Archive for 2009

One Reason that the Stock Market is Rising While Unemployment is Soaring

Courtesy of George Washington

Washington’s Blog.

Daniel Gross points out that part of the reason that the American stock markets are going up even though unemployment is rising and the real economy suffering is because multinational corporations headquartered in the U.S. are experiencing strong sales abroad:

Here’s a puzzle: The stock markets are doing very well, yet the performance of the underlying economy doesn’t seem to justify optimism. The buoyant S&P 500 has risen 53 percent since the March bottom. And while the economy expanded at a 3.5 percent rate in the third quarter, unemployment is high, incomes are stagnant, and consumers are shaky…

It could be that the notion the stock market is an accurate gauge of the domestic economy’s temperature is outdated.

The Dow, the S&P 500, and the NASDAQ are primarily indices of large U.S.-based companies, not main street businesses: more Davos than Chamber of Commerce.

These increasingly cosmopolitan firms have been busy globalizing and expanding their operations overseas. In 2006, according to Standard & Poor’s, 238 members of the S&P 500 broke out revenues between U.S. and non-U.S. sales. These companies notched about 43.6 percent of sales outside the United States. For large companies that had already saturated the U.S. market, the home market was something of an afterthought. In the second quarter of 2007, 66 percent of Coca-Cola’s beverage business came from outside North America.

And thanks to the long recession, demand for products and services of all types in the United States has shrunk even since 2006. Yes, the global economy in 2008 experienced its first year of shrinkage since World War II. But growth has resumed, and in some places—Peru, China, India—it never stopped. As a result, the globe’s economic geography has continued to change, with the United States accounting for a smaller chunk of global output and demand each year. For much of the past two years, virtually all growth in economic activity has taken place outside America’s borders. As a result, U.S.-based companies are becoming even more reliant on non-U.S. customers and operations for sales… in two years, big companies’ proportion of sales coming from outside the United States rose 9.8 percent. It’s likely the 2009 figure will be something very close to 50 percent.

Don’t American Workers Win?

The fact that companies based in America are raking in profits from sales…
continue reading





WSJ: Galleon and the Trouble With Insider Trading

WSJ: Galleon and the Trouble With Insider Trading

Courtesy of Andy Kessler

Wsj_logo
It happened almost every earnings season. Our hedge fund would own a million shares in some company and two weeks before it was to report quarterly earnings, its stock would start dropping. There was no news to explain it. We were in the dark, even though it was my job to know. Inevitably, the company would report a disappointing quarter, missing Wall Street’s earnings expectations by a penny or two. Someone knew. A salesman’s brother-in-law heard a few deals didn’t close. Or maybe an insider was singing.

The recent arrest of Galleon Group hedge fund’s Raj Rajaratnam on insider trading charges puts a spotlight on this game. Is trading on industry knowledge widespread? Absolutely. That’s how many hedge funds and mutual funds get an edge. Is insider trading also widespread? Only the Securities and Exchange Committee’s wire-tappers know for sure.

It’s a short walk from running an information network to being an insider.

Stock markets trade on information. Millions of people generate billions of trades every day. Each trade contains a tiny piece of information built into it. ("I think Apple is killing Nokia" or "I think GM is toast.") Eventually we are proved right or wrong, and we make money or we don’t. In the long run, the market is always right. On any given day, your guess is as good as mine.

As long there have been markets, there have been those who have tried to get an edge. Whoever could get the first news from a battlefield, of an oil discovery, or figure out that a company’s earnings were better than anyone expected could reap almost instant profits. Edward Calahan invented the stock ticker (later improved by Thomas Edison and Alfred Vail) just so J.P. Morgan could sit in midtown and get stock quotes from the New York Stock Exchange faster than anyone else. Everyone else had to wait for the Dow Jones Customers’ Afternoon Letter with closing prices.

Now it has come to the point where firms are spending millions and putting wicked fast computer servers next to exchanges so they can have an edge and, through a system of high-speed or "flash" trading, figure out which way individual stocks or the markets are heading before anyone else.

Can individual


continue reading


Tags: , , , ,




SMITHERS: BUBBLES ARE FORMING ALL OVER THE WORLD

SMITHERS: BUBBLES ARE FORMING ALL OVER THE WORLD

Courtesy of The Pragmatic Capitalist

Excellent thoughts here from Andrew Smithers:

 


Tags: ,




Different Kind of Real Estate Crash

Different Kind of Real Estate Crash

Courtesy of Mish

Here are some images Bill Hopen, my sculptor friend sent me regarding a real estate crash in China.

Yes, It’s a 12 story building lying flat on the ground.

(1) An underground garage was being dug on the south side, to a depth of 4.6 meters.
(2) The excavated dirt was being piled up on the north side, to a height of 10 meters.
(3) The building experienced uneven lateral pressure from south and north.
(4) This resulted in a lateral pressure of 3,000 tons, which was greater than what the pilings could tolerate. Thus the building toppled over in the southerly direction.

If the buildings were closer together there would also have been a domino effect.

Note the hollow concrete piers.

Synopsis of Event

Bill Hopen writes:

Mish, this photographic image is so metaphorical, it could only have been more symbolic if a domino effect had occurred. I think of the financial collapse of the families that own these condos and the impact to the bank underpinning the construction loans, then I think of the whole city collapsing without the buildings physically falling over.

All my young in-laws are rushing in to buy condos putting life savings down as well as laying down additional borrowed family cash down and then paying way more to buy each month than it would cost them to rent. It’s as if the boom crash in the west never happened and they believe themselves immune.

For more from Bill Hopen please see Inside China: A Sculptor’s View

Mike "Mish" Shedlock

 


Tags: ,




Late Night Gold Breakout

Courtesy of Tyler Durden

With the dollar preparing for another day of Uncle Ben inspired self-flagellation, gold is already enjoying a flying start at north of $1,100. The complete multiasset melt up appears to be at most days away.

In the meantime, the dollar is back to 12 day lows: so much for that economic improvement. 





CNBC’s Days As GE’s Propganda Puppet Are Almost Over

Courtesy of Tyler Durden

In what may end up being one of the best things for CNBC, if not for many of its anchors, the WSJ reports that the Comcast-GE deal for NBC Universal is practically complete. Next stop for the Englewood Cliffs brigade: 15th and Market. Fear not: the Walt Whitman rush our traffic is much more manageable than that of the George Washington. Also, Smokes has a 3 for 1 special for 40 year old anchorettes who will do anything to adjust the weighted average age of their bodies by 5 to 10 years lower.

After weeks of wrestling, both sides have agreed to value NBC Universal at around $30 billion, people close to the talks said. The agreement includes a mechanism that could reduce the cash Comcast would have to kick in when the deal closes, two of those people said.

The two companies are now ironing out the final details of an agreement, according to the people. An announcement could come as early as the end of this week, the people said.

And lest you thought ratings shopping was over, it is not. Expect some serious S&P and Moody’s cheerleading by CNBC “per the producers” this entire week:

Last Thursday, GE and Comcast met with debt-rating companies to seek their opinions on the approximately $9 billion in debt NBC Universal would take on as part of the combination, said people familiar with the meetings. The parties want NBC Universal’s debt to be investment-grade, the people said. The debt rating is an important element of the deal because NBC Universal would use its borrowing capacity to help buy out the stakes of both GE and Vivendi.

GE and Comcast are hoping for a signal this week on how the ratings firms would regard NBC Universal’s debt, people familiar with the meetings said.

Not surprisingly, Murdoch, after expressing a preliminary interest, is now out of the pciture:

News Corp., which owns The Wall Street Journal, had held preliminary conversations with GE about an alternative deal involving NBC Universal. Those discussions have ended, according to people familiar with the matter, who said the talks never advanced far.

With CNBC’s anchors cracking uneasy jokes about the Comcast’s health plan, yet…
continue reading





Historical Dollar-Carry Perspectives

Courtesy of Tyler Durden

Recently the dollar has become the carry currency of choice for virtually anyone who breathes, let alone manages even one dollar in assets, courtesy of unprecedented Wall Street-Fed complicity. And while there is no longer any speculation about the carry trade’s prevalence, it is interesting to observe how the topic of DXY-SPX -1:1 correlation has developed over the past two years. While digging through the annals of the Internet, we came across this essay by Brad Setser, in which the current Administration think-tanker is proven not exactly correct: “In my view, it will be hard for the dollar to emerge as major funding currency.” Right.

Setzer’s complete thoughts below:

Dollar, funding currency for the global carry trade?

With the Fed now aggressively cutting US interest rates to keep the bursting of a real estate bubble from devastating the US financial system and economy, is the dollar about to turn into the yen- that is, the key funding currency for the global carry trade?

Mark Gongloff of the Wall Street Journal — citing a set of currency traders — posed the question yesterday:

Japan’s yen has been the carry-trade vehicle of choice for years, given the country’s superlow interest rates. The Swiss franc has been another. If the Fed keeps cutting rates, carry-traders might line up to ride the dollar like a birthday pony, with important implications for markets and the economy.

In my view, it will be hard for the dollar to emerge as major funding currency. At least not in the absence of truly unprecedented generosity from the world’s central banks.

Why?

Fundamentally, because the US has a huge external deficit and needs to borrow money from the rest of the world even in a slump, while Japan’s slump added to Japan’s external surplus and thus the supply of funds it could lend to the world.

Funding currencies usually have — in addition to low interest rates – lots of savings, and consequently spare funds to invest globally. That doesn’t sound much like the US.    

The United States own need for funding limits the dollar’s ability to serve as a global funding currency.The US saves far less than it invests, and has to make up the difference by borrowing from the


continue reading





Don’t Panic: Out Damned Spot….

Courtesy of Marla Singer

 





Health Care FARCE Voted Up Last Night

Health Care FARCE Voted Up Last Night

health care reformCourtesy of Karl Denninger at The Market Ticker


continue reading


Tags: ,




The America Burger…Enjoy, Slobs.

The America Burger…Enjoy, Slobs.

america-burger

from NatalieDee.com

Sure, I could write 3 or 4 paragraphs about the decline of dignity and the pervasive slovenliness of my countrymen, exactly when we need all of our faculties to be at their sharpest, but why bother when Natalie Dee so perfectly encapsulates this concept in her America Burger faux advertisement.

As American archetype Homer Simpson would unironically say, “It’s funny ’cause it’s true.”

NatalieDee.com

 


Tags: ,




 
 
 

Zero Hedge

Enemy Of The People?

Courtesy of ZeroHedge. View original post here.

Via The Zman blog,

There has never been a time when normal people did not know the media was biased and biased in a predictable direction. For every non-liberal in the media, there were at least ten liberals. The ratio was probably higher, but then, as now, some lefties liked to pretend they were independents or some third option.

The media used to invest a lot of time denying they had a bias and an agenda, but the only people who believed them were on the Left, which had the odd effect of confirming they had a bias and an agenda.

...



more from Tyler

Phil's Favorites

A 2019 Earnings Recession?

 

A 2019 Earnings Recession?

Courtesy of 

Shout to Leigh!

On the new Talk Your Book – Josh Brown is joined by Leigh Drogen of Estimize, one of the leading providers of crowdsourced financial and economic data to talk about the trend in corporate profits that could potentially lead to an earnings recession later this year.

What is the thing that Leigh is seeing in the data that Wall Street isn’t yet picking up on? What segment of the stock market is most at risk? Why is the crowd smarter than the narrow consensus of Wall Street analysts?

Check out Estimize ...



more from Ilene

ValueWalk

D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...



more from ValueWalk

Kimble Charting Solutions

Gold & Silver Testing Important Breakout Levels!

Courtesy of Chris Kimble.

Gold and Silver from a long-term perspective have created a series of lower highs over the past 8-years. Will 2019 bring a change to this trend? A big test is in play!

Gold since the lows in 2016 has created a series of higher lows, while Silver may have created a double bottom.

Gold & Silver are currently facing break attempts a (1) and (2). These falling resistance lines have disappointed metals bulls for the past few years.

The direction of Gold and Silver weeks and months from now should be highly influenced by what each does as they are attempting to break above important resistance levels.

To become a member of Kimbl...



more from Kimble C.S.

Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ...

http://www.insidercow.com/ more from Insider

Digital Currencies

Russia Prepares To Buy Up To $10 Billion In Bitcoin To Evade US Sanctions

Courtesy of Zero Hedge

While the market has been increasingly focused on the rising headwinds in the global economy in general, and China's economic slowdown in particular, while the media is obsessing over daily revelations that Trump may or may not have colluded with Russia to get elected, a far more critical, if underreported, shift has been taking place over the past year.

As we reported in June, whether due to concerns over draconian western sanctions and asset confiscations following the poisoning of former Russian military officer Sergei Skripal, or simply because it wanted to diversify away from the dollar, Russia liquidated virtually all of its Treasury holdings in the late spri...



more from Bitcoin

Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



more from Chart School

Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's failure based on his personality, which was evident years ago. This article, written in 2017, references a prescient article Bill wrote before Trump became president, in July, 2016, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



more from Our Members

Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

more from Biotech

Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



more from M.T.M.

OpTrader

Swing trading portfolio - week of September 11th, 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 ...



more from OpTrader

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

...

more from Promotions





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...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>