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Posts Tagged ‘subprime mortgages’

Food and Finance

High fructose corn syrup, enriched bleached flour, and "natural flavor" is to bread like CDOS, subprime loans and reverse convertibles are to finance. – Ilene 

Food and Finance

NEW YORK - AUGUST 06: Bread is displayed for sale at a Manhattan grocery store on August 6, 2010 in New York City. As a result of drought and an outbreak of wildfires that have decimated Russia's wheat crop, U.S. wheat prices have been steadily rising, igniting fears of a global rise of food prices. Russia announced a ban on grain and flour exports yesterday, which will take effect from August 15 to the end of the year. While prices fell slightly in trading today, U.S. wheat futures on the Chicago Board of Trade rose over 20 percent earlier in the week, having nearly doubled since early July to $8.41 a bushel. (Photo by Spencer Platt/Getty Images)

Courtesy of James Kwak at Baseline Scenario

I just read Michael Pollan’s book, In Defense of Food: An Eater’s Manifesto, and what struck me was the parallels between the evolution of food and the evolution of finance since the 1970s. This will only confirm my critics’ belief that I see the same thing everywhere, but bear with me for a minute.

Pollan’s account, grossly simplified, goes something like this. The dominant ideology of food in the United States is nutritionism: the idea that food should be thought of in terms of its component nutrients. Food science is devoted to identifying the nutrients in food that make us healthy or unhealthy, and encouraging us to consume more of the former and less of the latter. This is good for nutritional “science,” since you can write papers about omega-3 fatty acids, while it’s very hard to write papers about broccoli.

It’s especially good for the food industry, because nutritionism justifies even more intensive processing of food. Instead of making bread out of flour, yeast, water, and salt, Sara Lee makes “Soft & Smooth Whole Grain White Bread” out of “enriched bleached flour” (seven ingredients), water, “whole grains” (three ingredients), high fructose corn syrup, whey, wheat gluten, yeast, cellulose, honey, calcium sulfate, vegetable oil, salt, butter, dough conditioners (up to seven ingredients), guar gum, calcium propionate, distilled vinegar, yeast nutrients (three ingredients), corn starch, natural flavor [?], betacarotene, vitamin D3, soy lecithin, and soy flour (pp. 151-52). They add a modest amount of whole grains so they can call it “whole grain” bread, and then they add the sweeteners and the dough conditioners to make it taste more like Wonder Bread. Because processed foods sell at higher margins, we have an enormous food industry pushing highly processed food at us, very cheaply (because it’s mainly made out of highly-subsidized corn and soy), which despite its health claims (or perhaps because of them) is almost certainly bad for us, and bad for the environment as well. This has been abetted by the government, albeit perhaps reluctantly, which now allows labels like this on corn oil (pp. 155-56):

“Very limited and preliminary scientific evidence suggests that eating about one tablespoon (16


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The Subprime Debacle: Act 2

The Subprime Debacle: Act 2 

Courtesy of John Mauldin at Thoughts From The Frontline 

Trouble, oh we got trouble, Right here in River City! 
With a capital "T" That rhymes with "P" 
And that stands for Pool, That stands for pool.

We’ve surely got trouble! 
Right here in River City, 
Right here! Gotta figger out a way 
To keep the young ones moral after school! 
Trouble, trouble, trouble, trouble, trouble…

- From The Music Man

(Quick last-minute note: I think this (and next week’s) is/will be one of the more important letters I have written in the last ten years. Take the time to read, and if you agree send it on to friends and responsible parties. And note to new readers: this letter goes to 1.5 million of my closest friends. It is free. Now, let’s jump in!)

There’s trouble, my friends, and it is does indeed involve pool(s), but not in the pool hall. The real monster is hidden in those pools of subprime debt that have not gone away. When I first began writing and speaking about the coming subprime disaster, it was in late 2007 and early 2008. The subject was being dismissed in most polite circles. "The subprime problem," testified Ben Bernanke, "will be contained."

My early take? It would be a disaster for investors. I admit I did not see in January that it would bring down Lehman and trigger the worst banking crisis in 80 years, less than 18 months later. But it was clear that it would not be "contained." We had no idea.

I also said that it was going to create a monster legal battle down the road that would take years to develop. Well, in the fullness of time, those years have come nigh upon us. Today we briefly look at the housing market, then the mortgage foreclosure debacle, and then we go into the real problem lurking in the background. It is The Subprime Debacle, Act 2. It is NOT the mortgage foreclosure issue, as serious as that is. I seriously doubt it will be contained, as well. Could the confluence of a bank credit crisis in the US and a sovereign debt banking crisis in Europe lead to another full-blown world banking crisis? The potential is there. This situation wants some serious attention.

This letter is going to print a little longer. But…
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Foreclosuregate: Time to Break Up the Too-Big-to-Fail Banks?

Ellen Brown makes a compelling case for using the Kanjorski amendment to preemptively break up large financial institutions because they pose a threat to our economic stability. - Ilene 

Foreclosuregate: Time to Break Up the Too-Big-to-Fail Banks?

With risky behavior by big finance again threatening economic stability, how can we get things right this time?

Courtesy of 

Originally published in YES! Magazine    

Looming losses from the mortgage scandal dubbed “foreclosuregate” may qualify as the sort of systemic risk that, under the new financial reform bill, warrants the breakup of the too-big-to-fail banks. The Kanjorski amendment allows federal regulators to pre-emptively break up large financial institutions that—for any reason—pose a threat to U.S. financial or economic stability.

Although downplayed by most media accounts and popular financial analysts, crippling bank losses from foreclosure flaws appear to be imminent and unavoidable. The defects prompting the “RoboSigning Scandal” are not mere technicalities but are inherent to the securitization process. They cannot be cured. This deep-seated fraud is already explicitly outlined in publicly available lawsuits.

There is, however, no need to panic, no need for TARP II, and no need for legislation to further conceal the fraud and push the inevitable failure of the too-big-to-fail banks into the future.

Federal regulators now have the tools to take control and set things right. The Wall Street giants escaped the Volcker Rule, which would have limited their size, and the Brown-Kaufman amendment, which would have broken up the largest six banks outright; but the financial reform bill has us covered. The Kanjorski amendment—which slipped past lobbyists largely unnoticed—allows federal regulators to preemptively break up large financial institutions that pose a threat to U.S. financial or economic stability.

Rep. Grayson’s Call for a Moratorium

The new Financial Stability Oversight Council (FSOC) probably didn’t expect to have its authority called on quite so soon, but Rep. Alan Grayson (D-FL) has just put the amendment to the test. On October 7, in a letter addressed to Timothy Geithner, Shiela Bair, Ben Bernanke, Mary Schapiro, John Walsh (Acting Comptroller of the Currency), Gary Gensler, Ed DeMarco, and Debbie Matz (National Credit Union Administration), he asked for an emergency task force on foreclosure fraud. He said:

The liability here for the major banks is potentially enormous, and can lead


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2 Big 2 Foreclose--Is The Subprime End Game Approaching?

How big is the foreclosure mess? Big. Here’s WB7′s perspective. 

2 Big 2 Foreclose--Is The Subprime End Game Approaching?

Courtesy of williambanzai7 at Zero Hedge

MG

THE MIDDLE GAME QUAGMIRE

After a bad opening, there is hope for the middle game. After a bad middle game, there is hope for the endgame. But once you are in the endgame, the moment of truth has arrived. – Edmar Mednis (Grandmaster)  

I have one central thought of where this fraudclosure fiasco could lead, and this is why everyone should watch very carefully how the various players move their pieces in this subprime middle game.

Up until now, the banks have been making sweeping statements that this all reflects a "technical" glitch in foreclosure processes.

Well, having a posse of State AGs band together to commence a joint investigation is no longer a minor "technical" glitch. Allegations of masses of forged signatures, falsified or fabricated notarized documents,  back dating etc., if true, collectively amount to an institutional pattern of criminal behavior. Having the Justice Department announce it is opening a preliminary investigation raises the stakes even higher.

Being forced to suspend all foreclosures has obvious "material" economic consequences to the CDO note holders.

But having title companies pull out of the residential real estate market because they no longer trust the veracity of bank provided documents presages claims by mortgagors who lost their properties as well as the subsequent purchasers of same. The only way to conclusively cure that kind of problem is to get waivers, and releases from the various claimants wherever they may be or pass retroactive curative laws or laws doing things like creating a bailout fund to indemnify those who are injured (yikes!). You cannot simply say this is immaterial, sprinkle in the word MERS and hope this will all go away.

The CDO note holders will have potential claims stemming from the interruption of non-performing loan processing. Think breaches of the trust servicing agreements and allegations of "gross negligence or willful misconduct", the latter being magical legal hurdle in these types of agreements. However, the much…
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The Housing Holocaust

The Housing Holocaust

Courtesy of MIKE WHITNEY, writing at CounterPunch 

housingDon’t look now, but someone just pushed the housing market off a cliff. The National Association of Realtors announced on Tuesday that the sales of existing homes fell a staggering 27.2 per cent to a seasonally adjusted rate of 3.83 million units. This is the lowest number of sales since 1995. The reaction on Wall Street has been swift. Shares plunged in a wild sell-off that pushed stocks down more than 100 points in a matter of minutes. US Treasuries rallied on the news, sending bond yields lower as jittery investors sought safety from the ongoing avalanche of dismal economic data. The 10-year slid to 2.49 per cent while the 2 year note dipped to 0.46 per cent. Bond yields are a gauge of investor pessimism. At present, confidence in the management of the economy is at a nadir.

Analysts expected that housing sales would suffer after the Obama administration’s First-time Home-buyer credit expired in April, (deals had to close by the June 30 deadline) but they hadn’t expected a real estate holocaust ending in sales that are a paltry 25 per cent of their peak in 2005. The shocking drop in sales has added 2.5 months to the massive stockpile of unsold homes that is presently clogging the system and threatens to send prices into freefall. The pace of existing home sales is now slower than any time on record.

This latest housing smackdown will put more pressure on homeowners who are already in arrears or trying to decide whether its in their interest to make payments on a $300,000 mortgage for a house that is currently worth only $150,000. Expect foreclosures to rise sharply. 24 per cent of all mortgages already have negative equity. That’s 11.2 million loans. According to housing expert Charles Hugh Smith:

"Since there are about 47 million outstanding mortgages, and 24 million homes owned free and clear (no mortgage), then we can calculate that free-and-clear owners hold about a third of the $16.5 trillion in home equity — roughly $5.3 trillion. That leaves about $1.2 trillion in equity spread amongst the 47 million homes with mortgages…..

“Never before have American homeowners with mortgages held such a thin slice of equity, and never before have so many homeowners been at risk of negative equity. Predicting accurately how many homeowners end up underwater is…
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Was Fabrice Tourre Cheating On His Girlfriend? Are CDOs Really Nothing More Than “Intellectual Masturbation”?

Was Fabrice Tourre Cheating On His Girlfriend? Are CDOs Really Nothing More Than "Intellectual Masturbation"?

Courtesy of Tyler Durden

Businesswoman pulling rug from beneath other businesswoman

Zero Hedge is currently going through the 100 or so pages of just released Goldman emails that disclose in excruciating detail the events from late 2006 to late 2007 occurring in Goldman’s mortgage trading business. We will have a lot more to say on this tomorrow, suffice to say that we were pleasantly surprised that C-BASS, which we uncovered recently may be implicated in the Goldman SEC fraud scandal, is again involved. We also feel bad for Harvard and MS Prop, and a little better for Hayman Capital. Stay tuned. In the meantime, we will take a brief detour into the financial yellow pages, as we focus on the curious case of Fabrice Tourre, who once again plays a prominent role in today’s email discovery.

The first thing that caught our attention is the original "Fab Fab" email, finally reproduced in its entirety. One tangent that may be relevant to gleaning some more insight into the character of the "fabulous" 27 year-old mortgage god, is that at the time he penned his email to girlfriend (#1), then Goldman co-worker, Marine Serres, he was likely also with girlfriend (#2) Fatiha Bouktouche, a Columbia University post Doc, to whom he may have been disclosing proprietary Goldman holdings and trades. Who knows to whom, when or how Fatiha may have leaked insider trades whispered to her by Fabrice, and who knows what CDO trades Marine was pitching to the retarded (and soon to be bankrupt) European banks gobbling up everything Goldman would sell them, structured and originated by her boyfriend.

We recreate the original email:

From:       Fabrice Tourre
Sent:       Tuesday, January 23, 2007 11:34 PM
To:          Marine Serres
Subject:   Fw: ft--friday

Darling you should take a look at this article… Very insightful…More and more leverage in the system, l’edifice entier riqsue de s’effondrer  a tout moment…. Seul survivant potentiel, the fabulous Fab (as Mitch would kindly call me, even though there is nothing fabulous abt me, just kindness, altruism and deep love for some gorgeous and super smart French girl in London), standing in the middle of all these complex, highly levered exotic trades he created without necessarily understanding all the implications of these monstruosities !!! Anyway, not feeling too guilty about


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“Frankenstein turning against his own inventor”

(Quote by GS trader Fabrice Tourre.)  

Ironically, "Frankenstein" was the name of the inventor not the monster, though we often associate that name with the creature. Frankenstein’s monster lacked identity. His lack of identity and abandonment by his maker fueled his vile behavior. According to Wikipedia:

Mary Wollstonecraft

Part of Frankenstein’s rejection of his creation is the fact that he does not give it a name, which gives it a lack of identity. Instead it is referred to by words such as "monster", "demon", "fiend", "wretch" and "it". When Frankenstein converses with the monster in Chapter 10, he addresses it as "vile insect", "abhorred monster", "fiend", "wretched devil" and "abhorred devil".

During a telling of Frankenstein, Shelley referred to the creature as "Adam". Shelley was referring to the first man in the Garden of Eden, as in her epigraph:

Did I request thee, Maker from my clay
To mould Me man? Did I solicit thee
From darkness to promote me?

John MiltonParadise Lost (X.743–5)

 

Here’s a collection of articles on the infamous GS subprime shorting routine. – Ilene 

Goldman’s Tourre E-Mail Describes ‘Frankenstein’ Derivatives

By Christine Harper

April 25 (Bloomberg) -- Fabrice Tourre, a Goldman Sachs Group Inc. executive director facing a fraud lawsuit in the sale of a mortgage-linked investment, said an index that facilitated derivatives trading in the market was “like Frankenstein.”

The so-called ABX index is “the type of thing which you invent telling yourself: ‘Well, what if we created a ‘thing,’


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Goldman Email Describes ‘Frankenstein’ Derivatives; Tourre Brags about Selling Abacus to “widows and orphans”; SEC Confident; German Bank Drops Goldman

Goldman Email Describes ‘Frankenstein’ Derivatives; Tourre Brags about Selling Abacus to "widows and orphans"; SEC Confident; German Bank Drops Goldman

Boris Karloff (1887-1969)

Courtesy of Mish 

Goldman Sachs claims it it dis not mislead clients. Its defense will not be very convincing in the face of revealing emails with "fabulous Fab" bragging about dumping Abacus bonds on widows and orphans.

Please consider Goldman’s Tourre E-Mail Describes ‘Frankenstein’ Derivatives

Fabrice Tourre, a Goldman Sachs Group Inc. executive director facing a fraud lawsuit in the sale of a mortgage-linked investment, said an index that facilitated derivatives trading in the market was “like Frankenstein.”

The so-called ABX index is “the type of thing which you invent telling yourself: ‘Well, what if we created a ‘thing,’ which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?’” Tourre said in a Jan. 29, 2007, e-mail released yesterday by Goldman Sachs. Watching the index fall is “a little like Frankenstein turning against his own inventor.”

In a March 7, 2007, e-mail Tourre describes the U.S. subprime mortgage market as “not too brilliant” and says that “according to Sparks,” an apparent reference to Daniel Sparks who ran Goldman Sachs’s mortgage business at the time, “that business is totally dead, and the poor little subprime borrowers will not last too long!!!”

A few months later, a June 13, 2007, e-mail shows Tourre claiming, “I’ve managed to sell a few Abacus bonds to widows and orphans that I ran into at the airport, apparently these Belgians adore synthetic ABS CDO2,” using short-hand for asset- backed collateralized debt obligations squared, or CDOs made up of tranches of CDOs containing asset-backed securities.

Goldman Sachs Readies Forceful Defense

The Washington Post is reporting Goldman Sachs readies forceful response against claims it misled clients

Goldman Sachs is preparing its most detailed defense yet to allegations that it misled clients in its mortgage securities business, arguing that the firm was unsure whether housing prices would rise or fall and did not take any action at odds with the interests of its clients.

Goldman prepared the 11-page document to serve as the basis for testimony that chief executive Lloyd Blankfein is scheduled to deliver Tuesday before the Senate Permanent Subcommittee on Investigations.

The Goldman paper describes debates among top executives in 2006 and 2007 over whether the firm should make investment decisions


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Simon Johnson and James Kwak on Bill Moyers

Simon Johnson and James Kwak on Bill Moyers

Click here for the Video.>> 

Bill Moyers, Simon Johnson, James Kwak

Transcript:

BILL MOYERS: Welcome to the JOURNAL. With all due respect, we can only wish those tea party activists who gathered this week were not so single-minded about just who’s responsible for their troubles, real and imagined. They’re up in arms, so to speak, against big government, especially the Obama administration. 

But if they thought this through, they’d be joining forces with other grassroots Americans who will soon be demonstrating in Washington and elsewhere against high finance, taking on Wall Street and the country’s biggest banks.

The original Tea Party, remember, wasn’t directed just against the British redcoats. Colonial patriots also took aim at the East India Company. That was the joint-stock enterprise originally chartered by the first Queen Elizabeth. Over the years, the government granted them special rights and privileges, which the owners turned into a monopoly over trade, including tea. 

It may seem a stretch from tea to credit default swaps, but the principle is the same: when enormous private wealth goes unchecked, regular folks get hurt – badly. That’s what happened in 2008 when the monied interests led us up the garden path to the great collapse. 

Suppose the Tea Party folk had dropped by those Senate hearings this week looking into the failure of Washington Mutual. That’s the bank that went belly up during the meltdown in September 2008. It was the largest such failure in American history. 

WaMu, as we were reminded this week, made sub-prime loans that its executives knew were rotten, then packaged them as mortgage securities, and pawned them off on unsuspecting investors. 

SEN. CARL LEVIN: And that was your responsibility to make sure that the securities which went out to the investors were following notice to the investors of everything that they needed to know in order that the information be complete and truthful. That’s what your testimony was, under oath. 

DAVID BECK: It’s a very real possibility that the loans that went out were better quality than Mr. Shaw laid out. 

SEN. CARL LEVIN: And you don’t - 

DAVID BECK: A very real possibility. 

SEN. CARL LEVIN: And there’s a very good possibility that they were exactly the quality that he laid out, right? Is that right? 

DAVID BECK: That’s right. 

SEN. CARL LEVIN: Okay. And you don’t know, and apparently you don’t care. And the trouble is, you should have cared. 

BILL…
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SEC Charges Goldman Sachs With Fraud On Subprime Mortgages, Paulson & Co. Implicated

SEC Charges Goldman Sachs With Fraud On Subprime Mortgages, Paulson & Co. Implicated

Courtesy of Zero Hedge  

Washington, D.C., April 16, 2010 — The Securities and Exchange Commission today charged Goldman, Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.

The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.

"The product was new and complex but the deception and conflicts are old and simple," said Robert Khuzami, Director of the Division of Enforcement. "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party." 

Kenneth Lench, Chief of the SEC’s Structured and New Products Unit, added, "The SEC continues to investigate the practices of investment banks and others involved in the securitization of complex financial products tied to the U.S. housing market as it was beginning to show signs of distress."

The SEC alleges that one of the world’s largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events.

According to the SEC’s complaint, filed in U.S. District Court for the Southern District of New York, the marketing materials for the CDO known as ABACUS 2007-AC1 (ABACUS) all represented that the RMBS portfolio underlying the CDO was selected by ACA Management LLC (ACA), a third party with expertise in analyzing credit risk in RMBS. The SEC alleges that undisclosed in the marketing materials and unbeknownst to investors, the Paulson & Co. hedge fund, which was poised to benefit if the RMBS defaulted, played a significant role in selecting which RMBS should make up the portfolio.

The SEC’s complaint alleges that after participating in the…
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Phil's Favorites

Crash Boys

Michael Lewis helps explain the flash crash and how it happened, and Navinder Singh Sarao's role in it, by providing a little Market Manipulation 101 background to the event. 

Crash Boys By  at Bloomberg View

The first question that arises from the Commodity Futures Trading Commission’s case against Navinder Singh Sarao is: Why did it take them five years to bring it?

A guy living with his parents next to London'...



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Zero Hedge

Presenting De-Dollarization In One Simple Map

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Sometimes a picture is indeed worth a thousand words (or a thousand yuan) which is why we present the following map which shows all of the countries that have joined the China-led Asian Infrastructure Investment Bank with no comment other than to say "spot the odd G-7 nations out"...

*  *  *

Bonus chart:

...

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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

King Dollar slipping below support, say Joe Friday

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

King Dollar has been on a role since last summer, up over 20% in less than a year. When looking back on the US$, the rally has been rare and nearly historic. Majority of the rally took place inside the steep rising channel above. Over the past month the US$ might have put in a double top. Over the past few days, the US$ has slipped a little below rising support at red arrow above.

CLICK ON CHART TO ENLARGE

As you can see from the table abo...



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Chart School

S&P 500 Snapshot: A Record Close to End the Week

Courtesy of Doug Short.

The pre-market economic news was the release of the March Durable Goods, which had a strong headline number, but Core Capex posted its seventh consecutive decline and is down 4.0% year-over-year. The S&P 500 vacillated in the opening minutes and then trudged higher to its 0.38% intraday record high. The index then moved sideways most of the afternoon before settling for a 0.23% closing gain -- enough for a new all-time record close.

Today the yield on the 10-year Note closed at 1.93%, down three bps from the previous close but above the 1.87% close last Friday.

Here is a 15-minute chart of the week.

Here is a daily snapshot of SPY ETF, which gives a better sense of investor particiaption...



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Digital Currencies

Why Bitcoin's male domination will be its downfall

Here's an interesting argument by Felix Salmon, although I think he is taking two correct observations and mistakenly attributing a cause-and-effect relationship to them: Bitcoin is going nowhere because women are not involved.

More likely, in my opinion, women are not involved in bitcoin because bitcoin is going nowhere (and they know it). Or maybe, simply, bitcoin is going nowhere and women are not involved. 

Why Bitcoin's male domination will be its downfall 

By Felix Salmon

Nathaniel Popper’s new book, Digital Gold, is as close as you can get to being the definitive account of the history of Bitcoin. As its subtitle proclaims, the book tells the story of the “misfits” (the first generation of hacker-l...



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OpTrader

Swing trading portfolio - week of April 20th, 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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Sabrient

Sector Detector: Earnings and GDP temporarily take investor spotlight off the Fed

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

Courtesy of Sabrient Systems and Gradient Analytics

As we get into the heart of earnings season and anticipate the GDP report for Q1, the investor spotlight has been taken off the Federal Reserve and timing of its first interest rate hike, at least temporarily. Even though Q1 economic growth will undoubtedly look weak, the future remains bright for the U.S economy – even though many multinationals will struggle with top-line growth due to the strong dollar – and any near-term selloff resulting from weak economic or earnings news should be bought yet again in expectation of better results for the balance of the year. High sector correlations remain a concern, reflectin...



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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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Market Shadows

Kimble Charts: South Korea's EWY

Kimble Charts: South Korea's EWY

By Ilene 

Chris Kimble likes the iShares MSCI South Korea Capped (EWY), but only if it breaks out of a pennant pattern. This South Korean equities ETF has underperformed the S&P 500 by 60% since 2011.

You're probably familiar with its largest holding, Samsung Electronics Co Ltd, and at least several other represented companies such as Hyundai Motor Co and Kia Motors Corp.

...



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Mapping The Market

S&P 500 Leverage and Hedges Options - Part 2

Courtesy of Jean-Luc Saillard.

In my last post (Part 1 of this article), I looked at alternative ETFs that could be used as hedges against the corrections that we have seen during that long 2 year bull run. Looking at the results, it seems that for short (less than a month) corrections, a VIX ETF like VXX could actually be a viable candidate to hedge or speculate on the way down. Another alternative ETF was TMF, a long Treasuries ETF which banks on the fact that when markets go down, money tends to pack into treasuries viewed as safe instruments. In some cases, TMF even outperformed the usual hedging instruments like leveraged ETFs. There could of course be other factors at play since some of 2014 corrections were related to geopolitical events which are certain...

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Pharmboy

2015 - Biotech Fever

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

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...



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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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