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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Phil's Favorites

Congress is considering privacy legislation - be afraid

 

Congress is considering privacy legislation – be afraid

Courtesy of Jeff Sovern, St. John's University

Supreme Court Justice Louis Brandeis called privacy the “right to be let alone.” Perhaps Congress should give states trying to protect consumer data the same right.

For years, a gridlocked Congress ignored privacy, apart from occasionally scolding companies such as Equifax and Marriott after their major data breaches. In its absence, ...



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Zero Hedge

Key Events This Week: Trade War, EU Elections, Durables, PMIs And Fed Minutes

Courtesy of ZeroHedge

Looking at this week's key events, Deutsche Bank's Craig Nicol writes that while the unpredictable nature of US-China trade developments will likely continue to be the main focus for markets again next week, we also have the European Parliament elections circus to look forward to as well as various survey reports including the flash May PMIs which may offer some insight into the impact of trade escalation on economic data. The FOMC and ECB meeting minutes are also due, along with a heavy calendar of Fed officials speaking.

The European Parliament elections will kick off next Thursday with voting continuing into the weekend across the continent, with results expected on Sunday. With the elections surrounded by internal and external challenges for the EU, members di...



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Kimble Charting Solutions

Will S&P 500 Double Top Derail The Rally?

Courtesy of Chris Kimble.

The rally off the December stock market lows has been strong, to say the least. The S&P 500 rallied 25 percent before hitting and testing the 2018 high.

The old highs proved to be formidable resistance and ushered in some volatility in May… and a 5 percent pullback.

In today’s 2-pack, we look at that resistance level – could that be a double top? We can see similar patterns develop on the S&P 500 Index and its Equal Weight counterpart.

Both indexes are testing short-term Fibonacci retracement levels of the recent decline at point (2).

What takes place here after potential double top highs will be important. Stay tuned...



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Insider Scoop

60 Biggest Movers From Friday

Courtesy of Benzinga.

Gainers
  • Fastly, Inc. (NYSE: FSLY) shares jumped 50 percent to close at $23.99 on Friday. Fastly priced its 11.25 million share IPO at $16 per share.
  • Outlook Therapeutics, Inc. (NASDAQ: OTLK) shares climbed 37.3 percent to close at $2.10 on Friday after the stock rose over 68 percent Thursday following an Oppenheimer initiation at Outperform with a price target of $12.
  • Cray Inc. (NASDAQ: CRAY) shares rose 22.5 percent to close at $36.52 after Hewlett Packard Enterpri...


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Chart School

Weekly Market Recap May 18, 2019

Courtesy of Blain.

China – U.S. trade talk continued to dominate the week.   A heavy selloff Monday was followed by 3 up days, with Friday moderately down.

On Monday, Chinese officials announced retaliatory tariffs against the U.S., hitting $60 billion in annual exports to China with new or expanded duties that could reach 25%.

Then on Wednesday:

The Trump administration plans to delay a decision on instituting new tariffs on car and auto part imports for up to six months, according to media reports.

...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



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Biotech

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

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

 

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University

...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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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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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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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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