One more Ronald Wayne fun fact, in the early '90's he sold the original Apple contract signed by him, Jobs, and Wozniak for $500. In 2011 it was sold for $1.6 million. This guy has the market on bad days if you ask me.
JESSICA DESVARIEUX, PRODUCER, TRNN: Welcome to the Real News Network. I’m Jessica Desvarieux in Baltimore. And welcome to this edition of the Hudson Report. Now joining us is MichaelHudson. He’s an economics professor at the University of Missouri Kansas City, and he has a new book out titled Killing the Host. Thank you so much for joining us, Michael.
MICHAEL HUDSON: It’s good to be here, Jessica. Since we last talked I’ve also been appointed a professor at Peking University in Beijing.
DESVARIEUX: Awesome. Congratulations. So Michael, let’s get right into it and talk about the big stories of 2015, economic stories, I should say. What would you say are thethree most important stories that people should be aware of?
HUDSON: Well, the leading story is that the economy has not recovered. That the 1 percent have recovered, but the 99 percent have not recovered. And there is no sign of recovery, or even any sign that the presidential candidates running in next year’s election are trying to do anything.
The next story is that the 1 percent have recovered. I’m told that the largest sustained gains in any kind of asset have been number one Andy Warhol paintings, and number two, Stradivarius violins. These are trophies for the rich. They’re going way up while wages are not going up and consumer prices are not going up.
And the third story would be international, that the United States has changed the rules of the International Monetary Fund. Essentially, the U.S. has dragged Europe into an economic war against Russia, China, and the BRICS.
DESVARIEUX: Can you be more specific about that last story? How are they doing that?
HUDSON: Well, earlier this month the International Monetary Fund changed its rules that it had had since 1945. The whole international financial system since 1945 was based on the fact that governments when they’re bailed out, or when they borrow from other governments, they have to repay their debts, and that the IMF is going to bring leverage to make sure that the international, intergovernmental finance system remains intact by saying it’s not
The world’s biggest sovereign wealth fund criticized Volkswagen AG’s ownership structure, saying it concentrates too much power with the Porsche-Piech family and puts minority shareholders at a disadvantage amid the carmaker’s emissions crisis.
Ho-hum, another week, another multimillion-dollar settlement between regulators and a behemoth bank acting badly.
The most recent version involves two such financial institutions, Barclaysand Credit Suisse. They agreed last Sunday to pay $154.3 million after regulators contended that their stock trading platforms, advertised as places where investors would not be preyed on by high-frequency traders, were actually precisely the opposite.
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
It was another bloody week in the stock market (S&P 500 index dropped -3.1%), and any half-glass full data was interpreted as half-empty. The week was epitomized by a Citigroup report entitled “World Economy Trapped in a Death Spiral.” A sluggish monthly jobs report on Friday, which registered a less than anticipated addition of 151,000 jobs, painted a we...
Greg Ip had a piece in the Wall Street Journal yesterday discussing the debt burden in the USA and how low interest rates have “moved back” the “hands on the doomsday debt clock”. The article touches on the important topic of entitlement spending and whether it’s sustainable, but does so in a manner that misleads readers about why this might be a problem.
For instance, Ip says that “higher federal borrowing puts upward pressure on interest rates”. This is classic “crowding out”,...
Tech averages had the weakest start, Powerful gap downs had set things off, but buyers were able to make a comeback into the close. However, morning gaps remain. Volume climbed to register as distribution, which for the Nasdaq was the second day of distribution in a row.
The Nasdaq 100 is on the fiftth day of selling in a row. The August swing low wasn't fully tested. Bulls will be looking for a bullish 'morning star' where today's candlestick 'hammer' is followed by an opening gap, then a rally for the rest of the day. Should this emerge, then a move to test 4,300 is next. If there is a weak open, then any chance for a bullish 'hammer' based on today's action is signifi...
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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.
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...
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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 firstname.lastname@example.org 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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