by ilene - December 19th, 2014 6:48 pm
Must see: Phil visits with Money Talk's Kim Parlee on Business News Network. In this great interview, Phil talks about his target price range for oil and presents an options trade idea that he is calling the "Trade of 2015."
Click on the links:
Segment 1 (Oil, Russia, and the Fed) : http://www.bnn.ca/Shows/Money-
Segment 2 (Trade of the Year 2015) : http://www.bnn.ca/Shows/Money-
In segment 2, Phil introduces the trade of the year for 2015 and discusses the strategy of "being the house."
by ilene - December 19th, 2014 4:36 pm
Courtesy of Lance Roberts of STA Wealth Management
"Twas the week before Christmas, when all through markets
Not a trader was stirring, because they already left for the Hamptons.
Which left the "inmates running the asylum" with very little care
As everyone hoped a 'Santa Claus Rally' would soon be there."
Yes, it is that magical week leading up to Christmas and the subsequent low volume push into the new year. For individuals, it is "magic time" as hopes are high that "Santa Claus" will come to WallStreet.
Of course, as mutual funds window dress portfolios for the end of year reporting, it tends to elevate the most popular stocks in the markets. However, investors should also be wary of the rotation of the calendar as those same managers then sell positions for tax purposes in the New Year.
This weekend's reading list is a smattering of articles that cover a wide range of topics from investing to oil. As always, I try to provide opposing points of view to give readers a complete picture of the topic. As a portfolio manager, it is important to remember that our fundamental beliefs can lead us into making poor investment decisions. Therefore, it is crucial for long-term investment success that we eliminate the emotional biases that affect our decision-making processes.
With that said, here are the things I will be reading this weekend.
1) Be A Good Loser by Mebane Faber via Meb Faber Research
"One of the biggest challenges of investing is long periods of underperformance, or outright negative performance and losses. Cliff Asness has a fun piece out on his blog where he talks about 5 year periods in stocks, bonds, and commodities and basically how anything can happen.
So if you’re going to be an investor, get used to being a loser!"
Read Also: What To Expect When Your Expecting by Michael Batnick via The Irrelevant Investor
2) An Unconventional Way Of Looking At Valuations by GaveKal Research
by ilene - December 19th, 2014 3:54 pm
Courtesy of Mish.
Abolition of rent controls in Spain this month have prompted some landlords to increase fees by tens of thousands of euros. The Guardian claims Spanish rent changes ‘could close 20,000 small businesses’.
Is this a good thing? Ponder that question for a moment, but also consider a few snips from the article.
Up to 20,000 small Spanish businesses could be forced to close when rent controls are abolished at the end of this month, according to the self-employed workers union. Many of the closures will be emblematic shops that shape the urban landscape in cities such as Madrid, Granada and Barcelona.
The Camisería Hernando has been in business since 1857 and has occupied the same shop on Madrid’s Gran Vía for 50 years but is closing after the rent shot up from €3,000 to €30,000 a month.
Barcelona has already lost a toy shop and a secondhand bookstore that have been a feature of the old part of the city for more than a century. Both premises have been occupied by retail clothing chains. Other gems such as the modernista Monge stamp shop and the Quiles grocery are also under threat as the city succumbs to an influx of chain stores.
Local government officials have refused to intervene to preserve the city’s heritage but local artists and intellectuals are taking the case of Monge to court. While some landlords have been prepared to negotiate affordable rent hikes, many shops are in buildings owned by banks and funds that simply notify the shopkeepers of the impending rise.
“About 60% of the 200,000 affected businesses have been able to negotiate a rise of around 35%,” César García, of the self-employed workers union, said. “But most of the rest have received a letter telling them the rent is going up by thousands of euros and that it’s not negotiable.”
“We’re closing after 72 years,” said Susana Esnarriega, owner of Así, a doll shop on Madrid’s Gran Via. “The landlord is giving us till Epiphany to get out but he hasn’t even made us an offer.”
Good Thing or Not?
Is this a good thing? It's a somewhat misleading question because I was not specific.
Did I mean a good thing that
by ilene - December 19th, 2014 3:22 pm
Courtesy of David Stockman via Contra Corner
Virtually every day there is an eruption of lunacy from one central bank or another somewhere in the world. Today it was the Swiss central bank’s turn, and it didn’t pull any punches with regard to Russian billionaires seeking a safe haven from the ruble-rubble in Moscow or investors from all around its borders fleeing Mario Draghi’s impending euro-trashing campaign. The essence of its action was that your money is not welcome in Switzerland; and if you do bring it, we will extract a rental payment from your deposits.
For the time being, that levy amounts to a negative 25 bps on deposits with the Swiss Central bank—-a maneuver that is designed to drive Swiss Libor into the realm of negative interest rates as well. But the more significant implication is that the Swiss are prepared to print endless amounts of their own currency to enforce this utterly unnatural edict on savers and depositors within its borders.
Yes, the once and former pillar of monetary rectitude, the SNB, has gone all-in for money printing. Indeed, it now aims to become the BOJ on steroids—-a monetary Godzilla.
So its current plunge into the netherworld of negative interest rates is nothing new. It’s just the next step in its long-standing campaign to put a floor under the Swiss Franc at 120. That means effectively that it stands ready to print enough francs to purchase any and all euros (and other currencies) on offer without limit.
And print it has. During the last 80 months, the SNB’s balance sheet has soared from 100B CHF to 530B CHF——a 5X explosion that would make even Bernanke envious. Better still, a balance sheet which stood at 20% of Swiss GDP in early 2008—-now towers at a world record 80% of the alpine nation’s total output. Kuroda-san, with a balance sheet at 50% of Japan’s GDP, can only pine for the efficiency of the SNB’s printing presses.
As per the usual Keynesian folly, this is all being done in the name of protecting Switzerland’s fabled export industries.
Let’s see. During the most recent year, Switzerland did export $265 billion of goods, representing an impressive 41% of GDP. But then again, it also imported $250 billion of stuff. Accordingly, for every dollar of watches, ball point pens, (Logitech) mouses, top-end pharmaceuticals and state of the art high…
by ilene - December 18th, 2014 8:22 pm
Courtesy of Mish.
Theory #1: Break-Even Rates Provide “Deflation Warning”
Bloomberg is sounding a Deflation Warning as 2-Year Break-Even Rates Go Negative.
Break-even rates are the difference between treasuries and the same-duration Treasury Inflation-Protected Securities (TIPS). The break-even rate turned negative yesterday for the first time since 2009.
In theory, break-even rates reflect investors’ expectations for inflation over the life of the securities.
When break-even rates are negative, it’s an indication investors expect price deflation for the duration, in this case for two years.
From Bloomberg …
The drop in the break-even rate followed a Labor Department report yesterday that showed consumer prices dropped 0.3 percent in November, the most in almost six years, on tumbling energy prices. Principal and interest payments on Treasury Inflation Protected Securities are indexed to changes in the consumer price index, so a lower than forecast CPI diminishes the value of projected future payments from TIPS.
The break-even rate dropped to negative 0.035 percent yesterday. The difference was 0.024 percent today.
The negative break-even rate represents “an uncertainty premium that maybe oil could fall to $40 a barrel,” said Donald Ellenberger, who oversees about $10 billion as head of multi-sector strategies at Federated Investors in Pittsburgh. “The shortest-term TIPS are very influenced by the direction of the consumer price index. It’s telling you inflation on the short-end could turn negative.”
Fed Chair Janet Yellen downplayed the notion at the press conference after the conclusion of yesterday’s two-day policy meeting. Falling break-even rates may represent a decline in the inflation premium risk or the range of inflation outcomes investors are taking into consideration, she said. One of the justifications for the Fed to raise rates for the first time since 2006 is to keep consumer price increases from getting out of control.
Out of Control Consumer Prices?
Color me extremely skeptical regarding out of control consumer prices. In fact, I side with this headline: Krugman, Fighting Consensus, Says 2015 Fed Rate Increase Is Unlikely.
Paul Krugman, challenging the consensus of economists and the Federal Reserve’s forecasts, said policy makers are unlikely to raise interest rates in 2015 as they struggle to spur inflation amid sluggish global economic growth.
by ilene - December 18th, 2014 2:46 pm
Courtesy of Pater Tenebrarum of Acting Man
December FOMC Decree
Prior to the announcement of the FOMC decision on Wednesday, it was widely expected that the verbiage in the statement would be changed so as to convey an increasingly hawkish stance. Specifically, it was expected that the following phrase, which has been a mainstay of FOMC statements for many moons, would finally be given the boot and no longer appear:
“…it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time”
It is inter alia this bizarre focus on little turns of phrase in the FOMC statement that has caused us to compare the analysis of the actions of the monetary bureaucracy with the art of “Kremlinology” of yore. The Committee is indeed reminiscent of the Soviet Politbureau in many respects. It is unelected, it is engaged in central planning, and its pronouncements are cloaked in an aura of mysticism, akin to decrees handed down from Olympus.
While it is fairly easy (and in our opinion, absolutely necessary) to make fun of this, it is unfortunately affecting the lives of nearly everyone on the planet. The only exceptions that come to mind are Indian tribes in remote areas of the rain forest, since they don’t use money and possess no capitalistic production structure.
Fed chair Janet Yellen: “A couple. You know, a pair. What the Russians call “dva”, although I hear the Russians are no longer as familiar with such low numbers as they once used to be. My dictionary says it means “two”. One less than the number one is supposed to count to before throwing the holy hand grenade of Antioch after its pin has been removed. Not one, definitely not five, absolutely not four and not three either. Two.”
Photo credit: Agence France-Presse / Getty Images
So what has happened to the above mentioned phrase? It has indeed been altered. Instead we got this:
“Based on its current assessment, the Committee judges that it can be
by ilene - December 18th, 2014 2:23 pm
Courtesy of Mish.
Here’s and amusing but totally unscientific informal poll on how to tackle the illegal immigrant problem.
Students were asked if they would sign a petition to deport US citizens on a one-for-one basis in exchange for allowing illegal immigrants to stay in the US.
Link if video does not play: Deport US Citizens to Keep Illegal Immigrants?
The people who conducted this experiment said about 2/3 of the college students signed the petition.
What does this suggest, if anything, about the quality of our education system? Or is it simply proof that people in general do not listen?
Support for the Plan
Such questions aside, I actually think this is a brilliant plan, with just one minor modification: We have to have sufficient grounds for deporting.
I suggest war crimes are sufficient grounds. More specifically, I propose we deport to an international war crimes tribunal a select group of the worst war crimes offenders.
Top Five War Crimes Candidates
- Former Vice President Dick Cheney
- Former President George Bush
- Former Defense Secretary Donald Rumsfeld
- Former CIA director George Tenet
- President Barack Obama – for drone policy
Cheney, Bush, and Rumsfeld would be on charges of various war crimes, bombings, and torture. Tenet would be for torture. Obama would be for indiscriminate killing of innocent men, women, and children via his drone policy….
by ilene - December 18th, 2014 12:47 pm
By Dennis Miller
In the spirit of the holidays, I’m sharing a happy truth: many people do, in fact, retire rich. Who are these rare birds and what can they teach us?
Rich Retire #1—The Pension Holder. If you have a large pension in 2014, you likely are or were a government employee. Many government workers receive pensions equal to 75-80% of their working salaries. In some government departments, it’s the unwritten custom for department heads to bump a worker’s salary 20% or so when he or she is a year or two from retirement. This boosts the employee’s base for his retirement pay.
Of course, in the private sector, pensions have gone the way of the slide rule. So let’s move on.
Rich Retire #2—The Small-Business Owner. If a self-employed person builds up a small or mid-sized business that he can sell when he’s ready to retire, that can fund a comfortable lifestyle during his nonworking years. Sure, it’s not “retirement investing” in the traditional sense, but it’s a path that’s worked for many entrepreneurs.
Rich Retire #3—The exceptional investor. Investors who lock in large boom-time gains are a step ahead of most. Those who resist the ever-so-tempting urge to spend that extra dough can watch it grow, and just like that, a rich retirement is theirs for the taking.
Rich Retire #4—The exceptional saver. A friend’s dad used to tell him, “Save 10% of your pay once you start working and you’ll be a millionaire by your mid-40s.” This friend’s dad was wrong. It didn’t take him that long. Ultra-disciplined savers live their lives this way, setting themselves up to retire rich without a last-minute race to the finish line.
Rich Retire #5—The former debtor who pays himself now. Except for those born independently wealthy, many of us spend years paying down sizable debts, such as a mortgage or educational loans. The rich retire clears those debts as soon as possible, but continues to make those payments… to himself.
by ilene - December 18th, 2014 11:20 am
Courtesy of Lee Adler of the Wall Street Examiner
Don’t believe everything you read in the mainstream media. Especially don’t believe anything in the financial news media until you’ve looked at the data yourself. It’s no wonder investors are so often caught flatfooted in the markets. Financial “journalists” feed their readers and viewers a constant stream of misinformation and bad data. Financial reporters are so atrocious at serving their audience I have to believe that they are, wittingly or unwittingly, part of a deliberate and elaborate campaign of disinformation… unless you believe in Coincidence Theory.
Housing starts collapsed in November. They weren’t good, they weren’t even so-so as media reports intimated. The seasonally adjusted annualized number which the paid flacks report is absolute nonsense. It’s fiction.
Actual, not seasonally adjusted single family starts were down by 10,400 units in November to 47,700 units. November is always a down month but this was the worst November performance since 2008, in the teeth of the housing crash. On a year to year basis starts were down by 6.3%. It’s absurd that you can’t find that fact anywhere near the mainstream media headlines. In fact, Bloomberg outright lied about it, “While housing starts declined 1.6 percent…” They used the fictitious data. It’s not ok to use seasonally adjusted data because it “usually” accurately reflects the trend.It is especially not ok to use it when reporting the year to year change, which obviously has NO seasonality.
Multifamily starts fell 10.6% year over year.
A picture tells the story at a glance.
This kind of misimpression happens often enough that it is damaging and dangerous, fooling not only the public and the media which disseminates it, but also the genius clowns who make policy.
by ilene - December 18th, 2014 10:38 am
Submitted by Tyler Durden.
Yesterday, moments before the North Korea "hacking" tragicomedy escalated into full retard mode with Sony pulling The Interview, or a movie that absent the attention would certainly be a flop, Wired released an article titled: "North Korea Almost Certainly Did Not Hack Sony" (title subsequently changed to the one below as can be seen in the URL alias "http://www.wired.com/2014/12/north-korea-did-not-hack-sony-probs"), which however, and for the better, retains its content as it is quite critical in debunking the latest government "certainty."
It is quite clear that someone is lying (we leave it up to readers to decide who). The question is "why"?