Author Archive for Zero Hedge

European Stocks Suffer Biggest Monthly Loss In 4 Years

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

If not for the squeeze at the end of last week, this would have been European stocks’ worst week since Lehman. However, with the ‘save’ Stoxx 600 (Europe’s S&P 500) dropped almost 9% – its biggest drop since the peak of the EU crisis in 2011…

Worst month since 2011…

Saved from even worse collapse by last week’s rescue..

Charts: Bloomberg





The Oil Volatility Farce Continues: Oil Now Surging As OPEC Hints At “Fair Price” Talks

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The equity market momo-igniters tried USDJPY – and failed. Then they tried XIV – and failed. So what next? WTI crude of course which has just exploded back to Friday’s highs, with Brent Crude also breaking back above $50.

It appears the catalyst this time may be a stray OPEC headline:

  • OPEC READY TO TALK TO OTHER PRODUCERS TO ACHIEVE `FAIR PRICES’

And then one asks: what OPEC? Didn’t Saudi Arabia destroy the cartel last November.

For now, however, welcome to the Penny-Oil market:

Friday high stops have been run – now run to the lows to test those stops?

Finally, let’s not forget that today is month end for the person many expect will be oil’s second casualty in one year – Andy Hall, who late in 2014 blew up once already, and should oil have continued its gravitational descent, would have been in line for a second hedge fund closure in under 12 months. So is it just month end window dressing by all those underwater commodity managers? Why, of course.





Economics 102: WalMart Cuts Worker Hours After Hiking Minimum Wages

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

This year, some American executives who heeded loud calls for across-the-board wage hikes for America’s lowest-paid workers received a complimentary refresher course in undergad economics courtesy of the free market. 

Take Dan Price for instance, the 31-year old CEO of Seattle-based Gravity Payments Systems who found out the hard way that setting the pay floor at $70K comes with all manner of unintended consequences. 

And then there’s Wal-Mart.

Earlier this year, the retail behemoth became one of several corporate heavyweights to raise wages for its meagerly compensated workers, around 500,000 of which are now set to receive at least $9/hour and $10/hour by Q1 2016. The move will cost somewhere around $1 billion this year. 

Now one thing that should have been abundantly clear from the start is that if ever there were an employer that could ill-afford a $1 billion across-the-board pay raise without immediately making up the difference by either firing some employees, cutting hours, or squeezing the supply chain it’s Wal-Mart. After all, they’re the “low price leader”, and you don’t hold on to that title by passing labor costs on to customers.

Predictably, the company moved to extract more “value” from its suppliers and when that didn’t prove sufficient, the folks in Bentonville brought in the “plumbers.” 

But the story didn’t stop there. Late last month we highlighted an internal memo circulated at Arkansas recruiting firm Cameron Smith & Associates which looked to be an attempt to prepare the firm’s employees for layoffs at Wal-Mart’s home office. Then, not a week later, Bloomberg ran a story detailing the grievances of some senior Wal-Mart employees who suddenly realized that although they may still be making more than their subordinates, the wage hierarchy had been distorted and that distortion had nothing to do with merit. As we put it, “higher paid employees don’t understand why everyone under them in the corporate structure suddenly makes more money and if people who are higher up on the corporate ladder don’t receive raises that keep the hierarchy proportional they may simply quit which means that, for Wal-Mart, raising the minimum for the lowest paid workers to just $9/hour will end up costing the company around $1.5 billion if you include the additional raises the company will have to
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Is China Dumping German Paper Now? Bund Prices Are Collapsing

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

German bonds are under significant pressure again this morning – despite equity weakness and US Treasury strength. This raises the rather interesting question of whether – after decimating Treasuries last week, is China turning to its Bund holdings and liquidating them to raise cash?

Bunds crushed to one-month lows…

as 10Y yields spike to 6-week highs…

Charts: Bloomberg





“The Quantitative Easing Hangover Is Starting” – Dallas Fed Dead-Cat-Bounce Collapses To Post-2009 Recession Lows

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

With the biggest miss sicne April 2013, Dallas Fed's 2-month dead-cat-bounce has collapsed to -15.8 (against expectations of -4.0). This is practically the weakest level for the manufacturing index since 2009. The entire report is a disaster – Fisher's exit seems well timed? – as New Orders crash from +0.7 to -12.5 and Pries Paid craters from +0.1 to -8.0.Even worse, 14 of the 15 'hope' indicators declined and as one respondent warned "the quantitative easing hangover is starting." We have 3 simple words – "not unequivocally good."

Worse!

Under the surface the responses were really ugly, with 14 out of 15 forward-looking indicators all hinting at contraction.

Here are the best survey responses:

  • "The quantitative easing hangover is starting."
  • Overall business is slowing.
  • " New orders have dropped to half of what they were last year. Capital project equipment continues to be sourced in China and Korea as the owners are chasing every dollar of savings possible. We had our first layoff in 15 years."
  • "Oil and gas prices, weather, world outlook and politics make for a poor forecast" 
  • "All our time is spent complying with increasing government regulations."
  • "The strong dollar has significantly impacted our export business. We have balanced this with domestic growth."
  • " We are deeply concerned about the markets and the effects they are having globally" 
  • " The interest in manufacturing has increased; however, the orders have not followed."
  • " The continued decline in the West Texas Intermediate crude oil price is expected to soften the demand for our basic fabricated products" 
  • " August will be our worst production and delivery month since March 2014."

Charts: Bloomberg





Goldman Warns This Extreme Indicator “Is Rare Outside Of A Recession”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The current VIX level of 26 is equal to the median VIX level over the last three recessions. As Goldman warns, while extreme VIX levels periodically occur, our analysis shows that VIX levels in the high-twenties to low-thirties for extended periods of time are rare outside of recessions. Furthermore, this was foreseeable as equities were ignoring potential warning signs from other asset classes prior to the recent sell-off.

Via Goldman Sachs,

While extreme VIX levels periodically occur, our analysis shows that VIX levels in the high- twenties to low-thirties for extended periods of time are rare outside of recessions. The second quarter revised US GDP print was 3.7% and our tracking estimate for Q3 currently stands at 2.3%, which biases us toward a mean reversion to lower VIX levels.

High-twenties to low-thirties VIX equates to recession volatility
On the economic front: Many investors have argued that VIX levels in the high-twenties to low-thirties are justified. We argue that while periodic spikes should be expected, it is hard to sustain high VIX levels outside of recessions. A few simple statistics:

  • Recession volatility: The median level of S&P 500 realized volatility in a recession month has been 17.5 back to 1929.
  • Non-recession volatility: The median level of realized vol in a non-recession month has been 11.4.
  • VIX over the last three recessions: VIX levels go back to January 1990. Since that time there have been three recessions. Average VIX levels in the first two recessions (1990-1991, 2001) were 25 and 26 respectively. The worst of the worst was of course the Great Financial Crisis. Average VIX levels in the 2008-2009 recession were 34.

Volatility perspective: A simple VIX exercise. Suppose that we are not in a recession. Then, applying a hefty 5 point risk premium to the non-recession S&P 500 realized volatility number of 11.4, would suggest that median VIX levels might be somewhere in the neighborhood of 16.5. Even if we were in a recession, applying the same 5 point risk premium to the median level of S&P 500 realized volatility in a recession month would suggest a VIX level of 22.5 (17.5 + 5 = 22.5). Using averages instead of medians pushes the VIX higher due to the skewness in the underlying distribution of volatility (22.5+ 5=27.5).

While the VIX may have…
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Oil Is Crashing

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The illiquid algo-induced idiocy that are the ‘markets’ is nowhere more evident than in WTI crude futures this morning…

It appears the positive USD-Oil correlation has broken.





Chicago PMI Bounce Stalls, “Firms At Risk Of Being Over-Inventoried”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Following this morning's ISM Milwaukee disappointment, missing for the 8th month sof the last 9 (printing 47.67 vs 50.00 exp and hovering at 2 year lows) with production and prices plunging, Chicago PMI just printed a slightly disappointing 54.4 (against expectations of 54.5). After last month's surprise bounce, this slowdown suggests there is little to no momentum in any 'recovery' stemming from a Q2 bounce. Weakness under the surface is broad and as purchasers warned "failure of New Orders to materialize "within the next few weeks" could put firms at risk of being over-inventoried and curtail producton levels." Perhaps most worrying though is the 4th consecutive contraction in employment… but the recovery?

Production and Prices plunged holding Milwaukee's ISM near 2-year lows…

But then Chicago PMI hit…

And underlying factors were weak…

  • MNI CHICAGO REPORT: BAROMETER 54.4 AUG VS 54.7 JUL SEASADJ
  • MNI CHICAGO: SUPPLIER DELIVERIES RISE TO HIGHEST SINCE MARCH
  • MNI CHICAGO: EMPLOYMENT UP BUT IN CONTRACTION FOR 4TH MONTH
  • MNI CHICAGO: PRICES PAID FALL BACK BELOW 50
  • MNI CHICAGO: INVENTORIES COMPONENT HIGHEST SINCE NOV 2014
  • MNI CHICAGO: ORDER BACKLOGS CONTRACT AT FASTER RATE
  • MNI CHICAGO: PRODUCTION AND NEW ORDERS EASE SLIGHTLY

Some purchasers reported enough work to keep their facilities "busy" but said that there were a lot of small orders with large orders lacking.

Part of the resilience in Production and New Orders was due to stock growth as companies built inventories at the fastest pace since November 2014.

*  *  *

Judging by the market's response – it appears bad news is now bad news.

Charts: Bloomberg





Key Economic Events Of The Coming Busy Week: ISM, ADP, Trade, Producttivity And Jobs, Jobs, Jobs

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

It’s a busy week for the market, and not to mention the Dow Jones-dependent Fed, which will have to parse through reports on Chicago PMI, Construction Spending, ISM (Mfg and Services), ADP, Productivity and Labor Costs, Factory Orders, Trade Balance, and the weekly highlight: Friday’s Jobs reports.

  • The key event US this afternoon is the August Chicago PMI along with the ISM Milwaukee and Dallas Fed manufacturing activity reading.
  • It’s a busy early session in Asia on Tuesday with August PMI readings for China and Japan, along with capex spending and vehicles sales data in the latter. The RBA decision is also due in Australia. In Europe on Tuesday we get the final August manufacturing PMI’s for the Euro area, Germany and France, along with unemployment data for the former. In the UK we’ll get mortgage approvals, net consumer credit and the manufacturing PMI. In the US on Tuesday we’ve got ISM manufacturing and prices paid, IBD/TIPP economic optimism survey, construction spending, manufacturing PMI and vehicles sales data all due.
  • We start in Europe on Wednesday when we get Euro area PPI. This is followed up in the US with the ADP employment change reading, nonfarm productivity, unit labour costs, factory orders and the ISM NY. The Fed is also due to release the Beige Book on Wednesday.
  • In Japan on Thursday the August services and composite PMI readings are due. After this in Europe we’ll get French employment indicators, Euro area retail sales and the services and composite PMI’s for the Euro area, Germany, UK and France. The ECB meeting is also due where our colleagues expect the ECB to respond to recent events with verbal intervention. Over in the US on Thursday we’ll get more employment data with Challenger job cuts and initial jobless claims, as well as the final services and composite PMI’s, July trade balance and finally the ISM non-manufacturing print.
  • It’s a busy end to the week on Friday and we start with German factory orders and French consumer confidence. This is before the main event in the US on Friday with the August payrolls reading and associated releases including average hourly earnings, unemployment and labour force participation rate. As well as the data, there will be much focus on Fedspeak with Rosengren due to


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Bernie Sanders Blasts “The Business Model Of Wall Street Is Fraud”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Screen Shot 2015-08-30 at 8.50.41 PM

During a recent interview with CNN’s Jake Tapper, Bernie Sanders exclaimed: “I think the business model of Wall Street is fraud.”

Basically. Unfortunately, it will never change until serious jail sentences are handed out for the serious fraud, as opposed to taxpayer bailouts.

Watch the interview here. Is it really surprising that he’s close to catching Wall Street handler Hillary Clinton?





 
 
 

Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

If you're feeling bullish after last week's stock-market rebound, look at these charts... (Business Insider)

Last week was a heck of a week in the global markets.

On Monday, it looked like the world was ending, with the Dow Jones Industrial Average plunging more than 1,000 points and closing down nearly 600. Tuesday saw more carnage. By mid-week, however, stocks were ripping higher again. And by Friday, they actually closed up for the week.

The bottom is in... just not for the S&P (Market Watch)

The Feder...



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Zero Hedge

European Stocks Suffer Biggest Monthly Loss In 4 Years

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

If not for the squeeze at the end of last week, this would have been European stocks' worst week since Lehman. However, with the 'save' Stoxx 600 (Europe's S&P 500) dropped almost 9% - its biggest drop since the peak of the EU crisis in 2011...

Worst month since 2011...

Saved from even worse collapse by last week's rescue..

Charts: Bloomberg

...

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OpTrader

Swing trading portfolio - week of August 31st, 2015

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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Kimble Charting Solutions

Forget the S&P 500, keep your eyes on this leader!

Courtesy of Chris Kimble.

We live in a highly correlated world when it comes to stock market trends!

Last week as the Dow was falling 1,000 points a week ago today, the Power of the Pattern reflected that many of the key markets around the world were hitting 4-year rising channel support at the same time.

I shared on 8/26, that the “Global bull market was still intact!” ( See Post Here)  

Did many of you tell your friend...



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Phil's Favorites

The Real Refugee Crisis Is In The Future

Courtesy of The Automatic Earth.


Dorothea Lange Farm family fleeing OK drought for CA, car broken down, abandoned Aug 1936

Perhaps Angela Merkel thought we didn’t yet know how full of it she is. Perhaps that’s why she said yesterday with regards to Europe’s refugee crisis that “Everything must move quickly,” only to call an EU meeting a full two weeks later. That announcement show one thing: Merkel doesn’t see this as a crisis. If she did, she would have called for such a meeting a long time ago, and not some point far into the future.

With the death toll approaching 20,000, not counting those who died entirely anonymously, we can now try to calculate and predict how many more will perish in those two weeks before that meeting w...



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Insider Scoop

Lowered Miner Estimates Lead To Southern Copper Downgrade

Courtesy of Benzinga.

Related SCCO How To Play Copper Long Term Amid A Low Prices Environment HSBC Initiates Southern Copper At Buy
  • Southern Copper Corp (NYSE: SCCO) shares are down 8 percent in the last three months, even after picking up momentum last week and rising 6 percent.
  • JP Morgan’s Rodolfo Angele downgraded the rating on the company from Overweight to Neutral, while reducing the price targ...


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Chart School

Rally Stalls Out

Courtesy of Declan.

After all the volatility during the week, Friday's action was a little reprieve. Markets sit a point where shorts will fancy their chances, although further upside should not be viewed as surprising given the level of volatility markets experienced last week. If there is an indication bears are going to come back with a vengeance, it's that buying volume has been well down on prior selling.

The Nasdaq finished on former trading range support, turned resistance. Watch for a short squeeze from this level, up to the 200-day MA.


The Nasdaq 100 may have given an indication of what to expect on Monday as it started to edge more into t...

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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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Sabrient

Sector Detector: Finally, market capitulation gives bulls a real test of conviction, plus perhaps a buying opportunity

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

Courtesy of Sabrient Systems and Gradient Analytics

The dark veil around China is creating a little too much uncertainty for investors, with the usual fear mongers piling on and sending the vast buy-the-dip crowd running for the sidelines until the smoke clears. Furthermore, Sabrient’s fundamentals-based SectorCast rankings have been flashing near-term defensive signals. The end result is a long overdue capitulation event that has left no market segment unscathed in its mass carnage. The historically long technical consolidation finally came to the point of having to break one way or the other, and it decided to break hard to the downside, actually testing the lows from last ...



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ValueWalk

Some Hedge Funds "Hedged" During Stock Market Sell Off, Others Not As Risk Focused

By Mark Melin. Originally published at ValueWalk.

With the VIX index jumping 120 percent on a weekly basis, the most in its history, and with the index measuring volatility or "fear" up near 47 percent on the day, one might think professional investors might be concerned. While the sell off did surprise some, certain hedge fund managers have started to dip their toes in the water to buy stocks they have on their accumulation list, while other algorithmic strategies are actually prospering in this volatile but generally consistently trending market.

Stock market sell off surprises some while others were prepared and are hedged prospering

While so...



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Digital Currencies

Bitcoin Battered After "Governance Coup"

Courtesy of ZeroHedge. View original post here.

Naysyers are warning that the recent plunge in Bitcoin prices - from almost $318 at its peak during the Greek crisis, to $221 yesterday - is due to growing power struggle over the future of the cryptocurrency that is dividing its lead developers. On Saturday, a rival version of the current software was released by two bitcoin big guns. As Reuters reports, Bitcoin XT would increase the block size to 8 megabytes enabling more transactions to be processed every second. Those who oppose Bitcoin XT say the bigger block size jeopardizes the vision of a decentralized payments system that bitcoin is built on with some believing ...



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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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