One of the things I’m increasingly dismayed to learn is that no matter how much detail, data, and qualification I might include in these commentaries, my conclusions will often be summed up by writers or bloggers in a single sentence that often bears no relation to my point. For instance, my view that quantitative easing will trigger a "jump depreciation" in the dollar has evidently placed me among analysts warning of hyperinflation and Treasury default (a club whose card is nowhere in my wallet).
To clarify once again – I emphatically do not anticipate inflationary pressures until the second half of this decade. As I’ve repeatedly emphasized, the primary driver of inflation – historically and across countries – has been growth in government spending for purposes that do not expand the productive capacity of the economy.
Quantitative easing does not pressure the dollar by fueling inflation. It has a much more subtle effect (but one that can be expected to be amplified if fiscal policy is long-run inflationary as it is at present). Normally, equilibrium in capital flows between countries is achieved through changes in interest rates. As a result, countries with greater capital needs or higher long-run inflation tendencies also have higher interest rates. If interest rates can adjust, exchange rates don’t have to. But notice what quantitative easing does: by sitting on long-term bond yields (and creating a negative real interest rate differential versus other countries), quantitative easing prevents bond prices from acting as an adjustment factor, and forces the burden of adjustment on the exchange rate.
While some observers have noted that the value of the Japanese yen did not deteriorate dramatically over the full course of quantitative easing by the Bank of Japan – from its beginning until it was finally wound down
Although the data doesn’t necessarily indicate that a double dip is here (just a slowing of the expansion so far), there is no doubt that mentally, we’re collectively urging it on.
Stocks suck, commodities have all been schmeissed (even gold last week), housing is going through another leg down (yanking the $8,000 tax credit sure didn’t help), the bond market is screaming (under 3% yield on the ten year!) and everyone is getting themselves liquid again.
While I understand that it’s only natural, at least historically, for the expansion to cool off from the initial rip-roaring pace, it is impossible to ignore how pathetically quickly we’ve lost what little momentum our trillions of dollars have gotten us.
Zero percent interest rates forever, tax credits for cars and homes, infrastructure spending, stimulus after stimulus – and it’s starting to feel like we fired a cap gun at a charging elephant.
Here’s some reading on the latest in Double Dip-ology. Hopefully they’re wrong, but the stock market doesn’t seem to think they are…
Mark Cuban once remarked something to the effect of "stocks that don’t pay dividends are like baseball cards – only worth what you could convince the next guy to pay for them."
Floyd Norris looks at some statistics on dividend declarations last year:
Will stock investors who like receiving quarterly dividends have better news this year? S&P thinks yes, according to the article:
“The fourth quarter was in no way a good period for dividends, but compared to recent history it marks a significant improvement, and when added to the stabilization in increases, supports our belief that the worst is over for dividends,” said Howard Silverblatt, the senior index analyst at S.& P.
“Standard & Poor’s believes that the dividend recovery will be slow, and that it will take until 2012 to 2013 to return to where we were in 2007 and 2008,” he added.
The dearth of positive dividend news becomes even more vexxing in the context of our zero interest rate environment so let’s hope the rebound in payout increases happens.
Back in February (see post) numerous equity investors refused to believe that a crude oil recovery is likely to be unsustainable. Many viewed this as a buying opportunity - just as they did in 2011 when such "bottom fishing" strategy worked. "Look at the declines in oil rigs" many argued - US crude production is about to dive. Even some in the energy business were convinced that crude oil recovery is coming and we will be back at $70/bbl in no time. It was wishful thinking.
By Money Metals Exchange. Originally published at ValueWalk.
Mining Companies, Regulators Deathly Silent After Midnight Raid On Gold Prices by Mike Gleason is a Director with Money Metals Exchange
With gold and silver on the defensive following a dramatic midnight raid on gold prices last week, Mike Gleason reached out to Chris Powell, Secretary Treasurer at the Gold Anti-Trust Action Committee, also known as GATA to discuss possible gold price manipulation.
Mike Gleason: Several days ago, we had another attack on the gold market – right as it was holding above a critical price support zone. Someone sold several billions of dollars in gold futures contracts during the wee hours of the night immediately b...
ATHENS (Reuters) - Greece's stock market will reopen on Monday after a five-week shutdown caused by capital controls, but local investors will face restrictions aimed at stemming capital flight, a bourse spokeswoman said on Friday.
The Athens Stock Exchange (ASE) (.ATG) (EXCr.AT) has been shut since June 29, when the government closed banks and imposed strict limits on withdrawals and foreign transfers to avert a run on deposits.
The Finance Ministry cleared the way for the exchange to resume operations by issuing a decree setting out new trading rules for local investors. There will be no restrictions on foreign investors.
MagneGas Corporation (NASDAQ: MNGA) this week completed metal cutting demonstrations with over 40 representatives from the Fossil Fuel division of a major northeast Utility. The Company believes the demonstrations were successful as they have received multiple requests for fuel as a result of those meetings.
The Utility is one of the ten largest in the United States with over $35 billion in assets and large volume use of acetylene. Multiple company officials and representatives from the Fossil Fuel Division of the Utility were in attendance. This particular division is the largest user of acetylene and propane at the Company. The test used MagneGas® to cut 2 inch steel plates and resulted in very little pre-heat time with clean cuts. Officials have indicated an int...
Tech indices finished strong after they overcame the opening half hour of selling. The Fed statement was greeted favorably, although market breadth is not looking pretty. The Nasdaq still has a distance to travel to make back all of its losses, but has done well to hold up against Semiconductor weakness.
The Semiconductor Index is struggling to make inroads against past losses as the Nasdaq and Nasdaq 100 push respectable gains. I find it hard to see how this scenario can continue, ...
In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enhanced version using top-ranked stocks from the top-ranked sectors.
Corporate earnings reports have been mixed at best, interspersed with the occasional spectacular report -- primarily from mega-caps like Google (GOOGL), Facebook (FB), or Amazon (AMZN). Some of the bul...
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 and Ilene are available to chat with Members, comments are found below each post.
Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).
Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself.
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...
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 firstname.lastname@example.org 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.
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 PSW Investments, 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.
Site owned and operated by PSW Investments, LLC. Contact us at: 403 Central Avenue, Hawthorne, NJ 07506. Phone: (201) 743-8009. Email: email@example.com.