Archive for 2009

Greece risks financial Armageddon while Ireland makes cuts

Greece risks financial Armageddon while Ireland makes cuts

Courtesy of Edward Harrison at Credit Writedowns

Pastel coloured shops

The Irish government announced draconian spending cuts of 6 billion Euros in order to stave off a debt crisis in the worst modern-day downturn in the nation’s history.  Even so, Irish government bond yields have been rising relative to German government bond yields, the benchmark for the Eurozone.  Over the past five years the spread had averaged about 40bps. Now it is 170bps. But, the Irish seem to be making the necessary cuts forced on them by lower tax receipts and currency union.

The Greek government, on the other hand, is not taking the same tack. Witness comments by the country’s Premier as reported in the Telegraph by Ambrose Evans-Pritchard:

Salaried workers will not pay for this situation: we will not proceed with wage freezes or cuts. We did not come to power to tear down the social state.

Nice sentiment. But what does that mean in practice?  I see this as asking for trouble.  The only way to interpret this statement is as a vow not to take the same draconian up to ten percent pay cut measures the Irish are now taking – ones that are likely to lead to strikes and social unrest. But, the reality is the Greeks have no other choice.  Either make the cuts or face national bankruptcy. It’s as simple as that.

To be clear, these cuts will mean depression in Greece as similar measures in Latvia have done. Evans-Pritchard says:

Mr Papandreou has good reason to throw the gauntlet at Europe’s feet. Greece is being told to adopt an IMF-style austerity package, without the devaluation so central to IMF plans. The prescription is ruinous and patently self-defeating. Public debt is already 113pc of GDP. The Commission says it will reach 125pc by late 2010. It may top 140pc by 2012.

If Greece were to impose the draconian pay cuts under way in Ireland (5pc for lower state workers, rising to 20pc for bosses), it would deepen depression and cause tax revenues to collapse further. It is already too late for such crude policies. Greece is past the tipping point of a compound debt spiral.

Indeed, as I indicated in a recent post, market participants are talking openly of a …
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2009 REVIEW & 2010 PREVIEW

2009 REVIEW & 2010 PREVIEW

Man in car holding road map, smiling, portrait, close-up

Courtesy of The Pragmatic Capitalist

The following is the excellent 2009 review and 2010 preview by PFG Best:

As we approach year-end, I thought it would be helpful to share a quick recap of 2009 and an outlook for 2010.  Feel free to call or email me with any questions: Eaven Horter (ehorter@pfgbest.com).

It’s my belief the main market drivers of 2009 were interest rates and risk aversion.  Let’s first begin with the Federal Funds rate.  The last elongated period of sub-2% interest rates lasted 3 years – from December 2001 to November 2004.  This time period was post-9/11, when our country rebuilt itself in many ways, where low interest rates led to several “asset bubbles” that did indeed end up popping – easy credit and real estate made for a dangerous duo.  We are currently just over a year with the Federal Funds rate under 2%, which dropped below the 2% level in October 2008.  The current rate was set just a year ago – a historical low of 0% to 0.25%.  However, the US economy and global economies are MUCH worse off now then post-9/11.  With this in mind, an easy case can be made that Bernanke’s continued message of an “extended period” of low interest rates is truly not just rhetoric.

An interesting consideration for this current recession and interest rate scenario is how much more interconnected the world economies are now versus earlier in this decade.  What were emerging economies eight years ago are now developing nations, which makes for less of a reliance on larger countries, such as the United States.  An example of this is how the world has moved from a G7/G8 focus to a G20 circle, bringing important players into the global economic decision making process.  With this interconnectedness, especially in relation to the United States, we saw a focus on commentary and policy from Foreign Central Banks and the large effects these had on global markets – just look to interest rate increases in Australia and how that affected the value of the USD and the AUD.

Luckily, some of us have learned from our histories and we’ve now begun to see lawmakers take proactive measures in respect to asset bubbles.  An example would be the


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BULL VS. BEAR: THE 2010 OUTLOOK

BULL VS. BEAR: THE 2010 OUTLOOK

Courtesy of The Pragmatic Capitalist

A few different perspectives from highly respected traders for 2010.  This week we have Todd Harrison vs. Jeff Saut and John Markman:

The bulls:

The bear:

 





Hmmm…. Dubai (Again) – More?

Hmmm…. Dubai (Again) – More?

Courtesy of Karl Denninger at The Market Ticker


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Italian Prime Minister Berlusconi Attacked At Rally In Milan, Condemned As “Act Of Terrorism”

Courtesy of Tyler Durden

Populist anger is starting to awake all over the world, as the G-20′s actions continue favoring only the "aristocratic" banker class. We hope Berlusconi’s mistresses will still find him just as attractive even with a black eye, bleeding lips and busted teeth.

 





Jon Stewart on Glenn Beck’s Gold Interest

Jon Stewart on Glenn Beck’s Gold Interest

H/t to Barry Ritholtz

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
Beck – Not So Mellow Gold
www.thedailyshow.com
Daily Show
Full Episodes
Political Humor Health Care Crisis

 


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Finreg I: Bank capital and original sin

This is a very thoughtful article on the banks, the financial system, government and regulation. I share Steve’s feeling of bleakness, maybe more so, because while Steve suggests workable solutions are possible, it seems to me that given the political money system controlling government, real, long-lasting solutions are unlikely. (My yellow highlights.) - Ilene

Finreg I: Bank capital and original sin

God warning Adam and Eve

Courtesy of Steve Randy Waldman at Interfluidity

I have always flattered myself that I would someday die either in prison or with a rope around my neck. So I was excited when The Epicurean Dealmaker invited me to write about financial regulation and crosspost at a site called The New Decembrists. But my views on the topic have grown both more vehement and more distant from the terms of the current debate (such as it is), and I’m having a hard time expressing myself. So I’ll ask readers’ indulgence, go slowly, and start from the beginning. This will be the first long post of a series.


Banks are not financial intermediaries. Their role is not, as the storybooks pretend, to serve as a nexus between savers with capital and entrepreneurs in need of capital for economically valuable projects. Savers do transfer funds to banks, and banks do transfer funds to borrowers. But transfers of funds are related to the provision of capital like nightfall is related to lovemaking. Passion and moonlight are often found together, yes, and there are reasons for that. But the two are very distinct phenomena. They are connected more by coincidence than essence.

The essence of capital provision is bearing economic risk. The flow of funds is like the flow of urine: important, even essential, as one learns when the prostate malfunctions. But “liquidity”, as they say, takes care of itself when the body is healthy. In financial arrangements, whenever capital is amply provided — whenever there is a party clearly both willing and able to bear the risks of an enterprise — there is no trouble getting cash from people who can be certain of its repayment. Always when people claim there is a dearth of “liquidity”, they are really pointing to an absence of capital and expressing disagreement with potential funders about the risks of a venture. Before the Fed swooped in to provide, 2007-vintage CDOs were “illiquid” because…
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Americans More Pessimistic On Economy, Nation’s Direction

Americans More Pessimistic On Economy, Nation’s Direction

Thumbs Down Gesture

Courtesy of Mish

 

A Bloomberg survey shows Americans Grow More Pessimistic on Economy, Nation’s Direction.

Americans have grown gloomier about both the economy and the nation’s direction over the past three months even as the U.S. shows signs of moving from recession to recovery.

Almost half the people now feel less financially secure than when President Barack Obama took office in January, a Bloomberg National Poll shows.

Those concerns have put consumers in a miserly mood as they head to the mall for holiday shopping, with half the country planning to spend less on gifts than last year and few buyers willing to run up credit-card debt for Christmas.

The mood among members of Obama’s own Democratic Party has shifted most dramatically: While Democrats remain the most positive, the proportion saying the country is on the right track dropped to 58 percent from 71 percent in September. Among independents, 26 percent say the country is on the right track, down from 29 percent in September.

“The recession may be over, but the administration seems to be losing the battle when it comes to winning the hearts and minds of Americans,” says Chris Rupkey, chief financial economist for Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “This is important because the spending of consumers is the main factor that will turn the economic recovery into a self- sustaining one.”

Poll Highlights 

  • Only 31 percent expect the economy to improve in six months
  • 81 percent say persistently high unemployment is a major threat
  • 60 percent say stimulus plans have no effect or actually hurt the economy
  • Only 26 percent feel more secure now than when Obama took office
  • Only 33 percent view Bernanke as favorable
  • Only 8 percent plan on spending more for the holidays, while 47 percent plan on spending less.

Click here to see the Bloomberg National Poll questions, answers, and methodology.

Mike "Mish" Shedlock


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Wrap-Up – Too Bearish or Just too Early?

Well, we've been here before.

Once again the market has staged a spectacular recovery on virtually no volume and mixed news.  While we went into last weekend just a little bit bearish (about 55%), this Friday the market topped out about 150 points higher than last Friday, closer to the top of our range so we went much more bearish on Friday, perhaps too bearish considering this was the best Friday finish since Nov 6th and we haven't had a down Monday since October 26th.

Our plays this week turned very bearish to balance out the more bullish set we took in the first week of the month (see last week's Wrap-Up).  Almost all of our bullish trade ideas have already made 20% and some are way over our goals as we were able to cash out a lot more winning bullish plays and press our bearish plays, turning the $100K Virtual Portfolio extremely bearish and twice as invested as last week.  Big winners from the last wrap-up included:

  • DIA $104 puts sold at $2.25, now $.55 – up 75%
  • DIA $103 puts sold at $1.65, now .30 – up 81% 
  • SONC Jan $10 puts sold for .85, now .55 – up 35%
  • DIA $104 puts sold at $2.55, now $55 – up 78%
  • BAX artificial buy/write (too complicated to summarize) – over goal already!
  • AMZN Dec $150 calls sold at $4, now .10 – up 98%
  • USO Dec $39 puts at .82, now $3.50 – up 326%
  • FXP Dec $8 puts sold for .70, up 64%
  • OIH Dec $120 calls sold at $3.25, now .27 – up 92%
  • AMZN Jan $140/135 bear put spread at $2, now $3.60 – up 80%
  • IWM $60 puts sold for $1.30, now .72 – up 44%
  • NSH June buy/write at $18/20.25, now $25.86 – ahead of goal  
  • AMZN Dec $145 puts sold at $5 (average), now .25  – up 85%
  • AMZN Dec $150 calls sold at $3, now .10 – up 96%
  • TBT June $42/26 bull call spread at $1.80, now $2.60 – up 44%
  • TBT June $42 puts sold for $2.15, now $1.30 – up 40% (pair trade)
  • SRS Dec $8


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On the Value in Housing

On the Value in Housing

Glazier and paper hanger

Courtesy of Jake at Econompic Data  

Felix Salmon recently made the case in his post Against Liquidity:

Investing shouldn’t be about safety: it should be about calculated risk.

and…

Liquidity is not ever and always a good thing.

And I completely agree. But both of those points seem to be in conflict with a more recent post of his The Housing Speculators Return. I don’t always agree with Felix Salmon, but I typically understand his thought process. That is not necessarily the case in this post. Per Felix:

It bears repeating: homes aren’t investments, they’re places to live. If you can buy a nice house for less than you’d otherwise pay in rent, then go ahead and buy — no matter what the market looks like, or where mortgage rates are. On the other hand, if you’re looking for an “investment”, stick to securities. You can sell those much more easily when you need some money, and they won’t drive you into possible bankruptcy and homelessness if they go down rather than up.

Let me go through my grievances with that one paragraph, then I’ll detail my personal thoughts on housing more broadly.

Homes Are "Only" Places to Live

In addition to living in a home, a house can serve as a long term investment that produces income (i.e. he makes just that point with his alternative to owning… RENTING, which is just paying another homeowner for the right to live in that home).

Rent Must Be More than a Mortgage Payment to Justify Owning

This ignores the fact that rents (typically) rise, while a fixed rate mortgage payment doesn’t. BLS data shows that the cost of renting typically rises by the rate of inflation over the long run.

Thus, if you plan to live in that home for a long period of time (there were previous generations who bought to live in home the rest of one’s life), then as long as rent moves higher than a mortgage at some point in time, you may be better off (not to mention the tax benefits of writing off interest). That includes after 30 years when a homeowner no longer has a mortgage, but renters…
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Zero Hedge

Auto Shares Surge As Fiat, Renault Confirm Merger Talks

Courtesy of ZeroHedge. View original post here.

With President Trump in Japan for a state visit and most of Europe headed to the polls to vote in the quinquennial EU Parliamentary elections, there was enough news to keep market watchers occupied during what was supposed to be a quiet holiday weekend in the US. 

But on top of these political headlines, on Saturday afternoon, the news broke that Italian-American carmaker Fiat Chrysler had approached France's Renault with a merger proposal that would leave the shareholders of each carmaker with half of the combined company, in a tie-up that would create the world's third-largest au...



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Phil's Favorites

Trump and the problem with pardons

 

Trump and the problem with pardons

Courtesy of Andrew Bell, Indiana University

As a veteran, I was astonished by the recent news that President Trump may be considering pardons for U.S. military members accused or convicted of war crimes. But as a scholar who studies the U.S. military and combat ethics, I understand even more clearly the harmful long-term impact such pardons can have on the military.

My researc...



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Insider Scoop

Jefferies Sees 60-Percent Upside In Aphria Shares, Says Buy The Dip

Courtesy of Benzinga.

After a red-hot start to 2019, Canadian cannabis producer Aphria Inc (NYSE: APHA) has run out of steam, tumbling more than 31 percent in the past three months.

Despite the recent weakness, one Wall Street analyst said Friday that the stock has 30-percent upside potential. 

The Analyst

Jefferies analyst ...



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Kimble Charting Solutions

DAX (Germany) About To Send A Bearish Message To The S&P 500?

Courtesy of Chris Kimble.

Is the DAX index from Germany about to send a bearish message to stocks in Europe and the States? Sure could!

This chart looks at the DAX over the past 9-years. It’s spent the majority of the past 8-years inside of rising channel (1), creating a series of higher lows and higher highs.

It looks to have created a “Double Top” as it was kissing the underside of the rising channel last year at (2).

After creating the potential double top, the DAX index has continued to create a series of lower highs, while experiencing a bearish divergence with the S...



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Chart School

Brexit Joke - Cant be serious all the time

Courtesy of Read the Ticker.

Alistair Williams comedian nails it, thank god for good humour! Prime Minister May the negotiator. Not!


Alistair Williams Comedian youtube

This is a classic! ha!







Fundamentals are important, and so is market timing, here at readtheticker.com we believe a combination of Gann Angles, ...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



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Biotech

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

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

 

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University

...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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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 ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

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

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

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

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

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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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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.

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