by phil - November 17th, 2015 8:24 am
That's right, the G20 is fixing the entire Global Economy right… now! There, did you feel it? All better. I for one am so relieved I'm going to take all of my cash off the sidelines and buy overpriced stocks – how about you? This morning, our fabulous 20 World leaders took time off from solving ISIS and Climate Change to issue a communique declaring their intent to raise the GDP of our entire planet by 2% by 2018 "as announced in Brisbane last year."
As I noted in our Morning Alert to Members, this is the same goal they have miserably failed to accomplish for the last 7 years but hope springs eternal I suppose – I just wish I was still young and stupid enough to believe that our leaders were somehow wise enough to solve ONE of these issues – let alone all of them. Just check out item number 6 and tell me how much confidence you have in getting this accomplished:
6. We are committed to ensure that growth is inclusive, job-rich and benefits all segments of our societies. Rising inequalities in many countries may pose risks to social cohesion and the well- 2 being of our citizens and can also have negative economic impact and hinder our objective to lift growth. A comprehensive and balanced set of economic, financial, labour, education and social policies will contribute to reducing inequalities. We endorse the Declaration of our Labour and Employment Ministers and commit to implementing its priorities to make labour markets more inclusive as outlined by the G20 Policy Priorities on Labour Income Share and Inequalities. We ask our Finance, and Labour and Employment Ministers to review our growth strategies and employment plans to strengthen our action against inequality and in support of inclusive growth. Recognizing that social dialogue is essential to advance our goals, we welcome the B20 and L20 joint statement on jobs, growth and decent work.
Apparently, if the G20 is going to grow the global economy at a 4% pace, they'll have to do it without the United States, as the Congressional Budget Office forecasts just over 2% growth in the US in 2018 and forward and…
by phil - November 16th, 2015 8:31 am
Big tragedy over in Paris this weekend.
You would think the markets would be trading down with the World's largest tourist destination suffering the worst terror attack in their history right at the start of the holiday shopping season. Clearly, if it can happen in Paris – it can happen in any major city and you would think that would have investors acting cautiously. Well it did – for about 5 minutes – as the markets opened down about 1% in Europe and the US futures but 4 hours later (7am, EST) and we're back in the green – it's simply amazing what traders are willing to ignore these days.
I was eating at an outdoor cafe in Washington, DC this weekend and I'm glad I didn't see the above picture first or I wouldn't have been quite as relaxed. We all know it's not that hard to get a gun in the US and, so far, we've been lucky there have "only" been 325 mass shootings so far this year – and mostly by US citizens – so we don't worry about those, right?
Check out Florida on this map – it looks like it's going to sink under the weight of the mass shootings! Even the gangs in LA are warning their members to stay away from Florida… That's why, in the US, we have the occasional terrorist attack and we just move on – terrorists would have to step up their game considerably to kill more Americans than Americans do! In France, on the other hand, there's only 1 homicide per 1M people per year, vs 32 in the US. That's why they are still shocked when someone kills their citizens.
Keep in mind that's 32 people PER YEAR out of 1M so, over the course of your 75-year life, you have a 2,400 out of 1M chance of being murdered in the US – better than 1 in 50. Not you, of course, you are reading a stock market newsletter, which means you are probably in the top 10% and you are not likely to live in "those" neighborhoods – and pray you never do!
by phil - November 13th, 2015 8:20 am
Will the G20 "fix" this?
Now we're getting terrible GDP reports from all 19 Eurozone nations, coming in at an overall 0.3% in Q3, down from a not exciting 0.4% in Q2 and please keep in mind this is DESPITE TRILLIONS of DOLLARS in stimulus. Draghi has already said he plans to do more of the same and we can expect all of the G20 nations to pledge to do SOMETHING to prevent a Global Recession – but can they? Should they?
What we need the G20 to do is to put shovels in the ground and fund some infrastructure projects that put real money into the economy and, more importantly, begin to burn of the massive surplus of raw materials that China's slowdown has left us with. Pumping another $58.6Tn into the Top 1% (see Tuesday's post) isn't going to "fix" anything but the balance sheets of people rich enough to have balance sheets.
If you can't get Capitalists to pay their laborers more then the Government (the one that is supposed to be "of the people, by the people and FOR the people") then it is the JOB of the Government to compete with those Capitalists for cheap labor and cheap materials. The Capitalists are not making efficient use of our workforce or our materials – that is an OPPORTUNITY for the Government to get a few home improvement projects done while they can be done cheaply.
The same logic should apply to any industry that is being mismanaged. If private enterprise is unable to efficiently deliver low-cost health care to all of the citizens, then why can't our Government compete to offer a service at a lower cost? That's not socialism – that's real Capitalism.
The thing we are doing now is nothing like Capitalism, it is Corporate Welfare on a massive scale and the worst thing about it is that, ultimately, the burden of all these debts we're incurring falls back on the same people we are making no effort to help – it makes no sense – unless you are the one getting the Corporate Welfare, of course.
by phil - November 12th, 2015 8:29 am
Who says cash can't be fun?
Yesterday, in the morning post, I noted the weak volume rally was a good shorting opportunity in the Futures – specifically the Russell (/TF) at 1,190 (pictured here, now 1,170 for a $2,000 gain!) and the Nikkei (/NKD) at 19,800 (now 19,635). The Russell was good for a very quick $1,000 per contract gain and has hit $2,000 as of this morning (where we're done for now, expecting a bounce here) while the Nikkei took longer to grind out it's $1,000 win at 19,600 before bouncing back.
A lot of traders have an irrational fear of trading the Futures (and options, for that matter) and it's one of the things we work on in our Weekly Webinars (replay available here). The cost of initiating a Russell Futures Contract is $5,940 in margin (may vary by broker) and you simply bet long if you think the Russell will go higher or short if you think it will go lower and then you make (or lose) $100 for each point the Russell moves.
The very great thing about the Futures is that you can play them in off hours, like yesterday morning – when we saw the Futures market rising for bad reasons ahead of what we thought would be a weak open based on the data that was coming in. My comment at the time was:
The volume on yesterday's move up was a joke and this morning we're being pushed even higher in the Futures, back to 1,190 on the Russell (/TF) and 19.800 on the Nikkei (/NKD) along with 2,085 on the S&P (/ES), 17,800 on the Dow (/YM) and 4,660 on the Nasdaq (/NQ). I listed the Russell and Nikkei first as they are going to be our key shorts – providing the others stay below their lines.
That's the real key to playing the Futures (and it's not very different with stocks or options) – pick a strong support or resistance line where several factors line up that lead you to take a stand and then, once you make your bet – get out quickly if things don't go the way you…
by phil - November 11th, 2015 8:21 am
More bad news from Japan and China.
Industrial Production in China was once again revised lower – to 5.6% Growth from 5.7% in September while Fixed Asset Investments were only up 10.2%, slowing from 10.3% and, while these seem like good numbers, they are the slowest annual pace in over 20 years! The Chinese Government's official PMI figure came in at 49.8 in October – still contracting while the private Markit Survey measured worse, at 48.2.
China's Shanshui Cement will be the next major corporation to default on their bonds, heading into defaut on $314M next Thursday. Shao Jiamin, who heads HFT Investment Management (China's top bond fund) predicts "a substantial correction in riskier debt as the restart of initial public offerings drives money back into shares." Any collapse could damp Chinese investors’ enthusiasm for fixed-income, just as President Xi Jinping seeks to create a stable fundraising platform for small businesses and maintain access to financing for state-led infrastructure projects.
Just to the east of China, Japanese Business Confidence is down for the 3rd consecutive month to a 2.5-year low at 3, down more than 50% from 7 in September reflecting fears that a China-led slowdown in overseas demand may have pushed the economy into recession. The poor poll results will be followed by government data out on Monday, which is expected to show the economy slipped back into recession through September due to a drop in capital spending in the face of weak foreign and domestic demand.
Meanwhile, Japan’s three biggest lenders will probably report a drop in second-quarter profit after Asia’s economic slowdown weakened overseas loan growth and global financial-market volatility crimped fee businesses. Combined net income at Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. fell 24 percent from a year earlier to 597 billion yen ($4.8 billion) in the three months ended Sept. 30, according to calculations based on the average of five analyst estimates compiled by Bloomberg.
Portugal's center-right Government has toppled just two weeks after it was formed and an anti-austerity coalition has formed to challenge the EU over terms of their $85Bn bail-out.
by phil - November 10th, 2015 8:06 am
Here's another thing we can pretend doesn't matter.
Emerging-market debt has grown $28Tn since 2009, according to the Institute of International Finance, which on Monday introduced a database tracking 18 developing markets. Global debt has soared $50Tn during the period to surpass a total of $240Tn, or 320% of global gross domestic product, in early 2015. That's right, the Planet Earth is now more than 3 TIMES it's annual gross salary on debt!
Non-financial corporate sector debt in emerging markets has risen $13Tn since 2009, increasing more than five-fold over the past decade to surpass $23.7Tn in the first quarter of 2015. The advance has been most concentrated in emerging Asia, where it rose to 125% of GDP. As noted in the chart above, OVER 100% of the GDP growth since 2007 has simply been more debt: more stimulus, more bailouts, more ZIRP policies by our Central Banksters – all masking NEGATIVE real economic growth.
Take China… please. Today we got a NEGATIVE 5.9% reading in their PPI Report with CPI up just 1.3% – clearly in a deflationary state yet The State continues to claim the economy is growing at a 6.9% annual pace. That is totally and completely B*LLSH*T and shame on you for putting up with it!
Yes, shame on you if you are a fellow Financial Analyst, shame on you if you are a Financial Writer and shame on you if you are a consumer of this information and just passively let yourself be lied to – SHAME!!! Where is the outrage? Don't you deserve to know the truth? Shouldn't there be an investigation or are we so frightened of China that we don't even have the balls to demand an audit?
That's right, China is our biggest trading partner – it is in the interest of the United States in general and investors in particular to have a fair and accurate assessment of their real economy. Why does no one demand this? Conveniently, we have a GOP debate tonight – let's ask the candidates what they plan to do about it!
by phil - November 9th, 2015 8:37 am
First of all – let's talk jobs.
The markets managed to end the week on a high note as a huge beat on the headline Non-Farm Payroll number stunned us all with 271,000 jobs added in October. In our morning post on Friday, I noted we were skeptical and would be shorting into the weekend in our Live Member Chat Room and we did – fortunately.
As it turns out, upon closer examination, pretty much all of those additional jobs were part-time jobs and, in fact, people in the prime working age group (25-54) LOST 35,000 jobs in October. What seems to have happened is that full time jobs were replaced with part time jobs for retirees. Multiple job holders increased by 109,000 in October, an indication that people who lost full time jobs had to take two or more part time jobs in order to make ends meet.
Also, 94.5M people dropped out of the work force, giving us the lowest labor-force participation rate since the recession of the 1970s. If you want to know the story in just one chart – here's what's been happening in our economy since 2007 as the servant class increases dramatically while middle-class jobs disappear permanently:
Again, if you are in the Top 1%, congratulations – this is what "winning" looks like. After all, we NEED more servants. We need them more than we need our 20th car because silverware doesn't polish itself and each kid should have their own Nanny and why should we pay one person a lot of money to do a job when we can pay two people a little money instead? When we pay two people part-time, neither gets benefits and neither one feels like they have any leverage over us – saving us lots of money down the road!
When I go to Chilie's, there's one waitress running around serving 5 or 6 tables and I have to wait for food which costs about $25 per person by the time I get my check and pay the tip. When I go to Nobu, my waiter has perhaps 3 other tables but also support staff and I can barely put my…
by phil - November 8th, 2015 9:58 am
We are right on target.
At the end of our 3rd month, our 5% Portfolio (now called the Options Opportunity Portfolio) is right on target with an overall portfolio balance of $115,538, which is up 15.5% from our August 8th starting date. Even more impressive is the $26,521 (26.5%) we've made on the positions we've closed so far and we've re-invested some of those profits into new, aggressive long-term positions that we feel will bring us further net gains down the road.
The 5% (Monthly) Portfolio is a project we have been running with Seeking Alpha for readers who were interested in learning various option trading techniques that could generate a monthly income in a virtual tracking portfolio. The name was changed to the Options Opportunity Portfolio, which is also descriptive but our goal remains using a $100,000 Portfolio with ordinary margin to generate $5,000 in monthly income. As you can see, our current open positions are using just $13,000 in margin and we have $84,743 in cash, reflecting our very cautious stance in the current market environment.
Another huge educational point we are trying to make here is that you don't have to risk a lot to get great returns. Here is a rundown of all the positions we've closed to date – about 17 different stocks and ETFs we've identified over the same amount of weeks – not a very active portfolio but not one for passive traders either (and that reminds me that our Butterfly Portfolio Seminar will be next week in Washington DC!).
It should be noted that our biggest winning position that we've closed, SQQQ (+$9,351), is also our biggest open loss that we haven't closed (-$8,050) and that's the focus of today's lesson. SQQQ is an ultra-short Nasdaq ETF that moves 3 times the inverse to QQQ. We use it as a hedge, as insurance, to protect our long-term positions and, like any insurance policy – we kind of hope it never pays off!
by phil - November 6th, 2015 8:39 am
Only 37% of NYSE stocks are over their 200-day moving average.
Usually, that's the kind of statistic you see in a bear market but, miraculously, our masterfully manipulated markets don't need broad participation to make record highs because the Banksters have very good algorithms that tell them exactly which key stocks to buy to give them maximum leverage while putting as little money as possible into any given index.
You would thing the money men would hate anything with the phrase "Al Gor" in it but algorithms are the unsung heroes of the rally, used to manipulate stocks, options, ETFs, commodities, currencies – you name it and they can make it dance! They also cause very harsh market swings that we human traders are able to take advantage of and our 5% Rule™ at Philstockworld is designed to detect and predict algorithmic trading patterns so we can bet against them – or go along for the ride – depending on what makes the most sense at any given time.
It's very profitable, too. Just yesterday, our long /NG (Natural Gas Futures) trade made over $1,100 per contract as we ran up from $2.26 in the morning to $2.37 in the afternoon.
This morning, we made the call at $2.26 again and we just got a $300 run back to $2.29 and we can do this over and over and over again because the machines running the program never get tired or running the same pattern. We can even flip around and short under $2.40 (until it finally breaks) and take those rides down back to $2.26 (until that breaks) and, when our range fails us – we simply wait for the next predictable pattern to form and do it again.
That's pretty much all there is to Futures trading these days. While we do pay attention to the overriding Fundamentals that are driving the market (in the case of /NG, we lean bullish because it's getting cold in the winter – duh!), mostly we look for good, predictable patterns in the algos that show up on the charts which we can then take advantage of. Much as we complain about how the markets are blatantly manipulated –…
by phil - November 5th, 2015 8:29 am
One million people are marching in 500 cities tonight.
If that is a surprise to you, you must be being held hostage but the American Mainstream Media who, for the 3rd consecutive year, seem very determined to pretend what is now a major, Global Anti-Capitalism protest gets no airtime at all. You would think it was a Bernie Sanders rally the way the MSM is ignoring this event...
That's right, the US Corporate Media has ZERO (0) mentions of this massive, world-wide event on the first page of a Google search for "Million Mask March 2015" (as of 8:12 am) and, since it begins at 1pm, EST, we've safely cleared the morning news cycle so there's little danger of anyone in the US getting any ideas about protesting Capitalism (those that haven't already had their brains beaten in during Occupy Wall Street, that is). Even my own Huffington Post only mentions it in their UK edition.
What you will hear instead today, is that Chinese markets are back in "bull market territory" because they have rallied 20% off their August lows. I told our Members we should make this a drinking game today and have a shot every time we hear someone on TV say China Bull Market to describe what is really nothing more than a dead cat bounce:
Let's have a reality check, shall we? The Shanghai was up to 5,200 and fell to 2,800, which is 46% and now, that 46% has gained 20%, which is 9% out of the 46% it lost. Saying this is a 20% rally is nothing more than a math trick, designed to lure the next round of suckers in to buy out the shares that the Media Elite and their Top 1% sponsors are still stuck with. This is not sour grapes because we are short the China ETF (FXI), this is a no BS analysis of what is happening.
It's a scam! The people on TV are lying to you. You KNOW they are covering up anti-Capitalism protests – that is very obvious – so why would you not believe they are lying to you about other things like China,…