Author Archive for ilene

GDPNow Forecast Sinks to 1.8% Following Advance Economic Indicators Reports

Courtesy of Mish.

Today the Census Department released its first “Advance Economic Indicators Report”. The new report adds wholesale and retail inventories to its existing International Trade in Goods report.

For details see Trade Deficit Widens as Imports Rise More Than Exports; Advance Economic Indicators Initial Release.

Following the report, the GDPNow Forecast dropped 0.5 percentage points to 1.8%.

Latest forecast: 1.8 percent — July 28, 2016

GDPNow 2016-07-26

The final GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 1.8 percent on July 28, down from 2.3 percent on July 27. After the U.S. Census Bureau’s inaugural release of its advance economic indicators report, which covers retail and wholesale inventories and foreign trade in goods, the nowcast of the contribution of net exports to second-quarter real GDP growth declined from 0.17 percentage points to –0.10 percentage points and the nowcast of the contribution of inventory investment to growth declined from –0.63 percentage points to –0.79 percentage points.

That is the final DGPNow forecast for the second quarter.

The “Advance” BEA Gross Domestic Product, for 2nd quarter 2016 comes out tomorrow. The next GDPNow forecast will be for third quarter.

Note how lagging these BEA GDP reports are. The third quarter is nearly a third over and we will just now get data for the second quarter (and it will be revised again and again).


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Puppet Theory: Is Trump Putin’s Puppet?

Courtesy of Mish.

Slate writer Franklin Foer says “Vladimir Putin has a plan for destroying the West—and that plan looks a lot like Donald Trump. If the Russian president could design a candidate to undermine American interests—and advance his own—he’d look a lot like Donald Trump.”

Foer went as far as to directly label Trump as Putin’s Puppet.

Continuing the “puppet” meme, Newsweek writer Maxim Trudolyubov noted “Trump has shattered the Republican orthodoxy on Russia, promising to get along with Moscow and heaping praise on Putin.”

Trudolyubov then asked the question Is Trump Putin’s Puppet?

Puppet Theory

Trudolyubov asked the question and never even bothered to answer it.

I will. The question is a joke, and Foer is a fool. No one is pulling Trump’s string.

Indeed, the Democrat and Republican leadership hate Trump precisely because he is no one’s puppet.

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Trade Deficit Widens as Imports Rise More Than Exports; Advance Economic Indicators Initial Release

Courtesy of Mish.

The International Trade in Goods report shows a widening trade gap. Both exports and imports rose for the month but the gap widened more than any Bloomberg Econoday economist’s estimate.

Trade Gap Widens to -$63.3 Billion

Trade Gap 2016-07A

Highlights

Exports of goods improved in June though imports rose even more, making for a $63.3 billion goods deficit in the month. The mix will pull down tomorrow’s second-quarter GDP report, where exports are a subtraction, but nevertheless is a welcome sign of strength in cross-border demand.

Exports rose 0.9 percent led by gains for foods and for consumer goods. Exports of capital goods, which have been weak, posted a solid monthly gain, also at 0.9 percent. The import side shows a big gain for industrial supplies where price inflation for oil is at play but also a 1.2 percent gain for capital goods imports and a second very strong gain for the leading component, consumer goods which rose 3.3 percent following May’s 2.7 percent. Gains in imports of consumer goods point to business confidence in consumer demand.

Advance Economic Indicators

Starting today, the Commerce Department will release an Monthly Advance Economic Indicators Report. In addition to the balance of trade, it also includes Advance Wholesale and Retail Inventories.

Advance conomic Indicators 2016-07A

Advance International Trade in Goods

The international trade deficit was $63.3 billion in June, up $2.2 billion from $61.1 billion in May. Exports of goods for June were $120.2 billion, $1.1 billion more than May exports. Imports of goods for June were $183.5 billion, $3.3 billion more than May imports.

Advance Wholesale Inventories

Wholesale inventories for June, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $589.3 billion, virtually unchanged (±0.4 percent) from May 2016, and virtually unchanged (±1.6 percent) from June 2015. The April 2016 to May 2016 percent change was unrevised at up 0.1 percent (±0.2 percent).




Advance Retail Inventories

Retail inventories for June, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $604.2 billion, an increase of 0.5 percent (±0.2 percent) from May 2016, and were up 5.6 percent (±0.7 percent) from June 2015. The April 2016 to May 2016 percent change was unrevised at up 0.5 percent (±0.2 percent).

Mike “Mish” Shedlock


Original article here.





Anything can happen

 

Anything can happen

Courtesy of 

Anything can happen. At least, more things than you can imagine can happen.

Facebook, after trouncing yet another quarter’s earnings report, has now climbed to a market value greater than that of Berkshire Hathaway. It may be temporary, it may be forever. Regardless, at the current moment, a ten year old company with few physical assets and a small amount of employees is now worth more than an empire built by Warren Buffett over the course of 50 years.

How many people had the imagination to picture something like this as being within the realm of possibilities, let alone a likelihood?

Masha Gessen writes about our lack of imagination regarding graver things at the New York Review of Books:

Lack of imagination is one of our greatest handicaps as humans and as citizens. Mikhail Khodorkovsky, one of the richest men in the world, could not imagine that Putin would put him in jail, and this was one of the reasons he ignored repeated warnings and stayed in Russia. Then he spent ten years in a Russian prison. David Cameron could not imagine that his fellow citizens would vote to secede from the European Union, so he called for a referendum. Soon after the vote last month, pundits in both the UK and the US regrouped and started reassuring themselves and their audiences that the UK will not really leave the EU—because they can’t imagine it. I have spent much of this year arguing with my American friends about Donald Trump. Even after Trump had won enough delegates to lock up the Republican nomination, reasonable, well-informed people insisted that some Republican savior would swoop in and reclaim that party. There was little, if any, evidence in favor of that kind of outcome, but for a brief moment many Americans seemed to believe in the unlikely rather than the obvious. Why?

“I just can’t imagine Trump becoming the nominee,” many said at the time. But a lack of imagination is not an argument: it’s a limitation. It is essential to


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Breaking News And Best Of The Web

Courtesy of John Rubino.

Fed does nothing, says little. Gold pops, stocks Decline. Japan considers 50-year bonds. Companies report fake numbers. Money pours into corporate bonds as sovereign yields go negative. G-20 commits to more stimulus. Debt keeps soaring while yield curves flatten. Judge rules that bitcoin is not money. Clinton accepts nomination. Gold and silver miners start reporting.

Best Of The Web

Biggest companies in the S&P 500 use made-up earnings numbers – MarketWatch
This is how independent central banks are – Gold Republic
Why real reform is impossible – OfTwoMinds.com
Plutocracy, then and now – the lesser of two evils – Jesse’s Cafe Americain
How to profit form these massive, Brexit-induced trends – Casey Research
5 reasons why Trump will win – Michael Moore
An upside down world – Financial Sense
IceCap asks what happens when the bond bubble finally pops – Zero Hedge
It’s all connected – Globe And Mail
The central planning virus mutates – Acting Man
Cycle of insurgency: cops are being targeted, what’s next? – The Fifth Column
The real reason pharma companies hate medical marijuana – Liberty Blizkrieg
The world is taking its revenge against elites – Guardian

—————————————————————–

Breaking News

The Economy

7/28    Can the world deal with a new bank crisis? – Bloomberg

7/28    Insanity in Japan – Zero Hedge

7/28    Households on the hook for Italy’s next bailout – Bloomberg

7/28    Debt rattle – Automatic Earth

7/28    Wolfgang Schäuble bails out Spain, Portugal – Politico

7/28    Ford plunges after warning “we don’t see growth” – Zero Hedge

7/28    GDPNow forecast sinks to 1.8% – Mish

7/28    Oil industry about to be burned again by fall in oil prices – Zero Hedge

7/28    Japan boldly considers issuing 50-year bonds – MarketWatch

7/28    Key indicator says the economy is in big trouble – Casey Research

7/28    When it comes to rate hikes, the Fed has no stick – CNBC

7/28    Oil tanks after EIA reports 1.7M barrel crude build – Oil Price

7/28    Global banks are staging a bank run in China – Epoch Times

7/28    More warning signs from China’s economy – ValueWalk

7/28    Brexit is hitting the economy hard – Guardian

7/28    Unclear why US Fed so eager to raise


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New Milestone: Trump and Hillary Converge at 58% Unfavorable Rating; Neocons for Hillary

Courtesy of Mish.

This election is quite likely to come down to which party is more motivated to vote for someone they do not like.

For the first time in Gallup polls, Trump’s Image on Par With Clinton’s, at an equally poor 58% unfavorable rating.

Trump Hillary Ratings2

The numbers for both candidates, based on interviewing conducted July 18-25, are 37% favorable and 58% unfavorable. In all previous Gallup updates stretching back to last July, Clinton’s net favorable has been higher than Trump’s.

When the data from Saturday, Sunday and Monday are isolated, the numbers are even slightly more in Trump’s favor — 37%/58% favorable/unfavorable, compared with Clinton’s 36%/59%. In other words, there is no evidence through Monday night that Trump is losing his image gains from his Cleveland convention.

At this point, we can say that although Americans’ views of the Cleveland convention were not at all positive after it ended, the underlying trend data show that over the last week or so, Trump has managed to reach a milestone in his campaign: His image among Americans is now identical to that of his opponent.

Trend Favors Trump

This trend favors Trump, perhaps strongly so.

  1. Bernie supporters feel disenfranchised and many of them will sit this election out, totally disgusted with the mess.
  2. Trump may lose some of the warmonger vote to Hillary but will more than make up for it by picking up disgruntled blue collar workers who blame Mexico and China for stealing their jobs.

Good Riddance

Dave Stockman reports Neocons Lining-Up For Hillary—–Good Riddance!

AS HILLARY CLINTON puts together what she hopes will be a winning coalition in November, many progressives remain wary — but she has the war hawks firmly behind her.

“I would say all Republican foreign policy professionals are anti-Trump,” leading neoconservative Robert Kagan told a group gathered around him, groupie-style, at a “foreign policy professionals for Hillary” fundraiser I attended last week. “I would say that a majority of people in my circle will vote for Hillary.”

As the co-founder of the neoconservative think tank Project for the New American Century, Kagan played a leading role in pushing for America’s unilateral invasion of Iraq and insisted for years afterward that it had turned out great.

Despite the catastrophic effects of that war, Kagan insisted


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Spot the Odd One: Gold Up, Silver Up, Oil Down, Dollar Down, Treasuries Up, Economy Strengthening

Courtesy of Mish.

In today’s FOMC Statement the Fed says the labor market has strengthened, household spending is growing strongly, and economic activity is expanding at a moderate rate.

Let’s see what the market thinks of that assessment.

Commodities Reaction to FOMC Statement

FOMC July Meeting A

Gold Up, Silver Up, Oil and Copper Down

Bond Reaction to FOMC Statement

FOMC July Meeting B

US Treasury Yields Lower

US Dollar Reaction to FOMC Statement


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FOMC Interest Rates and Their Impact on the US Economy: Part 2

Courtesy of Chuck Carnevale.

FOMC Interest Rates and Their Impact on the US Economy: Part 2

Introduction

To me, interest rates and their future direction seems to be obsessively discussed and debated by many investors.  So much so, that I often get the impression that many investors believe that interest rates coupled with Federal Reserve policy are the primary drivers of our economy.  From my perspective, interest rates and Federal Reserve monetary policy are contributing factors to economic growth and stability.  However, I would stop short of considering them of primary importance.

The Most Important Factors of Economic Strength

The true strength of an economy is fundamentally related to its capacity to produce sufficient goods and services in order to meet the needs and wants of its people.  Strong economies are highly productive, and production is the true source of wealth.  In order for an economy to be productive it must possess the resources required to produce goods and services.  In economic terms these are referred to as factors of production.  Under modern economic theory there are four factors of production, they are land, labor, capital and entrepreneurship.

Importantly, the reader should notice that money is not included in that list.  Money is simply a medium of exchange, and as such, it has no intrinsic value in its own right.  Its only value comes from the product (goods and services) that buyers or sellers are willing to accept in exchange for the goods and services they want or are offering.  There is an excellent series on the Federal Reserve Bank of St. Louis website titled “Economic Lowdown Podcast Series” that I highly recommend to readers interested in learning more about how the economy works.  Here’s an excerpt from Episode 2-Factors of Production:

“You will notice that I did not include money as a factor of production. You might ask, isn’t money a type of capital? Money is not capital as economists define capital because it is not a productive resource. While money can be used to buy capital, it is the capital good (things such as machinery and tools) that is used to produce goods and services. When was the last time you saw a carpenter pounding a nail with a five dollar bill or a warehouse foreman lifting a pallet with a 20 dollar bill? Money merely facilitates trade, but it is


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More Banking Mystifications

 

More Banking Mystifications

Courtesy of James Kwak, Baseline Scenario

Apparently, both parties have platform planks calling for the reinstatement of the Glass-Steagall Act of 1933, the law that separated investment banking from commercial banking until it was finally repealed in 1999 (after being watered down by the Federal Reserve beginning in the late 1980s). Bringing back Glass-Steagall in some form would force megabanks like JPMorgan Chase, Citigroup, and Bank of America to split up; it would also force Goldman Sachs to get rid of the retail banking operations it started in a bid to get access to cheap deposits.

In his article discussing this possibility, Andrew Ross Sorkin of the Times slips in this:

“Whether reinstating the law is good idea or not, the short-term implications are decidedly negative: It would most likely mean a loss of jobs as part of a slowdown in lending from the biggest banks.”

I looked down to the next paragraph for the explanation, but he had already moved on to another unsubstantiated claim (that the U.S. banking industry would be at a competitive disadvantage). So, I thought, maybe it’s so obvious that Glass-Steagall would reduce lending that Sorkin didn’t think it was worth explaining. I thought about that for a while. I couldn’t see it.

In fact, basic intuitions about finance indicate that Glass-Steagall should have no effect on lending whatsoever. Banks should loan money to borrowers who are good risks: that is, those who pay an interest rate that more than compensates for the risk of default. (I’m simplifying a bit, but the details aren’t relevant.) Common sense tells you that whether the bank doing the lending is affiliated with an investment bank shouldn’t make a difference.

To dig a little deeper, banks should be making loans whose expected returns exceed the appropriate cost of capital. So, maybe Sorkin thinks that grafting an investment bank onto a commercial bank will lower its cost of capital. I can’t think of any obvious reason why this should be the case. Even if it does, however, we do NOT want the commercial bank to now start making more loans than it did before it was affiliated with the investment bank. Capital markets are supposed to direct funds to households…
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Fed Talks of Strengthening Economy, But Didn’t Hike: Why? Door Open for September?

Courtesy of Mish.

In today’s FOMC Statement the Fed says the labor market has strengthened, household spending is growing strongly, and economic activity is expanding at a moderate rate.

Supposedly, “near-term risks to the economic outlook have diminished”.

But “against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.”

Stop Talking and Do It

Esther L. George, president of the Federal Reserve Bank of Kansas City dissented. She preferred to raise the target range for the federal funds rate to 1/2 to 3/4 percent today.

Ester George

Door Open for September?

The Wall Street Journal reports Fed Leaves Door Open to Move as Soon as September.


Continue reading here…





 
 
 

Chart School

Moving Averages: June Month-End Update

Courtesy of Doug Short's Advisor Perspectives.

We have discontinued our moving average series due to limited data resources. For continued coverage of the Ivy Portfolio and timing methods, please see Meb Faber's website here.

The S&P 500 closed June with a monthly gain of 0.09% which follows a gain of 1.53% last month. All three S&P 500 MAs are signaling "invested" and all five Ivy Portfolio ETF MAs are signaling "invested". In the table, monthly closes that are within 2% of a signal are highlighted in yellow.

The Ivy Portfolio

The above table shows the current 10-month simple moving average (SMA) signal for each o...



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Zero Hedge

Why Reuters Is Tweaking Its Presidential Poll

Courtesy of ZeroHedge. View original post here.

A 13-point lead for Hillary Clinton on July 14 has vanished in two weeks with Donald Trump now leading in the polls by 1 point. This is clearly unacceptable to the establishment and so Reuters/Ipsos is taking matters into its own hands... and 'tweaking' its polling methodology.

Trump has seena yuuge bounce since Comey and the convention as Clinton's bounce was marginal...

...



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Phil's Favorites

Greenwald Explains What Out-of-Touch Media Doesn't Get About Trump, Russia, and US Electorate

 

Greenwald Explains What Out-of-Touch Media Doesn't Get About Trump, Russia, and US Electorate

'People have been so fucked by the prevailing order in such deep and fundamental and enduring ways that they can't imagine that anything is worse than preservation of the status quo'

By Deirdre Fulton at Common Dreams

 

"You have this huge portion of the populace in both the U.K. and the U.S. that is so angry and so helpless that they view exploding things without any idea of what the resulti...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Why Economists Are Better Than Markets at Telling You How the Economy Is Doing (Bloomberg)

If you want to know how the economy is doing, trust an expert rather than the financial markets, says a team led by Paul Donovan, UBS Ltd.'s managing director of global economics.

The stock market just did something it hasn't done in at least 45 years (Business Insider)

The stock market has been really boring. 

...



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ValueWalk

NetSuite Inc Stock Soars On Oracle Corporation Bid

By Jacob Wolinsky. Originally published at ValueWalk.

NetSuite Inc (NYSE:N) is soaring this morning as Oracle Corporation (NASDAQ:ORCL) has made a bid to buy the company for $9.3 billion. This deal has been rumored for some time but obviously few expected such a large premium or did not think the bid was certaintly coming as the stock is up about 18 percent at the time of this writing which is a lot for a tech giant. Here is what the sell side is saying.

NetSuite – analysts react

Nomura

Should the transaction take place, Oracle would pay about 9x NTM EV / revenue (based on consensus estimates for NetSuite), above the average multiple paid in our precedent SaaS Software acquisitions analysis of 6.8x . Additionally, Oracl...



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Insider Scoop

Benzinga's M&A Chatter for Wednesday July 27, 2016

Courtesy of Benzinga.

The following are the M&A deals, rumors and chatter circulating on Wall Street for Wednesday July 27, 2016:

Sequenom Being Acquired by Lab Corp for $2.40/Share in Cash

The Deal:
Laboratory Corporation of America Holdings (NYSE: LH) and Sequenom, Inc. (NASDAQ: SQNM) announced Wednesday, that they have entered into a definitive agreement aunder which LabCorp would acquire all of the outstanding shares of Sequenom in a cash tender offer for $2.40 per share, for an equity value of $302 million.

The closing of the acquisition i...



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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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Digital Currencies

Judge Rules Bitcoin Isn't Money Because It "Can't be Hidden Under A Mattress"

Courtesy of ZeroHedge. View original post here.

By Everett Numbers via TheAntiMedia.org

In a landmark decision, a Florida judge dismissed charges of money laundering against a Bitcoin seller on Monday following expert testimony showing state law did not apply to the cryptocurrency.

Michell Espinoza was charged with three felony charges related to money laundering i...



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Kimble Charting Solutions

Junk Bonds at important inflection point, should impact stocks!

Courtesy of Chris Kimble.

Junk bonds have been quality at sending Risk On and Risk Off message to the broad stock market. Below looks at Junk Bond ETF JNK over the past decade.

JNK finds itself at an important price point below and what it does in the upcoming couple of weeks could become a big influence on the Risk On/Risk Off trade.

CLICK ON CHART TO ENLARGE

...

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OpTrader

Swing trading portfolio - week of July 25th, 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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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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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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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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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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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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