Archive for 2013

The New Normal In Nine Charts

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

From macro to micro; from momentum to valuation; and from money supply to expectations, the ‘new normal’ in which investors find themselves is one currently dislocated and ‘different’ from the past. However, as we have seen all too often in the past, these dislocations do not last forever. And with positioning (here, here, and here) as bullish as its ever been, it seems there is little room for error in economic reality catching up to stocks ‘hope’-filled expectations.

 

Top-Down – US equity valuation appears notably divergent from New Orders…

 

and overall macro performance

 

which both seem to indicate a 12.5x Fwd P/E is more appropriate than ~14x?

Especially as Revenue Growth looks dismally recession-prone

 

as does the stagnant earnings growth

 

with margins appearing to have topped out

 

and the situation going forward is nothing but awful as negative pre-announcements continue to surge

 

which leaves the S&P 500 looking anything but cheap against 40 year average valuations.

As Barclays’ Barry Knapp notes, relative to historical valuation metrics, equities look modestly cheap to cash flow (low capex is the likely reason), fair to earnings metrics and notably elevated to balance sheet and debt based measures (EV).

 

which, given how weak revenue growth is looking this quarter, leads him to continue to believe current implied EPS growth (~18%), well above Barclays’ 7% estimate, is too high.

 

But, in the new normal, a drop back to the reality of 1325 on the S&P 500 seems so out of the realm of possibilities to most buy- and sell-side strategists as to be worthy of ridicule; as opposed to the likes of Gross, Dalio, Singer, Grant, Bass, and Klarman who all see our current farce for what it is – entirely unsustainable!!

When all that seems to matter (as clearly macro-, micro-, and flows do not) is the ninth chart… global central bank largesse…

 

Though of course, there is a limit to what ‘valuation’ even the greatest fool will stand (unless the whole market becomes AMZN)…

 

Charts: Bloomberg and Barclays

Bonus 10th Chart: The Long-Term trend on the S&P 500 seems to be stifling progress for now…as the pump-effect is having less and less impact (flatter and flatter slopes of nominal recovery)…







Swing trading portfolio – week of February 4th, 2013

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

Optrader 

Swing trading virtual portfolio

 

One trade virtual portfolio

 





World’s Biggest Retirement Fund Considers Selling Its Japanese Bonds

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

While in the past 3 months both the USDJPY and the Nikkei index have soared on the same vague mix of promises (than can never be delivered), and threats (by central bankers, which work only as long as they remain purely abstract and are not acted upon), one security that has barely budged are Japanese bonds: without doubt the fulcrum security that will put a premature end to Abe’s latest attempt to reflate an economy, whose total debt is a ridiculous 2000% of annual public revenues, and which will spend half of its annual tax income on interest expense if rates merely double from their record low levels. Until now: Bloomberg reports that Japan’s Government Pension Investment Fund: the largest retirement fund in the world overseeing 108 trillion yen ($1.16 trillion), and historically the biggest buyer of Japanese bonds, “will begin talks in April about whether to reduce its 67% allocation to domestic bonds.” Read: sell, which may be why we have already seen a rather steep move across the JGB complex overnight, because one the largest player in the space moves, everyone else follows as nobody wants to be the last seller left.

And once the selling begins, logically so does the countdown to the end of Japan’s latest reflation attempt, as like it or not, Japan can not afford rising rates, no matter how high it blows the stock market bubble (which by the way is unchanged in non-yen terms), as the alternative is a full blown banking sector crisis, coupled with a public funding crisis.

And also because this time is no different from all the other times Japan has done just this. Only on no previous occasions did Japan have some JPY1 quadrillion in public debt, or nearly 250% in debt/GDP.

From Bloomberg:

The GPIF, as the fund created in 2006 is known, didn’t alter the structure of its holdings during the worst global financial crisis in 80 years or in response to the 2011 earthquake and nuclear disaster. Talks to shift its positions come as Prime Minister Shinzo Abe and the Bank of Japan pledge to restore economic growth and spur inflation, which will mean higher interest rates, Mitani said.

 

If we think about the future and if interest


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William K. Black’s Public Eye Speech at Davos – ‘Mankiw Morality’

William K. Black's Public Eye Speech at Davos – 'Mankiw Morality'

Courtesy of Jesse's Cafe Americain

"Greed, I say, is a great flood; it is a whirlpool that sucks a person down, a constant yearning, always seeking a hold, continually in movement."

Siddh?rtha Gautama Buddha

“Just as it was in the days of Noah, so will it be in the days of the Son of Man. People were eating, drinking, marrying and being given away in marriage, up to the very day Noah entered the ark. Then the flood came, and swept them all away."

Luke 17:26-27

"What is the appropriate behavior for a man or a woman in the midst of this world, where each person is clinging to his piece of debris? What is the proper salutation between people as they pass each other in this flood?"

Leonard Cohen





Failure to Reform

The Failure to Reform

Courtesy of Jesse's Cafe Americain

"But there is a sort of 'Ok guys, you're mad, but how are you going to stop me' mentality at the top."

Robert Johnson

Audacious oligarchy.

This will not end well.

And a preview of Matt Taibbi and Bill Moyers discussing Why We Can't Let the Banks Off the Hook.

Ignoring such pervasive white collar crimes, which are still ongoing by the way, creates a climate of extreme moral hazard, festering corruption, and teaches felony by example. 

I think they give Obama, the regulators, and the Congress far to much credit in ignoring these crimes 'for the good of the system.' It is all about careerism, the credibility trap, and going along to get along. 

They cannot reform the system because they are the system, and the political and financial elite are doing just fine with the system the way that it is, thank you very much. They do not want things to change.

 

More from Matt Taibbi, Rolling Stone:

Choice of Mary Jo White to Head SEC Puts Fox In Charge of Hen House

I was shocked when I heard that Mary Jo White, a former U.S. Attorney and a partner for the white-shoe Wall Street defense firm Debevoise and Plimpton, had been named the new head of the SEC.

I thought to myself: Couldn't they have found someone who wasn't a key figure in one of the most notorious scandals to hit the SEC in the past two decades? And couldn't they have found someone who isn't a perfect symbol of the revolving-door culture under which regulators go soft on suspected Wall Street criminals, knowing they have million-dollar jobs waiting for them at hotshot defense firms as long as they play nice with the banks while still in office?

I'll leave it to others to chronicle the other highlights and lowlights of Mary Jo White's career, and focus only on the one incident I know very well: her role in the squelching of then-SEC investigator Gary Aguirre's investigation into an insider trading incident involving future Morgan Stanley CEO John Mack. While representing Morgan Stanley at Debevoise and Plimpton, White played a key role in this inexcusable episode…

Continue >

 

New SEC Chief Mary Jo White Thinks the Government Should Bring
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Black Carbon: The Secret Climate Threat

 

Source: csmonitor.com via CSMonitor on Pinterest

By Nicholas Kusnetz, at Rolling Stone

Climate scientists have shed new light on a serious threat to our way of life: black carbon. (No, it's not a metal band, though there is one that's pretty close.) New research suggests that this substance – more commonly known as soot – is one of the biggest causes of global warming, second only to carbon dioxide in slowly making parts of our planet uninhabitable.

Earlier this month, a group of climate scientists made waves in the environmental community when they published a study arguing that black carbon is fully twice as bad as previously thought. In fact, they estimate it causes two-thirds as much warming as carbon dioxide. That's the bad news. The good news – and "good" is relative when it comes to climate – is that this may be one of the few areas where nations rich and poor can come together and actually do something about climate change.

A brief explanation of the problem: When almost anything burns, it releases tiny particles of soot into the air. That black stuff in the plume of diesel smoke you see pouring out of a garbage truck's exhaust pipe? That's black carbon. We've long known that those particles contribute to global warming in several ways, as well as leading to millions of premature deaths worldwide. Most simply, when struck by light, soot heats up like a black leather car seat on a sunny day. When it floats down onto ice or snow, it turns what was once a bright, shiny, heat-reflective surface into a filthy heat-sink….

Keep reading: Black Carbon: The Secret Climate Threat | Politics News | Rolling Stone.





“Lights Out” Caption Contest

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Someone, somewhere will surely blame the upcoming Q1 GDP miss on what just happened in New Orleans.

Before and after:

.. and in real time:





Rajoy Further Implicated in Scandal; Support Drops to 23.9% in Record Plunge

Courtesy of Mish.

Prime minister Mariano Rajoy is now personally implicated in the slush fund scandal in Spain. Via Google translate, please consider Rajoy and his family were paid with money from Gürtel travel

The front page of Monday’s newspaper “La Gaceta” promises new revelations about political scandals that are playing close to the popular government of Mariano Rajoy.

The fore mentioned entitled ‘A Rajoy also paid travel, “about a picture of the back of the highest representative of the Spanish.

“His wife, his son and personal assistant flew business class to Las Palmas with money Gürtel”, added the subtitle, attaching notes as evidence under seal ‘exclusive’.

That should not be a surprise, but what choices do voters have?

Please consider this choppy translation from El Pais: crisis and corruption lead to PP to lower expectations

At this time, there is a ruling party with almost hegemonic majority, allowing it to act with little parliamentary scrutiny and yet have an estimate of the single vote of 23.9%, the lowest of democracy, only one year after having swept the polls. In a month and has lost six points from more than 20 points overall, without stating whether touched and thoroughly. And in theory are almost three years to allow citizens to speak at the polls. Your vote expectancy is now almost three points below the result of the AP of Manuel Fraga , 1982, when the PSOE of Felipe González swept him with 202 deputies.

Political Party Descriptions

From Wikipedia, here is a description of the top political parties in Spain.

Who do voters trust?

No one. Worse yet, Rajoy and the EU have threatened journalists that do not toe the party line. It’s 1984 in spades. For details, please see Big Brother in Action: EU Wants Power to Sack Journalists; Prime Minister Rajoy Threatens Newspapers Following Corruption Articles 

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com



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This Moment Of “Electrifying” Football Comedy Brought To You By The “Greenest Game” In Superbowl History

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

While it is now unanimous that Solyndra just won the funniest ad of the Superbowl by a mile, while we await for electricity to return to the Superdome (a stadium which has seen some $471 million in taxpayer funds since Katrina, and apparently not nearly enough) as the Boeing battery used to power up Super Bowl 47 is replaced, we wish to bring to our readers this message of supreme ironic poetry delivered by none other than the US Department of Energy.

From Energy.gov

While the Baltimore Ravens and San Francisco 49ers compete to hoist the Vince Lombardi trophy this weekend, eco-friendly fans and city leaders in New Orleans are competing to maximize sustainability practices to the fullest.

 

To make this the greenest Super Bowl, the New Orleans Host Committee has partnered with fans and the community to offset energy use across the major Super Bowl venues. The exterior of the Mercedes-Benz Superdome features more than 26,000 LED lights on 96 full-color graphic display panels, designed to wash the building in a spectrum of animated colors, patterns and images. The system draws only 10 kilowatts of electricity — equivalent to the amount of energy used by a small home — and the lights are expected to last for many years before needing replacement.

 

Off the football field, New Orleans is embracing energy efficiency with help from the Energy Department. The city retrofitted four libraries using an integrative design approach — adding motion sensor lights, energy-efficient heating and cooling systems, and upgrades to the building envelopes. These improvements helped cut the libraries’ energy costs by 30 percent and serve as a standard for other city-owned buildings. New Orleans streets feature more than 1,200 energy-efficient light fixtures. In addition to saving the city money on energy costs — an estimated $70,000 annually — the new lights help the city reduce routine maintenance due to their longer lifespan.

 

Embracing energy efficiency and renewable energy is having a profound impact on attracting developers and private industry in the New Orleans’ re-building efforts. The push to re-invent this destination city contributes to makingSunday’s game the greenest in Super Bowl history.

… And darkest





When Goodwill Turns Nasty

When Goodwill Turns Nasty

Courtesy of EconMatters

More and more in fashion lately in the financial world is companies taking huge write-downs of some flopped acquisitions. Even the big-name players with tremendous resources to scrutinize the acquisition can't escape this fate.

Microsoft had to own up last July to a $6.2-billion write-off of the acquisition of aQuantive, a digital advertising company that Microsoft bought for $6.3 billion cash in 2007.  The size of the write-down is significant even for Microsoft.  For comparison purpose, Microsoft operating  operating profit in Dec. 2012 quarter was $7.8 billion.

Nevertheless, Microsoft can at least have some consolation as just four month later, shares of tech giant HP suffered a 11% plunge partly because of a massive $8.8 billion write-off at Autonomy, a British software company it acquired in 2011 for around $10 billion, due to 'serious' accounting issues.

This is not just limited to the typically high-flying tech sector either. Last week, Caterpillar, the manufacturer of mining and construction equipment, also said it would need to write off $580 million in 4Q, 2012 goodwill related to a 2011 acquisition in China citing possible accounting fraud.

According to Bloomberg, goodwill, basically the amount paid over the book value of the target firm in an acquisition, in the S&P 500 companies have more than doubled on a per-share basis as companies have paid an increasingly higher takeover premium over the underlying asset value (i.e. goodwill) for the past decade.

 

 

Why do you think these companies supposedly with some of the best financial minds in the world at their disposal would overpay that much for another company?  A large part of it is that M&A is still one of the quicker and easier way to generate some positive buzz juicing up company stock.  Hungry for future top-line growth (which is usually tied to executive pay) in a lack-luster world economy, corporation executives are more inclined overlook certain "ambiguity."

Furthermore, increasing foreign acquisition in new/developing markets has also increased the risk of accounting discrepancy or min-interpretation more than most people have realized.  Of course, the unprecedented synchronized QEs from world's central banks have a big hand in over-valuation in almost all asset class as well.

It typically takes at least 2-3 years for companies to realize the full synergy, or discovering the dog, of an acquisition.  Bloomberg quoted Erin Lyons, a Citigroup Inc. credit strategist, that…
continue reading





 
 
 

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?

...



more from Ilene

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.

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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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