Archive for the ‘Phil’s Favorites’ Category

Buyer beware: How Libra differs from Bitcoin

 

Buyer beware: How Libra differs from Bitcoin

Recent revelations about the lack of privacy protections in place at the companies involved in Facebook’s new Libra crytocurrency raise concerns about how much trust users can place in Libra. (Shutterstock)

Courtesy of Alfred Lehar, University of Calgary

Facebook, the largest social network in the world, stunned the world earlier this year with the announcement of its own cryptocurrency, Libra.

The launch has raised questions about the difference between Libra and existing cryptocurrencies, as well as the implications of private companies competing with sovereign countries in issuing currencies.

Unlike Bitcoin, which has neither an owner nor a controlling body, Libra will be governed by a Swiss foundation comprised of several members that are well-established brands, including Uber, Visa and PayPal.

Libra operates within a much more controlled environment relative to many other cryptos like Bitcoin and Ether. It also doesn’t run on a blockchain.

Instead, the book-keeping of Libra transactions is bestowed upon a set of trusted computing nodes controlled by the members of the Libra foundation. In contrast, Bitcoin is a free-for-all where anybody can join the group of computers that verify transactions.

This difference in governance structure has wide-ranging implications for the economic gains and possible risks society faces from a possible widespread adoption of new currencies like Libra.

How to grow?

A fundamental issue most fintech companies face today is scaleability. The Visa network can authorize up to 65,000 transactions per second, while Bitcoin typically processes a few hundred thousand a day.

Technically, it’s possible to expand the Bitcoin network to a commercially viable scale, but due to the lack of a governing body, several attempts to increase capacity have ended up in endless debates, fights within the community and different camps going their own ways. It’s resulted in the creation of offspring currencies such as BitcoinGold and BitcoinCash.

Libra overcomes these struggles by a well-defined governance structure where necessary technical adaptations can be efficiently decided upon in an organized manner.

But Libra decision-makers may be tempted to put their own best interests ahead of the consumers’…
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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 billion in less than 2 weeks. Things must really be bad out there. Much worse than we can imagine.

But is it bearish? Typically, massive money printing can only mean one thing for asset prices. Up, up and away.

Fed De Facto New QE Announcement

Here’s the NY Fed announcement covering this New Fed QE.

In accordance with the Federal Open Market Committee (FOMC) directive issued September 18, 2019, the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York will conduct a series of overnight and term repurchase agreement (repo) operations to help maintain the federal funds rate within the target range.

The Desk will offer three 14-day term repo operations for an aggregate amount of at least $30 billion each, as indicated in the schedule below. The Desk also will offer daily overnight repo operations for an aggregate amount of at least $75 billion each, until Thursday, October 10, 2019. Awarded amounts may be less than the amount offered, depending on the total quantity of eligible propositions submitted. Securities eligible as collateral include Treasury, agency debt, and agency mortgage-backed securities. Additional details about the operations will be released each afternoon for the following day’s operation(s).

Here’s Where the NY Fed Tells Us that New QE is Permanent

After October 10, 2019, the Desk will conduct operations as necessary to help maintain


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Partisan divide creates different Americas, separate lives

 

Partisan divide creates different Americas, separate lives

Even in the physical world, it’s hard to cross partisan lines. igorstevanovic/Shutterstock.com

Courtesy of Robert B. Talisse, Vanderbilt University

When people try to explain why the United States is so politically polarized now, they frequently refer to the concept of “echo chambers.”

That’s the idea that people on social media interact only with like-minded people, reinforcing each other’s beliefs. When people don’t encounter competing ideas, the argument goes, they become less willing to cooperate with political opponents.

The problem goes beyond the online world. In my new book, “Overdoing Democracy: Why We Must Put Politics in its Place,” I explain that in the United States, liberals and conservatives do not only differ politically.

They also live separate lives in the physical world.

This phenomenon was first documented in journalist Bill Bishop’s 2004 book “The Big Sort.” Scholars have found it has persisted into more recent years as well.

It turns out that people’s physical communities, surroundings and lifestyles can be their own form of an echo chamber. This separation is so complete that it includes not only the communities and neighborhoods where people live, but also where people shop and what brands they buy, what sort of work they do, where they worship, what sorts of vacations they take and even how they decorate their homes.

How personal do political divisions get?

It’s common knowledge that liberals and conservatives live in different places. After all, the idea of “red states” and “blue states” is based in reality. But preferences are much more local than that.

Liberals and conservatives in the U.S. systematically favor different kinds of physical environments. Even when they live in regions that might overall appear more politically mixed, liberals prefer walkable and ethnically diverse communities, while conservatives gravitate toward areas with larger houses and more private land.

Different preferences govern the most personal surroundings: One study shows that liberals and conservatives decorate their homes differently. Clocks and flags for conservatives, art and maps for liberals. According to the same research, they also fashion different workspaces.…
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Fed’s rate cut signals a recession may be ahead – and it may not have enough ammunition to fight it

 

Fed’s rate cut signals a recession may be ahead – and it may not have enough ammunition to fight it

The Fed’s Jerome Powell keeps his cards close to his chest. AP Photo/Patrick Semansky

Courtesy of Michael Klein, Tufts University

The Federal Reserve seems a lot more concerned about the state of the economy than it’s been letting on.

The Fed lowered its target interest rate by a quarter point on Sept. 18, the second such cut since July – and the first reductions since the Great Recession more than 10 years ago.

Judging by the words of Fed Chair Jerome Powell, this isn’t that big a deal. In his statement following the decision, he said: “We took this step to help keep the U.S. economy strong in the face of some notable developments and to provide insurance against ongoing risks.”

True, the economy has been pretty strong for 10 years now, pushing the unemployment rate to a near record-low 3.7%. But in my view, as an economist and expert on monetary policy, Powell’s calm words belie a deeper concern. And, if a recession is on the way, the Fed may be ill-equipped to fight it.

Trouble brewing

A clear sign of the Fed’s concern is the back-to-back rate cuts, something that only happens during recessions or in anticipation of a downturn.

But there are many other troubling signs in the economic outlook.

For example, earlier this month, the Institute for Supply Management reported that manufacturing activity has slowed significantly. The sector actually contracted in August for the first time in three years. And although the unemployment rate remains historically low, jobs growth is slowing as a result of global trade turbulence.

Bond investors’ apparent deep unease about the state of the economy resulted in the inversion of the yield curve, which is often viewed as a harbinger of recession. Usually investors demand higher yields to lend for longer terms than for short periods. An inverted yield curve means that’s reversed, a sign investors are expecting trouble ahead.

The global outlook is also disconcerting. China’s economic growth…
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The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

Courtesy of Pam Martens

New York Fed Headquarters Building in Lower Manhattan

New York Fed Headquarters Building in Lower Manhattan

The storyline in the business press is that the lending rate on overnight repos had spiked to an unprecedented 10 percent, necessitating an emergency infusion of $53 billion by the New York Fed on Tuesday to ramp up liquidity for overnight loans and bring down the loan rate. (That was followed with $75 billion more on Wednesday, Thursday and today – raising the question that if the money is going to the same banks, isn’t that a term loan, not an overnight loan? We don’t know, however, if the money is going to the same banks because the Fed, as it did during the 2008 financial crisis, is staying mum about where the money is going.)

As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action. What was it that the Fed saw in the tea leaves back in July that prompted it to write that directive on July 31? This is the statement from the New York Fed indicating its first $75 billion operation on Tuesday, of which $53 billion was taken by the banks, was under a directive dated July 31:

“In accordance with the FOMC Directive issued July 31, 2019, the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York will conduct an overnight repurchase agreement (repo) operation from 9:30 AM ET to 9:45 AM ET today, September 17, 2019, in order to help maintain the federal funds rate within the target range of 2 to 2-1/4 percent.

“This repo operation will be conducted with Primary Dealers for up to an aggregate amount of $75 billion…”

The largest banks on Wall Street are the Fed’s “primary dealers,” along with the U.S. units of numerous global banks. See the full list here.

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What Are Your Thoughts: Is Anyone Really “Middle Class”?

 

What Are Your Thoughts: Is Anyone Really “Middle Class”?

Courtesy of 

 

On a new edition of What Are Your Thoughts?, Michael Batnick and Josh Brown discuss:

  • The Repo Rate mini-panic
  • Are we ready for the Daniel Jones Era?
  • Does it really take $350,000 a year to live in cities?
  • Standup comics up in arms over political correctness and “cancel culture”
  • People got excited about value stocks recently. Again.
  • More terrible sports takes from Josh
  • Do you need a car to live in New York City?
  • and lots more.

Be sure to subscribe to their channel so you never miss an update





Plastic Apocalypse: Alarming Levels Of Plastic Found In Children

Courtesy of ZeroHedge

In the last several months we have been one of the first to cover the plastic apocalypse.

New studies are being published that detail high levels of dangerous microplastics had been detected in some of the most remote regions of the world. Another study warned microplastics are turning up in human stool. Now there are new reports that show high levels of microplastics have been found in blood and urine samples of children. 

The study, conducted by the German Environment Ministry and the Robert Koch Institute, found an alarming 97% of blood and urine samples from 2,500 children tested between 2014 and 2017 had traces of microplastics. 

Der Spiegel, the German weekly magazine, published the findings over the weekend, which were part of a national study focused on "human biomonitoring" of 3 to 17-year-olds, found traces of 11 out of 15 plastic ingredients in the collected samples. 

"Our study clearly shows that plastic ingredients, which are rising in production, are also showing up more and more in the body. It is really worrying that the youngest children are most affected as the most sensitive group," Marike Kolossa-Gehring, one of the study's authors, told the magazine.

Researchers found perfluorooctanoic acid (PFOA), also used in cleaning products, waterproof clothing, food packaging, and cooking utensils, was present in the blood and urine samples. 

PFOA has been described as a dangerous chemical that is toxic to the liver. The EU will outlaw the substance next year.

In at least 20% of the 2,500 children tested, microplastics were above safe government limits. Children from low-income regions were more susceptible to ingesting plastics than ones from the middle class and wealthy areas. 


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Federal Reserve Bank of New York Statement On Repurchase Operation – Roll Over Beethoven!

Courtesy of Lee Adler

This is a syndicated repost courtesy of NY | Press Releases:

September 19, 2019

In accordance with the FOMC Directive issued September 18, 2019, the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York will conduct an overnight repurchase agreement (repo) operation from 8:15 AM ET to 8:30 AM ET tomorrow, Friday, September 20, 2019, in order to help maintain the federal funds rate within the target range of 1-3/4 to 2 percent.

This repo operation will be conducted with Primary Dealers for up to an aggregate amount of $75 billion…

– Federal Reserve Bank of New York (Reposted with permission.)

Meanwhile, if you haven’t read it already, my extended take on this is here:

Show Me The Money Jerry! Here’s Why Fed TOMO Repos Will Be a Feature Not a Bug

The new Fed TOMO (Temporary Open Market Operations) are the first sign that the Fed must move aggressively to counter the tightening of the money markets.

Now, I’ve been forecasting this for months in Liquidity Trader. We were well aware the massive waves of Treasury supply would collide with a shortage of cash. We also knew that the exponential growth in margin and repo lending would end badly. But the necessity for the Fed to act aggressively has come upon us much quicker than I thought it would.

And this could be a game changer.

The Fed Has No Choice- It Must Print

The Fed must print wads of money to counter the immense supply pressure of wave upon wave of newly issued US Treasury securities of all durations. This supply pressure will virtually never end, as the government finances a booming US economy with constant, massive deficit spending, or, what some call “defecate” spending.

The Fed has actually been tight since 2014. It got tighter in 2017 with “normaliztion” of the balance sheet. The ECB and BoJ effectively tightened in 2018. All 3 of the big boy central banks were forced to reverse course over the past couple of…
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Lenders Raise Collateral Concerns Over WeWork CEO’s $500 Million Personal Credit Line

Courtesy of ZeroHedge

And the hits keep coming for the 'trillionaire-to-be' CEO of WeWork as Bloomberg reports that the lenders are looking to revise terms on Adam Neumann's massive personal credit line amid collateral concerns as the real estate company's valuation plummets.

Bloomberg details that Neumann arranged a credit line of as much as $500 million from JPMorgan Chase & Co., UBS Group AG and Credit Suisse Group AG secured by some of his shares in WeWork, according to the company’s regulatory filings.

As of July 31, he had drawn $380 million of the principal amount available, the filings show.

The last few weeks of farce as WeWork's prospective valuation has collapsed along with the chances of it IPOing anytime soon, has raised concerns that the collateral value of the shares pledged to cover Neumann's massive personal line of credit may not cover the additional risks that are now evident to the once greedy consortium who were just weeks ago willing to fall over each other to lend him cash.

Additionally the cost of debt on the company itself has soared to almost 700bps over Treasuries as the IPO has fallen apart…

Source: Bloomberg

Neumann’s lenders have the ability to make a margin call if the stock declines below specific prices, regulatory filings show, without indicating what impact — if any — estimated valuations might have. The credit line is scheduled to mature next September, but may be extended at the discretion of lenders.

And remember, the company is still burning $2 in cash for every $1 of revenue that it takes in.

Of course, none of this is a real problem for Neumann, as he intends to live forever after all.

 





Altria Tumbles To 5 Year Low As Mystery Vaping Disease Cases Rise To 530

Courtesy of ZeroHedge

Altria stock, which already had a disappointing 2019, tumbled to fresh five year lows after the CDC announced during a Thursday briefing that 530 people have fallen ill from the mysterious vaping-related lung ailment that has raised alarms across the U.S., up from 380 "confirmed and probable cases" that the government reported last week. Worse, no less than seven people have already died from the mystery illness. Officials said they still hadn’t determined a cause of the ailment, and that there didn’t appear to be one product or substance involved in all instances. Cases have been identified in 38 states.

After hitting the market with a bang with the implicit endorsement of both regulators and established tobacco companies, vaping has found itself under fire from all sides, especially now that it was unveiled that vaping addicts tend to shift to traditional cigarettes, making vaping a wonderful "gateway" product for big tobacco… one which may now have served its purpose.

"We are leaving no stone unturned," said Mitchell Zeller, director of the Center for Tobacco Products at the U.S. Food and Drug Administration.

The sudden and "unexpected" – because who could possibly anticipate adverse outcomes from inhaling heated water vapor infused with not only nicotine but countless unknown substances – surge of vaping illnesses, combined with an explosion of underage use of e-cigarettes, has forced public health officials to rapidly reassess what had been lax regulation of the fledgling industry.

As we reported previously, US doctors have now seen hundreds of cases where patients have shown up in the emergency room, suddenly stricken with dangerous respiratory damage. Their lungs looked like they’d been ravaged by a disease, or as if they’d been exposed to a noxious industrial chemical. What the cases all shared in common: they had all recently used vaping products.

As Bloomberg further notes, over the past several years, there have been a limited number of similar case reports, raising the question of whether there might have been other older incidents that were missed. But the severity and number of recent cases suggest that something has


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Zero Hedge

Belgian F-16 Pilot Ejects Before Fiery Crash, Gets Caught In High Voltage Power Lines

Courtesy of ZeroHedge View original post here.

A Belgian F-16 fighter jet crashed in Northwestern France on Thursday, leaving one of its pilots hanging by his parachute from high voltage electricity lines, according to the BBC

Both pilots had minor injuries after they ejected from the plane, which clipped the roof of a house and crashed in a field near Pluvinger. The pilot stuck in the 250,000 volt power lines was brought down after a two hour rescue operation by French emergency ser...



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Phil's Favorites

Buyer beware: How Libra differs from Bitcoin

 

Buyer beware: How Libra differs from Bitcoin

Recent revelations about the lack of privacy protections in place at the companies involved in Facebook’s new Libra crytocurrency raise concerns about how much trust users can place in Libra. (Shutterstock)

Courtesy of Alfred Lehar, University of Calgary

Facebook, the largest social network in the world, stunned the world earlier this year with the announcement of its own cryptocurrency, Libra.

The launch has raised questions about the difference between Libra and existing cryptocurrencies, as well as the implications of private companies competing with s...



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Digital Currencies

Buyer beware: How Libra differs from Bitcoin

 

Buyer beware: How Libra differs from Bitcoin

Recent revelations about the lack of privacy protections in place at the companies involved in Facebook’s new Libra crytocurrency raise concerns about how much trust users can place in Libra. (Shutterstock)

Courtesy of Alfred Lehar, University of Calgary

Facebook, the largest social network in the world, stunned the world earlier this year with the announcement of its own cryptocurrency, Libra.

The launch has raised questions about the difference between Libra and existing cryptocurrencies, as well as the implications of private companies competing with s...



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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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The Technical Traders

Is A Price Revaluation Event About To Happen?

Courtesy of Technical Traders

Skilled technical traders must be aware that price is setting up for a breakout or breakdown event with recent Doji, Hammer
and other narrow range price bars.  These types of Japanese Candlestick patterns are warnings that price is coiling into
a tight range and the more we see them in a series, the more likely price is building up some type of explosive price breakout/breakdown move in the near future.  The ES (S&P 500 E-mini futures) chart is a perfect example of these types of price bars on the Daily chart (see below).

Tri-Star Tops, Three River Evening Star patterns, Hammers/Hangmen and Dojis are all very common near extreme price peaks and troughs.  The rea...



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Kimble Charting Solutions

India About To Experience Major Strength? Possible Says Joe Friday

Courtesy of Chris Kimble

If one invested in the India ETF (INDA) back in January of 2012, your total 7-year return would be 24%. During the same time frame, the S&P 500 made 124%. The 7-year spread between the two is a large 100%!

Are things about to improve for the INDA ETF and could it be time for the relative weakness to change? Possible!

This chart looks at the INDA/SPX ratio since early 2012. The ratio continues to be in a major downtrend.

The ratio hit a 7-year low a few months ago and this week it kissed those lows again at (1). The ratio near weeks end is attempting to...



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Insider Scoop

10 Biggest Price Target Changes For Friday

Courtesy of Benzinga

  • Credit Suisse raised IHS Markit Ltd (NYSE: INFO) price target from $68 to $76. IHS Markit shares closed at $67.75 on Thursday.
  • Wedbush boosted Restoration Hardware Holdings, Inc (NYSE: RH) price target from $170 to $185. RH shares closed at $169.49 on Thursday.
  • Mizuho lifted Seagate Technology PLC (NASDAQ: STX) price target from $46 to $50. Seagate shares closed at $52.94 on Thursday.
  • UBS raised the price target for Weight Watchers Intern...


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Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 

...

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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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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.

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