Archive for the ‘Phil’s Favorites’ Category

Uncertainty Soars in China and UK

Courtesy of Mish.

Global uncertainty is on the rise, led by China and the UK.

In the US and Europe measures of uncertainly are on the decline. I gather this from a chart that ZeroHedge tweeted this morning.

Global Uncertainty

Global Uncertainty

I asked ZeroHedge where the chart came from and he replied “In today’s Citi report from Willem Buiter”.

OK, but where did Buiter get the data?

Although the scales are different, the answer appears to be Economic Policy Uncertainty. The the patterns match precisely.

Economic Policy Uncertainty UK

Continue reading here…

The real reason the EpiPen and other off-patents are so expensive


The real reason the EpiPen and other off-patents are so expensive

By Timothy Holbrook, Emory University

The rising price for EpiPens, a drug delivery system that is crucial for persons experiencing potentially life-threatening allergic reactions, has resulted in outrage. The price increase, from about US$94 for a two-pack of injectable epinephrine to more than $600 in just nine years, has members of Congress calling for investigations in how Mylan, the drug’s manufacturer, can justify this increase. In the last year alone, the price has climbed by $200.

The company does offer a savings program that applies to some consumers. Those with high-deductible insurance plans, which includes a growing number of Americans, do not get much relief, however.

This is hardly the first example of sharp price increases. Turing Pharmaceuticals, and its then-chief executive Martin Shkreli, raised the price of the drug Daraprim, which treats a life-threatening parasitic infection, from $13.50 to $750 per tablet.

The drug, 62 years old at the time, was not covered by a patent and was a key antibiotic used in treating persons with HIV/AIDS. The price hike put patients’ health at risk, leading to a cost of hundreds of thousands of dollars for some. Shrekli, unsurprisingly, was vilified (and, for unrelated reasons, ultimately indicted on fraud).

While this conduct was outrageous, it wasn’t illegal. Any pharmaceutical company is free to set the price for its drug at any level the market will bear that maximizes their profits. Other drugs whose prices have risen include treatments for hepatitis C, cancer and high cholesterol. So, while the price hike was not the best public relations move, it is legal.

What explains such a rapid rise in price for a drug that has been around for several years? As a patent lawyer with particular experience in the pharmaceutical industry, I think it’s important to look at the role of patents and also FDA approvals in drug discovery and sales. Currently, a backlog of about 4,000 generic drugs is awaiting FDA approval. Both factors play a role in how both rare and common drugs, such as EpiPens, can shoot up in price so rapidly. [My emphasis. See also The Lack Of EpiPen Competitors Is The FDA's Fault.]

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News You Can Use From Phil’s Stock World


Financial Markets and Economy

OMEGA: 'The in-place equity bull market should last a long time' (Business Insider)

It's a good time to be in stocks, according to Omega Advisors' Steve Einhorn.

The stock market should forge ahead on its bull run, Einhorn said in an email Sunday to macro traders that was viewed by Business Insider.

Goldman Sees Pound, Yen and Kiwi Most Exposed to Yellen Shock (Bloomberg)

Goldman Sachs Group Inc. sees the pound, the yen and the New Zealand dollar as most vulnerable to a potential surprise from Federal Reserve Chair Janet Yellen’s Aug. 26 speech at the annual monetary-policy symposium in Jackson Hole, Wyoming.

Apollo, TPG Reject Caesars’ Demand for $990 Million Rescue (Bloomberg)

Caesars Entertainment Corp. needs another $990 million to help get its main operating unit out of bankruptcy, but its biggest shareholders, Apollo Global Management LLC and TPG Capital LP, have refused to kick in any more, according to a company financial adviser.

The Stock Market Is Quiet. Too Quiet. (New York Mag)

It’s been a long time since you’ve read a hair-raising story about volatility in the stock market. But fear not, financial-scare lovers! The market has now been serene for so long, you actually have cause to worry about the calm.

Thoughts On A Handful Of mREITs And The State Of The Industry (Week 45) (Seeking Alpha)

The emphasis this week is on alternative ways to assess book value. The latest sale of an mREIT reinforces the premise that investors should be wary of simply using book value as the key to estimating the fair value of a mortgage REIT.

Most Millennials Have Less Than $1,000 In Savings, Live Paycheck-to-Paycheck (Zero Hedge)

The majority of millennials are living paycheck to paycheck.

A recent survey of millennials by found that 51.8% of those aged 18-34 have less than $1,000 held between bank accounts and cash savings.

Subscribe and Save on Amazon? Don’t Count on It (NY Times)

WHAT do subscriptions to a newspaper, magazine or Netflix account have in common? Once you sign up, you

continue reading Weekly Trading Webinar – 08-24-16

Watch a replay of Phil's weekly trading webinar, recorded yesterday, below.

For LIVE access, join us at Phil's Stock World – click here! Weekly Trading Webinar – 08-24-16

Major Topics

00:01:48 Extrapolation
00:03:03 TSLA's Planned Roadmap to Vehicles
00:04:54 More on Extrapolation
00:06:19 TSLA Chart
00:08:42 Auto Sales by Quarter
00:10:00 Annual Vehicle Sales
00:13:52 Ford Sales Performance
00:15:53 Possible Problems with the Auto Business
00:16:40 Chinese Auto Sales
00:18:30 Ford Trade Status
00:19:21 Long-Term Ford Portfolio
00:22:27 Ford Trade Ideas
00:29:12 Velocity of Money
00:44:47 Owning a House vs. Renting
00:50:21 Home Sales
00:51:20 XON Chart
00:52:04 XON relation to Zika
00:53:42 APPL Car Environments
00:55:17 Self-driving Cars
00:57:56 Interest Rates
00:59:27 Selling Bonds in the Market
01:02:07 Self-driving car infrastructure ideas
01:08:04 Fair Market Price
01:09:00 DIS Chart
01:10:05 DIS Earnings
01:12:15 XON expires on Oct.
01:14:06 LOW Trade Ideas
01:20:58 DAL Trade Ideas
01:22:00 More Trade Ideas
01:25:00 BBY Trade Ideas
01:27:49 Petroleum Status Report
01:35:00 JNJ Earnings
01:39:00 Long Term Portfolio
01:45:00 Checking the Markets
01:47:46 Short-Term Portfolio
01:48:37 5% Portfolio
01:49:07 Butterfly Portfolio
01:52:40 More Trade Ideas

Phil's Weekly Trading Webinars provide a great opportunity to learn what we do at PSW. You can subscribe to our YouTube channel and view past webinars, here.  For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – join us at PSW — click here!

No Signs of Life in Fed Manufacturing Reports: Add Kansas City to List

Courtesy of Mish.

There were no signs of life today in the Kansas City Region Fed Manufacturing Survey.

Production, shipping, new orders, backlog of orders, number of employees,  and new export orders were all in negative territory.

Kansas City 2016-08A

Workweek likely rose due to employment falling more. Note that prices received declined but prices paid rose.

Since March of 2015, the Kansas City index was in positive territory only twice. Once was at +2, the other at +1.0.

Kansas City 2016-08B

Above chart from Bloomberg Econoday.

Disastrous August

Continue reading here…

What Can We Say About A System that Criminalizes A Safe Painkiller & Promotes Big Pharma Opiates?

Courtesy of Charles Hugh-Smith of Of Two Minds

When will the citizens wake up to the criminality of their government in favoring killer corporate opiates over safe natural painkillers?

Set your mindset to objective and come with me to the little-known but plucky nation of Lower Slobovia. The residents of Lower Slobovia have two choices when they are suffering from chronic pain:

1. A natural, non-addictive medication that they can grow themselves that has never caused a single fatality due to overdose, adverse reactions or mixing with other drugs (polypharmacy), or

2. synthetic opiates manufactured by pharmaceutical corporations that are highly addictive, trigger multiple adverse reactions, manifest dangerous polypharmaceutical attributes and have killed over 165,000 people in the past 15 years-- 28 times the nation's 5,790 combat deaths in recent military conflicts.

The corporations manufacturing and distributing the synthetic opiates as "safe" hid the truth about their medications from doctors, patients and the media: 'You Want a Description of Hell?' Oxycontin's 12-Hour Problem (via John F.) OxyContin’s stunning success masked a fundamental problem: The drug wears off hours early in many people, a Los Angeles Times investigation found. OxyContin is a chemical cousin of heroin, and when it doesn’t last, patients can experience excruciating symptoms of withdrawal, including an intense craving for the drug.

So take a guess which class of drugs is perfectly legal and widely promoted by Lower Slobovia's healthcare system, and which one is classified as a restricted Schedule 1 drug by the nation's Drug Enforcement Agency (DEA), i.e. as dangerous as heroin?

I suspect you saw this coming, right? The natural painkiller that never killed a single soul and can be grown at home is criminalized, while the drugs that have already killed 165,000 people (a number that grossly understates the total number of deaths at least partly attributable to synthetic opiates) and addicted and/or harmed millions of other users is perfectly legal, declared "safe" by the pushers (oops, I mean pharmaceutical manufacturers) and the government, and distributed in the tens of millions of doses by the "healthcare" system.

Lower Slobovia's DEA, the corporate manufacturers of the killer-opiates and its healthcare system that slavishly distributes millions of the killer pills should be immediately escorted to Devil's

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Dear Congress: Have You Received Money From These Pharma Companies?

Courtesy of ZeroHedge. View original post here.

We have been following the latest melodrama involving a "greedy" Mylan, and numerous "humanistic" US politicians, all the way up to the Democratic presidential candidate, exchange blows over the company's dramatic price increases of its EpiPen anti-allergy medication, with a healthy dose of amusement for one simple reason: if Congress wants to crack down on someone, it should crack down on itself.

After all, the only reason Mylan has been able to pass the kinds of price increases that Congress is now blasting it for, is because of US laws and regulations; laws which incidentally, have been determined in Washington's backroom bribe parlor, i.e. the corner offices of thousands of local lobby organizations dispensing with billions of dollars in "client" funds.

Clients such as the companies listed below.

Which brings us to this question: dear Congress, have you received millions in lobby dollars from the US pharmaceutical industry.

Or perhaps Congress denies that virtually every single pharmaceutical company operating in the US has spent millions on influence peddling pardon lobbying, in recent years? Perhaps, just like in the case of the Clinton foundation defense, that money was not used to buy favors and influence legislation, but was purely for humanitarian reasons?

So how much money has the US pharma industry spent? According to OpenSecrets, so far in 2016, the amount is $129 million, rising to $2.3 billion over the past decade.

Here is a small selection of the 369 lobbying "clients" OpenSecrets keeps track of: one can see Mylan toward the bottom.

And, as usual, we conclude with our favorite chart showing the relationship between the pharmaceutical industry  and Congress, according to which every dollar spent by big Pharma on lobbying generates a return of 77,500%!

And since virtually all representatives and senators suddenly appear so eager to accuse Mylan and its CEO of greed, we look forward to each and every member of Congress explaining to the American public, and their constituency, precisely where all their lobby dollars have came from, what laws were enacted as a result, and most importantly, what they spent the money on.

Expect Downward Revision to 2nd Quarter GDP Tomorrow

Courtesy of Mish.

Following yesterday’s existing home sales report, the Atlanta Fed GDP Now Modelforecast for third quarter GDP fell 0.2 percentage points to 3.4%.

We will not see the BEA’s first estimate for third quarter GDP until October 28. The second estimate for second quarter GDP comes out tomorrow. Based on revisions to June data, I expect a lower estimate to second quarter GDP.

Skipping ahead, this is what the Atlanta Fed model projects for third quarter.

Latest forecast: 3.4 percent — August 25, 2016

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2016 is 3.4 percent on August 25, down from 3.6 percent on August 16. After yesterday’s existing-home sales release from the National Association of Realtors, the forecast for third-quarter real residential investment growth declined from 1.0 percent to –2.6 percent.

GDPNow 2016-08-25

I’ll Take the Under

For a look at the existing home sales report that took 0.2 percentage points off the forecast, please see Existing Home Sales Sink 3.2% in July, Down 1.6% From Year Ago

Continue reading here…

The Lack Of EpiPen Competitors Is The FDA’s Fault

Johnathan Newman explains how the FDA, if it wanted to, could fix the problem of Mylan controlling the EpiPen market pretty quickly and he concludes that capitalism has nothing to do with the price increases. Part one is correct, but part two is a stretch. 

What the FDA could do:

1. Speed up the review of TEVA's generic EpiPen. (See also The real reason the EpiPen and other off-patents are so expensive.)

2. Approve pre-loaded styringes filled with epinephrine -- the FDA could stop stalling this cheap alternative. 

3. The FDA could reverse course and make it legal for pharmacies to substitute Adrenaclick as a generic alternative to EpiPen. 

The Lack Of EpiPen Competitors Is The FDA's Fault

By Jonathan Newman of The Mises Institute

There’s a new bout of outrage over an expensive medicine or medical treatment. While the good in question changes each time, the blame always seems to fall on greedy corporations who just aren’t regulated enough. Free markets and capitalism are the scapegoat, even when nothing remotely resembling unhampered markets in health care is in place in the United States.

This time, it’s the EpiPen, a device that easily and safely injects epinephrine to quickly open up airways for people undergoing severe anaphylaxis because of an extreme allergy. It has saved the lives of countless people who are allergic to bee stings, certain foods, or other drugs because it can be administered on the spot by somebody without any medical training.

EpiPen is sold by Mylan, and the price for a pack of two has increased from about $100 in 2007 to over $600 as of May 2016. Mylan has tried to quell the storm by pointing out that many of their customers pay nothing for the drug because of insurance. Their deflection has been unsuccessful.

The economist looks for competitors in cases like this. A firm cannot just willy-nilly raise their prices without a competing firm leaping in to give consumers what they want at a lower price. As it turns out, Mylan has a great friend who keeps would-be competitors out of the market, or at least makes it so difficult for them that they eventually go out of business. That friend is the FDA.

With the

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Wall Street Journal Regurgitates Misleading Government Data on Durable Goods

Courtesy of Lee Adler of the Wall Street Examiner

The Wall Street Journal today dutifully reported the Commerce Department’s seasonally adjusted data on Durable Goods orders in July, proclaiming:

U.S. Durable-Goods Orders Rebounded in July, Jumping 4.4%

However, the actual, not seasonally adjusted data tells another story. It’s easy to actual data to tell if the momentum of the business is gaining or losing ground. Just compare the year to year change for the current month with immediate past months.

The actual data showed a year to year decline of -6.4% and a month to month decline of -13.7%.

That doesn’t tell us much on a standalone basis. We need to compare that to past data to see the momentum of the business. The year to year decline of -6.4% in July was indeed a hair better than June’s drop of -6.7%. However the July drop was larger than each of the 10 months prior to June. That’s a pretty weak basis for claiming that July had an increase of 4.3%. It’s easy enough to see on a chart however.

Durable Goods Orders - Click to enlarge

We also see that the July level was 1.7% below the July 2007 peak, while the June level was just 1.1% below the June 2007 peak.

The June-July month to month drop of -13.7% means little on its own. A month to month decline of some magnitude is normal for July. The July month to month decline was a hair better than in July of 2015, when the drop was -14.1%. Is that a material improvement? Not compared with an 8.4% July gain in 2014. That was an outlier, but the average change in July since the recovery began in 2009 has been -10.5%. The current month was materially worse than average, 30% worse to be precise.

This data is for nominal dollar value. It does not adjust for inflation. Using the PPI for durable goods as the deflator, the big picture on a unit volume basis is a whole lot worse than the nominal data shows. Meanwhile stock prices have decoupled, particularly since 2013.

Real Durable Goods Orders and Stock Prices - Click to enlarge

In terms of unit volume of orders, current levels are well below 2007 levels. Order volume has been in a downtrend for 16 years as the

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Greenlight Masters H1 Letter: We Worry About Distortions Which Have Bid Up "Uber and uber-safe assets"

By VW Staff. Originally published at ValueWalk.

Everyone knows David Einhorn’s famous Greenlight Capital and to a slightly lesser extent his reinsurer Greenlight Re – however far less are familiar with Einhorn’s fund of fund Greenlight Masters.

Some of the hedge funds the FOF is invested in

  • Greenlight Capital
  • Dan Loeb’s Third Point Capital
  • East Bridge
  • Philly Financial
  • 683 Capital
  • ...

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Zero Hedge

The Reckoning Looms - Central Bankers Really Don't Know What They're Doing

Courtesy of ZeroHedge. View original post here.

Submitted by Michael Snider via Alhambra Investment Partners,

As I have written many, many times, the “unexpected” events of January and February were a dramatic wake-up call for central banks. Last August’s global liquidation they could at least try to ignore because it could possibly fit within the paradigm of “transitory”, a one-off aberration that was some mysterious Chinese viral contagion and thus of not any great, lingering importance. The...

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Chart School

Visualizing GDP: An Inside Look at the Q2 Second Estimate

Courtesy of Doug Short's Advisor Perspectives.

Note: The charts in this commentary have been updated to include the Q2 2016 Second Estimate.

The chart below is a way to visualize real GDP change since 2007. It uses a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself. Here is the latest overview from the Bureau of Labor Statistics:

The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE) and exports that were partly offset by negative contributions from private inventory investment, residential fixed investment, state and local government spending and nonresidential fixed investment. Imports...

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Phil's Favorites

Another Warning Sign

Courtesy of Lance Roberts via Real Investment Advice

Would Another $4 Trillion In QE Work?

Just recently, David Reifschneider, deputy director of the division of research and statistics for the Federal Reserve board in Washington, D.C., released a staff working paper entitled “Gauging The Ability Of The FOMC To Respond To Future Recessions.” 

The conclusion was simply this:

“Simulations of the FRB/US model of a severe recession suggest that large-scale asset purchases and forward guidance about the future path of the federal funds rate should be able to provide enough additional accommodation to fully compensate for a more limited [ability] to cut short-term interest rates...

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Kimble Charting Solutions

Basic Materials attempting breakout says Joe Friday

Courtesy of Chris Kimble.

Basic Materials stocks can often times give a decent snap shot of how an economy is doing from a growth or lack of perspective. Below looks at Basic Materials ETF (IYM) over the past decade.


IYM remains inside of an upward sloping mult-year rising channel (1), since 2009. It hit the bottom of this channel earlier this year and has bounce off support. Currently IYM is testing f...

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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Europe’s Refugee Pact With Turkey May Collapse Over Visa Dispute (Bloomberg)

The foundations of Turkey’s agreement with the European Union to curb the flow of migrants into Greece are looking increasingly shaky.

Asian Stocks Drop as Investors Avoid Risk Before Yellen Speech (Bloomberg)

Asian stocks fell, led by shares in Japan, as investors showed a reluctance to take on risk before Federal Reserve Chair Janet Yellen’s speech later Friday.


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Epizyme - A Waiting Game

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

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...

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Swing trading portfolio - week of August 22nd, 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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Digital Currencies

Man Who Introduced Millions to Bitcoin Says Blockchain Is a Bust


Man Who Introduced Millions to Bitcoin Says Blockchain Is a Bust 

By  at Bloomberg


Stefan Thomas, who introduced millions of people to bitcoin, has had a change of heart.

Blockchain, the ledger software that makes the digital currency possible...

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Mapping The Market

Illusion of Choice

From Jean-Luc:

Looks like we are down to about 10 companies for our consumer goods:

Just like banks, airlines and cable companies! 

The Illusion of Choice in Consumer Brands

Explore the full-size version of the above graphic in all its glory.

If today’s infographic looks familiar, that’s because it originates from a well-circulated report that Oxfam International puts together to show consolidation i...

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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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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! 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 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.

Thank you for you time!

FeedTheBull - Top Stock market and Finance Sites

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...

Learn more About Phil >>

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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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