Archive for 2011

Secrets of Elite Funds – Brief Intro

Courtesy of Leo Kolivakis

Via Pension Pulse.

What a beautiful day it was in Montreal. Absolutely perfect weather to celebrate Mother’s Day. I wish all the moms out there a Happy Mother’s Day, especially my mother who I love a lot. the only problem is that I was out all day enjoying this weather and I’m tired as I hit the gym early today.

Before I delve into this topic, please go back to read my comment on the value of losing money. If you’ve never felt the exhilaration of making money and more importantly, the pain of losing money in the markets, then you are not ready to manage money, especially not your own money. Most people shouldn’t be managing their money which is why I wrote a comment on the big secret stating that most investors are better off investing in some small cap value ETF and rebalancing their stock/bond portfolio at least once a year or as needed.

But I’m reminded of the wise words of Paul Samuelson, who once remarked that if everyone adopts Burton Malkiel’s “random walk” approach and invests in ETFs, even small cap value ETFs, then the collective actions of many will influence future returns. I mention this because legendary fund manager Jeremy Grantham, chairman of fund shop GMO and one of the few people who successfully called the 2008 crash in advance, is warning investors that small cap stocks are overvalued:

His firm’s latest calculations predict that investors in U.S. small-cap stocks will actually lose about a fifth of their money in real terms over the next seven or so years. That’s an annualized loss of about 2.8% after inflation.

 

As always when it comes to predictions, there are no guarantees. But GMO’s forecasts have a good track record.

The article cites many reasons as to why small cap stocks are overvalued, including QE2 and the fact that investors believe small caps outperform over the long-run (with greater volatility), but let me tell you the real reason why small caps are rising so much. Go back to read my comment on whether hedge funds have grown too big. With so much money being shoveled to hedge funds, it’s not surprising to see small cap stocks rally so strongly.

Why is that? For one, a large percentage…
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World’s Largest Commodity Hedge Fund And Andrew Hall Taken To Cleaners On Last Week’s Energy Plunge

Courtesy of Tyler Durden

And once again we get a reminder why the word “hedge” fund is such a misnomer. The FT reports the Clive Capital, the “world’s largest commodity hedge fund” as defined by the FT (although we are more than confident various other and much largest “energy-heavy” funds would be much more appropriate for this moniker) lost $400 million out of its (paltry) $5 billion in total AUM during last week’s coordinated energy take down, initiated by the forced margin intervention in precious metals. Clive “is the biggest of several big hedge funds believed to be reeling after the unexpected sell-off hit markets late last week.” Clive is not alone: “Others, including Astenbeck Capital, the Phibro-owned fund run by Andrew Hall, are thought to have taken double-digit percentage point losses to their portfolios, according to investors.” The FT’s take: “The scale of the losses demonstrates that even the savviest investors in commodities were wrongfooted by the correction, one of the sharpest one-day falls on record.” Our is slightly different: when a trade has enough momentum, and has been working long enough, even the quote unquote “savviest investors” become a momo chasing herd, with nobody hedging, and a massive drop in prices always likely to be the deathknell for some previously vaunted investor, whose only claim to fame was being lucky enough once to be at the right time and the right place, and to put a huge levered bet that worked out. And praying that he or she can recreate those conditions.

More from the FT:

In a letter sent to investors on Friday and seen by the Financial Times, Clive said it was down 8.9 per cent on the week after what it called “extraordinary” price movements on Thursday. Clive’s management said it was at a loss to explain what had caused crude oil markets to be “annihilated”.

“The move in Brent represented about a 5 standard deviation move, while WTI was a 4 standard deviation move,” Clive said in its letter. A five standard deviation daily move is a exceptionally rare event.

“Economic data was soft early in the week though micro news for oil continued to be bullish. Indeed there was news out earlier in the week of further supply disruptions in Yemen and a substantial technical supply outage in the UAE,” the fund


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BOJ Warns Monetization May Lead To Severe Inflation, Rise In Long-Term Interest Rates; Yet Will Buy ¥350 Billion In Bonds

Courtesy of Tyler Durden

It appears not only Bill Gross is insane enough to realize that direct monetization = inevitable interest rate hike. Slowly, even the central banks are starting to gravitate toward this conclusion.  From The just released minutes by the BOJ: “One member — referring to some recent views that the Bank should underwrite JGBs to fund restoration and rebuilding — expressed the opinion that such an action might initially seem to work well, but lessons drawn from history showed that it would eventually result in severe inflation and thereby inflict substantial damage on people’s living situation. This member continued that the Bank needed to keep working to gain the wider public’s understanding on this point. In relation to this, a few members expressed the view that, if confidence in the currency were impaired due to underwriting of JGBs by the Bank as the central bank, this might lead to a rise in long-term interest rates or instability in financial markets, and hamper the smooth issuance of JGBs.” Something tells us this “member” was not Bernanke (aside from the obvious reason that Benny is a gaijin). And where else, we wonder, have we seen this: an initial boost which fades away, leaving just concerns about runaway inflation. Is it possible that the dissident BOJ member can come to one or more FOMC meetings and actually give our clowns a first person perspective of how this whole “deflation battle” goes down 30 years in.

Other comments from the minutes:

Regarding U.S. and European financial markets, stock prices in major economies fell temporarily and long-term interest rates came under downward pressure, as investors’ risk aversion had heightened due to increased tension over the situation in North Africa and the Middle East and to the disaster in Japan.

On crude and supply/demand mechanics:

As for international commodity prices, while prices of nonferrous metals and grain had shown some signs of adjustments, crude oil prices had climbed due to growing demand from emerging economies, accommodative financial conditions around the world, and uncertainty about the situation in North Africa and the Middle East.

On Japan’s view of the US:

Private consumption had been firm mainly due to the effects of the fiscal stimulus measures; nevertheless, balance-sheet adjustments continued


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Greeks Stay In

Courtesy of Bruce Krasting

The Der Spiegel article on Friday kicked up a stir. The magazine reported that the possibility of Greece abandoning the peg to the Euro was being seriously considered. Over the weekend we find that there is little truth to the Spiegel claim.

J.C. Juncker (EU finance minister) had this to say:

“We’re not discussing the exit of Greece from the euro area. This is a stupid idea — no way.

The Greek finance minister, Papaconstantinou chimed in with:

Public debt would double, consumer spending power would be “shattered” and the country would sink into a “war-like recession,”

Okay, so no exit for Greece. Panic over for the time being. The conclusion is that once one joins Club Euro you can’t quit. Ever. Ever? That seems like a long time.

There would be a lot of pain for Greeks if the country decides to step outside the fixed peg of the Euro. Debt would soar in value as the old Drachma is introduced. Social payments that now are denominated in Euros would also cost the state much more. As a result all Euro denominated fixed liabilities by the state or the private sector would have to be restructured. That would entail big losses for many EU banks. It would also crunch the local Greek banks and many of the Greek citizens who hold the bonds.

But hold on a second. Aren’t all those bad things happening already? The holders of Greek debt are looking at TV screens and everyday they are reminded that their assets are trading at 50-60 cents on the dollar. The Greek economy is in the dumpster. It has been for years and it’s not going anywhere as long as this crisis lasts. Greek citizens are seeing round after round of cutbacks, but no progress is being made.

Were it not for the ECB providing short-term support, Greece would have gone belly up a long time ago. The folks in Brussels know that the support necessary to keep Greece afloat will have to be in place for at least another decade. The cost to the big countries in the EU is going to be a non-stop political headache for years to come. There is absolutely no possibility that the Greek economy can grow and…
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Full Barack Obama “60 Minutes” Interview And Complete Transcript

Courtesy of Tyler Durden

On Wednesday, May 4, 2011 – three days after he announced that American troops had killed Osama bin Laden in Pakistan – President Barack Obama talked with “60 Minutes” correspondent Steve Kroft in the Roosevelt Room of the White House. Below is a transcript of that interview, as well as the full interview.

STEVE KROFT: Mr. President, was this the most satisfying week of your Presidency?

PRESIDENT BARACK OBAMA: Well, it was certainly one of the most satisfying weeks not only for my Presidency, but I think for the United States since I’ve been President. Obviously bin Laden had been not only a symbol of terrorism, but a mass murderer who’s had eluded justice for so long, and so many families who have been affected I think had given up hope.

And for us to be able to definitively say, “We got the man who caused thousands of deaths here in the United States and who had been the rallying point for a violent extremist jihad around the world” was something that I think all of us were profoundly grateful to be a part of.

KROFT: Was the decision to launch this attack the most difficult decision that you’ve made as Commander-In-Chief?

PRESIDENT OBAMA: Certainly one. You know, every time I send young men and women into a war theatre, that’s a tough decision. And, you know, whenever you go to Walter Reed [Army Medical Center] or Bethesda [Naval Hospital] and you see the price that our young people pay to keep this country safe, that’s a tough decision. Whenever you write a letter to a family who’s lost a loved one. It’s sobering.

This was a very difficult decision, in part because the evidence that we had was not absolutely conclusive. This was circumstantial evidence that he was gonna be there. Obviously it entailed enormous risk to the guys that I sent in there. But ultimately I had so much confidence in the capacity of our guys to carry out the mission that I felt that the risks were outweighed by the potential benefit of us finally getting our man.

KROFT: When the CIA first brought this information to you . . .

PRESIDENT OBAMA: Right.

KROFT: What was your reaction? Was there a sense of excitement? Did this look promising from the very beginning?

PRESIDENT OBAMA: It did look promising…
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Morgan Stanley Follows Goldman, Downgrades Economy

Courtesy of Tyler Durden

And like clockwork, the expect avalanche of economic downgrades greenlighted by Jan Hatzius begins. Heading up the lemming crew, as always, is Morgan Stanley’s David Greenlaw. “We are adjusting our GDP growth forecast lower for the third time this year. We now look for +3.3% GDP growth over the four quarters of 2011 (versus +3.6% in our April update). Essentially, this puts us back to where we were in early December – before policymakers enacted a package of tax cuts aimed at stimulating the economy.” In other news David, how do you spell roundtrip (and is a refund due)? Or “hockeystick?” Or how about an imminent push for more QEasing once the inflationary “shock” is forgotten (unless Saudi Arabia falls to the tsunami of “spooks on the ground” in which case all bets are off), just in case the virtuous cycle doesn’t quite kick in, in this 3rd, and soon to be failed, attempt to jump start the economy. In other news, we can’t wait to hear what validation LaVorgna, who is always at the very end of the lemming bus, comes up with to justify his feverish enthusiasm over the economy, which once again proves to be worth the amount of money DB’s customers pay the firm’s sales coverage to bet against them.

Full note from Morgan Stanley:

Another downgrade to US growth. We are adjusting our GDP growth forecast lower for the third time this year. We now look for +3.3% GDP growth over the four quarters of 2011 (versus +3.6% in our April update). Essentially, this puts us back to where we were in early December – before policymakers enacted a package of tax cuts aimed at stimulating the economy.

The logic behind this round trip in the forecast is fairly straightforward. The payroll tax cut enacted in December was worth a little more than $100 billion of stimulus for 2011. However, gasoline prices started off the year at $3/gallon and now stand at about $4/gallon. A good rule of thumb is that every $1/gallon change in gasoline prices subtracts about $120 billion from discretionary spending power. Since the elevation in gasoline has been largely exogenous (unrelated to internal demand forces) and since the personal savings rate is expected to be relatively steady, the move in gasoline just about fully offsets the impact


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Jean-Claude Juncker, Luxembourg PM and Head Euro-Zone Finance Minister says “When it becomes serious, you have to lie”

Courtesy of Mish

Earlier today in EU Seeks Collateral for More Greek Aid; Trichet Reiterates Restructuring "Not on the Agenda", Market Reiterates "Trichet is a Pompous Fool" I Called ECB President Jean-Claude Trichet and Luxembourg Prime Minister Jean-Claude Junker, a pair of arrogant, pompous fools.

I failed to mention that Jean-Claude Junker readily admits something we should all know anyway, that he is a blatant liar.

Please consider Market jitters bring difficult choice between truth and lies for politicians, spokespeople

On March 29, when speculation swirled that Portugal needed a bailout, Prime Minister Jose Socrates denied — again — that that would happen despite clearly unsustainable market pressures.

"I’m sick of saying we won’t" be requesting help, he told journalists.

Just eight days later, in a chastened appearance on national television, Socrates did just that.

For Jean-Claude Juncker, the prime minister of Luxembourg, the threat of immediate market turbulence means the usual norms of transparency don’t apply.

"When it becomes serious, you have to lie," Juncker, who as the chairman of the regular meetings of eurozone finance ministers is one of the currency union’s key spokesmen, said in recent remarks.

When you readily admit you are a liar, why should anyone ever believe you?

Note that "serious" is subject to a huge variance interpretation. Also note that any time someone does think "things are serious", the only reasonable course of action is to assume an admitted liar is indeed lying.

If the market presumes you are lying, what good does it do to lie? Indeed, the market might over-react not understanding the seriousness of the lie, or even if it is a lie.

Now, given that Junker is a liar, precisely why should anyone possibly believe him when he says there was no discussion of Greece leaving the Euro? In fact, given that things are clearly "serious", why should we believe a single thing he says.

I had missed this admission by Junker and I thank Ilargi at Automatic Earth for pointing it out in Trojan Lies.

Mike "Mish" Shedlock





Clear Once Again

Courtesy of Michael Panzner of Financial Armageddon 

Most people recognize that the stock market has been divorced from reality for quite some time. That said, the relentless propagandizing from the shills on Wall Street sometimes leaves even me thinking that I really must be missing something. But invariably, along comes a bit of fact-based reporting, as with this annotated article from theNew York Times‘ Floyd Norris, "A Recovery Less Robust Than in the ’70s," and all is clear once again.

To judge by the stock market, the recovery from the Great Recession is much stronger than the one after the early 1970s recession, which followed the first oil price shock.

But by most other measures, the current recovery is far weaker.

20110507_CHARTS_graphic-popup-v2

Click here to read the rest. 

 





Stock World Weekly: Not Dead Yet

Courtesy of ilene

Here’s the latest Stock World Weekly:  Not Dead Yet. - Ilene 

 

Excerpts:  

On Thursday, Intel announced that it will begin high-volume manufacturing of chips using the world’s first “three dimensional” transistor, based upon a vertical “fin” structure that allows for a much more efficient gating effect. Intel Senior vice president Bill Holt commented, “The gains these transistors provide are really unprecedented” and we agree. The new technology, called “Tri-Gate,” produces transistors that operate at lower voltages, consume 50% less power, and leak less current, while also providing improved switching characteristics. 

This advance will make it possible for the next generation of computer chips to run cooler, use less power (extending battery life for portable devices), run faster, and generally perform better. It also makes it possible for Moore’s law (twice as many transistors every 24 months) to operate for at least another two years. While the technology was first announced back in 2002, it has taken this long to develop it to where it could be put into full production. The first chips using this technology are scheduled to be released early in 2012. (Intel Announces ‘3D’ Transistor Technology – Moore’s Law Extended)

[...]

This week’s announcement of the death of Osama bin Laden prompted author and journalist Nomi Prins to remind us that killing Osama does nothing to mitigate our economic woes. She wrote, “while all the Osama drama was unfolding, the Treasury Department issued another plea for raising the debt ceiling, aka supporting its pro-bank policy. It went something like this: We need to borrow more to pay social security obligations and not default on our debt, so other countries won’t question our ability to manage an economy (as if that hasn’t already happened) and we won’t have to pay more to borrow more. If we don’t – you know what’ll happen – yep, another financial crisis.

[...]

Lee Adler at the Wall Street Examiner (subscription edition) presented his take on the market’s drop last week and his expectations for the week ahead:

“I also suspect that this selloff was not an accident, that it was possibly orchestrated by the Fed acting behind the scenes. The surge in commodities was becoming an enormous problem for them. Bernanke said at his press conference that there was nothing the Fed could do about it. That was a preposterous statement and it should have rung…
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78.58% Gain In Seven Months

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

Click here to learn more about Income Trader

 





 
 
 

Zero Hedge

Bloomberg System Goes Down Ahead Of US Open

Courtesy of ZeroHedge. View original post here.

For the second time in a few months, the Bloomberg Terminal system appears to be down and is causing panic across Wall Street ahead of the US market open...

Traders are not happy...

When Bloomberg panels go down 8 minutes before the open...... pic.twitter.com/pqoQoyoBHj

— NOD (@NOD008) January 17, 2019 ...

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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.

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