Archive for 2010

Drinks With the President.

Courtesy of madhedgefundtrader

President Barrack Obama certainly arrives at a party like a rock star. Three silver GM Suburbans flanking an armored black Cadillac limo screech to a halt with lights flashing, and all of the roads in the immediate vicinity closed to traffic. A dozen sunglass bedecked Secret Service agents leap out, immediately scanning the perimeter. The president bounds out and briskly walks to the plush Atherton home, where he enters through the kitchen of former EBay executive and California state controller, Steve Wesley.

For a mere $30,400 donation to the Democratic National Committee, I received a sweaty handshake and an assembly line photo with the once South Chicago community organizer. A Koch brother I am not. The event came on the heels of the President’s 45 minute private audience with the Golden State’s own version of royalty, Apple’s (AAPL) Steve Jobs.

It was all part of a broad swing through the Western states to rally the faithful, and to top off the DNC’s coffers, which has raised a record $50 million in California this year. Perhaps Obama just wants to be among friends. While his national job approval rating languishes at 47%, it is 55% here, and an eye popping 72% among Democrats.

With a short two weeks until the election, the online betting site, Intrade (click here for their site at http://www.intrade.com/ ), is giving an 95% probability that the Republicans will win control of the house. But to me, this is all starting to take on the flavor of a consensus trade that I love to fade. The Democratic Party has become the BP of American politics. Expectations of its imminent demise may be greatly exaggerated, but not for the reasons you expect.

Since the 2008 election, some 4 million “millennials”, “generation Y’s”, or “echo boomers” have gained the right to vote. Have you spoken to your kids lately? The only issues they care about, the environment, global warming, gay rights, and ending the war, are overwhelmingly Democratic ones.

Another 2 million immigrants have also joined the rolls. Thanks to the racist rants by many Tea Party candidates – last week Nevada Senate candidate Sharon Angell said she thought many Mexicans looked like Asians—I would be surprised if any of these voted conservative.

Sure, only 30% of these groups vote at all. But when election results swing on…
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Stock World Weekly

Hello Everyone and Happy Halloween! This weeks’ newsletter is available here.  Feedback much appreciated. 

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Bank of England Head Mervyn King Proposes Eliminating Fractional Reserve Banking

Courtesy of George Washington

Washington’s Blog

Mervyn King – the governor of the Bank of England – has proposed abolishing fractional reserve banking.

As the BBC noted last week:

Mervyn King, the governor of the Bank of England, has tonight made a big intervention into the debate on banking reform. In a speech at Buttonwood, New York, he [listed] much more radical proposals.

 

1. Forcing the riskiest banks to hold capital “several times the magnitude” of requirements at present.
2. The Volcker rule-style enforced breakup of banks into speculative and non-speculative arms.
3. The “Kotlikoff proposal”, which forces banks to match each pool of risks with a requisite amount of capital, preventing losses in one spilling over into another.
4. Stunningly, Mervyn King imagines the “abolition of fractional reserve banking”:

 

“Eliminating fractional reserve banking explicitly recognises that the pretence that risk-free deposits can be supported by risky assets is alchemy. If there is a need for genuinely safe deposits the only way they can be provided, while ensuring costs and benefits are fully aligned, is to insist such deposits do not co-exist with risky assets.”

 

King does not advocate any of these radical plans – but the fact that he goes out of his way to list them, and to place them on the agenda of the UK’s Independent Commission on Banking, means that we are not yet at the end of the debate about long-term reform of the banks.

 

***

 

Beyond the technicalities, the fact that a central banker in a G7 country is prepared to imagine such outcomes is itself significant.

Moreover, King wrote to Ben Dyson and stated:

You suggest that banks should be forced to conform to the underlying purpose of the 1844 Bank Reform Act. You might be aware that I have said publicly that I think ideas in this spirit – such as those advocated by John Kay – certainly merit serious consideration in the debate as to how we reform our financial system. I remain sympathetic to these views. But as I said in my previous letter, I do not want to prejudice the outcome of the Banking commission’s deliberations. Now the Commission has been set up, I think we


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FX Intervention Fright Night?

Courtesy of Tyler Durden

Whoooosh… or just another DXY flash crash? If this was indeed a BoJ intervention, it is the worst money spent by a central bank in the history of Keynesianism, with a half life of less than 30 minutes. Elsewhere, gold is predictably nearing its all time highs.





Did The EUR/USD Just Flash Crash?

Courtesy of derailedcapitalism

From DerailedCapitalism:

 

At 8PM EST tonight the EUR/USD cross sold off 80pips in seconds only to rebound 60pips. Is this another mini flash crash causing ripples through the fx markets with HFT’s going haywire? DXY spiked to 77.30. At what point are market regulators going to realize this gambling house is broken and there is no longer any creditability in capital markets?

EUR/USD

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DXY

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Iran Announces It Has Converted 15% Of Its $100 Billion+ In FX Reserves Into Gold

Courtesy of Tyler Durden

As of today, one of the world’s top oil exporters announced that has exchanged about $15 billion of its FX reserves into gold. Earlier, Iran announced that the country has converted about 15% of its foreign exchange reserves into gold, and “will not need to import the metal for the next ten years.” There is your mystery buyer to all that gold the IMF was selling in Q3… And since Ahmadinejad said that Iran’s total FX reserves exceed $100 billion, the amount of gold in stock held by Iran is more than $15 billion. Which is equivalent more than 345 tonnes at a closing price of about $1350. Which also means that the WGC’s official gold holdings are in dire need of an update, as Iran does not appear anywhere on the IMF’s listing of official gold holders, and with over 345 tonnes, it would make Iran a top 15 holder of the yellow metal.

From Bloomberg:

Iran has changed some 15 percent of its foreign exchange reserves into gold and will not need to import the metal for the next ten years, Mehr reported, citing Central Bank Governor Mahmoud Bahmani.

Iran’s gold reserves have “multiplied several times” in the past two years, Bahmani said in a report published late yesterday by the state-run news agency.

Bahmani gave no specific figures, only saying the country consumes 30 tons of gold a year and that the central bank will have “ample supplies for the next 10 years” even if it doesn’t increase its gold holdings further.

Iranian President Mahmoud Ahmadinejad said yesterday his country’s foreign exchange reserves exceed $100 billion.

 





A Look At Global Economic Events In The Upcoming Most Important Week Of The Year – All Aboard The QE2!

Courtesy of Tyler Durden

Week in review

Intense speculation over what the Fed will do and uncertainty over how much is priced kept markets trading in a relatively tight range through most of the week. European peripheral spreads have started widening again as sovereign concerns have started to re-surface. Reports late Friday afternoon that the Portuguese government has reached an agreement with the socialists on the 2011 budget should provide some relief to markets. Reports that the US Administration is considering extending middle income tax cuts permanently and higher income tax cuts temporarily may also provide some boost to sentiment.

Week Ahead

The macro calendar does not get any more packed than this. We kick off with the usual monthly global PMIs, in particular the China PMI and US ISM (slight moderation is expected for both, more details below). We get our final GLI reading as well, which is important to watch for confirmation of stabilizing momentum. The initial reading showed a positive uptick after four months of negative momentum.

The US mid-term elections is on Tuesday, followed by the all important FOMC meeting on Wednesday. Our US economists’ baseline view is for a program of about $500 bn in Treasury purchases, to be accomplished over a period of about six months, but it is quite possible that a program of similar implied size might instead be specified in terms of a monthly purchase rate. In either case, there should be a clear indication that the program could extend beyond the initial commitment. Ultimately, our US economists expect the cumulative easing to reach a possible $2trn..

We also have important central bank meetings on either side of the FOMC decision, with the latter weighing heavily on the individual response functions. The RBA meets the day before the FOMC and it is likely that they hold rates steady (although our Australia economists think they go ahead with a hike in December). BOE, ECB and BOJ are all scheduled to meet soon after the FOMC. The BoJ meeting was advanced to allow an earlier start of its asset purchases program. For the MPC, our UK economists do not expect an announcement of additional QE. Policymakers around the world will no doubt be closely watching the market reaction following the FOMC decision.

We end the week with the key non-farm payrolls release. We expect the headline at +50k and private sector…
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ZOMBIE HOUSEHOLDS

ZOMBIE HOUSEHOLDS

Courtesy of The Pragmatic Capitalist 

By Annaly Capital Management

Thursday’s third quarter GDP release provides a ton of fodder for the data dorks among us. There will be more to follow on this in the October monthly commentary, but today we’ll look at just one of the stand-out drivers of GDP in Q3: private residential investment. The chart below shows its astounding rebound, which added a full 0.53% to the 3.5% GDP number.

The percentage change becomes less impressive when viewed in the context of the dollar level of activity, but it also starts to look like the beginning stages of a typical recovery in housing. Compare the current reading to the previous bust in the late 1980s and subsequent boom that began in 1991. Are we in store for a similar road back to “normal”?

How comparable are the two situations, the early 1990s and the late 2000s? What happened in 1991 to help put in a bottom? First, mortgage rates came down from over 10% in 1990 to 7% by 1993. Second, household debt as a percentage of GDP was 60% in 1990. The ratio of household liabilities to disposable personal income was 85%. The respective levels of these metrics are now 95% and 130%, each at or very near all-time records of indebtedness. The tailwinds for the housing market were substantial in the early part of the previous decade: interest rates were coming down and borrowers had room to expand their debt loads. The official response during this crisis has been an attempt to artificially engineer the same tailwinds that existed naturally before. The Federal Reserve has purchased around $977 billion of agency MBS in an attempt to bring mortgage rates lower (despite already historically low rates). Tax credits have been created and expanded to incent already heavily-indebted households to take on more debt. So far, it’s worked!

low angle view of two young men and women coming down a buildings steps

We’ll close with a great quote from James Aitken, of Aitken Advisors, that sums up the situation perfectly:

“The primary difference between Japan and the United States at this point of their respective monetary malaises is that whereas Japan created a nation of zombie corporations, the United States is creating a nation of zombie households.”





Super Sectors By John Nyaradi

Courtesy of John Nyaradi

I don’t usually recommend books in a blog post but I make exceptions for exceptional books. John Nyaradi’s book “Super Sectors” just came out and I believe that it is a useful book for anyone wanting to really take advantage of rising industries and sectors. He includes a section in the book containing interviews with top advisers and industry experts (including yours truly) which adds a wealth of information that you won’t find in other books.

Buy the book here, enjoy! www.supersectors.net





Researchers Find the ‘Liberal Gene’

Researchers Find the ‘Liberal Gene’

By Jeremy A. Kaplan, FoxNews.com

Deoxyribonucleic Acid (Dna) Is A Nucleic Acid Usually In The Form Of A Double Helix That Contains The Genetic Instructions Specifying The Biological Development Of All Cellular Forms Of Life And Most Viruses. Dna Is A Long Polymer Of Nucleotides And Encodes The Sequence Of The Amino Acid Residues In Proteins Using The Genetic Code, A Triplet Code Of Nucleotides. Illus Dna Deoxyribonucleic Acid Biotech Research 523-153 Cmsp Custom Medical Stock Photo

Don’t hold liberals responsible for their opinion — they can’t help themselves.

A new study has concluded that ideology is not just a social thing; it’s built into the DNA, borne along by a gene called DRD4. Tagged "the liberal gene," DRD4 is the first specific bit of human DNA that predisposes people to certain political views, the study’s authors claim.

And the key to it all: Liberals are more open, said lead researcher James H. Fowler, a professor of both medical genetics and political science at the University of California, San Diego.

"The way openness is measured, it’s really about receptivity to different lifestyles, for example, or different norms or customs," he told FoxNews.com. "We hypothesize that individuals with a genetic predisposition toward seeking out new experiences [a measure of openness] will tend to be more liberal" — but only if they had a number of friends when growing up, Fowler cautioned.

This isn’t a typical gene association study," he said. "There’s a combination of genes and environment that matter."

Continue here >

Source: Friendships Moderate an Association between a Dopamine Gene Variant and Political Ideology

Jaime E. Settle,Christopher T. Dawes,Nicholas A. Christakis and James H. Fowler (2010).
The Journal of Politics, Volume 72, Issue 04, October 2010 pp 1189-1198
http://journals.cambridge.org/action/displayAbstract?aid=7909320





 
 
 

Zero Hedge

Americans' Economic Hope Has Collapsed

Courtesy of ZeroHedge. View original post here.

Which came first, the confidence or the stock market rally?

One thing is for sure, the crash in stocks in December has crushed the hope of Americans that their economic future is going to be better under President Trump.

Overall confidence dipped to 58.1 - a 4-month low, but, U.S. consumers this month were the most downbeat on the economy since November 2016, a third straight drop after expectations reached a 16-year high just three months earlier, as the partial government shutdown wears on toward a fourth week.

...



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Kimble Charting Solutions

Triple Breakout Test In Play For S&P 500!

Courtesy of Chris Kimble.

Is the rally of late about to run out of steam or is a major breakout about to take place in the S&P 500? What happens at current prices should go a long way in determining this question.

This chart looks at the equal weight S&P 500 ETF (RSP) on a daily basis over the past 15-months.

The rally from the lows on Christmas Eve has RSP testing the top of a newly formed falling channel while testing the underneath side of the 2018 trading range and its falling 50-day moving average at (1).

At this time RPS is facing a triple resistance test. Wil...



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Phil's Favorites

Brexit deal flops, Theresa May survives -- so what happens now?

 

Brexit deal flops, Theresa May survives -- so what happens now?

Courtesy of Victoria Honeyman, University of Leeds

As the clock ticks down to March 29 2019, all of the political manoeuvring, negotiating, arguing and fighting is coming to a peak. In the two and a half years since the 2016 EU referendum, views on both sides have hardened and agreement still seems as far away as it was the day after the referendum.

With Theresa May’s withdrawal agreement disliked by all sides, and voted down by an unprecedented majority in the House of Commons, everyone is wondering what can and should be done next?

...



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Digital Currencies

Crypto-Bubble: Will Bitcoin Bottom In February Or Has It Already?

Courtesy of Michelle Jones via ValueWalk.com

The new year has been relatively good for the price of bitcoin after a spectacular collapse of the cryptocurrency bubble in 2018. It’s up notably since the middle of December and traded around the psychological level of $4,000... so is this a sign that the crypto market is about to recover?

Of course, it depends on who you ask, but one analyst discovered a pattern which might point to a bottom next month.

A year after the cryptocurrency bubble popped

CCN...



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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...



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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

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...



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Members' Corner

Why Trump Can't Learn

 

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

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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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.

...

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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...



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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.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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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.

Market Shadows >>