Archive for October, 2014

US Now Importing the World’s Deflation

Courtesy of John Rubino.

With US QE about to end, the rest of the world faced the prospect of another “taper tantrum” financial crisis, one that this time around could suck the world into a deflationary vortex. So it should come as no surprise that the end of QE was countered with a series of offsetting treats for the global financial markets:

• The US Fed promised to keep interest rates low for a really long time.

• The European Central Bank announced that in November it would start buying asset backed bonds, in effect beginning an open-ended, potentially huge debt monetization program of its own.

• Japan’s version of Social Security is massively increasing its equity purchases:

Japan’s public retirement-savings manager will put half its holdings in local and foreign stocks and start investing in alternative assets as the world’s biggest pension fund seeks higher returns.

The 127.3 trillion yen ($1.1 trillion) Government Pension Investment Fund set allocation targets of 25 percent each for Japanese and overseas equities, up from 12 percent each, it said at a briefing today in Tokyo. GPIF will reduce domestic bonds to 35 percent of assets from 60 percent. The new figures don’t include an allocation to short-term assets, while the previous targets did. Analysts surveyed by Bloomberg this month had anticipated levels of 24 percent for local stocks, 15 percent for global shares and 40 percent for Japanese bonds, taking short-term holdings into account.

And last but definitely not least:

Japan central bank shocks market with fresh easing

LOS ANGELES (MarketWatch) — In an unexpected move, the Bank of Japan’s policy board voted by a 5-to-4 margin to expand the pace of its quantitative easing, sending Tokyo stocks soaring and the Japanese yen falling sharply.

The central bank expanded the size of its Japanese Government Bond purchases to the equivalent of “about 80 trillion yen” ($727 billion) a year, an increase of ¥30 trillion from the previous pace. It said it would also buy longer-dated JGBs, seeking an average remaining maturity of 7-10 years.

The central bank also said it would triple its purchases of exchange-traded funds and real-estate investment trusts.

Concerns about dwindling inflation


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The Story Changes: Ebola Is Now “Aerostable” And Can Remain On Surfaces For 50 Days

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Michael Snyder of The End of the American Dream blog,

When it comes to Ebola, the story that the government is telling us just keeps on changing.  At first, government officials were claiming that it was very difficult to spread the Ebola virus.  Some of them were even comparing it to HIV.  We were given the impression that we had to have “direct contact” with someone else’s body fluids in order to have any chance of catching the virus.  But of course that is not true at all.  Now authorities are admitting that Ebola is “aerostable”, that it can be “spread through droplets”, and that it can remain on surfaces for up to 50 days.  That is far different information than we have been getting up until this point.  So that means when they were so confidently declaring that they know exactly how Ebola spreads they were lying to us.

On October 24th, a 33 page document was released by the Defense Threat Reduction Agency, and in that document it is admitted that Ebola is “aerostable”.  WND was one of the first news outlets to report on this…

The information was contained in a 33-page report released Oct. 24 by the Defense Threat Reduction Agency, the Department of Defense’s Combat Support Agency for countering weapons of mass destruction.

 

The agency report states “preliminary studies indicate that Ebola is aerostable in an enclosed controlled system in the dark and can survive for long periods in different liquid media and can also be recovered from plastic and glass surfaces at low temperatures for over 3 weeks.”

 

The report says the government is seeking technologies for the “rapid disinfection” of Ebola, including an aerosol version of the virus.

 

“The technology must prove effective against viral contamination either deposited as an aerosol or heavy contaminated combined with body fluids,” reads the solicitation document.

You can view the document for yourself right here.

So is there any difference between “aerostable” and “airborne”?

That is a very good question.

Meanwhile, the CDC has finally come out and publicly admitted that Ebola “is spread through droplets”.

In other words, it can be spread by a cough or a sneeze.

On the CDC website, it now says …
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A Massive FX Quake Hits Japan: This Is What It Looked Like

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

When central bankers go wild…

 

h/t @NanexLLC

*  *  *

Perhaps a better analogy is as follows:





Who Will Suffer From A Leveraged Credit Shakeout?

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Charlie Hennemann via CFA Institute blog,

Of all the noteworthy moments from the 2014 CFA Institute Fixed-Income Management Conference, the bombshell may have been the default call from Martin S. Fridson, CFA.

Fridson, CIO at Lehmann Livian Fridson Advisors, has been a leading figure in the high-yield bond market since it was known as the “junk bond” market — and he sees as much as $1.6 trillion in high-yield defaults coming in a surge he expects to begin soon.

“And this is not based on an apocalyptic forecast,” he assured the audience.

High-yield bonds, typically issued with credit ratings at the bottom of the scale, tend to suffer default surges during troughs in the credit cycle. The first high-yield default surge occurred from 1989 to 1992, and encompassed the collapse of Drexel Burnham Lambert. The second surge ran from 1999 to 2003, following the bursting of the dot-com bubble, and the third happened in the midst of the global financial crisis, from 2008 to 2009.

Fridson suggests the next default surge will be larger than the last three combined. Each surge saw an average annual high-yield default rate above 7% (which, if extended over a multi-year period, can add up to real money).

Fridson currently projects that 1,155 issuers will default in the next wave. Over a four-year period that easily surpasses the 644 defaults in 1999–2003, the largest of the three prior default surges.

For context, Fridson points to the last default surge of 2008–2009: It lasted only two years, and the market swung from a record number of defaults in 2008 to a below-average number in 2009, something Fridson “would have said was impossible.” The reason, of course, was that interventionist policies did as intended in the wake of the financial crisis, cutting the credit cycle short and…
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Meanwhile, The French Are Revolting…

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Amid record unemployment, even recorder youth unemployment, and politicians willingly breaking EU treaties (with apparently no consequences), it appears – just as in the US – police brutality in France was the straw that broke ‘Le Camel’s back. As RT reports, another anti-police brutality protest turned violent in the French city of Rennes, with masked youths and police engaging in running street battles. The unrest follows the death of a young environmental activist earlier this week. Overnight Thursday, protesters in the northwestern city lobbed flairs at police and flipped over cars, some of which they set ablaze. Police responded by firing tear gas. We hear guillotines are still cheap on ebay.

 

 

The French (youth) are revolting…

As RT reports,

A similar protest in Paris on Wednesday also descended into violence. Around 250 people gathered outside City Hall in Paris, with some throwing rocks at police and writing “Remi is dead, the state kills” on walls, The Local’s French edition reports. At least 33 people were taken into police custody following the unrest.

 

 

The protests are in response to the death of 21-year-old activist Remi Fraisse. He was killed early on Sunday by an explosion, which occurred during violent clashes with police at the site of a contested-dam project in southwestern France.

His death, the first in a mainland protest in France since 1986, has been blamed on a concussion grenade fired by police. France’s Interior Minister Bernard Cazeneuve, who came under serious pressure to resign following the incident, announced an immediate suspension of such grenades, which are intended to stun rather than kill.

 

The incident has put additional pressure on the already unpopular government of Francois Hollande, who has vowed that a thorough investigation will be conducted into the circumstances surrounding Fraisse’s death.

*  *  *

Is this the start?





The BoJ Jumps The Monetary Shark – Now The Machines, Madmen And Morons Are Raging

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by David Stockman via Contra Corner blog,

This is just plain sick. Hardly a day after the greatest central bank fraudster of all time, Maestro Greenspan, confessed that QE has not helped the main street economy and jobs, the lunatics at the BOJ flat-out jumped the monetary shark. Even then, the madman Kuroda pulled off his incendiary maneuver by a bare 5-4 vote. Apparently the dissenters – Messrs. Morimoto, Ishida, Sato and Kiuchi – are only semi-mad.

Never mind that the BOJ will now escalate its bond purchase rate to $750 billion per year – a figure so astonishingly large that it would amount to nearly $3 trillion per year if applied to a US scale GDP. And that comes on top of a central bank balance sheet which had previously exploded to nearly 50% of Japan’s national income or more than double the already mind-boggling US ratio of 25%.

In fact, this was just the beginning of a Ponzi scheme so vast that in a matter of seconds its ignited the Japanese stock averages by 5%. And here’s the reason: Japan Inc. is fixing to inject a massive bid into the stock market based on a monumental emission of central bank credit created out of thin air. So doing, it has generated the greatest front-running frenzy ever recorded.

The scheme is so insane that the surge of markets around the world in response to the BOJ’s announcement is proof positive that the mother of all central bank bubbles now envelopes the entire globe. Specifically, in order to go on a stock buying spree, Japan’s state pension fund (the GPIF) intends to dump massive amounts of Japanese government bonds (JCB’s). This will enable it to reduce its government bond holding – built up over decades – from about 60% to only 35% of its portfolio.

Needless to say, in an even quasi-honest capital market, the GPIF’s announced plan would unleash a relentless wave of selling and price decline. Yet, instead, the Japanese bond market soared on this dumping announcement because the JCBs are intended to tumble right into the maws of the BOJ’s endless bid. Charles Ponzi would have been truly envious!

Accordingly, the 10-year JGB is now trading at a microscopic 43 bps and the 5-year at a hardly recordable 11 bps. So, say again. The purpose of all this massive money printing is to drive the inflation rate to 2%. Nevertheless, Japanese government debt is heading deeper into the land of negative real…
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Moving Averages: Month-End Update

Courtesy of Doug Short.

Valid until the market close on November 28, 2014

The S&P 500 closed September with a monthly gain of 2.32%. All three S&P 500 MAs and three of the five the Ivy Portfolio ETF MAs are signaling “Invested”.

The Ivy Portfolio

The table below shows the current 10-month simple moving average (SMA) signal for each of the five ETFs featured in The Ivy Portfolio. I’ve also included a table of 12-month SMAs for the same ETFs for this popular alternative strategy.

For a facinating analysis of the Ivy Portfolio strategy, see this article by Adam Butler, Mike Philbrick and Rodrigo Gordillo:

Backtesting Moving Averages

Monthly Close Signals Over the past few years I’ve used Excel to track the performance of various moving-average timing strategies. But now I use the backtesting tools available on the ETFReplay.com website. Anyone who is interested in market timing with ETFs should have a look at this website. Here are the two tools I most frequently use:

Background on Moving Averages

Buying and selling based on a moving average of monthly closes can be an effective strategy for managing the risk of severe loss from major bear markets. In essence, when the monthly close of the index is above the moving average value, you hold the index. When the index closes below, you move to cash. The disadvantage is that it never gets you out at the top or back in at the bottom. Also, it can produce the occasional whipsaw (short-term buy or sell signal), such as we’ve occasionally experienced over the past year.

Nevertheless, a chart of the S&P 500 monthly closes since 1995 shows that a 10- or 12-month simple moving average (SMA) strategy would have insured participation in most of the upside price movement while dramatically reducing losses.

The 10-month exponential moving average (EMA) is a slight variant on the simple moving average. This version mathematically increases the weighting of newer data in the 10-month sequence. Since 1995 it has produced fewer whipsaws than the equivalent simple moving average, although it was a month slower to signal a sell after these two market tops.

A look back at…
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“Troubling Trend” NATO Warns Russian Military Aircraft Incursions Worst Since Cold War

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Over the last 2 days, more than two dozen Russian military aircraft, in four groups, were tracked and intercepted conducting aerial maneuvers around Europe, according to NATO. As The Wall Street Journal reports, this activity is on a scale seldom seen since the end of the Cold War, prompting NATO jets to scramble in another sign of how raw East-West relations have grown. "There is a troubling trend… of sabre rattling" warned The White House, noting that NATO has intercepted over 100 incursions by Russia year-to-date to which the US Army chief of staff ominously warned, this is "Russian aggression," and "we have to reassure our allies."

 

A photo released Wednesday by the Norwegian Air Force shows what it said was a Norwegian F-16AM Fighting Falcon, left, accompanying a Russian Tupolev Tu-95MS at an undisclosed location

 

As The Wall Street Journal reports,

Russian military aircraft conducted aerial maneuvers around Europe this week on a scale seldom seen since the end of the Cold War, prompting NATO jets to scramble in another sign of how raw East-West relations have grown.

 

The North Atlantic Treaty Organization said that more than two dozen Russian aircraft in four groups were intercepted and tracked on Tuesday and Wednesday, an unusually high level of activity that the alliance said could have endangered passing civilian flights.

 

Military jets from eight nations were scrambled to meet the Russian aircraft, which a NATO spokesman said remained in international airspace and didn’t violate NATO territory.

 

However, NATO officials said such flights heighten the risks of military miscalculations. They also come at a time when U.S. officials have been voicing concern about Moscow’s actions in the wake of the Ukraine crisis, where thousands have been killed in months of fighting between the government and Russia-backed separatists.

 

“There is a troubling trend of out-of-area events being increasingly used by Russia along its periphery for political saber-rattling, with probing incursions by air and sea by the Russian military becoming more commonplace and flagrant,” a senior Obama administration official said. “The United States has repeatedly called upon Russia to respect international law and the sovereign territory of its neighbors.”

 

There was no immediate comment from Moscow, which has denied in the past


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Meet “Rolling Jubilee” – The Group Buying & Tearing-Up Student Loans

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

An offshoot of 'Occupy Wall Street' is taking the $1.2 trillion student loan bubble, debt servitude dilemma of America's youth into its own hands… bit by tiny bit. As The BBC reports, activist group 'Rolling Jubilee' wants to "liberate debtors" by buying student-debt-bundled ABS on the secondary market (where they trade at significant discounts) and writing off the underlying loans. As Rolling Jubilee notes, "your debts are on sale… just not on sale to you," until now.

Rolling Jubilee says the problem lies deep within the structure of the education system and the way that selling education as a commodity reinforces inequality.

"It is documented that they end up worse off and have no better chance of getting work than if they simply finished high school," she says.

This week, the Federal Reserve chief Janet Yellen warned the quadrupling of the student loan debt since 2004 represented a barrier to social mobility.

John Aspray, national field director at the United States Student Association (USSA), said recent changes in law mean people in medical or gambling debt can declare themselves bankrupt – but to do so for student debt means satisfying an '"undue hardship" criteria, which is very difficult to prove.

 

"Opportunities for renegotiating are very well hidden," he says.

 

He says Rolling Jubilee's work was "important and symbolic" as a lot of people "don't even consider" getting rid of their debt.

 

As 85% of student loans are guaranteed by the national government the USSA is putting pressure on the department to "cut contracts with the worse corporations", says Mr Aspray.

 

"Political reforms are needed," he says. "We are going to see people continuing to rebel against this."

As The BBC reports,

An activist group in the United States has been carrying out deeds that some might think the stuff of dreams – buying and cancelling other people's student debts.

 

Rolling Jubilee has purchased and abolished $3.8m (£2.35m) of debt owed by 2,700 students, paying just over $100,000 (£62,000), or as it says, "pennies on the dollar".

 

The campaign group, which wants to "liberate debtors", says it takes its name from the tradition in many religions of


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“Who Do You Trust?”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Ben Hunt of Salient Partners' Epsilon Theory blog,


 

Seek not the favor of the multitude; it is seldom got by honest and lawful means. But seek the testimony of few; and number not voices, but weigh them.
? Immanuel Kant

Have you no sense of decency, sir? At long last, have you left no sense of decency?
? Joseph Welch, counsel for the US Army, confronting Sen. Joseph McCarthy (1954)

Trust Cramer!
– CNBC ad campaign

We are all wrong so often that it amazes me that we can have any conviction at all over the direction of things to come. But we must.
– Jim Cramer
 

Pro wrestling is not fake; it's sports entertainment. We go out there and we perform, and a lot of what we do out there is real, but we're not going to insult anyone's intelligence – there is a predetermined winner. It's just the fans don't know who it is, and that's what makes it so intriguing.
? Kurt Angle, professional wrestler

People never understood that there was a Brian and there was the  Boz.They were two completely different people. 

– Brian Bosworth, flamboyant pro football bust 

Ginny!" said Mr. Weasley, flabbergasted. "Haven't I taught you anything? What have I always told you? Never trust anything that can think for itself if you can't see where it keeps its brain?”
? J.K. Rowling, Harry Potter and the Chamber of Secrets (1998)

Oliver Sacks is both a gifted neurologist and a gifted writer. I want to begin this note with a passage from his book “An Anthropologist on Mars”. It’s a long selection, but worth the effort.

He


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Phil's Favorites

Buyer beware: How Libra differs from Bitcoin

 

Buyer beware: How Libra differs from Bitcoin

Recent revelations about the lack of privacy protections in place at the companies involved in Facebook’s new Libra crytocurrency raise concerns about how much trust users can place in Libra. (Shutterstock)

Courtesy of Alfred Lehar, University of Calgary

Facebook, the largest social network in the world, stunned the world earlier this year with the announcement of its own cryptocurrency, Libra.

The launch has raised questions about the difference between Libra and existing cryptocurrencies, as well as the implications of private companies competing with s...



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Digital Currencies

Buyer beware: How Libra differs from Bitcoin

 

Buyer beware: How Libra differs from Bitcoin

Recent revelations about the lack of privacy protections in place at the companies involved in Facebook’s new Libra crytocurrency raise concerns about how much trust users can place in Libra. (Shutterstock)

Courtesy of Alfred Lehar, University of Calgary

Facebook, the largest social network in the world, stunned the world earlier this year with the announcement of its own cryptocurrency, Libra.

The launch has raised questions about the difference between Libra and existing cryptocurrencies, as well as the implications of private companies competing with s...



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Zero Hedge

What's Hot In Women's Fashion?

Courtesy of ZeroHedge View original post here.

Via Global Macro Monitor,

Capitalism at its best or worst?

We have a few questions:

1)  Does the Tariff Man get a royalty for the sale of each dress sold, and will that violate the Emolumen...



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Lee's Free Thinking

Look Out Bears! Fed New QE Now Up to $165 Billion

Courtesy of Lee Adler

I have been warning for months that the Fed would need new QE to counter the impact of massive waves of Treasury supply. I thought that that would come later, rather than sooner. Sorry folks, wrong about that. The NY Fed announced another round of new TOMO (Temporary Open Market Operations) today.

In addition to the $75 billion in overnight repos that the Fed issued and has been rolling over since Tuesday, next week the Fed will issue another $90 billion. They’ll come in the form of three $30 billion, 14 day repos to be offered next week.

That brings the new Fed QE to a total of $165 billion. Even in the worst days of the financial crisis, I can’t remember the Fed ballooning its balance sheet by $165 bi...



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The Technical Traders

Is A Price Revaluation Event About To Happen?

Courtesy of Technical Traders

Skilled technical traders must be aware that price is setting up for a breakout or breakdown event with recent Doji, Hammer
and other narrow range price bars.  These types of Japanese Candlestick patterns are warnings that price is coiling into
a tight range and the more we see them in a series, the more likely price is building up some type of explosive price breakout/breakdown move in the near future.  The ES (S&P 500 E-mini futures) chart is a perfect example of these types of price bars on the Daily chart (see below).

Tri-Star Tops, Three River Evening Star patterns, Hammers/Hangmen and Dojis are all very common near extreme price peaks and troughs.  The rea...



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Kimble Charting Solutions

India About To Experience Major Strength? Possible Says Joe Friday

Courtesy of Chris Kimble

If one invested in the India ETF (INDA) back in January of 2012, your total 7-year return would be 24%. During the same time frame, the S&P 500 made 124%. The 7-year spread between the two is a large 100%!

Are things about to improve for the INDA ETF and could it be time for the relative weakness to change? Possible!

This chart looks at the INDA/SPX ratio since early 2012. The ratio continues to be in a major downtrend.

The ratio hit a 7-year low a few months ago and this week it kissed those lows again at (1). The ratio near weeks end is attempting to...



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Insider Scoop

10 Biggest Price Target Changes For Friday

Courtesy of Benzinga

  • Credit Suisse raised IHS Markit Ltd (NYSE: INFO) price target from $68 to $76. IHS Markit shares closed at $67.75 on Thursday.
  • Wedbush boosted Restoration Hardware Holdings, Inc (NYSE: RH) price target from $170 to $185. RH shares closed at $169.49 on Thursday.
  • Mizuho lifted Seagate Technology PLC (NASDAQ: STX) price target from $46 to $50. Seagate shares closed at $52.94 on Thursday.
  • UBS raised the price target for Weight Watchers Intern...


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Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 

...

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Biotech

The Big Pharma Takeover of Medical Cannabis

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

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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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:

 

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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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