Archive for the ‘Appears on main page’ Category

Terrific Tuesday – Inflation Boosts Earnings

J&J (JNJ) to Start Q3 Earnings Season for Pharma SectorInlfation is great!

Johnson & Johnson's (JNJ) Q3 sales were up 11% at $23.34Bn but earnings were only up 3% so IT'S TIME TO RAISE PRICES!   That's right, why should JNJ suffer through inflation when they can make their custormers suffer instead?  And, speaking of suffering, although they have been sued because their talc-based products seem to have been (allegedly) causing cancer all these years – it won't affect the company because they formed a new company that has no assets and assigned them all talc-related liabilities.   Yes, you can do that when you are a corporation (and when the courts are packed with Conservative judges who are sympathic only to the Top 1%).

.Clever moves like that have taken JNJ to new all-time highs recently, topping out at almost $500Bn (now $421Bn at $160) last month on the heels of revenues that have been driven by their lesser-desired Covid shot (8% market share), which will still drive profits this year and next but then they will go back to being a consumer products company who also make medical devices that are featured in many lawsuits – so I'm not sure I think I'd want them for the long-term at these prices.  

That's from 1973!  

Fortunately, JNJ has discontinued their baby powder (rather than just take out the asbestos?) as of last year but Reuters claimed they knew way aback in 1972 that there were high levels of asbestos in lab tests.  They were sued in 1999 but the plaintiffs couldn't seem to get access to the records they needed, so they were forced to drop the case but, 20 years later – the evidence turned up and the suit was back on.  During those 20 years, the documents also depict successful efforts to influence U.S. regulators’ plans to limit asbestos in cosmetic talc products and scientific research on the health effects of talc.

The earliest mentions of tainted J&J talc that Reuters found come from 1957 and 1958 reports by a consulting lab. They describe contaminants in talc from J&J’s Italian supplier as fibrous and “acicular,” or needle-like, tremolite. That’s one of the six minerals that in their…
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Does raising the minimum wage kill jobs? The centurylong search for the elusive answer shows why economics is so difficult – but data sure helps

 

Does raising the minimum wage kill jobs? The centurylong search for the elusive answer shows why economics is so difficult – but data sure helps

The fight over the minimum wage continues. AP Photo/John Raoux

Courtesy of Veronika Dolar, SUNY Old Westbury

For decades it was conventional wisdom in the field of economics that a higher minimum wage results in fewer jobs.

In part, that’s because it’s based on the law of supply and demand, one of the most well-known ideas in economics. Despite it being called a “law,” it’s actually two theories that suggest if the price of something goes up – wages, for example – demand will fall – in this case, for workers. Meanwhile, their supply will rise. Thus an introduction of a high minimum wage would cause the supply of labor to exceed demand, resulting in unemployment.

But this is just a theory with many built-in assumptions.

Then, in 1994, David Card, an economist at the University of California, Berkeley, and one of this year’s Nobel winners, and the late Alan Krueger used a natural experiment to show that, in the real world, this doesn’t actually happen. In 1992, New Jersey increased its minimum wage while neighboring Pennsylvania did not. Yet there was little change in employment.

When I discuss their work in my economics classes, however, I don’t portray it as an example of economists providing a definitive answer to the question of whether minimum wage hikes kill jobs. Instead, I challenge my students to think about all the ways one could answer this question, which clearly cannot be settled based on our beliefs. But rather, the answer requires data – which in economics, can be hard to come by.

Using models to study behavior

Economics studies the production, distribution and consumption of goods and services. And so, like other social sciences, economics is fundamentally interested in human behavior.

But humans behave in a wide variety of often hard-to-predict ways, with countless complications. As a result, economists rely on abstraction and theory to create models in hopes of representing and explaining the complex world that they are…
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Mandarin Monday – China’s Economy Slows Considerably

China's growth slowdown suggests recovery is losing steam - BBC News4.9% for Q3 in China.

That's down from 7.9% in Q2 as China struggled with power shortages (which the US did not have) and supply chain issues (which the US does have) as well as Beijing's efforts to reign in the madness in the Real Estate and Technology Sectors before they form a bubble that wipes out everything else (the US just lets it happen).  Delta Covid and the semiconductor shortage were also to blame and will also be factors in our own GDP.  Get ready to be disappointed.

Compared to Q2, China's Q3 GDP was up just 0.2%, which was up just 1.3% from Q1 – not a great year at all.  In an acknowledgment of the mounting risks to the economy, China's Statistics Bureau said that “There are increasing uncertainties in the external environment, while the domestic economic recovery is unstable and unbalanced.”  

On Friday, China Central Bank officials suggested it wouldn’t resort to a relatively large stimulus to drive up the growth rate in the final quarter of the year, for example by flooding the financial system with liquidity or slashing benchmark interest rates.  Officials also played down risks from the debt crisis at China Evergrande Group, the country’s most indebted property concern, whose troubles have rattled markets and raised questions about China’s overall economic and financial health.

We get our own GDP Report next week but, for now, we'll have to content ourselves with the Beige Book, which is like old Uncle Remus stories (now redacted by Disney) about the economy and has nothing to do with data.  This morning we'll get the Industrial Production Report along with the Housing Index, more Housing stuff tomorrow, Wednesday is Beige Book day and Thursday is the Philly Fed along with Leading Economic Indicators and we wrpa it up Friday with PMI.

Earnings, of course, are coming in hot an heavy but it's only the warm-up for Big Tech next week.  

Image

Remember, we are mainly concerned about how companies are dealing with inflation but it also looks like supply and labor shortages are going to…
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60/40 is Dead. Again.

 

60/40 is Dead. Again.

Courtesy of 

Doing nothing has been one of the best strategies of the last few decades.

I’m talking about the tried and true 60/40 portfolio. 60% stocks. 40% bonds. You had to rebalance, so not exactly nothing, but as close to it as you can get.

Nothing and easy, however, aren’t the same thing. You had to sit through multiple 50% crashes in the stock market. You had to sit on your hands during periods where “everyone” was getting rich. On the spectrum of easy to impossible, doing “nothing” is closer to the latter.

How many people can stay the course for multiple decades? The investor’s principal challenge is to fight the urge to de-risk in a bear market and add risk in a bull market. Most will lose this battle at some point. Some will lose the war.

Historically, the best, again not easiest, but best weapon to fight off these feelings was diversification. I use the word historically because nobody knows what the future holds. Given that 40% of the portfolio is now yielding under 2%, it’s unlikely that the past returns will be matched in the future.

The nightmare scenario for this strategy is that rising rates will bring stocks back down to earth. Low interest rates encourage investors to use their imaginations. But when money has a price, equations start to matter. And, needless to say, rising interest rates are also bad for bonds. So yeah, rising rates would be bad for bonds and probably for stocks too. But the question is, for how long?

If money leaves stocks and money leaves bonds, where does it go? It has to go somewhere, and one of the two largest asset classes in the world is usually the place where money finds a home. The brilliant Nick Maggiulli ran some numbers for me to quantify how often stocks and bonds are both down over a given period of time.

 

Long periods of negative stock and bond returns are rare. Of the 1,137 rolling 12 month periods since 1926, stocks and bonds were both negative on 16 occasions or 1.4% of the time.

Now the huge caveat


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How Netflix affects what we watch and who we are – and it’s not just the algorithm

 

How Netflix affects what we watch and who we are – and it’s not just the algorithm

pixinoo / Shutterstock

Courtesy of David Beer, University of York

Netflix’s dystopian Korean drama Squid Game has become the streaming platform’s biggest-ever series launch, with 111 million viewers watching at least two minutes of an episode.

Out of the thousands of programmes available on Netflix globally, how did so many people end up watching the same show? The easy answer is an algorithm – a computer program that offers us personalised recommendations on a platform based on our data and that of other users.

Streaming platforms like Netflix, Spotify and Amazon Prime have undoubtedly reshaped the way we consume media, primarily by massively increasing the film, music and TV available to viewers.

How do we cope with so many options? Services like Netflix use algorithms to guide our attention in certain directions, organising content and keeping us active on the platform. As soon as we open the app the personalisation processes begin.

Our cultural landscape is now automated rather than simply being a product of our previous experiences, background and social circles. These algorithms don’t just respond to our tastes, they also shape and influence them.

But focusing too much on the algorithm misses another important cultural transformation that has happened. To make all this content manageable, streaming platforms have introduced new ways of organising culture for us. The categories used to label culture into genres have always been important, but they took on new forms and power with streaming.

Classifying our tastes

The possibilities of streaming have inspired a new “classificatory imagination”. I coined this term to describe how viewing the world through genres, labels and categories helps shape our own identities and sense of place in the world.

While 50 years ago, you might have discovered a handful of music genres through friends or by going to the record shop, the advent of streaming has brought classification and genre to our media consumption on a grand scale. Spotify alone has over five thousand music genres. Listeners also come up…
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PhilStockWorld October Portfolio Review – Part 2

Image result for one million dollars animated gifImage result for one million dollars animated gif$2,234,532!  

That is up a whopping $66,833 in our paired portfolios, thanks to yesterday's market surge and that's even including this week's STP losses, since we did that review on Tuesday, and have dropped about $25,000 since.  That means the gains in the LTP were stunning – and we only made 2 adjustments last month!  Best of all, we are swimming in CASH!!!  We have $1,778,583 (83.5%) of it - up thanks to a lot of new puts that were sold in the past month, while the market was lower.

And that's our cycle – we buy low and then we sell high and we sold back in August – cutting about half of our positions and leaving us with cash to go shopping with and, what is the first thing we do when we add new positions?  We sell puts.  That puts even more cash into our portfolio and THEN, if we like the test drive, we establish an initial position by scaling in with a long spread (hedged, of course). 

I know it seems like a slow, tedious process but it protects our positions so we can ride out the dips and you can see the results as we started with a combined $600,000 in the LTP/STP back on October 1st of 2019 (arguably a bad time to start – just ahead of an epic crash) and now we're up $1,634,532 (272%).    

Since mid August, we added short puts on AAPL, AAWW, COIN, FDX, LEVI, MRNA, MT, VALE and XRX, putting an additional $86,600 into the portfolio in exchange for simply promising to buy those value stocks if they get significantly cheaper (net $98 for AAPL, net $175 for MRNA)  – those would become our base entry if we do get an entry and THEN we lower the basis further by selling more puts and calls (assuming we still like the stock).  

This is a simple strategy to follow but it requires PATIENCE for the long-term investor as it takes several quarters just to establish a position – BUT IT'S WORTH IT!!!

  • Short Puts – As noted above, we get paid to make a


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The PhilStockWorld com LIVE Weekly Webinar 10 13 2021

PSW's LIVE Weekly Webinar 10-13-2021

Major Topics:

00:00:42 – Charts
00:04:52 – Cotton
00:09:31 – Levi
00:25:28 – 30 year auction
00:28:40 – JNK
00:30:14 – JPM
00:30:39 – MoneyTalk portfolio
00:37:14 – BYD
00:40:07 – Metals: Gold
00:45:33 – HPQ
00:47:21 – SPWR
00:58:30 – VIAC
01:08:10 – Front page news: WSJ
01:19:09 – NFLX

 

Phil's Weekly Trading Webinars provide a great opportunity to see what we do at PSW. For LIVE access to all our webinars, join us at PSW!

Subscribe to our YouTube channel and view our past weekly webinars here.





4,400 Thursday – Banks and Inflation Boost Markets Again

Earnings are going well so far but it's the half-point drop in the Dollar that's boosting the market.  

Investors are, so far, pleased about the way companies seem to be handingling inflation, pushing prices along to the consumer and that leads to more profits – even if they only reflect the inflation.  PPI came in this morning showing a 0.5% increase in September, giving us an 8.6% rise for the year so far, accelerating from last month's 8.3% pace.  The good news is, Fuel is up 11.6% and, to the extent that's not a long-lasting problem, prices should calm down a bit going forward – so the markets are happy today.  

We may have reached Peak Pizza as Domino's (DPZ) dropped 3.5% this morning on a revenue miss but United Health (UNH) is up 3% and Walgreens (WBA) is up 2% – that's one we were betting on, of course.  Bank of America is up a full 2.5% on a 58% improvement in profits over last year and Morgan Stanley is heading on the same path with a 36% increase in profits.  

We will see how the Nasdaq handles the critical 15,000 line this week, the last two attempts were firmly rejected.  The fall from 15,600 to 14,600 gave us 200-point bounce lines at 14,800 (weak) and 15,000 (strong) and 14,400 was an overshoot to the downside (same 200 point-zone below 14,600) so what remains to be seen is – are we consolidating for a move back up or back down?

Tech earnings come next week, so these moves are just noise while we wait for them.  The S&P 500 is doing a similar bounce, having fallen from 4,550 to 4,300 which makes for 50-point bounces to 5,350 (weak) and 5,400 (strong) – so that's another line in the sand to watch this morning.   Unfortunately, on the Retail front, 85% of those surveyed expect supply-chain distruptions to hurt holiday sales.  That's going to affect on-line sellers as well.

Based on the Fed Minutes yesterday, the taper is definitely coming but it's certainly not dissuading traders this morning.  “Participants generally assessed that, provided that the economic recovery remained broadly on track, a gradual tapering process that concluded around
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If the US defaults on debt, expect the dollar to fall – and with it, Americans’ standard of living

 

If the US defaults on debt, expect the dollar to fall – and with it, Americans’ standard of living

Would a default mean an end to the dollar’s position as the go-to trading currency? AP Photo/Jacquelyn Martin

Courtesy of Michael Humphries, Touro College

Congress has seemingly kicked the debt ceiling deadline down the road – but the threat of a future default still exists.

On Oct. 7, 2021, lawmakers in the Senate agreed to extend the government’s ability to borrow until December. It came after Senate Minority Leader Mitch McConnell offered a temporary suspension to the debt limit, averting a default until at least December. But at that point, Democrats would have to find a way to raise the debt ceiling on their own – something they’ve said they won’t do.

This isn’t the first time Republicans have resisted helping a Democratic president raise the debt ceiling.

As an economist, I know that this political game of chicken has real-life consequences – even if it doesn’t end with default. In August 2011, during the Obama administration, brinkmanship over the debt ceiling led to an unprecedented downgrade of the United States’ credit rating, which caused markets to plunge.

What is national debt?

Understanding those consequences begins with looking at how the U.S. government finances its spending. The Treasury Department has three sources.

It can use revenue from taxes and fees approved by Congress but collected by the Treasury.

It can also print money through the Federal Reserve.

But when the first two options don’t supply enough cash to pay the bills, the Treasury can borrow the difference by issuing bonds and selling them on the world’s financial markets. Bondholders lend the government a set amount of money to be paid back with interest over a certain time frame. The amount owed is the national debt, which currently stands at US$28.43 trillion. That is above the debt ceiling of $28.4 trillion set by Congress earlier this year. The Treasury had been using “extraordinary measures” to finance government spending in lieu of an extension, but those measures were due to expire…
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Which Way Wednesday – CPI, Inflation, 30-Year Auctions and Fed Minutes

Lots of interesting things today.  

BlackRock (BLK), Delta (DAL), First Republic (FRC), JP Morgan (JPM) and SAP (SAP) all bet their earnings expectations this morning and tomorrow we'll hear from AA, BAC, C, CMC, DPZ, MS, PGR, TSM, USB, UNH, WAFD, WBA and WFC, so a good start to earnings but we'll pay particular attention to guidance that is given.  CPI is expected to be at 0.3% this morning pub probably higher and then we have a 30-year note auction at 1pm and that will only matter if it goes poorly – indicating investors are not willing to lend us money below 3% against what is likely 6% inflation.  

Fortunately the biggest buyer of notes is the Fed and the Fed will publish the minutes of their last meeting at 2pm and traders will anxiously read the tea leaves to see how long this taper/QE program will continue.  It's been a whole lot of nothing since we first tested 4,350 on the S&P 500 in September and we're still there this morning.  Congress finally approved lifting the debt cieling but that's hardly news and it's only good for two months – not a lot of impact there.  

Looking closely at earnings, Delta is facing fuel inflation pressures and JPM made all their income gains by adjusting their loan loss reserves down by $2.1Bn – overall revenues were flat and income would have been as well, otherwise.  

8:30 Update:  CPI came in hotter than expected (of course) at 0.4% for the month, running at a 5.4% annualized pace but it's likely to pick up even more into the holidays.  

Other than that, there's not much else going on so let's get back to our Portfolio Reviews:

Money Talk Portfolio Review:  This one is easy as we can't touch it between shows and I was last on TV on September 1st, when we added BYD and HPQ while cashing out of IBM.  At the time, the porfolio was up 95.9% at $195,906 and, at last month's review, we had made no progress at $194,944 but this month we're up 100.5% at $200,491 so congratulations to all who played along at home.

We have $167,589 (83.5%) in CASH!!!, so we're not too worried about the market dropping.  I should be on…
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Zero Hedge

40 Shipping Containers Adrift Off US Pacific Coast After Vessel Hit By Rough Seas 

Courtesy of ZeroHedge View original post here.

The global supply chain is more snarled than ever, forcing container ships to stack truck-size intermodal containers to the brim in a technique called containerization. The more shipping containers loaded up on a vessel, the more prone i...



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Phil's Favorites

Leveling the Playing Field With Cloud Gaming

 

Leveling the Playing Field With Cloud Gaming

Everyone Needs Access To Games

Courtesy of Reed Berkowitz at CuriouserInstitute

A friend of mine noticed something interesting. His teen was playing a game online with a group of other kids, but no one was actually “playing.” The characters were just kind of standing around chatting with each other as the game went on without them. The game had become secondary to the conversation. He mentioned it in our group chat and everyone with teens had noticed something similar. We had all seen our kids chatting on Discord or some other software and hanging out in-game.

It turns out that, without much fanfare, gaming has become one ...



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Politics

Trump wants the National Archives to keep his papers away from investigators - post-Watergate laws and executive orders may not let him

 

Trump wants the National Archives to keep his papers away from investigators – post-Watergate laws and executive orders may not let him

Nixon resigned after tapes he had fought making public incriminated him in the Watergate coverup. Bettmann/Getty

Courtesy of Shannon Bow O'Brien, The University of Texas at Austin College of Liberal Arts

The National Archives is the United States’ memory, a repository of artifacts that includes everything from half-fo...



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Biotech/COVID-19

An infectious disease expert explains new federal rules on 'mix-and-match' vaccine booster shots

 

An infectious disease expert explains new federal rules on ‘mix-and-match’ vaccine booster shots

Discuss with your doctor whether or not you need a booster – and if so, which vaccine will work best for you. Justin Sullivan/Getty Images News via Getty Images

Courtesy of Glenn J. Rapsinski, University of Pittsburgh Health Sciences

Many Americans now have the green light to get a COVID-19 vaccine booster – and the flexibility to receive a different brand than the ori...



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Digital Currencies

Bitcoin: why its value has rocketed once again

 

Bitcoin: why its value has rocketed once again

Shutterstock/rzoze19

Courtesy of Andrew Urquhart, University of Reading

Bitcoin’s journey into mainstream finance has reached another major milestone – and another record price. The cryptocurrency was trading at US$66,975 (£48,456) following the launch of an exchange traded fund (ETF) in the US w...



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Chart School

Price and Volume Swing Analysis on Bitcoin and Silver

Courtesy of Read the Ticker

Many take guidance from news, pundits or advisors. Well sometimes the swings of price and volume are a better measure of what happens next.

The big boys do not accumulate or distribute in single 1 second trade, they build positions over weeks, months and years. They use price swings in the market to build or reduce positions, and you can see their intent by studying swings of price and volume and applying Tim Ord logic as written in his book called 'The Secret Science of Price and Volume: Techniques for Spotting Market Trends, Hot Sectors, and the Best Stocks'.

Tim Ord is a follower of Richard Wyckoff logic, his book has added to the studies of Richard Wyckoff, Richard Ney and Bob Evans.

Richard Wyckoff after years of...

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Promotions

Phil's Interview on Options Trading with TD Bank

TD Bank's host Bryan Rogers interviewed Phil on June 10 as part of TD's Options Education Month. If you missed the program, be sure to watch the video below. It should be required viewing for anyone trading or thinking about trading using options. 

Watch here:

TD's webinar with Phil (link) or right here at PSW

Screenshots of TD's slides illustrating Phil's examples:

 

 

&n...



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Kimble Charting Solutions

Crude Oil Cleared For Blast Off On This Dual Breakout?

Courtesy of Chris Kimble

Is Crude Oil about to blast off and hit much higher prices? It might be worth being aware of what could be taking place this month in this important commodity!

Crude Oil has created lower highs over the past 13-years, since peaking back in 2008, along line (1).

It created a “Double Top at (2), then it proceeded to decline more than 60% in four months.

The countertrend rally in Crude Oil has it attempting to break above its 13-year falling resistance as well as its double top at (3).

A successful breakout at (3) would suggest Crude Oil is about to mo...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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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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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.