Archive for 2014

Challenge to Keynesians “Prove Rising Prices Provide an Overall Economic Benefit”

Courtesy of Mish.

The ECB has been concerned about falling consumer prices. I propose that's 100% stupid, yet that's the concern.

When the euro declined vs. the US dollar, the ECB was happy that inflation would inch back up. The fear now is that falling oil prices will take away the alleged gain of a falling euro.

With that backdrop, credit the Financial Times for the absurd headline of the week: Eurozone Fails to Benefit from Weak Currency as Oil Price Slides.

Pity the policy makers given the job of rescuing the eurozone from deflation.

The unorthodox steps the European Central Bank has taken since June – including a programme of private-sector asset purchases – have caused a steep fall in the euro. The single currency is down 8.4 per cent against the dollar and 4.75 per cent on a trade-weighted basis from its peaks this year.

The weaker exchange rate will ease pressure on the ECB in its fight to raise inflation back to its target of just below 2 per cent. Mario Draghi, the central bank’s president, has said the currency’s earlier strength explains 0.4 percentage points of the fall in inflation since 2012. In that year, prices were growing 2.7 per cent a year.

But just as this depreciation is starting to fuel inflation, the ECB must contend with a fall in oil prices that all but wipes out the effect of a sliding currency. A weaker euro should swiftly raise the cost of imported energy. Instead, Brent crude has fallen 9 per cent in euro terms this month alone. This is the main reason why eurozone inflation fell again in September to 0.3 per cent, a five-year low – a figure confirmed by data on Thursday.

“The drop in oil prices is a problem for the ECB,” says Marco Valli, an economist at UniCredit, adding, however, that the situation would have been far worse without the single currency’s fall.

“The impact on inflation is already visible and significant – if you still had the euro at 1.40 to the dollar, eurozone inflation would probably be zero.”

Pity the Keynesian Fools

Financial Times writers Delphine Strauss and Claire Jones say "pity the policy makers." I say pity


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The Pentagon Will Use 30 Person “Quick-Strike Team” To Deal With Domestic Ebola Patients

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

President Obama may have been busy golfing this weekend, and his brand new Ebola Czar may have had more pressing matters to attend than the White House’s Saturday evening meeting on the US “response to domestic Ebola cases” (because clearly the Ebola Czar is superfluous at such Ebola-related events), but that doesn’t mean that the administration will once again be caught with its pants down the next time an Ebola index patient is unveiled on US soil. Nope.

In taking a page right out of America’s response to the Ebola pandemic in… West Africa, where the US has dispatched several thousands troops to do, something, unclear what, earlier today, it was revealed that the U.S. military is forming a 30-person “quick-strike team”, which according to CNN is “equipped to provide direct treatment to Ebola patients inside the United States, a Defense Department official told CNN’s Barbara Starr on Sunday.”

From CNN:

The team will be under orders to deploy within 72 hours at any time over the next month, the official said.  The Department of Health and Human Services requested the military team, and the Pentagon has given verbal approval, the official said.

 

The team will include five doctors, 20 nurses and five trainers, Pentagon press secretary Rear Adm. John Kirby said in a statement.

 

The Pentagon has been working to determine what assistance it could offer the civilian health care sector following a White House meeting last week during which President Barack Obama said he wanted a more aggressive response, according to two Defense officials.

 

Defense Secretary Chuck Hagel ordered chief of the Northern Command, Gen. Chuck Jacoby, “to prepare and train a 30-person expeditionary medical support team that could, if required, provide short-notice assistance to civilian medical professionals in the United States,” Kirby said.

 

Jacoby is already working with the military on the joint team, Kirby said, and once formed, it will head to Fort Sam Houston in Texas for up to seven days of training in infection control and personal protective equipment. The training, provided by the U.S. Army Medical Research Institute of Infectious Diseases, will begin “within the next week or so,” Kirby said.

 

The team will remain in “prepare-to-deploy” status


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Three Of The Four JPMorgan “Market Bottom” Indicators Are All Flashing “Oversold” Green

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In the past week we discussed how to determine market bottom (or top) conditions either in extensive verbiage, or various pretty charts of the most prominent inflection points in US market history. Whether or not those are relevant to the current centrally-planned regime, where all of a sudden everyone is shocked, SHOCKED, to learn that there is no bond market liquidity (something we kept warning about again and again and again), remains to be seen. Still, some such as JPM, are already rushing to the defense of their clients (i.e., the people to whom JPM’s prop desk may have some selling left to do) by providing a handy backtest of which key technical indicators proved useful in the past when determining market bottoms (if not tops – that one JPM will probably never, ever disclose), and what these are saying at this moment.

So for all those who need convincing that the “bottom is now in”, and are desperate to BTFD because other, greater fools will also BTFD and so on, here it is, straight from Jamie Dimon’s (well, technically Nikolaos Panigirtzoglou’s) mouth:

The recent correction is also raising questions about which indicators have been useful in gauging equity market bottoms. The current equity market correction is the 19th (with 5% or more decline in the S&P500 index) since the current equity bull market started in March 2009. One simple way to assess which indicators have been useful in calling the bottom is shown in Table 2. Table 2 shows the minimum reading of four technical indicators within 2 days before or after each equity market bottom. These four indicators are 1) 14-day- RSI or Relative Strength Index which is a price based technical indicator comparing the magnitude of recent price gains and losses to identify overbought or oversold conditions, 2) 14-day VZO or Volume Zone Oscillator which is a volume based technical indicator. VZO separates up volumes from down volumes, it smoothes these volumes by an Exponential Moving Average for a given period, and then divides by the total volume for the same period. Similar to RSI, VZO’s usefulness is in identifying overbought/oversold volume conditions, 3) the S&P500 skew which is an option based price indicator we regularly use in our


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The Chart That Explains Why Fed’s Bullard Wants To Restart The QE Flow

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Remember when the Fed (and their Liesman-esque lackies) tried to convince the world that it was all about the ‘stock’ – and not the ‘flow’ – of Federal Reserve Assets that kept the world afloat on easy monetary policy (despite even Bullard admitting that was not the case after Goldman exposed the ugly truth). Having first explained to the world that it’s all about the flow over 2 years ago, it appears that, as every equity asset manager knows deep down (but is loathed to admit for fear of losing AUM), of course “tapering is tightening” – as the following chart shows, equity markets are waking up abruptly to that reality. So no wonder Bullard is now calling for moar QE – he knows it’s all there is to fill the gap between economic reality and market fiction.

 

Tapering is Tightening…. as the flow of Fed free money slows… so equity performance suffers.

 

Of course it’s not just the Fed (as Citi shows below) but for now the ECB seems unable to pull the trigger and the BoJ is hitting both political and market sentiment limits on its craziness.

 

And we better get moar… because the gap between perception and reality is huge…

 

Charts: Bloomberg and @Not_Jim_Cramer





The Crowded “Long-Dollar” Train Just Got Even More Crowded

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

With two weeks of weakness, one might be forgiven for thinking the crowded “long-dollar” train had let off a few passengers (after its post-Bretton Woods record-breaking streak of gains).

 

 

But no, as Goldman notes, that train just got even more crowded… as overall USD speculative net positioning is now the most long it has been in recent memory.

 

 

EUR net shorts increased $1.4bn to $24.6bn.

JPY net shorts decreased $1.2bn on the week to $11.8bn.

*  *  *

As an aside, just as we warned, the collapse in short-end yield in the last 2 weeks followed the most net short speculative positioning in 2Y futures since 2007

 

…and is likely not over yet… as even though the net short has been unwound extremely rapidly, in 2007, the yield compression did not stop there.

 

Source: Goldman Sachs





Equity Futures Open Higher, Retrace 50% Of Losses On USDJPY Kneejerk

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

UPDATE: A little early to call yet but Fed’s Rosengren quoted in FT “QE will end in October unless something dramatic happens” has knocked USDJPY and S&P lower…

 

More incoherent chatter from Japan about raising Japan’s GPIF allocation to “more than 20%, or around 25%” on the basis of Prime Minister Shinzo Abe’s ‘expert views’ have sent USDJPY higher out of the gate and thus S&P 500 futures are tracking – just as they did Friday afternoon – higher. Treasury futures prices are 6 ticks lower (+2.5bps yield) – retraced all the bond-short capitulation gains from Wednesday. S&P futures are 9pts higher – retracing 50% of last week’s losses.

 

This…

  • *ABE’S VIEWS TO BE FACTOR IN GPIF ASSET REVIEW TIMING: SHIOZAKI
  • *JAPAN GPIF MAY RAISE STOCK ALLOCATION TO MORE THAN 20%: NIKKEI
  • *JAPAN GPIF TO BOOST STOCK ALLOCATION TO ABOUT 25%: NIKKEI

Did this…

 

Which means this…

 

Dead cat bounce (as the majors track back down to Russell 2000 weakness on Friday)… or new new highs?

Charts: Bloomberg





When Confidence Crumbles

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Mark St. Cyr,

Once again we awake to an array of seemingly contradictory news and reports across the spectrum. Whether it be Ebola, the financial markets, or just plain ordinary life in general. It seems everything is once again in turmoil.

The issue at hand is migrating from worrisome to darn right alarming. And that’s not counting the general public at large. That speaks directly to the very one’s trying to re-establish confidence.

Today, what was once presumed as “a troubling situation in competent hands.” Now appears more inline with the space between “in” and “competent” being a typo.

The confidence in the people who are supposedly, as well as supposed to be “in charge” is doing more than just dwindling. It’s crumbling in Humpty Dumpty like fashion. For no matter how they try – it too may never go back together.

Once confidence wanes, or is lost, regaining it can be just as monumental of a task than the actual crisis itself. In particular it’s in the manner of reflexive or reactive assumptions that are communicated, along with conflicting assertions made by the very people trying to instil it – that diminish it. For it too can not only feed upon itself as not helping in real-time, but rather, hurting any and all credibility moving forward.

Sometimes no amount of “rights” will affect the one impression held by the public which you made wrong. Once it’s lost sometimes no amount of words seems to help. In fact, more words can actually make matters even worse. Sometimes – much worse.

This in turn is the exact tipping point where politicians, academics, et al find themselves not only up against a rock and a hard place, but also looking down the hillside where torches and pitchforks are advancing up the once presumed impassable slippery slopes.

The more they try to calm the public with words or speeches, the less anyone listens. For they believe they knew (as well as still know) all they needed earlier. And all of that has been shattered.

In other words: All that was told to them prior acts as the very foil as to not believe anything else. Regardless be it the truth – or not.

A great example of this paradigm can be found in Taleb’s…
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The Commodities Trading Cheat-Sheet

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

With commodity prices tumbling to 2009 lows, comprehending between the differing risks to Soybeans and Silver or Copper and Cocoa is crucial. Deutsche Bank has created just that ‘cheat-sheet’ – just how vulnerable is Gold to Ebola? or Silver to China growth?

 

Bloomberg’s Commodity index is at 2009 lows…

 

So here’s how to differentiate the commodity complex’s risks…

 

Charts: Bloomberg and Deutsche Bank





Ain’t Nobody Like To Be Alone

Courtesy of The Automatic Earth.



Dorothea Lange Play street for children. Sixth Street and Avenue C, NYC June 1936

George Monbiot has written a bunch of whoppers in the recent past, his pleas for more nuclear plants as the only way to save mankind in particular raised far more questions than they provided answers. But not everything he’s written since is as nonsensical as those pieces. This week he came with one that I think everyone should read and think about.

In it, he tries to tackle the topic of loneliness among us ‘modern people’. Not an easy topic to address, because there are just so many different sides and approaches to it. I sure don’t have the answers. I do have the questions, though. For starters, when does someone count as lonely? While there are people who feel lonely in the crowdiest of places, others may feel quite content and fulfilled in solitude.

We can all sense there’s something wrong, but it’s very hard even just to simply tell cause from effect. And claiming that our present social lives, and/or the lack thereof, are nothing but some kind of next phase, some development, is something that rings empty in the realization that during our 1 million year (or so) history, we’ve always been very social creatures.

The human being who interacts more with the world outside, and with fellow humans, through screens and phones and other gadgets, does not represent a form of progress. The happiest people in the world, if you discard the myriad of heavily biased surveys based on wealth levels as happiness indicators, live in societies where grandchildren are close to grandparents, and where families are close to their neighbors. It’s simply where we come from, and who we are.

But if you would go stand on some street corner and ask strangers if they are lonely, most would not admit to that. It’s only in other settings, in which people feel more at ease, that they will label themselves lonely. Interestingly, the loneliest among us are the young and the old. Poverty by itself does not cause loneliness, and neither does wealth; but lonely people can be found in all wealth levels. Age, however, does play a role.

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The ECB Changes Its Mind Which Bonds It Will Monetize, Then It Changes It Again

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

To get a sense of just how chaotic, unprepared, confused and in a word, clueless the ECB is about just its “private QE”, aka purchases of ABS, which should begin in the “next few days” (but certainly don’t hold your breath) – let alone the monetization of public sovereign debt – here is Exhibit A. Because if you were confused about what is about to happen, don’t worry: it appears the ECB hardly has any idea either, because it was just on October 7 when 40 ABS bonds were dropped from the ECB’s “eligible for purchasing” list. And then, just a week later, the ECB changed its mind about changing it mind, and reinstated 19 of the ineligible bonds right back!

Citi’s Himanshu Shrimali explains the stunning flip flop that only the ECB could have pulled off without losing all its credibility (perhaps because it no longer really has any):

As straight forward as the details of the ECB’s ABS purchase programme (ABSPP) released on 2 Oct 2014 seemed, many market participants were taken by surprise on 7 October when about 40 bonds became ineligible under the central bank’s collateral framework and 19 of them were again reinstated on 15 October. We understand that the bonds were initially removed from the list of eligible securities because of inadequate servicer continuity provisions — a requirement which came into force on 1 October 2013 but had a 1-year transitional period until 1 October 2014. We believe the reinstatements occurred because the ECB had earlier misinterpreted the adequacy of servicer continuity provisions in these bonds.

 

Some of these expelled bonds, which include Spanish and Portuguese RMBS, have lost 2–3 points in cash prices, according to our trading desk. A similar tiering is evident in the broader ABS market with ineligible bonds demanding 40–50bp spread pickup over eligible bonds.

Don’t worry though, and just repeat: “the bonds fell and rose not because of ECB frontrunning, or lack thereof, but because of fundamentals.” Keep repeating until it becomes the truth.

But back to the “official” narrative:

One of the pre-requisites for an ABS to be eligible for the ECB’s buying programme is eligibility under the collateral framework. The collateral criteria have been


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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

This Is The One Chart Every Trader Should Have "Taped To Their Screen"

Courtesy of Zero Hedge

After a year of tapering, the Fed’s balance sheet finally captured the market’s attention during the last three months of 2018.

By the start of the fourth quarter, the Fed had finished raising the caps on monthly roll-off of its balance sheet to the full $50bn per month (peaking at $30bn USTs, $20bn MBS, although on many months the (balance sheet) B/S does not actually shrink by this full amount which depends on the redemption schedule) and by end-Q4 markets also experienced some of the largest volatility and drawdowns in nearly a decade.

As Nomura&...



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ValueWalk

The Competition For Capital Has Made Stocks Cheap

By Michelle Jones. Originally published at ValueWalk.

The new year is upon us, and now is the time many investors look at what 2018 was and prepare for what 2019 might be. Recession jitters are starting to pick back up again, especially now that the full picture of 2018 is in the books. But what if you could pick only one theme for 2018? Jefferies strategist Sean Darby and team have a suggestion which is especially timely given that it appears to mark the end of an era.

StockSnap / PixabayVolatility carries into the new year

This past year was one of extremes, and the markets ended i...



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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"

 

 

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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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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