by Promotions - March 28th, 2015 7:45 am
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 the year with a brand new trade idea)
by ilene - March 7th, 2015 6:58 am
Watch: A 92/Y "7 Days of Genius" video program featuring Nobel laureates Paul Krugman and Joseph Stiglitz and French economist Thomas Piketty who discuss the "genius of economics" with MSNBC's moderator Alex Wagner.
Paul Krugman: “It seems safe to say that Capital in the Twenty-First Century, the magnum opus of the French economist Thomas Piketty, will be the most important economics book of the year—and maybe of the decade. Piketty, arguably the world’s leading expert on income and wealth inequality, does more than document the growing concentration of income in the hands of a small economic elite. He also makes a powerful case that we’re on the way back to ‘patrimonial capitalism,’ in which the commanding heights of the economy are dominated not just by wealth, but also by inherited wealth, in which birth matters more than effort and talent.”
by ilene - March 5th, 2015 10:26 pm
If you missed this earlier, be sure to watch Scott Galloway's presentation on the large global technology companies and the challenges facing them. Galloway discusses Amazon ("pure play commerce doesn't work"), its disruption by Uber, and Macy's, Facebook's bait-and-switch, Instragam ("the most powerful platform in the world"), the smartphone economy (outstanding for employment, terrible for wages), attracting better mates with an iPhone, Apple's successful move down the torso into luxury, and more.
Galloway speaks fast so you may want to watch it twice.
Courtesy of Joshua M Brown
Professor Scott Galloway (NYU) delivers one of the most masterful 15 minutes worth of important tech trends I’ve ever seen. He’s got strong opinions about what’s to become of Amazon, Facebook, Google and Apple – and the charts to back these opinions up.
An amuse bouche: “Google Glass is not a wearable, it’s a prophylactic ensuring you will not concieve a child because no one will get near you.”
Thanks to my friend Ken S. for passing this on. Watch it or miss out on what’s really happening:
Back to me: Watch also Winners/Losers in a Digital Age. In Winners/Losers, Galloway discusses general trends in the digital age, winners and losers in retail, social media and the broader society. He explores wealth inequality and the 0.01% (an "upward spiral downward"), the US tax code, education costs, the middle class, job shifts, the "ipad effect," the myth of progress, and a number of large tech and retail companies including AMZN (the "Tony Soprano of ecommerce"), TWTR, EL, TGT, and ("the first trillion dollar company") AAPL's brilliant move into the business of luxury. Apple is, without a doubt, winning the war. ~ Ilene
by ilene - February 27th, 2015 6:46 pm
By John Mauldin
There is an obsession in the marketplace over the date when the Fed will once again begin to raise rates. As if another 25 basis points is going to change the economics on tens of trillions of dollars of investments. But as we reflect on the issue more deeply, it becomes obvious that a minor bump in the fed funds rate will indeed change a great deal of economics all over the world.
No, it won’t do much to the cap rate on your latest real estate purchase, but it is likely to greatly affect the pricing of the currency and commodity markets. And those markets will affect corporate profits, which will affect the stock market. It’s all connected.
And what if the Fed has lost control? What if they are in a no-win situation where raising rates will cause reactions they don’t want, but not raising rates will result in equally unpleasant reactions?
A big part of the problem lies in what we analysts call divergent and convergent monetary policies. With Japan mounting an unprecedented quantitative easing attack on currencies everywhere and Europe getting ready to join in, with smaller nations all over the world lowering their interest rates, if the US were to raise rates, that move would strengthen the dollar even more. But that would mean even more deflation imported into the US.
Today we find that the headline CPI was -0.7% for January, coming on the heels of two previous months at -0.3%. The year-over-year rate slipped into negative numbers for the first time since October 2009, when we were still reeling from a deep recession.
The Fed typically raises rates when it wants to lean into inflation, not when inflation is falling. Yes, I know that Yellen in her testimony and in recent Fed releases has said the Fed is confident that inflation will once again rise to 2%. And that, even if you take out food and energy, inflation has still risen at 1.6% over the last 12 months.
by Market Shadows - February 25th, 2015 12:54 pm
Chris Kimble's chart for KOL shows a recently beaten down ETF struggling to pull itself up from the ashes. As the chart shows, KOL has recently drifted down to levels not seen since the financial crisis of 2008-9.
Bouncing or recovering with energy in general, coal prices appear to have stabilized in the short-term. Reflecting coal prices, KOL has traded between $13.45 and $19.75 during the past year. Bouncing from lows, KOL traded around 2% higher yesterday from $14.26 to $14.48 on high volume. It traded another 3.6% higher in after hours to $15, possibly related to Obama's veto of the Keystone XL bill allowing construction of the Keystone XL oil pipeline. KOL's back to around $14.56 now.
The chart below is of the NYMEX Central Appalachian coal futures near-month contract final settlement price history from Jan. 2008 to Dec. 2014. After running up rapidly in early 2008, coal prices fell quickly during the financial crisis. Coal traded in a narrower range since the 2008 spike. KOL's prices have behaved similarly. (Source.)
Chris's chart analysis suggests that KOL might be ready to stage a breakout to higher levels. Chris likes buying KOL with a stop loss at about $13.87.
For free alerts from Chris on other interesting chart patterns, visit his website and sign up at the top right.
For an in-depth analysis of the coal industry, Market Realist provides A must-know overview of the US thermal coal industry for investors. The Realist notes, "There are six main publicly traded companies that operate coal mines in the U.S., which are also part of the Market Vectors Coal ETF (KOL). These are Arch Coal (ACI), Alpha Natural Resource (ANR), Peabody Energy Corporation (BTU), Cloud Peak Energy (CLD), Consol Energy (CNX), and Walter Energy, Inc. (WLT), in order of production. In 2013, the top four publicly traded companies’ U.S. assets made up about a half of the U.S.’ annual coal supply." KOL's top holdings are listed here.
See also: Kimble Charts: Soybeans, 2-23-15.
by ilene - February 18th, 2015 12:10 pm
Growing your wealth isn't just about making money in the stock market. In 2015, Philstockworld.com will focus on wealth-building techniques which, combined with our winning investing strategies, can help put you on the path to a life of financial independence.
by ilene - February 16th, 2015 1:45 pm
By John Mauldin
We do not have to look to Greece to find massively underfunded obligations. Here in the US we can find hundreds of examples, willingly created by politicians and businessmen who proclaim they are working for the public good. We call them pension funds, but they’re just another form of unfunded debt. A sovereign bond is a promise to pay a certain amount of money over time. A defined-benefit pension fund is a promise to pay a certain amount of income over time. The value of either is determined by the ability of the government or the pension fund (or its sponsor) to pay.
I am in the Cayman Islands as I write this letter, to speak at an alternative investment conference attended by the management of some of the largest pension funds in the US and Europe, both public and private. Being here has motivated me to write this week’s letter on the problems that pension funds face. The pension fund managers I have talked with take their fiduciary obligations seriously, and they face some serious challenges.
I was on the stage with Nouriel Roubini (who makes me come off as the optimist), and we were talking about macroeconomic risks. I was asked what other sorts of risks people should be thinking about, and I cited a recent report about how pension fund obligations had dramatically increased because of a small change in mortality tables.
There has been a very steady increase in life expectancy over the last almost 100 years. It is a fairly well-defined trend. The actuarial accountants whose responsibility it is to track these things updated the life expectancy tables for a 65-year-old male, who can now expect to live an additional 21.6 years, two years longer than in the old table.
This trend toward longevity is very well established and is likely to accelerate as new technologies and medicines become available, which means that underfunded pension plans are even more underfunded than we think. [See yesterday's post: How Silicon Valley is
by ilene - January 27th, 2015 12:01 pm
Courtesy of Charles Gave of Gavekal Dragonomics
I want to start this paper by reiterating a few of my strongly held convictions about the role of central bankers:
- Economics is a branch of logic, itself a branch of philosophy, and not a branch of astrology (the good case) or mathematics (the bad case).
- So when I see the guardians of the Temple of Mammon—otherwise known as central bankers—following an illogical policy, I am mesmerized. I start to have doubts, either about my ability to follow a path of logical reasoning, or about the sanity of the current breed of central bankers. As far as the first option goes, our readers can decide, and the market will be the ultimate judge. As for the second, allow me to make a few remarks…
Four basic postulates for central bankers
To think ‘logically’ one generally starts with a few postulates learnt from experience. What should these postulates be for central bankers?
- I expect central bankers to know that the future is unknowable. This has been generally accepted wisdom at least since the time of the New Testament: “But of that day and hour knoweth no man.”
- Since Karl Popper, central bankers should know that the amount of risk in a system is roughly constant over time and that any effort to minimize risk or volatility at any point in time (usually just before an election) will lead to its more forceful re-emergence later on (hopefully after the election). In this sense an economic system is much like one of Alexander Calder’s mobiles: if you restrict the motion of one of its branches, any disturbance of the system will lead to much bigger movements elsewhere.
- Since Knut Wicksell, central bankers should know that the greater the difference between the ‘natural’ interest rate and the ‘market’ rate, the bigger the subsequent booms and busts. If sustained, a false price for the cost of money increases the risk in a system exponentially. A false price for interest rates leads to a false price for the exchange rate. From there all prices become false and the economy moves ex-growth,
by ilene - January 24th, 2015 4:53 pm
By John Mauldin
In today’s Outside the Box, good friend Ben Hunt informs us that we have entered the cult phase of the Golden Age of the Central Banker:
We pray for extraordinary monetary policy accommodation as a sign of our Central Bankers’ love, not because we think the policy will do much of anything to solve our real-world economic problems, but because their favor gives us confidence to stay in the market. I mean, does anyone really think that the problem with the Italian economy is that interest rates aren’t low enough? Gosh, if only ECB intervention could get the Italian 10-yr bond down to 1.75% from the current 1.85%, why then we’d be off to the races! Really? But God forbid that Mario Draghi doesn’t (finally) put his money where his mouth is and announce a trillion euro sovereign debt purchase plan. That would be a disaster, says Mr. Market. Why? Not because the absence of a debt purchase plan would be terrible for the real economy. That’s not a big deal one way or another. It would be a disaster because it would mean that the Central Bank gods are no longer responding to our prayers.
But, he points out, the cult phase of any human society is a stable phase in the sense that, while change may happen, it will not happen from within:
There is such an unwavering faith in Central Bank control over market outcomes, such a universal assumption of god-like omnipotence within this realm, that any internal market shock is going to be willed away.
However, there is a minor catch: external market risk factors are all screaming red.
I’ve been doing this for a long time, and I can’t remember a time when there was such a gulf between the environmental or exogenous risks to the market and the internal or behavioral dynamics of the market. The market today is Wile E. Coyote wearing his latest purchase from the Acme Company – a miraculous bat-wing costume that prevents the usual plunge into the canyon below by sheer dint of will.
by ilene - January 20th, 2015 5:49 pm
By John Mauldin
“Below the thunders of the upper deep,
Far far beneath in the abysmal sea,
His ancient, dreamless, uninvaded sleep
The Kraken sleepeth: faintest sunlights flee….
“There hath he lain for ages, and will lie
Battening upon huge sea-worms in his sleep,
Until the latter fire shall heat the deep;
Then once by man and angels to be seen,
In roaring he shall rise and on the surface die.”
– Alfred, Lord Tennyson, “The Kraken”
"The exact contrary of what is generally believed is often the truth."
– Jean De La Bruyère
“Cry ‘Havoc!’ And let slip the dogs of war!”
– William Shakespeare, Julius Caesar, Act III, Scene I
– Roberto Duran to the referee at the end of his fight with Sugar Ray Leonard, 1980
If you want evidence that central bankers play by their own rules, regardless of what they say or what conventional wisdom tells us, last week’s action by the Swiss National Bank should pretty much fill the bill. My friend Anatole Kaletsky, in a CNBC interview not long after the announcement, quipped (with a completely straight face) that just as James Bond has a license to kill, central bankers have a license to lie.
Swiss National Bank Chairman Thomas Jordan had assured us just the week before that the Swiss would continue to “hold the peg” whereby the SNB kept the value of the Swiss franc from rising higher than €1.22. “The cap is absolutely central,” he said. And SNB Vice Chairman Jean-Pierre Danthine said publicly only last Monday that the peg would remain a cornerstone of Swiss banking policy.
Early Thursday morning the Swiss abandoned that policy. Much of the press coverage in the (largish) wake of their surprise move has focused on the costs to banks and hedge funds around the world, but you have to realize that serious pain is being felt in Switzerland itself. Every bank and business that held non-Swiss-franc debt or investments took an immediate 15–20%+ haircut on its…