Author Archive for Zero Hedge

American Enterprise in a Nutshell

Courtesy of ZeroHedge. View original post here.

Submitted by Tim Knight from Slope of Hope.





China and Greece Signal a New Round of Deflation

Courtesy of ZeroHedge. View original post here.

Submitted by Phoenix Capital Research.

Stocks rallied today because the Fed meets today and tomorrow and traders are conditioned to play for a rally into Fed meetings. Also, stocks had fallen for four days straight prior to this and so we were oversold in the near-term.

The larger picture concerns the bursting of China’s stock bubble as well as the ongoing 3rd Greek bailout drama.

Regarding China, anyone who actually bothered performing real analysis could have seen that the economic data coming out of that country was totally bogus. Indeed, back in 2007, current First Vice Premiere of China, Li Keqiang, admitted to the US ambassador to China that ALL Chinese data, outside of electricity consumption, railroad cargo, and bank lending is for “reference only.”

With that in mind, China’s rail volumes had been collapsing at a pace not seen since the Asia Financial Crisis!

Despite this, 99% of analysts believed China’s GDP was growing at 7%+. Those people piled into Chinese stocks and commodities… and they’ve since been eviscerated as the Chinese stock bubble burst and commodity prices plunged to 13-year lows.

China has been the largest driver of global economic growth since 2009. With that country flirting with outright deflation, it's only a matter of time before global GDP tanks.

As for Greece… the negotiations regarding a third bailout have officially begun. However, things have grown more complicated as former Greek Finance Minister Yanis Varoufakis revealed that Greece had a “Plan B” in place that would allow it to switch from the Euro to the Drachma “at the flip of a switch.”

Germany was already fed up with Greece’s debt problems before this. Now that it’s clear Greece is ready to pull the nuclear option and leave the Euro, Germany’s economic council has backed a plan to kick out “uncooperative” Eurozone members.

When both sides in a negotiation begin to believe that not agreeing is the best solution, it’s only a matter of time before things break down in a serious fashion. This is why for many investment banks, a Grexit remains the “base case” scenario for this situation.

At the end of the day, both China and Greece are signaling that a new round of deflation has begun in the markets. Stocks are bouncing today, but a tectonic shift has begun.

It is now
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Why Your Portfolio Does Not Perform Like The Indices (In 1 Simple Chart)

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The average S&P 500 stock is no longer keeping pace with the market’s movesas breadth becomes focused on a shrinking pool of FOMO stocks.

Just add this to the list of charts that are flashing bright red “it’s over” signals…

Chart: FBN Securities





Greece’s Biggest Mistake Explained (In 1 Cartoon)

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Seriously…

Source: Townhall.com





Does “Creative Destruction” Include The State?

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

When do we get to exercise democracy and fire every factotum, apparatchik, toady and lackey in the state who has abused his/her authority?

Everyone lauds "creative destruction" when it shreds monopolies and disrupts private enterprise "business as usual." If thousands lose their middle-class livelihoods-- hey, that's the price of progress.

Improvements in productivity and efficiency can't be stopped, and those employed making buggy whips and collecting horse manure from fetid streets will have to move on to other employment.

This raises an obvious question few dare ask: does this inevitable process of creative destruction include the state? If not, why not? Aren't the state and the central bank the ultimate monopolies begging to be disrupted for the benefit of all? If government is inefficient and unproductive, shouldn't it be "creatively destroyed" in the same fashion as private enterprise?

The obvious answer is yes. Why should a monopoly (government) remain untouched by new knowledge and competition as it skims the cream from society to fund its own monopolies and grants one monopoly/cartel privilege after another to its private-sector cronies?

Under the tender care of the state, we now have uncompetitive, inefficient parastic cartels dominating higher education, national defense, healthcare insurance, pharmaceuticals and hospitals-- to name but a few of the major industries that are now state-enforced cartels thanks to the heavy hand of the state (i.e. regulatory capture).

Under the tender mercies of the state, prosecutors have a 90% conviction rate thanks to rigged forensic evidence, threats of life imprisonment (better to plea-bargain than risk years in America's gulag) and other strong-arm tactics that presume guilt, not innocence. We have the best judicial system that money can buy, meaning you're jail-bait if you can't put your hands on a couple hundred thousand for legal defense and the all-important media campaign.

No wonder "we're number one" in false convictions, innocent people rotting away in the drug gulag and overcrowded prisons. The citizenry are fish in a barrel for overzealous prosecutors and "get tough on drugs" politicos.

And for goodness sake, don't get caught with cash--you must be a drug lord! Only drug lords have more than $200 cash on them at any one time. Once again, the state monopoly on force reckons you're guilty until proven innocent--and in cases where…
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Austrian Bad Bank “Black Swan” Bail-In Is Unconstitutional, Austria Declares

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The subject of bail-ins and bank resolutions is back in the news this month as every eurocrat in Brussels scrambles to determine the best way to recapitalize Greece’s ailing banking sector, which, you’re reminded, is sinking further into insolvency with each passing day thanks to the unyielding upward pressure on NPLs that’s part and parcel the country’s outright economic collapse. 

And while you could be forgiven for focusing squarely on the trainwreck that’s occurring in Athens, it would be a mistake to ignore the fact that just a few months back, a black swan landed in Austria when a €7.6 billion capital hole was “discovered” in Heta Asset Resolution, the vehicle set up to resolve the now defunct lender Hypo Alpe-Adria-Bank. 

In short, the bad bank went bad, and when it became clear that no further state support was forthcoming, Heta Asset Resolution was itself put into resolution and a moratorium on bond payments was declared.

The debacle raised a number of troubling issues not the least of which involves the beautifully picturesque southern Austrian province of Carinthia, which had guaranteed some €10 billion worth of Heta debt despite the rather inconvenient fact that annual provincial revenues only amount to around €2.3 billion.

So here was a bad bank gone bad with billions in outstanding debt that carried public sector guarantees or, as we described it previously, “we now have a waterfall bailout chain whereby the state guaranteeing the debt of the insolvent entity that guaranteed yet another insolvent entity, will itself need to be bailed out by the sovereign.”

We went on to note (in what now looks remarkably prescient with regard to Greece) that “while the world waits for Greece to announce capital controls, or a bail-in, it’s none other than one of the Europe’s most pristine credits (one which until recently was rated AAA/Aaa) that informed creditors a bail-in is imminent: ‘The finance ministry noted that creditors can be forced to contribute to the costs of winding down Heta – or bailed in – under new European legislation that Austria adopted this year so that taxpayers do not have to shoulder the entire burden.’”

Or maybe not, because now, it appears as though the law which would have allowed for the imposition of some €800 million in
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Stuck In Market Purgatory: How China’s Citizens Lash Out At The Broken Market, In Their Own Words

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

What a difference a month makes: back in June, Chinese farmers could barely wait long enough to open one (or more) brokerage accounts and leave the pig herd for good, filled with dreams of getting filthy rich and early retirement happy endings; farmers who said on the record that “it’s a lot easier to make money from stocks than farmwork.

Alas, like with every rigged market (which in the New Normal is every market), dreams always turn into nightmares for the participants, and as we documented earlier, the same farmers who were giddy with delight a month ago realized that there is no such thing as a guaranteed “get rich quick” scheme, and the full extent of their naive stupidity:

“I have lost everything. I don’t know what to do… I trusted the government too much…” he exclaims, adding “I won’t touch stocks again, I have ruined everyone in my family.

Even sadder, like the Greeks, these poor (and now even poorer) representative of China’s lower/middle class only have themselves to blame. Call it Natural Selection with a margin call…

However, not everyone was stupid enough to gamble (with 5x leverage), and get wiped out. Some are stuck in stock market purgatory, or as Reuters puts it “trapped in the market” and now they are hoping, praying and “plotting their escape with government money.”

Some, like Mrs Zhu who is the “type of investor the Chinese government should worry about as it tries to engineer a turnaround in the country’s stock markets, whose massive swings have heightened fears for the country’s financial health.” Mrs. Zhu is one of millions of retail investors who bought at what they thought was a low price with hope of selling to a greater fool higher, however the greater fools ran out and sho is now “trapped by the market crash in June who prefer to hold losing positions rather than take a loss” – in short, Zhu is just waiting for indexes to rise so she can sell.

She could be waiting for a long time. In the meantime, this is how millions of hopeful underwater investors pray their purgatory ends:

“I will sell all my shares tomorrow if there is a chance,” said the government clerk, who almost hit the sell button…
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Nervous Nasdaq – Too Many Highs & Lows

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Via Dana Lyons' Tumblr,

A couple weeks ago, we posted a piece titled “The Junkie Market”. The focus of the post was on the number of New Highs and New Lows being registered on the New York Stock Exchange, specifically, the elevated level of each series. The point was that, historically, the occasions of large numbers of NYSE New Highs AND New Lows at the same time did not bode well for the stock market. This condition is the main tenet of the Hindenburg Omen and, while often ridiculed, there does appear to be validity to its warning. Today, we look at the same criteria applied to the Nasdaq. And we find similar potential reason for caution.

Specifically, due to the occurrence on July 20, we looked at all instances where the Nasdaq Composite closed at a 52-week high with at least 100 stocks hitting New Highs AND 100 hitting New Lows. Since 1986, July 20 marked the 29th day meeting such criteria. (We understand that 100 is a static number and seemingly not as relevant as New Highs and Lows as a % of total issues. However, the number of issues on the Nasdaq is currently at the low end for the entire period covering our NH/NL database (since 1986). Thus, if anything, it makes current signals more relevant, as shown below).

These were the months marking the occurrences:

  • October-December 1996
  • June-July 1997
  • April 1999
  • December 1999
  • February-March 2000
  • July 2007
  • October 2007
  • July 2015

As you can see, this is another example of the growing emergence of data points that echo the previous 2 cyclical tops. The 1996 occurrences essentially saw the Nasdaq move sideways for a couple of months before resuming its uptrend. The 1997 instances were followed by even less struggle as the index plowed higher. The 9 occurrences during those years took place as the Nasdaq was setting a record in the number of issues trading on its exchange at more than 5000. Thus, the “100″ marker represented less than 2% of all shares at that time. Additionally, the number of New Highs on those 9 dates during 1996-1997 averaged 219 while New Lows averaged 111. So, despite the large number of New Lows, they were still roughly just half of the New Highs.

The 1999-2000…
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Dow Spikes 170 Points “Off The Lows”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Because, why not…

No news…

Spot the odd one out…

As The S&P pushes back to its 50 & 100DMAs…

Charts: Bloomberg





Toys’R'Us Bonds Crash As Suppliers Set To Tighten Credit Lines

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Just two years after Toy'R'Us attempted (and failed) to IPO, Bloomberg reports that insurance companies are cutting back on their coverage of the firm's suppliers. Without this 'insurance', which protects suppliers in case a retailer fails to pay them for merchandise – as in the event of a bankruptcy – the risks of shipping to the retail chain soar.

The company’s $450 million 10.375 percent of senior unsecured bonds maturing August 2017 fell 11.5 cents to 71.1 cents on the dollar…

As Bloomberg reports,

Insurance companies are cutting back on their coverage of Toys “R” Us Inc. suppliers, bringing another headache to a retailer that has suffered more than two years of losses, people familiar with the matter said.

Coface SA and Euler Hermes Group, which sell credit insurance to vendors, are removing Toys “R” Us from some policies and declining to renew coverage in other cases, said the people, who asked not to be identified because the process isn’t public. The carriers may still negotiate with some vendors to keep providing some protection, one of the people said.

Losing coverage could raise concerns for toy suppliers as they weigh the risks of shipping to the retail chain, which scrapped plans for an initial public offering in 2013. Credit insurance protects suppliers in case a retailer fails to pay them for merchandise, as in the event of a bankruptcy.

Toys “R” Us also has been seeking additional restructuring advisers, who would look for ways to cut costs and explore the company’s next steps, said one of the people. The moves signal mounting troubles at the toy-store chain, which was taken private by Bain Capital Partners, KKR & Co. and Vornado Realty Trust in a $6.6 billion deal in 2005. Though it’s working on a comeback, Toys “R” Us has struggled to compete against online sellers and mass merchants like Wal-Mart Stores Inc.

The retailer has already been working with consultants at AlixPartners to cut expenses. It said last year that the firm helped it identify $150 million to $200 million in cost savings that could be achieved by the end of 2016. Toys “R” Us has since updated that target to $325 million.

*  *  *

Toys'R'Us bonds have collapsed to lows as investors recognize that credit insurers sometimes cancel existing
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Phil's Favorites

Actually, gold RISES after rate hikes begin

Courtesy of Joshua Brown, The Reformed Broker

If you believe that history is any guide at all when it comes to monetary policy, the dollar and gold, then this may be of interest to you…

Gold has been in a death spiral of late based on the twin fears of rising rates and a dollar at decade highs. According to HSBC’s FX strategist, David Bloom, gold has already priced in the first hike and it may be discounting a continuing dollar rally thesis that is unsupported by history. According to the bank, after the first hike of a cycle the dollar declines in the first 100 days, on average, and gold bounces from where everyone sold in anticipation.

In other words, buy the rumor of rate hikes and sell the event for USD – the reverse order for gold.

re the dollar:

while the ...



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ValueWalk

Ariel Focus Fund Q2 2015 Commentary

By VW Staff. Originally published at ValueWalk.

Ariel Focus Fund commentary for the second quarter ended June 30, 2015.

H/T Dataroma

For most of the second quarter, stocks were up fairly nicely at home and abroad—until the final few sessions. As news out of Puerto Rico and especially Greece worsened, stocks fell sharply. In the last two trading days of the quarter, the foreign stock MSCI EAFE Index dropped -2.97%, the U.S. large-cap S&P 500 Index fell -1.81%, and the U.S. small-cap Russell 2000 Index retreated -2.01%. To our minds, these sell-offs were not based on economic exposures but on an expansive sense of risk and, ultimately, on fear. The volatility extended to other asset classes: long U.S. bonds were up roughly +1.5% while high-yield bonds were off about -0...



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Zero Hedge

American Enterprise in a Nutshell

Courtesy of ZeroHedge. View original post here.

Submitted by Tim Knight from Slope of Hope.

...

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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Dollar gains against yen, but weakens vs. pound (Market Watch)

The dollar advanced against the yen on Tuesday as worries about China’s stock selloff abated somewhat, but the buck fell against the pound after the latest reading on U.K. economic growth matched expectations.

Some stabilization by Asian stocks prompted nervous investors to loosen their grip on the perceived safety of the Japanese currency.

The dollar USDJPY, -0.01%  was up at ¥123.73, compared with ¥123.24 late Monday in New York. ...



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All About Trends

Mid-Day Update

Reminder: David 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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Kimble Charting Solutions

Travel indicator being put to critical tests

Courtesy of Chris Kimble.

The American Economy is driven a good deal by the consumer.

The table below reflects that nearly 70% of GDP is based consumption.

CLICK ON CHART TO ENLARGE

The 4-pack below looks at consumption with a focus on the travel and leisure sector, by looking at Avis (CAR), Hertz (HTZ), Expedia (EXPE) and Priceline (PCLN).

CLICK ON CHART ABOVE TO ENLARGE

While many seem to be occupied by the news abou...



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Sabrient

Sector Detector: Lackluster earnings reports put eager bulls back into waiting mode

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

Courtesy of Sabrient Systems and Gradient Analytics

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enhanced version using top-ranked stocks from the top-ranked sectors.

Corporate earnings reports have been mixed at best, interspersed with the occasional spectacular report -- primarily from mega-caps like Google (GOOGL), Facebook (FB), or Amazon (AMZN). Some of the bul...



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Chart School

Fifth Day of Selling

Courtesy of Declan.

Sellers in the S&P made it five days of downside in a row. On this last day it closed near the day's lows, but also on its 200-day MA. If there was reason for a bounce, then tomorrow could be the day.  Technicals are all net negative.


The Dow took the selling harder. It undercut the July swing low having earlier lost its 200-day MA. Next up is the February swing low.


Small Caps finished at its 200-day MA, after it lost trendline support on Friday...

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OpTrader

Swing trading portfolio

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

Gold Spikes Back Above $1100, Bitcoin Jumps

Courtesy of ZeroHedge. View original post here.

Gold is jumping after the overnight double flash-crash...testing back towards $1100...

Bitcoin is back up to pre-"Greece is Fixed" levels...

Charts: Bloomberg and Bitcoinwisdom

...

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Pharmboy

Baxter's Spinoff

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

Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).

The Baxalta Spinoff

By Ilene with Trevor of Lowenthal Capital Partners and Paul Price

In its recent filing with the SEC, Baxter provides:

“This information statement is being ...



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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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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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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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