Posts Tagged ‘Analyst Research’

Rosenberg: The Truth About Retail Sales Is That They Still Stink

If anyone can explain why the retail sales weren’t really that good, it would be David Rosenberg, over breakfast.  - Ilene 

Rosenberg: The Truth About Retail Sales Is That They Still Stink

Glass of milk with fruits

Courtesy of Vince Veneziani at Clusterstock 

In this morning’s Breakfast With Dave newsletter, analyst David Rosenberg talks last week’s retail sales report.

Don’t believe everything that you read, says Rosie. According to "raw data," retail sales actually FELL1.6% month-over-month in February, and you can’t just blame seasonality for this.

Breakfast With Dave: “It’s always best to look at what consumers do rather than what they think or say. They’re spending — that’s the main thing”. That goes down as the glib remark of the weekend — front page of the Investors Business Daily (Shoppers Perk Up, Lifting Retail Sales, By A Surprise 0.3%). Another pundit said pretty well the same thing in Barron’s and following the data on Friday there was an economist on CNBC who said that you never win by betting against the U.S. consumer.

What a load of you-know-what.

Let’s more closely examine that retail sales report.

First, the raw data actually showed that sales fell 1.6% MoM in February. Now it would be meaningful if February was usually a weak month for sales compared to January so that it would make perfect sense for the seasonal adjustment factor to give the raw data an upward skew. But in fact, retail sales rise over half the time in February. And while, on average, the not seasonally adjusted retail sales data are down 0.4% in each February over the past decade, the reality is that this past February was four times as bad as the norm — not to mention tied for the third worst February since 1998. Really good result, eh?

Second, here we have the greatest stimulus experience in seven decades and retail sales are still down 5% from the pre-recession peak and on a per capital basis are down 8%. Sales are actually lower today than they were in January 2006 — four years ago — even though the population has risen 4.3% over this time. And on a per capita basis, retail sales are no…
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Economy, Analyst Research, Features

Christopher Thornburg’s Awesome Presentation: Why This Bounce Is Fake, And Why We’re Double-Dipping In 2011

Courtesy of Joe Weisenthal and Vince Veneziani at Clusterstock/Business Insider 

RoboticsOrlando PDF

Christopher Thornburg of Beacon Economics recently delivered an excellent presentation on the state of the economy and whether or not the bounce will last.

His answer is: no.

We strongly recommend you flip through it, if only because it’s an excellent overview of the current state of play.

Follow the presentation >

 

 


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The 15 Must-See Charts That Explain The Global Economy

Morgan Stanley: The 15 Must-See Charts That Explain The Global Economy

Courtesy of Vince Veneziani at Clusterstock/Business Insider 

Google Earth moneybag

Morgan Stanley just released a research report that painstakingly details the current state of our global economy.

Inside the 88-page report is a section called "Charts You Can’t Miss." It’s broken down in the following order of countries: Global economy, Europe, Asia (excluding Japan), and Japan. These charts focus on the underlying issues that truly affect our economy.

Credit spreads are at their highest levels ever post-Lehman and Germany’s industrial production is falling. Clearly there’s cause for concern.

If you’ve ever wanted a quick, comprehensive breakdown of the global marketplace, here’s your chance.

Check out these can’t miss charts >


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Saut: The “Selling Stampede” Is Over, Now It’s Time To Dance In The Rain

Saut: The "Selling Stampede" Is Over, Now It’s Time To Dance In The Rain

Courtesy of Joe Weisenthal at Clusterstock 

Prescient Raymond James strategist Jeff Saut says the "selling stampede" which is began calling for in early January is clearly over, but we’re not out of the woods yet:

For example, we entered 2010 in a pretty cautious mode, worried that the first few weeks of the new
year have historically been tricky. Subsequently, we determined the equity markets had fallen into a “selling stampede.” Knowingthat such stampedes tend to last 17 to 25 sessions we remained cautious, but continue to add stocks to our “watch list.” Following the climatic downside deluge of February 4th and 5th, we opined the stampede was abating and recommended tranching into (read:buying partial positions) some of the stocks on our various lists. We still feel that way.That positive view was reinforced last week when the 10-day exponential moving average (EMA) crossed above the 30-day EMA.

Additionally, the 50-DMA is turning up and on February 5th the number of S&P 500 stocks above their respective 50-DMAs had shrunk from 92% to ~19%. While that oversold reading has been somewhat corrected by the ensuing rally, roughly 50% of the S&P 500 stocks still remain below their 50-DMAs. 
Then there was this insight from Minyanville professor Tony Dwyer:

“One indicator that has proven to be an excellent short and intermediate-term buy signal for the S&P 500 is when the percentage of NYSE issues trading above their 10-DMA drops below 10%. The most recent signal was (on) 2/18/10, which represents only the 8th unique instance (rapid multiple signals following the first signal were ignored) in the past 30 years. The average one month gain following the first signal was 5.4%, with amaximum gain of 11.2% and the worst case (and only) loss of 1.31% in 1991.”

Hence, we continue to believe the “selling stampede” is over. To us the question then becomes, will we extend the current rally off February’s “hammer lows,” or will the pattern resemble that of the 1978 and 1979 “October Ouches” whereby the DJIA lost between 10 – 12% in a few short weeks and then based for a month, or two, before giving investors a decent rally. Worth noting is that the DJIA never went decidedly below those “hammer lows,” as can be seen in


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Rosenberg: Here’s Why The Correction Isn’t Over

Rosenberg: Here’s Why The Correction Isn’t Over

Courtesy of Joe Weisenthal at Clusterstock/Business Insider

Mint Tea

Gluskin-Sheff’s David Rosenberg reads the tea leaves on the recent market runup and concludes the correction may not be over, drawing particular attention to volume:

IS THE CORRECTION OVER?  
There is room to have an open mind in both directions, though we believe that there is still more downside than upside risk.  The problem for the bulls is that the market gains have occurred on lower volume, which was down 6% on the 
NYSE yesterday, and the major indices are still stuck below their 50-day moving averages (the only exception is the S&P 600).  

But the bulls will note that the market now does have some technical strength (as outlined in today’s Investors Business Daily).  The major averages have closed in the upper half of their daily ranges for six sessions in a row and often at or close to the highs of the day.  The list of stocks hitting a new high has hit 200 versus 12 those hitting a new low.  Sentiment has turned extremely negative considering that this correction was barely over an 8% down-move but indeed, before it occurred, the Investors Intelligence poll was at 52.2% bulls (18.9% bears) and at the recent lows it was at 35.6% bulls (and 27.8% for the bears).  That is a contrarian positive, at least on a near-term basis.  Moreover, there is a high correlation between the Euro and the S&P 500 and the short positions in the currency is at an all-time high, and as these shorts have to be covered, the dollar has softened a tad off its recent highs and this has corresponded with the rebound in the equity market.   Finally, we have 73% of companies beating their earnings estimate — this has dominated the press, and the fact that tech bellwethers like Hewlett-Packard managed to beat their estimates and raise guidance (as did Deere and Whole Foods) has also helped add some recent enthusiasm in the bullish camp.  This is an exercise to see both points of view, keep an open mind; however, we have not waffling and maintain a cautious view over risk assets for 2010.  This is still a technically-driven market — for confirmation of the sustainability of the rebound (recall that there were four other 5%+ declines during this bear market rally phase) we need to see:

1. Follow throughs (gains of at least 2% consecutively and on…
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Rosenberg: Careful, EVERYONE Is Now Bullish On The Dollar

Rosenberg: Careful, EVERYONE Is Now Bullish On The Dollar

American Money

Courtesy of Vince Veneziani at Clusterstock  

In his latest note, David Rosenberg details the massive sentiment swin from hating the dollar and loving the euro to the mirror opposite.

Breakfast With Dave:

So, as we see in the latest Commitment of Traders report, the massive swing in the U.S. dollar from a huge net short position to a record net long position in the futures and options pits has seen its best days. The net speculative long position that took the greenback up 8% from the lows has surged to an all-time high of 40,972 contracts; even cutting this excess exuberance over the U.S. dollar by half would require more of what we saw yesterday, which is a giveback in the currency. (As confirmation on the excess optimism that now prevails over the greenback, investor optimism on the U.S. dollar (a net 57%) in the just-released Merrill Lynch Global Fund Manager survey hit a 10-year high). So long as the U.S. dollar is softening as sentiment recedes from these lofty levels, risk appetite is bound to come back for a little while, as we saw yesterday with that impressive triple-digit up-move in the Dow.

Rosie Euro Dollar Positions 1

The flip-side, of course, is the Euro, which has an unprecedented amount of net speculative short positions against it. Again, this net short position is now in the process of reversing course and in this process we are likely to see risk assets enjoy a counter-trend bounce. (We should add here that another “defensive” currency that has commanded a lot of attention from the noncommercial accounts is the Japanese Yen, which also has the most pronounced net speculative long position in nine weeks). These are rallies worth renting but not owning.

 

Rosie Euro Dollar Positions 2

 


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Jeff Saut: The Time To Buy This Dip Is Right About… NOW

Jeff Saut: The Time To Buy This Dip Is Right About… NOW

Courtesy of Joe Weisenthal at Clusterstock

wall street snowstorm slideshow

wall street bull

Raymond James strategist Jeff Saut has been on top of his market-timing game, calling both the runup and the recent dip.

So you might want to pay attention to the fact that he’s licking his chops again, at least per his latest weekly call:

—-

We revisit The Great Blizzard of 1888 this morning because of the weather that has crippled the Northeast corridor over the past few weeks. Fortunately, communities are more capable of dealing with such storms today than they were more than a century ago. Still, the loss of productivity is likely going to be impactful in some of the upcoming economic reports.

That said, over the long weekend we studied the D-J Industrial Average (DJIA) chart from 1888 and found that March 11 – March 14 marked a bottom for the stock market. Also of interest is that today is session 18 in the envisioned “selling stampede” so often discussed in these missives.

For new readers, “selling stampedes” tend to last 17 to 25 sessions, with only one- to three-day counter trend rally attempts before they exhaust themselves on the downside. While it is true that some stampedes have extended for 25 to 30 sessions, it is rare to have one last for more than 30 days. Accordingly, we are getting increasingly interested in stocks again, and have been adding
names to our “watch list.” As for Dow Theory, which we have often been asked…
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Here’s Why The Financial System Isn’t Out Of The Woods, And Still Has A Ton Of Deleveraging To Do

Here’s Why The Financial System Isn’t Out Of The Woods, And Still Has A Ton Of Deleveraging To Do

Courtesy of Vince Veneziani at The Business Insider/Clusterstock

This morning’s JPMorgan (JPM) earnings report helped to reinforce the conventional wisdom that the worst is over and that the banking system is wobbly but on the mend.

But what if that’s not so.

A recent report from Deutsche Bank’s Bill Prophet, entitled "Alternative Universe," foretells a story of approaching disaster and even goes so far as to say "the health of the US commercial banking system will inevitably get worse before it gets better. And this has undeniable consequences for the rates market, if not Fed policy."

The reason? Bank balance sheets have hardly shrunk at all. This applies to both commercial and residential real estate.

Says Prophet on RMBS:

Nevertheless, we find it inconceivable that these assets are being marked anywhere close to their recoverable value, and the reality is that commercial bank exposure to them is as large now as it was 12 months ago. And in fact when we look at the entire $2tr portfolio of residential real estate assets on bank balance sheets (which would of course include the home-equity loans shown above), we reach a similar conclusion. Namely, as of the end of Q3-’09, the value of “home mortgage” assets has declined by just 1.6% from the end of ‘08 (see Chart 7).  Similar to CRE, these assets could be worth hundreds of billions of dollars less than where they are currently being marked.
 

Now let’s see the current picture of bank health ->

 


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Jeff Saut: Bond Market Starting To Break Down, Turn Cautious On Stocks

Jeff Saut: Bond Market Starting To Break Down, Turn Cautious On Stocks

Courtesy of Joe Weisenthal at Clusterstock

Raymond James strategist Jeff Saut is doing the wise thing and taking another week fo relax with family — we advise it — but in a brief note he warns of the breakdown in bonds.

—-

Indeed, we have been unabashedly bullish on most asset classes since March 2, 2009, although we have turned cautious a few times over the past eight months. To be sure, said asset classes were at least three standard deviations undervalued back in March. Since then, most have normalized to median valuation levels.  Accordingly, as we enter the New Year, we are once again turning cautious because the Treasury bond market is breaking down (read: higher interest rates) and the U.S. dollar is rallying. After being dollar-negative since 4Q01, we turned neutral to constructive on the “buck” in 4Q07 and recommended shutting down all negative U.S. dollar positions. More recently, we suggested the “greenback” might be in for a pretty decent rally. If so, the ubiquitous “dollar carry trade” is in jeopardy of unwinding with downside consequences for most asset classes.  Therefore, we think it prudent to “bank” some trading profits and hedge some investment positions as we approach the New Year.
 
That said, we still believe the nascent economic recovery will gain traction in 2010, and that earnings comparisons will look good in 1H10.  The question then becomes just how much of that has already been discounted by the 68% rally off of the March lows?  Also worth consideration is if this is a rally in an ongoing trading range stock market, or the beginning of a new secular bull market.  Currently, we don’t have a clue, but are happy that we have enjoyed the eight-month rise.  We think the trick from here, at least in the short/intermediate-term, is to protect the profits that have been made.

10-year tnote

 


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Rosenberg: If The Banks Don’t Extend Credit Soon, The Market Is Toast

chart

We’re not sure how much stock to put into correlations such as this one — especially since LOTS of charts have this dual-hump pattern over the last several years — but this is still some interesting commentary from Gluskin-Sheff’s David Rosenberg on the connection between monetary velocity and the stock market.

————

Chart 1 maps out the S&P 500 with money velocity (GDP/M1 ratio).  There is a
90% correlation between the two.  It is one thing to have the Fed pump liquidity
into the system but it is quite another for the liquidity to be re-leveraged into credit
and recycled into the economy.   

The Fed’s easing program is over two years old and the rampant Fed balance
sheet expansion 15 months old, and still to this day, what the commercial banks
have done (to Obama’s wrath) with all that liquidity is to keep it as cash on their
balance sheet to the tune of $1.2 trillion.  We’re not sure why Obama is as rankled
as he is because the banks are in fact lending out a good chunk of that Fed-
induced liquidity — right back to Uncle Sam (the banks now own a record $1.3
trillion of government securities).  

Back to the chart — there is obviously a close connection between money turnover
and the stock market.  But we can get periodic divergences as we did in the first
leg of the rally in 2003.  But the carry-through from 2004 to 2007 hinged critically
on that multi-year acceleration in money velocity.  If we don’t see the banks begin
to extend credit in 2010, it is hard to see the 2009 bounce from oversold lows as
being sustained in the coming year.   

 


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Zero Hedge

Red China Goes Redder, Stocks Tumble Despite Government Ban On Bearish Talk

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Despite more liquidity injections (CNY35 billion 7day RevRepo), archaic deals for brokerages to manipulate their balance sheets, and local reporters noting China's propaganda ministry ordering state media to publish only positive opinions about the stock market, not to criticize, Chinese stocks are in red once again. The record streak of margin debt declines continues and although futures were driven up early on, any strength has been sold into as unwinds wreak havoc on the ponzi wealth creation scheme. All major indices are in the red with Shenzhen (home of the 500%-club) the worst, down around 2% (though as CNBC would say "off the lows"...



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Phil's Favorites

Aging Trucker Workforce Coupled With Increased Demand Provides Strong Incentive for Trucking Robots

Courtesy of Mish.

Demand for truck drivers is on the rise. Yet, there are not enough young drivers who want that rough of a lifestyle.

Supply Chain reports Aging Truck Driver Work Force - A Major Issue in Filling Demand & Empty Seats.
With a combination of retirements and people exiting the industry, carriers need to recruit in roughly 100,000 drivers per year over the next decade to simply keep pace with projected United States freight needs.

The American Transportation Research Institute (ATRI) released a fascinating white paper analyzing the age demographics of truck drivers.
...



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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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Kimble Charting Solutions

Shanghai index creates historic reversal pattern like 2007

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

Much of the attention around the world seems to be revolving around a small country called Greece. What about the most populated country in the world (China), any key messages coming from there of late?

Well another Month, Quarter and Half a year are in the books. With this in mind I wanted to look at Monthly action of the hottest stock market in the world, the Shanghai Index. Above looks at the Shanghai index over the past 25-years. The 100%+ rally over the past year has pushed the Shanghai index up to its 23% Fibonacci ratio and a long-term resistance line, that has been in play for 25-years at (1) above.

As the Shanghai index was hitting this...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and  Economy

Ukraine Halts Russian Gas Purchases After Price Talks Fail (Zero Hedge)

It has been a bad day for deals and deadlines all around: first Greece is about to enter July without a bailout program and in default to the IMF with the ECB about to yank its ELA support or at least cut ELA haircuts; also the US failed to reach a nuclear deal with Iran in a can-kicking negotiation that has become so farcical there is no point in even covering it; and now moments ago a third June 30 "deal" failed to reach an acceptable conclusion when Russia and Ukraine were unable to reach an agreement on gas prices at talks in Vienna on Tuesday. As a result, Ukraine is suspending its purchase of Russian gas.

...



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Insider Scoop

Level 3 Acquires DDoS Mitigation Company Black Lotus, No Terms

Courtesy of Benzinga.

Related LVLT Benzinga's Top Initiations Goldman Sachs Initiates Level 3 Communications With Buy The Time To Hedge Is Now! June 2015 Update (Seeking Alpha)

Global telecommunications provider Level 3 Communications, Inc. (NYSE: LVLT), announced it acquired privately held Black Lotus, a provider of ...



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Chart School

No Update

Courtesy of Declan.

Stockcharts.com running very slow, so no update today. ...

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OpTrader

Swing trading portfolio - week of June 29th., 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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Digital Currencies

BitGold Now Available in US! Why BitGold?

Courtesy of Mish.

BitGold USA

Effective today, BitGold Announces Platform Launch in the United States.

BitGold, a platform for savings and payments in gold, is pleased to announce the launch of the BitGold platform for residents of the US and US territories. As of today, US residents can sign up on the BitGold platform and buy, sell, or redeem gold using BitGold’s Aurum payment and settlement technology. US residents will also have access to the BitGold mobile app and a prepaid card when these features launch over the coming weeks. Send and receive gold payment features are not initially available in the US.

About BitGold

...



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Sabrient

Sector Detector: Bulls under the gun to muster troops, while bears lie in wait

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

Courtesy of Sabrient Systems and Gradient Analytics

Two weeks ago, bulls seemed ready to push stocks higher as long-standing support reliably kicked in. But with just one full week to go before the Independence Day holiday week arrives, we will see if bulls can muster some reinforcements and make another run at the May highs. Small caps and NASDAQ are already there, but it is questionable whether those segments can drag along the broader market. To be sure, there is plenty of potential fuel floating around in the form of a friendly Fed and abundant global liquidity seeking the safety and strength of US stocks and bonds. While the technical picture has glimmers of strength, summer bears lie in wait.

In this weekly ...



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Pharmboy

Baxter's Spinoff

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).

The Baxalta Spinoff

By Ilene with Trevor of Lowenthal Capital Partners and Paul Price

In its recent filing with the SEC, Baxter provides:

“This information statement is being ...



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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

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. 

Since...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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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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