Archive for the ‘Phil’s Favorites’ Category

Why the war on poverty in the US isn’t over, in 4 charts

 

Why the war on poverty in the US isn't over, in 4 charts

File 20180718 142435 1v01jtj.jpg?ixlib=rb 1.1

About 12.7 percent of Americans lived below the poverty line in 2016. StanislauV/shutterstock.com

Courtesy of Robert L. Fischer, Case Western Reserve University

On July 12, President Trump’s Council of Economic Advisers concluded that America’s long-running war on poverty “is largely over and a success.”

I am a researcher who has studied poverty for nearly 20 years in Cleveland, a city with one of the country’s highest rates of poverty. While the council’s conclusion makes for a dramatic headline, it simply does not align with the reality of poverty in the U.S. today.

What is poverty?

The U.S. federal poverty line is set annually by the federal government, based on algorithms developed in the 1960s and adjusted for inflation.

In 2018, the federal poverty line for a family of four in the contiguous U.S. is $25,100. It’s somewhat higher in Hawaii ($28,870) and Alaska ($31,380).

However, the technical weaknesses of the federal poverty line are well known to researchers and those who work with populations in poverty. This measure considers only earned income, ignoring the costs of living for different family types, receipt of public benefits, as well as the value of assets, such as a home or car, held by families.

Most references to poverty refer to either the poverty rate or the number of people in poverty. The poverty rate is essentially the percentage of all people or a subcategory who have income below the poverty line. This allows researchers to compare over time even as the U.S. population increases. For example, 12.7 percent of the U.S. population was in poverty in 2016. The rate has hovered around 12 to 15 percent since 1980.

Other discussions reference the raw number of people in poverty. In 2016, 40.6 million people lived in poverty, up from approximately 25 million in 1980. The number of people in poverty gives a sense of the scale of the concern and helps to inform the design of relevant policies.

Both of these indicators fluctuate with the economy. For example, the poverty population grew by…
continue reading





Weekend Reading: Price Is What You Pay

Courtesy of Lance Roberts, RealInvestmentAdvice.com

Yesterday, I discussed the failure of tax cuts to “trickle down” as they have primarily been used for corporate share repurchases. As I was digging into the data, Doug Kass emailed me a quick note:

“Berkshire Hathaway, likely under the weight of an enormous cash horde and more scarce alternative investment opportunities, has announced that it is loosening the terms of its buyback policy. It is also a signpost that the company has matured and will only duplicate GDP-like growth.”

While the announcement set the shares of Berkshire (BRK/A) (BRK/B) surging higher yesterday, there is a more important message that investors should be heeding.

We recently delved into the performance of Berkshire as it has become the 10th-largest company in the world in terms of revenues:

“The graph below highlights this concern. It shows that 90-day rolling correlation of price changes in BRK/A and the S&P 500 are statistically similar. In the market crash of 2008/09 BRK/A’s price was cut in half, similar to the S&P 500. Based on correlations we suspect a similar relationship will hold true for the next big market drawdown.”

Both the sheer size of Berkshire, and the chart above, confirm Doug’s comment that Berkshire is likely to only generate rates of growth equivalent to GDP going forward.

So what’s the message that Mr. Buffett is sending? Simple: “Price is what you pay, value is what you get.”

Investing is about maximizing the return on invested dollars by buying something that is undervalued and selling it when it is overvalued. This is the point missed by those who promote “buy and hold” investing which is the same as “buy at any price.” 

Corporations are, in many ways, held hostage by Wall Street and short term investors. An earnings miss can be disastrous to a companies stock price which can have severe consequences to stock option compensated executives and employees, shareholders and even bondholders. So, with pressure on companies to deploy excess cash, what are the options considering the “beat the estimate” game that must be played.

  • Hire Workers? Employees are a high cost and have a direct impact on profitability. Companies hire as needed to


continue reading





Why Did Trump Just Bully the Federal Reserve on Interest Rates

Courtesy of Pam Martens

Fortune Magazine Cover August 2018

By Pam Martens and Russ Martens

Could we start hearing chants of “lock him up” against Fed Chair Jerome Powell at Trump rallies? Could Powell be ridiculed as “Little Interest Rate Man” on Trump’s Twitter feed? Trump may be attempting to plant those seeds of angst in Powell’s brain.

In addition to playing with Powell’s head, President Donald Trump accomplished two things in his interview on CNBC yesterday when he made it clear that he’s “not thrilled” with the Federal Reserve’s plans to continue raising interest rates. He threw more red meat to his base (many of whom want to abolish the Fed altogether) and he laid the groundwork for scapegoating the Fed if the economy goes south on his watch.

Trump had this to say about the Federal Reserve raising interest rates to CNBC anchor Joe Kernen (see full interview in video below):

“I’m not thrilled. Because we go up and every time you go up they want to raise rates again. I am not happy about it but at the same time I’m letting them do what they feel is best…Now I’m just saying the same thing that I would have said as a private citizen. So somebody would say you shouldn’t say that as a President. I couldn’t care less what they say.”

What motivated Trump to put the Federal Reserve in his cross hairs at this particular moment in time? We have two ideas on that. First, Trump takes exception to any hint that he is not a business and economic genius (he’s “like, really smart”) – notwithstanding his businesses’ six encounters at bankruptcy court. In the Fed’s Federal Open Market Committee (FOMC) minutes for its meeting of June 12-13, it appeared to be questioning the wisdom of Donald Trump’s nascent trade war. The minutes revealed this:

“…many [Federal Reserve] District contacts expressed concern about the possible adverse effects of tariffs and other proposed trade restrictions, both domestically and abroad, on future investment activity; contacts in some Districts indicated that plans for capital spending had been scaled back or postponed as a result of uncertainty over trade policy. Contacts in the steel and aluminum industries expected higher prices as a result of the tariffs


continue reading





China Just Doubled Oil Shipments To North Korea

Courtesy of Paraskova, Oilprice.com

After the recent visits of North Korean leader Kim Jong-un to China, Beijing has almost doubled the volume of crude oil pipeline shipments to North Korea, South Korea’s newspaper Chosun Ilbo reported on Thursday, citing a source in Beijing.

The surge in Chinese shipments to North Korea is raising additional concerns that China could undermine the international sanctions against Kim’s regime.

Pipeline volumes of between 30,000 tons to 40,000 tons are enough in the summer to keep the pipeline from China to North Korea unclogged, while this volume is around 80,000 tons in the winter, Chosun Ilbo’s source said. Although it’s summer, China has recently increased the oil flow to the winter levels, the source told the South Korean outlet.

Under the latest United Nations Security Council sanctions regarding oil sales to North Korea from December 2017, North Korea is allowed to import a maximum aggregate amount of 500,000 barrels of all refined oil products for 12 months beginning on January 1, 2018. The sanctions also introduced a limit of 4 million barrels – or 525,000 tons – per a twelve-month period as of 22 December 2017 for the supply, sale, or transfer of crude oil to North Korea.

If China sends 80,000 tons of oil to North Korea every month, this volume already brings the amount to 960,000 tons a year – above the 525,000 tons limit for a 12-month period in the sanctions, Chosun Ilbo argues.

Citing a confidential U.S. report to the UN sanctions committee, the AFP reported last week that the United States asked the UN Security Council to impose an immediate stop to all shipments of refined oil products to North Korea, after finding that Kim Jong-un’s regime had vastly exceeded the UN-restricted quota for oil product imports.

According to the U.S. report to the UN, North Korea received at least 759,793 barrels of oil products between January 1 and May 30, well above the 500,000-barrel annual quota.

The supplies have been made via ship-to-ship transfers with North Korean tankers that have called in port at least 89 times, the United States says. The United States also accused China and Russia for keeping oil sales to North Korea.





Why Comcast and Disney’s bidding war for Sky has reached astronomical heights

 

Why Comcast and Disney's bidding war for Sky has reached astronomical heights

Courtesy of John Colley, Warwick Business School, University of Warwick

The bidding war between Comcast and Disney for European pay-TV giant Sky’s operations seems to have paused at Comcast’s latest bid. But not before reaching astronomical heights, reflective of the dubious thinking that is driving a lot of mergers and acquisitions at the moment.

Bidding by the two major US entertainment businesses for Sky had reached US$34 billion – with Comcast trumping Disney’s previous bid in the region of US$32 billion. This is around 100% above the undisturbed share price and 15 times earnings before interest, tax, depreciation and amortisation (or EBITDA – a standard measure of a company’s operating performance).

By any standards, these are astronomical figures. And they are difficult to justify without the spectre of new online rivals, Amazon and Netflix.

It is generally accepted that the current prices needed to acquire businesses are at a high thanks to low interest rates making cheap cash readily available, together with reduced US corporate taxes and a strong US dollar. But, even so, bids rarely exceed 50% more than the share price value. In the case of Sky, the price has reached almost 100% and may have some way to go still.

Share prices reflect information in the public domain and provide a guide to what a business is worth. In this case, Comcast and Disney board determination to acquire is driving prices way above a level which can be justified by any conventional means. The recent AT&T-Time Warner deal at US$80 billion was 13 times earnings and it could be argued that Time Warner should be on a higher multiple than Sky as it is primarily a content producer, while Sky is more focused on distribution.

And the competition between Comcast and Disney is almost a side show compared to Disney’s US$52 billion deal to buy 21st Century Fox in December 2017. Again this enormous price was justified by the threat of Netflix and Amazon.

Power play

Major merger and acquisition deals, for the most part, destroy value. Not just for shareholders but often customers, suppliers and other stakeholders. Some…
continue reading





The trouble with edibles

 

The trouble with edibles

File 20180717 44103 1wtiscj.jpg?ixlib=rb 1.1

No one really knows for certain what the market potential is for cannabis, much less for edibles, but growth opportunities are palatable. (Shutterstock)

Courtesy of Sylvain Charlebois, Dalhousie University

On Oct. 17, smoking cannabis will become legal in Canada. As for cannabis edibles, they will take a bit longer: Cannabis-infused food products will be legal in a little less than a year’s time.

Once edibles are available, things will get complicated in Canada’s food industry. But with the right regulations, this is a profit opportunity that doesn’t come by every day.

Initially, Bill C-45 did not include edibles. That only happened last fall, when the parliamentary health committee decided that edibles would need to be included as well if the country was going to adopt a comprehensive approach to legalized cannabis.

According to a recently published survey from Dalhousie University, 93 per cent of those favourable to the legalization of marijuana are also very likely to try at least one edible product. Recognizing this possibility, the parliamentary committee approved a neat little amendment and, voilà, edibles became part of the package.

The food industry is a $200-billion sector. It is a massive portion of our economy, split into multiple streams. Food retailing, food service, delivery, food trucks, institutional services, arenas, stadiums — there are channels of distribution everywhere, and food can get to wherever you are.

In less than a year, this will include cannabis — except that, unlike the smokeable version, edibles can be consumed by anyone without those around them knowing. It’s discreet, convenient — and potentially dangerous.

Labelling required

Health Canada was caught by surprise by the additional legalization of edibles, and is still trying to come up with an appropriate regulatory framework. Many questions linger about the distinct dangers that edibles pose, particularly for children.

Food companies are notoriously paranoid about food-safety issues, because they are always just one recall, outbreak or tragic incident away from closing their doors. All it takes is one child eating a cannabis-infused product and the damage to that food company would be irreversible.


continue reading





What criminal conspiracy charges against an alleged Russian spy might mean for the NRA: 3 questions answered

 

What criminal conspiracy charges against an alleged Russian spy might mean for the NRA: 3 questions answered

File 20180717 44076 5fmqzs.jpg?ixlib=rb 1.1

Maria Butina, founder of a Russian gun group, allegedly infiltrated the Republican Party. AP Photo

Courtesy of Brian Galle, Georgetown University

Editor’s note: U.S. authorities have arrested Mariia Butina, a Russian advocate for firearms ownership also known as Maria. In a criminal complaint that led to her indictment, the Justice Department accused her of secretly infiltrating American electoral politics as a foreign agent working on behalf of Russia and engaged in an anti-U.S. conspiracy. Numerous media reports allege that Butina illegally helped funnel Russian money into Donald Trump’s presidential campaign through the National Rifle Association. Brian Galle, a law professor who used to work for the Justice Department, explains what the consequences might be if the charges and accounts are true.

1. How could the government punish the organization?

The court papers allude to the NRA, although not by name. Several news sources have described in detail the relationship Butina and her Russian employer built with the organization, starting in 2013 or earlier. Depending on what NRA officials knew and when they knew it, the government could make a case that the gun advocacy and lobby group coordinated with Butina to help her advance Russian interests here in the U.S. – making it a co-conspirator in her individual lawbreaking.

The NRA has several arms. Its largest operation is technically known as a social welfare group or 501(c)(4) organization, granting it exemption from U.S. taxes. Another branch is a traditional charitable organization, making contributions to that entity tax deductible. Under federal tax law, when either of these kinds of nonprofits break laws, they jeopardize their tax exempt status.

The government has stripped several nonprofits of their tax exemptions for breaking the law over the years, including organizations that used their charitable status to defraud donors and, in the 1940s and ‘50s, groups suspected of supporting communism.

Some media reports suggest the NRA served as a conduit for Russian money that landed in the Trump presidential campaign’s coffers. If that proves true, it…
continue reading





What makes Putin’s vision of a Russian-US oil alliance a pipedream

 

What makes Putin's vision of a Russian-US oil alliance a pipedream

File 20180718 142411 81xzbx.jpg?ixlib=rb 1.1

One historic handshake in Helsinki. AP Photo/Pablo Martinez Monsivais

Courtesy of Anna Mikulska, Rice University

When Russian leader Vladimir Putin addressed the media in Helsinki alongside President Donald Trump, he proposed that their countries “work together” to make oil and gas markets calmer.

Trump didn’t say whether he supported the idea but he repeated his frequent assertion that Russia and the U.S. are competitors, adding, “I think the word competitor is a compliment.”

As a scholar of global energy geopolitics, I can see why Putin might want to forge an OPEC-like alliance between the U.S. and Russia – and how this idea might interest both countries if such alliance were possible. But that is not the case.

No price-fixing

There are two main reasons why Putin’s proposal is a non-starter.

First, there’s no national oil company or monopoly over the industry in the U.S. and the federal government exerts no direct control over crude production as is the case in Russia. Second, forming a cartel with Russia to collude on production levels or pricing would break American anti-trust laws that bar price-fixing.

Putin’s idea is therefore impossible to execute regarding the oil industry, absent a government mandate, which would require an act of Congress and a host of new regulations.

As for natural gas, I believe that this concept is even more far-fetched. Natural gas does not trade in the same way oil does in the global markets, making OPEC-like arrangements extremely unlikely between any countries. Besides, as I have explained before, the U.S. and Russia are beginning to compete in that industry.

A Goldilocks industry

Even so, this proposal shines a light on the complex interplay among oil prices, global economics and national energy policies.

Because they …
continue reading





The PhilStockWorld Weekly Webinar – 07-18-18

The PhilStockWorld Weekly Webinar – 07-18-18

For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here

 

Major Topics:

00:04:02 – Checking on the Markets
00:05:27 – Moneytalk Portfolio Review
00:12:15 – Top Trades
00:20:38 – Crude Oil
00:24:45 – Coffee
00:26:10 – Gold & Silver
00:29:05 – RDFN
00:33:57 – OIH
00:46:00 – Trade Ideas
00:50:56 – Beige Book
01:17:46 – Aging US Population
01:26:00 – Midyear Trade Review

Phil's Weekly Trading Webinars provide a great opportunity to learn what we do at PSW. Subscribe to our YouTube channel and view past webinars, here. For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – join us at PSW — click here!





US health care companies begin exploring blockchain technologies

 

US health care companies begin exploring blockchain technologies

File 20180716 44097 1lcqnm6.jpg?ixlib=rb 1.1

Finding ways to link health care data in a secure and confidential way. PopTika/Shutterstock.com

Courtesy of Ana Santos Rutschman, Saint Louis University

The sprawling U.S. health care industry has trouble managing patient information: Every doctor, medical office, hospital, pharmacy, therapist and insurance company needs different pieces of data to properly care for patients. These records are scattered all over on each business’s computers – and some no doubt in filing cabinets too. They’re not all kept up to date with current information, as a person’s prescriptions change or new X-rays are taken, and they’re not easily shared from one provider to another.

For instance, in Boston alone, medical offices use more than two dozen different systems for keeping electronic health records. None of them can directly communicate with any of the others, and all of them present opportunities for hackers to steal, delete or modify records either individually or en masse. In an emergency, doctors may not be able to get crucial medical information because it’s stored somewhere else. That can result in direct harm to patients.

There might be a way out, toward a health care system where patients have accurate and updated records that are secure against tampering or snooping, and with data that can be shared quickly and easily with any provider who needs it. In my work on health care innovation at the Center for Health Law Studies, at Saint Louis University School of Law, I have been following the rise of a technology that may help us address the weaknesses in today’s health care record-keeping: blockchain.

A secure system to store private information

Blockchain systems, best known in connection with cryptocurrencies like Bitcoin, are networks of databases stored in different places that use securely encrypted messages to connect with each other over the internet. Information can’t be deleted, but it can be updated – though only by authorized users, whose identities are recorded along with their actions.

That would keep years of patient data secure and make any human errors in data entry easy to track down and correct. Patients themselves could review…
continue reading





 
 
 

Phil's Favorites

What Hollywood gets right and wrong about hacking

 

What Hollywood gets right and wrong about hacking

Gone phishin’. www.shutterstock.com

Courtesy of Catherine Flick, De Montfort University

Spoiler warnings for Mr. Robot, Arrow and Blackhat

Technology is everywhere we look, so it’s no surprise that the films and TV we enjoy are similarly obsessed. That’s not to say they manage to get it right when it comes to portraying tech accurately however – and one of their worst areas is computer hacking.

I’ve...



more from Ilene

Zero Hedge

As Firms Buy-Back Shares In Record Amounts, Look Who Was Selling

Courtesy of ZeroHedge. View original post here.

As the old adage goes "if you've been at the table for a while and you still don't know who the sucker is... it's you."

And in the case of the US equity market, it is hard to argue with who the 'whales' are and who the 'suckers' are based on the following data.

...

more from Tyler

Chart School

Gann Angles on Dow and Gold

Courtesy of Read the Ticker.

Gann Angles measure price moves relative to time.

The Dow is moving up the red Gann 1x1 line, so far the recent trend challenge has been over come. As price is near upper green dotted channel Gann angle from Oct 2007 price is now over bought. We can also see the very obvious Elliot 5 wave count from March 2009 lows, and a new Dow high would complete the 5 waves up.

The red line indicator below the Dow price chart is readtheticker.com RTT Flow Index.


Click for popup. Clear your browser cache if image is not showing.



Gold (GLD) could not get over $130, so a reaction back to minor support at $115 was to be expected.  Support should be found here, an...

more from Chart School

Members' Corner

There Are 3 Main Theories That Explain Trump's Approach to Putin and Russia-Which One Makes the Most Sense?

Theory Time - What do you think?

Thom Hartmann suggests that the "Manchurian Candidate theory" is the least likely explanation for Trump's pro-Russia behavior in "There Are 3 Main Theories That Explain Trump’s Approach to Putin and Russia—Which One Makes the Most Sense?" (below).  disagrees and suggests that Putin probably has "the goods" on Trump in "Trump’s Plot Against America". (To be fair, Hartmann acknowledges that his three theories are not mutually exclusive.) Jonathan Chait argues ...



more from Our Members

Insider Scoop

BofA Points To Yum China's Earnings Downside Risk In Downgrade

Courtesy of Benzinga.

Related 31 Stocks Moving In Friday's Mid-Day Session Benzinga's Top Upgrades, Downgrades For July 20, 2018 ...

http://www.insidercow.com/ more from Insider

Digital Currencies

Citadel CEO Says Bitcoin Still A "Head Scratcher" But Billionaire Lasry Sees $40,000 Soon

Courtesy of ZeroHedge. View original post here.

Ken Griffin, the CEO and founder of the Citadel hedge fund, has reiterated his negative stance on Bitcoin (BTC) in an interview with CNBC this morning.

Speaking at the Delivering Alpha Conference in New York, ...



more from Bitcoin

Biotech

How summer and diet damage your DNA, and what you can do

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

 

How summer and diet damage your DNA, and what you can do

Bright sun and fatty foods are a bad recipe for your DNA. By Tish1/shutterstock.com

Courtesy of Adam Barsouk, University of Pittsburgh

Today, your body will accumulate quadrillions of new injuries in your DNA. The constant onslaught of many forms of damage, some of which permanently...



more from Biotech

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...



more from M.T.M.

ValueWalk

Buffett At His Best

By csinvesting. Originally published at ValueWalk.

Bear with me as I share a bit of my history that helped me create SkyVu and the Battle Bears games. The University of Nebraska gave me my first job after college. I mostly pushed TV carts around, edited videos for professors or the occasional speaker event. One day, Warren Buffet came to campus to speak to the College of Business. I didn’t think much of this speech at the time but I saved it for some reason. 15 years later, as a founder of my own company, I watch and listen to this particular speech every year to remind myself of the fundamentals and values Mr. Buffett looks for. He’s addressing business students at his alma mater, so I think his style here is a bit more ‘close to home’ than in his other speeches. Hopefully many of you find great value in this video like I have. Sorry for the VHS...



more from ValueWalk

Kimble Charting Solutions

The Stock Bull Market Stops Here!

 

The Stock Bull Market Stops Here!

Courtesy of Kimble Charting

 

The definition of a bull market or bull trends widely vary. One of the more common criteria for bull markets is determined by the asset being above or below its 200 day moving average.

In my humble opinion, each index above remains in a bull trend, as triple support (200-day moving averages, 2-year rising support lines, and February lows) are still in play ...



more from Kimble C.S.

OpTrader

Swing trading portfolio - week of September 11th, 2017

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

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



more from Promotions

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...

more from David





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 >>


As Seen On:




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 >>