There is one major problem with putting houses of card back together – they tend to fall…over and over. And while abundant liquidity in May and June served as an artificial prop to return European core and PIIGS spreads to previous levels merely as mean reversion algos took holds, the second time around won’t be as lucky. CDR’s Tim Backshall was on the Strategy Session today, discussing the key trends in sovereign products over the past few months, noting the declining liquidity in both sovereign cash and derivative exposure (we will refresh on the DTCC sovereign data later after its weekly Tuesday update). Yet the most interesting observation by Backshall is the declining halflife of risk-on episodes, which much like the SNB’s (now declining) interventions, are having less of an impact on the market, as ever worsening fundamentals can only be swept under the carpet for so long before they really start stinking up the place, and indeed, as Tim points out at 5:30 into the interview, even the IMF now realizes that soon the eventual second domino will fall, and it is better the be prepared (via the previously discussed infinitely expanded credit line), than to have to scramble in the last minute as was necessary in May. In other words, the storm clouds are gathering and only fools will invest in risk asset without getting some additional clarity on what is happening in Europe. The bottom line as Backshall asks is: "do they default now or default later." And that pretty much sums it up. Buy stocks at your own peril.
Incidentally all this is happening as we read in an exclusive Bloomberg piece that "four months after the 110 billion- euro ($140 billion) bailout for Greece, the nation still hasn’t disclosed the full details of secret financial transactions it used to conceal debt" and that EuroStat still has not received the required disclosure about just how fake (or real) the Greek debt situation truly is. When one steps back and ponders just how bad (and unknown) the situation in Europe is, and that stocks are unchanged for the year, one must conclude, as Dylan Grice does every week, that the lunatics have truly taken over the asylum.
Back in April, when we discussed the inception of the IMF’s then brand new New Arrangement to Borrow (NAB) $500 billion credit facility, we asked rhetorically, "If the IMF believes that over half a trillion in short-term funding is needed imminently, is all hell about to break loose." A month later the question was answered, as Greece lay smoldering in the ashes of insolvency, and the developed world was on the hook for almost a trillion bucks to make sure the tattered eurozone remained in one piece (leading to such grotesque abortions as Ireland, whose cost of debt is approaching 6%, funding Greek debt at 5%).
Well, if that was the proverbial canary in the coalmine, today the entire flock just keeled over and died: today the IMF announced it "expanded and enhanced its lending tools to help contain the occurrence of financial crises." As a result, the IMF has as of today extended the duration of its existing Flexible Credit Line (FCL) to two years, concurrently removing the borrowing cap on this facility, which previously stood at 1000 percent of a member’s IMF quota, in essence making the FCL a limitless credit facility, to be used to rescue whomever, at the sole discretion of the IMF’s overlords. Additionally, as the FCL has some make believe acceptance criteria (and with countries such as Poland, Columbia, and Mexico having had access to it, these must certainly be sky high), the IMF is introducing a brand new credit facility, the Precautionary Credit Line (PCL), which will be geared for members with "sound policies [which just happen to need an unlimited source of rescue funding] who nevertheless may not meet the FCL’s high qualification requirements." In other words everyone. In yet other words, the IMF as of today, has a limitless facility to bail out anyone in the world, without a maximum bound in how much is lendable. One wonders who would be stupid enough to take advantage of the gullibility of IMF’s biggest backers (the US), to borrow an infinite amount of money for any reason whatsoever… And just what all this means for the imminent explosion of the amount of money in circulation…Not to mention the brand new Ben Bernanke smokescreen of…
As had been widely expected, today (a day before the stress test results finally stop leaking, compliments of the securities and exchange commission) the senate passed a measure approving the expansion of the credit line from the Treasury to the FDIC to $100 billion, from $30 billion previously. The vote passed 91 to 5. In addition, the FDIC will now have half a trillion credit limit that will expire by the end of 2010. As the senate has firmly decided that dollars are now not worth even their weight in zero-ply toilet paper, it makes sense to see just how quickly the FDIC has managed to eat through the Deposit Insurance Fund, of which it had roughly $19 billion at the end of 2008, and now has a couple of pennies above zero, which any way one looks at it is less than the statutory DIF reserve minimum of 1.15% of insured deposits (indicatively, the minimum balance in the DIF (at least according to existing laws: once can imagine these will be promptly "adjusted") should be $54 billion, or 1.15% of the $4.7 trillion in insured deposits. Once it falls below that amount the FDIC must come up with a restoration plan to raise the DIF to that level. Good luck with that) .
And all this was accomplished in a mere four months.
Oh, and by the way, advisor for the FDIC, in case you missed it before, is Perella Weinberg (here is the link for the ongoing Zero Hedge FDIC-Perella Weinberg compensation FOIA initiative).
[click on table for larger image] hat tip Guillermo
With stocks rising to record high after record high, and with even Goldman's clients now asking "When does the party end?" as noted by Goldman's David Kostin overnight, the answer is simple: nothing has changed. Specifically, between the Fed's ongoing monetization of tens of billions monthly in bonds, the missing piece to the equation is also a known one - corporate buybacks. In fact as Goldman admits, "February was the busiest month in our buyback desk’s history." (which surely is Chinese walled off from Goldman's prop trading desk). Why? Because as ...
The $OEXA200R Monthly (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com used to find the "sweet spot" time period in the market when you have the best chance of making money.
The weekly charts below are current through the week's close.
Weekly OEXA200R vs. S&P Comparison
According to this system, the market is now Un-tradable. The OEXA200R ended the week at 82%, unchanged from last weekend.
Nidec Corporation (NYSE: NJ) announced Friday that the Board of Directors of the Company, at a meeting held on March 8, 2014, made the following decisions regarding a stock split and an amendment to the Company's Articles of Incorporation, as well as a modification to the Company's share repurchase program, which was adopted at the meeting of the Board of Directors on January 22, 2014.
1. Purposes of the Stock Split
The Company has decided to implement the stock split to enhance the liquidity of the Company's common stock and expand its investor base by reducing the trading price per share of the Company's common stock.
2. Outline of the Stock Split
(1) Method of the Stock Split
Each of the shares of the Company's common stock held by shareholders included or...
Who says QE is ineffective? If you’re an owner of real estate or financial assets, it’s pretty darn f*cking effective.
From the Wall Street Journal:
The net worth of U.S. households and nonprofit organizations rose 14% last year, or almost $10 trillion, to $80.7 trillion, the highest on record, according to a Federal Reserve report released Thursday. Even adjusted for inflation using the Fed’s preferred gauge of prices, U.S. household net worth—the value of homes, stocks and other assets minus debts and other liabilities—hit a fresh record.
The Global X Social Media Index ETF (Ticker: SOCL) touched fresh record highs on Thursday morning, surprising no one given the top three holdings of the Fund are Hong Kong-based Tencent Holdings (12.678%), Facebook Inc. (12.506%) and LinkedIn Corp. (8.166%), which are up 130%, 160% and 22%, respectively, since this time last year. The SOCL reflects the performance of companies involved in the social media industry, including companies that provide social networking, file sharing and other web-based media applications. Shares in the ETF rose 1.3% today to a new high of $23.00, and have soared approximately 65% since this time last year.
Today brought three better than expected economic releases from Construction Spending, ISM Manufacturing, and Personal Income. The ISM figure was quite unexpected and Personal Income was well above expectations. If we ignore for a moment that the Final GDP reading for Q4 was lowered on Friday (which may or may not have been primarily caused by severe weather), we have had a week of better than expected economic numbers. Corporate earnings have also continued to exceed forecasts, albeit with a bit more cautious guidance.
Of course, none of that matters when the “war drums” start beating. Russia and the Ukraine are engaged in a serious game of “chicken” with a bear in the hen house. The Russian ruble has borne the brunt of the damage so far with a double digit drop today again...
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...
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.
And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference. Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014? The Biotech ETF beat the S&P by better than 3 points.
As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...
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...
Note: The material presented in this commentary is provided for
informational purposes only and is based upon information that is
considered to be reliable. However, neither MaddJack Enterprises, LLC
d/b/a PhilStockWorld (PSW) nor its affiliates
warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.