Author Archive for ilene

Federal Budget Deficit Growing – Bad News Is It Makes US Economy Look Good

 

Federal Budget Deficit Growing – Bad News Is It Makes US Economy Look Good

Courtesy of , Liquidity Trader

The US Federal Budget Deficit is growing. That makes the US economy look good. And that’s bad news.

Federal Tax revenues rose in June. The calendar also made government outlays look smaller than they were. Thus the deficit looked smaller than it really was.

To the media’s credit, most reported that the deficit grew on a year to date basis. Others reported that the June decline was due to timing of payments, and would have been larger if not for the calendar. So for once, they got it right.

But they left out what it means to you as an investor. It is emphatically not good news. Here’s why.

Growing Federal Budget Stimulates the US Economy

What was hidden in June showed up in July. The budget deficit continues to grow. That’s stimulus. It boosts US economic numbers.

But those numbers don’t tell the true story of the bifurcation of the US economy, which shows up in other tax data. That data shows that the few do very well indeed, boosting the top line data. But the majority are struggling to keep up. As more consumers fall behind, the US economy is being hollowed out.

This report is excerpted and modified from Federal Budget Deficit Simultaneously Stimulating and Eviscerating Won’t End Well.

That doesn’t matter to the stock market in the short run. But it remains to be seen if a bull market can continue to be built upon an ever-narrowing economic foundation.

Revenue Comparisons Are Improving But Below Pre Cut Level

Meanwhile, year to year revenue comparisons have been improving since February. That comparison is now with like to like tax rates effective after the big 2018 tax cut. The monthly comps now show modest growth. The question will be how much is due to real growth and how much will be due to inflation, with employee earnings inflating at 5% in June and 3.3% on average this year.

Proponents of the 2018 tax cut have said


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3 myths to bust about breaking up ‘big tech’

 

3 myths to bust about breaking up 'big tech'

Before taking on tech giants, shatter a few misconceptions. W. Scott McGill/Shutterstock.com

Courtesy of Bhaskar Chakravorti, Tufts University

As the public and government regulators around the world discuss whether and how to manage the power of technology companies, one idea that keeps coming up is breaking up these large conglomerate corporations into smaller pieces. Public distrust for tech companies has shifted to talk of antitrust action against them. Facebook, for instance, might then have to compete with Instagram for photo-sharing and WhatsApp for messaging – rather than owning both.

The idea has managed to garner support from both Massachusetts Sen. Elizabeth Warren, a Democrat, and Republican President Donald Trump.

However, advocates and opponents of breaking up big technology firms are falling prey to some serious misconceptions. I study the effects of digital technologies on lives and livelihoods across 85 countries and lead Tufts Fletcher School’s Digital Planet initiative studying technological innovation around the world. In my opinion, there are three myths worth busting before considering taking on big tech.

Myth 1: Comparing Standard Oil and Google

John D. Rockefeller, founder of Standard Oil. Urbanrenewal/Wikimedia Commons

Arguments for and against antitrust action against tech firms rely heavily on the experiences of earlier cases. The massive 19th-century monopoly Standard Oil has, in fact, been referred to as the “Google of its day.” There are also people who are recalling the 1990s antitrust case against Microsoft’s dominant position in the era of personal computers.

Google co-founders Sergey Brin, left, and Larry Page. Joi Ito/Wikimedia Commons, CC BY

Those cases from the past may seem similar to today’s situation, but this era is different in one crucial way: the global technology marketplace. Currently, there are two parallel “big tech” clusters. One is in the U.S., dominated by Google, Amazon, Facebook and Apple. The other is based…
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How immigrants give American companies a powerful boost against Chinese rivals

 

How immigrants give American companies a powerful boost against Chinese rivals

Courtesy of Benjamin A.T. Graham, University of Southern California – Dornsife College of Letters, Arts and Sciences

The ongoing trade war is the most visible front in America’s struggle with China for global influence. Oddly, it may be immigration policy, as much as tariffs and trade deals, that determines which country prevails.

That’s because American competitiveness in foreign markets is a key battlefield in the struggle. And while the U.S. has long been the leading source of foreign investment in developing countries, China has emerged as an increasingly assertive player. With its Belt and Road Initiative, China is using investment as a tool to extend its political influence throughout Asia, Africa and Latin America.

But as it turns out, immigrants – a group that President Donald Trump frequently denigrates – provide the U.S. with a surprisingly powerful competitive advantage, as my research has shown. And policies that limit the number of immigrants who can come to the U.S. could be detrimental to America’s competitiveness in the long run.

A nation of immigrants

While America is a nation of immigrants, China is not. Chinese companies have few immigrants to hire, and this hurts them.

There are only a million foreign-born residents in China, compared with 50 million in the U.S., even though China’s population is four times larger.

Whether an American company wants to invest in India, Nigeria, Armenia or Guatemala, there is a flourishing immigrant community in the U.S. that businesses can tap to help them navigate challenging social and political environments. Few Chinese companies can do the same.

This gives American companies a competitive edge. Specifically, immigrants’ social and political ties to their home countries, combined with the professional connections they make in the U.S., allow immigrants to bridge the gap between American companies and valuable networks in developing countries.

Brothers-in-law and childhood friends

In many developing countries, formal institutions like courts are weak, and personal relationships play a large role in both business and politics.

If you want to get a permit quickly, you need a brother-in-law…
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Senator Compares Facebook’s Libra Association to Spectre in James Bond Movie

Courtesy of Pam Martens

Yesterday the U.S. Senate Banking Committee assembled to hear Facebook’s David Marcus explain how the company wants to create a global digital currency called Libra, to be run by a Switzerland-based global organization called the Libra Association, made up of 27 members from the fields of payment systems, technology, telecommunications, blockchain services, venture capital, nonprofits and academic institutions.

Given Facebook’s serial history of abusing the privacy rights of its users and selling their data without their permission, not to mention its role in facilitating Russian interference in the 2016 presidential election, we immediately went to check out the names of the nonprofits that had signed up to monitor this sprawling international monetary system cooked up in a Facebook lab in a year’s time. We were hoping to see names like American Civil Liberties Union, Public Citizen, Consumer Federation of America, or Center for Constitutional Rights. No such luck. Here’s who Facebook lists under nonprofits, multilateral organizations and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking. We have to admit to ignorance of any of these groups.

At the end of the hearing, after Facebook’s Marcus had struggled to explain the checks and balances of his short-on-specifics plan, Senator Chris Van Hollen (D-MD) said he suspected that Americans were going to view this organization as something like Spectre (the evil international surveillance organization) from the James Bond movie series.

It felt like Van Hollen had just read our minds.

Senator Sherrod Brown (D-OH), the ranking member of the Committee, made opening remarks at the hearing that were so on-point and poignant to the interests and concerns of the American people that we’ve printed them in full below.

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Opposite of Conventional Wisdom

 

Opposite of Conventional Wisdom

Courtesy of 

There was an article in the New York Times that highlighted the reversal of previous findings in medicine.

Of more than 3,000 studies published from 2003 through 2017 in JAMA and the Lancet…more than one of 10 amounted to a “medical reversal”: a conclusion opposite of what had been conventional wisdom among doctors.

This got me thinking about conventional wisdom in investing that might need further scrutiny. Before I get into it, this thought exercise was way more difficult than I thought it would be. The only piece of conventional wisdom that 90% of investors will nod their head at is “diversification is the only free lunch.”

I was able to come up with five items where I think the opposite of conventional wisdom is true.

Stocks are riskier than bonds.

One-month U.S. Treasury bills, often put in the risk-free bucket, went 68 years with a negative real return. Sure stocks can kill you fast, but bonds can kill you slowly.

Gold is a good hedge against inflation.

This makes sense in theory, but it is not always the case in reality. If gold did provide a hedge against inflation, you would expect the two to be at least somewhat correlated. The chart below shows the rolling 12-month returns of gold and CPI. Of course I’m cherry picking by starting in 1980, a decade after rampant inflation and amazing returns for gold, but still, over the last 40 years, this conventional wisdom has not held up well.

If you can time the economy, you can time the stock market. 

Okay, this one is actually more true than I thought it would be before I looked at the data. Since 1950, by the time the recession started, on average, stocks were in a 9.2% drawdown, which you can see in the chart below. So it turns out that knowing when a recession starts is a great signal to get out of stocks. Problem is you can never know in real time when a where you are


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America’s Real Divide Isn’t Left vs. Right. It’s Democracy vs. Oligarchy.

 

"Crumbling Justice" by Thvndar

 

America’s Real Divide Isn’t Left vs. Right. It’s Democracy vs. Oligarchy.

Courtesy of Robert Reich

I keep hearing that the Democratic party has moved “left” and that some Democratic candidates may be “too far left”.

But in this era of unprecedented concentration of wealth and political power at the top, I can’t help wondering what it means to be “left”.

A half-century ago, when America had a large and growing middle class, those on the “left” sought stronger social safety nets and more public investment in schools, roads and research. Those on the “right” sought greater reliance on the free market.

But as wealth and power have concentrated at the top, everyone else – whether on the old right or the old left – has become disempowered and less secure.

Safety nets have unraveled, public investments have waned and the free market has been taken over by crony capitalism and corporate welfare cheats. Washington and state capitals are overwhelmed by money coming from the super-rich, Wall Street and big corporations.

So why do we continue to hear and use the same old “right” and “left” labels?

I suspect it’s because the emerging oligarchy feels safer if Americans are split along the old political battle lines. That way, Americans won’t notice they’re being shafted.

In reality, the biggest divide in America today runs between oligarchy and democracy. When oligarchs fill the coffers of political candidates, they neuter democracy.

The oligarchs know politicians won’t bite the hands that feed them. So as long as they control the money, they can be confident there will be no meaningful response to stagnant pay, climate change, military bloat or the soaring costs of health insurance, pharmaceuticals, college and housing.

There will be no substantial tax increases on the wealthy. There will be no antitrust enforcement to puncture the power of giant corporations. No meaningful regulation of Wall Street’s addiction to gambling with other peoples’ money. No end to corporate subsides. CEO pay will continue to skyrocket. Wall Street hedge fund and


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DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, Thomas Jefferson University

Over the past few years direct-to-consumer genetic tests that extract information from DNA in your chromosomes have become popular. Through a simple cheek swab, saliva collection or finger prick, companies offer the possibility of learning more about your family tree, ancestry, or risk of developing diseases such as Alzheimer’s or even certain cancers. More recently, some companies offer tests to measure the tips of chromosomes, called telomeres, to learn more about aging.

But what exactly are telomeres, what are telomere tests, and what are companies claiming they can tell you? Age based on your birthday versus your “telomere age”?

Telomeres play a big role in keeping our chromosomes and bodies healthy even though they make up only a tiny fraction of our total DNA. The Greek origins of the word telomere describes where to find them. “Telo” means “end” while “mere” means “part.” Telomeres cap both ends of all 46 chromosomes in each cell, and protect chromosomes from losing genetic material. They are often compared to the plastic tips at the ends of shoelaces that prevent fraying.

We are molecular biologists studying how chemicals, agents from the environment and metabolism damage telomeres and affect their lengths and function, and how damaged telomeres affect the health of our cells and genome. The idea of offering telomere length as part of a genetic test is intriguing since telomeres protect our genetic material. But equating telomere length with something as complex as aging struck us as tricky and overly simplistic.

Telomeres get shorter with each round of cell division. Kateryna Kon/Shutterstock.com

Link between telomere length and human diseases

Telomeres are important for human health and despite their protective function, they are not indestructible. Telomeres shorten every time a cell divides and shorten progressively as we…
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Deutsche Bank job cuts are tip of the iceberg for the finance industry

 

Deutsche Bank job cuts are tip of the iceberg for the finance industry

 

Welcome to the fintech revolution. Shutterstock

Courtesy of Arturo Bris, IMD Business School

Deutsche Bank caused a recent stir with the seemingly sudden announcement that it would cut 18,000 jobs – one fifth of its global staff. It is part of a reorganisation designed to return the bank to its core business of corporate banking, private banking and asset management. Most of the job losses will be in the global equity traders and investment banking division Deutsche Bank stated in an announcement made on July 7.

Some may read the bank’s problems as the result of a bad strategy, bad execution, bad luck, or a combination of these three. I, however, think that the German bank’s problems reflect the profound transformations currently taking place in the financial industry in general, and in investment banking especially.

Let me start by saying that the value of the financial industry is not easy to justify in terms of social and economic benefits. It is true that banks perform a useful function of redistributing financial risk, allocating capital and providing credit. But there are too many banks, and what is even worse, there are too many bankers.

Looking at the case of Deutsche Bank, between 2009 and 2018 the bank lost US$14.8 billion in market value (including dividends paid to shareholders). This is the total value loss, with some ups and downs. In 2016 the market value of Deutsche Bank dropped by almost US$27 billion, while in 2017 it grew by US$21.5 billion.

This means Deutsche Bank destroyed US$15,370 per employee, per year. And, on average, the 100,000 employees of Deutsche Bank were paid more than what they have generated. Hence the logic that firing 18,000 bankers creates value.

A new financial order

In his recent book “Bullshit Jobs: A Theory”, David Graeber from the London School of Economics describes a major trend in modern economies: the proliferation of useless, unfulfilling jobs that do not create value for society. In his words, it is the rapid development of FIRE (finance, insurance, and real estate) companies that…
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As flood risks increase across the US, it’s time to recognize the limits of levees

 

As flood risks increase across the US, it's time to recognize the limits of levees

Water rushes through a breached levee on the Arkansas River in Dardanelle, Ark., May 31, 2019. Yell County Sheriff's Department via AP

Courtesy of Amahia Mallea, Drake University

New Orleans averted disaster this month when tropical storm Barry delivered less rain in the Crescent City than forecasters originally feared. But Barry’s slog through Louisiana, Arkansas, Tennessee and Missouri is just the latest event in a year that has tested levees across the central U.S.

Many U.S. cities rely on levees for protection from floods. There are more than 100,000 miles of levees nationwide, in all 50 states and one of every five counties. Most of them seriously need repair: Levees received a D on the American Society of Civil Engineers’ 2018 national infrastructure report card.

Levees shield farms and towns from flooding, but they also create risk. When rivers rise, they can’t naturally spread out in the floodplain as they did in the pre-flood control era. Instead, they flow harder and faster and send more water downstream.

And climate models show that flood risks are increasing. During this year’s unusually wet winter and spring, dozens of levees on the Missouri, Mississippi and Arkansas rivers were overtopped or breached by floodwaters. Across the central U.S., rivers are becoming increasingly hard to control.

Levees exist in one out of every five U.S. counties. USACE

Remaking the Missouri

In my book, “A River in the City of Fountains,” I describe the complexities of flood control in Kansas City, which sits at the junction of the Missouri and Kansas rivers.

The Missouri, the larger of these two, is America’s longest river, rising in Montana’s Rocky Mountains and flowing east and south for 2,341 miles until it joins the Mississippi River north of St. Louis. Historically it was wide and shallow, full of sand bars and snags that created challenges for steamboats.

In the late 19th and early 20th centuries, Kansas City…
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Jeffrey Epstein’s Curiously Nimble Trading in LinkedIn Stock Raises Red Flags

Courtesy of Pam Martens.

Is Jeffrey Epstein, the accused sex trafficker and sexual assaulter of dozens of underage girls potentially guilty of financial crimes as well? His criminal profile suggests that may well be worth investigating.

Bernie Madoff knew he was no genius and could never compete with the physics and math geniuses employed by the major trading firms on Wall Street. So he simply generated fake investment statements to reassure his thousands of clients of his trading prowess and didn’t buy one stock for their portfolios over the decades he was looting their assets, according to prosecutors.

But the criminal profile that emerges for Jeffrey Epstein is that of a man so arrogant and confident of his genius that he felt he could beat anybody – by hook or by crook, or by hiring ruthless lawyers to intimidate and compromise Federal prosecutors.

Armed with an aptitude for physics and math, Epstein became a math teacher at the exclusive Dalton School in Manhattan – despite the fact that he lacked a college degree. He traded up from that position to work for Wall Street investment bank Bear Stearns, which blew itself up in the early days of the financial crash of 2008. Epstein’s exit from Bear Stearns coincided with an SEC investigation of the firm, the details of which remain murky. No charges were brought. Epstein moved on to collect $25,000 a month from Towers Financial, whose CEO Steven Hoffenberg went to prison for 20 years for turning the company into a $450 million Ponzi scheme. Hoffenberg has alleged in an affidavit filed in a previous court case that Epstein was a major participant in the Ponzi scheme.

In the years that followed, Epstein flaunted his wealth and appeared eager to promote himself as a billionaire hedge fund manager that accepted only billion dollar accounts. But other than billionaire Les Wexner, founder of The Limited retail clothing chain and the parent company of Victoria’s Secret, it’s unclear if Epstein actually managed money for other people in a hedge fund.

What is clear, if we can believe the public tax filings Epstein’s accountants made to the IRS for his nonprofit charity, is that Epstein, unlike Bernie Madoff, actually did know how to make money trading stocks – especially when…
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Zero Hedge

Has E.T. Gone Home?

Courtesy of ZeroHedge. View original post here.

UFO sightings have been making headlines again lately, notably with The New York Times running an interesting article about several U.S. Navy fighter pilots encountering mysterious objects near the southeastern coast of the United States.

That high-profile story remains unexplained and so do plenty of other UFO sightings reported by members of the public every year like strange lights crossing the night sky or orange disks hovering in the distance.

However, as Sta...



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Phil's Favorites

Food waste: using sustainable innovation to cut down what we throw away

 

Food waste: using sustainable innovation to cut down what we throw away

shutterstock.

Courtesy of Mehrnaz Tajmir, University of Bath and Baris Yalabik, University of Bath

Our appetite for food is a serious problem. The huge amount of energy, land and water used to fill our supermarket shelves mean that modern overproduction and excessive consumerism are rapidly depleting resources and damaging the planet.

Yet still, more than one-third of the world’s food...



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Kimble Charting Solutions

Doc Copper Is Pushing Higher Off 18-Year Rising Support, Says Joe Friday

Courtesy of Chris Kimble.

Gold & Silver have been hot of late! Is Doc Copper about to do the same? Possible says Joe Friday.

This chart looks at Copper Futures over the past 27-years. Copper has spent the majority of that time inside of rising channel (1).

The decline over the past year has Doc Copper testing 18-year rising support and lows of the past 8-months at (2).

Joe Friday Just The Facts Ma’am- Copper is attempting to rally off of long-term support at (3). As Copper is testing the bottom of this support channel, smart money hedgers are making a bi...



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Insider Scoop

Benzinga's Top Upgrades, Downgrades For July 19, 2019

Courtesy of Benzinga.

Upgrades
  • For American International Group Inc (NYSE: AIG), William Blair upgraded the previous rating of Market Perform to the current rating Outperform. American International Gr earned $1.58 in the first quarter, compared to $1.04 in the year-ago quarter. American International Gr's market-cap stands at $48,358,299,270. At the moment, the stock has a 52-week-high of $56.49 and a 52-week-low of $36.16. American International Gr c...


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Chart School

RTT Plus Chart Book (Sneak Peak)

Courtesy of Read the Ticker.

The magic of support and resistance channel lines and how they direct price. Here are some chart disclosed to members via the RTT Plus service. All charts are a few weeks old. 


XAU bound by parallel channel lines.


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Newmont Mining support from Gann Angles.



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US Dollar index (DXY) dominate cycle ...

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Digital Currencies

Cryptos Suddenly Panic-Bid, Bitcoin Back Above $10k

Courtesy of ZeroHedge. View original post here.

Following further selling pressure overnight, someone (or more than one) has decided to buy-the-dip in cryptos this morning, sending Bitcoin (and most of the altcoins) soaring...

A sea of green...

Source: Coin360

Bitcoin surged back above $10,000...

Ethereum bounced off suppo...



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Biotech

DNA testing companies offer telomere testing - but what does it tell you about aging and disease risk?

Reminder: We're is available to chat with Members, comments are found below each post.

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, ...



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ValueWalk

Professor Shubha Ghosh On The Current State Of Gene Editing

 

Professor Shubha Ghosh On The Current State Of Gene Editing

Courtesy of Jacob Wolinsky, ValueWalk

ValueWalk’s Q&A session with Professor Shubha Ghosh, a professor of law and the director of the Syracuse Intellectual Property Law Institute. In this interview, Professor Ghosh discusses his background, the Human Genome Project, the current state of gene editing, 3D printing for organ operations, and gene editing regulation.

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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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 >>