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

Americans' Economic Hope Has Collapsed

Courtesy of ZeroHedge. View original post here.

Which came first, the confidence or the stock market rally?

One thing is for sure, the crash in stocks in December has crushed the hope of Americans that their economic future is going to be better under President Trump.

Overall confidence dipped to 58.1 - a 4-month low, but, U.S. consumers this month were the most downbeat on the economy since November 2016, a third straight drop after expectations reached a 16-year high just three months earlier, as the partial government shutdown wears on toward a fourth week.

...



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Kimble Charting Solutions

Triple Breakout Test In Play For S&P 500!

Courtesy of Chris Kimble.

Is the rally of late about to run out of steam or is a major breakout about to take place in the S&P 500? What happens at current prices should go a long way in determining this question.

This chart looks at the equal weight S&P 500 ETF (RSP) on a daily basis over the past 15-months.

The rally from the lows on Christmas Eve has RSP testing the top of a newly formed falling channel while testing the underneath side of the 2018 trading range and its falling 50-day moving average at (1).

At this time RPS is facing a triple resistance test. Wil...



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Phil's Favorites

Brexit deal flops, Theresa May survives -- so what happens now?

 

Brexit deal flops, Theresa May survives -- so what happens now?

Courtesy of Victoria Honeyman, University of Leeds

As the clock ticks down to March 29 2019, all of the political manoeuvring, negotiating, arguing and fighting is coming to a peak. In the two and a half years since the 2016 EU referendum, views on both sides have hardened and agreement still seems as far away as it was the day after the referendum.

With Theresa May’s withdrawal agreement disliked by all sides, and voted down by an unprecedented majority in the House of Commons, everyone is wondering what can and should be done next?

...



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Digital Currencies

Crypto-Bubble: Will Bitcoin Bottom In February Or Has It Already?

Courtesy of Michelle Jones via ValueWalk.com

The new year has been relatively good for the price of bitcoin after a spectacular collapse of the cryptocurrency bubble in 2018. It’s up notably since the middle of December and traded around the psychological level of $4,000... so is this a sign that the crypto market is about to recover?

Of course, it depends on who you ask, but one analyst discovered a pattern which might point to a bottom next month.

A year after the cryptocurrency bubble popped

CCN...



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ValueWalk

D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...



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Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ...

http://www.insidercow.com/ more from Insider

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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