Archive for the ‘Uncategorized’ Category

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.…
continue reading





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…
continue reading





TGIF – Quad Witching Madness

I love CASH!!! 

We cashed in most of our Member Portfolios so I'm not at all worried about what will happen today.  It's the end of the quarter for options and Futures (2 kinds of each) so "quad witching" and these days can have some violent swings – though we're not expecting anything dire.  We still thought it was a good idea to take advantage of this triple market top – JUST in case Q 4 Earnings don't go well or the Trade Talks don't go well or Brexit doesn't go well, etc.

Just because we moved to CASH!!! doesn't mean we can't still find fun things to trade.  We've been watching McDermott (MDR) collapse for the last few days and yesterday morning, I sent a Top Trade Alert out to our Members saying:

MDR – Fortunately, we got out of ours a long time ago as we never wanted them, we just liked CBI, who they merged with.  Needless to say, the merger has not gone well (which is why we didn't want to ride it out) and now they are calling in restructuring experts.  MDR says it "is taking positive and proactive measures, as we have done in the past, intended to improve its capital structure and the long-term health of its balance sheet."   You can take them at their word (as no one is) or you can imagine this is a sort of cover-up for their emergency measures to stave off some sort of disaster that's looming.

I do watch them (because they took away my CBI) and last year they took a $2.7Bn hit on write-offs and such and this year they lost about $190M in the first two Qs and it's doubtful they turn that around by the end of the year but they have $455M in cash and I bet they end up down less than $100M for the year with a profit in Q4.  

Assuming that's true – then


continue reading





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





Federally Funded 3,000 Thursday

Here we are again! 

As we expected, the Fed cut rates another 0.25% yesterday after changing just 15 words from their last statement, essentially indicating that Business Spending has slowed down to justify the completely unneccessary cut.  “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,” Powell told reporters. So, apparently, we've gone from a "data-dependent" Fed to one that now uses psychic powers to react to trouble before it even happens?  

Powell said “Weakness in global growth and trade policy have weighed on the economy” but does that mean he will RAISE rates if Trump makes a deal with China?  Powell can't win so he shouldn't try to please Trump, who immediately tweeted about the Fed Chairman:  “No ‘guts,’ no sense, no vision!” for not giving the President the negative rates he demanded just last week.

Powell left the door open to “a more extensive sequences of cuts” if needed, but stressed this was not what officials expect. Instead, he described the situation as one “which can be addressed and should be addressed with moderate adjustments to the federal funds rate.”  Updated quarterly forecasts showed officials split over the need for rate cuts this year. Five didn’t want to move. Five saw a quarter-point reduction warranted, while seven saw 50 basis points of easing needed by year-end — half of which was delivered on Wednesday.

As you can see from the Fed's projections, we're wrapping up Trump's Presidency (hopefully!) with barely 2% GDP growth and an uptick in unemployment while the fiction of low inflation is being maintained and keep in mind that if inflation is 2% and the economy is growing 2% – then the economy isn't growing at all – things are just getting more expensive while we produce the same amount of stuff.  To some extent, that's to be expected in a mature economy but we do have 1% population growth so really 3% growth with 2% inflation should be the minimum we shoot for.

I discussed the Fed and the overall economy with Kim Parlee on Money Talk last night, so here's that segment:

Given all those concerns, as we noted in…
continue reading





Did negative-yielding debt peak?

 

Did negative-yielding debt peak?

Courtesy of 

My Chart o’ the Day comes from LPL Research chief strategist John Lynch and it looks at the phenomenon of negative-yielding debt. Lynch notes that “Unfortunately, the global search for yield has now morphed into a scenario in which fixed income investors, or lenders, attempt to ‘potentially lose less’ rather than ‘earn slightly more’ than the value of the loan extended.”

Hitting $17 trillion, this pile of bonds that charges you the investor interest seems to have taken a pause from growing larger – for now. As for the question of whether or not US Treasury bonds will ever sport a negative yield, Lynch says never say never, but he thinks the Fed takes overnight rates down to 1.5% and then stops, barring any unforeseen liquidity crisis or recession arising in the near term.

So, is that it? Have we seen the peak of this phenomenon? As is the case with most blog posts titled in the form of a question, you won’t be getting a definitive answer from me here either. But what would positively-yielding dividend paying stocks be worth if that did happen? I would tell you the answer is substantially more than the multiples we pay for them today.

I’d like to see the stock market climb – but not because we end up in a deflationary hellscape like Japan.

Source:

THE CURIOUS CASE OF NEGATIVE YIELDS
LPL Research – September 16th, 2019 





I thought “price distortion” was an opportunity

 

I thought “price distortion” was an opportunity

Courtesy of 

Larry Swedroe comes around swinging a sledgehammer at absurd claims that index funds are distorting the markets – if this is the case, then, if anything, selecting the mis-priced securities ought to be a field day for investors who believe they can do so.

Swedroe offers up the only argument against “passive distortion” that really matters – the vast chasm between winners and losers this year and last.

If we’re saying that money is pouring into indexes, and then that money is being allocated proportionately and blindly among the components of an index, then these components would be rising and falling in unison if its true that the indexes are setting (or stabilizing) prices.

But, of course, this is not at all what’s happening. You can’t have this much dispersion without active managers being the price setters:

As pointed out in my annual look at lessons the markets teach investors, the S&P 500 Index lost 4.4 percent in 2018, including dividends. In terms of price-only returns, 10 stocks were up at least 42.6 percent. On the other hand, the 10 largest losers lost at least 44.2 percent. All active managers had to do to outperform was overweight the top 10 and underweight the bottom 10. Or they simply could have held cash! Yet Vanguard 500 Index Investor (VFINX) outperformed 71 percent of actively managed funds in its asset class. 2019 is no different. Through August, the S&P 500 Index was up about 17.5 percent in terms of total return. According to S&P, 10 stocks returned at least 62.1 percent (led by the return of 94.2 percent by Chipotle), and 10 stocks lost at least 37 percent, the worst performer being Dupont, with a loss of almost 58 percent. The gap between the top and bottom performers was 152 percent, presenting active managers with a great opportunity to add value.

Demonstrating how absurd the criticism of passive investing is, if it were driving prices and destroying the price-discovery function, we would not have seen such wide disparity in returns. Clearly, active investors engaged in price discovery are still trading, and


continue reading





How does the ‘unidentified political object’ that is the European Union really work?

 

How does the 'unidentified political object' that is the European Union really work?

European Union flags at the EU headquarters in Brussels, Sept. 11, 2019. AP/Virginia Mayo

Courtesy of Garret Martin, American University School of International Service

In the run-up to the 2016 Brexit referendum in the United Kingdom, “Take our country back” became a rallying slogan for the campaign pushing for the U.K. to leave the European Union.

Opponents of further integration of the U.K. into the EU resented what they saw as the growth of EU powers over the years, believing it infringed excessively on the power of the U.K. to control its own destiny.

As evidence, so-called “Leave” supporters often erroneously claimed that 60% of U.K. laws were actually imposed from Brussels, the headquarters of EU institutions. Or they denounced the EU as being run by “unelected bureaucrats.”

The European Union is a political and economic union formed in 1993. It built upon previous institutions which had been promoting European integration since 1951. When it was established, it was a new form of political organization for Europe that did not fully resemble traditional political models. The EU is neither a centralized state, like France, nor is it a federation, like the United States.

And that elusive nature has made it hard to understand, even for those who closely study it like myself. Jacques Delors, a former president of the European Commission, the executive arm of the EU, once described the European Union as “an unidentified political object.”

Its complexity has also led to misconceptions, especially regarding the sensitive question of the division of powers between the EU and its member-states. Those misconceptions also played a part in the current government chaos in the U.K. as it fast approaches the Oct. 31 deadline to leave the EU.

Supporters of the U.K. leaving the EU demonstrate outside the Houses of Parliament in London, June 15, 2016. AP/Matt Dunham

Division of powers

After World War II, a small number of European countries initiated a program…
continue reading





Comment by phil

View Single Comment

  1. phil

    I'm never going to get to them but I want to be clear that I want to also cash out the LTP and STP.  I will do a review and note the "keepers" but, at the moment, the LTP is $1,729,833 (up 246%) and the STP is at $886,611 (up 786%) and when they were at $2.2M I was going to cash out ahead of the 7/31 meeting and quickly regretted it as we dropped close to $2M, now we're at $2.6M and MAYBE we get to $3M or maybe we drop back to $2M but I KNOW I can easily make $400,000 with $2.6M in cash to get to $3M but it will be a lot harder to have to start again with $2M and get to $3M – probably a year harder and there's that time thing again.  

    So, in conclusion – it's simply not worth the risk! 







Which Way Wednesday – Fed Edition

CASH!!!

That is our response to market uncertainty and we are officially cashing out our Money Talk Portfolio after a very successful 2-year run where we've taken it from a $50,000 start to $124,043, which is up a whopping 148%.  I'll be on BNN's Money Talk Show later this evening to discuss the matter but, in short – it's simply too hard to protect those gains against all the market uncertainty regarding the Fed, Trade, Brexit, the Middle East, Election Interference, Impeachment, Overpriced Stocks & Indexes and, of course, a slowing Global Economy.  While the market is, so far, content to "soar and ignore" – I don't think we have more than 10% left in the best of circumstances while the risk is a 20% drop – so I'd rather sit this quarter out.

Of course "sitting out" doesn't mean we won't still find things to trade – I just want to get a clean start in 2020 and I don't want to risk what we've made in the last quarter of 2019.  We also reviewed our Hemp Boca Portfolio yesterday morning in our Live Member Chat Room and, though it's only 4 months old and only up 8.2% so far, we reduced our risk on that one as well.  One difference is I'm on the Hemp Boca show at least once a month to make adjustments but only on Money Talk once a quarter and, between now and January – I really can't condone the risk of holding positions without the ability to make changes!  

Our Butterfly Portfolio is market neutral and self-hedging so we simply removed some of the riskier plays but the Options Opportunity Portfolio, which is now up almost 300% in less than two years is going to be completely closed down, as will the Long-Term Portfolio and the Short-Term Portfolio that protects it.  As with our Hemp Boca Portfolio, I will be highlighting those trades I think are worthy of keeping but, for the purposes of our educational porfolios – I think there's more to be gained next year starting with a clean slate so we can emphasize portfolio building strategies and stock picking.

Here's our Hemp Boca Review from yesterday's Live Member Chat Room:

continue reading





 
 
 

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...



more from Ilene

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...



more from Bitcoin

Zero Hedge

What's Hot In Women's Fashion?

Courtesy of ZeroHedge View original post here.

Via Global Macro Monitor,

Capitalism at its best or worst?

We have a few questions:

1)  Does the Tariff Man get a royalty for the sale of each dress sold, and will that violate the Emolumen...



more from Tyler

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...



more from Lee

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...



more from Tech. Traders

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...



more from Kimble C.S.

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...


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

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. 

...

more from Chart School

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...



more from Biotech

Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

more from M.T.M.

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...



more from Our Members

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

...

more from Promotions





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 >>