by ilene - October 13th, 2016 4:20 pm
In Part 1, Phil discusses oil prices, the S&P, the election for US Prez and Congress members, and the consequences of different election outcomes. In Part 2, he discusses Samsung and Apple, and in Part 3, Phil introduces his top candidate for Next Year's Trade of Year!
Options trader Phil Davis discusses possible outcomes of the U.S. presidential election and the potential implications for markets.
Money Talk is Canada's premier personal finance show. Every Wednesday, we talk to industry players who provide you with important personal finance information that you need – from investment strategies to financial planning.
by clarisezoleta - October 13th, 2016 1:46 pm
PhilStockWorld.com Weekly Trading Webinar – 10-12-16
For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here!
00:01:51 Checking on the Markets
00:04:14 Indexes Status
00:09:33 Daily Indices Charts
00:15:38 AAPL Long-Term Portfolio
00:17:09 AAPL Trade Ideas
00:26:12 Ericsson Trade Ideas
00:29:56 Long-Term Portfolio
00:30:06 Short-Term Portfolio
00:39:51 SHLD Trade Ideas
00:41:10 More Trade Ideas
00:49:;25 SHLD Trade
00:54:24 FOMC Meeting
01:03:05 FOMC Minutes
01:07:48 Checking on the Markets
01:11:32 Trade Ideas
01:18:22 Mortgage Market
01:21:17 USD Trade Ideas
01:24:16 Checking on the Markets
01:27:11 Profit Squeeze
01:29:37 Energy Consumption
01:36:37 Natural Gas
Phil's Weekly Trading Webinars provide a great opportunity to learn what we do at PSW. Subscribe to our YouTube channel and view past webinars, here. For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – join us at PSW — click here!
by ilene - October 12th, 2016 7:48 pm
Courtesy of John Mauldin, Outside the Box
I have been pounding the table over the mistakes made by central banks all around the world for some time now. When I started I was almost alone because markets were still going up and there were obvious market overvaluations. My argument back during QE3 was that over time an uber-dovish monetary policy would lead to excesses. We have now come to that point and I am no longer alone in my criticism. There is a growing concern from many corners of the globe that monetary policy, far from being benign, is actually quite malignant.
The problem is that the people who are in control of monetary policy, the central bankers, are in complete denial about the issues. They see the response of financial markets, and when they talk to investors they see the smiles on their faces. Which tells you the crowd these people run with. If they were talking to average savers and investors, retirees and those on pensions, they would be hearing a different story.
I have been bringing this issue up more and more because it is the single most important thing happening, with regard to our economic future. I think the shape of monetary policy in the US is actually more important than who we elect president – unless the new president actually changes the people who shape our monetary policy. Then, in terms of the economy, that is important!
(I get that there are a dozen issues surrounding the presidential election that have nothing, or at least very little, to do with the economy. And for many of you those issues take a higher priority. My role in this letter is to talk about the economy and the investment outlook, and I generally talk about politics only when it has an impact on those issues.)
This week for your Outside the Box I want to offer a short essay from somebody whom I have followed and admired for many years, Stephen Roach. He is the former chairman of Morgan Stanley Asia and the firm’s chief economist but is now ensconced as a senior fellow at Yale. In the piece that follows he highlights some of my own concerns but comes at the issue from a…
by ilene - October 11th, 2016 9:10 pm
Bill Gates once famously said that we systematically overestimate the change that will occur in two years, while underestimating the change that will come in the next ten. As Visual Capitalist's Jeff Desjardins notes, the ongoing conversation about the death of legacy media definitely fits that mold.
Over the last five to ten years, people have been talking about how the newspaper, magazine, or radio station would become all but obsolete. And while certainly things have changed in all of these industries, it’s clear that there has not been a full paradigm shift yet.
Here is the evidence that we have finally reached that inflection point…
Fixing the Plane
In a recent interview at the City University of New York’s journalism school, Ken Lerer described the challenges of traditional media as follows:
You have to fix the plane while you’re flying it.
Lerer, a co-founder of the Huffington Post and currently the Chairman for Buzzfeed, is alluding to the fact that legacy media has to maintain old business models based on subscription and print ad revenue, while successfully venturing into the digital world. The latter category is already hard enough, even without taking into account the balancing act of the former.
The moral of the story? Some of these “planes” are going to land safely, but most of them are going to crash and burn.
The cost structure of legacy media just doesn’t make sense in today’s digital world. Overhead is high, and revenue is harder to find due to the limited success of paywalls, rampant ad blocking, and the steady fall in display ad prices due to the emergence of programmatic bidding.
Why has legacy media been so slow to adopt change? Why don’t they just lay off half of their staff, ditch print operations, and start from scratch?
It’s because their major revenue sources are as slow at adopting as they are.
by ilene - October 11th, 2016 3:53 pm
While Sunday's second debate quickly devolved into a mudslinging match with the candidates providing little, if any, actionable views on how they intend to govern aside from canned talking points, something good has finally emerged from the debate: the following "duet" between Hillary and Donald, a rendition of “(I’ve Had) The Time Of My Life."
by ilene - October 10th, 2016 11:44 pm
Courtesy of Michael Batnick, The Irrelevant Investor
Over the weekend I listened to Russ Roberts’ interview with Jason Zweig, who made an excellent observation of how vast the financial markets are and how little time investors spend thinking about this:
I think if there’s one overriding theme to the book, one of the things I’ve tried to get across in "The Devil’s Financial Dictionary" is the importance of just being humble before the financial markets. I mean people are humble before nature -- think about when you stand on the rim of the Grand Canyon, or you walk to the edge of the ocean, or you look up at the stars — people feel this sense of awe and wonder and smallness because we are small when we compare ourselves with the natural world. Well individuals, and for that matter, policy makers, are small when we compare ourselves with the financial markets, but most of us forget that. And we think, oh we have better data or we know something the other guy doesn’t, and in fact we should have that same sense of just being a spec of sand on a long beach and just remember that whatever we know is very small compared to the totality of the information that’s out there.
According to Dimensional Funds, in 2015 the average number of daily global equity trades was 98.6 million, or $447.3 billion a day. Jack Bogle estimates in Clash of the Financial Cultures that we spend $33 trillion on trading a year, or 220% of U.S. GDP. These numbers are so big that they become almost meaningless. Let me attempt to put its vastness into terms we can wrap our head around.
If $447.3 billion in dollar bills were stacked on top of one another and then laid on their side, they would more than wrap around the world. If they were laid out tip-to-tip, they could make the 478,000 mile round-trip to the moon 90 times. $447.3 billion in one dollar bills weighs 985 million pounds, or 3,285 blue whales. Keep in mind, this is all in a day’s work.
So really, how can one stand on the rim of the financial Grand Canyon and not be humble?
Pictures via Pixabay.
by ilene - October 9th, 2016 8:53 pm
A military view on climate change: It's eroding our national security and we should prepare for it
In this presidential election year we have heard much about some issues, such as immigration and trade, and less about others. For example, climate change was discussed for an estimated 82 seconds in the first presidential debate last week, and for just 37 minutes in all presidential and vice presidential debates since the year 2000.
Many observers think climate change deserves more attention. They might be surprised to learn that U.S. military leaders and defense planners agree. The armed forces have been studying climate change for years from a perspective that rarely is mentioned in the news: as a national security threat. And they agree that it poses serious risks.
I spent 32 years as a meteorologist in the U.S. Navy, where I initiated and led the Navy’s Task Force on Climate Change. Here is how military planners see this issue: We know that the climate is changing, we know why it’s changing and we understand that change will have large impacts on our national security. Yet as a nation we still only begrudgingly take precautions.
The Obama administration recently announced several actions that create a framework for addressing climate-driven security threats. But much of the hard work lies ahead – assuming that our next president understands the risks and chooses to act on them.
Climate change affects our security in two ways. First, it causes stresses such as water shortages and crop failures, which can exacerbate or inflame existing tensions within or between states. These problems can lead to state failure, uncontrolled migration and ungoverned spaces.
On Sept. 21 the National Intelligence Council issued its most recent report on implications of climate change for U.S. national security. This document represents the U.S. intelligence community’s strategic-level view. It does not come from the Intergovermental Panel on Climate Change, politicians of either party or an advocacy group, but from nonpartisan, senior U.S. intelligence professionals.
by ilene - October 9th, 2016 5:02 pm
She takes us back to the 20th-century era of World Wars and draws upon the thinking of Liaquat Ahamed, whose seminal work The Lords of Finance is said to have been inspired by that unforgettable 1999 Time magazine cover story titled “The Committee to Save the World” – you know, the one that splashed the lovely mugs of Alan Greenspan, Robert Rubin, and Larry Summers up there, grinning like the Cheshire Cat (well, except for Larry, that is).
Ahamed’s treatise, says Danielle, is “a study [of] the perils of devaluing stores of value by force, the dangers of runaway debts, and the menace of monetary myopia.”
Franklin Roosevelt devalued the Depression-weighted US dollar by forcing up the price of gold. Germany’s inability to pay its World War I debts set off an explosive chain of defaults among US allies, compelling the US to effectively bail out Germany’s debt. And the stubborn orthodoxy of Depression-era central bankers led them into competitive interest rate rises that would let their countries to hold onto their dwindling gold supplies, even though the floundering global economy desperately needed lower interest rates.
But today, says Danielle,
If anything, the power of the kings and queens running the world’s central banks has become even more concentrated. In a reversal of economic fortunes, today’s economy is in desperate need of higher rather than lower interest rates, of a normalization of policy to put a floor under the bloodletting in pensions, insurance companies and among retirees worldwide.
And yet, the powers that be insist they know that better than the unwashed and uneducated masses that suffer at the hands of their misguided policies. Of course the benefits of negative interest rates outweigh the costs. And whose business is it anyway if central bankers impinge on the ability of capital to determine the value of a given entity?…
by ilene - October 9th, 2016 3:16 pm
Robert Burns. Source: Wikipedia.
Courtesy of John Mauldin, Thoughts from the Frontline
“However beautiful the strategy, you should occasionally look at the results.”
– Winston Churchill
But Mousie, thou art no thy-lane,
In proving foresight may be vain:
The best-laid schemes o' Mice an' Men
Gang aft agley,
An' lea'e us nought but grief an' pain,
For promis'd joy!
But little Mouse, you are not alone,
In proving foresight may be vain:
The best laid schemes of Mice and Men
Go often askew,
And leave us nothing but grief and pain,
For promised joy!
– Robert Burns, 1785
The Federal Open Market Committee, to almost no one’s surprise, did absolutely nothing at its last meeting other than say that maybe, if the data allow, they will raise rates in December. My cynical view on their dithering will be detailed below. And of course, the Bank of Japan met and decided that maybe they had gone a bridge too far; and rather than lowering already negative rates when the yield curve was flat out to 40 years, they decided to see if they could create a fulcrum around the 10-year Japanese bond at zero. So far, the move has not been a rousing success.
This is partially because their banks are bleeding cash and screaming at them, and they have got to figure out some way to walk back what is becoming a very destructive program. When you look at what low rates have done to the Japanese economy and Japanese retirees, Kuroda-san’s coming to Jackson Hole and declaring that negative rates have been a success demonstrated a fair amount of chutzpah. But then he supplied only a small helping of the staggering amount of hubris displayed at Jackson Hole by central bankers from all over the world, who were celebrating the success of the most repressive monetary policy conditions in the history of mankind. The IMF, the BIS, and…
by ilene - October 7th, 2016 5:40 pm
Almost every market participant out there has at least one horrific war story on a crash that profoundly affected their portfolio or world view.
For example, one unnamed stock broker I know had himself and his clients in a soaring gold stock called Bre-X in 1997. There was way less connectivity at this time, and this person was on a trip to Vegas for some sun and fun. Staying at Caesar’s Palace, he went out for a short while as the stock was trading near its highs of $286.50 per share.
When he got back to the hotel, he found out that news had already spread quickly: during a due diligence test, mining company Freeport had twinned seven drill holes, finding not even a trace of economic gold. The deposit was not real, and panic swept the market. His hotel phone had been ringing off the hook for three hours but he missed all the calls. Shares plummeted 83% that day, but he was already too late to get out of the stock.
It’s easy to rationalize the series of events that led to the fall of Bre-X in hindsight, but as Visual Capitalist's Jeff Desjardin notes, at the time many traders and experts like this broker were caught by surprise. A company worth around $4.5 billion basically went to zero almost overnight as its claim of 70 million ounces of gold vanished into thin air. That’s a “black swan”, and this one in particular changed the mining and finance industries forever.
BLACK SWANS: 9 RECENT EVENTS THAT CHANGED FINANCE FOREVER
The following infographic comes to us from Call Levels, and it highlights nine other recent “black swan” events that will have a lasting impact on how investors approach markets. These events range from the Asian financial crisis of 1997 to the more recent Brexit panic that occurred in June 2016.