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China Manufacturing Output and New Orders Contract Once Again

Courtesy of Mish.

Chinese manufacturing remains in contraction for 2014. Output and new orders were down for the 4th consecutive month, but at a slightly reduced pace according to the HSBC Flash China Manufacturing PMI.

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

The HSBC Flash China Manufacturing PMI stabilised at 48.3 in April, up from 48.0 in March. Domestic demand showed mild improvement and deflationary pressures eased, but downside risks to growth are still evident as both new export orders and employment contracted. The State Council released new measures to support growth and employment after the release of Q1 GDP. Whilst initial impact will likely be limited, they signalled readiness to do more if necessary. We think more measures may be unveiled in the coming months and the PBoC will keep sufficient liquidity.

There is a massive expectation that China will step on the gas at any time now to improve conditions. I rather doubt it, unless there is a far bigger, disorderly breakdown.

China needs to rebalance, and will. Slower and slower GDP growth will generally be the norm, most likely for years to come, perhaps interrupted by an occassional unsustainable spurt here or there.

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



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Ex-Morgan Stanley Chief Economist Admits “Fed Is Distorting Markets”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Stephen Roach, former Chief Economist at Morgan Stanley, has never been shy to share his opinions about the world and having left the Wall Street firm is even freer to speak uncomfortable truthiness. This brief clip, as Sovereign Man's Simon Black notes, says it all so succinctly… "The market has been distorted by far bigger forces than flash trading. To me, the force that has rigged the market… is the Federal Reserve, not the flash traders."

We recommend skipping to 13:05 for about 30 seconds of brilliance if you’re pressed for time:





What Will December 31, 2014 Financial Headlines Look Like?

What Will December 31, 2014 Financial Headlines Look Like?

By Elliott Wave International

The financial forecasts around the end of 2013 brimmed with optimism. Here are just a few examples:

  1. Many scoff at notion stock bubble exists — Associated Press, Nov. 19, 2013
  2. Economy Entering New Year on a Roll — Bloomberg, Dec. 25, 2013
  3. 'We have entered a 15- to 20-year bull market' — CNBC, Dec. 30, 2013
  4. Economy poised for strong 2014 — Atlanta Journal-Constitution, Jan. 1, 2014
  5. Market Prediction: Bull will keep charging in 2014 — USA Today, Jan. 2, 2014
  6. Bull Market has Years Left Based on S&P 500 Valuations — Bloomberg, Jan. 6, 2014
  7. Economist tells Denver audience to be aggressive over next four years — Denver Post, Jan. 9, 2014

This super bullish outlook was also expressed just before the 2000 and 2007 market tops. Indeed, a chart from the April 2014 Elliott Wave Financial Forecast shows that investment pros are more bullish now than before the two prior major market peaks.

EWI's special report, The State of the U.S. Markets — 2014 Edition notes:

Investors are even more optimistic than economists. While the overall economy barely grinds ahead in first gear, indicators of Wall Street psychology stand at historic extremes of optimism. This optimism is the only thing holding up nominal stock prices.

Market history shows that extremes in psychology always reach a turning point. The Wave Principle can help you identify when the market's trend is about to change.

It is a thrilling experience to pinpoint a turn, and the Wave Principle is the only approach that can occasionally provide the opportunity to do so.

The ability to identify such junctures is remarkable enough, but the Wave Principle is the only method of analysis that also provides guidelines for forecasting

It is our practice to try to determine in advance where the next move will likely take the market.

Elliott Wave Principle: Key to Market Behavior, tenth edition, p. 96

Be aware that the Wave Principle has now identified what appears to be a history making…
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Amazing Surge in Middle-Aged Folks Moving in With Parents

Courtesy of Mish.

Moving back home with parents is not just for millennials. A large number of those aged 50 to 64 are moving back home, for economic reasons, not for providing care to aged parents.

The LA Times reports Moving in with Parents Becomes More Common for the Middle-Aged

At a time when the still sluggish economy has sent a flood of jobless young adults back home, older people are quietly moving in with their parents at twice the rate of their younger counterparts.

For seven years through 2012, the number of Californians aged 50 to 64 who live in their parents’ homes swelled 67.6% to about 194,000, according to the UCLA Center for Health Policy Research and the Insight Center for Community Economic Development.

The jump is almost exclusively the result of financial hardship caused by the recession rather than for other reasons, such as the need to care for aging parents, said Steven P. Wallace, a UCLA professor of public health who crunched the data.

“The numbers are pretty amazing,” Wallace said. “It’s an age group that you normally think of as pretty financially stable. They’re mid-career. They may be thinking ahead toward retirement. They’ve got a nest egg going. And then all of a sudden you see this huge push back into their parents’ homes.”

Many more young adults live with their parents than those in their 50s and early 60s live with theirs. Among 18- to 29-year-olds, 1.6 million Californians have taken up residence in their childhood bedrooms, according to the data.

Though that’s a 33% jump from 2006, the pace is half that of the 50 to 64 age group.

The surge in middle-aged people moving in with parents reflects the grim economic reality that has taken hold in the aftermath of the Great Recession.

Long-term unemployment is especially acute for older people. The number of Americans 55 and older who have been out of work for a year or more was 617,000 at the end of December, a fivefold jump from the end of 2007 when the recession hit, according to the Bureau of Labor Statistics.

Those in their 50s move in only as a last resort. Many have exhausted savings. Some have jobs but can’t shoulder soaring rents in areas such as Los


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Bill Ackman’s Secret $$ Deal for Herbalife Whistleblower

 

 

Bill Ackman’s Secret $$ Deal for Herbalife Whistleblower

By  and , ABC News

In his year-long campaign against the embattled Herbalife company, Wall Street hedge fund manager Bill Ackman secretly promised a disgruntled former company executive as much as $3.6 million over 10 years if he lost his job after providing information to government investigators and the media.

Ackman’s firm so far has paid the whistleblower $80,000 under the arrangement, according to the former Herbalife executive’s lawyer.

“It was the right thing to do,” Ackman told ABC News.

The hedge fund run by the prominent Wall Street investor, known for his “short” positions, stands to make $1 billion if the price of Herbalife’s stock collapses as a result of his allegations the company is a fraud, a charge the company strongly denies.

The agreement between Ackman and the former executive, Giovanni Bohorquez, was signed in June 2013 but required both sides to keep it confidential.

Two months later, the New York Times published a critical article about an alleged problem in 2011 at an Herbalife manufacturing plant based on internal documents provided by a person described only as a “former employee, who was granted anonymity out of fear of retribution from the company.”

Continue: Bill Ackman’s Secret $$ Deal for Herbalife Whistleblower – ABC News.





The Political Poison of Vested Interests

The Political Poison of Vested Interests

Courtesy of Charles Hugh-Smith of OfTwoMinds

Once vested interests take control, the only possible "solution" left is collapse.

I have long identified diminishing returns as a key dynamic in the current unraveling of the Status Quo. Why is this so? We can summarize diminishing returns as dumping more money, capital, energy and effort into a system just to keep the output from falling to zero.

But as the costs of keeping the system from imploding rise, they soon consume all the oxygen in the system, and the system implodes anyway.

The Fatal Disease of the Status Quo: Diminishing Returns (May 1, 2013)

Our Era’s Definitive Dynamic: Diminishing Returns (November 11, 2013)

Sickcare, higher education and insanely expensive weapons systems are all examples of this dynamic. The higher education cartel has raised gargantuan sums to fund its poor quality product by turning students into debt-serfs via student loans.


We must add a second definitive dynamic: protecting vested interests. There are many ways of describing powerful constituencies with an enormous stake in maintaining the Status Quo--vested or entrenched interests, for example--but the key characteristic is the enormous political pain that these groups can inflict on self-serving politicos.

Once confronted with an aroused vested interest--public union, cartel, corporatocracy, Power Elite, etc.--politicos cave in and do what is politically expedient: avoid any real reform and simply shovel more money into the gaping maw of diminishing returns.

A good example is soaring higher education costs and the decline of actual learning and the real-world value of a college diploma. The long-term study Academically Adrift: Limited Learning on College Campuses concluded that "American higher education is characterized by limited or no learning for a large proportion of students."

But rather than enable (or even insist) on real reforms that dramatically lowered costs and improved results, the political Status Quo responds to the higher education cartel's screams for more money by extending more student credit and taxpayer-paid aid to the cartel.

(I address all these issues in my book The Nearly Free University and The Emerging Economy: The Revolution in Higher Education.)

Once politicos respond to the cries for more money and protection from diminishing…
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Soy Numero Uno

Soy Numero Uno

By Paul Price of Market Shadows

Bunge Limited (BG) is the world’s largest processor of soybeans. It is also a major producer of vegetable oils, fertilizer, sugar and bioenergy.

When commodities got hot in 2007-08, Bunge’s EPS shot up and the stock followed, rising 185% in 19 months.

The Great Recession took its toll on operations, dropping EPS to a low of $2.22 in 2009.  Since then profits have recovered.  They ranged from $4.62 – $5.90 in the latest three years. 2014 appears poised for a large increase. Consensus views from multiple sources see BG earning $7.04 – $7.10 this year and then $7.83 – $7.94 in 2015.

BG  Jan. 31, 2006 - Jan. 31, 2008

The shares have been holding a trading range over the last 12-months as the ‘show me’ crowd wants another quarter or two of good comparisons to become believers again. I’m already convinced after seeing Q4 come in at $1.35 versus $0.57 year-over-year.

Market Shadows  Virtual Put Writing Portfolio sold one contract each of the Jan. $80 strike put for 2015, and 2016 at $5.91 and $9.38 per share. The ‘if put’ prices look very attractive at $74.09 and $70.62 respectively.

 BG Jan. 2015 & 2016 $80 Puts for MS

Our maximum profit is 100% of the premium collected. That will occur if the puts end up expiring worthless because BG remains above $80 on the expiration dates. In a worst case scenario we’ll end up owning 100 or 200 shares of Bunge at a price well below today’s quote and for a moderate P/E.

 BG   Jan. 1, 2013 - Apr. 22, 2014

You can now follow these trades on the open positions list in our  Virtual Put Writing Portfolio  which has been showing outstanding results since we started it up in January of 2013.

Check out all our closed-out and current option trades to judge for yourselves if option selling is something that would work for your own situation.





David Einhorn: “We Are Witnessing Our Second Tech Bubble In 15 Years” – Full Letter

 

 

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

We have been saying for about 6 months that the second coming of the tech bubble is here. We are happy to learn that none other than hedge fund manager David Einhorn agrees. From his just released letter to clients:

We have repeatedly noted that it is dangerous to short stocks that have disconnected from traditional valuation methods. After all, twice a silly price is not twice as silly; it’s still just silly. This understanding limited our enthusiasm for shorting the handful of momentum stocks that dominated the headlines last year. Now there is a clear consensus that we are witnessing our second tech bubble in 15 years. What is uncertain is how much further the bubble can expand, and what might pop it.

In our view the current bubble is an echo of the previous tech bubble, but with fewer large capitalization stocks and much less public enthusiasm. Some indications that we are pretty far along include:

  • The rejection of conventional valuation methods;
  • Short-sellers forced to cover due to intolerable mark-to-market losses; and
  • Huge first day IPO pops for companies that have done little more than use the right buzzwords and attract the right venture capital.

And once again, certain “cool kid” companies and the cheerleading analysts are pretending that compensation paid in equity isn’t an expense because it is “non-cash.” Would these companies be able to retain their highly talented workforces if they stopped doling out large amounts of equity? If you are trying to determine the creditworthiness of these ventures, it might make sense to back out non-cash expenses. But if you are an equity holder trying to value the businesses as a multiple of profits, how can you ignore the real cost of future dilution that comes from paying the employees in stock?

So what is Einhorn doing? Shorting a basket of momentum stocks of course (good luck) each of which he views as having 90% downside.

Given the enormous


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Raising Taxes on Corporations that Pay Their CEOs Royally and Treat Their Workers Like Serfs

Raising Taxes on Corporations that Pay Their CEOs Royally and Treat Their Workers Like Serfs

Courtesy of Robert Reich

Until the 1980s, corporate CEOs were paid, on average, 30 times what their typical worker was paid. Since then, CEO pay has skyrocketed to 280 times the pay of a typical worker; in big companies, to 354 times.

Meanwhile, over the same thirty-year time span the median American worker has seen no pay increase at all, adjusted for inflation. Even though the pay of male workers continues to outpace that of females, the typical male worker between the ages of 25 and 44 peaked in 1973 and has been dropping ever since. Since 2000, wages of the median male worker across all age brackets has dropped 10 percent, after inflation.

This growing divergence between CEO pay and that of the typical American worker isn’t just wildly unfair. It’s also bad for the economy. It means most workers these days lack the purchasing power to buy what the economy is capable of producing — contributing to the slowest recovery on record. Meanwhile, CEOs and other top executives use their fortunes to fuel speculative booms followed by busts.

Anyone who believes CEOs deserve this astronomical pay hasn’t been paying attention. The entire stock market has risen to record highs. Most CEOs have done little more than ride the wave.

There’s no easy answer for reversing this trend, but this week I’ll be testifying in favor of a bill introduced in the California legislature that at least creates the right incentives. Other states would do well to take a close look.

The proposed legislation, SB 1372, sets corporate taxes according to the ratio of CEO pay to the pay of the company’s typical worker. Corporations with low pay ratios get a tax break.Those with high ratios get a tax increase.

For example, if the CEO makes 100 times the median worker in the company, the company’s tax rate drops from the current 8.8 percent down to 8 percent. If the CEO makes 25 times the pay of the typical worker, the tax rate goes down to 7 percent.

On the other hand, corporations with big disparities face higher taxes. If the CEO makes 200 times the typical employee,


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Millions of China’s Farmers Now Buy Climate-Change Insurance

Millions of China's Farmers Now Buy Climate-Change Insurance

By Coco Liu and ClimateWire
farming in China

Farming on the terraced fields in China becomes less risky with insurance. 
Credit: David Woo via Flickr

Weeks before the harvest started last summer, Li Ping's rice paddies were hit by extreme weather. Temperatures of 95 degrees Fahrenheit baked Longtan village in north China for over a month, causing leaf yellowing and damaging grain production. As a result, Li's rice yields decreased by 20 percent compared with normal years.

But Li did not struggle to raise money for his next planting, which he did after previous crop failures. Instead, the 51-year-old farmer waited at home for the money to come.

"I have insured my rice production since 2009," Li said. "The compensation I got didn't recover the total losses, but it did remove part of my financial pressure."

Li is one of hundreds of millions of Chinese farmers who are now using insurance as a tool to hedge against the risks of climate change. China is the world's second-largest agricultural insurance market after the United States by premium income, and it is scrambling to spread the use of climate-related insurance into other sectors.

Keep reading Millions of China's Farmers Now Buy Climate-Change Insurance – Scientific American.





 
 
 

Zero Hedge

Algos Getting Concerned Low Volume Levitation May Not Work Today

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

It has been exactly six days in which algos, reversing the most recent drop in the S&P with buying sparked by a casual Nikkei leak that the BOJ may, wink wink, boost its QE (subsequently denied until such time as that rumor has to be used again), have pushed the market higher in the longest buying streak since September, ignoring virtually every adverse macroeconomic news, and certainly ignoring an earnings season that is set to be the worst since 2012. Today, the buying streak may finally end on rumors even the vacuum tubes are scratching their glassy heads if more buying on bad or no news makes any sense now that even the likes of David Einhorn is openly saying the second tech bubble ha...



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Phil's Favorites

China Manufacturing Output and New Orders Contract Once Again

Courtesy of Mish.

Chinese manufacturing remains in contraction for 2014. Output and new orders were down for the 4th consecutive month, but at a slightly reduced pace according to the HSBC Flash China Manufacturing PMI.



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

“The HSBC Flash China Manufacturing PMI stabilised at 48.3 in April, up from 48.0 in March. Domestic demand showed mild improvement and deflationary pressures eased, but downside risks to growth are still evident...



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Chart School

STTG Market Recap April 22, 2014

Courtesy of Blain.

We continue in this "V shaped" move off last week's touch of the 200 day moving average on the NASDAQ.  The S&P 500 gained 0.41% and the NASDAQ 0.97%.  The indexes are nearing overbought near term so a day or two of rest would serve the bulls well to try to attempt a new leg higher.  In economic news existing home sales hit 4.59 million in March, versus a 4.55 million estimate.

In terms of the indexes the S&P 500 stalled at the trend line that connected the lows of summer 2013; some congestion lies ahead at year highs.

The NASDAQ has come back from deeply oversold conditions as this index is heavy with biotech and momentum stocks.  The dotted blue line is the previous high; since early March we have not seen the NASDAQ make...



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Market Shadows

Soy Numero Uno

Soy Numero Uno

By Paul Price of Market Shadows

Bunge Limited (BG) is the world’s largest processor of soybeans. It is also a major producer of vegetable oils, fertilizer, sugar and bioenergy.

When commodities got hot in 2007-08, Bunge’s EPS shot up and the stock followed, rising 185% in 19 months.

The Great Recession took its toll on operations, dropping EPS to a low of $2.22 in 2009.  Since then profits have recovered.  They ranged from $4.62 - $5.90 in the latest three years. 2014 appears poised for a large increase. Consensus views from multiple sources see BG earning $7.04 - $7.10 this year and then $7.83 - $7.94 in 2015.

...



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Option Review

Casino Stocks LVS, WYNN On The Run Ahead of Earnings

Shares in Las Vegas Sands Corp. (Ticker: LVS) are up sharply today, gaining as much as 5.7% to touch $80.12 and the highest level since April 4th, mirroring gains in shares of resort casino operator Wynn Resorts Ltd. (Ticker: WYNN). The move in Wynn shares appears, at least in part, to follow a big increase in target price from analysts at CLSA who upped their target on the ‘buy’ rated stock to $350 from $250 a share. CLSA also has a ‘buy’ rating on Las Vegas Sands with a $100 price target according to a note from reporter, Janet Freund, on Bloomberg. Both companies are scheduled to report first-quarter earnings after the closing bell on Thursday.

...

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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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Sabrient

What the Market Wants: Market Poised to Head Higher: 3 Stocks to Consider

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

Courtesy of David Brown, Sabrient Systems and Gradient Analytics

Yesterday, the market continued its winning ways for the fifth consecutive day.  The S&P 500 closed within 1% of its all-time high, and the DJI was even closer to its all-time high.  Healthcare, Energy and Technology led the sectors while Financials, Telecom, and Utilities finished slightly in the red.  All three sectors in the red are typically flight-to-safety stocks, so despite lower than average volume, the market appears poised to make new highs.

Mid-cap Growth led the style/caps last week, up 2.87%, and Small-cap Growth trailed, up 2.22%. This week will bring well over 100 S&P 500 stocks reporting their March quarter earn...



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OpTrader

Swing trading portfolio - Week of April 21st, 2014

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

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here...



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Stock World Weekly

Stock World Weekly

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

Here's this week's Stock World Weekly. Click here and sign in with your PSW user name and password, or sign up for a free trial.

...

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Digital Currencies

Facebook Takes Life Seriously and Moves To Create Its Own Virtual Currency, Increases UltraCoin Valuation Significantly

Courtesy of ZeroHedge. View original post here.

Submitted by Reggie Middleton.

The Financial Times reports:

[Facebook] The social network is only weeks away from obtaining regulatory approval in Ireland for a service that would allow its users to store money on Facebook and use it to pay and exchange money with others, according to several people involved in the process. 

The authorisation from Ireland’s central bank to become an “e-money” institution would allow ...



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Promotions

See Live Demo Of This Google-Like Trade Algorithm

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

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

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

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

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



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Pharmboy

Here We Go Again - Pharma & Biotechs 2014

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

Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.

And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference.  Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014?  The Biotech ETF beat the S&P by better than 3 points.

As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...



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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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