Archive for 2011

How will they will prop up stocks after QE? An answer?

Courtesy of Bruce Krasting

Bernanke has told us at least a half-dozen times that the primary objective of QE is to jack up stock prices. Let’s give the man his due. It has worked. Rising equities and an improving economy are now synonymous. Daily doses of QE through POMO purchases are creating liquidity. Some of that loose money finds its way to equities. 

The problem with QE is that some of that money is also going to unwanted places. And it is a factor in rising inflation around the world. While it is correct to say that the Fed can’t be blamed for everything, it is also correct to say that ZIRP and QE are adding to the problem.

For that reason alone (there are many other good reasons) QE will end this summer. When the connection between the Fed’s easy money and rising global food prices is made in the NY Times (it will be) QE will die. 

If that should be the case one would have to expect that a drop in demand for equities (and other things) is going to have to occur at some point this year. It could be as early away as four months (the last month of QE will be of no significance). This creates a problem for policy makers. They can’t let stocks find their own level. After all, it is now proven that we need stocks going up for the economy to expand, it must work the other way round. Right? 

I think that there is a solution to this problem. Give the S&P 100 a bunch of money and an excuse to do share buybacks. Something like that just might happen. It is a development that is most certainly worth watching for if you have an eye on the tape.

This headline tells the story:

The NY Times had a story on this last year:

If you have a day with nothing to do read this (61 page) report titled:

The conclusion of the report regarding the 2004 tax holiday for US corporations:

Estimates indicate that a $1 increase in repatriations was associated with a $0.60-$0.92 increase in payouts to shareholders.

The pieces are on the table. The US…
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The Unsustainable Meets the Irresistible

Courtesy of John Mauldin at Thoughts from the Frontline 

This week’s letter is a result of two lengthy conversations I had today, which have me in a reflective mode. Plus, I finished the last, final edits of my book, all of which is causing me to mull over the unsustainability of the US fiscal situation. There is a true Endgame here, and it may happen before we are ready.

The first conversation was with Kyle Bass, Richard Howard, and Peter Mauthe, over lunch (more on Peter, who has come to work with me, below). Kyle is the head of Hayman Advisors, a very successful macro hedge fund based here in Dallas. Then I recorded a Conversation with David Rosenberg and Lacy Hunt, which is one of the best we have ever done. Subscribers will be very happy. The new Conversation with George Friedman is now online, too. You can learn more about Conversations with John Mauldin at .  And please comment on this and future letters in the readers’ forums of my new website. Now, to this week’s letter. My goal is to make this one a little shorter than normal. We’ll see how I do.

The Unsustainable Meets the Irresistible

Kyle, Lacy, and David are typically pushed into the bearish category, but (not surprisingly to me) their forecast for the next few quarters is rather strong. None of us would be surprised by a high-3% number for GDP this quarter, and 4% is not out of the question. And we all see GDP tailing off as the year winds down. Inventory builds begin to slow, and in 2012 the 2% payroll holiday goes away. Plus, as I have written and David has noted, the pressure on state and local spending is getting larger with every passing day.

State and local spending is the second biggest component of the economy. The chart below, from David’s letter this week, gives us a visual image of just how large it is. Note…
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America Appears To Be Trapped in a Massive Coverup of Control Fraud and Corruption

Courtesy of Jesse’s Americain Cafe

I think most readers with an economics background would be familiar with a liquidity trap, which is a situation where monetary policy is unable to stimulate an economy suffering a non-cyclical credit contraction, either through lowering interest rates or increasing the money supply because expectations of adverse events (e.g., exogenous deflationary factors, insufficient aggregate demand, or civil or international war) make persons with liquid assets unwilling to invest.

America is caught in a confidence or credibility trap, in which the changes, investigations, and reforms necessary to restore trust to an economy or market are rendered unlikely because doing so would expose a pervasive corruption that the principals fear would destroy any remaining trust.  It could  also endanger the careers of politicians and business people who may have permitted and even appeared to facilitate the control fraud that caused the financial crisis in the first place.  Personal risk trumps public stewardship.

The fraudulent activity is covered up and therefore continues or appears to continue, crowding out most productive business investment and activity which cannot possibly hope to compete with the highly profitable fraudulent activity under such opaque and uncertain circumstances.  Informed market participants are unwilling to invest their liquid assets in a system which they suspect is riddled with accounting fraud, insider trading, and regulatory weaknesses, except of course in a few situations and somewhat ironically in some existing frauds, such as a bubble in equity valuations for example, which they think they understand.

geithner, bernankeThe American government is indeed acting as if it is involved in a massive coverup of a control fraud and corruption that could perhaps be the worst in its history.  I think many people who are looking at this know in their hearts that all is not well, that there is something not quite right in the current situation.  How else can we explain such massive and widespread financial fraud, with so few meaningful indictments, or even ongoing investigations with credible disclosures?  And the worst perpetrators appear to be dictating the remedies and reforms to the system for this government sponsored recovery.

Hank, Tim, and Ben alluded to the consequences of the discovery and uncontrolled disclosure of this fraud, and it frightened the Congress so badly that they immediately gave up and signed over 700 billion dollars, and many billions more, to facilitate the coverup of this under the guise of recovery and stabilization.  I would like to imagine that those in charge are attempting to prevent a panic while they…
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Tavaokoli: No Need to Qualify – This IS a Massive Cover-up of a Control Fraud

Courtesy of Jesse’s Americain Cafe

Hard to top this for straight talk and right to the heart of the matter from someone who knows the financial markets, and especially derivatives, better than most.

From this afternoon’s mailbag:

"Loved your commentary: ‘The American government is acting as if it is involved in a massive cover-up of a control fraud and corruption that could perhaps be the worst in its history.’

There’s no need to qualify. The government is involved in a massive cover-up of control fraud and corruption, and it is the worst in U.S. history. 

We let the servants quietly steal from the wine cellar and larder (for more than a century), and after discovering that no one would check their behavior—in fact, we handed the keys to our consumables to all the servants and let them bribe the overseers—they have watered down all the wine, and they backed up the truck to the larder and replaced most of the food with jars of peanut butter.

The bad guys have won, it’s almost too late to find our food and wine (5 year statute of limitations for securities fraud). As you rightly point out, those who speak up like William K. Black are marginalized.

Perhaps the most positive thing one can do at this point is try to stay on top of the anomalies created by this mess and try to preserve and increase wealth for the few that will listen."

Janet Tavakoli


Seven Men, Nine Days, One New Monetary Cartel, Pt. 2

Courtesy of Phoenix Capital Research

Thus, on a wintery day in November 1910, seven men retreated to JP Morgan’s private Jekyll Island resort to plan a system of banking that would address all of these problems, while simultaneously expanding their power and influence over the US banking system.

G. Edward Griffin, in The Creature From Jekyll Island, puts their primary goals as the following: 

1)    To stop the growing influence of smaller banks and increase the Anglo-American banking giants’ grip on the US financial system

2)    To shift US banking to a more “loan heavy” structure thereby expanding the monetary base more dramatically (making money more “elastic”)

3)    To pool all national banks reserves and set nation-wide standards for loans to reserves ratios, thereby minimizing the risks of bank runs and failure

4)    To establish a means of shifting the losses from bank failures away from the banks and onto the public

And finally…

5)    To develop a PR campaign that would result in the US populace accepting the implementation of a full-scale private banking cartel

I do not have time to detail the precise proceedings of the meetings these men held over their nine day stay at Jekyll Island, nor is there room to explain precisely how they infiltrated the US political system and managed to introduce a banking plan that was written by Frank Vanderlip and Benjamin Strong (who represented the Rockefeller and Morgan families, respectively) as if it were a bill produced by members of Congress. 

However, a brief overview is as follows:

Initially Senator Aldrich proposed something quite similar to the Bank of England, in which there would be one single large bank. However, the Rockefeller interests (who had ample experience with the US populace’s reaction to monopolies) thought this would be too much for Americans to stomach. Instead, they proposed the creation of 12 regional banks largely to maintain the illusion that the Fed would be a union, not a single central bank.

This is where the expertise of Paul Warburg, who had the most experience with…
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Al-Jazeera Releases “The Palestine Papers”: Thousands Of Documents Detailing A Decade Of Secret Israeli Palestinian Negotiations

Courtesy of Tyler Durden

Al-Jazeera has released thousands of previously classified documents which due to their content will likely bring the already sensitive situation in the Middle East to a boil once again. While the document progenitor could well be Wikileaks, the TV network refuses to disclose the source: “Because of the sensitive nature of these documents, Al Jazeera will not reveal the source(s) or detail how they came into our possession. We have taken great care over an extended period of time to assure ourselves of their authenticity.” As for what is contained: “The material is voluminous and detailed; it provides an unprecedented look inside the continuing negotiations involving high-level American, Israeli, and Palestinian Authority officials.” Apparently, the disclosure is so sensitive that the ISP of the Palestinian authority has just blocked the Aljazeera site containing the early releases. We look forward to reading the documents as they are released between January 23 and 26. Judging by the prompt retaliation they will be worth the read: according to the Palestinian Authority, Al-Jazeera has just declared was on Palestinians, which intuitively makes little sense.

From Al-Jazeera:

Over the last several months, Al Jazeera has been given unhindered access to the largest-ever leak of confidential documents related to the Israeli-Palestinian conflict. There are nearly 1,700 files, thousands of pages of diplomatic correspondence detailing the inner workings of the Israeli-Palestinian peace process. These documents – memos, e-mails, maps, minutes from private meetings, accounts of high level exchanges, strategy papers and even power point presentations – date from 1999 to 2010.

The material is voluminous and detailed; it provides an unprecedented look inside the continuing negotiations involving high-level American, Israeli, and Palestinian Authority officials.

Al Jazeera will release the documents between January 23-26th, 2011. They will reveal new details about:

    * the Palestinian Authority’s willingness to concede illegal Israeli settlements in East Jerusalem, and to be “creative” about the status of the Haram al-Sharif/Temple Mount;
    * the compromises the Palestinian Authority was prepared to make on refugees and the right of return;
    * details of the PA’s security cooperation with Israel;
    * and private exchanges between Palestinian and American negotiators in late 2009, when the Goldstone Report was being discussed at the United Nations.

Because of the sensitive nature of these documents, Al Jazeera will not reveal the source(s)

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Stock World Weekly

Here’s the newest: Stock World Weekly Newsletter. Comments welcome! – Ilene 

Jobs Cartoon

Archives here. 

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Can You Hear the Waterfall? (DIA, SPY, FXI, NYSE)

Courtesy of John Nyaradi

 One of the most intriguing aspects of financial writing is the various colorful aphorisms that abound in this business.  We enjoy comments like “the trend is your friend,” and we hope to “let our winners run” while we watch “bulls and bears” struggle for control of the hearts and minds of the markets.

 One of my favorites and I think the one most applicable for today is the concept of the “waterfall” or the “waterfall decline.”  It’s certainly a visual image and on that can clearly be seen on charts like the recent Shanghai Composite that we’ll take a look at in a moment. 

 With each passing day, the probability of a waterfall decline in U.S. markets becomes more likely.

 This week a well known and widely read financial website, Seeking Alpha, made some significant changes to their leader board/opinion leaders, and with more than 4,000 contributors on the site, I’m pleased and honored to report that I am currently ranked #4 in the Today’s Market category. 

I can highly recommend Seeking Alpha as a top source of up to the minute financial information and analysis.  It’s easy and free to join their more than 600,000 current members and I would be honored to welcome you to my group of readers. 

On My Radar 

On a technical basis, the markets remain overstretched and ripe for a correction, while fundamentally, we saw selling on good news and earnings that are “good” now suddenly don’t appear to be “good enough.”  By many analysts’ measurement, the market is overvalued by as much as 50-60% with one of my favorites, Tobin’s Q, developed by Nobel Prize Winner, James Tobin, currently indicating an overvaluation of 63% (Doug Short)

chart courtesy of 

In this chart of the S&P 500, we can see that we’re still in a definite uptrend with prices above the 20, 50 and 200 day moving averages, however, RSI is in the oversold, “red zone,” and MACD has recently switched to a “sell” signal.

chart courtesy of 

Looking at the chart of the Shanghai Composite, we see it in the red and black candlesticks with the overlay of the S&P 500 in black bars.  It’s easy to see how the two have been closely correlated until just early December and the “waterfall declines last April and more recently since November in the…
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“Bond Recoveries Or Chocolate”: Ivory Coast Issues Ultimatum With Cocoa Export Ban, As Chocolate Prices Set To Surge Monday

Courtesy of Tyler Durden

When a week ago we observed the Onionesque reality of life in the Ivory Coast, where deposed president Gbagbo is threatening to wipe out bondholders of $2.3 billion in debt (Corporate Ticker: NUTZ) unless he becomes formally recognized, we made the following bold prediction: “we are sure that Blythe Masters and her team were recently in Yamoussoukro discussing the most effective way to corner the cocoa market (paper Cocoa ETF?), thus getting the price of the sweet powder up by a few trillion percent (in exchange for a nice 25% of all upside going to Jamie Dimon’s firm of course).” Sure enough, when it comes to our track record of macabre predictions we continue to be near 100%. The FT has just reported that Alassane Ouattara, Laurent Gbagbo’s opponent in the presidential election (and the man formally acknowledged by the UN as the country’s president) has just imposed a one-month export ban of cocoa, ostensibly in an attempt to oust Laurent Gbagbo. In other words, the international community has to choose: bond recoveries or chocolate. That said, we are certain that it is none other than noted commodity market cornering expert JPM that can claim league table advisory credit for what according to the FT will be a 10% jump in the price of cocoa on opening Monday. The immediate retaliation by Gbagbo will most certainly be to force a technical default on the country’s bonds which are already in their grace period, and start a localized mini liquidity (and solvency) crisis in Africa… As if the developed world did not have enough of those as is. And in the meantime, we sense a great disturbance in the inflationary Force, as if millions of fatty voices suddenly cried out in terror, and were suddenly silenced. Prepare for the next round of food inflation worldwide.

From the FT:

Cocoa is the main source of income for the government of Ivory Coast and any stoppage in exports would cut the funding Mr Gbagbo relies on to pay loyal civil servants and the military. Diplomats believe he needs about $150m a month.

Any reduction in supply is likely to push the price of the commodity used in chocolate towards a 33-year high because Ivory Coast accounts for about 40 per cent of global cocoa exports. The cocoa market closed

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“Buy A Gun” Google Queries Hit All Time High, And Other Off The Grid Economic Indicators

Courtesy of Tyler Durden

In lieu of a credible macroeconomic data reporting infrastructure in America, increasingly more people are forced to resort to secondary trend indicators, most of which have zero economic “credibility” within the mainstream, yet which provide just as good a perspective of what may be happening behind the scenes in this once great country. A good example was a recent Gallup poll, which contrary to all expectations based on a now completley irrelvant and thoroughly discredited ADP number, which led some br(j)okers such as the Barclays Insane Predictions Team to speculate a 580,000 NFP number was in the books, indicated that the jobless situation barely improved in December. Sure enough, this was promptly confirmed by the January 7 NFP number. And so, in looking for a variety of other “off the grid” economic indicators we read a recent report by Nicholas Colas, which proves to us that we are not the only ‘nerdy’ entity out there increasingly searching for metrics that have some rooting in reality, and not in the FASB-BLS-Census Bureau joint ventured never-never land. And while we recreate the key points from the report, the one item that should be highlighted is that, as we have suspected for a while, the social undertow of fear, skepticism and anger is coming to a boil, as Google queries of the “Buy A Gun” search querry have just hit an all time high. How much of this is due to the recent events from Tucson, AZ is unclear. What is clear is that the trend is most certainly not your friend (unless you are of course the CEO of Smith and Wesson).

We’ll leave the interpretation of this chart to our very erudite politicians.

As for other must read observations on the topic of derivative economic indicators, we present Nicholas Colas’ must read latest: “Off The Grid” Economic Indicators – Q410 Edition

There are a lot of economic indicators out there, and we pay attention to all of them because government decision makers have told us they shape economic policy. But there’s a wealth of independently developed economic and statistical data available as well, and much of it provides much-needed color on the real state of the U.S. economy. Our collection of anecdotal datapoints, which we have dubbed the “Off The Grid” indicators, paint a more nuanced picture of a slow
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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 ... more from Insider

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 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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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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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


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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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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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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