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Financial Markets and Economy

U.S. Indexes Rise to Records as Bond Rout Eases Ahead of the ECB (Bloomberg)

U.S. stock benchmarks jumped the most in a month, powering to fresh records as the bond selloff eased, fueling demand for dividend-yielding equities amid mounting speculation the European Central Bank will extend its asset-buying program.

Goldman Tells Stock Pickers to Rejoice as Correlations Decline (Bloomberg)

America’s bull market in equities has been tough on active managers who have mostly failed to beat the performance of ETFs and mutual funds that track indexes. 

The ‘Weird’ Commodity Hurting the Bears as Prices Double (Bloomberg)

Iron ore’s probably heading for a retreat in 2017 as new mine supply comes online and a surplus builds, according to UBS Group AG, which acknowledged that the commodity’s recent surge was unexpected and had torpedoed an earlier forecast for a slump this quarter. 

In mammoth task, BP sends almost three million barrels of U.S. oil to Asia (Reuters)

Oil major BP (BP.L) is shipping almost three million barrels of U.S. crude to customers across Asia, pioneering a lengthy and complex operation likely to become more popular after OPEC last week announced deep production cuts.

Fed May Struggle to Signal What Comes After December (The Wall Street Journal)

When Federal Reserve officials meet next week, agreeing to raise short-term interest rates will be the easy part. The trickier task could be debating the likely path of interest rates in the months and years ahead.

Airline Profits Set to Slide Back From Record as Oil Price Rises (Bloomberg)

Global airline earnings are set to decline next year after reaching a record in 2016 as higher oil prices clip margins, according to the industry’s main trade group.

China premier says steady growth this year to lay good foundation for 2017 (Reuters)

China will reach its key economic targets this year, which will lay a good foundation for 2017, state television quoted Premier Li Keqiang as saying on Wednesday.

Li said China's economy maintained steady growth this year,


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News You Can Use From Phil’s Stock World

 

Financial Markets and Economy

Trump Bull Market Bounty Tops $1 Trillion as Bear Cases Go Quiet (Bloomberg)

Donald Trump is doing to U.S. equity bears what seven years of economic stimulus rarely could: shut them up.

Two years of paralysis has for now ended in stocks, with more than $1 trillion added to shares values since Election Day and the Dow Jones Industrial Average looking bound for 20,000.

China’s Banks Are Hiding More Than $2 Trillion in Loans (The Wall Street Journal)

In 2014, the Chinese city of Haimen on the mouth of the Yangtze River set out to build a large apartment complex and turned to Bank of Nanjing Co. for about $29 million in financing.

China's Yuan Pessimists Are Multiplying (Bloomberg)

China is tightening capital controls as the imminent renewal of a foreign-exchange conversion quota adds to depreciation pressure on the yuan.

Monte Paschi Asks ECB for More Time to Complete Capital Increase (Bloomberg)

Banca Monte dei Paschi di Siena SpA requested more time from the European Central Bank to complete a plan to raise 5 billion euros ($5.4 billion) by private means as the troubled lender struggles to attract new investors.

Trump Win Set Off $2 Trillion Shock Rotation to Stocks From Debt (Bloomberg)

Donald Trump’s election win sent a $2 trillion shock wave through global markets over the past month.

That’s how much equities’ global market value has jumped. And that’s about the size of the loss in worth of the Bloomberg Barclays Global Aggregate Index of bonds, over the worst month for global bonds in dollar terms on record.

Xi Said to Become First Chinese President at Davos Summit (Bloomberg)

President Xi Jinping will become the first Chinese head of state to attend the World Economic Forum in Switzerland next month, a person familiar with the trip said, as the country seeks a larger role in shaping the global financial order.

ICE told to speed up investigations on U.S. futures exchange (Reuters)

Intercontinental Exchange Inc (ICE.N)


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12 Stocks To Watch For December 8, 2016

Courtesy of Benzinga.

12 Stocks To Watch For December 8, 2016

Some of the stocks that may grab investor focus today are:

  • Wall Street expects Sears Holdings Corp (NASDAQ: SHLD) to report a quarterly loss at $4.06 per share on revenue of $4.95 billion before the opening bell. Sears shares fell 3.22 percent to $11.73 in after-hours trading.
  • Lululemon Athletica inc. (NASDAQ: LULU) reported stronger-than-expected earnings for its third quarter and announced a $100 million stock buyback plan. Lululemon shares climbed 14.07 percent to $68.26 in the after-hours trading session.
  • Analysts expect Broadcom Ltd (NASDAQ: AVGO) to post quarterly earnings at $3.38 per share on revenue of $4.12 billion after the closing bell. Broadcom shares gained 0.93 percent to $170.11 in after-hours trading.
  • Casey’s General Stores Inc (NASDAQ: CASY) posted weaker-than-expected earnings for its second quarter on Wednesday. Casey’s shares dropped 2.71 percent to $120.85 in the after-hours trading session.
  • H & R Block Inc (NYSE: HRB) reported a narrower-than-expected loss for its second quarter on Wednesday. H & R Block shares surged 7.11 percent to $25.00 in the after-hours trading session.
  • Before the opening bell, Science Applications International Corp (NYSE: SAIC) is projected to report its quarterly earnings at $0.84 per share on revenue of $1.15 billion. SAIC shares gained 0.04 percent to $82.15 in after-hours trading.

Find out what’s going on in today’s market and bring any questions you have to Benzinga’s PreMarket Prep.

  • Costco Wholesale Corporation (NASDAQ: COST) reported upbeat profit for its first quarter on Wednesday. Costco shares gained 1.40 percent to $156.00 in the after-hours trading session.
  • Analysts are expecting Ciena


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Portland “Orecrats” Target Income Inequality: Pass Massive 25% Tax on Corporations Having “Excessive CEO Pay”

Courtesy of Mish.

Liberals in the city of Portland Oregon have put their foot down against income inequality.

The “Orecrats” are not going after CEOs, but rather corporations that have CEO salaries the “Orecrats” deem excessive.

The tax penalty on corporations is as much as 25%.

portland-tax

Please consider Portland Adopts Surcharge on C.E.O. Pay in Move vs. Income Inequality.

Moving to address income inequality on a local level, the City Council in Portland, Ore., voted on Wednesday to impose a surtax on companies whose chief executives earn more than 100 times the median pay of their rank-and-file workers.

The surcharge, which Portland officials said is the first in the nation linked to chief executives’ pay, would be added to the city’s business tax for those companies that exceed the pay threshold. Currently, roughly 550 companies that generate significant income on sales in Portland pay the business tax.

Under the new rule, companies must pay an additional 10 percent in taxes if their chief executives receive compensation greater than 100 times the median pay of all their employees. Companies with pay ratios greater than 250 times the median will face a 25 percent surcharge.

The tax will take effect next year, after the Securities and Exchange Commission begins to require public companies to calculate and disclose how their chief executives’ compensation compares with their workers’ median pay. The S.E.C. rule was required under the Dodd-Frank legislation enacted in 2010.

Thomas Piketty, a professor at the Paris School of Economics and an authority on income inequality who wrote “Capital in the Twenty-First Century,” said he favored the Portland tax as a first step.

“This is certainly part of the solution,” Mr. Piketty wrote in an email, “but the tax surcharge needs to be large enough; the threshold ‘100 times’ should be substantially lowered.”

Another supporter of the tax is Charlie Hales, the mayor of Portland.

“Income inequality is real, it is a national problem and the federal government isn’t doing anything about it,” Mr. Hales, a Democrat, said in a telephone interview. “We have a habit of trying things in Portland; maybe they’re not perfect at the first iteration. But local action replicated around the country can start to make a difference.”

Mr. Hales, who did not seek re-election, will leave office at the end of the month.


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Australia’s Alternate Universe: Lost in Space Roundup

Courtesy of Mish.

Australia suffered its worst GDP decline since the financial crisis in 2008. Economists expected a decline of 0.1% but Third Quarter GDP Declined 0.5%.

Trade data subtracted 0.2 percentage points and construction data released last week were much worse than expected. Business Investment was also weak.

Add to those concerns, a housing bubble that has been ready to pop for years, but hasn’t yet. Is now the time?

Australia last had a recession in 1991. Analysts think recessions can be avoided for something like forever.

Not Even Halfway

australia-recession

Financial review writer Phillip Baker says Australian Economy is Not Half Way to a Recession.

The economy may have gone backwards in the September quarter, but we’re not on the edge of a recession.

Economic expansions like the one Australia has enjoyed for so long don’t just die suddenly. They have to be killed off and at this stage it doesn’t look like that will happen.

An annual growth rate of 2.5 per cent is now much more likely as this year’s annual growth rate will probably come in at 2.3 per cent, again, lower than most economists had predicted at the start of 2016.

Perhaps the biggest worry from this latest report was the drop-off in consumer spending.

After all, it makes up more than half of total demand and is a key to the RBA’s growth forecasts.

Slow wage growth and slowing employment growth are to blame, but we need consumers to dip into their savings more to boost spending growth.

The other major concern was the drop-off in dwelling investments, which implies we can no longer rely on the housing market for growth.

The real issue however is what can be done about it from here?

RBA won’t be helping

The obvious reaction will be to call out for more interest rate cuts from the Reserve Bank, but in reality monetary policy is on its last legs.

To get the economy growing we need consumers to spend more. We need more investing from business and we need more jobs being created.

If there wasn’t so much public debt around there would be more pressure on the federal government to undertake spending on infrastructure.

Phillip Baker’s Alternate Universe

  1. Consumer spending


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Use the MACD, And Moving Average Indicators To Perfection!

 

Use the MACD, And Moving Average Indicators To Perfection!

Courtesy of 

This was the subject line of an email that came into my inbox tonight and it’s something I’ve been thinking about for a while. No, not how to use MACD to perfection, but how investors think about signals and indicators.

A few weeks ago I was riding the subway, when after a minute or two of sitting at a station, on came the dreaded “we are delayed due to train traffic ahead of us.” The person sitting next to me let out an audible “ugggh.” I wasn’t surprised to hear the sound of frustration; after all, nobody prefers a longer commute. But what made me take notice was what sparked it. It wasn’t the two minutes of sitting at the platform, but rather the automated message, as if you need a signal to confirm the fact that you’re sitting still.

Searching for signals is part of what makes us human beings. We look for signals in people’s body language, we look for signals from god, and we definitely look for signals in the stock market.

The problem is we tend to overdo it. I mean, how many signals do we really need to tell us that the economy is expanding or contracting, or that stocks are going lower or higher? Looking for the signal behind the signal’s signal is fourth-order thinking at its dumbest.

We’re addicted to signals because they provide us with a scapegoat. They give us something to blame other than chance when we experience an adverse outcome. Heaven forbid we look in the mirror and accept that we made a bad decision or just experienced bad luck.

The email I got tonight is a great example of how dirtbags prey on an investor’s naivety. The truth is that indicators are just a derivative of price; they’re an elaborate way of turning something simple into something complex. Indicators can’t be used to perfection because they don’t actually indicate anything about the future any more than a magic eight ball does.

This should all be stating the obvious, but based on the number of these emails I receive, apparently they’re great at providing false hope.





Don’t Fear the Reaper

 

Don’t Fear the Reaper

Courtesy of 

In a recent Bloomberg article, Luke Kawa writes how investors are positioning themselves as interest rates rise:

Cumulative inflows into the iShares Short Maturity Bond ETF (NEAR), Floating Rate Bond ETF, SPDR Bloomberg Barclays Short Term High Yield Bond ETF, PowerShares Senior Loan Portfolio , and the Vanguard Short-Term Corporate Bond ETF  topped $400 million in total for the first session of the week, the highest since the inception date of the most recent member of this product group. One thing all these offerings have in common: low duration.

Anecdotally I can confirm that investors are indeed worried about how bonds and bond funds will behave if rates continue to rise. I would argue, however, that they’re worries are misguided. The sense I get is that they’re not just worried about their fixed-income returns falling short of expectations, they’re freaking out about a full blown meltdown.

The ten-year rate went from a low of 1.40% in July to as high as 2.40% last week. Over this time, particularly in the last few weeks as rates have gone higher, bonds have gotten “crushed.” TLT, the ETF representing one of the most sensitive parts of the bond market, has fallen 16% from its highs in July (It remains up 1.6% on the year). BND, the total U.S. bond market is 4% off its highs, and is up 2.3% YTD.

People are acting as if there has never been a period of rising interest rates.  In January 1941, the 10-year treasury was yielding 1.95%, by September 1981 it was up to 15%. Over that time, ten-year bonds had nominal losses just ten times, with the worst annual loss at 5% (table below). When bonds get crushed, it’s not the losses you see on your statement that get you, but rather the losses you feel when you go to the grocery store.

10-yr-returns

Inflation is a much greater threat for bond holders than rising rates. Below is the real and nominal growth of $1 for a *bond portfolio. All that white space is inflation. People often point to how risky stocks are by citing the Great Depression. Stocks peaked in 1929 and didn’t regain those levels until 1955 (1945…
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Technical Risk Management Rules (Video)

Courtesy of EconMatters

We discuss technical risk management theory in this video based upon a viewer`s question regarding risk strategies. Thinking big accounts means one can ignore technical warning signs to bail on a trade have cost many a trader massive capital losses and sleepless nights.





China Spotlight: Capital Flight Intensifies, US Treasury Reserves Plunge, Capital Controls Increase

Courtesy of Mish.

A reader pinged me the other day about China “dumping” US treasuries.

I responded, “dumping” does not properly describe what’s happening. China did not sell US treasuries because it wants to get rid of them. Rather, China’s reserves plunged because of capital flight. China is doing all it can to stop capital flight and shore up the value of the yuan.

China has tightened capital controls a couple of times, but so far, it hasn’t worked.

china-reserves

China’s Foreign Reserves Drop Most in 10 Months

Bloomberg reports China’s Foreign Reserves Drop Most in 10 Months as Yuan Slumps.

Key Points

  • Reserves decreased $69.1 billion to $3.05 trillion in November, the People’s Bank of China said in a statement Wednesday
  • That compares with the median forecast of $3.06 trillion in a Bloomberg survey of economists
  • Decline was biggest since reserves tumbled $99.5 billion in January

Big Picture

The fifth-straight monthly decline brings the reduction in the stockpile to almost $1 trillion from a record $4 trillion in June 2014. While authorities have begun tightening capital controls, a $50,000 limit that Chinese citizens are allowed to convert from yuan annually will reset at the start of the new year, potentially adding depreciation pressure on the currency.

“A combination of yuan weakness and a peak in the mainland property sector is conspiring to increase capital outflows,” Bloomberg Intelligence economists Tom Orlik and Fielding Chen wrote in a report. “Another month of falling reserves does little to inspire confidence, especially as households await the renewal of their FX quota at the start of 2017. Even so, with the yuan steady so far in December and capital controls in place, there’s reason to hope China’s reserve buffer will end the year on a more stable note.”

“The announcement of additional capital controls will smooth the fall in reserves for some time but won’t solve the problem,” said Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis SA in Hong Kong. “China isn’t out of the woods.”

“I smell more capital controls, which run against any hopes of reform or internationalization of the yuan or a sharp drop in the yuan,” said Michael Every, head of financial markets research at Rabobank NA in Hong Kong. “And all these fun and games come before we have even seen President


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Mishcast of Nowcast, GDPNow for December 9, 2016

Courtesy of Mish.

The GDPNow Model forecast for fourth quarter GDP dipped to 2.6% from 2.9% on December 1.

Tuesday’s commerce reports on trade and factory orders played no part of the downgrade.

Instead, auto sales and the employment report from last Friday factored into the analysis.

here-we-go-again

Latest forecast: 2.6 percent — December 6, 2016

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2016 is 2.6 percent on December 6, down from 2.9 percent on December 1. The forecast for fourth-quarter real personal consumption expenditures growth fell from 2.5 percent to 2.3 percent on December 2 after the employment situation release from the U.S. Bureau of Labor Statistics and the auto sales release from the U.S. Bureau of Economic Analysis. The forecast for fourth-quarter real nonresidential equipment investment growth has fallen from 6.6 percent to 3.9 percent since December 1.

Contributions

What Happened?

The above table explains clearly: The big upside in non-manufacturing ISM, the big upside in factory orders, and the expansion in the trade deficit, the later to the downside, were all factored in.

It’s not the reports that matter in these forecasts, it’s how the forecasts did in comparison to model expectations that matters.

 

 

Continue reading here…





 
 
 

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News You Can Use From Phil's Stock World

 

Financial Markets and Economy

U.S. Indexes Rise to Records as Bond Rout Eases Ahead of the ECB (Bloomberg)

U.S. stock benchmarks jumped the most in a month, powering to fresh records as the bond selloff eased, fueling demand for dividend-yielding equities amid mounting speculation the European Central Bank will extend its asset-buying program.

Goldman Tells Stock Pickers to Rejoice as Correlations Decline (Bloomberg)

America’s bull market in equities has been tough on active managers who have ...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

U.S. Indexes Rise to Records as Bond Rout Eases Ahead of the ECB (Bloomberg)

U.S. stock benchmarks jumped the most in a month, powering to fresh records as the bond selloff eased, fueling demand for dividend-yielding equities amid mounting speculation the European Central Bank will extend its asset-buying program.

Goldman Tells Stock Pickers to Rejoice as Correlations Decline (Bloomberg)

America’s bull market in equities has been tough on active managers who have ...



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Zero Hedge

ECB Introduces Cash Collateral To Resolve Shortage Of Eligible Eurosystem Collateral

Courtesy of ZeroHedge. View original post here.

While most were expecting the ECB to extend its QE program by at least 6 months (it did so by 9) and not to taper (it did so by cutting the monthly purchases from €80 to €60 billion), another just as prominent question was whether the ECB would tackle the problem of collateral shortage, and if so how. After all, as we have shown in the past few weeks, while there has been a selloff in the Bund long end, the short end, especially 2Y Bunds, have seen their yields tumble to record lows as financial institutions loaded up on securities to satisfy collateral...



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Kimble Charting Solutions

Banks testing "Triple" breakout level right now

Courtesy of Chris Kimble.

Most quality rallies in stocks, have historically seen banks come along for the ride. Up until a couple of months ago, Banks had been a disappointment to many, as they had lagged the broad market for the prior 18 months.

Below looks at the Bank Index (BKX) over the past decade and why the Power of the Pattern, feels banks have an important “Breakout Test” in play at this time!

CLICK ON CHART TO ENLARGE

...

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ValueWalk

Aswath Damodaran - Session 23: The Options to Expand & Abandon, Financial Flexibility and Distressed Equity

By VWArticles. Originally published at ValueWalk.

Published on Dec 5, 2016 ]]> Get The Full Walter Schloss Series in PDF

Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

We respect your email privacy

We started this class by looking at the option to expand, where your capacity to enter or expand into new (big) markets can justify up-front bad investments and then at the option to abandon poorly performing investments. We then valued financial flexibility as an option, and argued that it was worth more to capital-constrained companies with unpredictable and high-value-added investments. We continued wi...



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Chart School

Dow Jones Gann Angle Update

Courtesy of Read the Ticker.

When the Dow Jones moves the media must have an explanation for it. However the insiders have the nod to what is going on.

The media story so far is that since the TRUMP win, managers have been rotating their portfolios to represent TRUMP trends (lower taxes, go easy on the 'too big to fail' Wall Street banks, more jobs for Americans). Prior the election the stock market was set up for a HILLARY win, due to more of the same, status quo, FED support. But....

Using Richard Ney logic, the short answer is, stocks were always going up and the election results do not matter nor would a higher 10 yr bond or lackluster fundamentals. The real story is the marke...

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Members' Corner

Trump, Meet The New Boss?

Courtesy of Nattering Naybob.

Over at Philstockworld... High Finance for Real People - Fun and Profits... 

StJL - "Once again, I think that the middle class voters who turned in great numbers for Trump will soon realize that they voted against their best economic interest. Trump will only be part of the equation – the GOP Congress can't wait to weaken the social safety nets that are so needed by the same people who are so happy today. But too late now I guess"
No surprises here as all along we maintained the memory of what happened in 2000. With that fresh in mind, rather than forgotten in the past, we knew that given the indoctrination of the electorate, anything was possible and history keeps repeating itself...

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Promotions

Phil's Stock World's Las Vegas Conference!

 

Come join us for the Phil's Stock World's Conference in Las Vegas!

Date:  Sunday, Feb 12, 2017 and Monday Feb 13, 2017.            

Beginning Time:  8:00 am Sunday morning

Location: Caesar's Palace in Las Vegas

Notes

Caesar's has tentatively offered us rooms for $189 on Saturday night and $129 for Sunday night. However, we have to sign the contract ASAP. We need at least 10 people to pay me via Paypal or we may lose the best rate for the rooms. (Once we are guaranteed ten attendees, I will put up instructions to call the hotel for individual rooms.)

The more people who sign up,...



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OpTrader

Swing trading portfolio - week of December 5th, 2016

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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Digital Currencies

Largest US Bitcoin Exchange Is "Extremely Concerned" With IRS Crackdown Targeting Its Users

Courtesy of ZeroHedge. View original post here.

Last Thursday we reported that in a startling development seeking to breach the privacy veil of users of America's largest bitcoin exchange, the IRS filed court papers seeking a judicial order to serve a so-called “John Doe” summons on the San Francisco-based Bitcoin platform Coinbase.

The government’s request is part of a bitcoin tax-evasion probe, and se...



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Mapping The Market

The Most Overlooked Trait of Investing Success

Via Jean-Luc

Good article on investing success:

The Most Overlooked Trait of Investing Success

By Morgan Housel

There is a reason no Berkshire Hathaway investor chides Buffett when the company has a bad quarter. It’s because Buffett has so thoroughly convinced his investors that it’s pointless to try to navigate around 90-day intervals. He’s done that by writing incredibly lucid letters to investors for the last 50 years, communicating in easy-to-understand language at annual meetings, and speaking on TV in ways that someone with no investing experience can grasp.

Yes, Buffett runs an amazing investment company. But he also runs an amazing investor company. One of the most underappreciated part of his s...



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Biotech

Epizyme - A Waiting Game

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

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...



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All About Trends

Mid-Day Update

Reminder: Harlan 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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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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