by ilene - November 25th, 2015 2:28 pm
The PSW weekly webinar is ready to watch if you missed the live version. Enjoy!
[Subscribe to our YouTube Channel here.]
00:01:53 Quick look at the stock market.
00:02:47 Markets Overview: Germany, DAX, Nikkei, Euro Stoxx, S&P, $SPX, AMZN, WMT, VMW, EMC, GOOG
00:25:56 XLY INDEX: AMZN, DIS, HD, NKE
00:32:00 IBM: It does a lot of buybacks!
00:50:40 IBM: Review Positions
01:04:41 IBM: puts and bull calls spread
01:26:20 IBM puts, trade idea
01:29:24 DOLLAR Stronger, GLD, SLV, TLT
01:34:00 CIM puts
by Market Shadows - November 25th, 2015 1:18 pm
Financial Markets and Economy
Asia stocks mixed amid geopolitical tension, oil eases from highs (Business Insider)
Asian stocks were mixed in early trading on Wednesday as investors assessed the geopolitical risk surrounding Turkey's downing of a Russian fighter jet, while crude oil prices eased from two-week highs.
For commodities, it’s like the 21st century never happened.
The last time the Bloomberg Commodity Index of investor returns was this low, Apple Inc.’s best-selling product was a desktop computer, and you could pay for it with francs and deutsche marks.
'Silk Road' Countries' Gold Reserves Accumulation Has Grown 450% Since 2008 (Jesse's Cafe Americain)
Silk road total demand, including the growth of official reserves and commercial imports, has risen from 1,493 tonnes in the year 2000 to over 27,087 tonnes in 2015.
Twitter raises questions for investors (Market Watch)
We’ve been on the right side of what I predicted would be a Bubble-Blowing Bull Market, and I’ve reminded you to ignore the noise, as we’ve used hyped non-crises — the Euro-crisis, Fed rate-hike hysteria, China slowdown, currency wars, and so on — to buy more stocks and have then been able to take some partial profits when the bull market got back to new highs.
Nickel makers in China including Jinchuan Group Co., the country’s largest supplier of refined metal, plan to gather on Friday to discuss measures to respond to the lowest prices in 12 years, including possible cuts to supply, according to people with knowledge of the event.
European stock-index futures advanced, indicating equities will rebound after falling the most in almost two weeks.
ISIS Releases “Greatest” Piece Of Terrorist Video Propaganda In History, Tells US, Russia To “Bring It On”
by ilene - November 25th, 2015 11:20 am
By now, it’s probably safe to say that pretty much anyone who follows current events has seen at least one ISIS propaganda video. What began with clips of “Jihadi John” beheading Western journalists quickly escalated to footage of obscenely graphic executions.
The world recoiled in horror when the group’s Al Hayat Media Center released a slick, high-def production depicting a Jordanian pilot being burned alive in a cage earlier this year and from that point on, the group essentially tried to one-up themselves with each new video murder montage. Notable highlights include: putting a handful of “confessed spies” in a cage and drowning them, cramming four people into a maroon Toyota Corolla and blowing it up with an RPG, dousing three people with gasoline before hanging them upside down from a swing set and lighting them on fire, enlisting the help of some 30 pre-teenage jihadists to execute several dozen enemy soldiers in an amphitheatre in Palmyra, lining up eight people atop landmines on a fog-covered mountain side and making them watch as their executioners come riding in on horses out of the woods to light the fuse, and who can forget running over an SAA soldier with a tank.
Less violent clips have recently included a series of videos celebrating the massacre in Paris, two of which contained threats against targets in the US including the White House (which ISIS will “turn black”) and Times Square.
Of course the peculiar (and very surreal) thing about the videos is the production quality. Islamic State’s Hollywood specials are always filmed in crisp 1080p and more often than not, feature multiple camera angles, slick graphics, slow motion replays, and even artificial wind to give the whole thing a more dramatic feel.
Well, just when we thought we’d seen the best Al Hayat had to offer, ISIS released a video on Tuesday that very well might qualify as the most spectacularly absurd piece of terrorist propaganda ever created.
Over the course of four minutes and fourteen seconds, ISIS literally threatens every country on the face of the earth, shows pictures of its fighters grinning and horsing around like something out of a Gap ad, calls Bill Clinton a "fornicator", runs down the statistics on verteran suicide rates in America, brands…
by ilene - November 25th, 2015 10:46 am
Courtesy of Pam Martens.
On September 11, 2002, the Securities and Exchange Commission brought charges against the three top executives of Tyco International. The complaint began with this: “This is a looting case.”
The SEC charged that Tyco’s CEO, Dennis Kozlowski and Mark Schwartz, its CFO, “took hundreds of millions of dollars in secret, unauthorized and improper low interest or interest-free loans and compensation from Tyco.” The transactions were concealed from shareholders and, according to the SEC, “Kozlowski and Swartz later pocketed tens of millions of dollars by causing Tyco to forgive repayment of many of their improper loans” and “engaged in numerous highly profitable related party transactions with Tyco and awarded themselves lavish perquisites — without disclosing either the transactions or perquisites to Tyco shareholders.”
USA Today reported that the Manhattan apartment that Tyco had been providing to Kozlowski “includes a $6,000 shower curtain, coat hangers valued at $2,900, two sets of sheets for $5,960 and a $445 pincushion.”
The SEC also charged that the General Counsel of Tyco, Mark Belnick, a former partner of the corporate law firm Paul, Weiss, Rifkind, Wharton & Garrison, “defrauded Tyco shareholders of millions of dollars through egregious self-dealing transactions.” According to the SEC, “from 1998 into early 2002, Belnick received approximately $14,000,000 in interest-free loans from Tyco to buy and renovate a $4,000,000 apartment on Central Park West and to buy and renovate a $10,000,000 ski chalet in Park City, Utah.” The SEC noted that “by failing to disclose his self-dealing to investors, Belnick violated the antifraud provisions of the federal securities laws.”
Kozlowski and Schwartz were eventually tried by the Manhattan District Attorney’s office and sent to prison. (Both are out now.) Belnick was acquitted by a jury on fraud and larceny charges brought by the D.A. The jury believed that Belnick had internal company approvals for the loans. The SEC eventually settled its civil case against Belnick with a civil penalty in the amount of $100,000 and the prohibition that he not serve as an officer or director of a public company for a period of five years. He was allowed to retain his law license.
by ilene - November 25th, 2015 2:48 am
Courtesy of Mish.
Tomorrow is Thanksgiving. Black and Blue Friday will follow, putting U.S. Consumers and Stores in Face Off Over Discounts.
A Reuters/Ipsos survey found more people planned to cut holiday spending than increase in every category surveyed: clothing, jewelry, electronics, food and toys, and that 46 percent felt they could wait longer in the season to buy because of faster shipping.
Appliances, entertainment items, infant products and hardware showed narrowing discounts, MarketTrak reported, while promotions for apparel, toys and electronics were getting bigger.
Kurt Jetta, head of retail industry researcher TABS Group, found the discounts underwhelming.
“The fact that retail has been so weak coming in to the season would suggest they may need to ramp up efforts to make up for this later,” Jetta said. Consumers were cautious going into the holidays, with sales at Macy’s, Nordstrom Inc and Best Buy missing expectations in recent quarterly results. Target’s online sales fell due to a drop in demand for electronics.
The Reuters/Ipsos survey of 4,639 adults from Nov. 12-23 found 28 percent of consumers expected discounts of 50 percent or more on most items, 36 percent hoped to see promotions of at least 33 percent while 49 percent expect a minimum discount of 20 percent on most products.
A survey for Boston Consulting Group found 70 percent of consumers would spend the same or less as last year, describing the consumer outlook as “tepid.”
“Consumers have been trained to know that they can wait, and they will wait and that will force the retailers to continue to be promotional,” said Joel Bines, managing director at AlixPartners.
Polls are notoriously unreliable. Typically consumers spend more than they expect, on junk they do not need and cannot really afford.
Yet, manufacturing reports have been dismal, and retail sales tepid other than autos.
The recovery is also very long in the tooth, with the Fed poised to hike interest rates.
All things considered I expect a very weak holiday shopping season. If so, someone is sure to be blue. Will it be retailers or shoppers with buying hangovers? I suspect both….
by Market Shadows - November 25th, 2015 1:19 am
Financial Markets and Economy
Barclays bets on stock boom as world money growth soars (The Telegraph)
Barclays has advised clients to jump into world stock markets with both feet, citing the fastest growth in the global money supply in over thirty years and an accelerating recovery in China .
Ian Scott, the bank’s global equity strategist, said the sheer force of liquidity will overwhelm the first interest rate rises by the US Federal Reserve, expected to kick off next month.
It took no time for news of a $160 billion merger between Pfizer and Allergan to spur objections from several presidential candidates.
The deal will allow Pfizer to move its domicile from the US to Ireland, where its tax bill will fall drastically. The politicians see this expatriation as a slap in the face.
Energy stocks rose, but shares of airlines and travel companies sank as investors feared a drop in travel and vacation spending.
Singapore will outpace Hong Kong in growth in the ranks of millionaires over the next five years, with about one in 30 people qualifying as high net worth by 2020, swelled by Indians and Chinese keen to avoid social unrest, according to WealthInsight.
Third-quarter GDP upped to 2.1% from 1.5% (Market Watch)
The U.S. economy grew faster in the third quarter
by ilene - November 24th, 2015 11:05 pm
Courtesy of Joshua Brown, The Reformed Broker
If you’re a millennial, your definition of financial risk should be based entirely on the likelihood of losing your job or heading down the wrong career path. Stock market volatility should literally be the last thing on your mind.
Rob Arnott has made the case that the odds of you losing your job go up substantially when the stock market goes down, but it’s important that you separate the two things in your mind when putting away pre-tax money into a retirement account.
In fact, I would argue that stock market volatility should be embraced for the under 35 set. Ostensibly, you’ve got years (decades) of future accumulation ahead of you – why on earth would you be rooting for higher and higher investment markets when you’re a guaranteed buyer for the foreseeable future? Expected returns for an asset class generally rise when prices stagnate or fall. The big open secret of the investment business is that a know-nothing investor with time on his side is in a better position for gains than a brilliant investor, armed with all the tools under the sun, with near-term liabilities to fund.
In this morning’s incredibly helpful BAML US Equity Year Ahead Strategy report, Savita Subramanian & Co tuck in a pair of important charts for younger investors to wrap their heads around. Below, a contrast between the probability of losing money in stocks over the next decade versus the likelihood of negative returns in the bond market. People in their 20’s should only concern themselves with the fixed income portion of their portfolios in terms of having dry powder for strategic rebalances.
Let’s take a look:
The Millennial: stocks for the long term
While Millennials may be a more risk-averse generation, having witnessed the carnage of the global financial crisis and its impact on their parents, this generation has the benefit of long time horizons. As Chart 28 shows, the probability of losing money in the S&P 500 declines markedly as one’s time horizon increases. By contrast, the probability of losing money in bonds as rates rise has been far higher.
Flight Paths Over Turkey Analyzed; Obama Defends Turkey; Choose Your Friends and Enemies Wisely; Merkel Madness
by ilene - November 24th, 2015 5:39 pm
Courtesy of Mish.
In the wake of Turkey shooting down a Russian aircraft over Syria, the immediate impact will be to make negotiations on the removal of Assad all the more difficult. First let’s analyze the flight path of the downed aircraft courtesy of Stratfor.
Map of Flight Path of Downed Russian Aircraft
Deadly Few Seconds
The short distances involved and the speed at which fighter jets fly does support the view made by a US official: “They were in Turkish airspace only 2 to 3 seconds“.
Obama Defends Turkey
Voice of America reports Turkey Has Right to Defend Its Territory, Airspace.
President Barack Obama said the downing of a Russian fighter jet along the Syrian-Turkish border Tuesday is evidence of an “ongoing problem” with Russia’s military operations in Syria, and that Turkey had a “right to defend its territory and its airspace.”
Speaking during a joint news conference with French President Francois Hollande, Obama said information about Turkey’s downing of the Russian Su-24 was still being collected, but noted that Russian military aircraft are targeting moderate Syrian opposition groups very close to Turkey’s borders.
A U.S. military spokesman confirmed that Turkish pilots issued repeated warnings to the Russian plane and didn’t get a response. However, the spokesman said it was not immediately clear on which side of the border the Russian jet was flying. Moscow insists the jet never left Syrian airspace.
Moderate Al Qaeda Yet Again
There’s Obama once again with more bullsheet about “moderate” Al Qaeda rebels. Nonetheless, it does appear Russia violated Turkey’s airspace.
Everyone is supposed to be on the same side here, but it’s all a lie. Turkey buys oil from ISIS and that provides the funds for ISIS to buy weapons and maintain fighting….
by ilene - November 24th, 2015 4:30 pm
Courtesy of Lance Roberts via STA Wealth Management
With the "inmates running the asylum" during a holiday-shortened trading week, the upward bias to the market is set to continue. However, as I addressed last week:
"As we progress through the last two months of the year, historical tendencies suggest a bias to the upside. This is particularly the case given the weakness this past summer which has left many mutual and hedge funds trailing their benchmarks. The need to play 'catch-up' will likely create a push into larger capitalization stocks as portfolios are 'window dressed' for year end reporting.
This traditional 'Santa Claus' rally, however, does not guarantee the resumption of the ongoing 'bull market' into 2016. The chart below lays out my expectation for the market through the end of the year."
"With the markets currently oversold on a very short-term basis, the current probability is a rally into the 'Thanksgiving' holiday next week and potentially into the first week of December. As opposed to my rudimentary projections, the push higher will likely be a 'choppy' advance rather than a straight line."
So far, the analysis over the last several weeks has continued to play out as expected. However, and this is crucially important, a near-term expectation of a bullish advance due to the recent correction and seasonal tendencies is not the same as long-term bullish outlook.
As stated above, while seasonality likely holds the cards through the end of this year, projecting much beyond that window is foolishness.
The Real Value Of Cash
This brings to mind a call I had on the radio show recently discussing his advisor's reluctance to hold cash.
The argument against holding cash goes this way:
"If you hold cash you lose value over time to inflation."
This is a true statement if you hold cash for an EXTREMELY long period. However, holding cash as a "hedge" against market volatility during periods of elevated uncertainty is a different matter entirely.
"I have written previously that historically it is relatively unimportant the markets are making new highs. The reality is that new highs represent about 5% of
by ilene - November 24th, 2015 4:20 pm
Courtesy of Pam Martens.
After lamenting in a recent book how Presidents George W. Bush and Obama didn’t answer his letters (Return to Sender: Unanswered Letters to the President, 2001-2015), Ralph Nader has finally been requited by a powerful person in Washington.
Nader had the temerity to write Fed Chair Janet Yellen a letter on October 30, pointing out how the Fed’s zero bound interest rate policy is crimping the spending ability of savers who rely on such things as savings accounts and money market interest for added income to survive. Yesterday, Yellen boldly answered Nader’s letter with a smackdown.
The letter has caused an outbreak of sexism charges against Nader by various writers for his suggestion in the letter that Yellen would be wise to “sit down with your Nobel Prize winning husband, economist George Akerlof, who is known to be consumer-sensitive.” Annie Lowrey at New York Magazine said it suggested Yellen needed things mansplained to her “small lady brain” lest there be “cryfests” and “emotional overeating” at the nation’s central bank.
A number of writers have dismissed Nader’s letter as nonsense. In fact, there is a large segment of seniors who can’t afford to risk their meager life savings in the stock market, who have historically relied on the interest from insured money market accounts, insured certificates of deposit, and U.S. Treasury notes and bills to supplement their pension or Social Security benefits. Those individuals have seen that income cut by half or more since the 2008 crash and the Fed’s slashing of interest rates.
But what about economist George Akerlof? Might he actually have something important to share with Janet Yellen and the rest of us for that matter? In fact, Akerlof has co-authored a recent book with a theory that, taken to its logical conclusion, casts a dangerous light on the very institution his wife heads, the Federal Reserve.