It’s official:all the markers of manias both past and present have now been surpassed.
NASDAQ™ new highs? Check. All major Indexes both in actual terms as well as adjusted for inflation? Check. Earnings reports being enthusiastically reported as more “beats” than misses? Check. How about employment data? Yep. Within statistically accepted range of near full employment. How about all the macro data? Is it supportive of such a move? Absolutely! And getting better with each release. For Bad is now good, and worse is – excellent!
All of the above sounds great to the uninitiated person on the street. The only problem is as you may now understand the real truth is: that specious (i.e., superficially plausible, but actually wrong) has replaced true/truth – as fact. And in my opinion not just superficially. It now seems how most, if not all financial matters are reported. At all levels.
It is in this context that explains why the average person as well as rudimentary “investor” in some 401K plan is both confused by what they hear, as well as disinterested. The default position when it comes to topics such as these (i.e., data deciphering) is to not pay any mind and just “hope for the best.” There’s no greater example of this than the unopened 401K statement that arrives in the mailbox.
In times of distress, market gyrations, confusion and more. The default thing to do by nearly all “passive investors” is to – not open the envelope. Using this frame of reference it should leave no wondering why channels like CNBC™ aren’t tuning in viewers, but actually turning them off. So let’s take some of the opening paragraph and put the implied references against the true meanings of what has been reported thus far.
The indexes have all once again hit “never before seen in the history of the markets” highs. Once would infer that the economy should then be tearing along at a pace relative to such strong “market” forces. Yeah, not so much.
One would think an “earnings beat” would mean just that: beat because they earned more money than projected. No. You “beat” because of financial engineering. i.e., GAAP vs Non-GAAP. This is where “fake it till you make it” takes on a whole new
Citi’s Matt King once again hits it out of the ballpark.
After laying out the fundamental problems caused by central planning, namely a historic plunge in yields, and a collapse in global growth…
… a decline in consumer spending and a collapse in investment, offset by a surge in buybacks and new debt issuance.
Matt King presents the only response the central banks have: leave investors with nothing to buy.
Which he summarizes in 6 short words.
But how does buying a couple billion in sovereign bonds every month whether in the US, or Japan or Europe translate into record stock prices even as the global economy has not been this bad since the first Great Depression?After all, there are tens of trillions in securities across the globe (not counting the hundreds of trillions in derivatives).
Simple: when you manage a 693x leverage between a sovereign bond entry and a CCC bond exit, it is perhaps far more surprising that the S&P isn’t artificial orders of magnitude higher.
My first Uber lift was in South Carolina. My driver was from Sudan originally, but had emigrated to the US 20 years ago. Being the curious sort, I asked him about his life in Sudan and why he moved. He said that he left when his country had crumbled too far, past the point where a reasonable person could have a reasonable expectation of personal safety, when all institutions had become corrupted making business increasingly difficult. So he left.
Detecting a hitch in his delivery when he spoke of coming to the US, I asked him how he felt about the US now, 20 years later. "To be honest," he said, "the same things I saw in Sudan that led me to leave are happening here now. That saddens me greatly, because where else is there to go?"
It’s time to face some uncomfortable ideas about the state of civilization in the United States. This country is no longer the beacon of freedom illuminating a better way for the world. Why not? Because it has ceased to be civilized.
The recent spate of police brutality videos and the complete lack of a useful or even sane response by the police unions is shaping my writing here. But it goes well beyond those incidents and extends into all corners of the lives of US citizens now, as police abuse is only one symptom of a much deeper problem.
What do we mean by "civilized?" Well, take a look at its official definition and see if you note any descriptors that are lacking in present day US culture:
1.Cultured, educated, sophisticated, enlightened, humaneAlltrulycivilized countries mustdeploretorture.
A civilized society, then, is one that is humane at its core, that knows right from wrong, and which does not need to conduct lengthy ‘internal reviews’ to discover if videotaped brutality is indeed showing illegal abuse.
Let’s begin by examining a few recent cases of brutality, so many of which now exist that I have to narrow the field substantially in the interest of brevity. I'm going to skip over the one where an unarmed black man was shot five times in the back and coldly murdered by the officer in South Carolina, because that has already (and rightly)…
At the end of last month we noted that stocks were entering a dangerous period: the “buyback blackout” that surrounds earnings. As we’ve documented exhaustively, stocks have benefited handsomely from the corporate share repurchase bid and so in the absence of demand from cost-insensitive corporate management teams, and with households and institutions both selling as outlined here, the following chart, which shows that equity flows are aggresively negative, comes as no surprise. Having said that, stocks are at record highs begging the question: “who is buying?”
Big decoupling in recent weeks between US equity flows and prices (new highs today –…correction risks will grow in absence of fresh inflows in coming weeks.
We might ask the following: is there someone (or some central planning agency) out there buying ES or spoofing to push the market higher without ever actually buying anything? One never knows — perhaps Kuroda’s plunge protection is now operating outside of Tokyo.
That piggy bank, otherwise known as "The Clinton Global Graft Initiative", had an interesting way of doling out the "contributions" it received.
The Clintons are a malignant tumor on the body politic. They have a history of doing anything for money — including selling out their own country — and when it comes to their personal bank accounts, there's apparently never enough zeroes.
Over the past year, special-operations forces have landed in 81 countries.
These days, the sun never sets on America’s special-operations forces. Over the past year, they have landed in 81 countries, most of them training local commandos to fight so American troops don’t have to. From Honduras to Mongolia, Estonia to Djibouti, U.S. special operators teach local soldiers diplomatic skills to shield their countries against extremist ideologies, as well as combat skills to fight militants who break through.
President Barack Obama, as part of his plan to shrink U.S. reliance on traditional warfare, has promised to piece together a web of such alliances from South Asia to the Sahel. Faced with mobile enemies working independently of foreign governments, the U.S. military has scattered small, nimble teams in many places, rather than just maintaining large forces in a few.
The budget for Special Operations Command in Tampa, Fla., which dispatches elite troops around the world, jumped to $10 billion in the fiscal year that ended on Sept. 30, from $2.2 billion in 2001. Congress has doubled the command to nearly 70,000 people this year, from 33,000 in fiscal 2001. The Army, Navy, Marine Corps and Air Force provide further funding.
Navy SEALs and Army Green Berets, for example, are stationed in the Baltics, training elite troops from Lithuania, Estonia and Latvia for the type of proxy warfare Russia has conducted in the Crimea and eastern Ukraine.
But the vast majority of special-operations missions involve coaxing and coaching foreign forces to combat extremists the U.S. considers threats.
U.S. special operators are encouraged to learn local culture, language and politics as they report on a country’s vulnerability to extremists. “This isn’t spying—this is armed anthropology,” said David Maxwell, a former Special Forces colonel now at Georgetown University.
There wasn’t a whole lot of action during the cash market session as indices held on to most of their premarket gains. The only index to come up short was the semiconductor index. It confirmed a wedge breakdown, and it’s looking increasingly likely a double top is in play. A retest of the 200-day MA would appear to be the favored outcome going forward.
The S&P hasn’t quite negated the ‘bull trap’ and the risk is a triple top if this weakness in the Semiconductor Index spreads to the Nasdaq, Large and Small Caps. The technical picture remains okay plus it looks to be enjoying the start of a relative advantage against the Russell 2000.
The Nasdaq is looking vulnerable given Friday’s action in the Semiconductor Index. Watch for a potential bearish ‘shooting star’.
The Russell 2000 was looking good towards knocking its ‘bull trap’ on Thursday, but Friday’s action left it back at its 20-day MA and near channel support.
For Monday, look for a weak start as indices struggle to breakdown resistance, and the one strong index in the Nasdaq is negatively impacted by the selling in the Semiconductor Index. If sellers do make their presence felt, watch how trendline support plays out.
Consider my address book — and yes, the simple fact that I have one already tells you a good deal about me. All the names, street addresses, email addresses, and phone numbers that matter to me are still on paper, not in a computer or on an iPhone, and it’s not complicated to know what that means: I’m an old guy getting older. Going on 71, though I can hardly believe it. And that little book shows all the signs of where I’m headed. It wasn’t true a few years ago, but if I start flipping through the pages now, I can’t help but notice that the dead, with their addresses and phone numbers still beside them, are creeping up on the living, and that my little address book looks increasingly like a mausoleum.
Age has been on my mind of late, especially when I spend time with you. This year, my father, your great-grandfather, who died in 1983, would have been 109 years old. And somehow, I find that moving. I feel him a part of me in ways I wouldn’t have allowed myself to admit in my youth, and so think of myself as more than a century old. Strangely, this leaves me with a modest, very personal sense of hope. Through my children (and perhaps you, too), someday long after I’m gone, I can imagine myself older still. Don’t misunderstand me: I haven’t a spiritual bone in my body, but I do think that, in some fashion, we continue to live inside each other and so carry each other onward.
As happens with someone of my age, the future seems to be foreshortening and yet it remains the remarkable mystery it’s always been. We can’t help ourselves: we dream about, wonder about, and predict what the future might hold in store for us. It's an urge that, I suspect, is hardwired into us. Yet, curiously enough, we’re regularly wrong in the futures we dream up. Every now and then, though, you peer ahead and see something that proves — thanks to your perceptiveness or pure dumb luck (there’s no way to know which) — eerily on target.
The Future Foreseen
Back in 2001, before I even imagined a grandson in my life, I had…
In the immediate aftermath of yesterday's destructive Nepal earthquake, which has led to hundreds of aftershocks and a constantly rising death toll, currently exceeding 2000, the most visually stunning, if quite deadly, phenomenon was a massive avalanche on Mt. Everest and leading to at least 17 casualties, including a Google executive, and 61 injured.
According to Xinhua, the avalanche began Saturday on Mount Kumori, a 7,000-meter-high mountain just a few miles from Mount Qomolangma, also known as Mount Everest, gathering strength as it headed toward the base camp where climbing expeditions have been preparing to make their summit attempts in the coming weeks, he said. Numerous climbers may now be cut off on routes leading to the top of the world's highest peak.
The avalanche plowed into a part of base camp, a sprawling seasonal village of climbers, guides and porters, flattening at least 30 tents, Tshering said. All of the dead and injured were at base camp.
Terrifiyingvideo from a skier at base-camp - warning – expletive-strewn…
Survivors reached over Internet messaging services described a scene of terror as the snow and ice roared through the nearby Khumbu Icefall and into the camp.
The nationalities of base camp victims were unclear as climbers described chaotic attempts to treat the injured amid fears of more landslides and aftershocks that continue to rattle the region. Chinese media "West China City Daily" reported that a Chinese climber and two Sherpa guides were among the dead.
Dan Fredinburg, a Google executive who described himself as an adventurer, was among the dead, Google confirmed. Lawrence You, the company's director of privacy, posted online that Fredinburg was with three other Google employees hiking Mount Qomolangma. Fredinburg served as product manager and the head of privacy at Google X.
Apple closed last week at an all-time weekly closing high at (1) in the chart above. Apple recently broke above its 4-year rising channel, came back to test old resistance and pushed higher, setting this new record high.
In November of last year, when Apple was trading below $110 per share, the Power of the Pattern shared that Apple’s upside target stood at $150.(See post here)
- Singapore, India and China continue to import staggering volumes of gold from the West - U.K. exports of bullion to Switzerland increase 6 fold to a very large 97 tonnes - Gold exports from Switzerland to both China and India doubled in March - Shanghai Gold Exchange (SGE) becoming most important centre for physical gold trade - LBMA says London gold...
The Department of Transportation's Federal Highway Commission has released the latest report on Traffic Volume Trends, data through February.
"Travel on all roads and streets changed by 2.8% (6.1 billion vehicle miles) for February 2015 as compared with February 2014." The less volatile 12-month moving average is up 0.20% month-over-month and 2.36% year-over-year. If we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) is a smaller change, up 0.13% month-over-month and up only 1.23% year-over-year.
Here is a chart that illustrates this data series from its inception in 1971. It illustrates the "Moving 12-Month Total on ALL Roads," as the DOT terms it. The ...
A reader asked me if I ever hired someone for the minimum wage. He also believes the minimum wage is really a maximum wage.
From Drew ... Mish, I’m curious if you have ever had to actually pay someone minimum wage to work for you week in, week out, year after year?
I’ve signed plenty of paychecks myself, and honestly, I could never employ someone and pay the minimum wage knowing it was not enough for that person to live on, regardless of whether or not the “market” says I could hire them for that price. I have willingly paid more, and they always very much appreciated it, and I also felt like I got more effort since they knew I was paying them more. But I know that’s not how large corporations work.
I believe you would argue whether or not the minimum is enough on which to live is irrelevant a...
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Here's an interesting argument by Felix Salmon, although I think he is taking two correct observations and mistakenly attributing a cause-and-effect relationship to them: Bitcoin is going nowhere because women are not involved.
More likely, in my opinion, women are not involved in bitcoin because bitcoin is going nowhere (and they know it). Or maybe, simply, bitcoin is going nowhere and women are not involved.
Nathaniel Popper’s new book, Digital Gold, is as close as you can get to being the definitive account of the history of Bitcoin. As its subtitle proclaims, the book tells the story of the “misfits” (the first generation of hacker-l...
As we get into the heart of earnings season and anticipate the GDP report for Q1, the investor spotlight has been taken off the Federal Reserve and timing of its first interest rate hike, at least temporarily. Even though Q1 economic growth will undoubtedly look weak, the future remains bright for the U.S economy – even though many multinationals will struggle with top-line growth due to the strong dollar – and any near-term selloff resulting from weak economic or earnings news should be bought yet again in expectation of better results for the balance of the year. High sector correlations remain a concern, reflectin...
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...
In my last post (Part 1 of this article), I looked at alternative ETFs that could be used as hedges against the corrections that we have seen during that long 2 year bull run. Looking at the results, it seems that for short (less than a month) corrections, a VIX ETF like VXX could actually be a viable candidate to hedge or speculate on the way down. Another alternative ETF was TMF, a long Treasuries ETF which banks on the fact that when markets go down, money tends to pack into treasuries viewed as safe instruments. In some cases, TMF even outperformed the usual hedging instruments like leveraged ETFs. There could of course be other factors at play since some of 2014 corrections were related to geopolitical events which are certain...
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PSW Members - well, what a year for biotechs! The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down! The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months. What could go wrong?
Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.
Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies. A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...
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 firstname.lastname@example.org 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.
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