Momentum Monday – The Simulation Is Making Me Nervous
by ilene - August 10th, 2020 7:14 pm
Momentum Monday – The Simulation Is Making Me Nervous
Courtesy of Howard Lindzon
Happy Monday.
As always, Ivanhoff and I do our weekly video and you can watch/listen right here.
Ivanhoff has a great synopsis of the market action and themes defining the price action in the US Markets:
1. Asset inflation and the U.S. Dollar. It is simple, if the U.S. Dollar continues to lose ground, people will attempt to protect of purchasing power of their capital and the price of many assets is likely to go up – stocks, real estate, crypto, precious metals.
2. So many breakdowns in software stocks after they reported earnings illustrating that the COVID-related restrictions and spending cuts are not favorable for all tech stocks. This has been an ongoing theme for a second week in a row.
3. Small caps finally woke up ($IWM). I don’t know if it is because of the expectations of another stimulus, a working vaccine, or just catching up with the rest of the market. A potential rotation into small-caps will only prolong the current rally in stocks.
4. More strength in solar ($TAN). Every single earnings report in solar has led to a gap and go this quarter. None of those reports showed spectacular growth. The market is forward-looking and buying in anticipation of a major new clean energy bill.
5. The dips in mega-cap tech stocks like $AAPL, $FB, $AMZN, and $GOOGL are still scooped up. Obviously, no company is completely invincible and politicians like to attack the big and successful.
6. We saw some epic melt-ups in highly shorted stocks – $CVNA, $W, $OSTK, $CELH, etc.. While fun while they last, typically those tend to happen towards the end of a bullish cycle. They are not the perfect timing indicator but it is something to be aware of.
Ivanhoff is a swing trader so he will attack the market from all sides.
I’m an old trend follower so at one level it’s easy…the big names (FAANG, $MSFT, $TSLA and the $QQQ) continue to be in
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How Beirut’s port explosion exacerbates Lebanon’s economic crisis
by ilene - August 10th, 2020 7:13 pm
How Beirut's port explosion exacerbates Lebanon's economic crisis
Courtesy of Hannes Baumann, University of Liverpool
The explosion that tore through Beirut on Tuesday August 4 was so strong that shockwaves were felt on the island of Cyprus, over 200 kilometres away. At least 135 people were killed and 5,000 injured in the blast. Such devastation would be difficult to deal with at the best of times but it hit the Lebanese capital in the midst of a severe economic crisis that has only been compounded by the COVID-19 pandemic.
Before the blast, Lebanon’s currency had plummeted to record lows, losing more than 80% of its value since October 2019. The Lebanese pound has been officially pegged to the US dollar since 1997 at the rate of L£1,500 to US$1, with the two currencies largely used interchangeably. But this exchange rate has long been untenable.
This is because the nation’s government debt levels have for years been among the highest in the world, as were current account deficits (the difference between a country’s imports of goods and services and exports). Lebanon produces little and depends heavily on imports, including most of its food. It was borrowing heavily to pay for these imports.
This would usually prompt capital to leave the country, making the value of the currency fall. For years, however, the country avoided this fate. Local banks were happy to lend to the government because they were receiving exorbitantly high interest rates. The fact that many politicians held stakes in the banks cemented this cosy relationship between government and finance. Meanwhile, the country’s large diaspora was happy to deposit US dollars they had earned elsewhere in Lebanese banks. Friendly Gulf governments also provided financial assistance.
Yet by 2016, even the country’s loyal diaspora started getting cold feet about depositing money back in Lebanon and relations with the Gulf grew frostier. Capital flows into Lebanon slowed down. To try and keep money flowing in, the central bank then engaged in complex borrowing arrangements with local banks which it described as “financial engineering” but critics have labelled a Ponzi scheme.
But economic confidence was not restored and by September 2019 the central bank could no longer…
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Don’t want federal agents in your city or town? Then protect federal property
by ilene - August 10th, 2020 6:42 pm
Don't want federal agents in your city or town? Then protect federal property
During a protest, federal police officials stand inside a fence at the federal courthouse in Portland, Oregon, July 25, 2020. (Photo by Ankur Dholakia / AFP via Getty Images
Courtesy of Frank V. Zerunyan, University of Southern California
I recently visited Portland, Oregon, and saw the destruction around the federal courthouse there – walls defaced with graffiti, fences vandalized, and the remains of garbage fires that had been set.
The vast majority of anti-racism protests over the past two months in the city have reportedly been peaceful, and the damage was due to a small minority of rioters who fought police and federal agents around the building.
President Donald Trump sent in federal agents, claiming Portland was no longer able to maintain order and adequately protect federal property.
The agents’ uninvited presence, and how they purportedly treated protesters, escalated the conflict. The city’s mayor and Oregon’s governor repeatedly asked the agents to leave; the state attorney general sued to restrict the operations of federal agents. The federal presence, they said, violated the 10th Amendment, which guarantees a state’s sovereign right to police its citizens. A federal judge in Portland rejected the state’s arguments for lack of standing.
As a three-term mayor and city council member, as well as a legal scholar, I know that what’s called “home rule,” or local control, is the most sacred refrain in the vocabulary of every mayor and council member I know.
At the same time, the scene I witnessed at the federal courthouse in Portland is disturbing. As political interests on both sides fuel the fire of the violence, the American people are left wondering if federal agents will appear in their cities next.
Federal troops were sent by President Dwight Eisenhower to Little Rock, Ark., in 1957 to protect Black students from mob violence when they integrated a city high school. Bettmann/Getty
State sovereignty, freedom, independence
The Founders feared an authoritarian central government.…
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TikTok and Microsoft: government agendas are driving businesses like no time since WW2 – here’s what they can do about it
by ilene - August 10th, 2020 5:10 pm
TikTok and Microsoft: government agendas are driving businesses like no time since WW2 – here's what they can do about it
Time’s up for TikTok. Ascannio
Courtesy of Howard Yu, International Institute for Management Development (IMD)
The Trump administration has turned up the heat on Chinese tech companies TikTok and WeChat with an executive order that US companies have 45 days to stop transacting with them. The administration has also recommended that Chinese firms listed on US exchanges be removed unless they provide US regulators access to their audited accounts.
It comes only days after the US president gave the go-ahead for Microsoft (or rival US bidders) to buy TikTok if the purchase can be completed by September 15. Failing that, Trump says he will shut down the video-sharing app in the US. Zhang Yiming, the chief executive of ByteDance, which owns TikTok, wrote to employees telling them he has no choice but to abide by US laws.
Thanks to the tight deadline, Microsoft is likely to snap up a crown jewel at a discount – TikTok is the fourth most popular app in the world. Trump also said the US Treasury should get “a very substantial portion” of the sale price, “because we’re making it possible for this deal to happen”. The mechanics of this are unclear. Microsoft said it “appreciates the US government’s and President Trump’s personal involvement”.
Business and the national agenda
Not since the second world war has the US government expected big businesses to champion a national agenda in this way. It’s one thing to expect businesses to be socially responsible toward local communities. But to ban access of foreign companies, and then to expect domestic companies and the government to profit profit directly from it, is a dangerous line to cross.
Most dangerous is to expect big companies to carry out “national duties” because the country is facing “foreign adversaries”. Do it my way, the leader might say, or I could break you apart. After all, this comes at a time when the excessive size and power of tech rivals such as Google, Facebook and Amazon is already…
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How to use ventilation and air filtration to prevent the spread of coronavirus indoors
by ilene - August 10th, 2020 5:01 pm
How to use ventilation and air filtration to prevent the spread of coronavirus indoors
Open windows are the simplest way to increase air flow in a room. Justin Paget / Digital Vision via Getty Images
Courtesy of Shelly Miller, University of Colorado Boulder
The vast majority of SARS-CoV-2 transmission occurs indoors, most of it from the inhalation of airborne particles that contain the coronavirus. The best way to prevent the virus from spreading in a home or business would be to simply keep infected people away. But this is hard to do when an estimated 40% of cases are asymptomatic and asymptomatic people can still spread the coronavirus to others.
Masks do a decent job at keeping the virus from spreading into the environment, but if an infected person is inside a building, inevitably some virus will escape into the air.
I am a professor of mechanical engineering at the University of Colorado Boulder. Much of my work has focused on how to control the transmission of airborne infectious diseases indoors, and I’ve been asked by my own university, my kids’ schools and even the Alaska State Legislature for advice on how to make indoor spaces safe during this pandemic.
Once the virus escapes into the air inside a building, you have two options: bring in fresh air from outside or remove the virus from the air inside the building.
All of the air in a room should be replaced with fresh, outside air at least six times per hour if there are a few people inside. Pico/iStock/Getty Images Plus via Getty Images
It’s all about fresh, outside air
The safest indoor space is one that constantly has lots of outside air replacing the stale air inside.
In commercial buildings, outside air is usually pumped in through heating, ventilating and air-conditioning (HVAC) systems. In homes, outside air gets in through open windows and doors, in addition to seeping in through various nooks and crannies.
Simply put, the more…
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Trump’s Executive Orders Sow Confusion and Illusions
by ilene - August 10th, 2020 9:39 am
Courtesy of Pam Martens
By Pam Martens and Russ Martens
President Donald Trump has taken to governing from the 19th Hole in the midst of the worst economic crisis since the Great Depression. On Saturday, speaking from the clubhouse of the Trump National Golf Club in Bedminster, New Jersey, Trump announced four executive actions that he promised would “take care of, pretty much, this entire situation,” meaning economic relief for struggling workers who have lost their jobs as a result of the pandemic. But by the time the Sunday talk shows rolled around, it became clear that the executive orders and memorandum had been hastily cobbled together with gaping holes and obstacles to providing meaningful relief.
Instead of actually extending the $600 supplemental federal unemployment assistance that unemployed workers have been receiving weekly under the CARES Act that Congress passed in March, Trump’s Memorandum offers only the possibility of $400 in weekly assistance and directs FEMA to come up with $44 billion of Disaster Relief Funds from the Department of Homeland Security to fund the program. Unfortunately, the Disaster Relief Funds, under statute, require a state match of 25 percent. This means that states, many of which are in desperate financial shape themselves, would have to provide $100 of the $400 federal supplement.
Matthew Barakat of the Associated Press is reporting this morning that many state officials and governors are dubious about being able to afford to participate in the plan.
The $600 federal supplement was needed because most states provide a miserly amount of state unemployment benefits (an average of $378 weekly). In the state of Florida, which has been heavily impacted by COVID-19, the maximum benefit is $275 weekly for just 12 weeks, or a cap of $3300. (Most states provide 26 weeks of state unemployment insurance, but for workers who lost their jobs during the major business shutdowns in March and haven’t been able to return to work, that will run out this month or next.) Florida’s $275 weekly benefit hasn’t increased in more than two decades, despite the cost of food and housing in Florida soaring over that period.
Trump’s eviction relief Executive Order is far worse than his unemployment insurance quagmire. It does not order…
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Beirut explosion: the disaster was exceptional but events leading up to it were not – researchers
by ilene - August 10th, 2020 12:28 am
Beirut explosion: the disaster was exceptional but events leading up to it were not – researchers
Courtesy of Scott Edwards, University of Bristol and Christian Bueger, University of Copenhagen
At the time of writing at least 100 people have lost their lives and a further 4,000 have been wounded following an explosion in the Port of Beirut. While the actual cause remains uncertain, the tragedy calls to attention the tremendous consequences of a lack of port security.
The explosion, on August 4, at around 6pm local time, appears to have been fuelled by 2,750 tons of the highly reactive chemical ammonium nitrate. The chemical had been the cargo on a ship, the the MV Rhosus, which entered the port at Beirut in 2013 due to a lack of seaworthiness and was prohibited from sailing. After the ship’s owner abandoned the vessel soon afterwards, the ammonium nitrate remained in a storage facility in Beirut’s port.
While the disaster itself was exceptional, the events leading up to it were not. Hazardous material is shipped across the world’s oceans on a daily basis. It is often mishandled or illegally traded. Abandoned containers of hazardous goods are found regularly in ports.
While maritime security tends to focus on preventing high-profile events such as piracy, terrorism or cyber-attacks, all too often it is daily mishandling that makes disasters possible. Part of preventing disasters such as what has happened in Beirut will mean strengthening port management and addressing crimes such as smuggling and corruption.
Abandoned ships
The International Maritime Organization (IMO) has recorded 97 cases of abandoned ships and crews since 2017. Ships are abandoned by their owners if a vessel is no longer lucrative to maintain, or perhaps if the ship has been stopped by authorities and fined. While the situation of the seafarers aboard these ships is often tragic, as they may receive little pay or even food for months, what happens to the load of the vessels is often unclear.
And the IMO number only reflects the cases of ships – we know little about how many containers stand abandoned in ports around the…
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The World’s Tech Giants, Ranked by Brand Value
by ilene - August 9th, 2020 5:26 pm
The World’s Tech Giants, Ranked by Brand Value
Courtesy of Theras A.G. Wood, Visual Capitalist
The World’s Tech Giants, Ranked by Brand Value
The pandemic has businesses everywhere on the ropes, with many firms filing for bankruptcy since lockdowns began. Despite the uncertainty, tech giants and major digital retail brands are still thriving—and some are running circles around those that are less pandemic-proof.
Using data from Kantar and Bloomberg, a recent brand report released by BrandZ shows which tech companies are proving their worth to consumers during COVID-19 chaos. With data covering almost 4 million consumers, BrandZ also reveals that the tech sector leads the world’s 100 most valued brands in terms of financial power and consumer sentiment.
Here’s how the top 20 tech brands from the report stack up:
Out of the top five tech brands, Microsoft made the biggest moves with 30% brand value growth. Other big movers in the top 20 were Instagram (owned by Facebook), Adobe, and LinkedIn (owned by Microsoft), rising 47%, 29%, and 31%, respectively.
Broken down by nation, U.S. brands are dominating tech’s heavy hitters, claiming 14 of the world’s top 20 tech brands. Chinese brands round out much of the remaining top 20, including tech entertainment and social media giant Tencent, which rose 15% in brand value since 2019.
Big Tech’s Heavyweights
Tech’s top brands are raking in billions of dollars, capturing consumer mindshare, captivating people, and comforting them during volatile months. Apple, Microsoft, Google, Tencent, and Facebook—tech’s leading contingent—have made those moves look easy during what are rough times for many world brands.
While most tech brands in the upper half of the top 20 saw significant increases in brand value, only Facebook and IBM were in decline from 2019, at -7% and -3% respectively. The biggest loss in tech’s top 20 came from China’s Baidu, which fell by -29% in 2020.
Waning consumer trust, thanks in part to the perceived misuse of personal data, is a gap that tech’s popularity alone won’t fill…
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A second COVID-19 wave? Here are 6 lessons from the first
by ilene - August 9th, 2020 4:26 am
A second COVID-19 wave? Here are 6 lessons from the first
A man wearing a face mask to curb the spread of COVID-19 walks past a temporary Pride art installation in Vancouver on Aug. 3, 2020. THE CANADIAN PRESS/Darryl Dyck
Courtesy of Loren Falkenberg, University of Calgary and Jillian Walsh, University of York
As COVID-19 spread across the globe, governments looked to epidemiologists to slow its transmission.
Without a vaccine, large-scale testing capacity and sufficient critical-care beds, epidemiologists pushed countries to enact social distancing measures and to lock down economies. These policies saved lives and bought time to better understand the virus.
Since the beginning of the pandemic, however, significant social and economic costs have resulted from the prolonged lockdowns. Blanket policies were enacted that didn’t take into consideration the social and economic costs or the ability of businesses to adapt their operations to mitigate the risks.
A shopper walks in the relatively empty Bayshore Shopping Centre mall in Ottawa on its first day open as part of Stage 2 of Ontario’s plan to lift COVID-19 lockdowns. THE CANADIAN PRESS/Justin Tang
While the uncertainty arising from this unprecedented situation makes additional caution understandable, it’s important to review the lessons learned before a second wave of COVID-19 or the next viral pandemic so we can better manage future crises in a way that limits medical, social and economic costs.
Lessons learned
Lesson 1: Simple behaviours are the most effective response.
The spread of COVID-19 can be reduced with simple actions, as noted by Bonnie Henry, now the medical officer of health for British Columbia, in her 2009 book Soap and Water & Common Sense: The Definitive Guide to Viruses, Bacteria, Parasites, and Disease. Hand washing, regular disinfecting of surfaces, wearing face masks and social distancing can drop the R0 below 1 and limit community spread of the virus.
Lesson 2: Testing and tracking identify hot spots.
Open access to COVID-19 testing allows communities to identify and limit the rate of transmission. It also allows…
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Bridge to Vaccine or Nowhere?
by ilene - August 9th, 2020 4:17 am
Bridge to Vaccine or Nowhere?
Courtesy of Wade Slome, Investing Caffeine
We are approximately eight months into a global pandemic that has infected an estimated 18 million people and taken almost 700,000 lives. Everyone is wrestling with the ripple through effects that COVID-19 has not only had on our personal lives, but also on the broader aspects of our economy, including science, politics, economics, education, mental health, food supply, and transportation. The 7.8 billion people on the planet, including investors, are waiting for a bridge to a COVID-19 vaccine cure to come as soon as possible, so people and the world can begin returning towards normalcy.
The bridge to a COVID cure is not complete yet, but investors are currently paying notice and giving researchers the benefit of the doubt. Last month, stocks continued their advance with the S&P 500 catapulting another 5.5%. Since the low in March this year, stock prices have appreciated an astounding +49%, and are actually in the black (i.e., positive) for the year despite unemployment climbing above 11% and a massive 2nd quarter economic contraction in GDP of -32.9%. Some stock enthusiasm can be attributed to forecasted 3rd quarter GDP growth of 16%. The stock market story is even brighter, if you consider the technology-heavy NASDAQ index rose +6.8% for the month, +62% from this year’s low, and +20% for 2020.
With the destruction of lives and economic activity so severe, how can stock prices be so lofty? In short, after the economy ground to a virtual halt in March, business has been slowly getting better. At the heart of this improvement, the learning curve in treating this deadly virus has slowed the bleeding of the COVID-19 disease. The progress in controlling the virus can be seen in the declining number of daily COVID-19 cases (see chart below).
Source: The COVID Tracking Project
The stabilization and the beginning of a downward trend of cases can be explained with the successful application of therapeutics like remdesivir (manufactured by Gilead Sciences); generic steroids like dexamethasone; improved ventilator implementation in conjunction with blood thinners;…
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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...
Ilene is editor and affiliate program
coordinator for PSW.