Archive for 2015

What Happens When A Russian Surface-To-Air Missile Launch Goes Horribly Wrong

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Shortly after Russia announced early last week that it would take advantage of the lifting of the Iran sanctions and proceed to deliver an unknown number of S-300 “defensive” surface-to-air missiles, the Kremlin sought to reassure Israeli Prime Minister Benjamin Netanyahu that any deliveries of these to Iran will not threaten Israel’s security.

Judging by the following video which captures what happens when a launch of a S-300 SAM goes horribly wrong (and the immediate stunned aftermath), he may very well be right.

That, or the Russian troops were simply showcasing what will happen one day when no amount of Mario Draghi threats can push the EURUSD higher any longer.





Evening News, 4-19-15

From Bloomberg:

Zhou Sees China Stimulus Scope, Zeti on Ringgit: Asia at the IMF

Asian policy makers who gathered in Washington for the International Monetary Fund’s spring meetings signaled readiness to preserve policy space, said the U.S. should get its impending interest-rate increase over with, and anticipated China’s growing influence in global currency markets and infrastructure development. (Read here)

Finland's Center Party Leader Juha SipilaMillionaire-Led Party Wins Finnish Vote Vowing to End Recession

Finland’s Center Party, led by self-made millionaire Juha Sipila, won national elections as Finns look for a path out of the country’s economic sclerosis.

After three years of recession, the next government will need to repair the damage done by lost trade with Russia and the demise of a consumer electronics industry once led by Nokia Oyj. The decline of the paper industry has also wiped out thousands of jobs, leaving unemployment above 10 percent as economic growth hobbles along at half the euro-zone average. (More)

Deutsche Bank’s Postbank Faces Indefinite Strike Amid Review

Deutsche Bank AG employees in its Postbank unit voted in favor of striking indefinitely, escalating protests as they seek job protections amid a companywide strategic review that may lead to the division’s sale. (Read here)

Arenas Debates More Stimulus as He Pledges Chile Balanced Budget

Chile’s Finance Minister Alberto Arenas opened the door to extending this year’s fiscal stimulus to the years ahead, while reiterating the government’s commitment to balancing the structural budget by 2018.

“A debate on counter-cyclical fiscal policy for more time in Chile is a debate that is welcome and we will be making an evaluation,” Arenas said Sunday in an interview in Washington, where he is attending the International Monetary Fund and World Bank’sspring meeting. (Continue)

Nigerian Finance Minister Ngozi Okonjo-IwealaNigeria, Algeria See Oil Prices Staying Low for a Long Time

Oil prices are likely to stay low for a long time after falling more than 40 percent in the past year, said officials from two OPEC nations.

Nigeria and Algeria both warned that oil prices, currently at around $60 a barrel,


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Forget The Snow, It’s The Drought That Is Crushing The US Economy

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

With all eyes and talking heads focused on the 'weather', it seems cold, wet, snowy, and frigid are the most GDP-destructive adjectives. However, as Bloomberg reports, the drought out West is starting to infiltrate U.S. housing data, according to the chief economist of a homebuilders' group, and weakening a major part of the nation's economy.

As Bloomeberg reports,

Housing starts in the West fell for a third straight month, dropping by 19 percent in March to an annualized rate of 201,000 for the weakest since May. Construction rebounded from harsh winter weather in other parts of the country, such as the Northeast, where they jumped a record 115 percent, and the Midwest.

The weakness in the West might reflect the record-setting drought, which may be discouraging companies from building or taking out permits for new construction, said David Crowe, chief economist at the National Association of Home Builders in Washington. Uncertainty surrounding local water policy and the ability to obtain water connections for new homes or apartment buildings could be holding some builders back, he said.

"Until it's clear what restrictions mean for new building, it's wise for builders to be hesitant," Crowe said. "This is more serious than just a temporary dry period. This is a new regime that says it's going to be harder to obtain additional water usage."

And it's not just California…

About 21 percent of the contiguous U.S. fell in the "moderate" to "extreme" drought categories at the end of March, according to the Palmer Drought Index, which dates back to the beginning of the 20th century.

States such as California, Nevada and Wyoming were experiencing extreme drought in some or all of their boundaries last month, according to the National Climatic Data Center.

Of course, this weakness is transitory – just like the multi-decade drought that is being forecast; but analysts are ever full of hope:

"When it comes to new-home construction, the stage is set for strength in the second quarter," Patrick Newport and Stephanie Karol, U.S. economists at IHS Global Insight, wrote in a note to clients.

Tomorrow… just you wait…





Is The Credibility Bubble Bursting?

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by John Rubino via Dollar Collapse blog,

In a fiat currency system, perception is, by definition, everything. Paper money has no intrinsic value. So the people saving it and accepting it in exchange aren’t expressing faith in the money itself but in the competence and honesty — and power — of the institutions managing it. Let that faith erode and those slips of colored paper and ephemeral computer bits revert to their intrinsic value.

And on the credibility front, the trends aren’t encouraging. Consider the coverage of this weekend’s Washington DC meetings of the International Monetary Fund and World Bank, two global financial institutions that the US dominates. From the New York Times:

At global economic gathering, concerns that US is ceding its leadership role

This article is available only to subscribers, but a similar one from India’s Business Standard makes many of the same points:

US primacy seen ebbing at global meet

As world leaders converge here for their semiannual trek to the capital of what is still the world’s most powerful economy, concern is rising in many quarters that the United States is retreating from global economic leadership just when it is needed most.

The spring meetings of the International Monetary Fund and World Bank have filled Washington with motorcades and traffic jams and loaded the schedules of President Obama and Treasury Secretary Jacob J Lew. But they have also highlighted what some in Washington and around the world see as a United States government so bitterly divided that it is on the verge of ceding the global economic stage it built at the end of World War II and has largely directed ever since.

“It’s almost handing over legitimacy to the rising powers,” Arvind Subramanian, the chief economic adviser to the government of India, said of the United States in an interview. “People can’t be too public about these things, but I would argue this is the single most important issue of these spring meetings.”

Other officials attending the meetings this week, speaking on the condition of anonymity, agreed that the role of the United States around the world was at the top of their concerns.

Washington’s retreat is not so much by intent, Mr. Subramanian said, but a result of dysfunction and a lack of resources to project economic


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You Think Your Job Is Bad

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Meet Zhang Shuang – Cliff-Cleaning Litter-Collector…

Cleaner Zhang Shuang collects litter dropped by tourists on the cliff of Laojun Mountain, 2,000 meters above sea level, in Luoyang, Central China’s Hunan province.

 Zhang Shuang risks his life to abseil down the cliff every three to five days for the past eight years as a cleaner. He calls for tourists to stop littering and polluting the environment.

…And all that for less than US minimum wage?

Source: English.People.CN





Money Printing And The Bane Of Financial Engineering – How The Biggest LBO In History Blew-Up

Courtesy of David Stockman via Contra Corner

Financial engineering is one of the worst ills perpetuated by the Fed’s regime of cheap debt and money market subsidies for speculation. And these deformations are turbo-charged by the tax code which creates a powerful bias toward loading capital structures with tax deductible debt, and to delivering returns as lightly taxed capital gains rather than ordinary income.  In fact, stock buybacks and LBOs are the bastard offspring of the IRS and Federal Reserve.

Indeed, it would be safe to say that in an honest free market with a neutral tax regime, LBOs in particular would be as rare as a white buffalo. That’s because they inherently cause waste, inefficiency and malinvestment—–the opposite of market driven results.  These deadweight losses to society are, in turn, the product of a symbiotic arrangement of convenience between an avaristic breed of money manger——private equity funds—–and institutional investors, such as pension funds and insurance companies, which have a desperate need for yield in a financial system where returns on conventional fixed income securities are systematically repressed by the central bank.

Private equity managers are tax-enabled speculators. Their winnings come in the form of a 20% carried interest on the thin slice of equity at the bottom of an LBO capital structure. This 20% share of the return earned by the limited partners (LPs), who actually put up the money and bear the extreme risk of being pinned under a mountain of debt, might arguably be considered generous. But there is no way that it should be considered a capital gain. It is nothing more than the service fee earned for managing other people’s money.

Needless to say, the taxation once over lightly of carried interest winnings as capital gains creates a humungous incentive to swing for the fences, thereby exacerbating the inherent risk asymmetry of the LBO business model. In short, carried interest driven private equity managers loose nothing on bad bets——100% of the losses go to the LPs.  But 16% of what are often massive upsides in winning deals go to the titans of private equity on a tax free basis (i.e. 80% of 20%).

The fact is, there are a few thousand private equity partners who have captured hundreds of billions in winnings from this arrangement during the past 2-3…
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Bulls Lose Their Wiggle Room

Courtesy of Declan.

Sellers hit indices hard on Friday, leaving markets vulnerable to breaks of nearby support. The S&P managed to find some traction at trendline support and 50-day MA, but it won’t be able to handle any further loss on Monday. To add insult to injury, volume climbed to register as distribution, and there were ‘sell’ triggers between +DI / -DI and On-Balance-Volume.


The Nasdaq also dug in at trendline support and 50-day MA. However, the +DI / -DI bearish cross, and On-Balance-Volume ‘sell’ add to the sell side.


The Russell 2000 finished Friday with a ‘bull trap’. It was a disappointing turn after a period of market leadership. The index is still holding on to its relative leadership, but after Friday it might find this hard to hold on to. Note the ‘sell’ trigger in the MACD, in addition to the ‘sell’ triggers in the +DI/-DI and CCI.


The one index which has switched to the bear side is the Semiconductor Index. It lost bearish wedge support below the 702 neckline and is looking vulnerable to further losses down to 660.


Monday could be tricky for bulls as bears may have finally put the scare on longs. There is support to work with, but much of this support has already endured multiple tests and is unlikely to survive much more. The Semiconductor Index has already cracked, will others follow?

You’ve now read my opinion, next read Douglas’ and Jani’s.





Direct Evidence For The Supercycle

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Jeffrey Snider via Alhambra Investment Partners,

When categorizing intuition about the real economy, it is often regarded as a combination of both structural and now cyclical problems. There was, as yet, no true recovery owing largely to factors that continue to linger beyond historical comparisons about what “should” have occurred in and after the Great Recession. Some economists refer to deleveraging especially of households as that primary structural problem, but it is first debatable whether deleveraging has even occurred and secondly that any such trends may more readily be attributed as symptoms of something else entirely.

I think it is actually a mistake to try to separate these trends, as they amount to a large and overarching supercycle. The lack of recovery in the US and the rest of the world is indistinguishable, in terms of causation, from any turn toward darker cyclicality in 2015; even including potential recession. The dominant feature of the supercycle has been chronic instability in economic form. Recession would just be the most severe of those kinds of expressions.

If there is indeed a supercycle at work, then it must be conveyed under some unifying format or system of conduct. Should it exist, we should be able to easily locate its source or main form of manifestation. And it think that is the case as the recent Chinese struggles so helpfully illustrate. The supercycle is the rise and fall of the “dollar.”

ABOOK April 2015 China IP Eurodollar Shift

I don’t mean that in the respect of the dollar as the denomination of the world’s reserve exchangeability, but rather in the exact methodology of how that has taken shape since the final end of the gold era in 1971 (the gold era actually ended long before that, closing the “gold window” was just the last step in a process that actually dated to the 1950’s). What took over has been expressed as the petrodollar standard, but that elevates the oil producing nations to what I think is an unearned pedestal – if there is a pedestal in this global financial arrangements it is not OPEC accounts it is the eurodollar banks, largely in London, that service them.

Even that word, “service”, is quite misleading in terms of the modern “dollar” framework. In one sense, yes, eurodollar banks offer services but…
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Draghi Tells Euro Shorts To “Make His Day”, Again

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

With a “defiant” Syriza determined to hold onto any shred of dignity and legitimacy that may remain in the wake of months of painful negotiations with its creditors and with a €5 billion advance from Russia (a large chunk of which will promptly be paid to the IMF which use it to bailout Ukraine which will hand it right back to Russia) shaping up to be the last lifeline for Greece before Athens is reduced to issuing IOUs to pay pensions and salaries, the focus is beginning to shift away from Grexit and towards contagion risk. 

The worry is that once Greece goes, both the credit market and periphery depositors will suddenly realize that the EMU is not “indissoluble,” but is in fact nothing more than a confederation of fixed exchange rates. This realization could (and to a certain extent already has) cause credit investors to begin pricing redenomination risk back into sovereign spreads and, far more importantly (because as UBS recently noted, bonds don’t cause breakups, bank runs do), may lead depositors to question the wisdom of holding their euros in bank accounts where they’re earning next to no interest and where, should some “accident” occur, they are subject to conversion into a national currency that would swiftly collapse against the euro once introduced. 

And so, with every sell side European credit strategist trying to figure out what happens when €60 billion in monthly asset purchases by a central bank collide head on with an unprecedented sovereign default and with speculators’ net short position on the EUR now at levels last seen in 2012, it’s time to bring out the big guns with Mario Draghi staging a sequel to his now famous “whatever it takes” speech which came in the summer of 2012, when spreads were blowing out across the periphery and when euro net shorts looked a lot like they do today. 

While conceding that a Greek exit from the euro would put everyone in “uncharted waters,” Draghi says he has the tools to combat contagion and as for shorting the euro, well, perhaps the best way to sum up Draghi’s position is to quote Clint Eastwood: “go ahead, make my day.” 

Here’s more via FT:

Mario Draghi said the euro area was better equipped than it had


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Well That Hasn’t Happened Before – Exhibit 3

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

We have never, ever, seen a larger Fed-fueled, mal-investment boom in private construction…

While some see new record highs in private construction spending as a signal that everything is ‘normal’ again, it is that ‘normal’ that we should be most afraid of as extremely cheap money in the form of loans backing this construction (which will never go down in value thanks to The Fed’s omnipotence) will lead inevitably to a glut or over-supply… or, as we have seen recently, a collapse in credit will disable these highly-levered property speculators from rolling debt.

The distorted picture being painted by ‘unemployment trends’ and constant reassurance by any and every talking head that – thanks to the stock market’s renaissance – everything is set for escape velocity merely places the entrepreneur once again with misleading signals… either a) they do not invest due to uncertainty or b) they pile in speculatively and lose thanks to Fed promises.

Be careful what you wish for… the last 2 times property construction rose at 50% YoY was the top…

Chart: Bloomberg

*  *  *

See Exhibit 1 here

See Exhibit 2 here





 
 
 

Zero Hedge

Trapped (When Will We Know 'They' Lost Control?)

Courtesy of ZeroHedge View original post here.

Authored by Sven Henrich via NorthmanTrader.com,

What? You thought a 850+ point drop in the $DJIA would result in a down week? No Sir. The unholy alliance has struck again. Massive jawboning by multiple administration officials about how well the China trade deal was going, a favorable jobs report and above all, the US Federal Reserve, all contributed to a furious rally to make markets green for the week on (whe...



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Phil's Favorites

The Portfolio Gap

 

The Portfolio Gap

Courtesy of 

Dalbar is known for publishing a study on returns from equity funds compared to the returns that investors capture in those same funds. Every year reveals the same message: The average investor, with remarkable consistency, underperforms their own investments, ostensibly by buying and selling at inopportune times.

The methodology behind the study has been under assault for at least the last 15 years. Here is ...



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Digital Currencies

Visualizing The New Cryptocurrency Economy

Courtesy of ZeroeHedge

Over a decade ago, the birth of Bitcoin sparked a revolution in the digital world - and just last year, the number of active cryptocurrencies jumped from roughly 1,600 to over 3,000 worldwide.

As Visual Capitalist's Ashley Viens details below, cryptocurrencies have now evolved past simple digital currencies, offering solutions to meet the complex needs of modern financial markets.

Today’s graphic from Abra visualizes the complex, ever-evolving cryptocurrency ecosys...



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Kimble Charting Solutions

Gold Miners Indicator Attempting Multi-Year Breakout, Says Joe Friday

Courtesy of Chris Kimble

Are Gold Mining stocks about to be sent a bullish signal they haven’t received in years? Possible says Joe Friday.

This chart looks at the Senior Miner/Junior miner (GDXJ/GDX) ratio over the past few years. Historically when the ratio is heading up, miners tend to do very well.

The ratio has created a series of lower highs just below the falling line (1), since the summer of 2016. The ratio is currently testing the strong falling resistance line and the June 2019 highs at (2).

Joe Friday Just The Facts Ma’am; If the ratio succeeds in a double breakout at (2), it sends miners a long-awaited bullish message.

...

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Insider Scoop

Scott Galloway Calls For Twitter's Board To Replace 'Part-Time CEO' Jack Dorsey Amid Africa Move Plans

Courtesy of Benzinga

A shareholder in Twitter Inc. (NASDAQ: TWTR) and New York University business professor wrote an open letter Friday to the company's board calling for the replacement of CEO Jack Dorsey.

What To Know

Scott Galloway, who owns more than 330,000 shares of Twitter stock a...



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Lee's Free Thinking

Chart Shows the Fed Ramping Up Not QE - Funding Almost All Treasury Issuance

 

Chart Shows the Fed Ramping Up Not QE – Funding Almost All Treasury Issuance

Courtesy of Lee Adler, Wall Street Examiner 

The Fed is ramping up “Not QE” .

The Fed bought $2.2 billion in notes today in its POMO, “not QE,” operations. Actually $2.15 billion because they sold back a whole $50 million. Must have been a little glitch in the force.

This brings the Fed’s total outright purchases of Treasuries to $170 billion since it started Not QE, on September 17.

It also did $107 billion in gross new repo loans to Primary Dealers to buy Tre...



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Chart School

Silver stock taking the sector higher

Courtesy of Read the Ticker

As the US economy begins to show late cycle characteristics like: GDP slowing, higher inflation, higher wage costs, CEO confidence slump. 

Previous Post: Gold Stocks Review

The big players in the market are looking for the next swing off good value lows. This means more money is finding it way into the gold and silver sector, and it is said gold and silver stocks actually lead the metal prices.

The cycle below shows prices are ready to move in the months ahead (older chart re posted).


Click for popup. Clear your browser cache if image is not showing...



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Members' Corner

Sacha Baron Cohen Uses ADL Speech to Tear Apart Mark Zuckerberg and Facebook

 

Sacha Baron Cohen Uses ADL Speech to Tear Apart Mark Zuckerberg and Facebook

By Matt Wilstein

Excerpt:

Sacha Baron Cohen accepted the International Leadership Award at the Anti-Defamation League’s Never is Now summit on anti-Semitism and hate Thursday. And the comedian and actor used his keynote speech to single out the one Jewish-American who he believes is doing the most to facilitate “hate and violence” in America: Facebook founder and CEO Mark Zuckerberg.

He began with a joke at the Trump administration’s expense. “Thank you, ADL, for this recognition and your work in fighting racism, hate and bigotry,” Baron Cohen said, according to his prepared...



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The Technical Traders

VIX Warns Of Imminent Market Correction

Courtesy of Technical Traders

The VIX is warning that a market peak may be setting up in the global markets and that investors should be cautious of the extremely low price in the VIX. These extremely low prices in the VIX are typically followed by some type of increased volatility in the markets.

The US Federal Reserve continues to push an easy money policy and has recently begun acquiring more dept allowing a deeper move towards a Quantitative Easing stance. This move, along with investor confidence in the US markets, has prompted early warning signs that the market has reached near extreme levels/peaks. 

Vix Value Drops Before Monthly Expiration

When the VIX falls to levels below 12~13, this typically v...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

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

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

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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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