Author Archive for ilene

Buy stocks now or after the election?

 

Buy stocks now or after the election?

Courtesy of 

 

On an all-new episode of What Are Your Thoughts, Josh Brown and Michael Batnick take on the biggest topics on Wall Street this week, including:

*The “pressure cooker of uncertainty” has many investors waiting with cash for the election to be over.
*Amazon is actually losing market share to the old category killers like Best Buy and Walmart, who are getting good at ecommerce.
*YOU ASKED: What should my strategy be, investing or trading?
*Which would produce the biggest rally, a vaccine approval or a signed stimulus bill?
*What’s the deal with ARK Innovation ETF sponsors taunting everyone in Value-land?
*What should we make of Affirm and the other “buy now, pay later” technologies – disruptive for credit cards?
*QQQ inflows and outflows have been wild this year – is options activity the most likely reason?

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Adam Smith would be a Democrat! Beware common clichés about economics.

 

Best-selling author and scientist David Brin shares another excerpt from his book, Polemical Judo, about the current war against democracy and how we can fight back. (Read the first, second and final chapter at the Contrary Brin Blog, and an excerpt from chapter 5, The War on All Fact People, here, and an excerpt from chapter 10, We are Different, Different is Difficult, here.)

 

Adam Smith would be a Democrat! Beware common clichés about economics.

Courtesy of David Brin, Contrary Brin Blog

For the longest time, Donald Trump had one issue in which he led Joe Biden… "The Economy." And it drove me crazy! If there is one issue for which the evidence is overwhelmingly open-and-shut, it is the almost perfect record of better economic outcomes across the span of Democratic Administrations versus Republican ones. And yet, no DP politician seems remotely capable of making such a case, in debate or even in position papers.

Finally, last week, polls showed Biden pulling ahead on economics, as well. But no thanks to self-gelded Democratic Party polemics!

And so, let's resume publishing chapters of Polemical Judo with Chapter Eleven, on that very topic. And yes, this is a long one!  So again, I'll be splitting it in half. Because no one has the patience to read, anymore. (Read also: More on why OUTCOMES show Republican "economics" betrays markets, fiscal sense and the future: Chapter 11's second part.)

And yes, as always I have plenty to say about the week's events, as well. But this time I'll hold off, till the end. 

POLEMICAL JUDO – Chapter 11  

Economics –

No, you don’t get Adam Smith… and Other Rationalizations

“For as wealth is power, so all power will infallibly draw wealth to itself by some means or other.”

– Edmund Burke (1780)

In August 2019 a coalition of executives representing some of America’s largest companies issued a statement that redefines “the purpose of a corporation.”[1] No longer…
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Brick and Mortar Winners in a Post Covid World

 

Brick and Mortar Winners in a Post Covid World

Courtesy of Howard Lindzon

Before I get started…

Zoom zoomed past Exxon in market cap yesterday. At some level that makes sense as Zoom is the fuel for 2020 economy. Between alternative energy and COVID, I have no idea if Exxon can regain past glory.

Next up…

JC does a fun weekly show with me where we talk about the markets and a few favorite ideas, and his team does a great job of slipping in great edits to make it funny and worth sticking around. Here is this week’s episode.

Someone on Twitter had fun with the video and put this photo together with the tagline: Howard (when his portfolio was banks and energy) and Howard (when his portfolio went all digital).

Onwards…

Gavin Baker offers up a great piece of research and writing titled Why category leading brick and mortar retailers are likely the biggest long term Covid beneficiaries. The gist:

I believe the biggest long term beneficiaries of Covid will prove to be category leading brick and mortar retailers. By this I simply mean brick and mortar retailers who have dominant share in a category — whether it be home improvement, general merchandise, electronics or any other retail category. Their destiny has likely changed forever. Many of the perceived Covid winners such as e-commerce, videogame and streaming media companies have simply been pulled a few years forward into a future that was inevitable. Their destiny did not change. The future for those businesses simply accelerated whereas the future for category leading “brick and mortar” retailers has changed dramatically as a result of Covid, more so than for any other business of which I can think. It is likely that food delivery and videoconferencing companies are also permanently advantaged due to Covid, but the change in ultimate outcome is not as extreme as I think it will be for category leading brick and mortar retailers.

Make sure you read the whole piece.





Loan Loss Reserves at Mega Banks Are Far from Where They Need to Be

Courtesy of Pam Martens

Loan Loss Reserve to Total Loans for All U.S. Commercial Banks

By Pam Martens and Russ Martens

It’s time to revisit that scene from the movie, The Big Short, where Steve Carell, playing Mark Baum, is sitting in the audience at the American Securitization Forum and interrupts the speaker on stage who has just stated that he expects subprime losses “will be contained at 5 percent.” Baum loudly asks: “Would you say that it is a possibility or a probability that subprime losses stop at 5 percent?” The speaker says: “I would say that it is a very strong probability, indeed.” Baum sits down but then begins to waive his arm in the air, forming a zero with his fingers. Baum then shouts out: “Zero! Zero! There is a zero percent chance that your subprime losses will stop at 5 percent.”

You can view the scene from the movie below.

That scene came to mind when we graphed the loan loss reserves at U.S. banks through the second quarter of this year, using data from the St. Louis Fed. (See above chart.)

Consider us on record as waving our arm in the air and shouting that there is zero, ZERO! chance that the megabanks in the U.S. are properly reserved for what comes next.


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China makes it incredibly hard for foreign businesses to operate – but they stay because the money is just too good

 

China makes it incredibly hard for foreign businesses to operate – but they stay because the money is just too good

A shipping container passes the Golden Gate Bridge in San Francisco bound for Oakland, Calif. AP Images/Eric Risberg

Courtesy of Amitrajeet A. Batabyal, Rochester Institute of Technology

Doing business in China can be a difficult and contentious proposition for companies in many countries. Yet even with charges of intellectual property theft, forced partnerships and tight restrictions on doing business, China continues to attract foreign capital. Why do businesses want to invest in China when there are so many other “business-friendly” countries and financial markets that support foreign investment?

The United States has accused China of stealing the intellectual property of American firms, theft that is estimated at US$600 billion annually. As a precondition for doing business in China, American and other firms may be subjected to the forced transfer of their technology. In addition, regulations can require foreign investors to partner and set up a joint venture with a Chinese firm before they can do business in China.

The Great Hall of the People in Beijing where China's national Congress gathered.

The Chinese premier delivers the government work report at the Great Hall of the People in Beijing. AP Photo/Ng Han Guan, Pool

In 2001, after becoming a member of the World Trade Organization, China promised to open up its banking, telecommunications and electronic payment processing sectors. But action in these areas has been nonexistent or, at best, half-hearted. The Chinese telecommunications industry, for example, remains under government control, and the government has barred Facebook and Google from offering their services in China.

What’s in it for investors

Doing Business 2020, a publication of the World Bank, ranks China – in terms of the availability of credit and the ease and magnitude of tax payments – 80th and 105th, respectively, out of 190 nations in the world. Using 10 other indicators, such as protection offered to minority investors, registering property and enforcing contracts, China ranks 31st out of 190 nations in the world for the…
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FLUFF AND FOLD

 

FLUFF AND FOLD

Courtesy of Grant's Almost Daily

A pair of Bloomberg headlines, concerning Brazilian President Jair Bolsonaro:

From Oct. 7:

Bolsonaro Declares Brazil Corruption-Free and Ends Carwash Probe

And from Oct. 15:

Bolsonaro Ally Resigns After Covid Cash Found in Underpants

FROM HERE TO ETERNITY

From the unintended consequences files:  The Financial Times reported over the weekend that Federal Reserve higher-ups are considering beefed-up regulation to combat risks associated with the current low-and-lower interest-rate regime.  

Boston Fed president Eric Rosengren told the FT that “if you want to follow a monetary policy. . . that applies low interest rates for a long time, you want robust financial supervisory authority in order to be able to restrict the amount of excessive risk-taking occurring at the same time.”  Neel Kashkari, president of the Minneapolis Fed, added: “I don’t know what the best policy solution is, but I know we can’t just keep doing what we’ve been doing. As soon as there’s a risk that hits, everybody flees and the Federal Reserve has to step in and bail out that market, and that’s crazy. And we need to take a hard look at that.”

A pullback in market interventions may be one way to limit moral hazard. Thus, a report last Thursday from the Congressional Oversight Commission recommended that the Fed wind down its Secondary Market Corporate Credit Facility (SMCCF) bond purchase program initiated during the teeth of the spring panic, explaining that: “Given the Federal Reserve’s success in buoying corporate bond markets and recognizing that primary market investment-grade corporate bond rates are now below pre-pandemic levels, the Commission does not believe that further secondary market corporate bond purchases through the SMCCF are necessary.” 

Indeed, this year’s severe economic shock has visited no lasting damage on financial assets, with the stock market near record highs and credit spreads not far removed from their pre-virus levels, while year-to-date junk bond issuance reached $351 billion on Friday according to Bank of America, some $30 billion above the prior high-water mark set in the 12 months of 2012.  

To be sure, animal spirits are percolating: This morning, Caa1-rated satellite…
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Well this is…something

 

Well this is…something

Courtesy of 

I was on stage with Cathie Wood last fall for a conference at the Bloomberg headquarters in NYC. The topic? Using social media to build influence for your investment firm.

My perspective was “It’s time for me to start pulling back, I don’t even enjoy it anymore. People are miserable and angry and jealous and mad at themselves and I don’t want to be around it anymore.” Cathie was like (I’m paraphrasing) “F*** that, we’re going full speed ahead on Twitter, we’re using it to be provocative and to meet new sources of information and to differentiate ourselves from passive growth funds.” Those weren’t her exact words but she was ready to roar on Finance Twitter. I was like, get me the hell out of here.

Fast forward a year – I’ve basically deleted my presence there, best decision of my life. Never been happier. She’s ridden the wave of fame that’s come along with her ultra-bullish Tesla position into a full-fledged cult following. Good for her and her ETF firm, ARK Investments. I found her to be serious, courageous and intellectually curious during that hour we spent together on stage. Glad it’s worked out.

But now maybe she’s taking things in a trollingly bizarre direction where they don’t necessarily need to go. Smashing value investors, innovation doubters and other non-believers over the head with shade in the below video, which hit the ARK Twitter feed late last week…

So now she’s got to contend with the TSLAQ crowd AND the millions of beleaguered old school value people who have nothing to show for all their self-flagellation over the last decade. Why stomp on a hornet’s nest that’s already fallen out of its tree and been dashed on the ground?

Maybe that’s why I’m so relieved to be out of the barrel. The fact that someone would deliberately


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Momentum Monday…Black Monday Was 33 Years Ago Today

 

Momentum Monday…Black Monday Was 33 Years Ago Today

Courtesy of Howard Lindzon

Good Monday morning everyone…

I remember Black Monday because my first job after college was at a brokerage firm in Toronto in the ‘wire room’.

I was a casualty of that ‘Black Monday’…the firm was a casualty as well.

Off I went back to graduate school and I wish I had BTFD (bought the f@#kibg dip) that day as the Dow dipped below 2,000!

Today the markets look quite different.

The Dow is over 28,000 and most of the business is electronic.

Onwards….

As Always, Ivanhoff and I tour the markets and check in on momentum. I take a look at some of my stocks that have been acting very well ($mcd, $fslr, $aaxn).

Here is this weeks episode.

Stocks around the world continue to display risk on characteristics including Japan and Chinese internet stocks.

Low interest rates continue…mortgage rates in Denmark have gone negative.

In the US, people keep spending their money at retail…from home.

Technically, the price action bodes well one year out…interesting data from Ryan Detrick.

Biotech was pointed out technically and it was something I noticed…take a look.

I am finding the time to watch the markets because the election is right around the corner and it feels like the President is in a tweet mode hell bent on keeping the markets firm through the election. The other side of these market tweet bursts has been awful.

Have a great week everyone.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here





How Criminal Charges Against a Wall Street Icon Went from Front Page News to a Yawn at the New York Times

Courtesy of Pam Martens

E.F. Hutton Story on Front Page of New York Times, May 3, 1985

E.F. Hutton Story on Front Page of New York Times, May 3, 1985

On May 2, 1985 the highest law enforcement officer in the United States, the head of the U.S. Department of Justice, Attorney General Edwin Meese, held a news conference to announce that the sixth largest brokerage firm on Wall Street, E.F. Hutton, was pleading guilty to 2,000 felony counts of wire and mail fraud. It had also agreed to pay criminal fines of $2 million and up to $8 million in restitution to the 400 banks it had defrauded. The fraud had lasted less than two years, from July 1, 1980 and February 28, 1982, and consisted of the following according to the Justice Department:

“The essence of the charges was that Hutton obtained the interest-free use of millions of dollars by intentionally writing checks in excess of the funds it had on deposit in various banks.”

On the following day, Friday, May 3, the New York Times put that story on the front page of its newspaper.

Now, carefully consider what happened three weeks ago.

On September 29, 2020, the U.S. Department of Justice sent out a press release announcing that it was bringing two criminal charges against the largest Wall Street bank in the United States. No press conference was held. The press release indicated that JPMorgan Chase had committed “tens of thousands of episodes of unlawful trading in the markets for precious metals” and “thousands of episodes of unlawful trading in the markets for U.S. Treasury futures and in the secondary (cash) market for U.S. Treasury notes and bonds.” The bank agreed to pay $920 million in fines and restitution.

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Caught in a Debt Trap

 

Caught in a Debt Trap

Courtesy of John Mauldin, Thoughts from the Frontline

We're caught in a trap
I can't walk out
Because I love you too much baby

Elvis Presley’s rendition of Suspicious Minds topped the record charts in 1969. The lyrics portray a romance that couldn’t work, but was also impossible to escape. That’s also a good way to describe our relationship with government debt. We know it can’t last, but we can’t walk out. We love government spending and its benefits (like Medicare, Social Security, and unemployment insurance) too much.

In other words, we are in a debt trap. Our political process can’t reduce spending and/or raise taxes enough to balance the budget, so the debt grows and grows. As it does, paying the interest plus the accumulated debt load pulls more capital away from more productive uses. This depresses economic growth, thereby generating even more spending and debt.

This has to end, and I think it will do so in the event I’ve called The Great Reset. When I first started talking about The Great Reset, we weren’t in the debt trap. We were “merely” in a situation with only bad choices. I didn’t think we would make them. Thus the underlying presumption was that we would end up in a debt trap.

The Great Reset will be our escape from the debt trap. While there will be some winners and (probably more often) losers, it won’t be fun for anyone. And it all springs from the debt trap.

Today I’ll talk about how we got into this trap, why we can’t escape without completely resetting the taxation/spending structure, and what it is doing to the economy. Let me warn you: Some of this will get political—but not in the way you might expect.

Whatever your persuasion, you aren’t going to like this. Nor should you.

Diverted Capital

I have the great privilege of being able to talk to some of the finest economic minds in the country. Rarely a week goes by that I do not spend significant time on the phone with Dr. Lacy Hunt. He and Van Hoisington write in their most
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Zero Hedge

Mystery Trader Shocks Market With Giant VIX Put Trades

Courtesy of ZeroHedge View original post here.

While everyone is familiar with the exploits of the notorious vol trader Ruffer LLP, better known in the market as "50 cent" for his penchant for buying deep OTM VIX calls which while usually expiring worthless, occasionally make a killing, such as the $2.6 billion the fund made during the March crash when VIX soared, a new and heretofore unknown player has emerged in the vol space. And because this particular trader's bet appear to be on a reduction in volatility Perhaps we can call him minus 50 cent?

According to Bloomberg, which first reported the mystery trader's exploits, so large w...



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ValueWalk

COVID-19 Shocks Will Continue to Shape Future FX Market Structure

By Jacob Wolinsky. Originally published at ValueWalk.

COVID-19 Shocks Will Continue to Shape Future FX Market Structure – A New Premium on Sell-Side Relationships and Algos

Q3 2020 hedge fund letters, conferences and more

Tuesday, October 20, 2020 | Stamford, CT USA — Although day-to-day aspects of the foreign exchange (FX) market have largely returned to normal, disruptions caused by the COVID-19 pandemic will have a lasting impact on market structure and functionality.

COVID-19 Crisis Continue...

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Phil's Favorites

Buy stocks now or after the election?

 

Buy stocks now or after the election?

Courtesy of 

 

On an all-new episode of What Are Your Thoughts, Josh Brown and Michael Batnick take on the biggest topics on Wall Street this week, including:

*The “pressure cooker of uncertainty” has many investors waiting with cash for the election to be over.
*Amazon is actually losing market share to the old category killers like Best Buy and Walmart, who are getting good at ecommerce.
*YOU ASKED: What should my strategy be, investing or trading?
*Which would produce the biggest rally, a vaccine approval or a signed stimulus bill?...



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Chart School

Dow Gann Angle Update

Courtesy of Read the Ticker

Time to see what happens to the Dow post US elections.

The Dow Gann Angle Target 3 (from 2007 top) is on the table, and what a ride that will be. The FED went BRRRRR is all the fundamental news you need to know. Gann angles are very good tool to see how the masses are pushing price.


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The last two US elections saw Bitcoin and the DOW rally well for 6 months, due to stimulus. The most bearish 2020 US Election case for the markets is a Biden win with the Senate and Congress controlled by the Democrats, somehow this blog feels that is very unlikely. So what could go wrong!


...

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Kimble Charting Solutions

Will 2020 Mark Historic Low For Interest Rates?

Courtesy of Chris Kimble

US treasury bond yields have been trending lower for over 3 decades. Could the latest drop mark a significant low for bond yields and interest rates?

In today’s chart, we can see that interest rates have had several spike lows and highs, but that each low is lower and each high is lower. That’s the definition of a downtrend. BUT, each of these spike lows has resulted in big rallies within the downtrend channel. And each of these lows and subsequent rallies have been marked by significant momentum lows (see each green line and shaded box).

So is it time for short-term yields to rally?

Looking at the current set-up, we can see that yiel...



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Biotech/COVID-19

Coronavirus reinfection cases: what we know so far - and the vital missing clues

 

Coronavirus reinfection cases: what we know so far – and the vital missing clues

By Sheena Cruickshank, University of Manchester

As President Trump claims that he is immune to COVID-19 and isolated reports emerge of reinfection, what is the truth about immunity to COVID-19?

To date, there have been six published ...



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Politics

Dan's Covid Charts: Blue States vs. Red States Over Time

 

The trend of lower Covid-19 case numbers per capita in blue states compared to red states isn't itself surprising, but the magnitude of the differences may be. You can visualize the evolving differences in case loads by watching the infection's progression, as measured by cases per capita, at Dan's website.

[Visit Dan’s COVID Charts to see these amazing animated charts and more. Fortunately, Dan broke his Twitter hiatus to share his work.]

People say I should break my 12-year Twitter hiatus to share my latest animated COVID chart. It compares state cases factoring in partisanship since June 1, when science had proven methodology as to how to stop the spread after the initial sucker punch. ...



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Digital Currencies

Bitcoin: the UK and US are clamping down on crypto trading - here's why it's not yet a big deal

 

Bitcoin: the UK and US are clamping down on crypto trading – here's why it's not yet a big deal

Where there’s a bit there’s a writ. Novikov Aleksey

Courtesy of Gavin Brown, University of Liverpool

The sale and promotion of derivatives of bitcoin and other cryptocurrencies to amateur investors is being banned in the UK by the financial regulator, the Financial Conduct Authority (FCA). It is a...



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Mapping The Market

COVID-19 Forces More Than Half of Asset Management Firms to Accelerate Adoption of Digital Marketing Technology

By Jacob Wolinsky. Originally published at ValueWalk.

There is no doubt that the use of technology to support client engagement initiatives brings both opportunities and threats but this has been brought into sharp focus this year with the COVID-19 pandemic.

The crisis has brought to the fore the need for firms to enable flexibility in client engagement – the expectation that providers will communicate to clients on their terms, at their speed and frequency and on their preferred channels, is now a given. This is even more critical when clients are experiencing unparalleled anxiety from both market conditions and their own personal circumstances.

...

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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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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. Contact Ilene to learn about our affiliate and content sharing programs.