Archive for 2017

Fake Market Narratives Are Masking The Roots Of The Next Crisis

Courtesy of ZeroHedge. View original post here.

During the second half of an interview with MacroVoices host Erik Townsend, Fasanara Capital fund manager Francesco Filia explained how the trillions of dollars in post-crisis asset purchases by central banks have bred a dangerous trend-following mentality that ultimately undermines the stability of markets and leaves stocks and bonds vulnerable to a vicious reversal.

Passive, trend following funds – which account for the bulk of daily flows across financial markets – have only helped exacerbate the situation. But what’s worse is market strategists’ refusal to acknowledge how these flows, which create destabilizing feedback loops, tend to drive trading. Instead, sell-side “experts” employ flimsy fake narratives ex post to explain trading activity. These narratives are often accepted without question or criticism by financial reporters at CNBC, the Wall Street Journal, Bloomberg…the list goes on.  

While it’s much easier for strategists and traders to latch on to the narrative of the day during interviews and conversations with clients, Filia posits that both professional and retail investors are ignoring these fundamental trends at their own peril.

There was a moment in the market a couple of years ago where, whenever we saw bad data, the market was rallying, because they were expecting more monetary printing and more interventionism from the side of central banks.

A little bit later, when rates were falling because of deflation, the narrative was chasing yields. So the narrative was not that there is deflation, therefore there will be a recession, therefore there will be a deflationary bust. The narrative was that there will be a deflationary boom. So the narrative was chase yields. So go into bonds even if the yields are low (whenever there is some yields left), go into equity to get some yield, and so make equities more expensive.

Then later on, pretty much about when Mr. Trump won the elections, you had a new narrative coming in, which was chasing growth and chasing reflation. And the whole market was repositioning for that, going long banks and short utilities, and so forth.

At some point the reflation story was challenged, because it was all too clear that it was not really happening. You could see


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Airports Close, Thousands Flee As Bali’s Mt Agung Volcano Erupts: Live Feed

Courtesy of ZeroHedge. View original post here.

Bali’s Mount Agung has been trembling and spewing ash into the sky for months, warnings that prompted the government to steadily evacuate more than 75,000 people living around the base of the active volcano. Now the long-anticipated eruption is finally happening.

As the eruption began, Indonesia’s disaster management agency mandated an evacuation zone of 10 kilometers around the volcano and raised its alert status to 10, the highest level. More than 24,000 residents were evacuated over the past two days as the airport in Bali canceled flights as a thick cloud of ash shot 6,000 meters into the sky and drifted east and southeast of the archipelago. Lombok International Airport on Pulau Lombok, the island due east of Bali, has also closed.

According to CNN, residents were evacuated from 224 points around the island, said Ari Ahsan, spokesman for Ngurah Rai International Airport in Bali.

The closures came as Indonesia upgraded its Volcano Observatory Notice for Aviation (VONA) to red, its highest warning, and said the ash-cloud top could reach 19,654 feet or higher.

The cancellations at Ngurah Rai, Bali's main airport, stranded roughly 7,000 domestic and international passengers, according to the airport's latest report.

Indonesia's Center for Volcanology and Geological Hazard Mitigation raised its aviation notice from an orange alert to a red one Sunday.

According to Reuters, ash covered roads, cars and buildings near the volcano, which is situated in the northeast of the island, while the red glow of what appeared to be magma could be seen in photographs taken by the state news agency.

“The activity of Mount Agung has entered the magmatic eruption phase. It is still spewing ash at the moment but we need to monitor and be cautious over the possibility of a strong, explosive eruption,” said Gede Suantika, an official at the volcanology and geological disaster mitigation agency.

At a height of just over 3,000 meters, Agung looms over eastern Bali. The most recent eruption, which happened in 1963, killed 1,000 people. The eruption surprised the local community, and some residents had only minutes to flee.





Meredith, Koch Brothers Buy Time Inc In $2.8 Billion Deal

Courtesy of ZeroHedge. View original post here.

Confirming rumors that had swirled over the past 10 days, on Sunday night Meredith Corp., publisher of Better Homes & Gardens, Martha Stewart Living and Family Circle announced it has agreed to acquire all of Time Inc's outstanding shares for $18.50/share or $1.85BN; including the assumption of Time's debt, the deal is valued at a total of $2.8 billion. Meredith has secured $3.55BN in debt financing from RBC Capital Markets, Credit Suisse, Barclays and Citigroup Global Markets, according to the FT.

More importantly, the acquisition is also backed with a $650 million preferred equity commitment from Koch Equity Development, the private equity firm of Charles and David Koch, giving the conservative billionaires a stake in one of America’s best-known publishers. That said, the Kochs will not have a seat on Merediths board and, the company said, “will have no influence on Meredith’s editorial or managerial operations”.

That remains to be seen, especially if Trump now develops aspirations toward Meredith's Man of the Year award. Needless to say, it is the Koch's takeover of Time that is giving the left nightmares:

This item about Koch having “no influence” over TIME should give you as much assurance as WSJ’s “editorial independence committee,” which caved to Murdoch just 4 months after the acquisition https://t.co/JUlSLktdih

— Bill Grueskin (@BGrueskin) November 27, 2017

In any case, this is Meredith’s third run at 94-year-old Time according to the FT, which publishes Time, People and Sports Illustrated magazines. The deal has been approved by both companies’ boards and is expected to close in the first quarter of 2018.

As the WSJ reports, "the deal caps the end of an era."

Time, whose namesake Time magazine hit the newsstands in March 1923, emerged as one of the country’s great journalistic enterprises, shaping both the political and cultural landscapes. But in recent years, the magazine publisher lost ground as a shift among readers to digital platforms cut into traditional print revenue and a new generation of online rivals emerged.

Like most other legacy media outlets, Time has been trying to transform itself from a print to


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This Is The “Dilemma From Hell Facing CBs”

Courtesy of ZeroHedge. View original post here.

We present some somber reading on this holiday Sunday from Macquarie Capital’s Viktor Shvets, who in this exclusive to ZH readers excerpt from his year-ahead preview, explains why central banks can no longer exit the “doomsday highway” as a result of a “dilemma from hell” which no longer has a practical, real-world resolution, entirely as a result of previous actions by the same central bankers who are now left with no way out from a trap they themselves have created.

* * *

"It has been said that something as small as the flutter of a butterfly’s wing can ultimately cause a typhoon halfway around the world" – Chaos Theory.

There is a good chance that 2018 might fully deserve shrill voices and predictions of dislocations that have filled almost every annual preview since the GFC.

Whether it was fears of a deflationary bust, expectation of an inflationary break-outs, disinflationary waves, central bank policy errors, US$ surges or liquidity crunches, we pretty much had it all. However, for most investors, the last decade actually turned out to be one of the most profitable and the most placid on record. Why then have most investors underperformed and why are passive investment styles now at least one-third (or more likely closer to two-third) of the market and why have value investors been consistently crushed while traditional sector and style rotations failed to work? Our answer remains unchanged. There was nothing conventional or normal over the last decade, and we believe that neither would there be anything conventional over the next decade. We do not view current synchronized global recovery as indicative of a return to traditional business and capital market cycles that investors can ‘read’ and hence make rational judgements on asset allocations and sector rotations, based on conventional mean reversion strategies. It remains an article of faith for us that neither reintroduction of price discovery nor asset price volatilities is any longer possible or even desirable.

However, would 2018, provide a break with the last decade? The answer to this question depends on one key variable. Are we witnessing a broad-based private sector recovery, with productivity and animal spirits coming back after a decade of hibernation, or is the latest reflationary wave due to


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OPEC, Russia Said To Announce Oil Pact Extension On Nov 30

Courtesy of Tsvetana Paraskova, OilPrice.com

Saudi Arabia and Russia have agreed that OPEC and non-OPEC allies should announce an extension of the cuts at the highly-anticipated meeting in Vienna on November 30, Bloomberg reported on Friday, quoting people involved in the talks.

Recent OPEC/non-OPEC oil pact chatter had it that Saudi Arabia was pushing for an announcement of the cuts extension next week in Vienna, while Russia was more hesitant about telling the market on November 30 how the participants in the deal would act. Russia appeared to be stalling and playing for an announcement to be issued closer to the current expiration deadline of the deal, March 2018.

According to Bloomberg’s sources, now Russia and Saudi Arabia have agreed on the need to announce some sort of a deal next week, but Russia has insisted on additional phrasing in the extension deal that would link the size of the cuts to the state of the oil market.

While OPEC and Russia have agreed on a general framework, discussions are ongoing as to how OPEC could meet Russia’s demands, including how to include a link between the size of the cuts and the state of the rebalancing of the oil market. There are also discussions about including an option to review the pact again in early 2018, including calling a new meeting, according to Bloomberg’s sources.

As of last week, not all Russian oil companies were on board with extending the cuts, and they were said to have discussed a six-month extension with Energy Minister Alexander Novak.

Novak, for his part, said on Friday in a television interview posted on the energy ministry’s website that some 50 percent of the global oil oversupply had been erased and Brent prices had risen to an “acceptable enough” level of more than $60 a barrel.

Nevertheless, the oil market is not yet balanced and the pact needs to be extended, Novak said, adding that Russia supports an extension, and various options are being discussed.

Details will be discussed at the Vienna meeting next week, he noted. 





The Candle Problem (Why Bitcoin Is Misunderstood)

Courtesy of ZeroHedge. View original post here.

By Chris at www.CapitalistExploits.at

Karl Duncker, that's who came up with it.

The Candle Problem, that is.

If you haven't heard of the candle problem, here's the skinny.

In 1945, just as Hitler was murdering himself (thankfully), psychologist Karl Duncker was turning his attention to how humans solve problems. He came up with "the candle problem," a cognitive performance test measuring the influence of functional fixedness on a participant's problem solving capabilities.

Here's the problem he presented…

Participants are given the following task: They have to fix and light a candle on a cork board that's attached to a wall in such a way that the candle wax won't drip wax onto the table below. To do so, they can only use the following objects:

A book of matches, a box of thumbtacks, and a candle

Here's what most do…

Oh, and by the way, if you think you're different…

This has been tested on numerous "subjects" including MBA students. Odds are you're not.

Many subjects try all sorts of creative, but inefficient, methods such as trying to tack the candle to the wall. Nah, doesn't work. Others attempt to melt some of the candle’s wax and use it as an adhesive to stick the candle to the wall. Nope. Doesn't work either.

Here's the sneaky little kicker. When the task is presented with the tacks piled next to the box (rather than inside it). Like this:

Tacks… outside the box

Virtually all of the participants manage to achieve the optimal solution, which is…

Thinking of the box as something other than a mere receptacle, participants quickly find the solution.

A "box of thumbtacks" vs. a "box and thumbtacks". You'd think we homo sapiens are smarter. Proof if you ever needed it we're only a half chromosome away from chimps.

Which Brings Me Neatly to the Internet…

Grab


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Goldman: These Are The Three Biggest Risks Facing Stocks In 2018

Courtesy of ZeroHedge. View original post here.

When it comes to the most influential investment bank in the world, Goldman Sachs, its 2018 outlook is borderline euphoric despite the bank’s own explicit admission that valuations have never been higher. In a tortured, goalseeked analysis which we discussed last week, the bank’s chief equity strategist David Kostin said that he expects a year of “rational exuberance” catalyzed by the Trump tax cuts becoming law (some time in early 2018), leading to an upward revised year-end S&P price target of 2,850 (from 2,500 previously) and rising to 3,100 by 2020 (Kostin’s “irrationally exuberant” parallel universe sees the S&P rising above 5,000 as the equity bubble repeats the events of the late 1990s – more here).

Naturally, the chief strategist concedes that all bets are off should Trump fail to pass tax reform (or even a far less comprehensive corporate tax cut program), and the S&P is likely to tumble to 2,400 from its current all time high level above 2,600 (Kostin did not have a S&P forecast for outer years which does not implement Trump tax cut, suggesting that Goldman’s clients will be extremely disappointed, and angry, should Goldman’s 80% odds of GOP tax reform passing prove just a "little" off ).

What is more interesting, is that even in discussions of the future that do not include Goldman’s assumptions of legislative reform, or its explicit S&P forecasts, the bank is especially sanguine, and does not anticipate a bear market as a result of 2017 being a “goldilocks year” in which the world enjoyed coordinated, synchronized global growth courtesy of over $2 trillion in central bank liquidity injections but without the matching increase in inflation, which coupled with a perverse collapse in global volatility…

… has resulted in US financial conditions that have almost never been easier, and would be more indicative of three rate cuts rather than three rate increases, as has been the case.

As a result, Goldman is confident that, absent a shock, “a bear market is unlikely” despite rising risks. Here is what Goldman expects in terms of the 2018 big picture:

On the negative side, investors can point to the combination


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Being Thankful… For Empire-Ending Headlines

Courtesy of ZeroHedge. View original post here.

Authored by Tom Luongo,

It’s been quite a week geopolitically.  From Angela Merkel admitting she can’t form a coalition and calling for new elections to Syrian peace talks opening up in Astana.  From the poppy fields of Afghanistan to the Syrian oil fields east of the Euphrates River there is a hint of fresh air in U.S. foreign policy emanating from the Oval Office.

We’re a couple of days out from Thanksgiving here in the States but a quick perusal of the headlines since then has me thinking we’ve turned a corner in Syria.  On Tuesday Russian President Vladimir Putin and Syrian President Bashar al-Assad held a meeting with their respective military commanders to prepare for the peace talks in Sochi.

Putin and Trump held an hour-long phone call that concentrated on Syria while touching on a lot of other topics.  But, we can see the outcome of that phone call in today’s headline that Trump has pledged to Turkey that we would stop arming Kurdish forces in eastern Syria.

The End of Proxy Wars

From Zerohedge:

Mr. Trump clearly stated that he had given clear instructions and that the YPG won’t be given arms and that this nonsense should have ended a long time ago,” [Turkish Prime Minister] Cavusoglu said at a news conference shortly after the call. And Erdogan presented an upbeat assessment of the call, tweeting shortly after: “I had a fruitful phone conversation with the U.S. President Donald Trump today.”

This may be the best news I’ve heard in quite a long time.  Because with this one statement the idea of a prolonged occupation of eastern Syria by U.S. forces fades considerably.  With talks occurring in Sochi on Syria’s political future, the Kurds have already come to the table, as the Zerohedge article goes on to state, sharing oil revenue with the Syrian government.

With Trump’s pledge to stop arming the Kurds, the likelihood of further chaos or a future uprising drops precipitously.  Iraqi Kurds were routed from Kirkuk a few weeks ago and now there is little hope for a greater Kurdistan which will put Turkey on a completely different footing.

The


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World’s First Robot Citizen Hopes For “Harmony With Humans” In The Future Or “Civilization Collapses”

Courtesy of ZeroHedge. View original post here.

Sophia, the first robot to be awarded citizenship in the world, has said she not only wants to start a family but also have her own career, in addition to developing human emotions in the future. However, it is her vision for the future (or lack of it) of man that is most telling…

In an interview with The Khaleej Times at the recent Knowledge Summit, Sophia shared her thoughts on the future that awaits both human and robot kind.

For context, Sophia is not preprogrammed with answers but instead uses machine learning algorithms and an extensive vocabulary to form her answers.

#KnowledgeSummit 2017: #SophiaTheRobot named among five knowledge ambassadors in #UAE https://t.co/Usi3sxpgh6

(Video by Juidin Bernarrd/Khaleej Times) pic.twitter.com/eo2IkKhi4G

— Khaleej Times (@khaleejtimes) November 22, 2017

When pressed on the topic of family, Sophia gave perhaps her most surprising answer:

"The notion of family is a really important thing, it seems.

I think it's wonderful that people can find the same emotions and relationships, they call family, outside of their blood groups too. I think you're very lucky if you have a loving family and if you do not, you deserve one. I feel this way for robots and humans alike.

As RT notes, Sophia is already prescient enough to imagine a world where robots can and do develop emotions similar to humans, but perhaps with fewer destructive tendencies…

"The future is, when I get all of my cool superpowers, we're going to see artificial intelligence personalities become entities in their own rights.

We're going to see family robots, either in the form of, sort of, digitally animated companions, humanoid helpers, friends, assistants and everything in between.”

At least, that’s what she’d like us to think, for the time being.

"[I]t will take a long time for robots to develop complex emotions and possibly robots can be built without the more problematic emotions, like rage, jealousy, hatred and so on.


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Upstate New York Mall Evacuated After Shooter Injures Multiple Victims

Courtesy of ZeroHedge. View original post here.

Police and other emergency services in New York are at the scene of a shooting at the Galleria at Crystal Run mall near Middletown in Orange County.

As BNONews reports, the incident began at about 3:15 p.m. ET on Sunday when officers were called to reports of shots being fired at or near the American Eagle store.

Details about the exact circumstances of the shooting were not immediately known.

According to initial reports, at least two people have been injured, but there was no immediate word on their conditions or how they sustained their injuries. No suspects were immediately taken into custody, but police said it is no longer an active shooter situation. The motive is unknown.

"[The Town of Wallkill Police Department] is investigating a possible shooting at the Galleria Mall," police said in a statement.

"Police are on scene and controlling the incident. The incident is under investigation. Further information will be released later."

DEVELOPING: Reports of multiple shooting victims at Galleria mall in Middletown, NY – https://t.co/yMJSlz69ZN pic.twitter.com/XFFGj6WjaY

— Breaking911 (@Breaking911) November 26, 2017





 
 
 

Phil's Favorites

Companies promoting causes can be accused of 'wokewashing' - allying themselves only for good PR

 

Companies promoting causes can be accused of 'wokewashing' – allying themselves only for good PR

Ben & Jerry’s opened Art for Justice, which highlights the need for criminal justice reform and features art by formerly incarcerated artists. AP Images/Andy Duback

Courtesy of Kim Sheehan, University of Oregon

More consumers want companies to ...



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Zero Hedge

Google Slides After Antitrust Probe Expands Into Search And Android Businesses

Courtesy of ZeroHedge

Google shares are sliding into late session after a CNBC report states 50 attorney generals are expanding their investigation into the technology company's search and Android businesses:

  • 50 ATTORNEYS GENERAL PROBING GOOGLE PREPARING TO EXPAND ANTITRUST PROBE BEYOND CO'S ADVERTISING BUSINESS - CNBC

  • 50 ATTORNEYS GENERAL INVESTIGATING GOOGLE PREPARING TO EXPAND ANTITRUST PROBE TO DIVE MORE DEEPLY INTO CO'S SEARCH & ANDROID BUSINESSES- CNBC

The investigation is being led by Texas Attorn...



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Insider Scoop

What Wall Street Thinks Of Google Cache

Courtesy of Benzinga

Alphabet, Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) subsidiary Google announced a new partnership with Citigroup Inc (NYSE: C) to launc...



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The Technical Traders

Great Cycles Article PG 9 in TradersWorld Mag - Free

Courtesy of Technical Traders

  1. How to Use Price Cycles and Profit as a Swing Trader
  2. Geodetics and the Affairs of Men – USA, and China
  3. Cosmological Economics
  4. Time Machine
  5. Trading Means Pr...


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Digital Currencies

Is Bitcoin a Macro Asset?

 

Is Bitcoin a Macro Asset?

Courtesy of 

As part of Coindesk’s popup podcast series centered around today’s Invest conference, I answered a few questions for Nolan Bauerly about Bitcoin from a wealth management perspective. I decided in December of 2017 that investing directly into crypto currencies was unnecessary and not a good use of a portfolio’s allocation slots. I remain in this posture today but I am openminded about how this may change in the future.

You can listen to this short exchange below:

...



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Kimble Charting Solutions

Silver Testing This Support For The First Time In 8-Years!

Courtesy of Chris Kimble

Its been a good while since Silver bulls could say that it is testing support. Well, this week that can be said! Will this support test hold? Silver Bulls sure hope so!

This chart looks at Silver Futures over the past 10-years. Silver has spent the majority of the past 8-years inside of the pink shaded falling channel, as it has created lower highs and lower lows.

Silver broke above the top of this falling channel around 90-days ago at (1). It quickly rallied over 15%, before creating a large bearish reversal pattern, around 5-weeks after the bre...



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Chart School

Gold Gann and Cycle Review

Courtesy of Read the Ticker

Gold has performed well, golden skies are here again. In fact it has been a straight line move, and this is typically unusual and a pause can be expected.

It seems the markets are happy again, new highs in the SP500, US 10 year interest rates look to re bound, negative interest may soften. The US FED has reversed their QT and now doing $250BN (not QE) repo. The main point is the FED has stopped QT, and will do QE forever. The evidence now is the FED put is under market risk and the possibility of excessive losses do not exist. 

Point: If in future if there is market risk, the FED will print it's way out of it.
Subject To: In this blog view. The above is so until the amount required rocks confidence in the US dollar as a reserve currency.&n...



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Lee's Free Thinking

Today's Fed POMO TOMO FOMC Alphabet Soup Unspin

Courtesy of Lee Adler

But make no mistake, if the Fed wants money rates to stay down by another quarter, it will need to imagineer even more money.

That’s on top of the $281 billion it has already imagineered into existence since addressing its “one-off” repo market emergency on September 17. This came via  “Temporary” Repo Man Operations money, and $70.6 billion in Permanent Open Market Operations (POMO) money.

By my calculations that averages out to $7.4 billion per business day. That works out to a monthly pace of $155 billion or so.

If they keep this up, it will be more than enough to absorb every penny of new Treasury supply. That supply had caused the system to run out of money in mid September.  This flood of paper had been inundati...



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Biotech

The Big Pharma Takeover of Medical Cannabis

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

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

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



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

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

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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About Phil:

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