Archive for the ‘Phil’s Favorites’ Category

News You Can Use From Phil’s Stock World

 

Financial Markets and Economy

Consumers Spend Even as Confidence Ebbs: U.S. Economic Takeaways (Bloomberg)

The American consumer came back with a vengeance last month. After a sluggish start to the year, households increased spending in April by the most since August 2009.

Sterling Slumps as Phone Poll Shows Brexit Referendum Getting Tighter (Wall Street Journal)

Sterling plunged against the dollar on Tuesday afternoon, after the announcement of an unexpectedly close Brexit poll.

An outlook for U.S. GDP (CNBC)

Rapid Update will offer new measures of how much an economic report changes the outlook on Wall Street for US growth forecasts.

Bond Investors Piling Into 'Cheap' ETFs Could Get A Painful Lesson (Forbes)

Figuring out the bond market is a pain. It is considerably larger, more complicated, and less transparent than the stock market.

Gold selling off much like it did before December rate hike (Market Watch)

Gold futures ended May with their first monthly decline of 2016, echoing a selloff that preceded the Federal Reserve’s December rate increase.

3 Years Of Painful Cuts To Bring Serious Oil Crunch (Econ Matters)

Total global oil production could decline for the next several years in a row as scarce new sources of supply come online.

OPEC in Vienna: Will the Saudi's Gamble Pay Off? (Fox Business)

During Christmas of 1975, as OPEC ministers gathered, the season’s quiet was shattered when Carlos the Jackal kidnapped them all — including ministers of Saudi Arabia and Iran.

Banks Retreat From Global Ambitions (Wall Street Journal)

Eighteen years ago, Sanford Weill declared the dawn of a new era in banking.

Yes, Nick Kristof, There Is a Conservative Bias in Economics (The Fiscal Times)

Nicholas Kristof recent reignited the debate over liberal bias in academia with his claim that “universities risk becoming liberal echo chambers and hostile environments for conservatives.” He does single out my profession, economics, as being better than most social science departments in representing conservative


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“Silver Trap” UK Style: Brexit Odds Way Off?

Courtesy of Mish.

We now have an update from Matt Singh at Number Cruncher Politics on the odds of Brexit.

Despite massive shifts in two polls by The Guardian (online and telephone polls both show Brexit in the lead), and a Telegraph poll yesterday which showed the Brexiteers only trailing by 6 points, down by 15 points the week before, Singh bumped up the odds of Brexit by a mere 2 percentage points to 21%.

Is Singh misreading the polls and a sentiment change just as Nate Silver did with Donald Trump in the US?

Please consider Is Britain heading for Brexit? Latest polls.

Today we got a pair of parallel phone and online polls from ICM for the Guardian. Online showed a 3 point lead for Leave, which is pretty unremarkable. But what was really fascinating was the big swing in the phone poll, compared with a fortnight ago, to show Leave 3 points ahead there too.

Coming on the heels of yesterday’s ORB/Telegraph poll, which showed the Brexiteers only trailing by 6 points (having trailed by 15 points the week before), certainly got people talking. Is this a Leave surge on the back of last week’s migration figures?

It could be. But there are a couple of reasons to be cautious. First of all, while substantial shifts in public opinion can and do happen, polls often overshoot, even when there is an apparent reason. When the draft EU deal was published in February, we some some huge Leave leads that didn’t last. A move has to be genuine and sustained, and very often big event-driven swings (see voting intention polling after party conferences and budgets) often haven’t been.

The other complicating factor is that the fieldwork for these polls was done over a bank holiday.

The effect on the forecast is relatively small – the central projection is now 55-45 and the Brexit probability has increased a couple of points to 21%. This illustrates the whole point of a polling average – to smooth out sudden moves. But if we continue to get polls like today’s, expect the forecast to move down and the Brexit probability to move up quite a bit further.

Matt Singh’s Brexit Odds 2016-05-31

Brexit 2016-05-31

Despite major moves in three separate polls, Singh bumped up his Brexit odds a mere


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Banks Should Get Down on Their Knees and Pray for Regulation

 

Banks Should Get Down on Their Knees and Pray for Regulation

Courtesy of Joshua M. Brown, The Reformed Broker

Everyone’s talking about this Wall Street Journal article that covers the regulatory flood. The banks brought it on themselves because of their actions before and after the Great Financial Crisis. And now they’ve got to live in the world they’ve created…

The 2010 Dodd-Frank law … is one of the most complex pieces of legislation ever. At more than 22,200 pages of rules, it is equivalent to roughly 15 copies of “War and Peace”…

The six largest U.S. banks by assets in 2013 together spent at least $70.2 billion that year on regulatory compliance, up from $34.7 billion in 2007…

At J.P. Morgan, the nation’s largest bank by assets, the head count associated with what it calls “controls,” which includes many compliance-related staff, has grown to 43,000 in 2015 from 24,000 in 2011…

I have a few comments.

The first is, “Good.” These companies forgot that their very purpose is to foster economic growth and development and to help money and credit circulate around the business world. Finance is a utility and ought to be treated as such. Utilities are highly regulated because of how critically important their health is to society. Banks are equally important and their health is of paramount concern, not their profit growth. A profitable bank is a healthy bank, of course, but the question is about where the profits come from.

Activities that earn profits for the banking system but jeopardize its survival should obviously not be celebrated. They no longer are – have a look at the multiples that large US banks currently trade at – price/book, price/earnings – all severely depressed. This will get better, but not much better. We probably won’t see a return of the empire building that got started in the late 1990’s. The age of the global-hedge-fund-as-bank ended eight years ago. The multiples from that bygone era are not soon to return.

We should be okay with this. Banking is not meant to be a swashbuckling endeavor or a means to its own ends, it’s meant to support real activity in the real world.


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New Polls Show Brexit in Lead For 1st Time: Did Cameron’s Brexit Fearmongering and Lies Backfire?

Courtesy of Mish.

New online and telephone polls by the Guardian show Brexit is in the lead for the first time ever.

Are those polls flawed or did Prime Minister David Cameron’s over-the-top fearmongering have the opposite effect as intended?

UK Voters Lean Towards Brexit

Please consider UK Voters Leaning Towards Brexit, Guardian Poll Reveals.

Public opinion has shifted towards the UK leaving the EU, two Guardian/ICM polls suggest as the referendum campaign picks up pace – with voters split 52% -48% in favour of Brexit, whether surveyed online or by phone.

Previous polls have tended to show voters surveyed online to be more in favour of Britain leaving the EU. But in the latest ICM research, carried out for the Guardian, both methodologies yielded the same result – a majority in favour of leaving.

In the phone poll of more than 1,000 adults, 45% said they favoured leaving the EU, and 42% remaining, with 13% saying they did not know. Once the “don’t knows” were excluded, that left 52% in favour of Brexit, against 48% for remain.

Using online polling, 47% said they would like to leave, and 44% remain, with 9% saying they were undecided. Excluding the latter, the result was the same as the phone method – 52-48 in favour of leaving.

Last time ICM carried out a poll for the Guardian, in mid-May, remain had a 10 percentage point lead among those polled by phone, on 55% to 45%. The online method produced the same result as the latest one: 52% for leave compared to 48% for remain.

Leave in Lead

Leave in Lead

Possible Outlier

It’s possible the poll is an outlier. If so, other polls sure to come will swing the other way. As of yesterday Number Cruncher Politics reported things this way.


Continue reading here…





Market Inefficiencies Give Black-Eyes to Classic Economists

 

Market Inefficiencies Give Black-Eyes to Classic Economists

Courtesy of Wade of Investing Caffeine

Markets are efficient. Individuals behave rationally. All information is reflected in prices. Huh…are you kidding me? These are the beliefs held by traditional free market economists (“rationalists”) like Eugene Fama (Economist at the University of Chicago and a.k.a. the “Father of the Efficient Market Hypothesis”). Striking blows to the rationalists are being thrown by “behavioralists” like Richard Thaler (Professor of Behavioral Science and Economics at the University of Chicago), who believes emotions often lead to suboptimal decisions and also thinks efficient market economics is a bunch of hogwash.

Individual investors, pensions, endowments, institutional investors, governments, were left sifting through the rubble in the aftermath of the 2008-2009 financial crisis because common beliefs were thrown out the window. Experts and non-experts are still attempting to figure out how this mass destruction occurred and how it can be prevented in the future. Economists, as always, are happy to throw in their two cents. Right now traditional free market economists like Fama have received a black eye and are on the defensive – forced to explain to the behavioral finance economists (Thaler et. al.) how efficient markets could lead to such a disastrous outcome.

Religion and Economics

Like religious debates, economic rhetoric can get heated too. Religion can be divided up in into various categories (e.g., Christianity, Islam, Judaism, Hinduism, Buddhism, and other), or more simply, religion can be divided into those who believe in a god (theism) and those who do not (atheism). There are multiple economic categorizations or schools as well (e.g., Keynsians, monetarists, libertarians, behavioral finance economists, etc.).  Debates and disagreements across the rainbow of religions and economic schools have been going on for centuries, and the arrival and departure of the 2008-09 financial crisis further ignited the battle between the “behavioralists” (behavioral finance economists) and the “rationalists” (traditional free market economists).

Behavioral Finance on the Offensive

In the efficient market world of the “rationalists,” market prices reflect all available information and cannot be wrong at any moment in time. Effectively, individuals are considered human calculators that optimize everything from interest rates and costs to benefits and inflation expectations in every decision. What classic economists fail to account for are the emotional and…
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Dallas Fed Manufacturing Production Plunges Again, Overall Activity Down 17 Straight Months

Courtesy of Mish.

The rise in oil prices from below $30 to near $50 was supposed to light a fire on manufacturing in the oil producing states. It didn’t.

Dallas Fed 2016-05-31

Bloomberg Econoday reports ….

Highlights

The Dallas manufacturing production index fell into negative territory with a reading of minus 13.1 from a positive 5.8 reading in April. At the same time, the May general activity index sank to minus 20.8 from minus 13.9 last time. This was the 17th consecutive negative reading.

New orders also fell back into negative territory. After popping up 6.2 in April after four consecutive declines, new orders dropped to a reading of minus 14.9. Employment remains weak, at minus 6.7 for a fifth straight contraction. Price data showed some life with wages up and raw materials, which had been week, also up. Selling prices, however, remain a negative, at minus 3.3, an improvement from minus 6.6 in April.

The ongoing recovery for oil is having a positive effect on energy prices and is likely to have a wider positive effect for the Texas manufacturing area eventually. However, this report is a setback.

Three Questions

  1. Is “setback” the right word for this disaster?
  2. What happens if oil stays at $50?
  3. What happens if oil heads back to $40?

Mike “Mish” Shedlock


Original article here.





GDPNow Flat After PCE Report; Rate Hike Odds Sink

Courtesy of Mish.

Despite glowing mainstream media reports on personal consumption expenditures and income, the Atlanta Fed GDPNow Model forecast for second quarter GDP did not budge.

Rate hike odds for June shrank substantially.

Latest forecast: 2.9 percent — May 31, 2016

GdpNow 2015-05-31

“The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 2.9 percent on May 31, unchanged from May 26. The second-quarter forecast for real consumer spending growth remained at 3.6 percent after this morning’s personal income and outlays release from the U.S. Bureau of Economic Analysis.”

Rate Hike Odds Sink

Fedwatch 2016-05-31

Despite glowing reports regarding consumer spending rising the most in seven years, not only was the GDPNowcast flat, but the CME Fedwatch rate hike odds fell 9.4 percentage points to 22.5 percent.


Continue reading here…





Consumers Come to Life in April; Bounce Less Than Meets the Eye

Courtesy of Mish.

The BEA’s Personal Income and Outlays report shows consumers came to life in April.

Income rose 0.4% month-over-month and spending rose a whopping 1.0%.

Inflation adjusted, the numbers look good, not fantastic. The headline reports would have you believe otherwise.

Let’s take a look at a couple mainstream media reports, then dive into the “real” picture.

U.S. Consumer Spending Climbed at Fastest Pace in Nearly Seven Years

The Wall Street Journal reports U.S. Consumer Spending Climbed at Fastest Pace in Nearly Seven Years.

Personal spending, which measures how much Americans paid for everything from raincoats to restaurants, increased 1.0% in April from a month earlier, the Commerce Department said on Tuesday. That was biggest one-month jump since August 2009.

Consumers had been steadily pulling back since mid-2015, one factor behind the paltry economic growth in the first quarter of the year.

Now it looks like the economy is picking up again, following a familiar pattern of a gloomy winter leading into a brighter spring.

Eye Catcher Spending

The Bloomberg Econoday reports …


Continue reading here…





Chevron is the Poster Child for an Overpriced Market (Video)

Courtesy of EconMatters

When reviewing the financial metrics of CVX, this stock is overpriced relative to the fundamentals of the company. CVX should Conservatively Retest $88 before year end. With over $42 Billion in Debt, a $50 oil price, and a 4% dividend this company is mismanaging capital right now trying to prop up the stock in the short term versus prudent fiscal management for the long term. This stock is a short on any pops into year end. Even with $60 oil this stock is overpriced as costs in the oil services sector are only going to go up from here! There are a lot of overpriced stocks right now, but CVX is one of the most offensive in our opinion.

 

 





Zurich Insurance Death: Reminder of Rash of Finance Deaths in 2013-15

Courtesy of Pam Martens.

Martin Senn, former CEO of Zurich Insurance Group, Reportedly Took His Life on Friday, May 27, 2016

Martin Senn, former CEO of Zurich Insurance Group, Reportedly Took His Life on Friday, May 27, 2016

Zurich Insurance Group has a terse statement on its web site today indicating that Martin Senn, its CEO who stepped down just five months ago, took his life last Friday. Senn was 59 years old. According to foreign news reports, Senn shot himself at the family’s vacation home in Klosters. Senn’s death comes less than three years after the sitting CFO of the same company, Pierre Wauthier, reportedly hung himself at his home near Lake Zug, Switzerland. Wauthier’s wife and two children were out of the country at the time and Wautheir was alone in the home, according to media reports.

In the case of Wauthier’s death, police reported that he had left a typed suicide note, not a typical form of communication for one taking their life.

On July 23, 2013, just five weeks before Wauthier is said to have taken his life, Carsten Schloter, 49, CEO of the large Swiss telecommunications provider, Swisscom, reportedly took his life by hanging himself in his home in Fribourg, near Bern. That followed by just six weeks the death of Daniel Eicher, CEO of publisher ABC Verlag, at his home in Bern. Eicher was just 56. Details concerning his death have remained sketchy.

Following Wauthier’s death in August of 2013, Zurich Insurance Group announced that George Quinn, the CFO at another Swiss insurer, Swiss Re, would be replacing Wauthier as of May 1, 2014. Before Quinn could exit Swiss Re, Tim Dickenson, Swiss Re’s Director of Communications, died under suspicious circumstances. Swiss Re put a lock down on details, refusing to provide Wall Street On Parade with the date of death, the location of the death, the circumstances or even the age of Dickenson. The Wall Street Journal was able to piece together that Dickenson died sometime between January 19 and January 28, 2014.

The month of December 2013 would mark the start of a bizarre series of deaths of employees of the largest U.S. bank on Wall Street, JPMorgan Chase. At the time of the deaths, which stretched into 2015, the financial crisis of 2007-2010…
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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Consumers Spend Even as Confidence Ebbs: U.S. Economic Takeaways (Bloomberg)

The American consumer came back with a vengeance last month. After a sluggish start to the year, households increased spending in April by the most since August 2009.

Sterling Slumps as Phone Poll Shows Brexit Referendum Getting Tighter (Wall Street Journal)

Sterling plunged against the dollar on Tuesday afternoon, after the announcement of an unexpectedly close Brexit poll.

...



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Chart School

Regression to Trend: The Latest Look at Long-Term Market Performance

Courtesy of Doug Short's Advisor Perspectives.

Quick take: At the end of May the inflation-adjusted S&P 500 index price was 81% above its long-term trend, down slightly from 83% the previous month.

About the only certainty in the stock market is that, over the long haul, over performance turns into under performance and vice versa. Is there a pattern to this movement? Let's apply some simple regression analysis (see footnote below) to the question.

Below is a chart of the S&P Composite stretching back to 1871 based on the real (inflation-adjusted) monthly average of daily closes. We're using a semi-log scale to equalize vertical distances for the same percentage change regardless of the index price range.

The regression trendline drawn through ...



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Phil's Favorites

"Silver Trap" UK Style: Brexit Odds Way Off?

Courtesy of Mish.

We now have an update from Matt Singh at Number Cruncher Politics on the odds of Brexit.

Despite massive shifts in two polls by The Guardian (online and telephone polls both show Brexit in the lead), and a Telegraph poll yesterday which showed the Brexiteers only trailing by 6 points, down by 15 points the week before, Singh bumped up the odds of Brexit by a mere 2 percentage points to 21%.

Is Singh misreading the polls and a sentiment change just as Nate Silver did with Donald Trump in the US?

Please consider Is Britain heading for Brexit? Latest polls.

Today we got a pair of parallel phone and online polls from ICM for the Guardian. Online showed a 3 point lead fo...



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Zero Hedge

"Jesus, Marx, & Darwin Would Be Banned From Today's Universities" - Oxford Professor Slams 'Safe-Space' Politics

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The impact of US-style "safe space" politics, in which causing offense is held to be a grave sin, is also limiting freedom of speech abroad. As Oxford Professor of European Studies Timothy Garton Ash exclaimed, figures like Jesus, Charles Darwin and Karl Marx would all be banned from British universities today due to the rise of social justice warrior pressure groups and correspondingly populist counter-extremism legislation.

This is "a double-pronged attack on free speech,"...



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ValueWalk

Jim Collins Interviews Jorge Paulo Lemann of 3G Capital (And Gisele Bundchen)

By Jacob Wolinsky. Originally published at ValueWalk.

Jim Collins Interviews Jorge Paulo Lemann of 3G Capital  (And Gisele Bundchen) but for only about two minutes

Big H/T Value Investing World

Also see ...



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OpTrader

Swing trading portfolio - week of May 30th, 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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Kimble Charting Solutions

Gold Mining Stocks- Most dangerous time to own them in years?

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

The rally in mining stocks since the first of the year has been very impressive.

The rally has taken Gold Miners ETF GDX up to test the 23% retracement of the collapse over the past 5-years. At the same time it is hitting the 23% level, two other resistance lines are being put to a test, with momentum at the highest levels in the past 5-years.

Joe Friday Just The Facts...



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Digital Currencies

The Biggest Bitcoin Arbitrage Ever?

Courtesy of Chris at CapitalistExploits

Do you remember when you were growing up and all your friends were allowed Atari game consoles but you weren’t?

Well, I do and the things seemed as foreign to me as Venus. Mostly because the little time I managed to spend on the gaming consoles when my friends weren’t hogging them I found it all a bit silly. I never “got” computer games, and to this day still have poor comprehension of things like Angry Birds.

I suspect that many people around the world view Bitcoin in the same way as I view Angry Birds: with mild amusement and a general lack of understanding as to what the hell all the fuss is about.

I was thinking of this since a buddy of mine recently started ...



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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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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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Mapping The Market

About that debate last night

Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,

The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now. 

And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now. 

Phil writes back,

I was expecting them to start throwing poop at each other &n...



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Promotions

PSW is more than just stock talk!

 

We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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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 jennifersurovy@yahoo.com 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.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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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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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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