The output of the nation’s factories, mines and utilities rose 0.8% in August. Output was also much stronger in July than first estimated, the Federal Reserve said Wednesday. The August increase was just a bit better than expected by economists surveyed by MarketWatch. Analysts had been expecting a 0.7% gain. Capacity utilization – a gauge of slack in the economy — rose to 69.6% in August from a revised 69.0% in July. There were gains across the board in August. Manufacturing expanded 0.6% in August. Excluding autos and auto parts, manufacturing rose 0.4%.
An economic rebound is definitely under way, how fast and far that rebound is remains to be seen. That said, I am impressed by the strength in output outside of the manufacturing sector. As I detailed yesterday, capacity utilization has historically had a strong relationship with employment.
In addition, the increase in capacity utilization decreases the worry over deflation (though not out of the woods yet). The relationship between capacity utilization and inflation was detailed here and we may be seeing the beginning stages of what may be a reflationary period that the broader investment community had been worried about for some time.
The Statistical Recovery, Part Three
Capacity Utilization Set to Rise
A Real Estate Green Shoot?
The Deleveraging Society
Some Thoughts on Secular Bear Markets
Weddings and Ten Years of Thoughts From the Frontline
This week we further explore why this recovery will be a Statistical Recovery, or one that, as someone said, is a recovery only a statistician could love. We look at capacity utilization, more on housing, some thoughts on debt and deflation, and some intriguing charts on volatility in the last secular bear-market cycle. This letter will print a little longer, but there are lots of charts. I have written this during the week, and I finish it here in Tulsa, where Amanda gets married tomorrow. (There is no deflation in weddings costs!)
Thanks to so many of you for your enthusiastic feedback about my latest Accredited Investor Newsletter, in which I undertook to examine the impact of last year’s dramatic increase in volatility on the performance of hedge funds and to ascertain those elements that led to success in the industry, such as select Global Macro and Managed Futures strategies, as well as the challenges. If you are an accredited investor (basically anywhere in the world, as I have partners in Europe, Canada, Africa, and Latin America) and haven’t yet read my analysis, I invite you to sign up here: www.accreditedinvestor.ws
For those of you who seek to take advantage of these themes and the developments I write about each week, let me again mention my good friend Jon Sundt at Altegris Investments, who is my US partner. Jon and his team have recently added some of the more successful names in the industry to their dedicated platform of alternative investments, including commodity pools, hedge funds, and managed futures accounts. Certain products that Altegris makes available on its platform access award-winning managers, and are designed to facilitate access for qualified and suitable readers at sometimes lower investment minimums than is normally required (though the net-worth requirements are still the same).
If you haven’t spoken with them in a while, it’s worth checking out their new lineup of world-class managers. Jon also tells me they just added yet more brilliant minds to their research team, making it,…
Although the U.S. stock market continues to hit new nominal highs on a nearly daily basis, the U.S. economy bumps along at a lackluster pace. This disconnect has been achieved by a massive Fed experiment in monetary stimulation. Through the combination of seemingly endless maintenance of zero interest rates and the injection of some $1trillion a year of synthetic money into fixed-income markets, the Fed is hoping that the boom it is creating on Wall Street will lead to a boom on Main Street. In reality, this a ...
It's time again for my weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny, Regular and Premium were unchanged. Regular and Premium are down 52 cents and 45 cents, respectively, from their interim highs in late February.
According to GasBuddy.com, no state is averaging above $4.00 per gallon, and only Hawaii is averaging over $3.80. Five states (Oklahoma, Missouri Kansas, Minnesota and Montana) are averaging under $3.00, up from three states last Monday.
How far are we from the interim high prices of 2011 and the all-time highs of 2008? Here's a visual answer.
Today, with very little market moving news, the S&P 500 closed at 1808.4, yet another new closing daily high. The index did touch the 1811 area on at least three distinctly different time slots creating a new resistance level. But after last week’s bevy of positive economic surprises, the sharp gain of 1.1% on Friday, leaving the index just a tiny point away from its ninth consecutive up week, we can’t be too quick to suggest today was a topping rally. For one thing, volume was quite low as traders seemed to be trying to sort out the odds on the earliest date of Fed tapering. Estimates range from this month to March and even later. But it’s going to happen…so why so much emphasis on when? Perhaps protection of end-of-the-year profits in so many fund managers portfolios? ...
Investors sent the S&P 500 to a record-high close despite speeches by Federal Reserve officials hinting that the taper could begin this month.
Monday’s trading action suggested that investors finally overcame their fear that the FOMC could vote to taper the Federal Reserve’s bond-buying on December 18. The S&P 500 reached a new, record-high close, despite the fact that three Federal Reserve officials gave speeches on Monday, suggesting that the tapering program could begin this month. Dallas FedHead Richard Fisher, Richmond FedHead Jeffrey Lacker and St. Louis FedHead James Bullard gave speeches on Monday, wherein each discussed the possibility that the cutbacks to the Fed’s bond-buying could begin in December. Is a Fe...
The spin does not get any better than this... As they reported they would,
*LEW SAYS U.S. SOLD ALL REMAINING SHARES OF GENERAL MOTORS RECOUPING $39 BLN OF ORIGINAL GM INVESTMENT
That is a $10.5 Billion loss! But, The Center for Automotive Research, a Michigan nonprofit organization that analyzes auto industry issues, those funds “saved or avoided the loss of $105.3 billion in transfer payments and the loss of personal and social insurance tax collections -- or 768% of the net investment.&...
OSIS – OSI Systems, Inc. – Options volume on OSI Systems today is well above the average daily level for the stock, with upwards of 7,500 contracts in play as of midday in New York versus average daily volume of 57 contracts. The surge in options trading on OSI Systems coincides with a 40% decline in the price of the underlying shares to $39.00 today, the lowest level since October of 2011. The company provided an update on a recent $60 million order cancellation by the Transportation Security Administration (TSA). Call options are more active than puts, with the call/put ratio hovering near 2.0 as of 12:40 p.m. EST. Some traders appear to be selling out of the money December and January 2014 expiry calls, while others step in to buy the contracts perhaps in the expectation that shares rebound in the...
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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.
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These rallies are becoming familiar. In early July we saw a streak of 12 of 13 sessions in a row up, early September 11 of 12, and mid October 11 of 13 (current streak). It is a bit uncanny the similarities and how the escalator goes straight up in vertical ascent as we see indexes come out of mini corrections during QE. So we are about at the same stage where the last two began to tire, so it will be interesting if this is similar or if the current consensus of the market that there is nothing to worry about until next year as the Fed and D.C. are both off the table and this 3% annual growth rate in earnings we are now seeing in the S...
Welcome to the fouth update of the IRA Virtual Portfolio. First I am going to summarize the current state of the Portfolio then I will get into all the activity we had during September expiration.
Profit and Loss – Net of closed positions the portfolio is up a total of $769
Market Commentary – Last expiration I said, "I would like to put a total of $20,000 to work by the end of SEP expiration. If the VIX pops up to around 20 I plan to put about $50,000 total to work." The market didn't quite reach the goal but I did manage to deploy $15,000 of buying power. I still feel the market is too high and expect a correction during October. If the vix pops up to around 20 I still plan to put about $50,000 to work. If a correction doesn't happen I still plan to have a total of $25,000 in buying power put to work by October expiration. Now on to the act...
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Come and get it! Read all about it! Biotechs, biotechs and more biotechs to buy buy buy for your portfolio! To date, almost 30 biotech companies have hit the market. Most of the time, there are fewer than 10-12!
For the last five years, biotechs have had issues obtaining offer prices above expectations. In 2013, that trend looks to be broken. According to BiotechNow, the offer prices are 4% above expectations! In addition, biotechs are going public with little more than a wing and a prayer (pre-clinical or Phase 1 data only). Really? What this means is that the drug or technology looks good in mice, rats, or dogs, etc, but there is no smidgen of evidence that it will work in humans. That's what is called an appitite for RISK!
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