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Comment by phil

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  1. phil

    Hey Yodi, glad you are on the mend.  So do Germans even care about fuel economy?  I guess the diesels get good MPG but I am surprised electric is so frowned upon – even BMW?  TSLA not doing so hot here either – haven't been able to take back $200. 

    Speaking of autos:

    AutoZone +2.9% after strong quarter

    • AutoZone (NYSE:AZO): FQ2 EPS of $6.51 beats by $0.13.
    • Revenue of $2.14B (+7.5% Y/Y) beats by $20M.
    • Press Release
    • AutoZone (NYSE:AZO) reports domestic same-store sales rose 3.6% in FQ2.
    • The company's gross profit rate increased 10 bps to 52.1% on higher merchandise margins.
    • Operating EBIT +7.1% to $361.269<
    • Operating expenses rate +20 bps to 35.4%.
    • Inventory +11% Y/Y.
    • Domestic store count +171 Y/Y to 5,042.
    • Total store count +387 to 5,458.
    • Previously: AutoZone beats by $0.13, beats on revenue
    • AZO +3.92% premarket

    Chrysler Fiat Automobiles works through snow and inventory in Feb.

    • Chrysler Fiat Automobiles (NYSE:FCAU) unit sales +5.6% to 163,586 units vs. a forecast range of 8% to 8.4%.
    • Car sales rose 2% during the month to 45,851 and truck sales increased 7% to 117,735.
    • Chrysler Fiat Automobiles (NYSE:FCAU) had its strongest February in the U.S. since 2007 despite a harsher period of weather than typical.
    • The automaker also extended its streak of consecutive positive sales growth months to 59.
    • Brand sales growth: Fiat -5% to 3,289; Chrysler +13% to 28,502; Jeep 21% to 55,642; Dodge -15% to 42,115; Ram +12% to 33,991; Alfa Romeo 47 (new).
    • Model sales growth: Jeep Patriot +59% to 10,280; Jeep Wrangler +21% to 12,911; Jeep Cherokee +19% to 14,026; Chrysler 200 +31% to 15,805; Dodge Dart +52% to 7,407; Ram P/U +7% to 31,298; Chrysler Town & Country -4% to 8,341; Fiat 500L +19% to 956; Alfa Romeo 4C (new) 47.
    • The automaker says it


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3 Key Asset Classes That Are Mispriced

Dr. David Kelly, Chief Global Strategist, J.P. Morgan Funds, believes three assets are currently and temporarily mispriced: oil, the US dollar and bonds. He suggests that interest rates will be raised in June. Although cheap oil is suppressing inflation, Kelly argues, the Federal Reserve recognizes this as a temporary phenomenon and will "continue to prepare for a long-overdue monetary normalization."

3 Key Asset Classes That Are Mispriced

By Dr. David Kelly

Oil is in the basement, the dollar is in the attic and the bond market’s sleeping in. In short, the house of financial assets is a house of confusion. While the passage of time and a steady flow of new data should restore some order, this progress could yet be halted or even reversed by significant geopolitical distractions. However, for investors, it is both important to understand the market’s mispricing of key asset classes and logical to invest on the assumption that the gravitational forces of macroeconomics and supply and demand will gradually bring markets to heel.

[...]

More jobs with rising wages should keep the Federal Reserve on track to begin to raise interest rates in June. Indeed, the only domestic fig leaf for a more dovish stance is the increase in labor force participation seen in this January report. This is improving with a 1.1% gain in labor force over the past year, more than the previous five years combined.

However, it is crucial to recognize that this is a temporary effect…

[...]

Oil prices are also being watched closely as surging short-term supply interacts with long-term fundamentals. For the moment the former seems to be having a bigger impact. However the reality is that while the world is currently producing excess oil, both production and consumption trends are calibrated to oil selling at over $100 a barrel. A sudden drop in prices to half that level will inevitably affect supply and demand. As just two examples of this, in January the share of U.S. light vehicle sales accounted for by relatively gas-guzzling light trucks reached 55.8%, its highest level since June of 2005, while employment in oil and gas drilling, which has boomed in recent years, fell by almost 1% in the month of January alone.

(my emphasis)

Full article: 3 Key Asset Classes That Are Mispriced – Barron's.





Testy Tuesday – Nasdaq 5,000 and Bust!

Boy is this getting silly.  

Apparently, we never learn.  Well, we at PSW learn.  We've been hedging the crap out of this rally for reasons that should be entirely evident on this chart – earnings are NOT GOOD!  

If earnings aren't good, then why are companies racing up to all-time high valuations?  Simply because (as I noted yesterday) monetary manipulation is at work.  

It's not like we haven't gone along for the ride – we're still up 30.7% in our bullish, Long-Term Portfolio, which is the where the vast majority of our allocations are put to work (see "Smart Portfolio Management" in the PSW Wiki).  Sure it's been 15 months now, so less impressive than 30% in a year – but not a bad pace (2% per month), nonetheless.  

Our Short-Term Portfolio, where we do our hedging, has taken a beating in February as we have spent a good deal of money adding protective short positions to protect the $150,000+ we gained in the Long-Term Portfolio – just in case the market isn't as safe as people seem to think it is.  Our STP has dropped from $204,000 in February (up 104% in the same 15 months) to just $193,720 as of yesterday's close, down $10,000 but still a nice, combined $844,000 – up 40.6% as a pair.  

Click to ViewWe spent that $10,000 on purpose, re-investing part of our 2014 profits into hedges that will (in theory) protect us from a market correction.  Long-term, we are still bullish and we intend to ride out a pullback but short-term, it's hard to imagine the market crushing through these nose-bleed levels without some sort of pullback.  That's why we're hedging in a nutshell.  

As you can see from Doug Short's S&P chart, we're "only" up 151% from our 2009 low on the S&P on an inflation-adjusted basis.  In raw numbers, we're up 217% at 2,117 from 2009's Hellish low of 666 but that still doesn't bring us to the levels of those 5 other historic bull runs.  It does, however, mark the biggest move made without a significant correction since before…
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Tesla: Bonfire of the Money Printers’ Vanities

Tesla: Bonfire of the Money Printers’ Vanities

By David Stockman, Former Director of the Office of Management and Budget

David Stockman needs no introduction, but I’ll give him one anyway. He’s a former US Congressman who, upon assuming responsibility as Ronald Reagan’s budget director in 1981, became the youngest presidential cabinet member of the 20th century.

Following a 20-year career on Wall Street, David is now an outspoken critic of government stupidity. He argues on behalf of outdated notions like a balanced budget, free markets, and for the government to just plain leave us alone.

Below, David shares a scathing financial analysis of Tesla… and that’s putting it nicely. He argues that Elon Musk’s company is a crony capitalist creation that owes its very existence to government handouts and bailouts.

Dan Steinhart
Managing Editor of The Casey Report

[Tesla picture credit here.]

Editor's Note: This article was originally published in Casey Daily Dispatch's Midweek Matters. Click here to receive Casey Daily Dispatch in your mailbox.


The trouble with the money-printing madness in the Eccles Building is that it generates huge deformations, misallocations, and speculative excesses in the financial markets. Eventually these bubbles splatter, as they have twice this century. The resulting carnage, needless to say, is not small. Combined financial and real estate asset markdowns totaled about $7 trillion after the dot-com bust and $15 trillion during the 2008-2009 financial crisis.

Yes, the Fed has managed to reflate this cheap money bubble for the third time now, but the certainty that it will splatter once again is not the issue at hand. What gets lost in the serial bubble-making process of modern central banking is that vast real resources—labor, capital, and materials—are misallocated owing to mispricing of stock, bonds, and real estate during the bubble inflation phase.

During the bust phase, of course, these excesses are written-down on financial statements and often liquidated entirely on an operational basis. But that’s just the problem. These bust-phase corrections amount to deadweight losses to the economy—a permanent setback to growth and societal prosperity.

The Wall Street casino is now festooned with giant deadweight losses waiting to happen. But perhaps none is more egregious than Tesla—a crony capitalist
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Comment by dclark41

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  1. dclark41

    Triboy

    Boy, you missed an opportunity to make a small gain or breakeven on that one at $23.50 a couple of days ago. Got to move on those directional plays.  The premise was that they would suffer from the same high costs as CAKE, and they did, but unfortunately, it was short-lived and the stock shot up before earnings mitigating the reaction for the suggested trade. Got to act on your own sometimes, especially on the directional trades.  Phil has commented the same sentiments with the SDS trade. It was a directional bet that didn't work. 







Comment by biodieselchris

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  1. biodieselchris

    I think LL is just a fad coming to end really. 







Interview with Mint.com – I Give ALL The Answers

Interview with Mint.com – I Give ALL The Answers

Interview_mint_Bankers_anonymous

Courtesy of Michael of Bankers Anonymous 

Finance website Mint.com asked me some good questions for their blog. You can visit them there or enjoy the repost below.

[Mint.com] As a former Wall Street insider, what do you think is the average person’s largest misconception about investing?

[Michael] The average person thinks that what Wall Street does is so complex that it requires extremely bright specialists to handle the complex needs of individuals. And the average person thinks implicitly that complexity and special skills naturally justify high fees.

And while it is true that many to most people on Wall Street are bright and there are complex things happening there, all that intellect and complexity is irrelevant for the vast majority of individuals. For most Americans, including high net worth individuals, a very simple and inexpensive approach will serve them best.

If you had the ability to get every person in the United States to adhere to three financial principles, what would those be? Why?

Great question. More than principles, I would go with three financial attitudes. Those would be:

a) Optimism – You kind of have to trust that markets are going to work out fine in the long run, even when the short run and medium run look extremely frightening.

b) Skepticism – Most financial solutions you get pitched with constantly are irrelevant or overly costly.

c) Modesty – Be realistic and modest about your own ability to ‘beat the pros,’ and realistic and modest about the ability of professionals you hire to ‘beat the pros.’ Also, modesty about attributing one’s investment success can avoid mistakes due to excessive confidence.

How does life change when one has more financial literacy? What does it take to be financially literate? 

Financial literacy is a process that most people need to engage in, but a process for which there are too few guides. Most of our parents don’t know how to help. Certainly our teachers and professors are mostly unhelpful guides. Most of the ‘experts’ in the media are in fact salespeople in one form or another, so while they can tell you the positive features


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Can You Retire? Getting to Your Number

Can You Retire? Getting to Your Number

Courtesy of Wade of Investing Caffeine

Nest Egg Cage

What’s “your number?” The catchy phrase has been tried on 30-second television commercials before, but the fact remains, most Americans have no clue how much they need to save for retirement. The ever-shifting and imprecise variables needed to compute the size of your needed nest egg can seem overwhelming: lifespan; career span; inflation; college tuition; healthcare expenses; rising insurance costs; social security; employer benefits; inheritance; child support; parental support; etc. The list goes on and with near-zero interest rates, and stock prices at record highs, the retirement challenge has only gotten riskier and more difficult.

I understand this task may not be easy and could eat into your House of Cardsviewing, Candy Crush playing, or football watching. However, if you can spend two weeks planning a family vacation, you certainly can afford devoting a few hours to scribbling down some numbers as it relates to the lifeblood of your financial future. The project is definitely doable.

Here are some key steps to finding “your number.” If you’re not single then calculate the figures for your household:

1). Calculate Your Budget: Where to start? A good place to begin is with is a boring budget (or your monthly expenses). The budget does not need to be down to the penny, but you should be able to estimate your monthly spend with the help of your bank and credit card statements. Make sure to include estimates for periodic unforeseen potential expenses like annual auto repairs, home repairs, or emergency hospital visits. Once you determine your monthly spend, extrapolating your annual spend shouldn’t be too difficult.

2). Compute Your Income: Your sources of income should be fairly straightforward. For most people this includes your salary and potential bonus. Some people will also generate income from investments, a business, and/or real estate. Before getting too excited about all the income you are raking in, don’t forget to subtract out taxes collected by Uncle Sam, and include a possible scenario of rising tax rates during your working years. Obviously, the economy can also have a positive or negative impact on your income projections, nevertheless, if you conservatively plan for some potential future setbacks, you will be in a much better position in forecasting the amount…
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March Monetary Madness – China Shoots a 0.25 Pointer!

March Madness Begins!

While team Euro's coach Draghi has practically guaranteed an EU victory with a $1.2Tn blast of monetary easing set to begin in March, other countries are NOT going to take this lying down and already we've seen a February easing of reserve requirements by the Chinese team and already, this weekend, they've kicked March off with a surprise 0.25% rate cut and THE GAME IS ON!!! 

WHO will devalue their currency most in March?  Already Switzerland, Sweden and Denmark are commanding negative rates – that means YOU PAY THEM to hold your money.  Monetary-policy makers are seeking to spur spending over saving.  The risk is that negative rates backfire and result in even less demand. That could happen if people begin stuffing their cash under mattresses, or if rates below zero eat into the profit margins of banks, which we're already beginning to see, as negative rates distort financial markets.

Willem Buiter, Citigroup’s global chief economist and a former Bank of England monetary policy maker, said in a January note that an interest rate of minus 5% should be no harder to set than a positive rate of 5%.

This is the way monetary policy is heading – it punishes you for NOT putting your money into high-risk assets.  In fact, logically, we can't really call stocks high risk if the market always goes up (supported by monetary easing) and rewards you with rising equity valuations while the banks, by comparison, GUARANTEE TO TAKE YOUR MONEY.  

This is another reason companies are buying their own stock at record levels ($450Bn last year, which is 8% of the Nasdaq's entire market cap), which has decreased the number of shares available for sale at the same time as cash is being forced into the stock market to avoid the Central Bank tax that is being imposed.

The Central Banks are also artificially depressing bond rates by snatching them up at auction, leaving few of those available to the general public, who then have to bid lower rates on the money they lend – even to countries and
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Comment by News:

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  1. News:

    http://www.nytimes.com/2015/02/28/business/daily-stock-market-activity.html?smprod=nytcore-ipad&smid=nytcore-ipad-share

    The Dow Jones industrial average and S.&P. 500 both hit new highs, but reports showing slower-than-estimated growth in the U.S. gave traders pause on Friday.







 
 
 

Phil's Favorites

Greecification of Spanish Politics and the Lies of Spain's Ministers

Courtesy of Mish.

There's an excellent post on Keep Talking Greece this evening on the simmering feud between Greek prime minister Alexis Tsipras and Spanish prime minister Minister Mariano Rajoy.

Tsipras made a claim that Rajoy's plan is to "wear down, topple or bring our government to unconditional surrender before our work begins to bear fruit and before the Greek example affects other countries… And mainly before the elections in Spain. ... for obvious political reasons".

Spanish foreign minister García Margallo, returned fire with a statement (a lie actually), that “Had Spain not given  €32.744 billion to Greece, it could have increased the unemployment benefits by 50 percent or increase pensions by 38 percent.”

Theheart of the bickering is the rise of the Spanish political party Podemos to the top of the Spanish...



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Chart School

Light Vehicle Sales Per Capita: A Better Look at the Long-Term Trend

Courtesy of Doug Short.

Note from dshort: Following up on yesterday's preliminary report on U.S. Light Vehicle sales, I've update the charts below.

For the past few years I've been following a couple of transportation metrics: Vehicle Miles Traveled and Gasoline Volume Sales. For both series I focus on the population adjusted data. Let's now do something similar with the Light Vehicle Sales report from the Bureau of Economic Analysis. This data series stretches back to January 1976. Since that first data point, the Civilian Noninstitutional Population Age 16 and Over (i.e., driving age not in the military or an inmate) has risen 61.7%.

Here is a chart, court...



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Zero Hedge

India Central Bank Cuts Interest Rate "Pre-Emptively" For Second Time In 2 Months

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In a surprise move, the RBI just cut its main interest rates for the second time in two months, taking it from 6.75% to 6.50%, in what the central bank calls a “pre-emptive” policy move, but what is in reality merely a confirmation that so far in 2015 at least 20 central banks have lowered their interest rate. 

From the statement: 

The RBI notes that the rupee has remained strong relative to peer countries. While an excessively strong rupee is undesirable, it too creates disinflationary impulses… 


...softer readings on inflation are expected to come in through the first half of 2015-16 before firming up to below 6 per cent in the second half. The fiscal consol...



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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

Sector Detector: Stocks break out again but may be running on fumes

Courtesy of Sabrient Systems and Gradient Analytics

Despite low trading volume, a strong dollar, mixed economic and earnings reports, paralyzing weather conditions throughout much of the U.S., and ominous global news events, stocks continue to march ever higher. The world remains on edge about potential Black Swan events from the likes of Russia, Greece, or ISIS (or lone wolf extremists). Moreover, the economic recovery of the U.S. may be feeling the pull of the proverbial ball-and-chain from the rest of the world’s economies. Nevertheless, awash in investable cash, global investors see few choices better than U.S. equities.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then ...



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OpTrader

Swing trading portfolio - week of March 2nd, 2015

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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Market Shadows

Kimble Charts: Coal

Kimble Charts: Coal

By Ilene 

Chris Kimble's chart for KOL shows a recently beaten down ETF struggling to pull itself up from the ashes. As the chart shows, KOL has recently drifted down to levels not seen since the financial crisis of 2008-9.

Bouncing or recovering with energy in general, coal prices appear to have stabilized in the short-term. Reflecting coal prices, KOL has traded between $13.45 and $19.75 during the past year. Bouncing from lows, KOL traded around 2% higher yesterday from $14.26 to $14.48 on high volume. It traded another 3.6% higher in after hours to $15, possibly related to ...



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Digital Currencies

MyCoin Exchange Disappears with Up To $387 Million, Reports Claim

Follow up from yesterday's Just the latest Bitcoin scam.

Hong Kong's MyCoin Disappears With Up To $387 Million, Reports Claim By  

Reports are emerging from Hong Kong that local bitcoin exchange MyCoin has shut its doors, taking with it possibly as much as HK$3bn ($386.9m) in investor funds.

If true, the supposed losses are a staggering amount, although this estimate is based on the company's own earlier claims that it served 3,000 clients who had invested HK$1m ($129,000) each.

...



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Pharmboy

2015 - Biotech Fever

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

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...



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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 user name and password. 

 

...

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Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...



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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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