That's something my kids are keenly aware of as they head back to high school. Turns out Jackie's (14) summer bucket list included a weekend at Martha's Vineyard and she was devastated to find out that telling me this on Thursday last week wasn't adequate notice to plan a trip for next weekend, even if I were so inclined.
The Fed schedules their Jackson Hole conference for the last week of summer because they know no one on Wall Street does anything until after Labor Day (9/5) so the purpose of the whole circus is to give us something to chew on over the holiday, when the G20 Meeting will be held in Hangzhou, China. As you can see from JackDamn's SPY chart, the market has been running hot all summer but we're having a lot of trouble at that top channel and there's very little support below 2,160 on the S&P all the way back to 2,100.
Hope, though, springs eternal into the fall as bullish investors are still salivating over the possibility (they think certainty) of another major round of fiscal stimulus and God help us all if the G20 disappoints on that front next weekend because the Fed certainly gave us no clear direction out of their meeting.
What Yellen said on Friday (key quote) was:
"In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal-funds rate has strengthened in recent months."
"I believe" is not the same as "we believe" and a divided Fed is what has given us this choppy summer trading pattern. Vice Chairman Fisher seemed to have more of the team spirit saying: "We should be on a program of gradual rate increases," though he added, "We can afford to be patient" when it comes to acting. The Fed Governors were all over the place in their statements, however but, generally, all hedged towards data-dependence:
"If we had a lot of good news and we got into the September meeting and other people wanted to go, I could
U.K. Prime Minister Theresa May asked her cabinet ministers to come up with a blueprint for how their departments may be able to benefit from Britain’s exit from the European Union ahead of the Group of 20 leaders’ summit in China, according to newspaper reports.
Egypt will no longer accept imported wheat containing any traces of the ergot fungus, the Agriculture Ministry said Sunday, sowing fresh regulatory confusion that has hampered shipments to the world’s biggest buyer of the grain.
Any discussion of Islamist terrorism in Europe and the refugee crisis has to be placed in a broader historical context. One way to approach this is to think about the Mediterranean Sea, which was central to the Roman Empire.
The Romans occupied both shores of the Mediterranean and created a single integrated political and economic system around it. As the Roman Empire declined, the system fractured. The general outcome was that Christianity was prevalent on the northern shore of the Mediterranean, and Islam became dominant on the southern shore.
Over time, both extended beyond the Mediterranean basin. Christianity extended to the east (into Russia) and north of the Alps (into Germany, Britain, and Scandinavia). Islam extended south (deeper into Africa) and east (into the Indian Ocean basin and the South China Sea).
But the Mediterranean remained the center of gravity and the flash point of their relationship, as it is today.
The Early Years of Christianity and Islam
The fourth century was a critical time for Christianity. Constantine converted to Christianity and declared Byzantium (today’s Istanbul) the new Rome. His ascent was bloody, and he used Christianity to hold together the remnants of the Roman Empire. One reason that he chose Byzantium as his seat was to try to control the northern and southern shores of the Mediterranean under one set of beliefs.
From the beginning, Christianity was both a religion and a political force, though never united into a single entity. It was divided into regional churches with different doctrines. The primordial split was between the Roman church and the Orthodox churches of the east.
Muhammed founded Islam about 300 years later on the Arabian Peninsula. Islam was a political religion as well, uniting the faithful and the empire. Islam surged eastward into Persia and westward into the southern shore of the Mediterranean, where it supplanted most of the fragmented Christian regions.
Then a few centuries after Muhammed’s death, Islam fragmented into the Shiite regions of Persia and the Euphrates valley, and the Sunni regions in the west, the southern Mediterranean in particular.
Income Portfolio – Not a full update but concentrating on moves that need to be made:
TASR – No point to keeping Sept $7.50 put at .30 to make .10 per month. Let's buy it back and see if we get a downturn we can sell Dec puts into (now .55).
CZR – Big drop this month – great for a new entry (not today – maybe next week – goes for all)
RRD – Strong
FCX – CEO just bought more. Good for new entry.
CLF – Fine. Good for new entry.
HOV – Good for new entry.
AA – Good for new entry.
CSCO – Fine
AGNC – Good for new entry.
AAPL – Damn, we own that piece of crap? Good for new entry.
EWZ – Wow, what a drop!
TSAL – Improving a bit.
BRK.B – June $100 caller now $11.60, which is .40 less than we sold them for! Those ran up a lot on us so let's just be happy to make .40 and see how that 50 dma holds up ($110) next week before selling again.
DIA – Wow, that was stupid not buying those short Aug $149 puts back when we went bearish. No one reminded me then and I forgot but, if we're naked short DIA in the STP, it's not likely we want to be long essentially the same position in the Income Portfolio. No biggie, our Aug $147 puts are up $2.20 at $3.95 and the June $149 puts are down $1.13 at $2. I'm bullish into the close so let's wait but, generally, I think I'm happy with the roll to the quarterly $148 puts at $2.05 as the .05 pays for the roll and we'll just see what happens over the weekend. That's the official play by the day's end but no hurry as the Dow may rise 100 into the close and save us some money.
PGH – Good for new entry.
OIH – Fine.
UNH – Fine
GLW – Fine
BRCM – Good for new entry.
ABX – Arrrrgh! OK, so we entered with a commitment to buy 1,500 at net $27 and now they are $16. We can buy back the 2015
Traders, bloggers, media talking heads, and pundits of all stripes went into a feverish sweat as they anticipated the comments of Federal Reserve Chairman Janet Yellen at the annual economic summit held in Jackson Hole, Wyoming. When Yellen, arguably the most dovish Fed Chairman in history, uttered, “I believe the case for an increase in the federal funds rate has strengthened in recent months,” an endless stream of commentators used this opportunity to spout out a never-ending stream of predictions describing the looming consequences of such a potential rate increase.
As I’ve stated before, the Fed receives both too much blame and too much credit for basically doing nothing except moving short-term interest rates up or down (and most of the time they do nothing). However, until the next Fed meeting in September (or later), we all will be placed in purgatory with non-stop speculation regarding the timing of the next rate increase.
While this Fed scapegoat explanation is quite convenient for the doom-and-gloomers (see The Fed Ate My Homework), it is way off base. I hate to break it to Mr. Hilsenrath, or other conspiracy theorists and perma-bears, but blaming a small group of boring bankers is an overly-simplistic “straw man” argument that does not address the infinite number of other factors contributing to our nation’s social and economic problems.
Ever since the bull market began in 2009, a pervasive skepticism and mistrust have kept the bull market climbing a wall of worry to all-time record levels. In the process, Hilsenrath et. al. have proliferated an inexhaustible list of myths about the Fed and its powers. Here are some of…
"If you do the math, you will soon get to the point where you have to recognize the probability of living in a real world is very slim because it is simply dwarfed by the number of existing simulations.
"From this point of view, it is more likely that our world is 20 levels deep in a vicious simulation cycle than it being the original world.
Submitted for your approval… a civilization which manages to go from cave dwelling apes, cowering in ignorance while wondering where the sun goes at night, to talking chimps basking in the sun with integrated computers on a chip in just under 200K years.
For our purposes, imagine if you will… these talking monkeys somehow manage to survive their seemingly palpable need to dislike someone other than themselves, aka their apocalyptic idiocy which walks hand in hand with their wisdom, and natural cataclysm for another 800K years or so….
Following Moore's Law, in that futuristic "here and now" these beings can not only sim a universe, but digitize and dump their cranial contents and supposed divine essence into it. After eons, robots perform the tedious physical tasks, while these ethereal beings, long for the days of yore and covet that lost carnal experience.
And then there was light, in the form of "On Earth" a virtual ride in which many souls get their turn in the old barrel of monkeys, so to speak. Too good to be true? The devil's in the details, and as always, there's a small one printed on…
Before-tax corporate earnings fell 4.9 percent in the second quarter from a year earlier, the fifth consecutive decline and the worst streak since the end of the recession in mid-2009, Commerce Department figures showed on Friday.
A NEW report from the International Labour Organisation has provided a snapshot of job prospects for young people around the world. Things have worsened this year following a period of slight improvement.
Uncertainty remains, but Florida is in the cross hairs.
What to expect today after tornado outbreak.
Why we’re watching Gaston closely now.
These headlines were pulled from a few articles today at weather.com. You could seamlessly replace Florida, tornado, and Gaston with a stock because like the weather, markets are highly complex with countless variables that can’t fully be modeled.
In his highly entertaining book, But What If We’re Wrong, Chuck Klosterman talks about how much money has been spent trying to predict the weather:
Somebody once told me a joke about meteorology. The premise is that we’ve been trying to predict the weather since 3000 BC. The yearly budget for the National Weather Service is $1 billion…Even a conservative estimate places the annual amount of money spent on meteorology at somewhere around $5 billion. And as a result of this investment, our weather can be correctly predicted around 66 percent of the time. As a society, we can go two out of three. Yet if some random dude simply says, “I think the weather tomorrow will be the same as the weather today,” he will be right 33 percent of the time. He can go one for three. So we’ve invested hundreds of billions of dollars and countless hours into meteorological research, with the net effect of becoming twice as accurate as some bozo who looks out the window and points at the sky.
The Wall Street Journal just reported that U.S. mutual funds spend more than $300 million every year to send investors written reports. This is an astonishingly large number, but it’s peanuts compared to how much they spend trying to beat their benchmark. And while the net effect of becoming twice as accurate as some bozo might be true with the weather, it’s the opposite with investing.
The chart below from Dimensional Funds shows that all a bozo has to do to beat the majority of professionals is buy an index fund.
There are a number of explanations as to why funds underperform, from…
I’m out all day at a Dimensional Funds applied investment workshop in midtown but I wanted to check in with something cool we’re discussing…
David Plecha, the global head of fixed income at DFA, doesn’t believe in the bond market “liquidity crisis” meme that the newspapers like to trot out every few weeks.
Rather, he views what’s going on as an evolution and not a crisis or a problem – the fixed income market is about 20 years behind the stock market’s evolution but headed in the right direction. Peer to peer trading between buyside shops is the future and the new source of liquidity. These days, buyers can also be sellers and anyone can submit a quote for bids or offers.
The dealers’ role, meanwhile, is changing to more of a frequent trader rather than an inventory provider / middleman.
What’s actually going on is that volume in the bond market is high, back to where it was pre-2008 crisis. This is counter to the narrative you typically hear from disgruntled dealer desks and reporters.
What is very different is that dealer inventories have shrunk considerably. This is because of capital requirement rules like Basel III that force banks to be less leveraged and to carry less risk. Banks have responded by shedding inventory and turning over their supply of bonds more frequently. Trading velocity is way up. Dealers are buying and turning around quickly to make a sale.
Here’s what it looks like:
The next time you hear someone say “bond liquidity crisis”, show them this.
Japan's consumer prices fell in July by the most in more than three years as more firms delayed price hikes due to weak consumption, keeping the central bank under pressure to expand an already massive stimulus program.
California is preparing to create a mandatory state-run retirement plan for an estimated six million workers at companies that do not now offer any retirement benefits. The move could make California the first state to require companies to take part in such a system.
Mexico is evaluating ways to aid private equity investors and spur growth in the industry, including a reduction in the tax that funds pay to list companies on the stock exchange, according to four people with knowledge of the proposals.
Japan should play a "constructive" role at the upcoming G20 summit in the Chinese city of Hangzhou because cooperation is in the interests of all parties, China's top diplomat told a visiting Japanese envoy.
Something is different this time. For the last few years, China has 'ensured stability' in the Yuan ahead of major geopolitical events - no matter what - only to let things slide back into turmoiling after. Ahead of this weekend's G-20, however, and amid notably deteriorating fundamentals (and an increasingly hawkish-sounding Fed), China has let the Yuan tumble in the last week... and traders are piling into bets on post-G-20 weakness to continue.
As Bloomberg notes, history shows that the Chinese currency usually strengthens ahead of major political or economic event...
The European Union on Tuesday ordered Ireland to collect $14.5 billion in unpaid taxes from Apple, a record penalty that worsened tensions with the United States over the bloc’s crackdown on sweetheart deals with global multinationals.
By The Foundation for Economic Education. Originally published at ValueWalk.
European Ruling against Apple and Ireland Vindicates Brexit
Taxation is bad enough: two consenting parties arrange a mutually-beneficial exchange, and an interloping third party demands a cut.
What compounded injustice then for a fourth party to enter the scene: a super-state/super-bandit who insists that the shakedown wasn’t big enough. No, the victim must hand over more to the lesser thief, even against the recipient’s will and in spite of his protest!
Thou Shalt Not… Not Steal
Ireland must join the rest of the Union in bleeding the private sector dry.
The U.S. is on track this year to post the longest stretch of falling food prices in more than 50 years, a streak that is cheering shoppers at the checkout line but putting a financial strain on farmers and grocery stores.
The trend is being fueled by an excess supply of dairy products, meat, grains and other staples and less demand for many of those same products from China and elsewhere due to the strong dollar. Lower energy costs...
The US Dollar/Yen is facing a trio of potential support lines at this time with few people bullish the US$/Yen at Stocktwits. What happens at this potential support zone, could well impact the Risk On trade from now until year end.
CLICK ON CHART TO ENLARGE
The trend in the US$/Yen remains down for the past few months, as the YEN has been stronger than the US$. The US$/YEN remains inside of a steep falling channel over the past 10-months.
The bottom of this steep falling channel and two ot...
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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...
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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