Archive for 2012

Is the Fed in Control? If So, Control of What?

Courtesy of Mish.

Reader Richard is wondering about a statement I made in Problem is Demand: First IBM, then Intel, now Google.

Specifically Richard questions my statement “In spite of what everyone seems to think, the Fed is not really in control of much of anything”.

Richard writes …

Hi, Mish

I am a big fan of yours but I am shocked, however, by your quote in my subject line. How can you say that when the Fed totally controls everything in the financial markets not only in the U.S. but much of elsewhere in the world? It is single-highhandedly propping up the U.S. equity market, rendering bond vigilantes ineffective in the bond market, and creating an “echo real estate bubble” at will!

Hoping to hear an elaboration from you in your next blog.

Regards, Richard

No Echo Bubble in Housing

Hello Richard, for starters, there is no echo real estate bubble.

Home sales are at depressed levels, financial institutions are still overloaded with hugely underwater properties, and prices have bounced a bit in some areas, by 5-10% bounces following 50-60% declines hardly constitutes an echo bubble.

Had Richard said the Fed created an echo bubble in stock prices, I would have agreed. Let’s step back a second and look at the three primary things the Fed wants to accomplish.

Three Things Fed Desperate to Accomplish

  1. Stimulate Credit 
  2. Stimulate Jobs
  3. Stimulate Housing



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Swing trading portfolio – week of October 22nd, 2012

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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One trade virtual portfolio

 





Stock Market Fragility Fast Approaching “Flash Crash” Levels

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

This past Friday, on the 25th anniversary of Black Monday, Bill Gross warned that in the current centrally-planned market "central bank puts" are the modern day equivalent of "portfolio insurance", and he is right. By sending complacency to record levels, and essentially forcing investors to no longer worry, hedge and generally ignore tail risk, the central planners, in their futile attempts to reflate stocks at all costs, are guaranteeing that the market will experience just the type of fat tail event they promise will never occur. As for the catalyst that will make sure of it is none other than our old friend: high frequency trading. Because while central planning is the mechanism by which investing is dragged away from mean reversion, price clearing and fair value discovery, it is HFT that is Bernanke's analogue in the millisecond trading world (as all those who had stop limit orders (that did not get DKed) on May 6, 2010 very well remember). Because when the next Black ___day does happen, it will be due to central planning, but it will be enacted courtesy of HFT (which will never go away until the next and probably final market crash: too much exchange revenue depends on the perpetuation of this parasitic liquidity drain).

Which is why it is only appropriate to warn readers that when it comes to system market fragility, at least according to Nanex, whose work ZH first presented nearly two years ago and has since gone mainstream now that HFT is the universal scapegoat of even such legacy media venues as CNBC (it is always better to bash the vacuum tubes than the people who profit, or those who have made a mockery of the stock market – it is not like anything will change anyway), the frequency and magnitude of "wild price spike" events (to put it simply) are now both rising at an exponential rate, and fast approaching Flash Crash levels.

From Nanex:

Below is a chart showing the daily counts for all NMS stocks of prices that exceeding NxCore filter level 6. Filter levels range from 2 (lowest) to 7 (highest). Stock prices flagged at these levels are almost always canceled or corrected by the exchange later in the trading session.  The chart below indicates that wild


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[Video] 60 Minutes Interviews the Man who Famously Resigned from Goldman Sachs – Greg Smith

Submitted by Mark Hanna

Courtesy of MarketMontage. View original post here.

An interesting – but unsurprising – interview with former VP (which is a “middle management” title on Wall Street) Greg Smith, formerly of Goldman Sachs.  If you don’t remember the story of Mr. Smith – he left his half a million a year job in a very public manner – offering his reasons in an op-ed in the New York Times early this year. Anyone who has been following the goings on, in the world of Wall Street the past half decade+ won’t be surprised by his ‘revelations’ but certainly it is still an interesting view.  It does appear that the world of investment banking took a tremendous – and many would argue bad – change once these stopped becoming private partnerships and instead became public companies.

13 minute video – email readers will need to come to site to view

Disclosure Notice

Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog





China, China, Everywhere; But Not A Drop Of QE To Drink

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

With this evening's news that Japan and the USA are 'backing down' from a planned 'joint security drill' to recapture a remote 'uninhabited' island in Okinawa province (apparently amid concerns of backlash from Beijing); and chatter of the PBoC gauging demand for reverse repos (instead of flooding us with newly minted Yuan which everyone believes is just the remedy), it seems very clear who the world's super-power is (militarily and economically). Furthermore, as The Diplomat explains, multi-faceted challenges to the new leadership — possible economic stagnation, social unrest, elite disunity, and a revival of pro-democracy forces — will make it more distracted and less politically capable to maintain discipline on numerous actors now involved in China's foreign policy.  The effects of such accumulated internal woes, while not necessarily aggressive, are certain to be an erratic pattern of behavior that both worries and puzzles China's neighbors and the rest of the international community.

"Be careful what you wish for.  A weaker China could nevertheless
inflict serious damage to the world order."

On China's Political Transition (via Damien Ma's interview with Foreign Affairs Magazine):

Via Minxin Pei of The Diplomat: Sorry World, What Happens In Beijing, WON'T Stay In Beijing

One of the questions on the minds of most China watchers these days is how Beijing will behave externally when it faces a far more difficult internal environmentOf the well-recognized challenges China will encounter in the coming years are its deteriorating economic dynamism, a structure of decision-making with diffused power and uncertain authority, rising nationalism, growing demand for political reform, and widespread popular disenchantment with the status quo.

In totality, these internal difficulties will reduce the resources available to maintain and expand China's influence around the world, constrain the Chinese military's ability to accelerate its modernization, and make Chinese leaders more reluctant to assume greater international or regional responsibilities.  Most worryingly, erratic behavior driven by a mixture of lack of leadership experience and political security will most likely mark Beijing's foreign policy conduct in the coming years.

Given the high profile China has assumed in projecting its economic influence around the world, particularly in resource-rich developing countries, one might dismiss as fanciful the suggestion that looming economic hardships at home may severely limit


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Weekly Market Commentary: Breadth Weakness Continues

Courtesy of Declan Fallon

Another week, another set of breadth losses for the indices.

The Nasdaq was the worst hit of the indices.  The Percentage of Nasdaq Stocks above 50-day MA finished  at lows of 37%, but stochastics are only half-way towards oversold territory.

The Summation Index only saw marginal more losses than last week. It closed the week below 0, but the index doesn’t typically reach oversold levels until below -600. This could take another few weeks before a swing low is reached.

The Bullish Percents similarly experienced a small loss.  Technicals are in neutral territory, but still net bearish.  Still looks to offer plenty of downside before a swing low is reached.

Despite the brief respite on the daily timeframe, the weekly chart for the Nasdaq favours a move to 2,863 support.  Higher volume selling marked confirmed distribution.

While tech struggles, Large Caps held their ground.  The Dow and S&P held support for another week.

And the Russell 2000 finished just above declining resistance – turned support.  The inverse doji offers a workable support zone, although technicals are neutral (and a long way from oversold territory).

Bullls will look to focus on Large Caps, and its continued advance.  More speculative players may want to take a look at the Russell 2000.  Shorts may find more on offer from the Nasdaq (or Nasdaq 100), as these are caught in a support no-mans land.

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NASDAQ Tech Wreck 2.0?

Courtesy of John Nyaradi.

With last week’s dismal action in the Nasdaq index and tech sector, October could be another bad month for the Nasdaq.

tech wreck, nasdaq, qqq, nysearca:qqqMuch of the headline news last week was focused on the 25th anniversary of “Black Monday,” October 19, 1987, when world markets crashed and the Dow Jones Industrial Average (NYSEARCA:DIA)) plunged 508 points or approximately 24% in one day.

Much has been written about whether or not Black Monday can happen again, and, of course it can, but on its anniversary this year, it’s more important to pay attention to what’s happening today, particularly what’s happening in the tech sector since tech tends to be a leader both up and down in today’s modern markets.

 On My ETF Radar

nasdaq, QQQ, nysearca:qqq

chart courtesy of StockCharts.com

In the chart of the Nasdaq Composite (NYSEARCA:QQQ) above, we can see how the index is in a significant downtrend, with declining momentum and has decisively broken its 50 day moving average. Next significant support lies in the 2900 level, approximately 3% from current levels.

S&P 500 , spy, nysearca:spy

chart courtesy of StockCharts.com

In this chart of the S&P 500 (NYSEARCA:SPY) we can see how the index has formed a triple top, which is generally seen as an ominous development in technical analysis, momentum is declining and Friday’s sell off ended right at the 50 day moving average.

s&p 500, spy, nysearca:spy

chart courtesy of StockCharts.com

In the point and figure chart of the S&P 500 (NYSEARCA:SPY) we can see that the chart is on a “sell” signal with a downside price objective of  1380, some 3.7% from today’s levels.  A close below the blue, bullish support line at approximately 1390 would indicate the onset of a new bear  market according to point and figure methodology.

Add it all up, and the technical indicators are looking more and more bearish.

On a fundamental level, one must pay attention to the Nasdaq as it’s loaded with big names like Google (GOOG) Apple (AAPL) Microsoft (MSFT) Intel (INTC) and others.  Therefore, the index represents some of the strongest, leading edge companies operating in the technology sector which has become indispensable to the functioning of modern, developed economies.  Furthermore, Nasdaq and glamor names like Apple (AAPL) tend to attract the interest of big players in the hedge fund and institutional space, and if the…
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Is a Debt Jubilee the Next Big Meme?

Courtesy of John Rubino.

The idea of a “debt jubilee” — that is, a wide-spread forgiveness of debt as a way to reset the US financial system — has been bouncing around for a while. But it hasn’t gained mainstream traction because it seems, at first glance, to be too simplistic to be worth serious thought. It must have a fatal flaw that would jump out as soon as one looks at it, which makes looking a waste of time.

But the idea keeps bubbling up, so the other day I finally decided to try to understand it. And the story, as with most apparently simple things, is more complicated and harder to dismiss than it seems at first.

According to Wikipedia, “The concept of the Jubilee is a special year of remission of sins and universal pardon. In the Biblical Book of Leviticus, a Jubilee year is mentioned to occur every fiftieth year, in which slaves and prisoners would be freed, debts would be forgiven and the mercies of God would be particularly manifest.”

Note the fifty-year cycle, which is not that far from the 60-year Kondratieff Wave, at the end of which debt is forcibly erased through mass default.

The problem with the classical jubilee concept is spelled out by Martin Hutchinson and Robert Cyran in a 2011 New York Times article:

The Downside to a Debt Jubilee
Good ends do not justify bad means. That philosophical observation applies to proposals for a big American debt jubilee that are now doing the rounds. The basic idea is to slash consumer debt, which is an admirable aim for an overleveraged nation. Household debt is still 90 percent of gross domestic product, down only modestly from the 2008 peak of 100 percent. But even bank-haters should recognize that this cure might be worse than the disease.

To start, writing off debts would not necessarily increase economic growth. Every liability is also an asset, so while a dollar that is no longer required for debt repayment might add some cents to consumer spending, it is also a dollar cut out of a bank’s capital or of an investor’s net worth — subtracting from resources and confidence.

And write-offs big enough to change consumer behavior would probably be big enough to destabilize banks. The Federal Reserve or the government would need to help, presumably by injecting newly printed


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Stock Review: Time Warner ($TWC)

Courtesy of Declan Fallon

My latest stock review covers Time Warner.  Other stock reviews can be found here.

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Chinese Gold Imports Through August Surpass Total ECB Holdings, Imports From Australia Surge 900%

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

First it was more than the UK. Then more than Portugal. Then a month ago we said that as of September, “it is now safe to say that in 2012 alone China has imported more gold than the ECB’s entire official 502.1 tons of holdings.” Sure enough, according to the latest release from the Hong Kong Census and Statistics Department, through the end of August, China had imported a whopping gross 512 tons of gold, 10 tons more than the latest official ECB gold holdings. We can now safely say that as of today, China will have imported more gold than the 11th largest official holder of gold, India, with 558 tons.

Yet despite importing more gold than the sovereign holdings of virtually all official entities, save for ten, importing more gold in July than in any month in 2012 except for April, importing more gold in 8 months in 2012 than all of 2011, and importing four times as much between January and July than as much as in the same period last year, here is MarketWatch with its brilliant conclusion that the ‘plunge’ in gold imports in August can only be indicative of the end of the Chinese gold market, and the second coming of infinitely dilutable fiat.

“China’s near-term appetite for gold appears to be waning as bullion imports from Hong Kong slow,” HSBC analysts said in a note following the data release last week.

 

Anecdotal evidence also pointed to the cooling trend, with one Hong Kong bullion dealer saying the word from mainland clients was that gold inventories are saturated.

 

“What we are hearing from our customers is that they were buying gold rapidly over the last couple of years, but they would now see some of their stocks sold off before they rebuild some of their inventories,” Scotia Mocatta managing director Sunil Kashyap said in Hong Kong.

There is spin, and there is of course, reality. We urge readers to identify where on the chart below is the evidence of Chinese disillusionment with gold:

Furthermore, with the status quo cartel in desperate need of China stepping up its monetary easing, and jumping right into the race to debase, which is absolutely critical to…
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ValueWalk

#1 Performing Global Macro Hedge Fund Sees More Shorts Opportunities Ahead As China Bursts

By Jacob Wolinsky. Originally published at ValueWalk.

Crescat Global Macro Fund update to investors on 1/19/2019

Crescat Global Macro Fund and Crescat Long/Short fund delivered strong returns for both December and full year 2018 in a difficult market. Based on ...



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Zero Hedge

Johns Hopkins, Bristol-Myers Face $1 Billion Suit For Infecting Guatemalan Hookers With Syphilis 

Courtesy of ZeroHedge. View original post here.

A federal judge in Maryland said Johns Hopkins University, pharmaceutical company Bristol-Myers Squibb and the Rockefeller Foundation must face a $1 billion lawsuit over their roles in a top-secret program in the 1940s ran by the US government that injected hundreds of Guatemalans with syphilis, reported Reuters.

Several doctors from Hopkins an...



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Phil's Favorites

Divisive economics

 

Guest author David Brin — scientist, technology consultant, best-selling author and futurist — explores the records of Democrats and Republicans on the US economy in the following post. For David's latest posts, visit the CONTRARY BRIN blog. For his books and short stories, visit his web...



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Kimble Charting Solutions

Stock declines did not break 9-year support, says Joe Friday

Courtesy of Chris Kimble.

We often hear “Stocks take an escalator up and an elevator down!” No doubt stocks did experience a swift decline from the September highs to the Christmas eve lows. Looks like the “elevator” part of the phrase came true as 2018 was coming to an end.

The first part of the “stocks take an escalator up” seems to still be in play as well despite the swift decline of late.

Joe Friday Just The Facts Ma’am- All of these indices hit long-term rising support on Christmas Eve at each (1), where support held and rallies have followed.

If you find long-term perspectives helpf...



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Digital Currencies

Transparency and privacy: Empowering people through blockchain

 

Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...



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Insider Scoop

Cars.com Explores Strategic Alternatives, Analyst Sees Possible Sale Price Around $30 Per Share

Courtesy of Benzinga.

Related 44 Biggest Movers From Yesterday 38 Stocks Moving In Wednesday's Mid-Day Session ...

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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"

 

 

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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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