Archive for 2017

The U.S. Owes UNESCO Half A Billion Dollars

Courtesy of ZeroHedge. View original post here.

This week, the U.S. and Israel announced that they would be withdrawing from UNESCO, citing 'continuing anti-Israel bias'.

As Statista's Niall McCarthy notes, the move comes as a major blow to the organization which is known for designating cultural sites around the world such as the Grand Canyon or ancient Palmyra in Syria.

The U.S. has been expected to pay the bulk of UNESCO's budget for years and it cancelled its financial contributions back in 2011 in protest of Palestine's admission as a full member.

In the years since, it has amassed significant arrears of over $500 million…

Infographic: The U.S. Owes UNESCO Half A Billion Dollars  | Statista

You will find more statistics at Statista

This year, the UK, Japan and Brazil have all failed to pay their contributions so far, accrueing nearly $70 million of arrears between them.

This isn't the first time the U.S. has turned its back on UNESCO.

The country also left the organization under Ronald Reagan in the 1980s before rejoining under George W. Bush in 2003.

The latest withdrawal will come into effect at the very end of 2018.





There Are 2.7 Trillion Reasons Why Tesla Won’t Rule The World

Courtesy of Zero Hedge

News of mass “performance-based departures” at Tesla, reported yesterday by the San Jose Mercury News has underscored the fact that Elon Musk and company have burned through a ridiculous amount of cash in the past two quarters alone, raising questions about why the company would choose to cut nearly 10% of its workforce when the assembly line for the company’s new Model 3 sedan has reportedly not yet been completed, and production remains woefully behind schedule as employees at the company’s Freemont factory have been forced to piece together the cars by hand.

And with Elon Musk reeling from a series of embarrassing revelations, Bloomberg is here to remind us of one of the many reasons why Tesla will never become a global automotive behemoth.

So far, the US government’s generous tax incentives for buyers of electric vehicles have helped bolster Tesla’s sales – a strategy that has been employed across Europe – and have sustained the market’s misguided conviction that Tesla will one day become a profitable enterprise.

But unfortunately, those incentives aren’t nearly enough to create the infrastructure to support Morgan Stanley’s forecast of 526 million electric vehicles operating globally by 2040. Building the charging stations and other infrastructure necessary would cost an astonishing $2.7 trillion, much of which would probably need to be allocated by governments.

Morgan Stanley says the problem requires a mix of private and public funding across regions and sectors. The investment bank’s strategists added that any auto company or government with aggressive targets would be unfeasible unless the infrastructure is in place.

As we’ve noted time and time again, the electric-vehicle industry is essentially being support by generous – and borderline anti-competitive – government subsidies. In China, which has aggressively pushed EVs as a potential remedy for its pollution problem, communist party officials have hit on an effective strategy for forcing consumers to favor electric vehicles. In Shanghai, where tens of thousands of people enter monthly lotteries for just a handful of license plates, consumers who buy electric cars are given license plates with little resistance.

Morgan Stanley expects China to become the largest EV market in the world by 2040, accounting for about a third of global infrastructure spending, Bloomberg reports.

But with Trump in office, it’s unlikely the US will prove so amendable to subsidizing Elon Musk’s ambitions for much longer.





Overheating China PPI Sends 10Y Yields To 30 Month Highs As Banks Inject Another Quarter Trillion Dollars In Loans

Courtesy of ZeroHedge. View original post here.

Despite a disappointing US CPI report on Friday, which saw core inflation miss once again despite an expected spike due to the "hurricane effect", moments ago China reported that in September, its CPI printed at 1.6% Y/Y, in line with expectations, and down from, 1.8% in August largely due to high year-over-year base effects, but it was PPI to come in smoking hot, jumping from 6.3% last month to 6.9% Y/Y, slamming expectations of a 6.4% print and just shy of the highest forecast, driven by the recent surge in commodity costs and strong PMI surveys.

While there has been no reaction in the Yuan, either on shore or off, the stronger than expected PPI has pushed China's 10Y yield to the highest in 30 months, or since April of 2015.

Adding fuel to the flame was PBOC head Zhou Xiaochuan who said earlier that China’s GDP would pick up from the 6.9%  figure recorded in the first six months of the year "thanks to a boost from household spending", according to a synopsis of his comments at the G30 International Banking Seminar posted to the People’s Bank of China website on Monday." The reason why his comments have impacted the long-end is that the reported, and completely fabricated number, is higher than the previous consensus forecast of a goalseeked Q3 Chinese GDP of 6.8%.

And while spiking Chinese yields wouldn't be concerned if China was indeed deleveraging as the Communist Party and the PBOC claim it is doing, the reality is, of course, that China continues to add more and more debt as the latest weekend credit numbers out of the PBOC revealed. As Bloomberg reported earlier, China's broadest credit aggregated, Total Social Financing, jumped to 1.82 trillion yuan, or over a quarter trillion dollars in September ($276BN to be precise), vs a Wall Street estimate of 1.57 trillion yuan and 1.48 trillion yuan the prior month. New yuan loans also beat expectations, at 1.27 trillion yuan, versus a projected 1.2 trillion yuan, while for the first time in months, the broader M2 money supply did not hit fresh fresh record lows, and instead beat expectations, rising to 9.2% from an all time low of 8.9%.


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Buffett’s Wrong – Why Market Valuations Are Not Justified By Low Interest Rates

Courtesy of ZeroHedge. View original post here.

As is his way, Billionaire investor Warren Buffett calmed an anxious nation earlier this month with his comments that:

"Valuations make sense with interest rates where they are."

And it seemed to work as stocks hit new record highs and Americans have never, ever been more sure that stocks will continue rising for the next 12 months

Why wouldn't they – Buffett knows all, right?

Wrong, says John Hussman

Via Hussman Funds.com

It’s such a comforting, even satisfying assumption; the idea that “lower interest rates justify higher valuations.” The idea is one of the most basic principles of finance. Indeed, investors could consider it a law of investing. Except for the fact that it’s an incomplete sentence. Unfortunately, the convenience of investing-by-slogan, rather than carefully thinking about finance and examining evidence, is currently leading investors into what is likely to be one of the worst disasters in the history of the U.S. stock market.

Here are the propositions that are actually true:

  • An investment security is nothing but a claim on some stream of expected future cash flows that will be delivered into the hands of investors over time.
  • Provided that the stream of expected future cash flows is held constant, discounting those future cash flows at a lower rate (which is the same as accepting a lower future rate of return), will result in a higher “justified” price today, and this impact can be quantified.

Below, we’ll also establish and demonstrate some additional propositions:

  • If interest rates are low because growth rates are also low, no valuation premium on stocks is “justified” by the low interest rates. Prospective returns are reduced without the need for any valuation premium at all.
  • Provided that a valuation ratio is based on a “sufficient statistic” for long-term cash flows, the logarithm of that valuation ratio will, in turn, act as a sufficient statistic for long-term investment returns.
  • Revenues and margin-adjusted earnings have historically been far more reliable “sufficient statistics” of future cash flows than year-to-year earnings, or even


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Is Bend, Oregon In A Bubble?

Courtesy of ZeroHedge. View original post here.

Authored by Chris Hamilton via Econimica blog,

I grew up in Bend, Oregon and hope to retire there someday soon.  I love everything Bend has to offer (if you don't know Bend, think Boulder or Sun Valley…but better).  I have family, friends, and rental properties in Bend. 

So when a friend sent me a video with an economist (Bill Valentine) explaining why Bend was not in "a bubble" in mid-2017 and that residential property "prices were virtually permanently headed higher", I was pleased but simultaneously more than a little curious.

My curiosity stemmed from the fact that since 1985, Bend's property values have risen in excess of 6x's.  Since 2000, prices are up nearly 3 fold.  Subsequent to the financial crisis lows, property values have nearly doubled and prices are now marginally higher than the '07 peak.  The same peak which economists unanimously agreed was an unsustainable speculative "bubble".  But this time is different???

To define our terms, "a bubble" is trade in an asset that strongly exceeds the asset's intrinsic value.  Mr. Valentine explained that Bend's property values are not in "a bubble" and that "property prices (in Bend) are virtually permanently headed higher" because "more people want to and can move into Bend from cities with loftier property values than the future supply of homes (in Bend) can keep up with".  So, Mr. Valentine's bet on Bend (or most highly desirable getaway destinations) is a bet on continual property value rises in the larger cities (alongside continued financial asset appreciation…whose ownership is concentrated in the cities).  This will allow these "city folk" to ultimately sell high and buy high in relatively cheaper Bend.  Plus Bend will be unable or geographically constrained from adding adequate supply of new housing to keep up with demand.

Growth Explained…and Why Organic Growth Has Slowed

Growth among the working age population is the key to increasing demand and economic growth.  The chart below shows average household incomes and expenditures (consumption) by age of the head of the households.  Not surprisingly, the 35 to 64 year old population has significantly higher incomes and spends significantly more than young adults or elderly.  In particular, the 45 to 54 year old average household earn more than 2.5x's the income and spend nearly 2x's as much than that of 75+ year old households.  Population growth in the right age


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Colin Kaepernick Files a Grievance Against NFL Owners for Collusion

Bleacher Report's Mike Freeman reports that Colin Kaepernick filed a grievance against NFL owners for collusion.

After remaining unsigned through six weeks of the 2017 NFL season, Colin Kaepernick claims the league is participating in collusion.

According to Bleacher Report's Mike Freeman, the former San Francisco 49ers quarterback has filed a grievance against the owners for collusion under the latest collective bargaining agreement.

More here >





WTF is the Blockchain?

 





Social Security Means-Testing Looms: “It’s Impossible Without A 50% Income Tax Hike”

Courtesy of John Mauldin, MauldinEconomics.com

The projected total US debt will be $30 trillion within 10 years, using the CBO’s own numbers. But the CBO also makes the rosy assumptions that there will be no recessions and that GDP will grow at a 4% nominal rate.

Now, that’s possible; I'm inclined to haircut it a bit.

If you asked me to bet the “over/under” on the debt in 2027, I would bet the over at $35 trillion.

After the next recession the deficit will be $30 trillion within 4–5 years and then grow from there at a rate of anywhere from $1.5 to $2 trillion per year (I covered my team’s calculations in this letter).

Is it any wonder why I’m so concerned about pensions?

Social Security Is Impossible Under This Deficit

Note: That is not the CBO’s projected debt. It does not take into account the off-budget deficit that still ends up having to be borrowed. Last year the deficit was well over $1 trillion—but we were told it was in the neighborhood of $600 billion.

If any normal company tried to use accounting like the US Congress does, the SEC would rightly declare it fraudulent and shut it down immediately.

Here’s a chart from the Treasury’s annual financial report, projecting government receipts and spending:

Note that this chart expresses the various items as percentages of GDP, not dollars. So the relatively flat spending categories simply mean they are forecasted to grow in line with the economy, or just a little faster.

But the space representing net interest grows much faster than GDP does – fast enough to make total federal spending add up to one-third of GDP by 2090.

Obviously, this chart is based on all kinds of assumptions, and reality will be far different. I doubt we will make it to 2090 (or even 2050) without at least one global depression or other calamity that radically resets all the assumptions.

Beneficial changes are also possible – biotech breakthroughs that reduce healthcare expenditures, for instance.

Still, looking at the demographic reality of longer lifespans and lower birthrates, it’s hard to believe Social Security can


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Comment by phil

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  1. phil

    VXX/Jash – So it was net $1,250 and now the Oct $38s are 0.95 ($1,900) so still salvageable.  If you want to continue to be long vol, You can assume we won't hit $42 by next Friday, cash the $38s and roll to the Jan $35 ($6)/38 ($5) bull call spread for $1 as those are almost $2 in the money.  The short puts are $3.60 at the moment and the Jan $34 puts are also $3.60 so, if you can roll down $6 (15%) every quarter – it's hard to worry about those, right? 

    • The pro-business policies of the new administration were hoped to unleash a wave of corporate lending, but Federal Reserve data show the growth in such loans dropping to 2.1% from 8.1% last November.
    • "All the turmoil and the inability to move policy through Washington set in,” says Jeff Glenzer from the Association for Financial Professionals.
    • Others, however, say the slowdown may just be a return to the mean – growth in corporate lending has run well head of GDP growth in the years since the financial crisis.
    • Q3 earnings results begin this week, with JPMorgan and Citigroup on Thursday. Analysts have been trimming some earnings estimates – U.S. Bancorp (NYSE:USB) and BB&T (NYSE:BBT) to name two – as bank managements during conference season last month signaled slower-than-hoped loan growth.
    • The Wall Street Journal reports that Apple (NASDAQ:AAPL) has struck a deal with Steven Spielberg to produce new episodes of a classic 1980s sci-fi and horror anthology.
    • The deal involves Apple, Spielberg’s Amblin Television, and Comcast’s (NASDAQ:CMCSA) NBC and pertains to NBC’s show “Amazing Stories.” 
    • Spielberg will likely serve as executive producer for the ten episodes, which reportedly each have a budget


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Is Blockchain-Driven Bandwidth the New Super Currency?

Courtesy of ZeroHedge. View original post here.

By financedude85

It may not be talked about as much anymore, but bandwidth continues to be a prime commodity that powers the internet. The rise of cloud computing may have created the notion that scaling up capacity is easy whenever an app or service demands more. However, the ability to scale up doesn’t mean that computing resources are limitless. 

Resource and hosting providers may also claim that they can provide “unmetered” and “unlimited” services but the fine print would actually say otherwise. These service packages still have limits. It’s not like one can subscribe to a $5-a-month hosting package and run YouTube on it. Bandwidth also comes with a price. 

Being finite and useful makes bandwidth valuable. The idea of bandwidth being “currency” has been floated around even a decade ago, back when peer-to-peer and streaming video were only emerging. Demand for bandwidth was rising and the global infrastructure was far from the size and complexity that it has today. 

The challenge then was to make the economics work. However, it’s only recently that such a concept could effectively be explored thanks to the emergence of the blockchain. Now that new blockchain platforms allow just about anything of value to be tokenized and traded like bitcoin, blockchain-driven bandwidth could just become the new super currency.  

Decentralized computing resources 

Decentralized computing resource provision through blockchain is now gaining traction. Blockchain can be used to effectively pool together computing resources and make these available to other users.

Sia and Filecoin, for instance, provide a decentralized file storage solution, by “renting” hard disk space to create a “decentralized Dropbox”. Golem allows users around the globe to rent their CPU processing power to other users seeking to enhance their computational capabilities, thus creating a worldwide supercomputer for hire.

Datum also offers database storage through the blockchain. These services allow users to tap distributed resources in order to safely store their data. Unlike traditional cloud storage where files and data can essentially be accessed by providers, a decentralized approach encrypts files and information and distributes data across the network. Only the owner could gain access to the information.

Aside from storage, other computing resources could also be tapped for other purposes.


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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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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:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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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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