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Japan PMI “Strongest Since March”: Does That Mean “Strong”?

Courtesy of Mish.

The spin in media reporting, in both directions (but typically bullish), is pervasive.

Here is a case in point. Markit reports Japan PMI Points to Strongest Manufacturing Expansion Since March.

Does “strongest since March” mean “strong”?

Here are the Key Points:

  • Flash Japan Manufacturing PMI™ at 52.4 (50.5 in July). Modest improvement in growth registered in August.
  • Flash Japan Manufacturing Output Index at 53.2 (49.8 in July). Output increased at solid pace.

A few charts will put this into perspective.

click on chart for sharper image

It seems to me that Japan has been treading water above and below the 50-50 expansion-contraction line for years (mostly below since 2007).

Will this surge prove to be more lasting than any of the others?

If so, please don’t credit Abenomics. Instead, I propose the recovery is due to trend exhaustion, in spite of Abenomics.

Mike “Mish” Shedlock

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The Chase for (no) Yield

The Chase for (no) Yield

Courtesy of 

A popular tale financial pundits and Fed critics like to tell around the campfire is that the Fed’s ultra-low rate policies have led to a speculative mania that has Americans chasing down risky investments for higher yields from sun-up til sundown. The “Chase for Yield” is, according to some, about to be our undoing – just look at the tremors caused by the early August blip of selling in the junk bond market for the latest evidence of this.

But what if the data suggested that, while many are ramping up their allocation to riskier assets, the lion’s share of people were not. What if it turned out that most people are doing just the opposite of “chasing” higher yields?

via MarketWatch (emphasis mine):

Data from the little-noticed financial accounts report show the American people have $10.8 trillion parked in cash, bank accounts and money-market funds that pay little or no interest. At the end of the first quarter, low-yielding assets totaled 84.5% of annual disposable personal income, the highest share in 23 years. Sure, people need to keep some money handy to pay their bills and some folks might have a few hundred or a few thousand in a rainy-day fund, but no one needs immediate access to the equivalent of 11 months of income. In essence, there’s $10.8 trillion stuffed into mattresses. That $10.8 trillion hoard represents a failure of Fed policy.

Since the Fed began quantitative easing in September 2012, U.S. households have socked away $1.17 trillion in their low-yield accounts. That means that 95% of the Fed’s $1.24 trillion QE3 ended up not in bubbly markets but in a safe and boring bank account. 

But don’t let that alter your narrative, which by now is probably immaculately delivered and quite compelling.


China Manufacturing PMI Treads Water

Courtesy of Mish.

Chinese manufacturing is once again treading water, barely above contraction according to the HSBC Flash China Manufacturing PMI.

Key points

  • Flash China Manufacturing PMI™ at 50.3 in August (51.7 in July). Three-month low.
  • Flash China Manufacturing Output Index at 51.3 in August (52.8 in July). Three-month low.

click on chart for sharper image


Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said …

The HSBC Flash China Manufacturing PMI moderated to 50.3 in August, down from 51.7 in July. Both domestic and external new orders rose at slower rates compared to the previous month. Meanwhile, disinflationary pressure returned as input and output prices contracted over the month. Today’s data suggest that the economic recovery is still continuing but its momentum has slowed again. Therefore, industrial demand and investment activity growth will likely stay on a relatively subdued path. We think more policy support is needed to help consolidate the recovery. Both monetary and fiscal policy should remain accommodative until there is a more sustained rebound in economic activity.”

Mish Translation of Comments

China PMI has gone nowhere. The last uptick Qu raved about is now in the ashcan. Thus, Qu wants more “policy support” AKA loose money from the China central bank to “consolidate the recovery“.

Mike “Mish” Shedlock 

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LinkedIn Drops On Rumor Einhorn Is Shorting Shares

Courtesy of Benzinga.

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LinkedIn (NYSE: LNKD) dipped as much as two percent Tuesday on a rumor that noted short-seller David Einhorn had taken a short position in the company.

LinkedIn shares are up 36 percent in the past month and recently beat second-quarter expectations by a significant margin. But its shares are volatile and the company missed consensus views in two of the past three quarters.

Einhorn, in his quarterly letter to investors last month, said "there are a number of tech stocks caught up in a smaller version of the 1999-2000 Internet bubble and we've created a bubble basket to short them."

Einhorn didn't disclose stocks included in the basket.

As of July 31, short interest represented 5.4 million of LinkedIn's 218.7 million shares outstanding. That's nearly unchanged from mid-July.

LinkedIn traded recently at $218.80, off $0.14.

Posted-In: David EinhornNews Rumors

UPDATE: J.M. Smucker FQ1 Profit Misses Street View

Courtesy of Benzinga.

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The J.M. Smucker Company (NYSE: SJM) reported weaker-than-expected fiscal first-quarter earnings.

The Orrville, Ohio-based company posted a quarterly profit of $116 million, or $1.14 per share, versus a year-ago profit of $126.6 million, or $1.19 per share. Excluding non-recurring items, Smucker’s adjusted profit came in at $1.34 per share.

Its sales dropped 2% to $1.32 billion. However, analysts were expecting earnings of $1.37 per share on revenue of $1.37 billion.

Smucker projects full-year sales to rise at a rate slightly less than the 5% provided at the beginning of the year. However, the company affirmed its adjusted EPS forecast of $5.95 to $6.05.

Sales at the US Retail Coffee segment fell 2% to $502.7 million, while sales at the US Retail Consumer Foods segment declined 3% to $522.8 million. Net sales in the International, Foodservice, and Natural Foods segment dropped 1% to $298.3 million.

Selling, distribution, and administrative expenses rose 1% in the quarter, while operating income dropped $21.7 million.

Net interest expense fell $6.4 million in the quarter, while income taxes fell $3.4 million in the quarter.

Richard Smucker, Chief Executive Officer said, “Our team continues to focus on profitably building our brands, driving innovation, and optimizing our supply chain. There is little doubt that the operating environment is challenging. However, our brands are well positioned to perform in this competitive market.”

Smucker shares gained 0.31% to close at $103.45 yesterday.

Posted-In: profitEarnings News Guidance

UPDATE: Nestlé Posts Lower H1 Earnings, Announces Share Buyback

Courtesy of Benzinga.

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Nestlé SA (OTC: NSRGY) reported a 9.6% drop in its first-half earnings and announced its plans to launch an 8 billion Swiss franc ($8.8 billion) share buyback programme.

The Vevey, Switzerland-based company’s net profit for the period declined to 4.63 billion Swiss francs ($5.07 billion), versus a year-ago profit of 5.12 billion francs. However, analysts were expecting a profit of 5.01 billion francs.

Its revenue slipped 4.8% to 42.98 billion francs compared to 45.17 billion francs. Its organic sales growth was 4.7% in the six months ended June 30, versus 4.1% in the year-earlier period.

Sales growth in emerging markets was 9.7%, compared to 8.2% in the year-earlier period. Sales growth in the Americas was 4.9%, down from 5.0 percent a year ago, while sales growth in Europe increased to 1.4%. Sales growth was 7.5% in Asia.

Nestlé’s trading operating margin narrowed to 15.0%, from 15.1% in the year-ago period. Its Operating cash flow in the period was CHF 4.3 billion.

The company also confirmed its organic sales outlook of about 5% for the full year.

Paul Bulcke, Nestlé CEO said, “We delivered solid, broad-based organic growth, driven by real internal growth and pricing in what is still a very volatile trading environment. We continued to drive the growth momentum with innovation, increased support behind our brands, and a focus on efficiencies.”

Nestlé shares gained 0.42% to close at $73.89 yesterday.

Posted-In: profitEarnings News Buybacks

Point72 Still Under A Cloud As President Plans To Step Down

Courtesy of Benzinga.

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Hedge fund giant Point72 Asset Management said its president, Thomas Conheeney, will step down at the end of 2014 and be succeeded by Douglas Haynes, managing director for human capital at Point72.

Formerly known as SAC Capital Advisors, the firm pleaded guilty to insider trading charges in April and its chief executive Steven A. Cohen continues to face a civil action that could bar him from managing money.

Point72 had assets of $15.6 billion as of its latest regulatory filing. That includes a reported $10 billion of Cohen's personal fortune

Eight former employees of of the firm were convicted or pleaded guilty to insider trading. Conheeney has not been charged.

Posted-In: News Legal Management

Whitney Tilson Says More Confident of Herbalife Short Position Following Ackman Presentation

Courtesy of Benzinga.

Whitney Tilson said in an email Tuesday, that he is more confident in his short position in Herbalife (NYSE: HLF), following Bill Ackman’s presentation. Tilson said he now believes his position has a 76% chance of succeeding vs 63% prior. That’s based on his belief that there is a 95% chance most of the company’s operations are a pyramid scheme, and there is now an 80% chance regulators will intervene.

Herbalife shares rose steadily throughout Ackman’s presentation Tuesday, and end the day up 25% at $77.67

Posted-In: News Movers & Shakers Insider Trades General

Hewlett-Packard Shares Shaky On Q3 Report

Courtesy of Benzinga.

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Hewlett-Packard (NYSE: HPQ) shares are volatile after the company announced better-than-expected third quarter earnings and raised guidance.

Revenue beat analyst expectations by 2.3 percent at $27.6 billion. This is a 1.4 percent improvement from the same period last year.

Personal systems sales increased 12 percent on an 18 percent climb in notebook unit sales. However, growth was dragged down by a shrinkage in the printing and enterprise service businesses.

Related Link: Morgan Stanley Recommends 'Adding To Positions' On iWatch, iPhone Launches

Earnings were inline at $0.89 per share — a 3.5 percent year over year increase in earnings compared to a 33 percent surge in stock price suggests significant multiple expansion.

CEO Meg Whitman said she is “very pleased” with the quarter and her “confidence in the turnaround,” is growing stronger.

Hewlett-Packard also raised its full year 2014 guidance. EPS is expected in the range of $3.70 to $3.74, compared to $3.63 to $3.75 previously. The midpoint of the new estimate is inline with Wall Street’s expectation.

Fourth quarter earnings are expected between $1.03 and $1.07 per share.

The issue was last trading at $34.65, down 0.5 percent in extended-hours trading.

Posted-In: Meg WhitmanEarnings News Guidance

Glaxo, Sanofi Trend Up On Potential Deal For Established Brands

Courtesy of Benzinga.

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Two European drug giants trended higher Monday on a report that at least two private equity groups had bid on the companies' older drug portfolios.

GlaxoSmithKlein PLC (NYSE: GSK) and Sanofi (NYSE: SNY) are fielding bids from KKR & Co. L.P. (NYSE: KKR) and Warburg Pincus, according to the Financial Times.

Total for the deal could top $10 billion as private equity companies seek to merge the two portfolios according to the report, which cited unnamed sources.

Glaxo has said it will divest established products with annual sales of $1.68 billion "before the end of the year." Glaxo announced the action July 23 when it said drug and vaccine sales fell four percent in its second quarter and 2014 sales growth seems "unlikely."

Reuters reported in April that Sanofi was looking into a similar sale of products that might be worth $7 billion to $8 billion. The Wall Street Journal repeated the rumor in June, adding Merck (NYSE: MRK) to the list with a potential sale of established brands that it said might garner $15 billion.

Glaxo changed hands recently at $48.30, up 0.56 percent; Sanofi was up only slightly at $53.21 while healthcare stocks broadly fell 2.3 percent.

Posted-In: News Wall Street Journal Rumors Asset Sales Hot Media


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 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."

Thank you for you time!


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Japan PMI "Strongest Since March": Does That Mean "Strong"?

Courtesy of Mish.

The spin in media reporting, in both directions (but typically bullish), is pervasive.

Here is a case in point. Markit reports Japan PMI Points to Strongest Manufacturing Expansion Since March.

Does "strongest since March" mean "strong"?

Here are the Key Points:

  • Flash Japan Manufacturing PMI™ at 52.4 (50.5 in July). Modest improvement in growth registered in August.
  • Flash Japan Manufacturing Output Index at 53.2 (49.8 in July). Output increased at solid pace.

A few charts will put this into perspective.


more from Ilene

Zero Hedge

Ferguson Tonight: Thunder Storms, Peaceful Protests, "Go Kill ISIS And Leave Us Alone" - Live Feed

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

One glimpse at the ominous clouds approaching Ferguson this evening was enough to suggest the end of the world was approaching but for now peacfeul protesters are once again walking (not allowed to stand) chanting "No Justice, No Peace" amidd dramatic lightning storms. The weather, for now, appears to have subdued the crowds but one protesters banner proclaiming "Go kill ISIS and leave us alone" caught our eye. Police presence is evident but not forceful for now as protesters proclaim "We want justice, here's your peace" suggesting tensions are de-escalating.


Live Feed:


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Chart School

Daily Market Commentary: Semiconductor Gains Accelerate

Courtesy of Declan.

It was more of the same from the Semiconductor index: a solid gain which took the index ever closer to 652 resistance. All of which is helping the Nasdaq and Nasdaq 100 maintain their push to all-time highs. Technicals for the Semiconductor Index are net bullish.  Weakness will offer itself as a buying opportunity, particularly at the breakout line and/or 50-day MA. Risk can be measured from the 38.2% fib retracement at $616.25.

The Nasdaq took a small loss, but 4,485 should be strong support. Losses back to this level will also offer a buying opportunity. A decisive undercut of 4,485 would switch to a 'bull trap', but that is not today's problem.

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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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Option Review

Elizabeth Arden Put Option Activity Revisited

It’s an ugly day for investors in Elizabeth Arden, with shares in the name losing roughly one-quarter of its value overnight after the retailer of beauty products and fragrances reported a wider than expected loss and sales that were lower than analysts anticipated. Shares in the name are down more than 23% in the final hour of trading to stand at $14.95.

On Friday of last week we wrote a short note about put option activity on the stock...

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Sector Detector: Bullish investors jockey for position as if the correction is over

Courtesy of Sabrient Systems and Gradient Analytics

As many investors enjoy the final weeks of summer, some optimistic bulls seem to be positioning themselves well ahead of Labor Day in anticipation of a fall rally. Indeed, last week’s action was impressive. After only a mere 4% correction, investors continued to brush off the disturbing violence both at home and abroad, and they took the minor pullback as their next buying opportunity. But was that really all the pullback we’re going to get this year? I doubt it. But I also believe that nothing short of a major Black Swan event can send this market into a deep correction.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then ...

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Swing trading portfolio - week of August 18th, 2014

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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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

The Stock World Weekly Newsletter is ready to go! View it here: Stock World Weekly. Just put in your user name and password, or take a free trial. 


#120692880 / ...

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Market Shadows

Helen Davis Chaitman Reviews In Bed with Wall Street.

Author Helen Davis Chaitman is a nationally recognized litigator with a diverse trial practice in the areas of lender liability, bankruptcy, bank fraud, RICO, professional malpractice, trusts and estates, and white collar defense. In 1995, Ms. Chaitman was named one of the nation's top ten litigators by the National Law Journal for a jury verdict she obtained in an accountants' malpractice case. Ms. Chaitman is the author of The Law of Lender Liability (Warren, Gorham & Lamont 1990)... Since early 2009, Ms. Chaitman has been an outspoken advocate for investors in Bernard L. Madoff Investment Securities LLC (more here).

Helen Davis Chaitman Reviews In Bed with Wall Street. 

By Helen Davis Chaitman   

I confess: Larry D...

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Digital Currencies

BitLicense Part 1 - Can Poorly Thought Out Regulation Drive the US Economy Back into the Dark Ages?

Courtesy of Reggie Middleton.

An Op-Ed piece penned by Veritaseum Chief Contracts Officer, Matt Bogosian

This past weekend (despite American Airlines' best efforts), Reggie and I made it to the Second Annual North American Bitcoin Conference in Chicago. While there were some very creative (and very ambitious) ideas on how to try to realize the disruptive Bitcoin protocol, one of the predominant topics of discussion was New York Superintendent of Financial Services Benjamin Lawsky's proposed Bitcoin regulations (the BitLicense proposal) - percieved by many participants at the event as an apparent ...

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Biotechs & Bubbles

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

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...

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See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...

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FeedTheBull - Top Stock market and Finance Sites

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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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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