Posts Tagged ‘LIBOR’

Thrilling Thursday – Rumors Run the Markets

Before we begin – let's catch up on the Libor scandal:  

"The Global Banking Industry relies on London having virtually no regulatory oversight.  The bulk of the Global financial crimes occur in London.  David Cameron, of course, is keen to protect the franchise of the city of London – it's the big profit center for his country and his Government – essentially peddling in fraud."

That is the key point made by Max Keiser (7:20) in the above video.  As Keiser points out, fraud and manipulation are rampant in the Global Financial Markets and have been for years.  I've been saying so and we have great systems to profit from the manipulation of fraudulent markets but they wouldn't work so well if the markets were not a sham, would they?  

While I'd love to go back to picking value stocks in clean market environment – I'm certainly not holding my breath.  Fining BCS $450M for making Billions of Dollars in a conspiracy to defraud Trillions of Dollars of Global investors over periods of years means you shouldn't hold yours either.  I'm pretty sure we can expect more of the same for a long, long time.  

This morning the Euro and the Dollar have been flying up and down along with our index futures on rumors that China will or won't be easing (100-point swings in the Dow pre-market) or that the ECB will or won't ease and that other countries will or won't kick in stimulus.  You know, the same old crap we've been hearing since early June – giving us roughly 10% gains across the International board – even as the Global Economic Data continues to decay:  

We are still "constructively bullish" which is what led us to stay cashy and cautious short-term, while holding bullish on our long-term bets.  We haven't got any strong downside bets as we have clear lines at those 50 dmas (red) with the 20 dmas (blue) curving up sharply to give us support before we feel compelled to go bearish again.  Of course, this "rally" has been a lot of low-volume BS – hence the "cashy and cautious" stance.  We have had no reason yet to actually go bearish and, since we added most of our long-term longs in early June – we have quite a while before we do become
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We Face Extraordinary Danger and Extraordinary Opportunity

We Face Extraordinary Danger and Extraordinary Opportunity

Courtesy of John Nyaradi’s Wall Street Sector Selector 

Black Cat Looking at Goldfish in Bowl

As I look across the global landscape today, I see extraordinary danger and extraordinary opportunity. 

Danger comes from the deteriorating economic environment at home and abroad and extraordinary opportunity comes from the enormous volatility and opportunities to “short” the market followed by a once in a generation opportunity to “buy dollars for dimes” once a bottom to this market has been reached.

Over the next five years I believe we will see more bankruptcies, both individual and sovereign, than we’ve seen in our history and we’ll also see more millionaires and billionaires created than ever before.

As individuals we will each make one of two choices.  We can assume the “deer in the headlights” posture and stash our money under the mattress, or we can educate ourselves, take prudently managed risk and work to take advantage of the enormous opportunities that will present themselves. 

Looking at My Screens 

This week we saw enormous volatility in every asset class as global forces washed over the markets of the world and investors/traders tried to position themselves on the only side of the market that counts, “the right side.” 

The downtrend that started in April is still firmly in place, notwithstanding Thursday’s rally from oversold levels and we remain in the “Red Flag Flying” mode expecting lower prices ahead. 

Taking a look at the chart of the S&P 500 we see:

chart courtesy of StockCharts.com 

In the chart above, we can see that the S&P remains just below its 200 Day Moving Average which will provide significant resistance while the MACD remains on a sell signal but momentum is turning up.  Above the blue 50 Day Moving Average is rolling over and the 200 Day red line is flattening which is also a bearish indicator. 

So for the time being, at least, we remain in a bearish configuration, expecting lower prices ahead. 

By the way, if you share our view and expectations of lower prices, this week’s mega rally on Thursday presented some extraordinary buying opportunities on the “short” side with relatively low risk at the moment.  I’ll be describing these in detail to my subscribers in our Position/Stop Loss Update this weekend. 

Members note that this week’s Position/Stop Loss Update will be sent on Monday afternoon due to markets being…
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Credit Storm in Europe

Credit Storm in Europe

By MIKE WHITNEY writing at CounterPunch 

Munich Oktoberfest Preparations

Credit market turmoil in the Eurozone has ignited frenzied trading on global markets. On Tuesday, shares tumbled nearly 300 points on the Dow Jones before launching an unconvincing 257-point late-day comeback. Wednesday the mayhem continued; all the major indexes seesawed wildly as positive news on durable goods was nixed by  reports on wobbly EU banks. Erratic selling pushed the S&P down to 1,067 while the Dow slipped below 10,000 for the first time since February 7.  The rise in Libor (the London Interbank Offered Rate) is increasing volatility, a red flag indicating trouble in interbank lending. Banks are wary of each other’s collateral as Greece and other underwater Club Med members appear to be headed for debt-restructuring. Libor is not yet at pre-Lehman levels, but the rate that banks charge each other for short-term loans has rocketed to a 10-month high. Improving economic data have not eased fears of another meltdown or removed the rot at the heart of the system. The banks are still loaded with loans and assets that are losing value. The credit system is breaking down. 

When banks post collateral overnight for short-term loans, the collateral is effectively downgraded, limiting the banks’ access to capital. This is what triggered the financial crisis two years ago, a run on repo. Regulated "depository" institutions now rely on a funding system that operates beyond government oversight, a shadow banking system.  The banks exchange collateral, in the form of bundled securities and  bonds with institutional investors (aka—"shadow banks"; investment banks, hedge funds, insurers) via repurchase agreements (repo) for short-term loans. The repo market now rivals the  traditional banking system in terms of size but lacks the guard rails and stop signs that make the regulated system safe. The system is inherently unstable and crisis-prone as a recently released paper by the Federal Reserve Bank of New York  (FRBNY) admits. Moody’s rating agency summarized the paper’s findings like this: the tri-party repo market “will remain a major source of systemic risk, especially given the current market volatility and the fact that the Federal Reserve’s primary dealer emergency lending facilities are no longer in place…… the market remains structurally vulnerable to a repo run…… If cash investors pulled away in a stressed environment, the clearing banks would be faced with a choice (as they were several times in 2008)…
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Much Ado About TED, LIBOR, and Currency Swaps

Much Ado About TED, LIBOR, and Currency Swaps

Courtesy of JESSE’S CAFÉ AMÉRICAIN

There is some alarm being expressed about the recent increase in the TED spread from some quarters this week.

Here is a short term chart of the TED. It is definitely elevated expressing the accelerated demand for dollars in Europe. Although the BIS reports will not catch up with this action for quite a while, I suspect we are seeing a replay of a flight away from dodgy assets such as dollar denominated CDO’s that European customers had deposited with their banks that are now being liquidated again. Also, and undeniably, there is a flight to gold, Swiss francs, and US dollars from the Euro as the ECB and the EMU sort out their serious issues brought about by a single currency and monetary policy working across a wide diversity of localized fiscal conditions.

However, here is the longer term picture of the TED spread. As you can see, it is a bit too early to hit the warning sirens. But it does bear watching.

The long view is not very dramatic, and also not as useful for promoting short euro hedge fund trades, or for generating viewer clicks.

For some additional perspective, here is a chart of the one year LIBOR rate.

Here is a short term view of LIBOR in US Dollars. It is definitely elevated.

But here is a similar short term view of LIBOR expressed in ECU’s. By comparing the two LIBOR charts one might think that there is an elevated demand for dollars, probably attributable to a flight to safety. The DX chart indicates that it seems to be peaking. But it can always take a turn for the worse. 

And while we are at it, here is a reprise of a prior discussion of the Fed’s swap lines with Europe, designed to relieve imbalanced demand for dollars.

The US is indeed contributing to the bailout of Greece, via its membership in the IMF. But not through the currency swap lines, unless there is something else going on there behind the scenes. Since the US owns the biggest printing press in the world, at least for now, that would not be a shock.

There may be a time to worry about European insolvency. But quite a bit of what we are hearing about Europe these…
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ValueWalk

Whitehall Locked Down After Police Arrest A Man Near Parliament

By Michelle Jones. Originally published at ValueWalk.

Police in the Whitehall neighborhood of London are on high alert after arresting a man who was said to be carrying a knife in the area around Parliament. Officials are telling the media that they’re investigating exactly what happened, but early reports indicate that no one was injured in the incident.

falco / PixabayKnives seen on the ground outside Whitehall

Photos that are circulating on social media show two knives and a backpack lying on the ground at the scene. Police are now questioning the suspect and have placed Whitehall on lockdown. Government buildings in Whitehall are also locked down, and witnesses reportedly told Metro...



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Zero Hedge

Pending Home Sales Drop In March - Stagnant For 2 Years

Courtesy of ZeroHedge. View original post here.

Contracts to buy previously owned U.S. homes declined in March after rising a month earlier by the most since 2010, as perhaps the seasonal exuberance gives way to affordability constraints. Despite NAR's comments that "home shoppers are coming out in droves this spring," it is evident from the chart below that pending home sales have been stagnant for almost two years.

2013 deja vua ll over again?

...



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Phil's Favorites

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Euro-Area Economic Confidence Surges to Highest in a Decade (Bloomberg)

Euro-area economic confidence jumped to the highest in almost a decade this month, a testament to a continued improvement that may soon prompt a policy shift at the European Central Bank.

European Bank Bulls Seek ECB Tapering Hints as France Risk Fades (Bloomberg)

Investors are waiting to see whether Mario Draghi joins in the optimism that has engulfed the region&r...



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Chart School

Markets Consolidate

Courtesy of Declan.

After two days of gains it was time for consolidation in markets. The Russell 2000 didn't get this memo and added a third day of gains managing a new closing high.


The S&P finished with a doji which tagged all-time high resistance. Technicals haven't changed from yesterday and relative performance has continued to weaken. The index just has to survive profit-taking and perhaps aggressive shorts looking to take advantage of the resistance tag.

...

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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Oil prices rebound after big draw in U.S. crude inventories (Reuters)

Oil prices rebounded from early losses on Wednesday after U.S. government data showed a larger-than-expected falloff in crude inventories, which encouraged buying after prices slid for several days on worries that a global crude glut was persisting despite cuts in output by producing countries.

Lucky, Good or Tipped Off? The Curious Case of Government Data and the Pound (The Wall Street Journal)

Some investors could be trading with knowledge of U.K. official statistics before they are publi...



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Kimble Charting Solutions

S&P 500; Dangerous place to run out of gas!

Courtesy of Chris Kimble.

Could the “Weekly Closing Highs and Lows” of last year, be impacting stock prices in 2017? The Power of the Pattern thinks so! Below looks at the S&P 500 over the past couple of years. where we applied Fibonacci to the “Weekly Closing Highs and Lows” of last year.

CLICK ON CHART TO ENLARGE

The S&P 500 ran into the 161% extension level at (2) and it stopped on a dime, at the end of February. Following a small decline the rally the past two weeks has it testi...



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OpTrader

Swing trading portfolio - week of April 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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Digital Currencies

BDC's Crypto Corner

Hello fellow PSW-ers, it's biodieselchris here. I've been interested in cryptocurrencies (informally, "cryptos" or "coins") since 2011 when I first heard about Bitcoin, Since that time I've become somewhat of a subject matter expert and personal investor in Bitcoin and other alternative cryptocurrencies ("altcoins"). I have even started one of my own!

I've been posting comments about cryptos in Phil's daily post from time to time. Recently, Phil and I got on a call and he asked if I would like to run a blog on his site specifically about cryptos, which I thought was a great idea. My goal would be to educate members on what I know about how coins work, how I research coins (what I find interesting), how exactly one can invest (buy, hold, and sell) coins and a basic, easy-to-follow general how-to on all things crypto. In addition, other members have expressed an interest in learning more directly...



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Members' Corner

Should I buy that stock?

Courtesy of Phil Stasukaitis (pstas)

I was asked by my local investment club to do a presentation on "how to buy a stock?" As I pondered the question, I began by noting all the elements that I monitor regularly and which come in to play as part of my decision process. As the group is comprised novices to experts, I tried to gear my discussion to cover both basics and more advanced concepts.

Four Part Discussion

  1. Macro Economic Indicators
  2. Market Indexes
  3. Fundamental Analysis
  4. Technical Analysis

1. Macro Economic Indicators

We'll start with reviewing some basic concepts and measurements that have direct effects on the stock market. 

A. Gross Domestic Product (GDP)

...

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Mapping The Market

Bombing - Right or Wrong?

Courtesy of Jean-Luc

I am telling you Angel – makes no sense… BTW:

Republicans Love Bombing, But Only When a Republican Does It

By Kevin Drum, Mother Jones

A few days ago I noted that Republican views of the economy changed dramatically when Donald Trump was elected, but Democratic views stayed pretty stable. Apparently Republicans view the economy through a partisan lens but Democrats don't.

Are there other examples of this? Yes indeed. Jeff Stein points to polling data about air strikes against Syria:

Democr...



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Biotech

CAR-T & CRISPR - the Future is Now

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

PSW Members....it has been a while since my last post, but since many have all been on the board following the chat, it is time for a scientific lesson in a few of the companies we are long.  In addition, another revolution is coming in the medical field, and it will be touched upon as well.

CAR-T - stands for Chimeric antigen receptors (CARs) and the T is for T-cell.  

From the picture above, T-cells are one cell type of our immune system that fight off infection as well as they are one player at keeping rogue cells from becoming cancerous. Unfortunately, cancer somehow evades the immune system and so it begins.

CAR-T came along in the late1980s via a brilliant scientist, Zelig Eshhar...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

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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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