Archive for 2018

2018 Market Outlook – Reality Dawns At The End Of The Artificial Liquidity Rainbow

 

2018 Market Outlook – Reality Dawns At The End Of The Artificial Liquidity Rainbow

Courtesy of Zero Hedge

Authored by Sven Henrich via NorthmanTrader.com,

This 2018 market outlook is building on recent articles I’ve published as they lay the foundation to the technical discussion I’ll be outlining below. Hence I won’t be repeating them here, but I may make occasional reference to them. If you haven’t read them I highly encourage you to have a read for the additional context & background. Specifically: 2017 Market LessonsYearly ChartsThe Debt Beneath, and Welcome to Gap Land.

In this analysis I’m outlining upside market upside targets I see from a technical perspective as well as select examples of signs I’m watching that would signal a change from the current uninterrupted trend in market prices. Additionally I’ll be looking at some specific price risk zones should the trend change. It is my intent to follow-up on this analysis on a regular basis here in the public section of the site throughout the year.

I’m approaching 2018 with eyes wide open in regards to the market conditions we find ourselves in. From my perspective global markets are engaged in the largest asset bubble in our lifetimes (the artificial liquidity bubble) the eventual unwind of which during the next recession will unfortunately hurt a majority of people. Again.

Consider the context:

8 years after the financial crisis we remain in an environment that is entirely dependent on artificial liquidity, be it via central bank liquidity driven low rates and/or QE or now US fiscal stimulus in the form of tax cuts. And while a reduction in central bank stimulus is anticipated for 2018 the $1.5 trillion US tax cut is the next active artificial boost to hit markets. You can view it perhaps this way: When the US ended QE3 Europe and Japan took over the stimulus baton, and now that Europe is reducing stimulus the US again is taking the lead, this time with fiscal stimulus.

It is a bizarre dance that excels in one aspect in particular: It never ends. Consider: German unemployment is at all time lows, and European PMIs are at their highest in over 7 years:

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Citizens Mob Caracas Shops Following Government-Mandated Price Cuts

 

Citizens Mob Caracas Shops Following Government-Mandated Price Cuts

Courtesy of Zero Hedge

With Inflation in Venezuela having surpassed 2,000%, the embattled government of President Nicolas Maduro has ordered shops to slash prices of goods to alleviate some of the burden on consumers, who’ve struggled to carry out basic transactions to purchase staples like food as hyperinflation causes prices to rise every few hours.

Maduro ordered more than 200 supermarkets in Latin America’s socialist paradise to cut prices back to last month’s levels.

News of the discounts spread like wildfire, leading hundreds to gather in front of stores before daybreak. When one major supermarket in the wealthier neighborhood of eastern Caracas remained closed past its normal hours, people began pounding on the storefront.

Many of the crowd’s denizens voiced their disapproval of Maduro’s government.

“We’re hungry! We want food!” screamed the crowd, which included babies, pensioners and children with disabilities.

“This scares me, but what can I do?” said Francisco Guaita, a carpenter hoping to find food for his three children, over the shouts and pushes. “This is the worst government. We want Maduro out.”

Critics said Maduro risked worsening the crisis by dissuading supermarkets from stocking their shelves, while also encouraging looting, according to Reuters.

The socialist, who was narrowly elected to replace the late Hugo Chavez in 2013, counters that he is a victim of a US-led “economic war” in which businesses hoard food and stoke prices to destabilize his government. He has also blamed websites like dolartoday.com, which publishes black-market exchange rates for the bolivar.

The state agency in charge of ensuring “fair prices” ordered some 214 supermarkets owned by 26 chains to drop their prices, pro-government newspaper Ultimas Noticias reported on Saturday, claiming that the chains were raising prices unfairly.

“This Tuesday we received an accusation and we deployed immediately. We confirmed that the big chains were increasing prices without any justification, because they were doing it for products that were in stock, not new ones,” William Contreras, the head…
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FX Weekly Preview: The Negative USD Narrative Remains Overwhelming

 

FX Weekly Preview: The Negative USD Narrative Remains Overwhelming

Courtesy of Zero Hedge

Submitted by Rajan Dhall MSTA and Shant Movsesian of fxdailyterminal.com

After a brief correction in the USD last September, the market has been quick to get the knives out, and into year end, there really was no reprieve for the greenback as thin market conditions led some to push the reserve currency back to its low against the usual suspects.  Aiding the move at the end of last week was the headline miss in Dec payrolls, but with markets likely close to full strength from this week onwards, we hope to see a more measured approach with more consideration towards 'time-frame' rather than just grinding out the longer term consensus.  

Top of the list is EUR/USD naturally, where we are constantly reminded that the Euro zone recovery is continuing at a steady (and robust) pace, with a somewhat obsessive focus on when the ECB will signal the end of the APP, with the current program set to the end of Sep.  Fair value levels based on the various PPP measures as well as FX swaps markets are seen to be closer to 1.2500, which is where the conservative targets for this year look to be.  It would however be dangerous to assume it will be a steady rise up to this area, with political obstacles yet to overcome, including the Italian elections now set for the start of March. 

On a policy basis, we sense a little complacency over the respective stance at the ECB and Fed – the latter still seen hiking 2 or 3 times this year, while the former will halt QE at best and rate normalisation coming well after this – certainly not until next year.  This is where time-frames come in, and we expect any EUR/USD move above 1.2100 to be limited in progress and longevity.  Obvious stuff, but one which the market seems to have ignored in recent weeks and months.

Closer in, next week's focus will be on the US inflation numbers at the end of week, and if we look to the ISM manufacturing prices paid index, there is room for upside here, as well as higher Oil price…
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Buckle Up: NYSE Files For Leveraged, Inverse Bitcoin ETFs

 

Buckle Up: NYSE Files For Leveraged, Inverse Bitcoin ETFs

Courtesy of Zero Hedge

In a move that will certainly not end well for investors, the New York Stock Exchange has asked the SEC to approve five ETFs including 2x leveraged and inverse flavors, linked to Bitcoin futures – which launched in December on the CME amd Cboe, according to a Thursday filing, which is in line with what we said mentioned in August, "we suspect a Bitcoin Futures ETF may actually occur before a Bitcoin ETF." 

The five "derivative of derivative" funds are as follows: 

  • Direxion Daily Bitcoin 1.25X Bull Shares
  • Direxion Daily Bitcoin 1.5X Bull Shares
  • Direxion Daily Bitcoin 2X Bull Shares
  • Direxion Daily Bitcoin 1X Bear Shares
  • Direxion Daily Bitcoin 2X Bear Shares

The target Bitcoin benchmark will be calculated as the last sale price published by the CME or CBOE on or before 11:00 a.m. EST, and "should not be expected to track the performance of the target benchmark for any period longer than one business day." 

Additionally, while each Fund will seek daily correlation to the target benchmark, it should not be expected to track dollar for dollar the spot price of bitcoin because the Fund will invest in Bitcoin Futures Contracts rather than directly in bitcoin, and the spot price movements of bitcoin may not correspond directly to price movements of the Bitcoin Futures Contracts

This means that a 1 percent gain in the price of bitcoin futures would result in a gain of between 1.25% and 2% for the bullish funds, and a 1-2% loss on bear shares, although due to the theta associated with the inherent leverage, the securities will ultimately see their value evaporate over time. 

Of course, as the filing explicitly warns, "the funds are not intended for long-term investing." Which means hang on to your hats as the world's most volatile asset (besides electricity) becomes even more volatile.

While no official tickers have been proposed, some have already floated suggestions:


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Bitcoin Futures Traders Are Quietly Building A Big Short Position

 

Bitcoin Futures Traders Are Quietly Building A Big Short Position

Courtesy of Zero Hedge

In retrospect, the launch of bitcoin futures one month ago has proven to be a modestly disappointing event: while it helped send the price of bitcoin soaring as traders braced for the institutionalization of bitcoin, the world's most popular cryptocurrency has stagnated since the beginning of December when first the Cboe then CME started trading bitcoin futures, trading in a range between $12,000 and $17,000.

And while bitcoin futures markets volumes have been lower than most had expected, the past 4 weeks have provided enough data to observe how volumes and open interest have evolved.

We discussed previously  that Bitcoin futures were off to a slow start in the first week of trading, with volumes of CBOE Bitcoin futures averaging just around $40MM per day, despite intense media hype helping fuel heavy trading when both contracts launched, at least in the first hours of trading.

Since then, volumes spike briefly in the following week coinciding with the launch of the CME futures, with volumes of on both exchanges at relatively similar levels.

Then, as JPM's Nikolaos Panagirtzoglou shows, after a spike in volumes to around $200mn on 22 December, which saw sharp swings in underlying Bitcoin prices, volumes have averaged around $50mn and $60mn per day on the CBOE and CME futures, respectively.

One month after their launch, futures trading volumes remain very modest compared to average Bitcoin trading volumes of around $15bn per day since futures contracts were launched according to coinmarketcap.com data. While open interest in both the CBOE and CME contracts has risen steadily, it too remains rather modest at around $60mn and $70mn, respectively.

Putting futures volumes in context, on Friday, the combined size of the bitcoin-futures markets at the two exchanges was roughly $150 million, measured in terms of the value of outstanding contracts, while the total value of all bitcoins in existence was around $290 billion. 

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US Border Patrol Conducted Record 30,000 Phone Searches In 2017

 

US Border Patrol Conducted Record 30,000 Phone Searches In 2017

Courtesy of Zero Hedge

While civil-libertarian minded lawmakers and the ACLU push to tighten restrictions on phone searches of American citizens, particularly when leaving or entering the US, the Customs and Border Protection Agency reported that the number of phone searches executed at the border skyrocketed in 2017, the Wall Street Journal reported.

The border patrol conducted a record number of cellphones and other devices at US points of entry last year as they intensified their hunt for smugglers and terrorists.

In fiscal year 2017, which ended Sept. 30, the government searched the devices of 30,200 people, the vast majority leaving the country, up from 19,051 in fiscal year 2016. More than 80% of the devices belonged to foreigners or legal permanent residents, with less than one in five owned by a U.S. citizen.

“In this digital age, border searches of electronic devices are essential to enforcing the law at the U.S. border and to protecting the American people,” said John Wagner, deputy executive assistant commissioner for the agency’s Office of Field Operations.

The agency on Friday released a new written policy outlining procedures for searching and seizing electronic devices at the border. The new guidance makes clear that agents can only examine information stored on the device, not data stored “in the cloud” that’s accessible from the device.

The policy makes clear that while agents can ask for passwords to access a device, the passwords aren’t to be retained in any way.

And the policy sets forth standards for agents to do an “advanced search,” which involves connecting the device to a computer to retrieve and copy information. Under the rules, advanced searches are allowed only if there is “reasonable suspicion” and “articulable facts” to support it, and with the approval of a supervisor. The standards for more in-depth searches hadn’t been spelled out before. No such standard exists for basic searches.

The new policy also requires border agents to notify a traveler when his or her device is to be searched, unless telling the traveler would harm “national security, law enforcement, officer safety, or other operational interests.”

Still, the ACLU and its plaintiffs in a lawsuit against the federal government…
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4 Tailwinds Driving Raymond James’ Insulet Bull Case

Courtesy of Benzinga.

4 Tailwinds Driving Raymond James' Insulet Bull Case

Raymond James identified four major tailwinds for Insulet Corporation (NASDAQ: PODD) that the firm said could help drive 20-percent-plus revenue growth over the next two years.

The Analyst

Raymond James analyst Jayson Bedford upgraded Insulet from Market Perform from Outperform with an $80 price target.

The Thesis

Share Gain Opportunity: Insulet is likely to benefit from a more favorable industry structure and share gain opportunity, Bedford said in a Monday note. (See the analyst’s track record here.)

The 50,000 U.S. users left in the lurch following Johnson & Johnson (NYSE: JNJ)‘s exit from the insulin pump market will be seeking an alternative when their contracts expire, the analyst said.

Insulet is now operating in a three-player market, though it boasts only a 15-percent share of the U.S. pump market. Being the No. 2 player, Insulet can grow its market share for “many years,” Bedford said. 

  • CMS Reimbursement: With Medicare reimbursement for the OmniPod likely imminent, Raymond James projects an incremental 300,000-plus user opportunity, assuming only Type 1 patients. It’s a $1-billion market opportunity on the basis of Insulet’s current service providers, according to Raymond James. 
  • Going Direct Internationally: Insulet’s move to distribute directly provides another source of growth. This is despite Bedford conservatively assuming a sharp deceleration in new user additions. 
  • New Product Momentum: Raymond James said DASH, Insulet’s new Bluetooth-enabled OmniPod and PDM, will be the first new product in five years. The company can exert some pricing power with DASH due to the favourable industry dynamics and its lower upfront cost business model, Bedford said. 

The Price Action

“If PODD can maintain its current 2018 forward multiple (7.7x sales) over the next year, the stock can trade into the low $80s,” Bedford said. The shares have nearly doubled over the past year.

Insulet was trading up 10.44 percent at $75.94 at the time of publication. 

Related Links:

Abbott Labs Has ‘An Emerging Picture Of Top-Tier Growth,’ Says Morgan Stanley


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The Fatal Mistake Crypto Investors are Making Now

 

The Fatal Mistake Crypto Investors are Making Now

Courtesy of

I wrote A Twist in the middle of December after attending a dinner discussion group of some of the leading engineers and software people on Wall Street. I came away from the night with a newfound appreciation for the argument that just because blockchain is revolutionary, that doesn’t mean most (or any) of the value would accrue to the coins and tokens themselves. 

Today you’re in for a special treat, a guest post about a fatal mistake that many investors are making right now when it comes to crypto assets and coins – the inability to distinguish between market value and intrinsic value. It was written by The Unassuming Banker, a long-time reader of mine who posts pseudonymously at his blog of the same name. With his permission, I share the piece in its entirety, and I really feel you cannot afford to skip the point he’s making here. I hope you enjoy this. – Josh

***

What is Bitcoin actually worth?

Lately it’s hard to go a day without someone asking me a question about Bitcoin. What is it? Why is it so valuable? Should I buy some? How do I buy some? The guy down on the corner in the pawn/gold exchange shop said he can buy me one (yes, this is actually happening!).

It seems Bitcoin and the crypto-currency craze has truly reached the mainstream and the implication of that are as of yet unknown. What we do know is that it’s attracting every shady crook and scam artist in the world. And why not? There really is tons of money to be made. I hope the following sheds some light on what Bitcoin is and isn’t.

Blockchain

Let’s start our discussion with the technology which made Bitcoin possible called “blockchain”. In very simple terms the blockchain technology is a record of all transactions ever done in Bitcoin. Imagine a gigantic piece of paper that lists every transaction ever completed. Then imagine that there are thousands of copies of this paper, and all of them are automatically


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S&P Breaks out of Channel

Courtesy of Declan

The S&P broke upside from one channel to leave it another. This is the third such acceleration in the last six months, leaving the index prone to a parabolic (if not profitable) run. Buying volume was low, but technical strength is good.
 


The Nasdaq rallied just under 1% but hasn't yet tagged the new upward acceleration channel. Technical strength is excellent although the index is only slowly regaining its relative advantage from the S&P.
 


The Russell 2000 is still struggling a little to push itself away from breakout resistance (current support). The new 'bear trap' is still a bullish factor although the index is losing ground against the S&P and Nasdaq.
 

Traders should all be back from their holidays so we may get a better idea of the market sentiment for 2018 from Monday. Further gains still looking the most likely option.  Given market favourability towards Trump it's hard to see a positive response if he was to lose power.  For now, deal with known facts and given there is very little negativity to work with one must assume new highs are the path of least resistance.





Comment by Pharmboy

View Single Comment

  1. Pharmboy

    Holy Heysus….what a market.  up up up up up up flat up up up up….. Rand must be a very happy lady rolling around in her capitalistic grave.







 
 
 

Zero Hedge

World Trade War I: US Asks South Korea To Join Anti-Huawei Campaign

Courtesy of ZeroHedge. View original post here.

The bilateral trade war between the US and China is gradually becoming a global trade war of global geopolitical and commercial dominance between the US and Chinese spheres of influence.

Shortly after the two largest mobile phone companies in the UK decided against launching Huawei-built 5G phones this morning, and roughly around the time a bevy of Japanese tech and telecom companies including ARM Holdings, Panasonic and SoftBank all imposed a boycott on supplying Huawei with mission critical components joining Australia, and New Zealand as major US allies to end commercial relat...



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Phil's Favorites

Overpriced tech IPOs sell grand visions but aren't worth their valuations

 

Overpriced tech IPOs sell grand visions but aren't worth their valuations

rblfmr / Shutterstock.com

Courtesy of John Colley, Warwick Business School, University of Warwick

The year of the tech IPO is 2019. Uber went public on May 10 with a US$82.4 billion valuation. Fellow ride-sharing app Lyft floated in March with a U$24 billion valuation and Pinterest had a US$10 billion IPO in April...



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Kimble Charting Solutions

Emerging Markets About To Submerge If 3-Year Support Breaks?

Courtesy of Chris Kimble.

Are Emerging Markets about to “Submerge” and head a good deal lower? What they do at (3) will go a long way in answering this question!

Emerging Markets ETF (EEM) has been lagging the broad market for the past 15-months. They hit their 50% retracement level of the last year’s highs and lows and falling resistance at (2) recently. The weakness of last has EEM trading below its 200-MA line.

EEM has spent the majority of the past 3-years inside of rising channel (1), which reflects that this trend remains up. The weakness of late has it testing the bo...



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Insider Scoop

Amgen To Buy Danish Collaborator Nuevolution For $167M

Courtesy of Benzinga.

Amgen, Inc. (NASDAQ: AMGN) took a logical step forward in buying a preclinical biotech it has been collaborating with since 2016. 

What Happened

Amgen announced Wednesday an agreement to buy Copenhagen-based Nuevolution for $167 million.

Th...



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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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