Archive for the ‘Appears on main page’ Category

Toppy Tuesday – S&P Back to 3,000 – Again

Can things get worse for Boeing (BA)?

Since Thursday's close, BA has dropped $40, from $370 to $330 and that's 10.8% in two sessions so we'll watch the $333 line (10%) to see if they can getg back over that and then we'd look for a weak bounce at $340 and a strong at $348 but the news on BA has been very, very bad with two downgrades yesterday as rumors came out that BA had lied to regulators – leading to hundreds of deaths.

BA booked a $5.6Bn charge in Q2 and estimated the 737 Max grounding would cost them $8Bn overall but that was 

 

IN PROGRESS

 





Arrogance destroyed the World Trade Organisation. What replaces it will be even worse

 

Arrogance destroyed the World Trade Organisation. What replaces it will be even worse

As the public face of globalism, the WTO mobilised protesters. It’ll be replaced by the law of the jungle. fuzheado/Flikr, CC BY-SA

Courtesy of John Quiggin, The University of Queensland

In line with his usual practice, Australia’s Prime Minister Scott Morrison has backed Donald Trump over the World Trade Organisation, criticising of China’s status in it as a “developing country”.

Critics of the intervention have pointed out that being a “developing country” doesn’t provide China with many benefit, and that Australia would be better off not taking sides.

But the debate, to use the cliché, is like arguing about the deck chairs on the Titanic.

In the absence of a surprising reversal from Trump, the World Trade Organisation will cease to exist as it has been in a matter of weeks.

More likely than not, it will never be revived.

The demise has been a long time coming.

Higher than heaven…

The WTO was established to replace the General Agreement on Tariffs and Trade at the end of the long Uruguay round of trade talks in 1995.

Its establishment coincided with the peak of market liberal triumphalism, exemplified by such books as Fukuyama’s The End of History and Thomas Friedman’s The Lexus and the Olive Tree.

It embraced the hubris of the times.

Its mission, according to one of its director-generals Renato Ruggiero, was “writing the constitution of a single global economy”.

In that context it felt free to override national governments on any issue that might affect international trade, most notably environmental policies.

Most famously, the WTO overrode US laws that required tuna and shrimp sold in the US (whether by US firms or importers) to follow practices that protected dolphins and turtles in decisions that were eventually reversed.

Unsurprisingly, it became a symbol of the way democratic governments were becoming powerless to resist the forces of the global economy. Popular resistance, including demonstrations and riots, boiled over at the 1999 WTO…
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Just Another Manic Monday

Image result for redeye flightIt's one long Sunday for me as I just flew in from California.

I left at 10pm, didn't sleep on the plane and now it's 8am and I find myself essentially continuing what I was saying last Monday (14th), when we flatlined at 2,965 after a very bad Friday sell-off.  This Friday was not as bad, with the S&P finishing at 2,986 and we're still flirting with 3,000 – again.  So it's the same old, same old with not much having changed over the weekend so earnings will be our primary focus for the week.

Lots of fun reports already and, so far, earnings have beaten low expectations, for the most part and we're into the meat of the S&P 500, with about 1/4 of the index reporting this week:

Image

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We'll keep an eye on the Tech Sector as the earnings there have been pretty erratic.  Semiconductors rose 6.74% in Q3, topping all six industries in Tech.  Semis are followed by Technology Hardware (+5.26%) in second place and IT Services (-3.19%) at a distant third. The worst Tech Sector Performer has been Software, whose quarterly return stands at a negative 16.3% but still many companies to report.  

In June, Goldman Sachs issued a warning to “write off high-growth tech stocks,” according to a CNBC report – this was not heeded by the market as the Nasdaq is up about 800 points (10%) since June.  The reasons for Goldman’s warning are double: they said that Technology stocks may be overvalued at their current levels, and that talks about potential regulatory changes from Washington may make stocks within the sector something of a “hazard.”

Keep in mind it's not about justifying the 10% move up from 7,200 (thowing out the spike) in the June dip but justifying the ENTIRE 60% move from 5,000 in the beginning of 2017 to 8,000 today.  We ran an analysis of the top Nasdaq stocks back on April 17th, looking at whether or not the Nasdaq could justify 8,000 and we thought it could – and that was our bullish premise at the time but we cashed
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Decoding the Fed

 

Decoding the Fed

Courtesy of John Mauldin, Thoughts from the Frontline

“In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

"There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

"Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.”

—Frédéric Bastiat, “That Which Is Seen and That Which Is Unseen,” 1850 (JM’s emphasis)

You may have noticed strange events in Washington, DC—strange even by today’s standards—and I don’t mean the White House or Capitol Hill. I’m talking about Federal Reserve policy.

In less than 12 months we have seen the Fed raise rates, cut rates, shrink its balance sheet, expand its balance sheet, inject liquidity, withdraw liquidity, and do who knows what else behind the scenes. Either Fed officials are confused or we are at some kind of economic turning point. Or possibly both—there is no playbook. At a minimum, I think we are at a turning point and the Fed is having to improvise policy as events dictate.

Observing all this, it’s easy to fixate on the present and forget what led to it, those “seen and unseen” effects Bastiat described. At times like this, it helps to take a step back and review the process that got us here. Today we’ll do that, considering the latest Fed activity in longer context.

That’s what the Fed does, after all, and understanding them may be


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How Asia transformed from the poorest continent in the world into a global economic powerhouse

 

How Asia transformed from the poorest continent in the world into a global economic powerhouse

By sladkozaponi/Shutterstock

Courtesy Deepak Nayyar, University of Oxford

In 1820, Asia accounted for two-thirds of the world’s population and more than one-half of global income. The subsequent decline of Asia was attributed to its integration with a world economy shaped by colonialism and driven by imperialism.

By the late 1960s, Asia was the poorest continent in the world when it came to income levels, marginal except for its large population. Its social indicators of development, among the worst anywhere, epitomised its underdevelopment. The deep pessimism about Asia’s economic prospects, voiced by the Swedish economist Gunnar Myrdal in his 1968 book Asian Drama, was widespread at the time.

In the half century since then, Asia has witnessed a profound transformation in terms of the economic progress of its nations and the living conditions of its people. By 2016, as my analysis of UN data shows, it accounted for 30% of world income, 40% of world manufacturing, and over one-third of world trade, while its income per capita converged towards the world average.

This transformation was unequal across countries and between people. Even so, predicting it would have required an imagination run wild. Asia’s economic transformation in this short time-span is almost unprecedented in history. My new book, Resurgent Asia, looks at this phenomenal change.

Given the size and the diversity of the Asian continent, looking at the region as a whole is not always appropriate. So in my research, I’ve disaggregated Asia into its four constituent sub-regions – East, South-East, South and West Asia – and further into 14 selected countries described as the Asian-14. These are China, South Korea and Taiwan in East Asia; Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam in South-East Asia; Bangladesh, India, Pakistan, and Sri Lanka in South Asia; and Turkey in West Asia. These countries account for more than four-fifths of the population and income of the continent. Japan is not included in the study because it is a high income country in Asia, and was already industrialised 50 years ago.



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Facebook’s Libra cryptocurrency can still take off and revolutionise money

 

Facebook's Libra cryptocurrency can still take off and revolutionise money

Poring Studio / Shutterstock.com

Courtesy of Gavin Brown, Manchester Metropolitan University and Richard Whittle, Manchester Metropolitan University

Facebook’s Libra cryptocurrency has suffered a few setbacks recently. As well as facing pressure from global regulators, seven of its 28 founding members have left the project – including high profile firms PayPal, Visa, Mastercard, eBay and Stripe. It leaves 21 companies in the Libra Association, the organisation overseeing the cryptocurrency.

But Facebook is big enough to launch Libra on its own, so why are these members even needed? After all, it is Facebook’s network of 1.59 billion daily active users that form the foundation of its business case to issue a non-sovereign currency. Why share the spoils?

The answer may be twofold. First, by having a council of members this enables Facebook to claim decentralisation status – a key tenet of any cryptocurrency. It’s a far cry from the fully decentralised alternatives of bitcoin et al., but certainly not centralised, so a valid claim.

Second, and perhaps primarily, by having a group of high-profile businesses as Libra members it goes some way towards sugarcoating this disruption in the eyes of the world’s regulators, in readiness for the inevitable pushback.

Many of the departing members – most being payments firms – stood to lose much of their core business if Libra becomes successful. So, in the face of the project facing additional scrutiny, Libra quickly became a net negative prospect for them and a respectful early withdrawal is entirely rational. But their places are likely to soon be taken up by other prospective members waiting in the wings. There are many companies that will want to capitalise on what could be a revolutionary global money system.

Total membership is likely to be expanded as a show of strength. Ben Maurer, Facebook’s blockchain technology lead, explained in June that, “over time, [Libra] is designed to transition the node membership from these founding members, who have a stake in the creation of the ecosystem, to people who hold Libra and have a stake in the ecosystem as a whole”.

Facebook has already announced that…
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Friday Market Follies – Flirting with 3,000 into the Weekend

Here we are again. 

The S&P 500 is back to 3,000, the Dow 27,000, Nasdaq 7,950 and Russell 1,550 so all is well(ish) for the moment.  Earnings have been, so far, on track for most of our early reporting companies but notable misses from big companies like AA, GS, UNP and ERIC have kept investors slightly concerned while the economic reports have generally been trending down

We'll see the Leading Economic Indicators Report at 10am but it doesn't really matter as we have Kaplan at 9, George and Kaplan at 10, Kashkari at 10:30, Clarida at 11:30 and Kaplan again at 5pm so whatever message Kaplan is selling is one the Fed is looking to make sure is repeated over and over again.  

I'm not sure what they are doing with Kaplan as his 9am is supposedly in Washington, DC while his 10am is scheduled for Denver but he's an economist, not a physicist – so he probably doesn't know that's not physically possible…  On Wednesday, Kaplan said the Fed was "actively debating issuing a digital currency" so BitCoin fans may want to pay attention to his speeches as well.  

Kaplan also "admitted" what I've maintained for years – that the Fed's ZIRP policy is a reaction to the US Government's $23 TRILLION in debt because each 1% of interest paid on bonds now translates to $230Bn out of the Government's budget.  Kaplan also noted: “People around the world are working real hard to try to find alternatives to dollars and dollar infrastructure because the more they’re invested in that, the more susceptible they are to sanctions, tariffs and what’s going on right now.”   

ImageIn other words, Trump's erratic behavior is now threatening the Dollar's role as the World's reserve currency – Putin couldn't have done more damage to our country if he had bombed us than Trump has done – and this mess can't be cleaned up easily.  Losing our status as the World's reserve currency could put us just a step or two away from bankruptcy – just like companies with too much debt that get downgraded are thrown into chaos.

Meanwhile, China's GDP dipped to 6% and that's the official number – it's…
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Boris Johnson’s Brexit deal: what’s in it and how is it different to Theresa May’s version?

 

Embed from Getty Images

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Boris Johnson's Brexit deal: what's in it and how is it different to Theresa May's version?

Courtesy of Simon Usherwood, University of Surrey

Against seemingly all the odds, we have a new Brexit deal. As an apparent vindication of UK prime minister Boris Johnson’s strategy to ramp up the threat of a no-deal departure from the EU and to force concessions from Brussels, one would imagine that Number 10 is rather happy right now. But that happiness will be tempered with caution, because some major issues lie ahead.

Negotiations in Brussels have produced legal texts on arrangements for Northern Ireland and on the political declaration, which outlines the broad outline of what the two sides want from their future relationship. These are the product of months of planning by the British government, so it’s reasonable to ask what has actually changed since former prime minister Theresa May struck her original deal.

Reading the text, the first impression is that there’s much more that hasn’t changed than has.

Northern Ireland

The protocol on Northern Ireland and Ireland has long been in the firing line. It proposes a backstop arrangement that would keep Northern Ireland in close alignment with the EU unless and until both UK and EU agreed to change that.

On that front, the introduction of a section on “democratic consent” is an important shift on the EU side. This provides a mechanism for the Northern Ireland Assembly to vote on whether to maintain the provisions of the protocol, with a requirement to have cross-community support. That means the UK is now no longer subject to the EU’s approval if it wants to end the backstop arrangement.

That said, a voting requirement to have majorities from both unionist and nationalist groupings makes it very hard to achieve – especially since the Northern Ireland Executive broke down several years ago and is still not in operation. While the Democratic Unionist Party (DUP) might control unionist voting, it can only do the same with nationalists if it creates a much more benign and cooperative environment. And even if that does happen and arrangements are voted down by Stormont, there is still a long phasing-out period, so things…
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Thrilling Thursday – A Brexit Deal (sort of) Brings Us back to 3,000 (again)

Image result for schrodinger's brexitIsn't this fun?  

IBM had a big miss, Netflix had a big beat, the indexes and futures are all over the place and Boris Johnson has Schrodinger's Brexit but he dares not look in the box because – as long as he doesn't, he has a deal that is dead and alive at the same time – which is quite the sweet spot for a politician – very much like Trump's secret China deal we are still waiting for the details of.  

Nonetheless the US Futures are back to yesterday's highs but that was based on the "Deal" that was touted at the EU open (3am, EST) but has already fallen apart as details are painting a less enthuiastic picture than we had overnight.  That doesn't stop our beloved S&P from testing 3,000 though – so it makes a great short below that line (/ES Futures) with tight stops above.  

We get the Philly Fed Report at 8:30, which is likely to be trending down from last monh's 12 and Industrial Production is likely to slip into contraction while Capacity Utilization was already a miserable 77.9% so 22.1% of our capacity is already idle – not a good thing at all…   There's also some housing data but that's it until tomorrow's Leading Economic Indicators (probably flat) along with China's GDP and we have 6 Fed Speeches tomorrow, so we'll probably finish the week at the 3,000 line – somehow – so quick profit-taking on the /ES shorts. 

On Tuesday at 11am, we put out a Top Trade Alert to our Members for the Marijuana ETF (MJ) at $18.40, which we added to our Short-Term Portfolio with the following spread:

  • Sell 10 MJ 2022 $20 puts for $5.40 ($5,400)
  • Buy 30 MJ 2022 $15 calls for $7 ($21,000) 


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Passive Products and Active Users

 

Passive Products and Active Users

Courtesy of 

The 20 largest ETFs have $1.556 trillion in assets. While the indexes they track are passive, their users are anything but. Over the previous twelve months, the total trading volume in these products was a whopping $11.529 trillion.

A recent paper from S&P Dow Jones Indices takes a deeper dive into trades linked to some of the most widely followed indexes. For example, there was $127.56 trillion worth of trades either directly in or linked to the S&P 500 in 2018, as you can see in the chart below.

 

Also in the paper was the average holding period in products linked to S&P DJI indices. They found that the median holding period was 174 calendar days, or around six months. However, using an asset-weighted average, the holding period drops to just 11 days.

 

Some will look at these numbers and argue that this is helping markets become more efficient. Others will look at it and argue that there is so much money in index funds that they’re distorting the prices of the underlying components. The truth is probably somewhere in-between.

Source:

A Window on Index Liquidity: Volumes Linked to S&P DJI Indices





 
 
 

Zero Hedge

Nearly Half Of US Consumers Report Their Incomes Don't Cover Their Expenses

Courtesy of ZeroHedge View original post here.

Low-income consumers are struggling to make ends meet despite the "greatest economy ever," and if a recession strikes or the employment cycle continues to decelerate -- this could mean the average American with insurmountable debts will likely fall behind on their debt servicing payments, according to a UBS report, first reported by Bloomberg

UBS analyst Matthew Mish wrote in a recent report that 4...



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The Technical Traders

Indexes Struggle and TRAN suggests a possible top

Courtesy of Technical Traders

Nearing the end of October, traders are usually a bit more cautious about the markets than at other times of the year. History has proven that October can be a month full of surprises.  It appears in 2019 is no different. Right now, the markets are still range bound and appear to be waiting for some news or other information to push the markets outside of the defined range.

We still have at least one more trading week to go in October, yet the US markets just don’t want to move away from this 25,000 to 27,000 range for the Dow Industrials. In fact, since early 2019, we have traded within a fairly moderate price range of about 3200 points on the YM – a rotation...



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Phil's Favorites

Arrogance destroyed the World Trade Organisation. What replaces it will be even worse

 

Arrogance destroyed the World Trade Organisation. What replaces it will be even worse

As the public face of globalism, the WTO mobilised protesters. It’ll be replaced by the law of the jungle. fuzheado/Flikr, CC BY-SA

Courtesy of John Quiggin, The University of Queensland

In line with his usual practice, Australia’s Prime Minister Scott Morrison has backed Donald Trump over the World Trade Organisation, criticising of China’s status in it as a “developing country”.

Critics of the int...



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Kimble Charting Solutions

Apple Bullish Breakout Suggesting Tech Follows In Its Path?

Courtesy of Chris Kimble

Is Apple sending a bullish message to the overall Tech market? Sure could be

Apple (AAPL) is working on a breakout above last year’s highs at (1), after creating a series of higher lows over the past year.

Tech ETF QQQ has been a similar-looking pattern to Apple over the past few months, as it is near old highs while creating higher lows.

Is Apple’s upside breakout suggesting that QQQ will follow in its footsteps and breakout?

Str...



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Insider Scoop

How Much Litigation Risk Is Priced Into Johnson & Johnson?

Courtesy of Benzinga

Johnson & Johnson (NYSE: JNJ) just can't seem to shake its talcum powder problems.

On Friday, Johnson & Johnson recalled 33,000 bottles of baby powder after a bottle purchased online by the FDA tested positive to asbestos.

Last year, a jury awarded a group ...



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Digital Currencies

Five hurdles blockchain faces to revolutionise banking

 

Five hurdles blockchain faces to revolutionise banking

Shutterstock

Courtesy of Markos Zachariadis, Warwick Business School, University of Warwick

Blockchain is touted as the next step in the digital revolution, a technology that will change every industry from music to wast...



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Chart School

Gold Stocks Review

Courtesy of Read the Ticker

Gold stocks are swinging back forth between the range, and a break out swing higher is due. Gold stocks are holding a near perfect Wyckoff accumulation pattern. All should get ready to play this sector. Yet we must recognize that gold stocks are a one of the most crazy rides at the stock market fair, so play very carefully.

More from RTT Tv







GDX PnF chart from within the video

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Important channels around the HUI.
...

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Lee's Free Thinking

Look Out Bears! Fed New QE Now Up to $165 Billion

Courtesy of Lee Adler

I have been warning for months that the Fed would need new QE to counter the impact of massive waves of Treasury supply. I thought that that would come later, rather than sooner. Sorry folks, wrong about that. The NY Fed announced another round of new TOMO (Temporary Open Market Operations) today.

In addition to the $75 billion in overnight repos that the Fed issued and has been rolling over since Tuesday, next week the Fed will issue another $90 billion. They’ll come in the form of three $30 billion, 14 day repos to be offered next week.

That brings the new Fed QE to a total of $165 billion. Even in the worst days of the financial crisis, I can’t remember the Fed ballooning its balance sheet by $165 bi...



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Biotech

The Big Pharma Takeover of Medical Cannabis

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

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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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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