by phil - April 15th, 2014 8:20 am
But, fortunately, it's still not time to pay the piper for all that money we're borrowing to goose the economy. Well, goose may be too strong a term as 5 years and $5 Trillion Dollars into this mess, we're really only flatlined the GDP to where it was back in 2007.
Did you get your $5,000,000,000,000 worth? We know the top 0.01% sure did. We've made the World's Billionaires alone $1.4Tn richer than they were in 2009 – and it only cost 140M working Americans $37,714 each! That's how much $5Tn in additional debt has cost us – on top of the $2.5Tn we piled on fighting Iraq or Afghanistan for whatever reason it was we had to invade those guys.
Don't worry, it's all fair, each one of those Billionaires also owes the same $37,714 as you do – they feel your pain! Multiply that by 3.5 and that's your share of the National Debt, which is still growing by $500Bn a year, although that's 1/2 of how fast it was growing under Bush II. And, of course, we're not even counting the Fed's $4Tn of additional debt – because we still get to pretend that will all work itself out in the end.
Just like CHINA!!! China's Central Bank has been trying to drain a little liquidity out of the system and it looks like that's already dropped GDP growth for the quarter down to 1.5%, nowhere near the 7.5% annual levels the Government was hoping for. That led Chinese stocks to fall about 1.5% this morning, led down by Financial and Commodity stocks. That's the reaction to M2 (money supply) GROWING by 12.1% instead of the 13.3% it was growing a month earlier and despite $169Bn in loan growth.
“Investors are a bit worried because M2 is quite low,” Zhang Haidong, an analyst at Tebon Securities Co., said by phone in Shanghai. “New loans may be better than expected by a little, but it’s still not considered good data;
by Sabrient - April 14th, 2014 6:40 pm
Last week’s market performance was nasty again, especially for the Small-cap Growth style/cap, down 4%. Large-caps faired the best, losing only 2.7%. That’s ugly and today’s market seemed likely to be uglier today with escalating tensions over the weekend in Ukraine.
But once again, positive economic trumped the beating of the war drums. Retail Sales jumped up 1.1% over a projected 0.8% and last month’s tepid 0.3%, which was revised up to 0.7%. While autos led, sales were up solidly overall. Business inventories were about as expected with a positive tone. Citigroup (C) handily beat estimates to add to the morning’s surprises. As a result, the market was positive through most of the day, led by the DJI, up 0.91%, and the S&P 500, up 0.82%. NASDAQ had a less robust day in part due to the continued sell-off in the biotechnology industry late in the day. The NASDAQ ended up 0.57%.
Joining Utilities, two sectors moved into or near positive territory for the month: Energy and Non-Cyclical Consumer Goods and Services. While Non-Cyclicals isn’t exclusively iShares IYK, raw sector data moved it into the black (see market stats). Our 30- to 90-day sector outlook still favors Technology with Healthcare and Utilities still reflecting the flight-to-safety.
There will be plenty of additional economic data over the remainder of the week: Consumer Price Index tomorrow, NAHB Housing Market data, Building Permits, Industrial Output, Initial Jobless Claims and Philly Fed data. A veritable flood of earnings releases will round out the week taking us into the three-day holiday weekend. Undoubtedly, the Ukraine situation could help the market if tensions ease or hamper them should violent conflict increase.
Now that the market is well off its highs, this week offers a great opportunity to grab bargains and watch for positive surprises in well-priced stocks. The VIX related derivatives continue to provide opportunity for short term hedging.
3 Stock Ideas for this Market
The following stocks were selected from the top of our stock universe with great earnings growth projections, reasonable valuations and recent upward revisions to earnings estimates.
Emerge Energy Services LP (EMES) –Energy
- Trading for 76x current earnings and 14x forward earnings estimates
- Analysts have revised earnings estimates up in the last 7 days
- 5.8% dividend yield
- 325% projected EPS growth next quarter,
by phil - April 14th, 2014 8:34 am
After a very ugly week, what's in store next?
This is one very ugly chart with an almost 10% drop on the Nasdaq and the Russell but that's GOOD news as it's about where we expect the Central Banksters to step in and do something, before things turn more ugly.
That's why we weren't pressing our bearish bets last week and we took our very aggressive TZA and XRT bets off the table in our Short-Term Portfolio and our $25,000 Portfolio because, with the indexes down this far, we expect at least a weak bounce to start the week – the question is – what happens after that?
Very simply, per our 5% Rule™, when the market drops 5%, we expect a 1% retrace and, in the case of the Nasdaq and the Russell, we expect a 2% retrace for a "weak bounce." Also, as you can see on our Big Chart, we have some serious support on the Dow at our "Must Hold" lijne at 16,000. There's pretty much no way it can fail that without a bounce.
The Dow fell from 16,600 to 16,000 and that's only 3.6% but it's a strong support line but, as noted by Dave Fry in his Dow Chart, the real support comes at the 200 dma, at 15,750, and that's 5.1% today but that 200 dma will rise while it waits for the Dow so we can still expect a test at 15,800, which should be 5% by that time, assuming our weak bounce fails this week.
On our other indexes, we'll be looking for:
- Dow 16,600 to 16,000 is 600 points (3.6%) and we're looking for a 120-point weak bounce to 16,120 and a 240-point strong bounce to 16,240 before we believe any sort of "rally."
- S&P 1,900 to 1,815 is 85 points down (4.5%) so 17 points to 1,832 is weak and 17 more to 1,849 is strong but let's call it 1,850 before we're impressed.
- Nasdaq failed 4,375 and down to 4,000 (8.5%), also a strong technical support line that held up in late Jan/early Feb as well. Keep in mind, when an index is going to fall 10%,
by Sabrient - April 14th, 2014 1:54 am
Courtesy of Sabrient Systems and Gradient Analytics
The sudden bearish turn last week in the market — after hitting new highs the prior week — has come fast and furious as selloffs are wont to do. And the pullback might have further still to go. But there are several reasons to expect a stabilization or bounce during this holiday-shortened week, and in any case I still expect that it eventually will turn out to be a great buying opportunity leading to higher prices later in the year. The major indexes are at or near round-number support levels, including NASDAQ at 4,000, Dow Jones Industrials at 16,000, S&P 500 at 1,800, and Russell 2000 at 1,100. And from a technical standpoint, despite violating support at the 50-day simple moving average, the S&P 500 remains well within the bounds of its long-standing bullish rising channel.
Among the ten U.S. business sectors, defensive sector Utilities stands alone as the year-to-date leader, up about +9% and hitting a new intraday high on Thursday. Healthcare had been keeping up for a while, but it has fallen back into the pack with the big selloff in biotech and biopharma.
No doubt, investors have been protecting capital, and there has been a rotation into the blue chips as the momentum darlings have been slaughtered. Experienced traders know that, although the glamour stocks can outperform value stocks over short periods of time, history shows that ultimately the tortoise beats the hare, i.e., value wins out. As such, I would not suggest jumping back into stocks like Netflix (NFLX) or 3D Systems (DDD) that have poor earnings quality and still display high forward valuations even after their massive selloffs.
So, yes, a market cleansing like this is both important and inevitable. However, as I observed last week, the market will often throw out the proverbial baby with the bathwater, which is a boon for savvy investors. For example, Sabrient favorites Jazz Pharmaceuticals (JAZZ) and Actavis plc (ACT) remain fundamentally sound, and their previously fair valuation is now even much more attractive.
Although we will likely see positive returns in the U.S. market, many market commentators are predicting those returns to be modest in the U.S. and other developed economies this year, but better for emerging markets and potentially outstanding for frontier markets. Indeed, the IMF reported at their meeting on Saturday that…
by ilene - April 13th, 2014 3:21 pm
By John Mauldin
“Everybody has a plan until they get punched in the face.”
– Mike Tyson
For the last 25 days I’ve been traveling in Argentina and South Africa, two countries whose economies can only be described as fragile, though for very different reasons. Emerging-market countries face a significantly different set of challenges than the developed world does. These challenges are compounded by the rather indifferent policies of developed-world central banks, which are (even if somewhat understandably) entirely self-centered. Argentina has brought its problems upon itself, but South Africa can somewhat justifiably express frustration at the developed world, which, as one emerging-market central bank leader suggests, is engaged in a covert currency war, one where the casualties are the result of unintended consequences. But the effects are nonetheless real if you’re an emerging-market country.
While I will write a little more about my experience in South Africa at the end of this letter, first I want to cover the entire emerging-market landscape to give us some context. Full and fair disclosure requires that I give a great deal of credit to my rather brilliant young associate, Worth Wray, who’s helped me pull together a great deal of this letter while I am on the road in a very busy speaking tour here in South Africa for Glacier, a local platform intermediary. They have afforded me the opportunity to meet with a significant number of financial industry participants and local businessman, at all levels of society. It has been a very serious learning experience for me. But more on that later; let’s think now about the problems facing emerging markets in general.
Every general has a plan before going into battle, which immediately begins to change upon contact with the enemy. Everyone has a plan until they get hit… and emerging markets have already taken a couple of punches since May 2013, when Fed Chairman Ben Bernanke first signaled his intent to “taper” his quantitative easing program and thereby incrementally wean the markets off of their steady drip of easy money. It was not too long
by SWW - April 13th, 2014 3:22 am
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Chart by Paul Price.