While the global financial markets have seemingly settled in for a fresh bout of volatility, municipal bond funds have remained relatively non-correlated to the turbulence infecting virtually every other investment category.
Inside the overall muni bond fund category, none of the 16 muni bond fund sub-categories, whether single-state or national, has a negative performance number for any period from one month to five years, annualized.
Your smart phone will be soon bundled into a bond.
American wireless carriers are likely to start issuing asset-backed bonds that are supported by customer payments on Apple Inc.’s iPhones and other equipment, according to a report published Friday by Moody’s Investors Service. Carriers are now increasingly selling phones through installment-plan financing that in many cases offer zero-interest rates.
A key index of global shipping prices is nearly 50% below its previous record low level.
We swore we wouldn’t devote any more Charts Of The Day to the Baltic Dry Index (BDI) after it broke its all-time low in November. Things are really getting out of hand now, though, so it deserves at least a mention. The previous record low in the BDI was 553, set back in 1986. Upon breaking that low in November, the BDI continued to crater. As of today, the Baltic Dry Index is listed at 303.00 – nearly a full 50% below its previous all-time low.
So what is the Baltic Dry Index? The BDI is a composite of various global shipping rates tied to the movement of raw materials. Why is it important? It can serve as a barometer of the global trade environment, as well as a measure of inflation based on global trade. If that is the case, the trade environment would appear downright dismal.
Now, of course much of the input into the BDI comes from the price of raw materials. Considering the deflationary spiral in commodities, the drop in the BDI to all-time lows shouldn’t be a shock. However, the depths that the index is now plumbing is quite alarming and suggests trouble in the global trade picture.
It would also suggest perhaps that the deflationary pressure is not just a supply issue. Consider every prior drop in the Baltic Dry Index down to the 500-600 level. Each time, the index immediately jumped as if latent demand was just waiting for those lower prices. That development has not yet occurred this time around, even as prices are reaching 45% below the previous record low.
The Baltic Dry Index has become a trendy thing to mention in recent years when discussing global market and economic conditions. The truth is, nobody really ever knows for sure what the broader message is behind the index’s behavior. That said, this recent plunge is making it quite difficult to conceive that it means anything positive in terms of the global
If there is to be an imminent recession, then jobs are an even more lagging indicator than ever.
Because this morning’s non-farm payroll report showed a continuation of two important trends: wages are rising and participation in the labor force is growing as workers come off the sidelines.
4.9% headline unemployment combined with rising average hourly earnings (2.5% growth this month) will do that. A tighter employment situation should lead to greater participation and higher pay. The mechanism is functioning.
The bad year for stocks is getting worse by the minute – and tech investors are feeling the brunt of the pain.
The 462 information technology stocks in the broadRussell 3000 index have shredded a total of $514 billion this year thanks to their average decline of 13.4%, according to a USA TODAY analysis of data from S&P Capital IQ.
Stocks across Europe sought firm direction Friday, as investors waited for the high-profile monthly U.S. jobs report and faced the prospect of a losing week for European equities.
The Stoxx Europe 600 rose 0.1% to 329.05, but has been darting in and out of positive territory throughout the session. For the week, however, the index looked solidly in the red, as it is poised to drop 3.6%. That would break two previous weeks of gains.
Savita Subramanian’s Equity & Quant Strategy group at BAML looks at the earnings outlook trend for the S&P 500. On a monthly basis, the trend in downward revisions is the worst they’ve seen since March of 2009.
In January, the three-month earnings estimate revision ratio (ERR) fell for the fifth consecutive month to 0.49 from 0.53 — its lowest level in ten months. This remains below the long-term average of 0.84, and indicates twice as many cuts as increases to earnings estimates. The more volatile one-month ratio fell to 0.35 from 0.54, the worst since March 2009.
And before you jump up on your desk and scream “IT’S BECAUSE OF ENERGY!” you should keep in mind that estimates are being revised downward for all ten sectorsover the last 3 months, not just oil companies:
Josh here – Two ways to think about this – positively speaking, lowered estimates means an easier number for companies to beat when they report throughout 2016. Negatively speaking, if the downward revisions are met, and then capped off by even lower estimates and outlooks, the current multiple on the market is at risk, regardless of where interest rates are. According to Subramanian, more than twice as many companies have had earnings revised downward than revised upward for the 3 month period. As for full-year 2016, EPS guidance for the S&P 500 as a whole is already down 3% since the first day of the year.
The Cuts Get Deeper
Bank of America Merrill Lynch – January 29th 2016
Of course, it is no crazier than the 3rd quarter of 2015 so far, when we had our August crash followed by a slow September bounce that led into a mega-rally that closed our year off back at the highs. At the moment, we are playing with the premise that it's the highs that were wrong – NOT our current 1,900 level on the S&P. We're not expecting any big rally here – just consolidation.
The S&P gets to 2,100 and we short /ES Futures at 2,100 (with tight stops above the line) and Russell (/TF) Futures below the 1,200 line and Nikkei (/NKD) Futures below the 20,000 line and then, tomorrow or Friday, I'll tell you how much money we made shorting and you'll say "why do I never catch these great trade ideas" and I'll say it's because you're not patient enough to wait for the pattern to reset itself and just make the obvious play.
This is the 11th time the S&P has been over 2,100 since May and, so far, it's been like a little money machine for us all year long on the short side. I know this time may be different and the last 10 times may have been different too, which is why we stop out if we don't get confirmation from the other indexes that things are toppy but, when it works – it's good for $250, $500, $1,000+ PER CONTRACT in the Futures at $50 per point to the downside.
By the way, I know we've been talking a lot about the Futures lately and that's because our portfolios are mainly in CASH!!! That means we have plenty on the sidelines to play with and the quick in and out…
U.S. crude oil futures were steady in lackluster early Asian trading on Friday as liquidity faded ahead of the Lunar New Year holiday across large parts of the region.
U.S. crude futures were trading at $31.73 per barrel at 0023 GMT, virtually unchanged from the previous close, and traders said liquidity was low due to the Lunar New Year holiday which will last for most of next week.
Taiwan's Foxconn has offered to invest around 659 billion yen ($5.6 billion) in struggling Japanese electronics maker Sharp Corp, two sources with knowledge of the matter said.
Sharp has chosen Foxconn as its preferred bidder in takeover talks. One source said Sharp's board on Thursday had voted 13-0 to negotiate with Foxconn instead of a state-backed Japanese fund, the Innovation Network Corp of Japan.
In the midst of a gloomy earnings season, the share buyback machine has remained in overdrive, and some experts are cautioning it will all end badly.
Companies, even those that are missing profit and sales estimates and cutting outlooks, or restructuring and cutting jobs, are still announcing buybacks. Coming after a long period of intensive spending on shareholder returns, the news is bad for investors hoping to
00:02:16 Checking on the Markets: Russell, OIL, NG, DX
00:09:58 Trade ideas
00:30:15 BAC: Stock of the year 2012, trade idea
00:39:40 Checking on the Markets
00:42:01 Exit on Futures, trade idea. Don’t pick the exit, watch the exit.
00:51:05 Options Opportunity Portfolio: Puts
00:59:15 Think or Swim. Pivot point.
01:01:56 SQQ Hedges
01:04:15 GOOG, AAPL
01:05:30 Checking on the Markets: YG, SI, DX, INDEX, NG, TLT, RB
01:06:41 OIL chart
01:09:56 Commodity pricing the Dollar.
01:10:24 Checking on the Markets: Russell, trade idea, AAPL, NASDAQ
01:15:38 BMY: the options are expensive. Trade ideas.
01:22:01 Checking on the Markets: Russell
01:27:00 What will happen on Monday.
01:28:43 Checking on the Markets: S&P, DOW, NASDAQ, NGK6
01:40:33 Next Week: China's shutdown.
01:42:08 Checking on the Markets
Last Sunday (31 January) Zero Hedge ran an article drawing attention to the big names in the hedge fund community who are betting heavily that the yuan will suffer a major devaluation any time between the next few months and perhaps the next three years.
The impression given is that this view is universal, almost to the exclusion of any other.
The China currency debate in financial markets is rather interesting right now with many market ramifications. A rapid depreciation in the Chinese currency could lead to an Asian currency market crisis. I can see both sides of the current debate of a rapid devaluation versus a prolonged drawn out devaluation of the currency.
Buying something at good value is a good approach, however it is another approach to know when to enter and exit the market, enter Wyckoff logic. If You 'know nothing' of Wyckoff logic is a good time to start.
Throughout the past 30 days of wild volatility, here’s what I didn’t do.
Panic. Worry. Sell.
In fact, the best I did was add to a couple of positions yesterday. The world was already in an uncertain state for the past 3+ years. It’s just that with the market rising, we pushed the issue to the back of our mind and ignored it.
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A number of systemic, structural forces are intersecting in 2016. One is the rise of non-state, non-central-bank-issued crypto-currencies.
We all know money is created and distributed by governments and central banks. The reason is simple: control the money and you control everything.
The invention of the blockchain and crypto-currencies such as Bitcoin have opened the door to non-state, non-central-bank currencies--money that is global and independent of any state or central bank, or indeed, any bank, as crypto-currencies are structurally peer-to-peer, meaning they don't require a bank to function: people can exchange crypto-currencies to pay for goods and services without a bank acting as a clearinghouse for all these transactions.
Last year, the S&P 500 large caps closed 2015 essentially flat on a total return basis, while the NASDAQ 100 showed a little better performance at +8.3% and the Russell 2000 small caps fell -5.9%. Overall, stocks disappointed even in the face of modest expectations, especially the small caps as market leadership was mostly limited to a handful of large and mega-cap darlings.
Notably, the full year chart for the S&P 500 looks very much like 2011. It got off to a good start, drifted sideways for...
Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.
Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).
Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself.
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 email@example.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.
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