Archive for 2018

Caught On Video: Chinese Rocket Booster Crashes To Earth, Erupts In Massive Fireball


Caught On Video: Chinese Rocket Booster Crashes To Earth, Erupts In Massive Fireball

Courtesy of Zero Hedge

A booster from a Chinese Long March 3B rocket created a massive explosion outside a town in Guangxiv, southwest China on Friday- and the explosion was all caught on video.

According to the Global Times, the Long March 3B rocket lifted off from Xichang Satellite Launch Centre in Sichuan Province at 07:18 local time on Friday, catapulting two Beidou-3 GNSS navigation satellites to earth’s orbit.

It is no secret that China’s growth in its space program has been accelerating with the development of the Long March rocket family launching satellites into space. An expanding space program comes in addition to the country’s rising economic power and international influence, which has alarmingly challenged Western space programs.

As the three-stage rocket with four-strap-on boosters soared towards the heavens, the four boosters separated from the rocket’s core and fell back to earth. One of the boosters landed near a town, while residents panicked as the impact caused a major explosion.

The village of Xiangdu in Tiandeng Country, Guangxi Zhuang Autonomous Region, is around 700 kilometers from the launch site and considered a “designated drop zones for debris for the launch,” according to the Global Times.

While the booster smashed into the town, the launch seems to have succeeded in propelling two satellites into orbit. The video below shows the moment the booster slammed into a hillside releasing a toxic plume of hazardous fumes.

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Chinese Yuan Surges To Strongest In Over 2 Years


Chinese Yuan Surges To Strongest In Over 2 Years

Courteys of Zero Hedge

As financial conditions get easier and easier in the US (despite The Fed's best efforts to tighten), and China continues its verbal 'tightening' on an over-leveraged financial system, China's onshore yuan has topped September's highs (when they last intervened), surging to its strongest since Nov 2015…

Offshore yuan is also under pressure with USDCNH selling (Yuan buying) reportedly led by banks and leverage accounts in Asia.

As we pointed out previously, US equities have been on a non-stop tear higher since the start of the Shanghai Accord in early 2016.

That won't help exports…

BUT… Critically, the illusion of a strengthening Yuan is merely the impact of manipulating the dollar against the rest of China's major trading partners' currency. As the chart above shows – China's broad Reniminbi basket (combining all the major FX crosses) has been flat for 18 months.

FX Weekly Preview: Confidence In The USD Plumbs New Depths


FX Weekly Preview: Confidence In The USD Plumbs New Depths

Courtesy of Zero Hedge

FX Weekly Preview – submitted by Shant Movsesian and Rajan Dhall MSTA

After another week of USD losses, it seems there is little to stem the tide which is spreading through the market despite the fundamental backdrop favouring a correction (at the very least) as well as short term dynamics showing the downside as overstretched – perhaps a redundant metric in this day and age of algo insurgency.  Blaming Trump policy is a familiar soundbite, with trade tensions hanging in the air and perhaps prompting some of the suggestions that China will trim or half buying of Treasuries which will impact on the yield curve.  Indeed, the likes of Bill Gross are calling now calling a bear market in Bonds, though it is not clear whether he is incorporating the above conjecture into his reasoning. 

One notable event for next week to interject with at this point (mentioning China) is the start of trade in the PetroYuan contract, which USD traders will be looking at for potential traction – or not – as this will naturally shed fresh light on the fate of the greenback as the global reserve currency, though naturally, over time.  

Nevertheless, the currency markets are making their view clear, but we (amongst others) are not going to go with the consensus, though this looks set to be tested in a market salivating at the prospect of a new trend to cling on to.  Looking at the daily and weekly charts, we can see the pointers are towards yet more weakness in the greenback – DXY tripped just below 91.00 – but we have a similar scenario this time last year when all and sundry were calling for parity and below in the heavily weighted EUR/USD rate.  The reflation trade done and then some; this is now turning into a potential washout, with the above episode with China's intentions on Treasury buying putting focus of the ever concerning debt mountain in the US.

Friday's much awaited CPI figures also turned out a tick up in the core inflation rate, but to little impact, as the market now has a preset idea of where it wants…
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Manhattan Median Apartment Rents Crash To Lowest Levels Since 2014


Manhattan Median Apartment Rents Crash To Lowest Levels Since 2014

Courtesy of Zero Hedge

Whether due to a massive flood of new supply or Trump's tax plan, which caps SALT, mortgage interest and property tax deductions, New York City landlords are suddenly in the unenviable position of having to slash rental rates to attract tenants. 

According to the latest rental report from Douglas Elliman, median rents in the Big Apple dropped 2.7% YoY in December…

…continuing a downward trend in rental rates that started last summer and leaving rates at their lowest levels since 2014. 

Of course, "attractive rents" are a relative term as the monthly dues for a tiny studio apartment in NYC will still run you $2,681, or $64.92 per square foot.  And while we're not great at the whole math thing, we're pretty sure that implies the average studio is roughly 495 square feet…or about the size of the average living room in all those "fly-over states" that elitist New Yorkers love to look down upon.

Not surprisingly, New Development rental rates seem to be leading the market down after posting a 5.9% sequential decline in December.

Meanwhile, Manhattan refugees seem to be flocking to Brooklyn…

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Citi Reveals The Reason Behind The Market’s Meltup


Citi Reveals The Reason Behind The Market's Meltup

Courtesy of Zero Hedge

It is hardly a secret, that one of the biggest threats facing risk assets in 2018 and onward, is the great central bank QE/balance sheet unwind, something we have discussed extensively in the past year, and as a recent example, in "This Is Most Worrying": In One Year, Central Bank Liquidity Will Collapse From $2 Trillion To Zero," in which Deutsche Bank said that "the most likely causes of a shift to ‘flight mode’ and a rise in volatility" is that by the end of [2018], the combined expansion of all the major Central Bank balance sheets will have collapsed from a 12 month growth rate of $2 trillion per annum to zero."

This is shown in the following chart depicting the total shrinkage in central bank asset growth:

And yet, despite the Fed's methodical, if slow balance sheet shrinkage and the ECB's recent QE tapering from €60 to €30BN per month, followed by the BOJ's latest "stealth tapering" last week, stocks have started off the new year with a panicked melt-up euphoria the likes of which haven't been seen in decades as the flurry of recent "serious" headlines suggests.

How does one reconcile this historic stock surge at a time of…
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Japanese Purchases Of US Treasurys Tumble


Japanese Purchases Of US Treasurys Tumble

Courtesy of Zero Hedge

In the last days of 2017, we showed something surprising: as a result of suddenly exploding USDJPY funding costs, there had never been a worse time for Japanese investors, traditionally some of the most ravenous purchasers of US paper, to buy US Treasurys.

As we explained on December 27, USD funding costs for Japanese insurers and banks to invest in US Treasuries – which had surged reaching a post-financial-crisis high of 2.35% on 15 Dec – are determined by three things, namely (1) the difference in US and Japanese risk-free rates (OIS), (2) the difference in US and Japanese interbank risk premiums (Libor-OIS), and (3) basis swaps, which illustrate the imbalance in currency-hedged US and Japanese investments.

In this particular case, widening of (1) as a result of Fed rate hikes and tightening of dollar funding conditions inside the US (2) and outside the US (3) have occurred simultaneously. This is shown in the chart below.

Whatever the cause behind these sharp funding shortages, one thing was clear – dollar funding costs (FX hedging costs) for both Japanese insurers, banks and other investors to buy US Treasuries were surging (with Japanese buyers and reached a post-financial-crisis high of 2.35% on 15 Dec. And in terms of practical implications for the treasury market this means that, all else equal, marginal demand for US paper is about to plunge for one simple reason: the FX-hedged yields on US Treasurys have plunged to (negative) levels never seen before (unless of course foreign investors buy US Treasurys unhedged).

To demonstrate this point, the chart below from Deutsche Bank shows the yields on currency-hedged US Treasuries from the perspective of Japanese investors. Annualized hedge costs had risen to 2.33% at the end of December, which means that investments in 10y US Treasuries would result in virtually no yield. Furthermore, yields from investment in shorter than 10y US Treasuries would be less than JGBs and result in negative spreads.

And while TSY funding costs, and various X-CCY basis swaps in the past two weeks has dropped, Japan's lack of appetite for US Treasurys will only continue to rise.

The reason is that as the Nikkei

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Who Do Russians Consider Their Greatest Enemies?


Who Do Russians Consider Their Greatest Enemies?

Courtesy of Zero Hedge

According to a new poll from The Levada Center, 23 percent of Russians believe their country is surrounded by enemies.

While, the list of who Americans consider their enemies has been covered by Statista beforeNiall McCarthy wonders what do Russians think?

You will find more statistics at Statista

The research shows that 68 percent of people in Russia consider the United States a threat.

Considering the annexation of the Crimea and the war in Eastern Ukraine, 29 percent of respondents also said that Ukraine is an enemy.

Even though the Russian military is heavily committed to the war in Syria, only 5 and 4 percent of people respectively say Islamic extremists are a threat. That's less than Germany, the UK and NATO which are all labelled enemies by 6 percent of Russians.

Internally, only two percent of respondents consider oligarchs and bankers enemies and one percent think Vladimir Putin is a threat.

“All These F**king Excuses”: Baltimore Parents Lash Out In Public Meeting Over Frozen Classrooms


"All These F**king Excuses": Baltimore Parents Lash Out In Public Meeting Over Frozen Classrooms

Courtesy of Zero Hedge

Last week we noted that Baltimore students and teachers returning to school from the long holiday break were greeted with frozen classrooms and some that were even flooded due to busted water pipes. Not surprisingly, the conditions prompted backlash on social media as outraged parents questioned why their students were being forced to attend class in an unsafe environment.

It was miserable. The kids had their coats, hats, and gloves on all day,” said Jesse Schneiderman, a social, studies teacher at Frederick Douglass High School.

One classroom at Frederick Douglass was completely destroyed, after flooding from a burst pipe rendered the classroom unsafe.

“A teacher in our basement, because her room is under the flooded classroom, lost all of her materials,” he said. “Other teachers had to teach in the library because their classrooms were too cold.”

Not surprisingly, the cold classrooms drew some harsh criticism from angry parents at a public meeting with the CEO of the Baltimore City Schools.  Here's more from Fox 45:

It was a heated meeting over cold classrooms with parents outraged with the system's CEO and board commissioners under fire.

"You tell me you care! I don't believe it because I've been here before the heating issue," screamed one parent at commissioners in a packed board room.

"Stop it! All these (expletive) excuses," she screamed.

It was a public outcry on the cold school crisis at the school board's first meeting since several days of a deep-freeze gripped the city.

Meanwhile, Mike Pesa, a teacher at Patterson High said students and teachers deserve better. "There was a room that was 37 degrees at my school and students were expected to stay in class all day. You can't learn in those conditions and it needs to change," said Pesa.

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Surging Russian-Chinese Trade Pressures Petrodollar


Surging Russian-Chinese Trade Pressures Petrodollar

Courtesy of Zero Hedge

Authored by Tom Luongo,

The latest trade figures on Chinese/Russian trade should be further warning to the U.S. that economic sanctions do not work. In May 2017 Russian and China agreed to increase bilateral trade to $80 billion by the end of 2018.

Well, they’re a year ahead of schedule…

The official figures for 2017 came in at $84.07 billion.

They did more than $8.1 billion in business in December alone. With the opening of the new ESPO oil pipeline connecting Siberia to China doubling the amount of oil China can import to 600,000 barrels per day we’ll see those numbers continue to accelerate.

And that’s the key. Remember, the massive $400 billion gas deal China made with Gazprom in 2014 hasn’t begun delivering gas. The first Power of Siberia pipeline isn’t due to be completed until 2019. The second Power of Siberia pipeline is on the table after this one.

And the two countries just agreed to a third pipeline to bring gas in from Russia’s far east last month.

So, despite back-biting from western media about the profitability of these projects, they are going forward and the two countries continue to strengthen fundamental ties to one another.

Greasing the Skids

We are now just a week away from trading yuan-denominated oil futures on the Shanghai International Energy Exchange(INE). Trading begins January 18th.

And while that won’t change the face of oil futures overnight, it will begin shifting price discovery away from U.S. dollar markets. It will also improve external yuan liquidity as well as visibility for Russian oil on the global market.

The Shanghai contract is for Medium Sour crude which is closer to the type of oil mainly produced by Russia. Russian Urals crude is considered…
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The Strange Case Of The Falling Dollar – And What It Means For Gold


The Strange Case Of The Falling Dollar – And What It Means For Gold

Courtesy of Zero Hedge

Authored by Alt-Market's Brandon Smith via Birch Gold Group,

Trillions of dollars in uncontrolled central bank stimulus and years of artificially low interest rates have poisoned every aspect of our financial system. Nothing functions as it used to. In fact, many markets actually move in the exact opposite manner as they did before the debt crisis began in 2008. The most obvious example has been stocks, which have enjoyed the most historic bull market ever despite all fundamental data being contrary to a healthy economy.

With a so far endless supply of cheap fiat from the Federal Reserve (among other central banks), as well as near zero interest overnight loans, everyone in the economic world was wondering where all the cash was flowing to. It certainly wasn’t going into the pockets of the average citizen. Instead, we find that the real benefactors of central bank support has been the already mega-rich as the wealth gap widens beyond all reason.  Furthermore, it is clear that central bank stimulus is the primary culprit behind the magical equities rally that SEEMS to be invincible.

To illustrate this correlation, one can compare the rise of the Fed’s balance sheet to the rise of the S&P 500 and see they match up almost exactly. Coincidence? I think not…

Another strangely behaving market factor that has gone mostly unnoticed has been the Dollar index (DXY). Beginning after the global financial crisis in 2008, the dollar’s value in reference to other foreign currencies initially moved in a rather predictable manner; collapsing in the face of unprecedented bailout and stimulus programs by the Fed, which required unlimited fiat creation from thin air. Naturally, commodities responded to fill the void in wealth protection and exploded in price. Oil markets in particular, which are priced only in the US dollar (something that is quickly changing today), nearly quadrupled. Gold witnessed a historic run, edging toward $2,000.

In the past few years, central banks have initiated a coordinated tightening policy, first by tapering QE, then raising interest rates, and now by decreasing their balance sheets. I would note that while oil and…
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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

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


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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 ... 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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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

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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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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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...

Learn more About Phil >>

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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.

Market Shadows >>