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Archive for the ‘Phil’s Favorites’ Category

“Eagle Cam”: Aerial View of London via Video Camera Attached to an Eagle

Courtesy of Mish.

An eagle got an impressive birds-eye-view of London this week, flying over the city’s most iconic landmarks using a Sony HDR-AZ1VR Action Cam attached to its back.

Link if video does not play: Action Cam Footage Shows Eagle Flying Over City of London

The BBC reports Eagle With Camera Flies Over London

An eagle with a camera attached has flown across London and offered a new perspective on some of the capital’s best-known landmarks.

The footage was recorded over a week by an Imperial Eagle called Darchan.

The animal has been brought to London from the French Alps by The Freedom Project to mark the 50th anniversary of the International Union for Conservation of Nature (IUCN) Red List.

The Red List compiles the world’s most threatened species.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com



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On The Looming Wall Of Chinese Defaults, Restructuring Firm Warns “You Know It’s Coming”

 

Courtesy of ZeroHedge. View original post here.

The news this week of China's largest corporate bankruptcy – Haixin Iron & Steel Group – amid crashing iron ore and steel prices was followed by analysts noting it "will be followed by others," as the major flaw of producers of iron ore, the most traded commodity after oil, is they tend to be "over-bullish." Distressed debt funds are starting to circle in preparation for what they expect to be a bloodbath as Bloomberg reports, bad debts in China are well underestimated because authorities persist in propping up weak companies and bailing out local investors. According to DAC Management, "we've yet to see it because if you look at corporate defaults, they keep getting covered by the government. At some point, they can’t cover every single one." Most worryingly though, KPMG points out, "when you see restructuring advisers getting hired by SOEs… you know it's coming."

As we noted previously,

“Instead of reorganization efforts conducted by local governments, this is an inevitable trend that China will take more ailing steel mills to the courts to protect creditors,” Xu said by phone from Beijing.

But apart from the Steel industry being on the verge of bankruptcy… China is doing great!

“There has to be a restructuring of the Chinese steel industry,” Eder said.

“The iron-ore producers are getting more and more aware that their growth expectations have to be redefined. There are enormous over-capacities and more is coming on stream. This will increase the pressure.”

*  *  *

And as Bloomberg reports, as far as distressed debt in China – you ain't seen nothing yet!

Bad debts in China are well underestimated because authorities persist in propping up weak companies and bailing out local investors, according to DAC Management LLC.

The Chicago-based asset management and advisory firm, which focuses on distressed credit and special situations in China, says the worst is yet to come, and that means lots


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UKIP Picks Up Second Seat Following Tory Defection, Two More Coming Up?

 

Courtesy of Mish.

The first one or two people doing something can hardly be called a trend. Yet, all trends start with a movement of One.

UKIP gained a second seat in British parliament as a result of a special election following a Tory defection to UKIP. The first UKIP seat also came from a special election following a Tory defection. Two other Tories are allegedly considering switching parties to UKIP.

Prime minister David Cameron's Tories are clearly under pressure.

Please consider UKIP Gains Second Commons Seat With Victory in Rochester.

The U.K. Independence Party dealt a new blow to Prime Minister David Cameron as it won a second seat in Parliament from his Conservatives in six weeks.

Mark Reckless, who defected to UKIP from the Tories in September and then forced a special election in his seat of Rochester & Strood, 30 miles (50 kilometers) southeast of London, was returned to the House of Commons with 16,867 votes. Conservative candidate Kelly Tolhurst came second with 13,947 votes.

The victory, following that of Reckless’s friend and fellow defector, Douglas Carswell, on 0ct. 9, may prompt further Tories hostile to Britain’s membership of the European Union to follow suit. The rise of UKIP, which seeks withdrawal from the EU and curbs on immigration, has already led Cameron to promise a referendum on leaving the bloc and to hint he’ll seek an end to the free movement of Europeans into Britain.

Fractured Politics

The result also underlines the way Britain’s political landscape has fractured in the run-up to May’s general election, making the outcome increasingly difficult to call. All three main parties lost votes, with the Tories down 14.5 percent on their 2010 result, Labour dropping 11.8 percent and the Liberal Democrats down 15.4 percent, according to data compiled by YouGov.

“This throws British politics up in the air,” UKIP leader Nigel Farage said in an interview with Bloomberg Television. “If anyone gives you a prediction for the next general election, they’re whistling in the wind.


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Sell, Sell, Sell… Central Bank Madmen Are Raging

Sell, Sell, Sell… Central Bank Madmen Are Raging

Courtesy of David Stockman via Contra Corner 

The global financial system has come unglued. Everywhere the real world evidence points to cooling growth, faltering investment, slowing trade, vast excess industrial capacity, peak private debt, public fiscal exhaustion, currency wars, intensified politico-military conflict and an unprecedented disconnect between debt-saturated real economies and irrationally exuberant financial markets.

Yet overnight two central banks promised what amounts to more monetary heroin and, presto, the S&P 500 index jerked up to 2070. That is, the robo-traders inflated the PE multiple for S&P’s basket of US-based global companies to a nose bleed 20X their reported LTM earnings.

And those earnings surely embody a high water mark in a world where Japan is going down for the count, China’s house of cards is truly collapsing, Europe is plunging into a triple dip and Wall Street’s spurious claim that 3% “escape velocity” has finally arrived in the US is soon to be discredited for the 5th year running. So it goes without saying that if “price discovery” actually existed in the Wall Street casino, the capitalization rate on these blatantly engineered earnings (i.e. inflated EPS* owing to massive buybacks) would be decidedly less exuberant.

In truth, nothing has changed about the precarious state of the world since yesterday. Except….. except the Great Bloviator at the ECB made another fatuous and undeliverable promise—- this time that he would do whatever he “must to raise inflation and inflation expectations as fast as possible”; and, at nearly the same hour, the desperate comrades in Beijing administered another sharp poke in the eye to China’s savers by lowering the deposit rate to by 25 bps to 2.75%.

Let’s see. Can it possibly be true that European growth is faltering because it does not have enough inflation? Or that China’s fantastic borrowing and building boom is cooling rapidly because the People Bank of China (PBOC) has been too stingy?

The answer is not on your life, of course.  So why would stocks soar based on two overnight announcements that can not possibly alleviate Europe’s slide into recession or the collapse of China’s out-of-control investment and construction bubble?

It can’t be a case of debatable data. Europe’s real GDP is no higher today than it was in the third quarter of 2006. Self-evidently, the temporary slowdown in consumer inflation during recent months owing to plunging oil prices


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Here’s Why the Fed has been More Insane Than the PBoC, and the ECB Tries but Fails

Here’s Why The Fed Has Been More Insane Than the PBoC, and The ECB Tries But Fails?

Courtesy of Lee Adler of the Wall Street Examiner

I saw this chart on Twitter the other day. 

The point of it was that the PBoC makes the rest of the world’s central banks look like pikers in terms of how much they have expanded their balance sheets. Wolf Richter also wrote a post about this phenomenon.

Relative Growth of Central Bank Balance Sheets 2003-14 - Click to enlarge

Relative Growth of Central Bank Balance Sheets 2003-14 – Click to enlarge

The point of it was that the PBoC makes the rest of the world’s central banks look like pikers in terms of how much they have expanded their balance sheets. Wolf Richter also wrote a post about this phenomenon.

Relative Growth of Central Bank Balance Sheets 2003-14 - Click to enlarge

Relative Growth of Central Bank Balance Sheets 2003-14 – Click to enlarge

But is the PBoC really worse than the rest of the criminals who run the world’s money printing business?

Relative index charts are funny things. You can make them show different relationships based on the start date. This chart represents change rates from the base year of 2003, but if the base year is 2008, you would see a very different result.

Yes, the PBoC was running wild from 2003 to 2008 as it tried to maintain the Yuan peg against a falling dollar. But since 2008 the PBoC has grown its balance sheet by “only” 90%. Since 2008 the Fed has grown by around 700%.  Who’s the irresponsible central bank over the past six years?

After I tweeted my thought to him, the next day Zschaepitz agreed and illustrated it with another nice chart, this time beginning in 2008.


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Everyone Wants Dollars (Again)

Courtesy of Marc To Market

A new phase in the markets began this month. The Federal Reserve ended its QE3+ purchases. The Bank of Japan unexpectedly and dramatically stepped up its asset purchases under its QQE operations.  The government's largest pension fund announced aggressive portfolio diversification plan. 

Contrary to some press reports, the ECB remained unanimous in favor of additional measures to arrest the deflationary headwinds, if needed.  The staff was instructed to accelerate work on other assets that can be purchases to expand the ECB's balance sheet back toward the 2012 peak.  

The softening of the flash PMI, and expectations that next week's flash HICP inflation estimate shows softer prices, underscored the likelihood that more measures will be needed, and before the weekend, Draghi expressed some urgency.  This raises the prospects of more action at the ECB meeting in early December.  Previously, it appeared more likely that the ECB would wait until next year, to see the participation in the next month's TLTRO and the beginning of the ABS purchase plan. 

In the UK, official guidance, including the Quarterly Inflation Report validated the investors deferring the first hike from next spring until the end of the year.  An increasing number of economists are pushing it out until 2016.  Whereas the BOJ and ECB are providing more monetary support, the BOE indicates it will not make conditions less accommodative for longer.    

The People's Bank of China joined the party before the weekend.  It announced the first cut in the benchmark one-year deposit rate. The 25 bp cut took many by surprise, as the PBOC was seen continuing to target liquidity injections, in part, ostensibly to minimize stimulating shadow banking activities.

The divergence has driven the dollar higher.  There are two notable exceptions among the major currencies. The New Zealand dollar has been the strongest this month, gaining 1.6% against the US dollar.  This is most a function of favorable economic news, leaving aside the decline in milk prices, for the domestic economy.  The other exception is the Canadian dollar.  As we have noted, it is common for the Canadian dollar to do well on the crosses in a strong US dollar
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Why the Economy Isn’t Slowing and Why That’s Bearish

Why The Economy Isn’t Slowing and Why That’s Bearish (Video)

Courtesy of Lee Adler of the Wall Street Examiner

Housing may be slowing, but the broader economy isn’t. And that’s bearish in the big picture.

 

This video was originally published for Radio Free Wall Street subscribers on September 23, 2014. To see the latest videos in real time, subscribe here

Get regular updates on the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE's Professional Edition risk free for 30 days!

 





View From Far Above

Courtesy of Tim Knight from Slope of Hope.

As the entire world knows by now, China joined the rest of the world's central banks in more "easing", which sent markets into a spastic move higher. As you can see by this view of the NQ, this massively bullish news has not, as of yet, represented any kind of sea-change in the markets. Before the day was even out (again, in some, not all markets),  the entire move up was reversed.

1122-china

As noted in my Bear Despair post earlier this week, however, the bulls are still firmly in control, with all the central banks as their allies. The Dow Jones Composite hit yet another lifetime high, and it has exceeded even its long-term resistance line (in blue):

1122-comp

A much closer look at this line shows how, once the price has pushed above it, the line changed from resistance to support. For ten days, the price valiantly obeyed support and then finally leaped above it. Until the price breaks that trendline again, the bulls have the bears by the short hairs.

1122-support

On a very long-term perspective, the NASDAQ Composite blew past the point that it "should" have stopped many months ago, marked by the arrow. Incredibly, the NASDAQ is approaching the levels it saw during the insaner-than-insane 2000 Internet peak.

1122-compq

As fantastic as the S&P 500 and the Dow 30 have been for the bulls, the much broader small cap index continues to show middling performance. My view continues to be that we are simply grinding out a top; I've tinted the analogous regions in green below.


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Bloomberg Sensationalism and Inaccuracies Regarding “Forced Nationalization of Crimea”

Courtesy of Mish.

A few days ago a friend emailed the Bloomberg article Russia Delivers a New Shock to Crimean Business: Forced Nationalization.

I replied something along the lines of "interesting, but I am going to bounce this of Jacob Dreizin", a US citizen who provides frequent updates to me regarding Ukraine.

I also bounced the article off Pater Tenebrarum at the Acting Man blog. Pater commented …

Russian oligarchs stealing stuff back from Ukrainian oligarchs would be my guess. I should add, the arbitrariness of this process is of course quite disturbing (regardless of the fact that Ukraine's oligarchs are a bunch of corrupt thieves). But this strikes me mainly as a case of politically motivated payback. The oligarchs all aligned themselves with Kiev as soon as it was clear that Yanukovich had lost power (many/most were aligned with Yanukovich as long as he ruled the roost). The separatists mainly lost Mariupol because Ukraine's richest oligarch ordered the 7,000 workers of his steel works to oust them. There have been horror stories from Mariupol about the treatment of ethnic Russians there, although it is difficult to know what is and what isn't true (independent information is spotty). But we know since Odessa that the right-wing goons in Kiev's employment are not to be trifled with (the videos of the event speak for themselves).

Reader Jacob Dreizin commented

Hello Mish

First off, that was some really sloppy reporting or editing by Bloomberg. "Crimean prime minister Kolomoyskiy" should actually be written as "Dnepropetrovsk governor Kolomoiskii."

But there's a lot more to it than that. You see, the Ukrainian economic model is a post-Soviet feudal model. Thus, most Crimean business (like most Ukrainian business) belongs either to one of about 8 or 10 leading oligarchs, or to various corrupt officials or former officials or their relatives or thugs or scam artists of various stripes, all of whom either bought it for pennies on the dollar from the state, or seized it from someone who bought it for pennies on the dollar from the state.

For example, the "Krymkhleb" bakery concern mentioned at the beginning of the article was ultimately controlled by a one-time politician from overthrown president Yanukovich's now-defunct party who went from being a young machinist in a


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Nick Colas: Ten Signs You’ve Been on Wall Street Too Long

Uh oh, I was just in the car the other day explaining the three points about why one of the only worthwhile country songs, The Gambler, actually applies to everything in life from 1) the stock market (obviously) to 2) relationships to 3) career moves. My favorite observations from Cola's 10 signs are in bold. 

Nick Colas: Ten Signs You’ve Been on Wall Street Too Long

Courtesy of 

Nicholas Colas pens an opus this morning, out of nowhere. He’s clearly feeling introspective today…

***

After 30 years in and around Wall Street, I feel like damaged goods.  That’s not necessarily a complaint, but rather a simple and factual observation.  An example to illustrate the problem: I have mental stop losses for just about everything in my life.  If I have a bad meal at a restaurant, I never go back.  If a personal relationship goes south, I “Take it off my screen”.  Very few things have a second chance with me.  If it doesn’t work out, well, one and done…

Consider this “Top 10” list of other examples

#1 – You start personal conversations with “I have three points to make today.”  Aside from business consultants, most people do not think in PowerPoint or outline form.  But after a decade or so in finance, you somehow decide that anything worth saying must have three supporting points.  For stock analysts it always comes back to “Industry dynamics, company strategy/financials, and valuation.”  For traders, it is “Market direction, sector moves, and company trading dynamics”.  Three things, always…  No one else thinks or talks this way, as my wife often quietly – but firmly – reminds me. 

#2 – Emotions are life’s “beta”.  The concept that a stock moves with either more or less volatility than the market seems a neat analog for life.  Sometimes you are the windshield, sometimes you’re the bug.  We’ve all had beta 3 days, both for good or for bad.  But no one except a finance person would try to quantify that with a number.  “How was your day, honey?”  Answer: “Oh, a gap up open when I got a new customer to trade with me, but


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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.

Here's the Happy Thanksgiving Edition of Stock World Weekly!

Click on this link and sign in with your PSW user name and password. 

Picture via Pixabay.

...

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Zero Hedge

Pity the Sub-Genius

Courtesy of ZeroHedge. View original post here.

Submitted by Tim Knight from Slope of Hope.

From the Slope of Hope: They say be careful what you wish for. And, as is often the case, "they" are right.

As a kid, I wished the world favored the smart. I was a smart kid, and it seemed like the world - at least my world - was dominated by bullies and airheads. Might made right, just like in the times of old. My high IQ and love of learning were no match for popular dolts, so a portion of my childhood was wasted just trying to disappear into the background.

Unknown to me at the time, much of the adult world operated the same way. It didn't take a ...



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Phil's Favorites

"Eagle Cam": Aerial View of London via Video Camera Attached to an Eagle

Courtesy of Mish.

An eagle got an impressive birds-eye-view of London this week, flying over the city's most iconic landmarks using a Sony HDR-AZ1VR Action Cam attached to its back.



Link if video does not play: Action Cam Footage Shows Eagle Flying Over City of London

The BBC reports Eagle With Camera Flies Over London
An eagle with a camera attached has flown across London and offered a new perspective on some of the capital's best-known landmarks.

The footage was recorded over a week by an Imperial Eagle called Darchan.

The animal has been brought to London from the French Alps by The Freedom Project to mark the 50th anniversary of the International Union for Conservation of ...



more from Ilene

Market Shadows

Official Moves in the Market Shadows' Virtual Portfolio

By Ilene 

I officially bought 250 shares of EZCH at $18.76 and sold 300 shares of IGT at $17.09 in Market Shadows' Virtual Portfolio yesterday (Fri. 11-21).

Click here for Thursday's post where I was thinking about buying EZCH. After further reading, I decided to add it to the virtual portfolio and to sell IGT and several other stocks, which we'll be saying goodbye to next week.

Notes

1. th...



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Chart School

The Big Four Economic Indicators: Real Retail Sales

Courtesy of Doug Short.

Note from dshort: With yesterday's release of the Consumer Price Index for October, I've updated Real Retail Sales for October.

Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.

There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are:

  • Industrial Production
  • Real Personal Income (excluding Transfer Payments)
  • Nonfarm Employment
  • Real Retail Sales
  • ...

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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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    OpTrader

    Swing trading portfolio - week of November 17th, 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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    Sabrient

    Sector Detector: Investors make up new rules for their new market paradigm

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

    Courtesy of Sabrient Systems and Gradient Analytics

    By Scott Martindale

    Investors in U.S. equities seem to have embraced a new market paradigm in which upside spikes come more swiftly than the downside selloffs. Remember when it used to be the other way around? When fear was stronger than greed? The market is consolidating its gains off the early-October V-bottom reversal, and no one seems to be in any hurry to unload shares this time around, with the holidays rapidly approaching and all. After all, there are bright blue skies directly overhead giving hope and respite from the early freeze blanketing the country.

    In this weekly update, I give my view of the current market environment, offer...



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    Digital Currencies

    Ukraine Central Bank Bans Bitcoin "To Protect Citizens" From Financing Terrorism

    If you would have supposed that Ukraine had enough problems to make banning bitcoins a backburner issue, you'd have been wrong. The rationale, "to protect consumers' rights" makes little to no sense... The other one, "to keep money in the country" makes more sense. 

    Ukraine Central Bank Bans Bitcoin "To Protect Citizens" From Financing Terrorism

    Courtesy of ZeroHedge. View original post here.

    The Hryvnia has collapsed to new record lows near 15/USD this morning. The Central Bank and bankers "agreed to keep UAH at 15-16/USD" but are &qu...



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    Option Review

    Yamana Gold call options sink

    Yamana Gold call options sink

    By Andrew Wilkinson at Interactive Brokers

    A four-year low for the spot price of gold has had a devastating impact on Yamana Gold (Ticker: AUY), with shares in the name down at the lowest price in six years. Some option traders were especially keen to sell premium and appear to see few signs of a lasting rebound within the next five months. The price of gold suffered again Wednesday as the dollar strengthened and stock prices advanced. The post price of gold fell to $1145 adding further pain to share prices of gold miners. Shares in Yamana Gold tumbled to $3.62 and the lowest price since 2008 as call option sellers used the April expiration contract to write premium at the $5.00 strike. That strike is now 38% above the price of the stock. Premium writers took in around 16-cents per contract o...



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    Pharmboy

    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 desired....buy 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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    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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    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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