Archive for December, 2009

A Decade’s Worth of Returns

A Decade’s Worth of Returns

Courtesy of Jesse’s Café Américain

From 1 January 2000 to 31 December 2009

Decade's Worth of Returns

 


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The year in U.S. home prices

The year in U.S. home prices

Courtesy of Tim Iacono at The Mess That Greenspan Made

Someone may have already compiled this chart this week after the release of the latest S&P Case-Shiller data on home prices on Tuesday. If so, it hasn’t crossed my computer screen, so it seemed like a good idea to create one here today in order to see how home prices have fared in the 20 metropolitan regions that the Case-Shiller Index follows.

year in u.s. housing

Note that the October data is released in December and the October figures also include the months of August and September, so this is anything but a real year-end result, but since most people aren’t interested in "year in review" type stuff in March, this will have to do.

Don’t be surprised if, around this time next year, the financial media is talking about the strong real estate rebounds in Las Vegas and Phoenix – prices can’t keep falling forever.

 


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The Transition to Risk

The Transition to Risk

Courtesy of Charles Hugh Smith Of Two Minds

high angle view of traffic driving on a freeway in snowfall

The hidden transition to ever-higher systemic risk was the major story of 2009: nothing’s been fixed, and the risks of systemic failure are rising every day.

On this last day of 2009, I want to address what I call the transition to risk.

One analogy is the way that the risks of suffering a fatal heart attack rise in a completely hidden way. The body doesn’t signal the slow accumulation of fatty deposits in arteries; the process is silent. Nor is there any conscious awareness that arteries are hardening. The accretion of risk is slow, steady, invisible--until it’s too late.

Some transitions to risk are highly visible. If you’re driving on winding mountain roads and suddenly enter a thick fog bank which cuts your visibility to a few feet, the risks posed by continuing at high speed skyrocket.

The prudent person slows down or even pulls well off the road; the imprudent person ends up a statistic.

Then there are situations in which risk is building but someone with an asymmetric stake in the game convinces everyone the risk remains low to serve their own needs.

The boat is leaking, the winds are rising, but the skipper’s profits require completion of the passage. So he reassures the nervous passengers that everything is fine, the weather is actually improving, and the ship’s pumps can easily handle the leaks.

In an economy with a mainstream media controlled by a handful of corporations and a government financial policy in the hands of a few secretive manipulators, this "reassurance" comes in the form of blatant propaganda.

Here is an example from today’s "news": (a.k.a. disinformation)

Jobless claims fall unexpectedly as layoffs ease.

The number of jobless workers continuing to claim benefits, meanwhile, dropped by 57,000 to 4.9 million, also better than the increase that analysts expected. This supports the "headline" propaganda: "Jobless claims fall unexpectedly as layoffs ease."

But the propaganda/disinformation masks the reality that it’s actually 10 million people who are receiving benefits, and that number increased by 200,000:

But the so-called continuing claims do not include millions of people that have used up the regular 26 weeks of benefits typically provided by states, and are receiving extended benefits for up to 73 additional weeks, paid for by the federal government.


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Trucking Put Options Drop Despite Slip in Shares at YRC Worldwide

Today’s tickers: YRCW, NOK & MDVN

YRCW – YRC Worldwide – I was a little skeptical yesterday of the extreme pessimism that depicted the predictions from the options market surrounding the fate of trucking giant, YRC Worldwide. Investors stepped up to buy huge amounts of put options at the 50 cent strike price that expire next month. With shares at that time trading at $1.00 the huge premium represents a rather expensive 50% layout on an event far from certain. The event is not necessarily the bankruptcy of the company itself, rather it’s the potential for the investor to make money from the trade. Investors would do well to look back at the actual trading price of stocks that go into bankruptcy. Shares don’t always go to zero and they can stay above 50 cents even upon entering a Chapter 11 filing. While today’s news of a debt-for-equity swap provides a reprieve from a filing now, investors continue to ditch the stock, which is today trading at 82 cents. However, those same put options at the 50 cent strike have fallen heavily to 35 cents offered today because the uncertainty surrounding the outcome is perceived to be lower. In the options world, we call that reading implied volatility. Today it’s fallen massively from 291% to 188% at the 50 cent strike.

NOK – Nokia Corp. ADR – Looks like an investor is either unwinding a implanting a call option spread on Finnish cell phone maker, Nokia, whose shares have traded between $12.85 and $12.97 this morning. It appears that open interest at both of the February $14 and $15 strikes took off yesterday with both reading around 35,000 lots today. Further bullish volume saw investors buy the lower strike calls at 28 cents and sell the higher $15 strike for about 9 cents. The net cost of the spread at 19 cents means that a surge of 15.6% in Nokia’s shares to $15.00 would maximize investors’ gains at 81 cents per contract. Volume today is 18,000 lots at each strike price. Shares have not traded above the $14.19 breakeven point since they slumped on October 14, 2009.

MDVN – Medivation Inc. – Shares of the biopharmaceutical company have risen at a 45 degree angle since October rising from $25 to almost $40 each this week. The company develops drugs for diseases with limited treatments including Alzheimer’s and Huntington’s disease. One…
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Fitting End To 2009 Trading: Big Volume Sell Off

Courtesy of Tyler Durden

It was only fitting that a year marked by irrational and erratic trading, saw a substantial volume selloff in the last 15 minutes of trading after there was absolutely no volume done all day. What sparked it? Only a few momentum chasing quants know, even as the bid seemed dangerously close to getting unglued. Suddenly all the big-cap liquidity provisioning seemed just a tad tenuous. Another way of looking at it: a cheap appetizer of things to come. Is the January 4 rush for the exits entre next?





Goldman’s Ten Questions For 2010

Goldman’s Ten Questions For 2010

Courtesy of Tyler Durden

One of the great paradoxes of life is that the smarter one is, the better one realizes just how little one knows. The same thing is  true with forecasts: one can hypothesize and conjecture, but if one is unlucky, one is screwed: no matter how thought out, error-proof or logical the narrative – it is the unpredictable events that ultimately shape events, not the "priced in" obvious factors. The Heisenberg Uncertainty Principle applies in a perverse fashion not only to the wave-particle duality in the quantum realm, but to the very underpinning of economics: by predicting the future we implicitly change it. The futility of forecasts is well known to all those, who with the exception of a several few, whose very existence is an economy of scale "strange attractor" (think Warren Buffett and Goldman Sachs), have tried to repeat a winning performance, be it based on fundamentals, technicals, or kangaroo entrails. It is also sufficiently useless to the point where we will spare you a Zero Hedge set of observations of what to expect: if you have been reading this blog, you know what we believe is relevant as we enter 2010. How it will all pan out, however, is a totally different story. It is therefore not too ironic, and somewhat fitting, that Goldman Sachs’ chief economists do not leave 2009 with a dogmatic set of forecasts, which, just like every other year would have the success rate of a coin toss, but with 10 key questions addressed exactly one year into the future. Here are Goldman’s 10 Questions for December 31, 2010.

*****

Our forecast for 2010 features sluggish GDP growth, employment gains that are too slow to prevent a further modest increase in the unemployment rate, low (and probably falling) core inflation, and a Federal Reserve that “exits” from some unconventional monetary policies but keeps the funds rate at its current near-zero level.  For the last US Economics Analyst of the year, we try to answer what we think are the 10 most important questions for 2010.

1. Have house prices bottomed?

Probably not yet, but we are quite uncertain.  Although US homes are no longer significantly overvalued, we believe that much of the increase in prices over the past six months has been due to three temporary factors: a) the homebuyer tax…
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A Zero Hedge Premium Preview: The Dionysian Rites of Henry Kissinger’s CIA and the Iranian Revolution of 2010

A Zero Hedge Premium Preview: The Dionysian Rites of Henry Kissinger’s CIA and the Iranian Revolution of 2010

Courtesy of Marla Singer

As you may or may not know, Zero Hedge is in the process of developing a number of premium offerings for 2010.  One of these is "Cf., The Journal of Irreverent Attacks on Conventional Wisdom, Entrenched Dogma and Sacred Cows."  For your reading pleasure, and to act as a preview of premium things to come, we attach Volume I, Issue I entitled "The Dionysian Rites of Henry Kissinger’s CIA and the Iranian Revolution of 2010."

Abstract:

Failing to foresee the Iranian Revolution of 1979 is, rightly or wrongly, often cited as one of the most significant and dramatic of Western intelligence failures. After enduring a superlatively ignominious electoral defeat in the history of the United States (Ronald Reagan defeated Jimmy Carter with 89.7% of votes in the Electoral College in 1980) and in what may have been the record holder for rapidly published post-presidential memoirs up to that point, Jimmy Carter’s 1982 book "Keeping Faith: Memoirs of a President" pointed an accusing finger at the Intelligence Community’s Iranian performance.  His recollections lamented the work of the Central Intelligence Agency in particular, citing an analyst report on Iran from August of 1978 indicating that the country "…is not in a revolutionary or even a pre-revolutionary situation."  By January of 1979 the Shah had fled. As might be imagined, what followed was a full court press, prompted by constant policy-maker pressure as well as the personal intervention of Henry Kissinger, who was badly embarrassed by the failure, to develop an organic revolution early warning system capability within the various appendages of United States intelligence.  We review one such system outlined in the Central Intelligence Agency report "Warnings of Revolution," dated March 1980 and apply the methodology to present-day Iran.  We find generally that the methodology’s results are consistent with a finding of probable revolution (as it is defined in the report) in present-day Iran. Our open source version of this tool with general application to a wide span of national targets is available for public use courtesy of Zero Hedge.

- Marla Singer and Geoffrey Batt

You can read the entire piece here.

Original source material is available here:

http://www.zerohedge.com/sites/default/files/CIA on Revolutionary Indicators.pdf
http://www.zerohedge.com/sites/default/files/CIA on Revolutionary Indicators II.pdf
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On Deck for January 2010: 1060 or 1160 in the SP 500?

On Deck for January 2010: 1060 or 1160 in the SP 500?

Courtesy of Jesse’s Café Américain

Here is a slightly different view of the SP 500 daily chart, showing potential retracement levels if it breaks down.

Try not to get in front of the move. This market is 70% program trading again.

Bonne Heureuse Année mes amis

SP 500 March Futures with Fibonacci Retracements (if there is a serious correction)

Longer Term View of the SP 500

And Then There Is Tech..

VIX: Back to Complacency
As a dog returns to its vomit, so a fool repeats his folly.


 

For last year’s words belong to last year’s language
And next year’s words await another voice.
And to make an end is to make a beginning.

T.S. Eliot, Little Gidding

The banks must be restrained, the financial system reformed, and balance restored to the economy before there can be any sustained recovery.

 





Updating the H1N1 Update

Updating the H1N1 Update

EM of swine influenza (H1N1) virus particles (virions), determined to be the cause of the

Watching and Waiting
Ukraine
Vaccines
Tamiflu Resistance
Dr. Niman vs. WHO, ECDC and CDC

by Ilene with guest expert Dr. Henry Niman at Recombinomics

Watching and Waiting

While the numbers of new cases of swine flu have been declining in many regions, including the United States, it is too early to know whether or not there will be subsequent waves of disease.

"Based on my experience with new diseases and the lessons learned from past pandemics, I think we should remain cautious and observe the evolution of the pandemic over the next six to 12 months before declaring victory," World Health Organization Director General Margaret Chan tells Swiss newspaper Le Temps. (World Health Official Says Swine Flu Still a Threat)

Although the WHO is remaining "cautious," changes in the virus’s genome that increase its virulence and resistance to Tamiflu are becoming more common.  Dr. Henry Niman, expert in flu virus evolution, believes another wave of illnesses will occur in early 2010.  In addition, he believes resistance to Tamiflu will become "fixed," similarly to how this genetic change evolved in the seasonal H1N1 virus.  (See Flu Update: Tamiflu resistance and Ukraine update, and Efficacy of Roche’s Flu Drug Tamiflu In Doubt, by David Phillips.)

WHO: H1N1 swine flu pandemic will stick around for another year

The World Health Organization warned government health authorities to remain vigilant on the H1N1 swine flu pandemic, saying the virus could mutate before vaccines can help it dissipate.

The World Health Organization is confident that the H1N1 swine flu pandemic will be under control in a year’s time – however, WHO officials warned global governments to remain vigilant for any mutations in the troublesome bug.

Dr. Niman believes this wave will be more severe than the previous two--but not due to random mutations. Rather, this will result from the process of recombination. Due to recombination, increasingly greater transmission of aggressive variants (D225G, D225E and D225N) and Tamiflu-resistant viruses will occur.

Ukraine

I’ve reprinted two recent articles at Recombinomics, with my comments in blue.

The WHO Surprise on D225G / D225N H1N1 Fatalities, Recombinomics Commentary

After considering the current available virological, epidemiological and clinical findings and following discussions on an earlier draft with WHO and its European-based


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Where We Are, Where We’re Heading

Where We Are, Where We’re Heading (2010)

Courtesy of Karl Denninger at The Market Ticker

Businessmen Jumping Off a Cliff

Let’s score the 2009 edition first:

  • The economy will NOT recover in 2009:  I’ll take this one, although some would argue I only deserve half (I said 8% unemployment U3, we actually got 10%.) 
  • Deflation, not inflation, will become evident well beyond housing.  Miss.  Valid if you look at energy, but the "well beyond" includes a meaningful subset of the various things people buy.  Nope.
  • Housing prices will continue to decline: Direct hit.
  • The Fed’s attempt to "pump liquidity" will be shown to be an abject failure: 1/2 a point.  Certainly if you look at stock prices, it’s a miss.  If you look at whether credit creation was stabilized and increased, its a horrifying score.  We did get the instability in the dollar, but no bond market crash.  I didn’t specify how, so I can’t take credit for that which I didn’t predict.
  • GDP will post a 12-month negative number, Depression print. Clean miss.
  • The stock market has not bottomed.  1/2 credit.  It had not bottomed but my SPX 500 @ 500 call was not achieved.  The 50% swing, however, got damn close.  Lots of money to be made if you’re quick and good, but an absolute minefield if you’re a long-term investor – spot on.
  • Precious metals will not be a safe haven: Clean miss.  Gold and silver have both performed well.
  • The Dollar will not collapse.  Correct.  It hasn’t.  It ended the year of 2008 at 82, it now trades at 78, down 5% or so. 
  • The pound or Euro – and perhaps both – will be where the FX dislocation initiates if it occurs.  Early, which means wrong.  Clean miss although the last month sure looks bad for the Euro.
  • The US Consumer goes from negative savings to positive:  Direct hit.
  • Commercial Real Estate will effectively collapse: Direct hit although the effect has been well-hidden.  Several Tickers have been written on this, including major banks walking off 50% underwater properties.  I can’t take full credit as the REIT explosion I expected didn’t happen, so I only get half a point.
  • Along with the above, expect 10% of retail stores to close.  I don’t have accurate numbers on this but it sure looks that way.
  • Several states will get in serious financial trouble


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Phil's Favorites

Coronavirus: the blow to the Chinese economy could be felt for years

 

Coronavirus: the blow to the Chinese economy could be felt for years

Courtesy of Chusu He, Coventry University

Investors are still being fairly complacent about the novel coronavirus. After the number of new daily cases suddenly shot up to more than 15,000 on February 12 following more than a week of decline, there were some jitters in the markets. With Chinese authorities saying the increase was due to a decision to broaden the definition for diagnosing people, there were falls in the region of 1% in European markets, and smaller retrenchments in Asia and North America.

It is...



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Biotech & Health

Coronavirus: the blow to the Chinese economy could be felt for years

 

Coronavirus: the blow to the Chinese economy could be felt for years

Courtesy of Chusu He, Coventry University

Investors are still being fairly complacent about the novel coronavirus. After the number of new daily cases suddenly shot up to more than 15,000 on February 12 following more than a week of decline, there were some jitters in the markets. With Chinese authorities saying the increase was due to a decision to broaden the definition for diagnosing people, there were falls in the region of 1% in European markets, and smaller retrenchments in Asia and North America.

It is...



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Zero Hedge

China Adopts 'Cultural Revolution-Style' Social Controls To Crush Outbreak As Death Toll Nears 2,000

Courtesy of ZeroHedge View original post here.

Summary:

  • Taiwan reports 1st coronavirus death
  • Hubei reports 1,933 new cases, 100 deaths
  • Hubei health officials report 1,933 new cases, 100 new deaths
  • Taiwan taxi driver who died from virus carried passengers from mainland, Hong Kong, Macau
  • Singapore reports 3 more cases
  • Total cases aboard 'Diamond Princess' climbs to 355 as US prepares to evacuate citizens
  • Indonesia says 6 passengers from Westerdam cruise ship tested negative
  • There are now at least 68,500 cases worldwide, and at least 1,665 de...


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Members' Corner

How to Stop Bill Barr

 

How to Stop Bill Barr

We must remove this cancer on our democracy.

Courtesy of Greg Olear, at PREVAIL, author of Dirty Rubles: An Introduction to Trump/Russia

...



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The Technical Traders

Is The Technology Sector Setting Up For A Crash? Part I

Courtesy of Technical Traders

One thing that continues to amaze our research team is the total scale and scope of the Capital Shift which is taking place across the globe.  For almost 5+ years, foreign investors have been piling into the US stock market chasing the stronger US dollar and continued advancement of US share prices. It is almost like there is no other place on the planet that will allow investors to pool capital into such a variety of strong assets while protecting against foreign capital risks.  Yet the one big question remains – when will a price reversion event hit the US stock
market?

So many researchers, even our team of researchers, believe we have found the keys to unloc...



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Kimble Charting Solutions

Joe Friday Says Germany (DAX) Could Rally 30%, Happy Valentines Day For The Bulls!

Courtesy of Chris Kimble

German DAX Index “weekly” Chart

The German DAX is one of the more important global stock market indices, as it represents the largest economy / market in the Euro Zone.

So it would be a real treat for the bulls to see this stock market index breakout as we celebrate Valentine’s Day.

The facts, Ma’am. Just the facts; The German DAX looks to have formed a bullish ascending triangle over the past 3 years and it is currently attempting to breakout above the top at (1)....



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Insider Scoop

Nissan Shares Tumble To Decade Low After Q3 Earnings Miss

Courtesy of Benzinga

The shares of Nissan Motor Co. Ltd. (OTC: NSANY) dropped to a decade low on Thursday after the company missed third-quarter earnings estimates and significantly cut its annual forecast for the financial 2019 year.

What Happened

Nissan, on Thursday, reported a net loss o...



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ValueWalk

Russell 2000 Index (RUT) hits an almost one-month high

By Gorilla Trades. Originally published at ValueWalk.

Ad the Russell 2000 Index (INDEXRUSSELL: RUT) hit an almost one-month high today, commenting on today’s trading Gorilla Trades strategist Ken Berman said:

Q4 2019 hedge fund letters, conferences and more

Russell 2000 Index (INDEXRUSSELL: RUT) Outperforms Large-Cap Benchmarks

While the overnight session was nothing short of scary stocks held on to most of yesterday's gains and small-caps even extended their winning streak. The Russell 2000 Index (INDEXRUSSELL: RUT) hit an almost one-month high today, finishing higher for the fourth day in a row while outperforming the large-cap benchmarks, and since the Volatility...



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Chart School

Dow theory warning from the Utilities Index

Courtesy of Read the Ticker

Charles Dow died in 1902, and the investors should thank him for his ever lasting Dow Theory Analysis.

Carrying on this blog theme looking at the Utility stocks. Previous post.
Dow Jones Utility index could trade like the FANGs
Formula for when the Great Stock Market Rally ends



You can learn about Dow Theory here

This post is concerned wi...

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Digital Currencies

Bitcoin Price May Hit $27K All-Time High By Summer, Predicts Fundstrat's Tom Lee

Courtesy of ZeroHedge View original post here.

Authored by William Suberg via CoinTelegraph.com,

Bitcoin is primed for average gains of almost 200% over the next six months, one of its best-known supporters has told mainstream media. 

...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Promotions

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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.

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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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