by Zero Hedge - July 15th, 2016 8:40 pm
Thanks to the fad-tastic launch of Pokemon GO – more popular than porn – Nintendo stock has exploded over 93% in the last 7 days (the most ever) to 6 years highs. But the Pokemania was really in the trading volume where 476 billion yen changed hands for the highest daily turnover on the Tokyo Stock Exchange this century…
Second-highest turnover for any given day was Tokyo Electric with 446b yen on May 21, 2013, followed by SoftBank with 431b yen on Nov. 29, 2005.
* * *
Seems sustainable, right?
Having second thoughts? Maybe you're right? From Gawker:
"Pokémon Go Is a Government Surveillance Psyop Conspiracy"
Less than a week after Pokémon Go’s launch, our streets are already filled with packs of phone-wielding, Weedle-catching zombies. They’re robbing our teens, filling our churches with sinners, and tricking our children into exercising. But worst of all, Pokémon Go is turning us all into an army of narcs in service of the coming New World Order.
Allow me to explain.
More like Privacy Poli-See Everything
We may disclose any information about you (or your authorized child) that is in our possession or control to government or law enforcement officials or private parties.
by ilene - July 15th, 2016 4:35 pm
Courtesy of Lance Roberts of RealInvestmentAdvice.com
Janet Yellen, in my opinion, is about to make a critical mistake. She is not going to raise rates in July.
Why is this a mistake? Simple. No matter when you think there will be an economic recession, there will eventually be one. As I have repeatedly stated, the biggest problem for the Federal Reserve has been getting caught at the “zero bound” of interest rates during the onset of a recessionary contraction. Such a combination of events would leave the Fed without a very valuable monetary policy tool.
Come July, Janet Yellen and the FOMC are going to once again “punt” hiking interest rates in favor of waiting for “global instability” due to the “Brexit” to subside. However, as stated this is a mistake for a couple of reasons.
First, with the markets making new all-time highs, there is a “price” cushion available for the markets to absorb a rate hike without breaking important downside support as shown below.
Secondly, with Central Banks globally flooding the markets with liquidity, as discussed yesterday, a further “shock absorber” is currently engaged in softening the impact of a rate hike.
“But, for now, a rash of global Central Banks continue to support asset prices by increasing accommodative policies either through additional reductions in interest rates or direct injections of liquidity. As Matt King from Citi recently noted:
‘It has been a surge in net global central bank asset purchases to their highest level since 2013.’”
Lastly, the economy is likely going to show a bit of “strength” in upcoming reports, with slightly stronger inflationary pressures. This pickup in economic strength will be another inventory restocking cycle following several months of weakness. As has been in the past, it will be transient and that strength will evaporate as quickly as it came.
If I was Janet Yellen, I would hike interest rates by .50 bps immediately in a surprise announcement and use the price and Central Bank liquidity cushions to soften the blow. This would move the Fed towards its goal of reloading its primary policy tool while there is some ability to temporarily control the outcome of the rate hike.
by ilene - July 14th, 2016 9:00 pm
This week's webinar is ready to view. Enjoy!
00:01:52 Checking on the Markets: NKD, DX, RB, CL, NG
00:04:05 Fed’s Rates
00:05:25 Weird Signals: GDP, Inventory-to-Sales
00:13:03 SPX Trade Idea
00:24:08 Short-Term Portfolio
00:25:12 10 Year Bond
00:31:43 US Money Supply
00:42:10 Value of Gold
00:47:56 SPX Low Volume
01:02:43 Biotech Trade Ideas: LABU, IBB
01:05:33 1% retirees/savers money
01:11:24 Checking on the Markets: CL, RB
01:13:49 Bitcoin, Gold
01:16:30 Fed’s debt
01:23:35 Checking on the Markets: RB. CL. NG
01:24:05 FRB: Beige Book
01:36:00 Shorting on YM
01:37:27 5% Portfolio
01:41:02 Butterfly Portfolio
01:41:20 Short-Term Portfolio
01:49:23 More Trade Ideas..
For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – join us at PSW — click here!
by ilene - July 14th, 2016 1:55 am
Scroll down for Hoisington Investment Management – Quarterly Review and Outlook, Second Quarter 2016, following an introduction by John Mauldin.
Courtesy of John Mauldin, Outside the Box
It has come to be a near truism that high levels of government debt and deficit spending suppress economic growth, but how exactly does that happen? In today’s Outside the Box, Dr. Lacy Hunt and Van Hoisington of Hoisington Investment Management give us a very detailed explanation of the dynamics involved.
On the deficit spending front, the authors state that the best evidence suggests that the US government expenditure multiplier is -0.01, which means that each additional dollar of deficit spending reduces private GDP by $1.01, resulting in a one-cent decline in real GDP. Additionally, the authors say, the multiplier is likely to become drastically more negative over time since the mandatory components of government spending (Social Security, Medicare, veteran’s benefits and the Affordable Care Act, etc.) will represent an ever-increasing share of the federal budget.
With regard to government debt, the authors describe a 2012 study by Carmen Reinhardt, Vincent Reinhardt, and Kenneth Rogoff (RR&R) that identified 26 major public debt overhang episodes in 22 advanced economies since the early 1800s, characterized by public debt-to-GDP levels exceeding 90% for at least five years. RR&R determined that these debt overhang episodes reduced the economic growth rate by slightly more than 33%, on average. As of last year, the US economy has met these criteria for reduced growth: government debt first exceeded 90% of GDP in 2010 and surpassed 100% in each of the past five years.
It is very significant, too, say Hoisington and Hunt, that while debt begins reducing economic growth at relatively low levels of government debt-to-GDP, as the debt level rises the debilitating impact on growth speeds up. That is, the impact increases nonlinearly.
The bottom line, say our authors, is that with global debt levels moving ever higher, we can expect that worldwide business conditions will continue to be poor and that the slowdown ahead will cut the already weak trajectory of nominal growth. We are at risk, they warn, of falling into a global “policy trap.”
Hoisington Investment Management Company (www.hoisington.com) is a registered investment advisor specializing in fixed-income portfolios for large institutional clients. Located in Austin,
by ilene - July 12th, 2016 4:31 pm
"Science advances one funeral at a time. Portfolio theory, however, may require a mass grave."
Courtesy of Joshua M Brown, The Reformed Broker
Poland, 1503: A young man named Nicolaus Copernicus returns home after years spent studying Catholicism and astrology among the priests and clerics of Italy. He is schooled in the ideas of Ptolemy, the Ancient Greek who had originally popularized the idea that the planets, sun and moon revolved around the earth. This idea had become accepted as fact and had been taught that way for over a thousand years.
But something bothered Copernicus about the movements in the sky he witnessed from the observatory atop his church. Specifically, the retrograde courses he saw the planets take, switching direction and seemingly traveling backwards on some nights. He begins to hand out his own booklet to friends, in which he claims it is the sun, and not the earth, that serves as the centripetal point in the universe. This upends the broadly understood Ptolemaic model and is even considered a form of heresy among his colleagues in the church.
In the early 1950’s, Harry Markowitz introduced his Modern Portfolio Theory (MPT) as an explanation for how, by diversifying one’s investments, an “efficient frontier” of risk versus reward could be achieved and optimized. A decade later, William Sharpe and his colleagues took the concept a step further and introduced the Capital Asset Pricing Model (CAPM), which sought to explain the sources of investment returns and lay out a framework for allocation decision-making. These are Nobel-prize winning theories. Many researchers have taken shots at them over the years and flaws have been discovered, but neither have been replaced or bested, despite the incessant attempts of thousands of academicians.
It is now commonly thought that the risk-free rate is the center of the financial universe and that the prices of all assets revolve around it. But what happens when the risk-free rate slowly ceases to exist. Or becomes a negative number?
Critics and revisionists of MPT and CAPM may have been wasting their time. Turns out, all of the potshots they’ve been taking for decades were entirely unnecessary. All it took to almost entirely subvert the laws of capitalism was a…
by ilene - July 10th, 2016 8:55 pm
Courtesy of John Mauldin, Thoughts from the Frontline
“There are decades where nothing happens, and there are weeks where decades happen.”
– Vladimir Lenin
“However beautiful the strategy, you should occasionally look at the results.”
– Winston Churchill
First, I want to express my shock and quiet despair over the events in Dallas this weekend. The shock comes from this actually happening in Dallas. If anything, Dallas police are accommodating and work with the community as well as any police force in the country. But this event is a reminder that tragedies don’t just happen somewhere else. All it takes is one or two lone actors, and the world of somewhere else lands on your doorstep. This sad spectacle is part and parcel of what we will be discussing today: a world where common sense and reasonable discourse are breaking down, leaving us with social outcomes that only a few years ago would have seemed impossible. As Buffalo Springfield sang, “There’s something happening here; what it is ain’t exactly clear.”
I offer my prayers and express my condolences and deep sympathy to the families whose loved ones were killed and injured. (I’ll include some additional personal thoughts at the end of the letter.)
Why do investors spend so much time thinking about the future? Any conclusions we reach are necessarily speculative. No one has a crystal ball. The efficient market advocates are correct when they note that we can’t predict the future. However, they’re wrong to say forecasting is useless (and they are off base with many of their other conclusions!). While we can never be 100% confident about tomorrow, we can often get close. Just as the universe abides by known physical laws, the economy follows known principles of human behavior. People try to minimize pain and maximize pleasure. If you can anticipate how they will do so, you can forecast economic results, not with perfect reliability but with high confidence. And so we spend a great deal of time forecasting outcomes for our businesses and investments.
by ilene - July 9th, 2016 1:43 pm
Courtesy of Joshua M Brown
You’re free to point out all the reasons, conditions, qualifications, if’s and or but’s you’d like, but today (Friday) the S&P 500 Total Return Index is printing a new all-time high.
Take a picture, it may not last long. Previous new highs in this index over the last two years have been preludes to corrections.
Or this is the one. The breakout that keeps going.
In favor of this being the one – internals look fabulous, with confirmation coming from both advance-decline and the upturn in the NYSE hi-lo index. Not in favor? Plunging rates, an incoherent Fed, European ridiculousness – you know, more of the same.
But today it’s happening in the TR index. Save your asterisks.
by Zero Hedge - July 8th, 2016 9:00 pm
A new study finds that roughly 26 million Americans remain "too poor to shop." The study, performed by America's Research Group, found that about 26 million Americans work on average two or three jobs at a time which, when added together, nets just shy of $30,000 in annual income. All while supporting anywhere from two to four children.
The chairman of ARG, Mr. Britt Beemer, said in an interview with the NY Post that he first started looking into data when he was tracking a different indicator. Beemer first started tracking a group and surveying roughly 15,000 people to determine who had not finished Christmas shopping in 2014. During that year, the number was 21 percent but recently ran as high as 29%. From there Beemer decided to analyze the data further and learned Americans are seeing increasing numbers of fellow citizens who are simply just too poor to shop.
Beemer told the Post: "The poorest Americans have stopped shopping, except for necessities." And "It's scary when you start to see things that you've never seen before"…"People are so pessimistic about their future."
Just this past April we wrote: "Most Americans' savings continue to decline, and millions of US households not only don't have any money left over to save away, but are forced to resort to credit to fund day to day expenses."
Recall from January the piece from the Atlantic that review that weak state of American's finances. The Atlantic learned that nearly 50% of Americans were not in a position to find $400 to pay of a doctor visit without reaching out to friends. So not only are 26 million Americans too poor to shop, there are also 2/3 of Americans who have no savings.
"Various surveys that I have talked about in the past have found that more than 60 percent of all Americans are living to paycheck to paycheck, but I didn’t realize that things were quite this bad for about half the country. If you can’t even come up with $400 for an unexpected emergency room visit, then you are just surviving from month to month by the skin of your teeth. Unfortunately, about half
by ilene - July 7th, 2016 5:16 pm
This week's webinar is ready to view. Enjoy!
00:02:48 Seeking Alpha: Fed’s Tarullo said
00:08:34 Checking on the Markets: NKD, AAPL
00:13:00 CA’s progressive income
00:15:40 Checking on the Markets: NKD, NASDAQ, INDEX, CL, RB, NG, DX, YG, SI, YM
00:18:50 Trade Ideas: WTI, RBOB, NIKKEI 225
00:26:36 Options Opportunity Portfolio: SQQQ, TZA, TLT
00:31:28 Big Chart
00:32:41 Butterfly Portfolio: DIS, TGT, TXN, VLO, WMT
00:36:07 Short-Term Portfolio
00:38:18 NG, Utility Company
00:49:48 ABX, NAK
00:58:49 TLT, Trade
01:03:12 USD, JPY Trade Idea
01:04:21 Reserve Currency
01:10:42 YG Trade Idea
01:28:18 EWJ Trade
01:31:22 FCX Trade Idea
01:42:47 BHP Period Earning
01:49:38 Checking on the Markets
01:50:07 Top Trades: SDS
For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – join us at PSW — click here!
by ilene - July 6th, 2016 8:46 pm
Courtesy of Dana Lyons
Since 1900, the 3rd quarter of election years has been the best performing quarter, on average, of the entire Presidential Cycle; although more recent results have not been quite as positive.
Perhaps as much as any time in recent memory, there seem to be numerous, potentially significant, cross-currents blowing in both directions in the stock market. At probably the bottom of the priority totem pole among such currents, for us, is seasonality. At any given time, there are plenty of other variables that we are more comfortable with in taking our cues on the market. That said, seasonality can, at times, have a very strong influence on markets. Furthermore, in the long-run, there have been few trading systems that would have kept pace with even a rather simple seasonality system. And one of the seasonal patterns with a respectable track record pertains to the Presidential Cycle.
Again, the Presidential Cycle refers to the behavior of the stock market vis-a-vis a 4-year Presidential term. Throughout time, stocks have tended to do very well during some periods of the Cycle, and not-so-well during other parts. It is not a fool-proof system, but it has behaved consistently enough to seriously consider its statistical merit. Therefore, while we do not directly incorporate it into our investment process, all things being equal, the Cycle can seemingly explain a good portion of the market’s movement. The problem is, all things are never equal, which makes it difficult to trust the Cycle with one’s funds.
Assuming, however, that one could reasonably rely on the Cycle, it may be entering a particularly interesting period. Specifically, since 1900, the best performing quarter of the Presidential Cycle, using the Dow Jones Industrial Average, has been the 3rd quarter of election years, i.e., the quarter we just entered on July 1. During the 29 cycles since 1900, the 3rd quarter of election years is the only quarter with an average return better than 5%.
Here are the returns listed from worst to best.