Phil's Newsletter

Thank G20 it’s Friday – Will World Leaders Keep Markets from Collapsing?

No, of course they won't.

What can the World leaders possibly do to sustain these ridiculously over-priced markets?  Things have simply gotten too expensive to buy – as in, there's simply not enough money in the World to buy the S&P 500 for 100% more than it was priced less than 5 years ago.  That's 20% average growth in an economy where wages are rising at 4% and GDP is rising at 1.8% which simply suggests that stocks have gotten 100% more expensive for no particular reason.

We'll get some more payroll information later this morning but, historically, wages have grown 6.26% annually since 1960 and that INCLUDES the crappy growth we've had this past decade (wages were -5% in 2009, in fact) and the market has grown at about 8.5%.  THAT we can accept.  It makes sense, more money – bigger markets – sure, we get that.  

Image result for wages top 1% 2016What we have now, however, is a stock market that is outpacting wage growth, productivity growth, GDP growth – pretty much anything you want to measure growth EXCEPT the growth in income of the Top 1%, who are, of course, the primary owners of stocks.  Their salaries have jumped about 25% in the same 5-year period but still, even that staggering amount of money isn't enough to justify the 100% rise in market prices.

When we say market bubbles, it's not really a bubble.  People buy stocks every day and people sell stocks every day and prices go up when the buyers are more enthusiastic than the sellers and vice versa but the problem with that is, when the stocks get very expensive AND the sellers get enthusiastic – it becomes much harder to find buyers and you can get violent adjustments in price in order to satisfy the demand for CASH!!! (have I mentioned how much I love CASH!!! lately?).

When you have CASH!!! while other people are panicking, YOU are in charge.  When a marlet is in a frenzy, as it is at the moment, then no one wants cash and everyone wants stocks, so the sellers of stocks are in charge and stocks get bid up to higher prices.  Just because the small
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Thinly-Traded Thursday – Weak Bounces Mean Nothing

You're welcome!  

We had plenty of time to execute our trade idea from yesterday morning's PSW Report, where I said:

"Our play this morning in our Live Member Chat Room was to go LONG on the Nasdaq Futures (/NQ) at 5,775, expecting at least a weak bounce (and a $500 profit) to 5,600 and maybe a strong ($1,000) bounce to 5,625 because we're still in a low-volume environment, so we're not expecting any major selling just yet."

As it turned out, we hit the jackpot with a $1,500 per contract gain and now re-testing the weak bounce line at 5,600 because, as we expected, the volume was nonsense (48M on SPY – less than half an average day) and gains quickly reversed on all the indexes after hours.  European indexs are testing Friday's lows this morning as Trump is speaking in Poland and scaring everyone ahead of the G20 meeting.  

Image result for trump g20 cartoonIt's not because of anything specifically he's saying – just the general loss of confidence people get every time they are reminded this guy is the President of the United States.  

I'm in Europe at the moment and generally they see Trump as a joke but they don't think he's dangerous – just ridiculous.  If anything, he's helping Europe to feel better about themselves and take charge of World affairs, no longer waiting for America to take the lead.

Meanwhile, while Donald Trump is breaking trade agreements, other countries are making them.  This morning, the EU and Japan signed a major free trade alliance, shifting even more of the balance of Global Power away from the Unitied States as relationships we worked on for decades are being tweeted away on a daily basis.  Among other things, the pact would eliminate duties on cars, agriculture and food imports, as well as other goods and products.  This will put US producers at a tremendous disadvantage if Trump can't check his ego and come to the table.

Image result for trump g20 cartoon

 U.S. ambassador Nikki Haley told a U.N. Security Council meeting that…
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Which Way Wednesday – G20 Time!

What a crazy vacation day. 

At Monday's close the Nasdaq went wild as a computer "glitch" sent the price of many stocks to $123.47 per share which, in the case of Amazon (AMZN) was a 87% drop, which briefly made us a LOT of money as AMZN is one of our hedges in our Short-Term Portfolio, along with our general hedge on the Nasdaq, using the Ultra-Short ETF (SQQQ).  

We were also long on Microsoft (MSFT), which went UP to $123.47, valuing the company suddenly at about $1Tn on the 100% instant gain.  The Nasdaq says the glitch was the result of "improper use of test data" but, of course, if they were hacked, they certainly wouldn't tell you, would they?

In other testing news, North Korea fired a nuclear-capable missile that, in theory, could reach Alaska and that will be used to justify another $50Bn in military spending in order to protect a state we bought for $7.2M and gave us Sarah Palin – I say let Kim Jong Un have it!  North Korea will certainly be a big topic of discussion at this week's G20 meeting but it's really the Trump and Putin show we have to look forward to.

In other bombshells, the Chinese Government is reigning in some of that free money and is asking for $11.5Bn back from Corporations by the end of next year, which is just a drop in the $162Bn bucket that Chinese companies have been usuing for M&A transactions around the World and it's an indication that the PBOC feels they have begun to overpay for these transactions and this is a "nice" way to review the quality of these loans.

ChinaMA_inline  

“We anticipate that yield levels for bonds from companies like HNA, Dalian Wanda and Fosun could rise in the near term,” said Anne Zhang, executive director for fixed income, currencies and commodities at JPMorgan Private Bank in Asia. “For now, we are advising investors to take a cautious view on those companies’ bonds and we are waiting for the


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Meaningless Monday Market Movement

OECD graphWhy are you here?

I'm not even here, I'm in Paris – it's a holdiay, you know…  Americans work way too hard, we don't take enough vacations.  America is the ONLY country in the OECD that doesn't have any mandated paid vacations and everyone else, other than Japan, takes AT LEAST 20 days off during the year with France at 31.  Not only that but the average Parisiene works 40 hours on weeks they do show up while American workers tend to work 47 hours a week.

The really strange thing about this is that America is also the only country where time off is trending DOWN, not up.  What's all this talk about automation if we still have to show up for work every day?  After making steady progress to about 20.3 days off through 1998, the twin economic upeheavals of 2001 and 2008 dropped the average US vacation time to 16.2 days, that's including our 5 public holidays!  

americanslostworkweek

The short story is, Americans are generally terrified of losing their jobs so they don't even take the days off they are entitled to. Yes, our Per Capita GDP of $57,000 blows France's $42,000 out of the water but I don't think you'd find many people here who would trade their lifestyles for an extra $13,000 (and all that extra money we make goes towards paying for Health Care and College anyway).  

Anyway, American's REALLY don't want to get into the GDP measuring game as we fall very far short of other vacation champs like Norway and Ireland ($69,000), Singapore ($87,000), Luxemboug ($104,000) and Qatar ($127,000) and no wonder everyone is jealous of them, right?    Luxemborg requires workers to be paid 70% more to work on Sundays and strictly limits the work-week to 40 hours with a minimum of 25 paid vacation days AND 10 public holidays.  

Résultat de recherche d'images pour "us productivity wages"Less vacation time is simply another way the Capitalists steal from the workers.  As you can see from the chart on the left, more productivity meant more wages until the 70s and, as noted above, that was also the…
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Final Friday of the First Half of 2017

Poof!

Just like that, half a year has gone by.  Who'd have thought, just 6 months ago, that the World would still be here with Donald Trump as President?  Given how bad we thought things were going to be, they are actually not so bad.  Yes, of course the President's Team is doing everything they can to bring about the Apocalypse but, so far, they've been generally ineffective at, well, everything: "Republicans frustrated as their to-do list grows."

So here we are, closing out the 2nd Quarter with the market near record-highs, despite yesterday's pullback, though we find it hard to trust anything that happens pre-market after yesterday's obviously fake prop-job.  It is the last day of the quarter and windows do need to be dressed but, as I predicted in Wednesday's Live Trading Webinar, the sellers took full advantage of the pumpers yesterday and sold into everything they had – giving us the biggest volume day of the month as declining shares and volume overwhelmed advancers 2:1.

The VIX briefly spiked up 50% as the market plunged and that sent SVXY (we're short on them) plunging back down but a long way to go to our $105 target in September so we're expecting to see a general up-trend in volatility over the summer – but let's not get ahead of ourselves and see how the quarter ends first. 

Though the Nasdaq is poised to finishe the month down about 1%, that's nothing compared to the amazing run it's had all year and, as evidenced by the chart below, literally nothing else seems to matter as EVERY OTHER INDICATOR has been falling while the Nasdaq has climbed 15% in the past 6 months.  We have been using the Nasdaq as one of our primary hedges (SQQQ) and they paid off in spades yesterday but that's nothing to get excited about as these dips don't tend to last long (so far).

More of a concern than macro indicators, however, is how much money it's been costing the G20 to prop up the markets for the past decade as Golbal Debt just hit $217 TRILLION
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Thrilling Thursday – Banks Pass Stress Tests (after being given $3.5Tn)

The banks all passed!  

After being handed $3.5Tn in various forms of relief by the Federal Reserve (and we already forgot another Trillion from TARP), our friendly Banksters were all given the go-ahead from the Fed (a cartel of Banksters that is NOT a Government Agency) to beign transferring that wealth (through dividends and stock buybacks) to the Top 1% while the losses from those bailed-out assets will be taken on by the Bottom 99% as additional Federal Debt.  

Image result for top 10% 75% of wealthSeems like business as usual in America to me where the Top 10% of the population (30M) hold 75% of the nation's wealth AND make 50% of the income – yet they need tax breaks to get by….  

As you can see from this distribution chart, no, this is not normal – the US has the worst wealth distribution in the developed world, you have to go to Oilgarchys like Russia or Dictatorships to find another country where the Top 10% takes more of the pie away from the Bottom 90% than they do in the US.  That's why our own Oligarchs rigged an election to install a more Russia-like system (where the top 10% have 85% of the wealth) – at some point they need to worry about the rubes realizing how much they are being screwed and rising up against them so the time to install an authoritarian regime is now – you have to nip dissent in the bud before it spreads.  

That's why the "Fake (non-Fox) News Media" is under attack, ideas cannot be spread to the masses unless they are the State's ideas – all other opinions must be squashed or invalidated.  Just the fact that I'm saying this here will cause this post to be censored at Seeking Alpha and several other places that usually syndicate our Morning Report.  

And it's not really about the Top 10%, they are generally poor compared to the Top 1% but they do go along (like any good party Member) because what's good for the Top 1% is usually good for the Top 10% as…
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Wednesday Window Dressers vs the Fed as Assets Continue to Bubble

Related imageThere's a battle going on at the top of the market.  

Four Fed speakers this week pulled out their pins and took a poke at the market bubble:  

  • Williams said "There seems to be a priced-to-perfection attitude out there.” and that the stock market rally "still seems to be running very much on fumes."  Speaking to Australian TV, Williams added that "We are seeing some reach for yield, and some, maybe, excess risk-taking in the financial system with very low rates. As we move interest rates back to more-normal, I think that that will, people will pull back on that."
  • Fischer said  "The increase in prices of risky assets in most asset markets over the past six months points to a notable uptick in risk appetites…. Measures of earnings strength, such as the return on assets, continue to approach pre-crisis levels at most banks, although with interest rates being so low, the return on assets might be expected to have declined relative to their pre-crisis levels--and that fact is also a cause for concern."  Fischer then also said that the corporate sector is "notably leveraged", that it would be foolish to think that all risks have been eliminated, and called for "close monitoring" of rising risk appetites.
  • Dudley said rates will keep rising as long as financial conditions remain loose: "When financial conditions tighten sharply, this may mean that monetary policy may need to be tightened by less or even loosened.  On the other hand, when financial conditions ease—as has been the case recently—this can provide additional impetus for the decision to continue to remove monetary policy accommodation."
  • And Chairwoman Janet Yellen said yesterday that some asset prices had become “somewhat rich" although like Fischer, she hedged that prices are fine… if one assumes record low rates in perpetuity… “Asset valuations are somewhat rich if you use some traditional metrics like price earnings ratios, but I wouldn’t try to comment on appropriate valuations, and those ratios ought to depend on long-term interest rates,” she said.  Yellen then said (already being taken out of context by bulls): "Will I say there will never, ever be another financial crisis? No, probably that would be going too far. But I do think we’re much safer and I hope that it will not be


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Toppy Tuesday – S&P 2,440 Keeps Failing into Earnings

Here we are again, again.

We've been watching that 2,440 line on the S&P all month long for signs of an upside breakout and, while the Nasdaq is still making record highs, the much more reliable S&P 500 seems reluctant to go higher.  Earnings season is just around the corner but a week delayed because of the Holiday, with Big Banks (C, JPM, WFC) reporting on the 14th and then comes the flood.

It's hard to imagine how the S&P can go higher without solid evidence it deserves to have a p/e greater than 25 (now 24.6) to cross that 2,500 mark so all eyes will be on the 500 and how much they are actually dropping to the bottom line this quarter.

Unfortuately, that may be a bit of a snag as the Atlanta Fed has once again lowered their GDPNow Forecast to 2.9%, down 30% from the original 4.2% estimate that kicked off the 2nd quarter.  Yesterday's Durable Goods Report for May was a horrific -1.1% and April's (the first month of Q2) report was revised down from terrible (-0.7%) to horrific (-0.9%) as well.  

GDPNowThat caused the forecasts for contributions of real Nonresidential Equipment and Inventory Investment to second-quarter real GDP growth to decline from 0.15% and 0.76% to 0.12% and 0.69%, respectively, which knocked the overall forecast futher down the line.

Keep in mind Trump's budget is based on 4% GDP Growth and failing to achieve that adds Trillions of Dollars to our deficit yet they will ignore this FACT and cut the taxes anyway and your children and your grandchildren will suffer for it for the rest of their lives – enjoy.

Of course, those lives are much more likely to be brief – especially if they are in the bottom 90% as the newest version of the TrumpDon'tCare lack of Health Bill cuts 22M people off from insurance and will skyrocket costs for people who remain covered – including seniors as the famous "donut hole" in coverage is back with a vengance under the new plan.  4,000 people PER MONTH will DIE due to lack of coverage - that's what your Senators are voting for – a 9/11 per month for America's…
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Monday Market Movement – Hedging for the Holidays

Image result for be carefulBe careful out there!  

That's how I often close my posts but I want to double-plus emphasize it this morning as we have the 4th of July next Tuesday and there will be very few Americans working on Monday (US markets close at 1pm) - as it's the perfect chance to take a long weekend.  In fact, next week is likely to be the slowest trading week of the year but that makes it very dangerous because any kind of panic into low volumes can cause a sharp sell-off so BE CAREFUL OUT THERE!  

We already took our winning commodity trades off the table (you're welcome) in an Alert I sent to our Members at 5:36 becasue we had nice pre-market moves up in oil, gasoline, natural gas – even coffee – all of our weekend longs, in fact.  These are the same trades we discussed in Wednesday's Live Trading Webinar and, of course, in Thursday morning's PSW Report, where I said:

Gasoline (/RB) is a bit more encouraging, already racing back to $1.435 (up $630 per contract) after hitting $1.395 on yesterday's lows.  $1.42 is our long spot on /RB with tight stops below so it's game on again this morning, as it is with Oil (/CL) at $42.50 – if you are brave.  We still like Coffee (/KC) at $122 but it doesn't like us and Natural Gas (/NGV7) went from $2.95 to $3 (up $500 per contract) yesterday and now it's back at $2.95 so why not take it again?

Why not indeed as we cashed in 2 longs for another $1,760 profit on the rejection at $3.05 and that's certainly good enough for 2 day's work, right?  We teach people how to trade Futures contracts every Wednesday in our Live Trading Webinars as well as every day inside Philstockworld – you can join us HERE.  

Once you pick up a good trading channel, you can make these same trades over and over again for quick profits like this and that's the best way to get started trading Futures – quick in and out trades with tight stops to limit your losses.  I also…
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Friday Already? Russell Rebalancing Should Make Things Interesting

$8.5 Trillion.  

That's the value of the Russell "small cap" Index (IWM), which is up $3.7Tn (77%) from $4.8Tn in 4 years.  While that's impressive, of course, it's lagging the Nasdaq, which is up 130% in the same time-frame, so the Russell (and the other indexes) have a long way to go if they are going to catch the Nadaq (QQQ) – or maybe the Nasdaq is ridiculously overvalued?

The Russell rebalancing or "Reconstitution", as they like to call it, takes place today and thank goodness they have made their own infographic to explain it because I couldn't figure out how to do it in less than 10 pages – so click here if you want the details.  There will not likely be a huge effect, they are simply rearranging the deck chairs – it's not like when the Dow or S&P add or drop companies but strange things do happen as companies shift from the Russell 3000 to the 2000 or the 1000 because it takes them out of one ETF and puts them in another in some cases.  

Last year you can see that red spike down in June though – that was the last rebalancing and the index dropped from 1,175 to 1,075 (-8.5%) in 2 days – but then recovered the next week.  We went long on the Russell Futures (/TF) yesterday in our Morning Report and caught a $500 per contract gain up to 1,410 but today we are watching and waiting to see what happens.  

Getting back to the Nasdaq, although it seems outrageously high, the tech companies have come on strong with earnings – or at least Apple (AAPL) has, since that one company added $11Bn in profits or 50% of the Nasdaq's gains but that's enough to keep the p/e ratio of the entire index at a not-too-crazy 25.97 vs 24.09 for the S&P while the Russell 2,000 has a p/e ratio of 82.36 – THAT is why it's lagging so far behind!  

Now, to be fair, the Russell 2,000 tends to include some start-ups that are still in the money-losing phase of their existence and they have to get much bigger before they graduate to the…
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ValueWalk

"Our Roads Are Crumbling" And Other Infrastructure Myths

By The Foundation for Economic Education. Originally published at ValueWalk.

Every year the American Society of Civil Engineers (ASCE) comes out with a report card on the condition of America’s infrastructure. We got a D+ this year. According to them, “Deteriorating infrastructure is impeding our ability to compete in the thriving global economy, and improvements are necessary to ensure our country is built for the future.”

]]> Get The Timeless Reading eBook in PDF

Get the entire 10-part series on Timeless Reading in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

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Zero Hedge

EU "Sounds Alarm" Over New US Sanctions On Russia; Germany Threatens Retaliation

Courtesy of ZeroHedge. View original post here.

Late on Friday, Congressional negotiators reached a deal to advance a bill that would punish Russia for its interference in the 2016 election and restrict the president’s power to remove sanctions on Moscow, according to the WSJ. The measure, if signed into law, will also give Congress veto powers to block any easing of Russian sanctions by the president. And while it remained unclear if President Donald Trump would sign the bill...



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Phil's Favorites

Macbeth, King Lear and Trump

Courtesy of The Automatic Earth.


Ford Madox Brown King Lear and Cordelia c1851

Mea culpa. Yesterday I wrote Scaramouche, Scaramouche, will you do the Fandango?, and not long after publishing it, I figured I missed the target I was going for. Not 100%, and it’s not all bad, as people’s reactions have confirmed, but…

The thing is, Trump’s nomination of Anthony Scaramucci as White House Communications Director was not the main point of my piece. Tempting, because everybody knows the Queen song, but not the main one, and it certainly shouldn’t have been the title of the piece.

So, sorry for that, and ...



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Insider Scoop

Different Market, Same Story: Subprime Auto Loan Defaults On The Rise

Courtesy of Benzinga.

Related Benzinga's Top Upgrades, Downgrades For July 18, 2017 Watch These 7 Huge Put Purchases In Thursday Trade Rel...

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Digital Currencies

Bitcoin (BTC/USD) Nears All-Time High on Spike Above Daily Chart Downchannel Resistance

Courtesy of ZeroHedge. View original post here.

Bitcoin (BTC/USD) crushed shorts yesterday, smashing above the daily chart's downchannel resistance and soaring towards the all-time high around 3000. With yesterday's massive rally, the negative weekly MACD crossover has been proved a false signal.  Odds are quite good that a sustainable longer term BTC/USD bottom was found last week, especially with ETH/USD also strongly rebounding this past week.  Some consolidation can be expected today with daily RSI and Stochastics tiring, although with daily MACD just having positive...



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Chart School

Small Caps Breakout

Courtesy of Declan.

It has taken a few days for Small Caps to make their move but today was the day the Russell 2000 joined other indices in mounting a breakout. It was a clean breakout supported by positive technical strength - putting to bed the June 'bull trap'. Watch for the second round of stop-whips with an intraday move (and recovery) below 1,430.


Other indices added to their breakouts. The S&P gapped and pushed on, backed by higher volume accumulation. Watch for a tag of upper channel resistance.

...

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Members' Corner

Why we need to act on climate change now

 

Why we need to act on climate change now

Interview with Jan Dash PhD, by Ilene Carrie, Editor at Phil’s Stock World

Jan Dash PhD is a physicist, an expert at quantitative finance and risk management, and a consultant at Bloomberg LP. In his thought-provoking book, Quantitative Finance and Risk Management, A Physicist's Approach, Jan devotes a chapter to climate change and its long-term systemic risk. In this article, Ilene interviews Jan regarding his thoughts on climate change and the way it can affect our futu...



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OpTrader

swing trading portfolio - week of July 17th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Biotech

Immunotherapy: Training the body to fight cancer

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

 

Immunotherapy: Training the body to fight cancer

Courtesy of Balveen KaurThe Ohio State University and Pravin KaumayaThe Ohio State University

An oral squamous cancer cell (white) being attacked by two T cells (red), part of a natural immune response. ...



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Mapping The Market

The App Economy Will Be Worth $6 Trillion in Five Years

Courtesy of Jean-Luc

This would be excellent news for AAPL and GOOG to a lesser extent although not inconsequential:

The App Economy Will Be Worth $6 Trillion in Five Years 

In five years, the app economy will be worth $6.3 trillion, up from $1.3 trillion last year, according to a report released today by app measurement company App Annie. What explains the growth? More people are spending more time and -- crucially -- more money in apps. While on average people aren't downloading many more apps, App Annie expects global app usership to nearly double to 6.3 billion people in the next five years while the time spent in apps will more than double. And, it expects the...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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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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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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