy of 

Last fall, financial advisors Anthony and Dina Isola came into our firm to talk shop one afternoon. We were blown away by their passion for saving the retirement portfolios of their clients, many of whom are teachers and professors who are inundated almost daily with bad product pitches at their schools.

Within a few weeks, we were talking about hiring them. It’s one of the best decisions we’ve made so far – an absolute grand slam from a culture perspective.

Tony’s background as a trader-turned-educator-turned-Certified Financial Planner makes him a highly unique animal in our menagerie. He comes to work ready to crush it every day, and he’s armed to the teeth with knowledge about how the machine takes advantage of the investor class at every turn. Dina’s detail-oriented work assures a smooth client experience for all who come to them for help.

Tony’s also got a great blog, called A Teachable Moment. When we set it up for him, we had no idea how consistently good his stuff would be each week.

For example, this bit about the application of history lessons is so crucial:

How can investors act as applied historians and use this skill set to create wealth?

There are several minefields that could easily be avoided with some knowledge of the past:

  • Most market corrections don’t turn into bear markets.
  • Using leverage to boost investment returns often ends badly.
  • The president has very little control over the global economy.
  • Buying new financial products at market peaks is a poor idea.
  • Bull markets last much longer than bear markets.
  • Stocks are six times more likely to be up 20% than down the same amount. (Michael Batnick)
  • Uncertainty is always present and it is not a wise choice to use it as an excuse not to invest.
  • Stocks will do the best job of protecting future purchasing power over long periods of time.
  • Investing in the fastest growing world economies will not guarantee higher investment returns.
  • Most

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New Home Sales Surge Most Since 2007, Median Price Down 5.1%, January-to-July Sales at 1963 Level

Courtesy of Mish.

New home sales are up huge amounts year-over-year but price is not following. On a seasonally adjusted annualized basis, news home sales are up 18.1% in the south (the largest region), and 40% in the Northeast (accounting for only a small increase in sales).

Bloomberg Econoday has more numbers.

Volatility is the name of game for the new home sales report where July’s headline surged, up a monthly 12.4 percent to a 654,000 annualized rate. A very small offset is a very modest 10,000 downward revision to June which now stands at 582,000. May is unrevised at 572,000. All these levels are at cycle highs while the sequential gains hint at sky-high momentum.

The surge in sales is apparently getting a big boost from seller discounting as the median price fell 5.1 percent to $294,600. The year-on-year price is suddenly in the negative column at minus 0.5 percent. These results confirm other indications of price softness, including recent FHFA and Case-Shiller data.

Lack of supply, in light of the sales gain, is becoming an even more pressing issue for housing. New homes on the market fell 7,000 in the month to 233,000 with monthly supply falling very sharply, to 4.3 months at the current sales rate from 4.9 months in June. In July last year, this reading was 5.2 months.

Strength in this report comes from the largest region which is the South where sales rose 18.1 percent to a 398,000 annualized pace. The Northeast, which is a very small region for new homes, surged 40.0 percent in the month but to only a 35,000 rate.

Housing data have been moving higher but not uniformly. Starts and permits data have been bumpy as has construction spending. But this report, together with data on sales of existing homes, are moving decisively to cycle highs and are pointing to housing as possibly the biggest positive surprise of the 2016 economy.

Highest Level Since 2007

The Wall Street Journal reports U.S. New Home Sales Rise to Highest Level Since 2007

Sales of newly built homes account for less than a tenth of total U.S. homebuying activity. Also, data on such purchases are volatile from month to month and subject to later revision. July’s increase came with a margin of error of plus or minus

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Great explanation of Predatory Capitalism

Via Phil:

That's from John Perkins, who wrote "Confessions of an Economic Hit Man", which is an excellent book. 

Richmond Fed Manufacturing Disaster: Activity, New Orders, Shipments Plunge

Courtesy of Mish.

The regional manufacturing reports are not having a good go of it this month. The Richmond Fed Region took a huge dive from +10 to -11. New orders lead the collapse, down a whopping 35 points to -20. The Empire State and Philly Fed reports were also weak.

Richmond Fed Synopsis

Richmond Fed 2016-08A

Disastrous Numbers

  • Index Down 21 points to-10
  • Shipments down 21 points to -14
  • New orders down 35 to -20
  • Order Backlog down 22 points to -1
  • Capacity utilization down 22 points to -19
  • Wages Up 7 points to +21
  • Finished goods inventories up 9 points to+21
  • Raw materials inventories up 4 points to +27

Inventories up, employment up, wages up. Shipments and new orders plunged. What a disaster, and it’s not just this regional report.

Disastrous Manufacturing August

Mike “Mish” Shedlock

Original article here.

Manufacturing PMI a Bit Weaker Than Expected

Courtesy of Mish.

The PMI Manufacturing report came in at 52.1 compared to a Bloomberg Econoday consensus estimate of 53.2, in a range of 52.7 to 53.5. New orders and employment showed particular weakness.


Weakness in orders and employment were unfortunate themes of last week’s Empire State and Philly Fed reports and likewise headline the manufacturing PMI report. The PMI, which is based on a nationwide sample of manufacturers, slowed by 8 tenths in the August flash to 52.1, a reading only modestly above breakeven 50 to indicate no more than limited expansion in composite activity.

Output is the month’s best strength but one that won’t last very long if orders remain soft. The sample is cutting back on inventories this month which, like the slowing in employment, hints at caution over the business outlook. Price trends are stagnant in yet another sign of softness in demand. One positive in the report is strength in export orders which, after a long run of weak readings, is suddenly near a 2-year high.

Exports aside, the strength in this report is limited and does not point to second-half strength for manufacturing.

Recent History

The manufacturing PMI firmed to 52.9 in the July, a moderate rate near breakeven 50 but still the best showing in 9 months and a reminder of how soft the factory sector has been this year. New orders, including those for exports, were strong in July which points to strength for production in August. Forecasters see the August flash coming in slightly higher at 53.2.

Markit Flash U.S. Manufacturing PMI

The Markit Flash U.S. Manufacturing PMI report was a bit more neutral, perhaps slightly optimistic about all of this.

Key Findings

  • Production continues to rise solidly
  • Total new order growth slows, despite fastest
  • increase in export sales for nearly two years

Markit US 2016-08F-A

Comments from Chris Williamson, Markit’s Chief Economist

  • The August drop in the PMI is a disappointment but less worrying when looked at in the context of July’s better than expected reading. Taking the July and August readings together suggests that manufacturing is enjoying its best growth so far this year in the third quarter, and should help drive stronger GDP growth.
  • With August seeing the largest rise in exports for almost two years, the improved trade performance should

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Wall Street’s Protection Racket: Mandatory Arbitration

Courtesy of Pam Martens

Scales of JusticeWhat people across Wall Street cannot figure out is why the Board of JPMorgan Chase, America’s biggest bank by assets, didn’t sack its CEO, Jamie Dimon, at some point between the bank’s first two felony counts in 2014 and its third felony count in 2015. Or, as two trial lawyers, Helen Davis Chaitman and Lance Gotthoffer point out on their web site, during the past five years as JPMorgan Chase racked up $35.7 billion in fines and settlements for “fraudulent and illegal practices.”

JPMorgan Chase’s abuses of its own customers are so vast that Chaitman and Gotthoffer had to create a Wheel of Misfortune to catalog the scams for ease of viewing by the public.

And here’s the worst part: those are just the frauds that the public is allowed to read about. JPMorgan Chase, along with other notoriously abusive banks on Wall Street, is allowed to force claims against it into a private justice system called mandatory arbitration. This system allows systemic abuses to avoid detection for years because claims made by both employees and customers are ushered into Star Chamber tribunals which lack the judicial protections afforded in a court of law.

JPMorgan Chase must be proud of its mandatory arbitration agreement for its employees because we found it at its web site. These are some of the salient points which show the stark contrasts between mandatory arbitration and a public courtroom proceeding where both the public and the press can observe the proceedings:

“The arbitrator, the Parties and their representatives must maintain the confidentiality of the hearings unless the law provides otherwise…

“The decision will be final and binding upon the Parties, and appeal of the decision to a court shall be limited as provided by the FAA [Federal Arbitration Act]…

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Zero Hedge

Dakota Access Pipeline Tensions Grow Increasingly Hostile As Officials Cut Off Water Supply, Arrest Dozens

Courtesy of ZeroHedge. View original post here.

An ongoing protest by Native American members of the Standing Rock tribe, intended to halt the construction of the Dakota Access Pipeline, got a little celebrity "love" today in Washington D.C. as Bernie supporter, Susan Sarandon, and friends decided to swing by to show their support.  In July, the environmental group Earthjustice filed a lawsuit (included in its entirety at the end of this post) on behalf of the Standing Rock tribe, seeking an injunction against the U.S. Army Corps of Engineers, which authorized the pipeline's construction.  Judge James E. Boarsberg heard arguments in the case to...

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Phil's Favorites

How Long Will It Take for the ECB to Own All Sovereign Debt of Spain, Germany, France?

Courtesy of Mish.

Huky Guru on Guru’s Blog posted a chart that answers the question: How Long Will it Take For the ECB to Own All Sovereign Debt of Eurozone Countries?

At the current rate of purchase of sovereign bonds the ECB will have have purchased all sovereign debt issued by Spain in 9 years and Germany in 8.8 years.

Bond Market Distortion

Distortion in the corporate bond market has ...

more from Ilene


Warren Buffett: Jeff Bezos Has 'Changed The World' In A Big Way

Courtesy of ValueWalk.

Berkshire Hathaway’s Warren Buffett discusses Jeff Bezos’ extraordinary success with Amazon.

Warren Buffett: Jeff Bezos Has ‘Changed The World’ In A Big Way


Image source: YouTube Video Screenshot

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Chart School

Modest Selling

Courtesy of Declan.

Yesterday's buying likely caught shorts out, but later weakness may have encouraged profit taking today. The damage was relatively light and only served as a warning.

For example, the S&P didn't lose breakout support and selling volume was light

The Nasdaq did see more selling to finish with a distribution day. The index finished on its 20-day MA, which it last saw in a convergence in June and was followed by a successful bounce.


more from Chart School

Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

German Economy Held Back by Weakest Services Growth in 15 Months (Bloomberg)

Germany’s economy lost some momentum this month as manufacturing cooled and the services sector posted its weakest performance in 15 months.

The US Has A Huge Rate Of Whites In Incarceration (But Nobody's Talking About It) (Zero Hedge)

Data provided by is helping shed light on America&rsq...

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Kimble Charting Solutions

Gold & Silver Miners potentially kissing resistance

Courtesy of Chris Kimble.

Below looks at the oldest miners index in the states, XAU index, over the past decade. The XAU index looks to be kissing potentially important resistance levels at this time.


All mining indices are up strong this year and all remain well below 2011 levels. Is the rally this year, nothing more than a counter trend rally in a long-term down trend? Not ...

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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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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


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:

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! 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 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.

Thank you for you time!

FeedTheBull - Top Stock market and Finance Sites

About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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