Archive for the ‘Phil’s Favorites’ Category

Can capitalism solve capitalism’s problems?

 

Can capitalism solve capitalism’s problems?

A session at Davos highlighted the consequences of capitalism. Fabrice Coffrini/AFP via Getty Images

Courtesy of Elizabeth Schmidt, University of Massachusetts Amherst

Capitalism is in trouble – at least judging by recent polls.

A majority of American millennials reject the economic system, while 55% of women age 18 to 54 say they prefer socialism. More Democrats now have a positive view of socialism than capitalism. And globally, 56% of respondents to a new survey agree “capitalism as it exists today does more harm than good in the world.”

One problem interpreting numbers like these is that there are many definitions of capitalism and socialism. More to the point, people seem to be thinking of a specific form of capitalism that deems the sole purpose of companies is to increase stock prices and enrich investors. Known as shareholder capitalism, it’s been the guiding light of American business for more than four decades. That’s what the survey meant by “as it exists today.”

As a scholar of socially responsible companies, however, I cannot help but notice a shift in corporate behavior in recent years. A new kind of capitalism seems to be emerging, one in which companies value communities, the environment and workers just as much as profits.

The latest evidence: Companies as diverse as alcohol maker AB InBev, airline JetBlue and money manager BlackRock have all in recent weeks made new commitments to pursue more sustainable business practices.

The purpose of business

Nearly 50 years ago, the economist Milton Friedman proclaimed that the sole purpose of a business is “to use its resources and engage in activities designed to increase its profits.”

Within a decade, Friedman’s claim became accepted wisdom in corporate boardrooms. The era of “shareholder primacy capitalism” had begun.

One result has been remarkable growth in the stock market. But critics argue companies and the “shareholder value theory” are also complicit in exacerbating many economic, social and environmental problems, such as income inequality and climate change.


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What to think when you’re thinking about impeachment: 5 essential reads

 

What to think when you're thinking about impeachment: 5 essential reads

Where the action is: The capitol building in Washington, D.C. Aurora Samperio/NurPhoto via Getty Images

Courtesy of Naomi Schalit, The Conversation

If you have a big appetite for politics news, you’re not going to go hungry this week.

The substantive part of the impeachment trial of President Donald Trump now begins, after Democrats from the House of Representatives delivered the articles of impeachment to the Senate last week and senators, as well as Chief Justice John Roberts, were sworn in.

At The Conversation, we’ve followed this story since it began as a whistleblower’s report back in what seems like prehistoric times – last August. We’ve been happy to leave the tick-tock reporting to our colleagues in the rest of the media – this happened and this happened, and then this happened. What we’ve done here is provide you with stories that tell you about the things related to the impeachment that you don’t see – the history, the trends, the legal implications.

Here are five of those stories to help you make sense of the news over the coming days and weeks.

1. Donald Trump, 2.0

Could the Senate convict and send President Trump packing – only to have the voters return him to the White House?

None of the three presidents who previously faced impeachment – Andrew Johnson, Richard Nixon and Bill Clinton – was convicted. None of them sought reelection after their trials. Johnson simply chose not to run, while Nixon and Clinton, both in their second terms, were barred by the Constitution (as opposed to some outcome related to being impeached) from running a third time.

But President Trump is already running for reelection. Austin Sarat, a scholar of American legal and political history at Amherst College, writes that “a little-known wrinkle in the Constitution might allow Trump to be reelected president in 2020 even if he is removed from office through the impeachment process.”

U.S. President Donald Trump speaks during a homecoming campaign rally on Nov.


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“Buying Momentum Has Fizzled Out”: Hedge Funds, CTAs Are Now All-In

Courtesy of ZeroHedge

When it comes to investor positioning and flows, we have been quite clear over the past two weeks: with stocks hitting all time highs on a daily basis, we first reported on Jan 11 that "Institutions, Retail And Algos Are Now All-In" and then again one week later, "Never Before Seen Market Complacency, As Everyone Goes Even More "All In"."

Confirming one part of this, overnight Goldman showed that equity net future positioning of hedge funds has hit an all time high, meaning there is little marginal space left for the smart money to buy.

Today, Nomura's two quants confirmed that when it comes to CTAs, they are indeed all in. As Nomura's Charlie McElligott writes, that "all major markets we track at + or – “100%” signals across the board which then allows for more leverage to be deployed into the positions / larger gross exposures":

At the same time, Nomura's other quant, Masanari Takada echoes this and writes "CTAs’ net long position in US equity futures has started to look excessive, and the momentum behind the buying seems to have fizzled out." According to the Nomura quant, this means that "Breezy bullishness looks like a bad idea at this point" and that "the situation looks primed for an overdone sell-off in response to even small fluctuations in the market."

What is the bigger picture? Here Takada preaches caution, noting that as a result of the Coronavirus concerns, "global equity markets have become jittery" and adds that "timing-wise… most hedge funds have swung to taking profits on their long positions in DM equities. It may be that these hedge funds have seized on the new coronavirus outbreak as a reason to take profits now."

Our estimates of major hedge funds’ exposure to DM equities (30-day beta) show that more hedge funds are exiting longs now than was the case at the end of December. Of course, long/short funds and other fundamentals-based, value-oriented investors following bottom-up strategies are feeling out dips to buy. Prior to this, however, global macro hedge funds, managed futures funds, and other such top-down investors


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The Man Who Advises the New York Fed Says It and Other Central Banks Are “Fueling a Ponzi Market”

Courtesy of Pam Martens

Scott Minerd

Scott Minerd

On Monday, a member of the New York Fed’s own Investor Advisory Committee on Financial Markets, Scott Minerd, published a critique which he headlined as follows: “Global Central Banks Fueling a Ponzi Market,” with this scary subhead: “Ultimately, investors will awaken to the rising tide of defaults and downgrades.”

The thrust of the article is that central banks (which include the New York Fed’s Wall Street money spigot that was launched on September 17, 2019) are creating a Ponzi scheme of liquidity that is hiding the true state of risk in both the stock and bond markets. The implication is that without the Fed’s cheap money flooding markets, interest rates on questionable debt would be much higher, thus providing a red flag for investors.

Minerd develops his thesis as follows:

“The disturbing trend is that despite the rally in risk assets in the prior year, the number of defaults rose by approximately 50 percent, according to data compiled by J.P. Morgan. Additionally, the number of distressed exchanges increased by 400 percent.

“This correlates well with our observation that the number of idiosyncratic defaults has been increasing. Ultimately, markets will need to reprice for this rising risk with increased bond spreads relative to Treasury securities. However, that day of reckoning when spreads rise is being held off by the flood of central bank liquidity and international investors fleeing negative yields overseas.

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Oil Is The Only Way Back Up For Venezuela

Courtesy of OilPrice.com, Editorial Dept.

There’s only one path to rebuilding Venezuela, and it’s paved with oil. For the time being, that path leads nowhere.

The key to controlling everything now lies with the National Assembly, the only body with the power to hand out oil licenses—and Maduro’s recent scheme to retake control of the country’s oil may just have been foiled by more Trump sanctions. 

Venezuela is the 12th largest oil producer in the world and home to the world’s largest oil reserves--all of which is irrelevant as long as it remains in the throes of a deep economic and humanitarian crisis amid runaway corruption, a devalued currency and crippling sanctions by the U.S. and the EU.

Maduro’s attempt to cling to power is relentless, but in his quest this past week to take control of the oil industry, Washington was paying close attention. And now, the rogue president and his government have suffered another major blow, with the US imposing fresh sanctions on seven Maduro acolytes. 

Legislative Crisis

Last week, Venezuela plunged into a major legislative crisis after soldiers and pro-Maduro supporters barred U.S.-backed opposition leader Juan Guaidó and his deputies from entry into congress before quickly naming Luis Parra, a former opposition lawmaker who recently defected to the Maduro camp, as head of a pro-government assembly.

Maduro loyalists and Guaidó’s opposition legislators engaged in a showdown of claims and counterclaims that left neither side with clear control of the assembly.

Diplomats and energy consultants see the latest drama as a move by Maduro to continue to cling to power by gaining control of congress and legitimizing investments by Russian, Chinese and other deep-pocketed investors in a bid to revive the country’s collapsing oil industry. 

Russia, China, India and Turkey have been demanding legal security from Caracas even as they look to tap the country’s cheap energy and mining assets.

Venezuela’s national assembly is the last independent government institution with the sole mandate to legally approve oil-licensing deals, thanks to a law crafted by Maduro’s leftist predecessor, the late Hugo Chávez, which gave state oil monopoly PDVSA (Petróleos de Venezuela) majority financial stakes and mandatory operational control. 

Had the congress takeover been successful, Maduro’s supporters would have been…
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The Next Trillion Dollar Stocks: What Are Your Thoughts?

 

The Next Trillion Dollar Stocks: What Are Your Thoughts?

Courtesy of 

In this edition of What Are Your Thoughts, Michael Batnick and Josh Brown discuss:

* Gold vs Bitcoin, let the trolling begin!
* Google joins the Trillion Dollar Club, who’s next?
* Can Bill Simmons sell The Ringer podcast network for $200 million?
* Actively managed US stock mutual funds had a great year in 2019, but most still couldn’t catch the S&P 500. So what?
* Will direct indexing disrupt the ETF business?
* Warren Buffett’s preferred metric to gauge how expensive the stock market is.

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





How high above the 200-day can the S&P 500 get?

 

How high above the 200-day can the S&P 500 get?

Courtesy of 

The big news this past week is that the S&P 500 got way out ahead of its 200-day moving average – more than 11% above, in fact.

Michael wrote about how shitty of a timing signal this measure is here, if you haven’t read it yet you CANNOT miss it.

In the meanwhile, Jon Krinsky notes that while we may be stretched based on recent history, in the 1990’s, the S&P was routinely more than 10% above the 200-day moving average, which led to consolidation periods followed by even higher new highs.

Here’s two charts from Jon:

It’s notable that this extreme breadth surge has happened with the SPX stretched vs. its 200 DMA. It is now at the widest spread (over 11%) since January 2018. Of course when momentum gets strong like it was two years ago, and it is now, there is no rule for how stretched things can become. It peaked at around 14% in Jan. ’18, and routinely was above 15% in the late 1990’s

By mid 1995, the SPX was 14% above its 200 DMA. You can see it routinely traded above that threshold over the last half of the decade, and while it did check back to its 200 DMA many times, there were other times where the market moved sideways or pushed even higher

Source:

What Happens When You Have a Breadth Surge and the SPX is Stretched?
Baycrest Partners – January 20th, 2020

Follow Jon Krinsky on Twitter! 





CVS, Walgreens Shares Slide As Amazon Files International Trademarks For Pharmacy Business

Courtesy of ZeroHedge

Amazon has just taken another step in its assault of the pharmacy industry. Since the company acquired PillPack, a disruptive online pharmacy, back in 2018, pharmacy mainstays like CVS and Walgreens Boots Alliance have been rattled by the e-commerce and cloud-computing giant's move into their territory. Their shares dipped on Tuesday as CNBC reported that Amazon had just filed trademarks for its 'Amazon Pharmacy' brand in several foreign markets, including Australia, Canada and the UK.

Amazon unveiled its plans to rebrand PillPack as 'Amazon Pharmacy' late last year, signaling to the market that it intended to pursue its pharmacy aims despite a high bar set by regulators in the US.

The problem with selling pharmaceuticals in the US is that, although the market is probably the largest for pharmaceuticals on the planet, it's also extremely competitive and complex. Since the PillPack buy, Amazon has already run into problems, including being sued by some of its competitors, and facing resistance from incumbent pharmacies when requesting patient data.

So, PillPack has shifted focus, and is apparently aiming to build its foundation abroad. Of course, filing the patents doesn't necessarily guarantee that Amazon is expanding PillPack. The pharmacy old guard has done an admirable job protecting their turf, and some are skeptical of Amazon's ability to break in.

But if Jeff Bezos has proven anything during his multidecade push to transform Amazon into 'the Everything Store', it's that Amazon can be a surprisingly fierce competitor. And the industry stalwarts will need to rely on more than just the largesse of consolidation to beat Bezos.

 




Financial trading bots have fascinating similarities to people – we need to learn from them

 

Financial trading bots have fascinating similarities to people – we need to learn from them

Automated for the people. WhiteMocca

Courtesy of Christian Borch, Copenhagen Business School

In 2019, the world fretted that algorithms now know us better than we know ourselves. No concept captures this better than surveillance capitalism, a term coined by American writer Shoshana Zuboff to describe a bleak new era in which the likes of Facebook and Google provide popular services while their algorithms hawk our digital traces.

Surprisingly, Zuboff’s concern doesn’t extend to the algorithms in financial markets that have replaced many of the humans on trading floors. Automated algorithmic trading took off around the beginning of the 21st century, first in the US but soon in Europe as well.

One important driver was high-frequency trading, which runs at blinding speeds, down to billionths of a second. It offered investors the prospect of an edge over their rivals, while helping to provide liquidity to a market by ensuring there was always someone willing to buy and sell at a particular price. High-frequency trading is now behind more than half of the volumes in both the stock and futures markets. In other markets, such as foreign exchange, algorithms have a smaller but still significant presence, with no signs that they will wane in future.

The vices of devices

Humans still program the algorithms and design their trading strategies, though the rise of deep learning is putting even this role under threat. But the moment the algorithms go live on markets, they act on their own accord without human intervention, dancing with each other in dizzying and often unexpected ways.

At first glance, they have little in common with us. They cannot think or feel, and despite the hype around machine learning, it’s still contentious and complicated to describe them as intelligent. Like human traders, however, they make decisions, observe others making decisions, and adjust their behaviour in response.

Fooled you. Wikimedia

At speeds many times faster than humans will probably ever…
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Why A Flu Outbreak In China Can Spook Global Markets

 

Why A Flu Outbreak In China Can Spook Global Markets

By John Rubino, Dollar Collapse 

When people talk about empires of the past, they generally mean Rome and Britain. But the biggest and in some ways most interesting empire was built and run by the Mongols in the 13th and 14th centuries. At it’s peak it stretched from China to Eastern Europe, which is more territory than Rome ever controlled.

Across that expanse there was free trade and unrestricted movement of people via the original “Silk Road” network. For a while there was a single currency which was accepted everywhere.

Genghis Khan — think of him as the Mongols’ (gleefully bloodthirsty) George Washington — organized his army along what we today would call colorblind lines. Instead of units based on clans and tribes, he mixed and matched soldiers of varied backgrounds and trained them to be loyal to one another regardless of origin. He also ordered his men to marry women from conquered cities, and to integrate into local cultures.

And he loved technology, collecting engineers and other people with useful skills from conquered lands and putting them to work developing new weapons and better agricultural practices.

“Pax Mongolica,” in short, had all the makings of a nascent modern system, hundreds of years before the Industrial Revolution.

Then came the Black Death.

Free movement of people allowed the disease to move quickly and uncontrollably. Local populations panicked and closed themselves off, frequently slaughtering their Mongol governors in the process. Trade collapsed, the Silk Road went dark and the Mongol empire expired.

Now fast forward to today’s world, where virtually anyone can fly or drive to virtually any other country — and millions each year do so. Trade is a huge part of most major national economies. A handful of currencies are accepted pretty much everywhere, while locals mix with visitors in melting pot mega-cities of 20 million-plus inhabitants, all breathing the same air.

Meanwhile, factory farms pump antibiotics into even healthy animals, turbocharging the natural tendency of microbes to evolve immunity to drugs. “Super-bugs” that can’t be killed with existing tech are now proliferating.

We’re


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Phil's Favorites

The digital economy is becoming ordinary. Best we understand it

 

The digital economy is becoming ordinary. Best we understand it

The digital economy includes small holder farmers being able to access finance on a mobile device without having to go to a bank. Shutterstock

Courtesy of Brian Armstrong, University of the Witwatersrand

The digital economy has been getting a lot of attention, with increasingly strong headlines offering apocalyptic as well as breathtakingly exciting scenarios. Some warn of job losses due to automation, some wonder at the things digital technology can do. And then there’s real scepticism about whether this will translate into delivering to people who need it most.

With all of this discuss...



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Kimble Charting Solutions

Bad News For Crude Oil Should Come From This Pattern, Says Joe Friday

Courtesy of Chris Kimble

It’s a good idea for investors to be aware of key indicators and inter-market relationships.

Perhaps it’s watching the US Dollar as an indicator for precious metals or emerging markets. Or watching interest rates for the economy. Experience, history, and relationships matter. And it’s good to simply add these to our tool-kit.

Today, we look at another relationship that has signaled numerous stock market tops and bottoms over the years, and especially the past several months, Crude Oil.

When crude oil tops or bottoms, it seems that ...



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Zero Hedge

WTF Chart Of The Day: Bonds Ain't Buying It

Courtesy of ZeroHedge View original post here.

Presented with little comment aside to ask (rhetorically), why - amid the unknown parameters of what appears to be escalating into a global pandemic, and ongoing weakness in economic data despite the 'trade deal' - are stocks soarng to record highs as bond yields collapse to 3-month lows?

Source: Bloomberg

Fun-durr-mentals don't matter...

S...



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Insider Scoop

5 Software-Application Stocks Moving In Thursday's After-Market Session

Courtesy of Benzinga

Gainers

Atlassian Corporation, Inc. (NASDAQ:TEAM) stock surged 9.7% to $145.50 during Thursday's after-market session. According to the most recent rating by Morgan Stanley, on January 13, the current rating is at Overweight.

Diebold Nixdorf, Inc. (NYSE:DBD) shares increased by 8.1% to $11.48. The most recent rating by DA Davidson, on December 13, is at Buy, with a price target of $17.00.

Telaria, Inc. (NYSE:TLRA) stock rose 4...



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The Technical Traders

January 2018 Stock Market Repeat - Yikes!

Courtesy of Technical Traders

Our research team caught a very interesting price pattern that correlates with the Put/Call ratio.  We are alerting our friends and followers with this research post of this exciting, yet unconfirmed, set up today.

In late 2017, the US stock market rallied from July through December with moderately low volatility throughout this span of time.  Near the end of 2017, the US stock market price activity stalled, then began a renewed price rally in early 2018 (see the first BLUE & YELLOW BOX on the chart below). Then, in January 2018, a very broad market reversion event took place which ultimately resulted in a very broad market correction in October through December 2018 of just over 20%.

...

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Biotech

Snakes could be the original source of the new coronavirus outbreak in China

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

 

Snakes could be the original source of the new coronavirus outbreak in China

Chinese cobra (Naja atra) with hood spread. Briston/Wikimedia, CC BY-SA

Haitao Guo, University of Pittsburgh; Guangxiang “George” Luo, Univers...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Monday, 16 September 2019, 05:22:48 PM

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


Comment: This chart says SP500 should go back to 2016 levels (overshoot will occur of course)



Date Found: Tuesday, 17 September 2019, 01:53:30 AM

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


Comment: This would be HUGE...got gold!


...

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Members' Corner

The War on All Fact People

 

David Brin shares an excerpt from his new book on the relentless war against democracy and how we can fight back. You can also read the first, second and final chapters of Polemical Judo at David's blog Contrary Brin.

The War on All Fact People 

Excerpted from David Brin's new book, the beginning of chapter 5, Polemical Judo: Memes...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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