Posts Tagged ‘Baltic Dry Index’

Which Way Wednesday – Finally Fed Up?

It's a Fed day today!

That, of course, means MORE FREE MONEY and the markets are giddy with anticipation ahead of the meeting – especially since we had more poor housing data yesterday and that's exactly the kind of bad news that is good news as it keeps the Fed in easy-money mode a little longer.  

As you may have guessed, we shorted oil this morning.  The July contract (/CLN4) expires on Friday and, as you can see from the chart, we continue to find great profits in the sell-off that we predicted would come last week.  We went over some Futures Trading Tips in yesterday's live Webinar as well as the new, bullish positions we've added to our Long-Term Portfolio.  Much as we rail against what we firmly believe will ultimately be a disastrous policy – you simply can't fight the Fed and we're not trying to – it's much more profitable to go with the flow. 

Going with the flow is exactly what we're doing with our oil trades as they STILL have 103M barrels worth of FAKE orders open for July delivery (actually, about 20M will actually be delivered so "only" 80M are fake at the moment) and that is down from the 172M FAKE orders that were open on Friday morning (see chart on Friday's post).  

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PSW Wrap-Up Show for the Week

We have a new episode of The Wrap-Up Show.

This time, it’s a quick review of the week’s activity:

Also, as we have a ton of Government Data that will be driving the markets next week, let’s review "How the US Government Manipulates Inflation Data" – just so we remember not to take it all too seriously.  


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REVALUING THE YUAN – AND OTHER TALES FROM A DRUNKEN SAILOR

REVALUING THE YUAN – AND OTHER TALES FROM A DRUNKEN SAILOR

Drunk Man Sleeping After Party

Courtesy of Rohan of Data Diary:

[h/t Pragcap]

Not quite a random walk, more like the one lurch forward, two staggers back, that is how the market has greeted the ‘news’ that China will be taking the yuan to a crawling peg.  First, risk markets rallied as we all looked inquisitively at each other and asked ‘isn’t this what we wanted?’.  Then with bearish trend reversals prominent in markets across the globe, the real response kicked in.

The weight of money now seems to be gathering behind the notion that the Chinese are serious about slowing their economy – and that the crawling revaluation of the yuan is just another plank in this strategy.  The clearest prognostication of the markets reception of these moves to reign in Chinese growth is provided by the Baltic Dry Index:

Baltic Dry Index 400x323 REVALUING THE YUAN AND OTHER TALES FROM A DRUNKEN SAILOR

It’d be fair to say freight rates have collapsed over the last couple of weeks.  When we read that capesize freight per tonne rates from Australia to China were down 25% last week (from Cotzias Shipping here), the simplest interpretation is that the demand for bulk commodities has taken a turn for the worse.

To place this in a little context, consider the following chart of world steel production:

World steel production 400x209 REVALUING THE YUAN AND OTHER TALES FROM A DRUNKEN SAILOR

The importance of China to global demand for iron ore and coking coal is self evident.  But to make the point all the more clearly, consider this excerpt from the World Steel Association’s May report (here)

World crude steel production in May 2010 was 9.8% higher in comparison with May 2007, before the impact of the global economic crisis was felt. However, while China, South Korea and Turkey showed increased crude steel production in May 2010 compared to the same month 2007, the US, Italy, Spain and Japan are not yet back to pre-crisis production levels. The EU is -18%, North America -14% and Latin America -9.8% down on the five months to May total in 2007.

Now the point of this thinking is that the reaction of risk markets to the news about the revaluation is understandable.  If we make the broad assumption that the downside risks around Europe have been essentially factored into the markets (for the moment), and that those relating to the US are in abeyance (for the moment), then those around China are to…
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Which Way Wednesday – World of Worries Weighs on Wall Street

7 W’s in the title - that has to be some kind of alliterative record! 

What could we possibly be worried about with the market making new highs?  Well, I’m a little concerned that Shanghai housing prices fell 10% in a week.  That’s the kind of behavior that may make you think they may have a bit of a bubble that’s popping.  Of course they held up well compared to Shenzhen, where prices dropped 14% in the first week of March.  That was matched by a 14% decline in iron ore shipments from Australia as China’s demand fell from 11M tons in January to 8.7M tons in February.  So, if you were wondering how much China’s $600Bn stimulus spending was affecting their economy – 14% is the effect of them simply slowing it down a little

Japanese Machinery Orders fell 3.7% in January and Producer Prices fell a deflationary 1.5% in the World’s second-largest economy (for now).  “The gap between supply and demand in the domestic economy has yet to shrink,” said Morita at Barclays Capital. “It’ll be very difficult for companies to pass on those costs. That’s not good for their profits.”  The Baltic Dry Index is topping out just over our 3,200 target, signaling a possible end to the great commodity run of 2010.  Devan Kaloo, head of Aberdeen’s Global Emerging Markets is predicting that emerging markets (we are long EDZ, now $47) may fall as much as 15% this year.  “The markets will see a correction this year,” Kaloo, whose Aberdeen Emerging Markets Institutional Fund has beaten 93 percent of competitors in 2010, said in an interview in New York. “People get over-optimistic and expect too much out of earnings and global growth.”      

Sure, I know I’ve been saying this for a while but it sounds so much more official when a guy in charge of $22Bn says it!  China’s 4 trillion yuan ($586 billion) stimulus package, coupled with record bank lending in 2009, helped the benchmark Shanghai Composite Index rally 80 percent last year. The gauge has dropped 6.4 percent in 2010.  “From a stock-picking perspective, we can find better opportunities” than China, Kaloo said. “The government pumped money into the financial system, but soon they’ll run out of money,” which will hurt the earnings of Chinese companies.

Amazingly, much of the tech growth we’re seeing in Asia is resulting from a mad rush to produce 3-D TVs in time for the holidays – something I believe may
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Weekend Trend Spotting and Virtual Portfolio Management

What a wild last 30 day's we've had! 

I'm going to do a little bit of charting today so we don't miss out on the next potential Meatball Market (where bad news "just doesn't matter") as we get past earnings season without any serious dings.  Of course, like Icarus, they higher we go, the further we have to fall, especially when we're getting there on wax wings but part of our fundamental outlook is looking at market sentiment along with the motives, means and opportunity of the manipulators

The Fed threw a little monkey-wrench into the works Thursday with a surprise rate move but the market was amazingly unphased and, as you'll notice on the chart below, we are neatly repeating the same move we saw in early November, when we waited 400 points for the correction that never came – until January 20th of course!  This week, we took a few pokes at short plays and got burned and we went into the weekend a little bearish but mostly neutral.  Our Buy List is off to the races, of course and only 2 of our 42 trade ideas there (AGNC and DF) are off course – I had meant to do an update this week but there's no point! 

We don't pay much attention to the Buy List in our daily posts or even in chat because those trades do their job with very little fuss.  Ideally, the bulk of your virtual portfolio should be made up of boring, low-touch trades that make nice, consistent returns and THAT allows us to have fun with our more aggressive short-term plays that do demand our regular attention.  Someone asked me about allocation the other day and I said that, generally, I feel 75% should be in long-term, well-hedged positions like the ones on our Buy List while the other 25% should be used for more opportunistic trading and, generally, we rarely stray from keeping 1/2 of that in cash to remain flexible. 

Of our aggressive virtual portfolio, we try to keep our allocations to no more than 10% of our cash on new positions (which means the more trades you make, the less you put into the next trade) and limit our losses to 20% of a full position or 2%
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G20 Thursday – Pittsburgh Ponders Our Planetary Predicament

Our global leaders all get together today with the Global Financial Crisis (yes, it's still a crisis) topping the list for the 2nd year in a row.

Fresh from the UN general assembly in New York, heads of government and a vast diplomatic entourage will descend on Pittsburgh today to kick off two days of talks on economic stability, financial regulation, climate change and bankers' bonuses. They will be greeted by boarded up shops and energetic protests.  On the eve of the summit, China indicated it was willing to countenance an initiative by President Barack Obama to smooth the flow of capital around the world in the hope of securing greater long-term economic stability.  The US proposal calls on rapidly expanding economies such as China, Brazil and India to boost domestic consumption in order to lower their trade surpluses, while the US and Europe would encourage more saving to reduce long-term budget deficits.  Gordon Brown yesterday (see UK protests in picture) backed the effort, saying he hoped "different continents can better work together to achieve the growth we need."

Yes, like any addict we NEED growth.  Stability just won't give us the fix we need as our entire global economy is based on borrowing to spend money we don't have today in anticipation of being able to pay it off in the future, when things are "better."  The fact that this has clearly not worked out at all for the past does not seem to deter our leaders.  In fact, in 2009, our pals in the G20 have borrowed an additional $5,365,000,000,0000 to see them over this little "rough patch" we're having:

[global_debt.jpg]

This doesn't take into account the $6Tn worth of debt OBLIGATIONS taken on by our own Fed and Treasury, not to mention whatever nonsense the rest of the world is into – this is just the checks they wrote in excess of the cash that came in – and the year isn't even over yet!    Now $5.3Tn may not seem like a lot to you but it is a 16% increase in total global debt in just 12 months.  In fact, according to the Global Debt Clock in the Economist, our friends in the G20 are on a path to increase our debt from a "mere" $30Tn last year all the way…
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RANDOM THOUGHTS ON MR. BIPOLAR

RANDOM THOUGHTS ON MR. BIPOLAR

Courtesy of The Pragmatic Capitalist

 


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Monday Market Melt-Down

Yee-haw!

We love the smell of pullback in the morning.  It smells like – victory!  After extensively reviewing our bearish positions in this week's wrap up and after calling for cashing out our bull plays last week and after taking a whole bunch of short positions – I would have been in a very bad mood this morning had we gone up 150-points instead of down so forgive me for being pleased with myself

Although we called the stick-save at Friday's close, even when I predicted it at 12:40 I said that: "getting back to there would be fake, fake, fake and failing there would be very bearish going into the weekend."  In my closing Alert to Members at 4:04 I said: "12:42 targets were:  Dow 9,350, S&P 1,005, Nas 1,990, NYSE 6,540 and RUT 570.  We got 9,321, 1,004, 1,985, 6,537 and 564 so let’s hear it for the 5% rule and Mr. Stick, who’s program is playing our tune.  This was, of course  fake, fake, fake, so we still expect our sell-off next week."   See, this stuff isn't too hard to follow – targets set at 12:42, targets failed at the close, stay short into the weekend… 

Speaking of targets, our first downside targets, which we went over in last Wednesday morning's post, should be tested this morning at Dow 9,100, S&P 980, Nasdaq 1,950, NYSE 6,400 and Russell 550.  As that post was an extensive discussion of levels and ranges we expect and is still fresh, I won't get back into into it here other than to say how mean you are for not using THIS LINK to get a free trial of the PSW REPORT (just 2 weeks left on summer offer) and then using THIS LINK to refer 2 friends and lock in your own discounts.  We're starting a new $100,000 Virtual Portfolio this weekend and only members will get those trade live and I'll also be continuing the $5,000 virtual portfolio and it's a great time to start following now that we are back to cash there

While we are nowhere near as bullish as Cramer (seen here in Thursday making fun of us for being too cautious), we are also not perma-bears.  A nice sell-off here is not only long overdue but it's also healthy and, if we hold 80% of the move up…
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The Most Important Economic Indicator You’ve Never Heard Of

Click here to sign up for a free subscription to the PSW Report.  It’s easy!  – Ilene 

The Most Important Economic Indicator You’ve Never Heard Of

Baltic dry indexBy Jeff Israely, courtesy of TIME

Those bullish on global economic recovery have their data points: the steady upward climb of world stock markets, three straight months of Chinese manufacturing expansion, the weak dollar. But there are still plenty of skeptics of a rapid and robust turnaround, with their own set of numbers to cite: continued bleeding of private-sector jobs in the US and Europe, more record lows in new home construction, and, er, the weak dollar. (Read "A Biden Show-and-Tell: How the Stimulus Has Created Jobs.")

Never before have so many experts and ordinary folk been so busy trying to gauge the timing and strength of the eventual worldwide economic rebound. One of the best indicators is found in the shipping industry. It’s global in scope and ever more indispensable in an economy so reliant on international commerce. Not surprisingly, perhaps, there is new evidence out on the open seas that both the bears and bulls can flag to help make their respective case. (See TIME 100 panelists on what’s next for capitalism.)

The Baltic Dry Index is the worldwide benchmark for shipping rates of raw materials, and it has registered some eye-popping gains over the past month. The London-based index registered its 23rd straight daily gain on Wednesday, closing at 4,291, its highest mark since September and the longest streak of gains since July 2006. Daily rates for the largest capsize ships, which typically carry iron ore, rose 6.8% on Wednesday to $93,197. Just five months ago, daily ship rental rates were hovering just above $2,000, about the price of a great seat on opening day at the new Yankee Stadium.

Baltic Index president Jeremy Penn cautions that shipping rates can sometimes fluctuate dramatically, and are often driven by specific factors such as carrier availability in key locations. Indeed the current boost is best explained by Chinese steel production demand and a shortage of the capsize vessels to haul the iron ore. Penn notes that it is not yet clear whether the core manufacturing that is turning again in China is linked to coming export demand or domestic infrastructure investment. "There are always quirks in the pricing," he…
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Atomic Testing Tuesday

Welcome back everyone! 

I hope you all had a nice holiday weekend.  PSW provided the Kindle crowd with some great beach reading with and update of our now $104,340 Virtual Portfolio, a 3-part series called "Hedging Your Way To Healthy Dividends" and our very timely "How To Vacation-Proof Your Virtual Portfolio" with an on-line lesson from Option Sage's Market Tamers.  All this sudden interest in North Korea's nuclear test didn't catch us unaware as Tyler reported on this Sunday night!.  Hey, the markets never sleep and neither do we!  

36 hours later, the North Korea nuclear test is still the top story and global markets are down and the dollar is bouncing as a flight to safety BUT IT'S NOT NEWS…  Come on people – this has been going on for more than 15 years with these guys, are we really going to freak out every single time we hear that North Korea has nuclear capabilities? REALLY???  Hey, I can write tomorrow's fear headlines today:  Iran doesn't like us, the Middle East may erupt in violence, the Taliban are still a threat.  Oops, looks like I got scooped on that last one by Defense Secretary Robert Gates, who decided that this weekend would be a good time to inform us that "the momentum in Afghanistan is with the Taliban, who are inflicting heavy U.S. casualties and hold de facto control of swaths of the country.

At the suggestion of some of his staff, Mr. Gates has begun referring to himself as the "secretary of war," saying that shows he and his department have no higher priority than the conflicts in Iraq and Afghanistan.  "If people begin to absorb the fact that we've got several dozen very dangerous terrorists in our jails right now…maybe a little greater perspective would be brought to the issue," he said.  Do not make the mistake of assuming anything Gates says is not carefully planned and coordinated – he was previously the director of the CIA, just like Poppa Bush (who he served under)!

We have been playing for the dollar bounce over the weekend so this is just great for our oil shorts as well as our overall market posture, as we were looking for another catalyst to push us to a lower level test and last week's Cheney/Obama virtual debate was
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ValueWalk

China May Not Have Stopped North Korea's Nuclear Program Deliberately

By Mauldin Economics. Originally published at ValueWalk.

The United States and China met to discuss trade issues.

The meeting ended without agreement on anything. The obligatory joint press conference after the talks, where everyone pretends that everything was fine, was canceled.

The only comment came from a US official who said there were frank discussions, which means that the talks were tough and full of threats.

CFTC Denies Asking Renaissance For Code

Trump’s Withdrawal from COP21 Means Nothing: Morgan Stanley

...



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Zero Hedge

Senate Releases Full Text Of "Skinny" Obamacare Repeal Bill, Vote Expected After Midnight

Courtesy of ZeroHedge. View original post here.

With the Senate healthcare vote expected sometime between midnight and 2am, moments ago the full text of the Senate "Skinny" bill which may or may not pass, has been released. Here is the summary version of what is hereby known as the "The Health Care Freedom Act":

  • REPEAL THE INDIVIDUAL MANDATE — Obamacare's individual mandate forced the American people to purchase insurance they frequently didn't want, couldn't afford or actually use. This pla...


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Phil's Favorites

Self-driving cars are coming - but are we ready?

 

Self-driving cars are coming – but are we ready?

Courtesy of Johanna ZmudTexas A&M University and Paul CarlsonTexas A&M University

How will we react when cars start driving themselves? Patramansky Oleg/Shutterstock.com

It’s been 60 years since the cover of Popular Mechanics magazine gave us the promise of flying cars. But our personal mobility options remain, today and ...



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Digital Currencies

"Digital Currencies Are Nothing But An Unfounded Fad" Howard Marks Calls Bitcoin "A Pyramid Scheme"

Courtesy of Zero Hedge

Excerpted from Howard Marks latest memo...

Digital Currencies

The discussion of innovative investments brings me to Bitcoin, Ether and other digital currencies. I’d guess these things have arisen from the intersection of (a) doubts about financial security – including the value of national currencies – that grew out of the financial crisis and (b) the comfort felt by millennials regarding all things virtual. But they’re not real.

Some businesses accept Bitcoin as payment.  Some buyers want to own Ether because it can be used to pay for computing power on the Ethereum network.&n...



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Insider Scoop

PayPal's Q2 Was Strong, But Valuation Has Some Analysts Concerned

Courtesy of Benzinga.

Related PYPL 5 Biggest Price Target Changes For Thursday PayPal Scores Q2 Beat, Analyst Sees More Improvements Ahea...

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Chart School

U.S. Dollar; Triple support test after rare 30-week decline

Courtesy of Chris Kimble

From 2011 to the start of this year, the US$ has been pretty strong, as it rallied nearly 30% in 6-years. Over the past 30-weeks, King Dollar has been rather weak.

Below looks at the US$ over the past 18-years, with 30-week performance applied-

King Dollar has declined over 9% in the last 30-weeks at (1). As one can see, this sharp of a decline in 30-weeks hasn’t taken place a ton of times since the late 1990’s. The decline has the US$ testing the bottom of a 24-month trading range and two rising support lines at the same time at (2...



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Biotech

Biologics: The pricey drugs transforming medicine

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

 

Biologics: The pricey drugs transforming medicine

Courtesy of Ian HaydonUniversity of Washington

The cells inside this bioreactor are the real pharmaceutical factories. Sanofi Pasteur, CC BY-NC-ND

In a factory just outside San Francisco, there’s an upright stainless steel vat the size of a small car, and it’s got something swirling inside.

The vat is stud...



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OpTrader

Swing trading portfolio - week of July 24th, 2017

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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Members' Corner

Why we need to act on climate change now

 

Why we need to act on climate change now

Interview with Jan Dash PhD, by Ilene Carrie, Editor at Phil’s Stock World

Jan Dash PhD is a physicist, an expert at quantitative finance and risk management, and a consultant at Bloomberg LP. In his thought-provoking book, Quantitative Finance and Risk Management, A Physicist's Approach, Jan devotes a chapter to climate change and its long-term systemic risk. In this article, Ilene interviews Jan regarding his thoughts on climate change and the way it can affect our futu...



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Mapping The Market

The App Economy Will Be Worth $6 Trillion in Five Years

Courtesy of Jean-Luc

This would be excellent news for AAPL and GOOG to a lesser extent although not inconsequential:

The App Economy Will Be Worth $6 Trillion in Five Years 

In five years, the app economy will be worth $6.3 trillion, up from $1.3 trillion last year, according to a report released today by app measurement company App Annie. What explains the growth? More people are spending more time and -- crucially -- more money in apps. While on average people aren't downloading many more apps, App Annie expects global app usership to nearly double to 6.3 billion people in the next five years while the time spent in apps will more than double. And, it expects the...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

Reminder: Harlan 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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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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