Archive for 2018

The Deadly Math Of America’s Faux Prosperity

Courtesy of ZeroHedge. View original post here.

Authored by Tom Luongo,

Record Deficits, Stronger Dollar Equals Record China Trade Deficit

Sometimes math is a real bitch. Donald Trump is a smart guy. I know he knows math.

Too bad he’s ignoring it.

Here’s the gig. The title says it all. Government spending is rising rapidly.  More actual money is flowing into the US economy. Where is that spending going? To buy cell phones, computers, cars, office supplies and all the rest.

It doesn’t matter if the purchase is made at Best Buy through a Purchase Order, the money still goes to stuff built and imported from China. The second order effect is that even if it goes to subsidize a farmer in Iowa or a defense contractor in California, that money winds up in the hands of a consumer who does what?

Goes to Best Buy and buys a new TV. This isn’t rocket science folks, it is simple cause and effect.

More money chases those goods.  Despite the naysayers, Apple is selling a crap-ton of $1200 phones…. built where?  China.

So, the budget deficit thanks to record spending is fueling the very trade deficit with China that Trump is complaining about daily.

Here’s the math.

Big Badda Boom

First up is the budget deficit numbers through nine months of fiscal year 2018, courtesy of Zerohedge.

This resulted in a June budget deficit of $75 billion, better than the consensus estimate of $98BN, and an improvement from the $147 billion deficit in May and as well as slightly less than the deficit of $90.2 billion recorded in June of 2017.This was the second biggest June budget deficit since the financial crisis…

…The June deficit brought the cumulative 2018F budget deficit to over $607BN during the first nine month of the fiscal year, up 16% over the past year; as a reminder the deficit is expect to increase further amid the tax and spending measures, and rise above $1 trillion.

The post has a ton of charts to illustrate the point, but it’s mostly unnecessary. The US Treasury is issuing debt at an astounding rate to cover this budget.  Spending goes up as tax receipts do…
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Trump’s claim that Europe is ‘losing its culture’ is racism – and it must be challenged

 

Trump's claim that Europe is 'losing its culture' is racism – and it must be challenged

Courtesy of Chris Allen, University of Leicester

According to Donald Trump, Britain and Europe is “losing its culture” as a result of immigration. In an interview with The Sun newspaper, given in Brussels shortly before travelling to London, Trump explained how migrants from the Middle East and Africa are permanently changing Europe for the worse.

Speaking about the pain it causes him, given that both his mother and father were European, he added:

I think what has happened to Europe is a shame. Allowing the immigration to take place in Europe is a shame. I think it changed the fabric of Europe and, unless you act very quickly, it’s never going to be what it was and I don’t mean that in a positive way … I think you are losing your culture. Look around.“

On one level, it may not be that surprising that someone who has made immigration a cornerstone of their political rhetoric and campaigning in the US, has made such comments. But it must be challenged nonetheless. When world leaders adopt cultural racism in this way, they legitimise right-wing extremism.

Trump on European culture.

Trump’s comments chime with the discourse of the far right in Europe over the past few decades. Key to this is the notion that the West is being ”invaded“. Starting with mass migration following World War II, champions of this rhetoric suggest that immigration to Europe has been far more insidious than humanitarian.

And when it comes to the recent influx of migrants fleeing civil war in Syria, the argument goes further. Now these arrivals seek to "take over” the nation states that are seen to have generously afforded them shelter. Focusing on the fact that recent migrants have been Muslim, far-right rhetoric goes on to suggest that takeover is equivalent to Islamification. It destroys “our” culture, values and way of life and therefore, all that “we” hold dear. Resisting immigration, therefore, is held up as the only way to protect Europe.

Far-right group Britain First, for instance, has routinely cited the perceived need to…
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A Problem Emerges For Japanese Stocks: The Biggest Market “Whale” Can’t Buy Any More

Courtesy of ZeroHedge. View original post here.

When it comes to Japan's risk assets, it is a widely – in incorrectly – accepted that only the Bank of Japan matters: and with Kuroda now a proud owner of nearly 80% of the country's ETFs and the BOJ a top 10 shareholder in nearly 40% of listed companies, one can see where this perception comes from.

However, when it comes to Japanese, and international, stocks there is one whale that is far more impactful than even the BOJ when it comes to capital allocation and the fate of risk assets: Japan's gargantuan Government Pension Investment Fund (or GPIF) – the largest in the world -  which manages 156 trillion yen ($1.41 trillion), and whose assets are broken down in 4 main categories: Japanese bonds, Japanese stocks, overseas bonds and overseas stocks. As the Nikkei notes, the GPIF earned the moniker as a "whale" in the stock market due to its massive holdings of domestic stocks. Previously, a greater weight was given to less risky domestic bonds, which amounted to 62% of total assets as recently as 2012.

The historical distribution of the GPIF's asset holdings is shown in the chart below: what is notable is that as a result of a mandated shift in its asset allocation several years ago, the fund which traditionally had a conservative posture with the bulk of its assets – usually as much as 70% – in the form of domestic bonds, had since shifted to a stock-heavy allocation, with the target allocation for domestic and foreign stocks rising to 50%.

And here a problem has emerged, because the GPIF's portfolio has exceeded its 25% allocation target for domestic stocks for the first time, a milestone that – unless the world's largest pension fund changes  its strategy for stable returns – could have severely adverse consequences for local risk assets.

According to a filing last Friday, Japanese equities accounted for 25.14% of the GPIF's portfolio at the end of March. That equates to over 40 trillion yen worth of shares covering roughly 2,300 issues.

Just like the BOJ, the fund…
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China GDP Growth Slows After Record Contraction In Shadow Banking Credit

Courtesy of ZeroHedge. View original post here.

Following the largest contraction in 'shadow banking system' credit, and a record low for M2 growth, fears were building that China's economic growth prospects may lag expectations.

By way of background for tonight's economic data deluge, here are the lowlights.

The drop in shadow bank was particularly sharp for the second month in a row: this has been the area where Beijing has been most focused in their deleveraging efforts as it’s the most opaque and riskiest segment of credit. And, as the chart below show, the aggregate off balance-sheet financing posted its biggest monthly drop on record in June

the lass granular M2 reading also posted a growth slowdown, rising only 8.0% in June, down from May's 8.3%, below consensus of 8.4%, and the lowest on record.

Both of which do nothing to help China's credit impulse. Investors see China's liquidity tightening…

Commenting on the ongoing slowdown in China's credit creation, Goldman said that the latest money and credit data highlighted the challenges the government is facing in loosening monetary policy.

But before we shift to the market's perceptions, don't forget, China's trade surplus with the US just hit a Trump-tantrum-creating record high…

Oh, and don't forget, Chinese stock markets have tumbled…

And bond markets have collapsed as defaults surge…

And Yuan has plunged…

So the big picture was not rosy heading into tonight's big data deluge.

Early signs for June pointed to weakness. The official and Caixin PMIs indicated a slowdown in momentum – with export order gauges weakening.

China stocks were down, Yuan flat, and China 10Y bonds 3bps lower in yield as the data hit.

And this is what the data looked like..

  • China Q2 GDP YoY MET EXPECTATIONS rising 6.7% – equal to the weakest since Q1 2009 (against expectations


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De-Dollarization: Chinese Refiner Replaces US Imports With Iranian Crude

Courtesy of ZeroHedge. View original post here.

Via FinancialTribune.com,

An independent Chinese refiner has suspended crude oil purchases from the United States and has now turned to Iran as one of its sources of crude, media reports cited an official from the refiner, Dongming Petrochemical Group, as saying.

The source said Beijing is planning to slap tariffs on US crude oil imports and replace them with West African and Middle Eastern crude, including crude from Iran, Oil Price reported. China has already said that it will not comply with US sanctions against Iran and it seems to be the only country for now in a position to do this.

US crude oil exports to China reached 400,000 barrels per day at the beginning of this month, but now Beijing is planning to impose a 25% tariff on these as part of its retaliation for Trump’s latest round of tariffs on $34 billion worth of Chinese goods. The retaliation began with tariffs on 545 US goods worth another $34 billion, but Reuters reports that oil tariffs will be announced at a later date.

Energy analysts seem to believe that these oil tariffs are more or less a certainty, and now expect a reshuffle of crude oil imports to Asia. With China turning to Iran for its crude, US oil could start flowing in greater amounts to another leading importer in the region, South Korea.

“If China retaliates with tariffs on US crude, that could improve South Korea’s terms of buying US crude … because the US would need a market to sell to,” an analyst from the Korea Energy Economic Institute said.

Meanwhile, South Korea’s Embassy in Iran this weekend rejected media reports that the country had suspended oil purchases from Iran under pressure from the United States.

The US has pressed South Korea and some other nations to cut down its purchase of Iranian oil to zero or face so-called secondary sanctions. The deadline is Nov. 4 when the 180-day grace period ends.

In May, the US announced its exit from the 2015 nuclear agreement with Iran, formally dubbed the Joint Comprehensive Plan of Action, and plans to reinstate harsh sanctions on the OPEC member.

The country is the third-biggest buyer of Iranian crude in Asia, buying Iranian crude at an average daily rate of almost 300,000 barrels since March this year.





Leg Amputations & Raw Sewage: More Ugly Problems From Tesla’s Production Hell

Courtesy of ZeroHedge. View original post here.

Today we got a little bit of a deeper look into the true "hell" that took (and is taking) place at Tesla in the weeks leading up to the company making its Model 3 push.

A new report from Bloomberg has Elon Musk exclaiming that he is going through "the most excruciatingly hellish several months that [he has] ever had" – along with reporting details on an unreported incident about a worker’s leg (that later had to be amputated) gushing blood from a forklift accident and recounting a story of employees having to trudge through raw sewage on the floor at the Fremont plan.

We’ve heard various news outlets and even the company itself talk about trying to hit its Model 3 production number and having to go through "production hell" for weeks now. We knew that Elon Musk was supposedly sleeping at the Fremont, California factory during this time ("I was wearing the same clothes for five days," he told Bloomberg) and that countless numbers of revisions have been made to Tesla's engineering and production processes in order to try and help the company reach its 5,000 car per week goal – which it was able to finally tap for the first time last week.

The question of whether or not the company is going to be able keep producing at this scale and at this rate remains to be seen.

Make no mistake, the hell that Tesla has gone through over the last month or two, as the patience of investors and Wall Street has worn thin, has been well documented.

Bloomberg published a report Thursday morning, looking at Tesla's walk through production hell in a deeper fashion. Aside from what we already know, the report provides a couple of new details on exactly how hellish the ride has been for employees.

Everybody knows that to reach its goal, Tesla has shifted vastly away from its original plans of how it was going to produce these vehicles. What was supposed to be a brand new, automated and best in industry production line turned into a makeshift tent hastily erected outside of the company's Fremont plant. Famously, analysts thought the plan was a ridiculous idea:

“Insanity,” said


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The Market Gods Are Laughing

Courtesy of ZeroHedge. View original post here.

Authored by Bill Bonner via Bonner & Partners,

President Trump escalated the trade war this week, making a kamikaze attack on a vast armada of Chinese imports – $200 billion in total – headed for California.

The Chinese say they will retaliate.

Phony Wars

Last month, we opined that the trade war wouldn’t go any better than Vietnam… or Iraq… or any of the feds’ other phony wars – against drugs, poverty, or terrorists.

It will be expensive, futile… and perhaps disastrous.

But that doesn’t mean it won’t be popular. Wars give the spectators something to live for – us versus them… good guys against bad guys… winners versus losers.

Their hat size swells as their champion wallops the Chinese. Their girth shrinks as he challenges and taunts the Canadians. Their manhood grows when the enemy gives in and admits defeat.

But while this puerile entertainment is taking place in the arena, the real action is going on in the expensive skyboxes, where the elite collude against the fans.

Wars shift resources from the boring and productive win-win deals in the private sector to the magnificently absurd win-lose deals of the feds and their cronies. The only real winner is the Deep State.

Weatherman David

We saw our colleague, former U.S. budget chief under President Reagan, David Stockman, on TV this week. The interview was painful to watch.

He was bravely trying to explain the trade deficit and why it was caused by monetary policy, not by trade ramparts that were too low.

But the young, know-it-all newscasters were such numbskulls – so lacking in any experience, theory, or historical perspective – he might as well have been instructing a walrus on how to chew gum. The lesson was in vain.

The three TV experts saw no problem with the trade deficit… and no danger approaching from Trump’s war on it.

If there were any clouds on the horizon, they didn’t see them; if there was any thunder, they didn’t hear it; whether lightning was striking the light posts near…
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New San Francisco Mayor: “There’s More Feces… Than I’ve Ever Seen”

Courtesy of ZeroHedge. View original post here.

The new Mayor of San Francisco, London Breed, is beside herself at the abject squalor resulting from decades of "progressive" policies that encourage homeless residents to use the streets as their personal toilet.

In an interview with local station NBC Bay Area, Breed acknowledged that the poo-coated city she was born and raised in has a "huge problem" she aims to clean up. 

"I will say there is more feces on the sidewalks than I’ve ever seen growing up here," Breed said.  "That is a huge problem and we are not just talking about from dogs — we’re talking about from humans."

Unfortunately, her solution is to simply ask the city's estimated 7,500 vagrants to kindly stop with all the street-squatting and clean up after themselves. Considering that 39% of homeless surveyed in San Francisco's "homeless census" claim to have mental health issues, we're not entirely sure how this policy will work. 

When pressed about whether her plan calls for harsher penalties against those who litter or defecate on city streets, Breed said "I didn’t express anything about a penalty."  Instead, the mayor said she has encouraged nonprofits "to talk to their clients, who, unfortunately, were mostly responsible for the conditions of our streets." -NBC Bay Area

"I work hard to make sure your programs are funded for the purposes of trying to get these individuals help, and what I am asking you to do is work with your clients and ask them to at least have respect for the community — at least, clean up after themselves and show respect to one another and people in the neighborhood," Breed told NBC, referencing her conversations with nonprofit groups aimed at serving the homeless.

San Francisco's "huge problem" isn't restricted to poo either – the city is full of drug addicts who are more or less allowed to just do their thing. On Friday, two days after Breed was sworn into office, she went on a jaunt around the city in an afternoon stroll, where a guy was literally prepping to shoot up as she walked past. 

#SanFrancisco Mayor @LondonBreed tours the


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How CEOs Actually Spend Their Time: It’s Not How You Think

Courtesy of ZeroHedge. View original post here.

Submitted by Nicholas Colas and Jessica Rabe of DataTrek Research

Legendary Harvard Business School professor Michael Porter and the dean of HBS have a new must-read article out; we have a summary and our take below. The topic: how CEOs actually spend their time. It’s not how you think

When we came across a new study in the Harvard Business Review on how CEOs spend their time, we took notice. Time is especially scarce for CEOs after all, and how they use it sends a message about their priorities and can have a direct impact on their company’s performance.

This 12-year study is particularly important because it is the longest and most comprehensive analysis on CEOs’ time allocations to date and its authors are both rock stars. Starting in 2006, researchers Michael E. Porter (of the famous Porter Model) and Nitin Nohria (the dean of HBS) tracked the activities of 27 CEOs in 15-minute increments, 24 hours of the day for three months each. Most of the companies were public and had an average annual revenue of $13.1 billion.

Here’s how many hours CEOs at these companies worked:

  • They worked 9.7 hours per weekday on average, or 48.5 hours a week
  • Each day on the weekend, they worked about 3.9 hours
  • They also worked 2.4 hours a day on vacation
  • 47% of their work was done at headquarters, with the balance at other “company locations, meeting external constituencies, commuting, traveling, and at home”
  • Grand total: 62.5 hours a week

What they did while working (75% of which was planned and 25% spontaneous):

  • They spent 25% of their time developing people and relationships
  • 25% on functional and business unit reviews
  • 21% on strategy
  • 16% on matching organizational structure and culture with the needs of the business
  • 4% on M&A
  • 4% on operating plans
  • 3% on professional development
  • 1% on crisis management

Time spent with those inside the organization:

  • 33% on direct reports
  • 22% with other senior managers
  • 10% with other managers
  • 5% with


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Week Finishes in Tech and Large Caps Favour

Courtesy of Declan.

Large Caps and Tech indices enjoyed a good week with breakouts holding by Friday’s close. There was no real volume on the breakouts but new highs leave markets in a position to attract sideline money.




The S&P didn’t do a whole lot on Friday but it remains on course to test channel resistance. Technicals are all in the green and the previous period of underperformance against the Russell 2000 looks to have shifted back in Large Caps favour.






The Nasdaq didn’t quite convince on its breakout but On-Balance-Volume has managed a new reaction high while other technicals are bullish. Wednesday’s swing low is the risk level for new buyers and there is likely value for a long trade based on Friday’s finish.





The Nasdaq 100 had the stronger breakout of the two Tech indices. It will run into resistance before other indices but also has the most room to defend support.





The index struggling a little for attention is the Russell 2000. While Friday’s broader market gains were small they didn’t get as far as the Small Caps index. The double top remains in play and aside from relative performance, other technicals are okay.





For tomorrow, bears will be looking to push nascent breakouts back below their latter support levels and generate a new round of ‘bull traps’ (shorting opportunities). Profit taking is also likely. However, if sellers fail to make their presence felt in early morning trading sideline bulls will become encouraged to step in and bid markets higher; Wednesday’s swing lows will become ‘stop’ levels for measuring risk (vs potential reward).




You’ve now read my opinion, next read Douglas’ blog.




I trade a small account on eToro, and invest using Ameritrade. If you would like to join me on eToro, register through the banner link and search for “fallond”.




If you are new to spread betting, here is a guide on position size based on eToro’s system.









 
 
 

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.

Market Shadows >>