Archive for the ‘Phil’s Favorites’ Category

Life in South Africa’s economic hub is improving — but big challenges remain


Life in South Africa's economic hub is improving — but big challenges remain

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The Gauteng City-Region is home to a quarter of South Africa’s population. Mark Momberg

Courtesy of Julia de Kadt, Gauteng City-Region Observatory and Alexandra Parker, Gauteng City-Region Observatory

More than 14 million people live in South Africa’s economic hub, the Gauteng City-Region. That’s 25% of the country’s population.

A lot of media reporting and public discussion about Gauteng is negative. Service delivery protests are common, high crime rates worry residents and the province’s economy is under pressure.

These challenges are real, and play a big role in people’s lives. But new research from the Gauteng City-Region Observatory (GCRO) suggests there’s a more nuanced story to tell about Gauteng. Data collected for the observatory’s fifth Quality of Life survey (2017/18) reveal that, in many ways, Gauteng residents’ lives are improving.

Overall quality of life in Gauteng is getting better. An index based on the data, measuring quality of life out of 10, has climbed slowly but steadily since 2011. In addition, in this survey people showed greater tolerance, as well as a much stronger sense of community.

The research

The GCRO is an independent research organisation, which generates data and analysis to help inform development and decision making in the Gauteng City-Region. It is a partnership between the provincial government, organised local government, the University of the Witwatersrand, and the University of Johannesburg.

The survey involved 24 889 adult residents of Gauteng, with a minimum of 30 respondents in each of the province’s 529 wards.

The latest survey collected a wealth of complex data. Respondents answered more than 240 questions, about a third of which were unchanged from previous iterations of the survey. In this way, we are able to gain insights into how the province has changed over time – and can see that there have been significant, often positive shifts in how people view the quality of their lives.

Of course, problems remain: more respondents report experiencing crime, and a growing proportion don’t believe that trust is possible across race groups.

The latest data offer a vital…
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Trump’s tariffs don’t apply to American flag imports from China – but they should


Trump's tariffs don't apply to American flag imports from China – but they should

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A surprising number of American flags are made in China.

Courtesy of Jay L. Zagorsky, Boston University

On Veterans Day, many Americans drape the Stars and Stripes around their neighborhoods, businesses promote U.S. flags alongside their holiday discounts, and officials display them in government buildings.

The holiday started off as a day to honor those who fought in the “war to end all wars” and marked the armistice that ended hostilities on Nov. 11 exactly a century ago. And today Americans wave flags to commemorate all veterans and active-duty members of the U.S. armed forces.

Recently, while walking by a VFW Post dutifully displaying a U.S. flag, I read a newspaper headline about the president’s latest round of tariffs on Chinese goods. The juxtaposition of seeing the flag and the headline made me wonder, how many of those star-spangled banners actually come from China? And if so, are they being hit with the tariffs too?

You may be surprised at the answers – I certainly was.

Made in China

Every shipment of imports brought into the U.S includes a detailed invoice that shows the price, quantity and category of goods being imported, as well as any tariff that’s been applied. The national flag of the United States even gets its own code: 6307909825.

The Harmonized Tariff Schedule shows imported flags must pay a 7 percent tariff unless the country of origin has signed a free trade agreement with the U.S.

The invoices show that in 2017 the U.S. imported 10 million American flags. Of those, all but 50,000 came from China.

These imports represent just a tiny fraction of the estimated 150 million U.S. flags Americans buy each year. Nevertheless, 10 million is still a large number for a national symbol.

The typical flag made in China is not the giant banner waving over car dealerships, town halls and fast-food…
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Why politicians are the real winners in Amazon’s HQ2 bidding war


Why politicians are the real winners in Amazon's HQ2 bidding war

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For cities that lost like New Jersey, there may be more than one way to win. AP Photo/Seth Wenig

Courtesy of Nathan Jensen, University of Texas at Austin and Edmund Malesky, Duke University

Now that Amazon has announced the winners of its competition to host its second headquarters, a question on many minds is whether it’ll be worth the incentives offered.

We have a different question: Why did so many cities play Amazon’s billion-dollar bidding game in the first place?

One media narrative has portrayed the leaders of losing locations as simply fooled by Amazon’s ingenious scheme. Most of the 238 cities that made bids – offering lucrative tax and other incentives – really didn’t have a shot because they didn’t fulfill the basic requirements, such as access to skilled human capital, sufficient infrastructure and population density.

According to this view, their role was to provide competition, driving down the tax bill Amazon would eventually pay in the locations it had already selected for its own business reasons. They also provided Amazon with valuable data about what types of incentives they would need to provide in the future as it expands.

There is certainly merit to this narrative. Where we disagree is the notion that the politicians were simple dupes in a game they didn’t fully understand. Rather, our research suggests it is far more likely they were willing participants.

Birmingham put large Amazon Dash ‘buttons’ all around town as part of its effort to lure the retailer’s second headquarters. AP Photo/Brynn Anderson

A game of incentives

Amazon first unveiled its public competition for what has been dubbed “HQ2” last September.

The retailer gave interested city and state governments only two months to put together proposals for the opportunity to attract what Amazon described as a US$5 billion investment that would employ 50,000 workers.

Most states, and dozens of cities, jumped at the opportunity to put in proposals. Of the 238…
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Retiring Before a Bear Market


Retiring Before a Bear Market

Courtesy of 

This might be one of the most important conversations we’ve done at The Compound this year. It’s every investor’s worst nightmare and we get people asking us about this scenario all the time.

Ben Carlson looked at what every retiree’s worst nightmare would look like under a range of stock market crash scenarios. Taking a hypothetical 60% stocks / 40% fixed income portfolio, assuming a steady annual withdrawal rate, Ben discusses what that might have been like, and what investors should take away from the exercise.

Josh Brown and Michael Batnick add their own two cents to the conversation. Let us know what you think in the comments below!

You can read Ben’s post here.

Be sure to subscribe to our channel so you never miss an update.


Oil Prices Are Confirming Global Reflation Is Over

Courtesy of Lance Roberts,

In Tuesday’s technical update, I discussed the breakdown in the major markets both internationally as well as domestically. Of note, was the massive bear market in China which is currently down nearly 50% from its peak.

What is important about China, besides being a major trading partner of the U.S., is that their economy has been a massive debt-driven experiment from building massive infrastructure projects that no one uses; to entire cities that no one lives in. However, the credit-driven impulse has maintained the illusion of economic growth over the last several years as China remained a major consumer of commodities. Yet despite the Government headlines of economic prosperity, the markets have been signaling a very different story.

In the U.S., the story is much the same. Near-term economic growth has been driven by artificial stimulus, government spending, and fiscal policy which provides an illusion of prosperity. For example, the chart below shows raw corporate profits (NIPA) both before, and after, tax.

Importantly, note that corporate profits, pre-tax, are at the same level as in 2012.  In other words, corporate profits have not grown over the last 6-years, yet it was the decline in the effective tax rate which pushed after-tax corporate profits to a record in the second quarter. Since consumption makes up roughly 70% of the economy, then corporate profits pre-tax profits should be growing if the economy was indeed growing substantially above 2%.

Corporate profitability is a lagging indicator of the economy as it is reported “after the fact.” As discussed previously, given that economic data in particular is subject to heavy backward revisions, the stock market tends to be a strong leading indicator of recessionary downturns.

Prior to 1980, the NBER did not officially date recession starting and ending points, but the market turned lower prior to previous recessions.

Besides the stock market, economically sensitive commodities also have a tendency to signal changes to the overall trend of the economy given their direct input into both the production and demand sides of the economic equation.

Oil is a highly sensitive indicator relative to the expansion or…
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World’s Largest Shipper Warns Of Early 2019 Slowdown 

Courtesy of Zero Hedge

The world’s largest shipper A.P. Moller-Maersk sounded the alarm on Wednesday by announcing there would be a tremendous “price to be paid” for President Trump's trade war as global demand has now plummeted to its lowest level in more than two years.

Chief Executive Soren Skou told the Financial Times that it expected global container trade to decline by .5% to 2% in 2019 and 2020 due to increased tariffs between the US and China.

"The impact right now on US-China trade is that Chinese imports to the US have gone up and US exports to China have gone down…Obviously, there will be a price to be paid sometime in the first quarter . . . There will be no real impact until after Chinese new year [in February],” Skou said in an interview.

The demand outlook for 2019 looks rather gloomy, as top US importers have been quickly stocking up on Chinese goods before new import tariffs take effect on January 01, this could mean that container demand plummets sometime between January and March 2019 – something that Skou warned about above.

The US has introduced tariffs of 10% to 25% on $250 billion worth of Chinese imports, prompting Beijing to retaliate with tariffs of their own. Trump has threatened China with a full-blown trade war in 2019, a move that would crush the global economy. 

In August, we first reported that freight data via Goldman identified global trade momentum was slowing since late 2017, and that July readings suggested an alarming continuation, and in some cases acceleration, of this trend.

The deceleration in shipping rates has closely tracked a tightening in global financial conditions, particularly evident in EM data, which in turn has largely been a manifestation of the ongoing escalation in the trade war.

Earlier this month, we outlined even more evidence from Reuters shows the cost of chartering commercial ships has collapsed even further. More specific, rates for container ships have sunk 27% from a multi-year peak while raw material vessel rates have fallen 10% from a five-year high, adding to the mounting evidence that slowing global trade could soon usher in a worldwide recession around 2020.

The Harper Petersen Charter Rate Index, which is published on a weekly basis, tracks rate levels…
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Bakken Prices Crumble On Pipeline Woes


Bakken Prices Crumble On Pipeline Woes

Courtesy of Nick Cunningham, Oil Price


Oil production is growing so quickly in the Bakken that the region is starting to suffer from painful pipeline constraints.

U.S. shale is not new to pipeline bottlenecks. The Permian basin has suffered from steep discounts this year, with WTI in Midland trading as much as $20 per barrel below WTI in Houston at times. Meanwhile, the midstream bottleneck is especially acute in Canada, where the inability to build a major pipeline out of Alberta has led to price discounts that have reached as high as $50 per barrel. Western Canada Select fell as low as $15 per barrel in recent daysafter a U.S. federal judge blocked construction on the Keystone XL pipeline, dealing yet another blow to Canada’s oil industry.

Now, the pipeline woes could be spreading to the Bakken. Production in the Bakken has jumped this year, rising from 1.188 million barrels per day (mb/d) in January to 1.354 mb/d in November, according to the EIA’s forecast in its Drilling Productivity Report. It is a dramatic turnaround for the Bakken after it had hit a temporary peak in late 2014 at 1.26 mb/d, before falling to 0.956 mb/d two years later. Since bottoming out at the end of 2016, however, production has slowly rebounded, with a record output level expected this month.

Rising output has been good news for Bakken shale drillers, but now they face an uncertain near-term future as pipeline capacity fills up. While the Bakken is producing over 1.3 mb/d in output, the region’s pipeline systems can only handle 1.25 mb/d, according to Reuters and Genscape. With pipelines essentially tapped out, oil producers are starting to turn to rail, just as they did years ago when the Bakken first burst onto the scene.

To make matters worse, cold weather could disrupt rail loadings, an unfortunate bit of timing as takeaway capacity dwindles.

Another complicating factor is that Canadian oil producers, facing their own pipeline bottlenecks, have been shipping more oil into the U.S. via rail, which is crowding the rail networks in the U.S. at a time when Bakken producers are trying to do the same. One mitigating factor is refinery maintenance – several

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Brexit draft deal agreed by British cabinet – but parliament’s approval remains unlikely


Brexit draft deal agreed by British cabinet – but parliament's approval remains unlikely

Courtesy of Robin Pettitt, Kingston University

When Theresa May emerged from a marathon five-hour cabinet meeting to announce that her cabinet had agreed to back the draft of a Brexit withdrawal agreement she said it was “the best that could be negotiated”. The decision paved the way for the publication of the text of the agreement, running to 585 pages.

But it has long been clear that any deal the prime minister would secure was always going to be too Leave for the “Remoaners” and too Remain for the “Brextremists” in the Conservative Party. Remoaners want all the EU benefits we currently enjoy, and Brextremists want none of the obligations. It echoes my daughter’s firm and unyielding declaration recently: “I don’t want to wear a coat, and I don’t want to be cold.” A deal that combines those two is simply not available (she wore the coat).

The inevitable consequence is that at some point there has to be a confrontation between those two stances. So far, it has been continuously postponed by keeping the details of a final deal as vague as possible. But with time inevitably running out, postponement was never a long-term solution.

Exactly what that confrontation will look like is as yet unknown, but considering how incompatible the positions of the two camps are someone will have to lose badly. It’s not impossible, if still unlikely, that the losers will feel sufficiently aggrieved to be compelled to leave the Conservative Party.

The impossibility of the task still facing May is illustrated by the fact that no one else wants her job right now. Despite extensive criticism of her approach to Brexit, none of the big beasts in the Brexit camp have overtly challenged her for the leadership, and the letters to the chair of the 1922 Committee are so far tantalisingly short of the magic 48 needed to trigger a challenge. If and when the number does reach 48 it is entirely likely that May would win a vote of confidence unless someone is willing to lead the charge as a would-be alternative leader – which seems unlikely given the nature of the job…
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Pioneering sociologist foresaw our current chaos 100 years ago


Pioneering sociologist foresaw our current chaos 100 years ago

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Emile Durkheim who taught at Sorbonne University is considered a founder of modern sociology. School of Life/You Tube, CC BY-SA

Courtesy of Galen Watts, Queen's University, Ontario

Globally, we are currently experiencing tremendous social and political turbulence. At the institutional level, liberal democracy faces the threat of rising authoritarianism and far-right extremism. At the local level, we seem to be living in an ever-increasing age of anxiety, engendered by precarious economic conditions and the gradual erosion of shared social norms. How might we navigate these difficult and disorienting times?

Emile Durkheim, one of the pioneers of the discipline of sociology, died 101 years ago this month. Although few outside of social science departments know his name, his intellectual legacy has been integral to shaping modern thought about society. His work may provide us with some assistance in diagnosing the perennial problems associated with modernity.

Whenever commentators argue that a social problem is “structural” in nature, they are invoking Durkheim’s ideas. It was Durkheim who introduced the idea that society is composed not simply of a collection of individuals, but also social and cultural structures that impose themselves upon, and even shape, individual action and thought. In his book The Rules of the Sociological Method he called these “social facts.”

A famous example of a social fact is found in Durkheim’s study, Suicide. In this book, Durkheim argues that the suicide rate of a country is not random, but rather reflects the degree of social cohesion within that society. He famously compares the suicide rate in Protestant and Catholic countries, concluding that the suicide rate in Protestant countries is higher because Protestantism encourages rugged individualism, while Catholicism fosters a form of collectivism.

What was so innovative about this theory is that it challenged long-standing assumptions about individual pathologies, which viewed these as mere byproducts of individual psychology. Adapting this theory to the contemporary era, we can say, according to Durkheim, the rate of suicide or mental illness in modern societies cannot be explained by merely appealing to individual psychology, but must also take into account macro conditions such as a society’s…
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The US government has huge debts, and House Democrats could lead the way on solutions – an economist explains how


The US government has huge debts, and House Democrats could lead the way on solutions – an economist explains how

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Democrat Nancy Pelosi spoke in D.C. the night of the midterm elections. Reuters/Jonathan Ernst

Courtesy of Laurence J. Kotlikoff, Boston University

Now that Democrats control the House, the question on many minds is what they will do with it.

Incoming Majority Leader Nancy Pelosi says Democrats will focus on corruption, money in politics, drug prices, gun control and protecting young immigrants. These are important but, in my view, second-order issues.

The biggest challenges facing the U.S. are much deeper and seriously jeopardize Americans’ future prosperity. Namely, soaring national debt, Social Security’s solvency and the lack of affordable health care.

As an economist, I’ve spent a lot of time researching and writing about these issues. And as a presidential candidate in 2016, I tried to put them on the national agenda when I staged an independent write-in campaign.

Were I leading the House Democrats right now, I would focus on passing three key bills. The Senate would likely turn them down, but their passage would show the country that Democrats are prepared to govern.

The US$200 trillion fiscal gap

It starts by acknowledging the true state of America’s fiscal condition.

No politician that I know of has ever told the truth about this, either because he or she didn’t know the truth or were hiding it. Brace yourself. Here’s where we really stand.

The official debt is $21.7 trillion – more than the value of all goods and services that will be produced in the U.S. this year. But this ignores massive unfunded obligations that have been kept off the books, such as paying for future Social Security, Medicare and Medicaid benefits.

When you calculate the present value of all anticipated future outlays less all the receipts projected by the Congressional Budget Office, you get a whopping $200 trillion fiscal gap. This is how much we – or more accurately our children – really owe.

Closing this fiscal gap will require dramatic changes, including much higher taxes and…
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Phil's Favorites

Life in South Africa's economic hub is improving -- but big challenges remain


Life in South Africa's economic hub is improving -- but big challenges remain

The Gauteng City-Region is home to a quarter of South Africa’s population. Mark Momberg

Courtesy of Julia de Kadt, Gauteng City-Region Observatory and Alexandra Parker, Gauteng City-Region Observatory

More than 14 million people live in South Africa’s economic hub, the Gauteng City-Region. That’s 25% of the country’s population.

A lot of media reporting and public discussion about Gauteng i...

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Zero Hedge

"It Was All A Lie": Homeless Vet, NJ Couple Charged In $400,000 GoFundMe Grift

Courtesy of ZeroHedge. View original post here.

A feel-good story about a New Jersey couple who raised over $400,000 to help a homeless good Samaritan - before they pilfered his GoFundMe account - was all a scam, a prosecutor said Thursday. 

39-year-old Mark D'Amico (left), 28-year-old Kate McClure (center) and 35-year-old Johnny Bobbitt (right) are facing theft and conspir...

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Kimble Charting Solutions

Gold Bugs; Would Love This To Be A Double Top!

Courtesy of Chris Kimble.

Gold, Silver, and the precious metals industry have a pretty simple relationship with the U.S. Dollar: They perform better when the Dollar is weakening… and they tend to struggle when the Dollar is strengthening.

One of our favorite ratios to monitor for Gold Bugs is the U.S. Dollar/Gold ratio. It tells us when the Dollar is weakening or heading lower (which is good for gold) or when it is strengthening or heading higher (bad for gold).

Looking at the Dollar/Gold chart below, we can see that the ratio climbed higher from late 2011 to early 2016. This wreaked havoc on Gold prices. Since peaking in early 2016, the ratio has formed a broad declining channel (pink shaded area). Each swing lower has provided a tailwind for Gold prices, while each counter-swing higher has been a headwind.

in ...

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Insider Scoop

Macy's Receives Mixed Analyst Reaction After Q3 Earnings Beat, Sales Miss

Courtesy of Benzinga.

Related M Big Box Bonanza: Walmart Beats Most Estimates, But Brexit Could Steal Attention Mid-A... more from Insider

Members' Corner



This is a three-part Opinion Video Series from NY Times about Russia’s meddling in the United States’ elections as part of its "decades-long campaign to tear the West apart." This is not fake news. Read more about the series here.



By Adam B. Ellick and Adam Westbrook



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Chart School

Weekly Market Recap Nov 11, 2018

Courtesy of Blain.

This past week was saw another positive move up by bulls – especially in the Dow and S&P 500; the NASDAQ was not quite as enthusiastic.   Wednesday’s rally was on the legs of an election that was seen as market friendly or at least not as bad as it could have been.   Essentially – paying people a lot of money to get nothing done the next 2 years – woo hoo!

The market is interpreting Wedneday’s result as insuring that “no big things will get done,” in Washington between now and 2020, Craig Birk, chief investment officer at Personal Capital told MarketWatch. “The market appreciates the relative certainty of the slow legislative agenda.” he said.

“As President Trump plans his 2020 reelection campaign, a gridlocked Congress is unlik...

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Digital Currencies

Bitcoin's high energy consumption is a concern - but it may be a price worth paying


Bitcoin's high energy consumption is a concern – but it may be a price worth paying


Courtesy of Steven Huckle, University of Sussex

Bitcoin recently turned ten years old. In that time, it has proved revolutionary because it ignores the need for modern money’s institutions to verify payments. Instead, Bitcoin relies on cryptographic techniques to prove identity and authenticity.

However, the price to pay for all of this innovation is a high carbon footprint, created by Bitc...

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Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...

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Gene-editing technique CRISPR identifies dangerous breast cancer mutations

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


Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Breast cancer type 1 (BRCA1) is a human tumor suppressor gene, found in all humans. Its protein, also called by the synonym BRCA1, is responsible for repairing DNA. ibreakstock/

By Jay Shendure, University of Washington; Greg Findlay, ...

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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...

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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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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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All About Trends

Mid-Day Update

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

Click here for the full report.

To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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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...

Learn more About Phil >>

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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 >>