Archive for the ‘Uncategorized’ Category

A Missing Caveat to Last Week’s Sell-Off

 

A Missing Caveat to Last Week’s Sell-Off

Courtesy of 

First of all, congratulations to my friend Ari Wald on the fifth anniversary of his weekly technical note, Inflection Points, for Oppenheimer & Co. I’ve been reading him since the beginning and posting his insights often here at TRB.

Ari makes sense of the price action and market cross-currents in a helpful, non-pedantic way, with enough detail for serious technicians but not so much so that you can’t understand what he’s saying. And his charts are always illuminating, no matter what’s going on.

Okay, here’s what Ari wants you to know about what we witnessed last week – a sell-off in the 10-year treasury yield that led to an inversion, along with the typical bludgeoning of the bank stocks that need a positively sloped curve…

It was ugly, but it doesn’t scream “TROUBLE!” for the US economy or the financial system. Ari chalks up the drop in rates to a technical follow-through for what’s happened with the German 10-year (negative yields again). Most importantly, there are no signs of credit stress in the major indicators, which is key if you’re buying on the dip…

No Signs of Major Credit Stress

The cautionary drop in interest rates isn’t being confirmed by signs of major stress in high-yield credit spreads either, by our analysis. While high yield has underperformed both Treasuries and corporate bonds in March, weakness hasn’t been meaningful in relation to the year-to-date outperformance going into this March peak; i.e., it’s been within trend, in our view. It’s also interesting to note that while banks have been a key underperformer in the equity market since the start of the month, the industry has surprisingly outperformed within the high-yield market.

Ari goes on to show that, for the month of March, high-yield bonds issued by banks are the top total return performing credits, still up 1.8% in March versus the return for the entire high-yield index of just .7%. So if you thought people were selling assets out there because they think there’s some fundamental issue with the economy or the financial system, you’d be very wrong.

Ari’s take is that…
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These Are the Goods

 

These Are the Goods

Courtesy of 

Articles

Don’t ever feel sorry for a vendor. He knows what he can sell for, and we want his bottom price. ~ By Zack Kanter

Free money on the sidewalk is always picked up ~ By Morgan Housel

Past outperformance tends to beget future underperformance ~ By Jeffrey Ptak

While it is easy to find fast-growing companies, it is more difficult to identify stocks with undervalued growth ~ By Daniel Sotiroff

Good trade. Bad trade. ~ By Phil Huber

Fees suck, access is hard, the complexity’s insane, taxes are actually okay, but the search costs are crazy. ~ By Jason Zweig

The jokes people tell or put on social media in 2011 do not represent who they are as people in 2019 ~ By Josh Brown

The sample size for the big cycles in U.S. versus the world is basically two. ~ By Ben Carlson

There is no single solution, only a web of possibilities. ~ By Nick Maggiulli

Diversification is a risk mitigation strategy to avoid unnecessary mistakes. ~ By Blair duQuesnay

Podcasts

You’re the only one living your life ~ With J.C. Parets and Phil Pearlman

There’s a 10% chance any time I’m on stage I’m gonna end it all ~ With Kara Swisher and Scott Galloway

Ryan Fitzpatrick is Chinese food. He’s good for three hours. ~ With Bill Simmons and Dave Jacoby

Books

Some parts of us will always be what we were. ~ By Delia Owens





Baseball’s biggest problem isn’t pace of play – it’s teams tanking

 

Baseball's biggest problem isn't pace of play – it's teams tanking

File 20190321 93051 1smhe8l.jpg?ixlib=rb 1.1

Miami Marlins fans have little to look forward to this season. AP Photo/Brynn Anderson

Courtesy of Adam Felder, University of Virginia

Major League Baseball is in trouble. But for all of Commissioner Rob Manfred’s concerns about pace of play, he’s looking in the wrong direction.

The game is healthy. The league isn’t.

Tanking – or intentionally losing – is endemic. Consider the Miami Marlins.

Since former Yankees great Derek Jeter’s ownership group took over the Marlins at the conclusion of the 2017 season, they’ve:

The 2018 Marlins went 63-98, 14 wins worse than 2017. Projections for 2019 have them somewhere between “just as lousy” and “even worse.”

It’s so dire that Jeter said fans might not remember the score of this season’s games, but at least they’ll remember the ballpark experience. Not exactly a ringing endorsement for Marlins baseball.

For the Marlins, though, it’s all part of a bigger plan: lose now, save money, accumulate young talent and – hopefully – win later.

The Marlins are just one of many teams following this strategy, and there’s a logic to their approach: There’s no prize for mediocrity, and if a team, at its best, will probably miss the playoffs, why bother trying? Why not shed payroll and collect the higher draft picks that come from having a terrible record?

As a data analyst, I wanted to study the underlying factors fueling this trend. It seems that the league’s inequitable pay structure plays a big role.

The best get paid … less?

Let’s begin by looking at who’s been getting the bulk of the playing time in MLB since 1995. For the sake of space, we’ll focus only on batters, using plate appearances – the number of times that player batted during the season –…
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March Madness: With gambling legal in eight states, who really wins?

 

March Madness: With gambling legal in eight states, who really wins?

File 20190321 93039 fjdvzz.jpg?ixlib=rb 1.1

The odds of more legal betting are good. AP Photo/John Locher

Courtesy of John Affleck, Pennsylvania State University

March means springtime, but also breathless headlines of Cinderellas, busted brackets and buzzer beaters.

This year, it’ll also include talk of “sharps,” “handles” and “point spreads,” as millions more Americans are able to openly wager for the first time on March Madness – the NCAA men’s basketball tournament. That’s thanks to the U.S. Supreme Court ruling that allowed states to legalize sports betting.

As a sports journalism professor, I’ve been following the evolution of sports gambling for several years – back to a time when it was portrayed as a revolutionary and scary moment for fans and teams alike.

With millions more Americans gambling legally, it’s no longer scary, but that doesn’t mean some officials and observers aren’t concerned about perils in its rapid growth.

The legal bandwagon

Most tournament gambling is still illegal, but that’s changing quickly.

According to a survey conducted by Morning Consult for the American Gaming Association, 47 million adults in the United State will wager US$8.5 billion on March Madness this year, including 4.1 million who will do so for the first time at a casino sportsbook or online using a legal app. The rest of the bets, including the tens of millions made in office pools around the country, will be illegal.

Yes, you heard that right. Your office pool is most likely illegal.

Last year, the American Gaming Association estimated that $10 billion was at stake, but the calculation method has since changed. We do know that 97 percent of the action was illegal, including office pools. Nevada accounted for the legal betting.

Now, as is the case in situations with state-by-state legislation, the rules vary from place to place.

Early adopter New Jersey has both casinos and online apps ready to take bets. Pennsylvania, meanwhile, now has several brick-and-mortar sportsbooks, but legal online betting is still a few months away. With just six betting locations open last month, Pennsylvania’s combined handle…
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The public may never see a report from Mueller’s investigation

 

The public may never see a report from Mueller's investigation

File 20190214 1736 14ds33w.jpg?ixlib=rb 1.1

Will the public ever see a report from Special Counsel Robert Mueller? Shutterstock

Courtesy of Stanley M. Brand, Pennsylvania State University

Almost from the day of Robert Mueller’s appointment as special counsel, the media and the public have expected that his investigation will end with a report to either the Congress or the public or both.

I’m a law school professor who teaches a course on the independent counsel, the predecessor of the special counsel.

For eight years, I was the general counsel for the U.S. House of Representatives, the chief legal officer responsible for representing the House, its members, officers and employees in connection with legal procedures and challenges to the conduct of their official activities.

I believe that the public’s expectation that they will see a report from the Mueller investigation is unrealistic. That expectation appears to be based on a misunderstanding of the legal principles involved in making any such report available to anyone outside of the Department of Justice.

Regulation reflects history

The previous law creating special counsels – which has now lapsed – directed the special counsel to report to the House of Representatives “substantial and credible information” of impeachable conduct.

The current regulation, adopted during the Clinton administration, provides no such direction.

It says only that “[a]t the conclusion of the Special Counsel’s work, he or she shall provide the Attorney General with a confidential report” explaining the decision to either prosecute or not.

The goal of those drafting the regulation was to restore more control to the department over the special counsel after what was seen as the excesses of previous independent counsels in the Iran Contra and Clinton cases.

Those excesses included overly broad and lengthy investigations such as the HUD Independent Counsel, which took eight years to complete; expensive investigations, including US$52 million estimated in one case; and oppressive prosecutorial tactics, like subpoenaing Monica Lewinsky’s mother to the grand jury.

Former Department of Justice official Neal Katyal, who drafted the regulations,…
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Holy s*** the yield curve inverted

 

Holy s*** the yield curve inverted

Courtesy of 

Bloomberg:

A closely watched section of the Treasury yield curve on Friday turned negative for the first time since the crisis more than a decade ago, underscoring concern about a possible economic slump and the prospect that the Federal Reserve will have to cut interest rates.

The gap between the 3-month and 10-year yields vanished on Friday as a surge of buying pushed long-end rates sharply lower. Inversion is widely considered a reliable harbinger of recession in the U.S. The 10-year slipped to as low as 2.439 percent.

Michael and I did this video to protect your psyche from all the bullshit you’re about to hear. Share it widely and remember who loves you.

Subscribe to the channel, we’re going to keep killing it for you every week.





Why flood insurance needs an overhaul: 6 questions answered

 

Picture via Pixabay

Why flood insurance needs an overhaul: 6 questions answered

Courtesy of Robert W. Klein, Georgia State University

Editor’s note: The Trump administration plans to significantly revamp the pricing of flood insurance. While some homeowners would see their premiums rise, others would benefit from lower rates. We asked an insurance expert to explain what the government program currently works and why it’s in dire need of fixing.

What is flood insurance?

Homeowners’ insurance does not cover damage to a home caused by flooding. A homeowner must have a separate policy to cover flood-related losses, defined as water traveling along or under the ground.

Most such policies are underwritten by the National Flood Insurance Program, which is part of the Federal Emergency Management Agency. The program was established in 1968 to address the lack of availability of flood insurance in the private market and reduce demand for federal disaster assistance. It also contains provisions intended to reduce flood risk.

The National Flood Insurance Program’s activities are funded largely by the premiums and fees paid by its policyholders, supplemented by a little from the federal budget to help pay for flood risk mapping. Because the program serves the public interest by promoting “sound land use” and minimizing exposure of property to flood losses, some believe that more of its funding for flood risk management should be borne by taxpayers.

Homeowners can purchase a federal flood policy directly from the program or through a private insurer. Separately, some private insurers sell their own flood policies on a limited basis for properties that are overcharged by the government’s program.

How many American homeowners have flood insurance?

It is difficult to determine exactly how many homeowners have flood insurance.

The National Flood Insurance Program had just over 5 million policies in force as of this January. Of these policies, approximately 69 percent were on single-family homes and 20 percent on condo units. There is no source on how many private flood policies are in force, but my sense is that that they represent only about 15 percent of all policies sold nationally.

In recent years, the …
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Flailing Friday – Crazy Market Action Continues

And now we are down again.  

The Dow started the week at 25,900 and we hit 26,130 on Tuesday but now back to 25,830 this morning so, on the whole, we'll be lucky to finish the week out flat.  It's a clearly manipulated, low-volume market and JP Morgan points out that, despite the S&P 500 surging 20% from its December low – almost every catagegory of investors tracked by JPM, from individuals to hedge funds and computer-driven trading, has shown little inclination to chase the rally. 

Dwindling liquidity is often dragged into discussions of market meltdowns. In December, for instance, when the S&P 500 plunged toward the brink of a bear market, both President Donald Trump and strategists from Goldman Sachs flagged it as potentially escalating the sell-off.  While very dangerous if the market turns negative, JPM says these low-volume conditions could also keep the rally going:

“Given liquidity, it is plausible that just short covering, buybacks, dealers’ gamma hedging, and some limited re-leveraging drove the entire recovery.  This, in turn, opens the possibility that the current rally can continue during the spring.”

JPM cites the dramatic reversal in Central Bank policies as putting another floor under the market.  While I agree with their premise, I believe it, like most bullish premises, is ignoring the risks of the overall Global slowdown driven by the Trade Wars, Rising Oil Prices and Brexit as well as the dramatic slowdown in Corporate Profits we'll see now that they don't have additional tax breaks and, of course, rising wages will eat into profits as well.  

Bullish but cautious is the best description of our stance.  As long as we hold those 200-day moving averages, things are fine but I'd sure feel better if the Russell could manage to take back their 200 dma at 1,592 (the bar is lowered every day) it doesn't seem too much to ask, does it?

As I noted recently, as long as we're over the 50 dma, they keep on rising and, when they cross over the 200 dma, that will be a very bullish signal – just as the cross…
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Britain has its first new deep coal mine in decades – a result of pretending climate change isn’t political

 

Britain has its first new deep coal mine in decades – a result of pretending climate change isn't political

File 20190321 93039 v3vybh.jpg?ixlib=rb 1.1

Oscar Johns / shutterstock

Courtesy of Rebecca Willis, Lancaster University

The UK is widely seen as a climate leader. Its Climate Change Act, which passed into law ten years ago, is the envy of the world. It has targets for carbon reduction enshrined in law, and recently, the government hinted that it would adopt a target of zero greenhouse gas emissions by 2050 (the current target is an 80% reduction). Four years ago, the government, with cross-party support, announced it would phase out coal-fired power generation by 2025.

And yet, at a planning committee meeting in the northern English county of Cumbria, where I live, local councillors have voted unanimously to approve a new deep coal mine, Britain’s first in three decades. The mine would extract nearly 3m tonnes of coal a year, primarily for the steel industry rather than power generation. According to Scientists for Global Responsibility, this would result in more than 9m tonnes of carbon dioxide being released into the atmosphere, every year for 50 years – that’s equal to the emissions from a million households.

How can a country with such strong ambitions to reduce carbon emissions, approve a plan to increase them so significantly? My research, which is based on interviews with MPs and looks at how politicians understand and respond to climate change, suggests why such a contradictory situation could have arisen.

The new mine will take coal from the seabed near St Bees Head, Cumbria. StaceyCheck / shutterstock

For the past decade, there has been a cross-party consensus in support of long-term carbon targets. Just five out of 650 MPs voted against the Climate Change Act. Yet a side-effect of this consensus has been that politicians have not talked about climate change very much. Political debate is conspicuous by its absence, the climate is rarely discussed in parliament, and few MPs champion the issue. One climate-conscious MP said that he was “known as a freak” for speaking out,…
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Why some counties are powerhouses for innovation

 

Why some counties are powerhouses for innovation

File 20190220 148539 1uibfnn.jpg?ixlib=rb 1.1

Santa Clara County produced more patents than any other U.S. county in recent history. MintImages/shutterstock.com

Courtesy of Christopher Boone, Arizona State University

By the time the application window closed, Amazon had received 238 proposals from cities and regions throughout North America looking to become the second headquarters of the behemoth tech company.

Amazon invited proposals especially from places that looked a lot like its native Seattle: metro areas with more than a million people; a stable and business-friendly environment; communities that could “think big and creatively” about real estate options; and a location that would attract and retain technical talent.

In the race to attract high-tech companies, what can cities and regions do to become centers of innovation? At the moment, some places are clearly in the lead.

By my analysis of data from the U.S. Patent Office, Santa Clara County, California, is sprinting ahead of the country. Between 2000 and 2015, more than 140,000 patents were granted in Santa Clara County. That’s triple the number for second-ranked San Diego County.

Four other counties in California – Los Angeles, San Mateo, Alameda and Orange – make the top 10. Washington’s King County, Massachusetts’s Middlesex County, Michigan’s Oakland County and Arizona’s Maricopa County round out the list.

These counties are in large metropolitan areas that are known as technology and innovation centers, including San Francisco, San Diego, Boston and Seattle. The other metro areas in the top 10, not the usual tech-hub suspects, are Greater Los Angeles, Detroit and Phoenix.

Higher education

Besides large concentrated populations, these metro areas share two other ingredients that support innovation. All of them have one or more leading research universities and a large proportion of college-educated people.

Santa Clara County is home to Stanford University, an institution that has become synonymous with the high-tech and innovation economy of Silicon Valley.

Stanford’s rise as a world-class research university coincided with a rapid increase in federal and military spending during the Cold War. The university’s suburban location gave it an advantage,…
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Phil's Favorites

No Free Lunch, Part 2

 

Picture via Pixabay

No Free Lunch, Part 2

Courtesy of John Mauldin, Thoughts from the Frontline 

Matching the stock market’s long-term average returns sounds like it should be easy, if you’re patient enough. But in fact it is remarkably difficult. In last week’s letter, Ed Easterling and I showed you why it is a longshot bet in almost every market environment. Returns over a decade or two are usually well above or well below average. Most of all, it’s fairly predictable which side of average will occur.

This has serious...



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Zero Hedge

San Francisco's 'Super Rich' Dominate A Widening US Wealth Divide

Courtesy of ZeroHedge. View original post here.

San Francisco is one of the few places in America where software engineers who earn hundreds of thousands of dollars a year routinely suffer the indignity of accidentally stepping in a steaming pile of human feces as they exit their crappy, overpriced one-bedroom apartments in the Mission District to grab a $20 burrito and $10 latte. That's part of SF's charm. After all, there's a reason it is, by some measures, the most unaffordable major city in the country.

...



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Chart School

Weekly Market Recap Mar 24, 2019

Courtesy of Blain.

It was looking like another week of Federal Reserve Kool Aid and crushing bears .. until Friday.  On the back of bad economic news out Europe, the yield curve inverted on the 3 month vs 10 year bond – before you fall asleep to that news, it is a quite important indicator for the economy (not necessarily the stock market… yet).   More on that in a bit.  As you can see the action in the bond market Friday was quite severe so it will be interesting to see the move in the coming few days.

As for the Federal Reserve:

The Federal Reserve signaled no more increase in interest rates this year and just one in 2020, according to its new ‘dot plot,’ and the bank said it would...



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ValueWalk

Micron this week was the poster child for this "bull-trap" lunacy

By Jacob Wolinsky. Originally published at ValueWalk.

From Crescat Capital

Thursday had the feel of a blow-off top for the bear market rally. We are near historic valuations for US stocks across at least eight fundamental measures and at a record late stage in the business cycle. Equity markets appear more stretched relative to underlying deteriorating fundamentals than ever.

Micron this week was the poster child for this “bull-trap” lunacy. Investors bid Micron’s stock up 10% on Thursday after the company released earnings. The move sent the semiconductor index to a record high on Thursday. The truth was that Micron gave terrible forward guidance on the conference call forcing analysts to slash estimates for revenues, earnings, and free cash flow for 2019 and 2020.

Friday the market start...



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Kimble Charting Solutions

NYSE Index Suggesting The Top Is In, Says Joe Friday

Courtesy of Chris Kimble.

Is a very broad stock index suggesting that a top is in play? What this index does to close this week should go a long way to answering that question!

This chart looks at the NYSE Index on a weekly basis over the past 4-years. Over the past 15-months, it has created a series of lower highs and lower lows inside of the shaded falling channel. It hit strong support around Christmas at (1) and a counter-trend rally started. The rally now has it testing the top of the falling channel at (2).

Joe Friday Just The Facts Ma’am- The NYSE index could be cre...



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Insider Scoop

10 Biggest Price Target Changes For Friday

Courtesy of Benzinga.

  • Buckingham cut the price target for Trinity Industries Inc (NYSE: TRN) from $32 to $26. Trinity Industries shares closed at $22.96 on Thursday.
  • Canaccord Genuity lowered the price target for Biogen Inc (NASDAQ: BIIB) from $396 to $275. Biogen shares closed at $226.88 on Thursday.
  • H.C. Wainwright cut the price target on Conatus Pharmaceuticals Inc (NASDAQ: CNAT) from $8 to $1.50. Conatus Pharmaceuticals shares closed at $2.91 on Thursday.
  • Wedb...


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Biotech

Marijuana is a lot more than just THC - a pharmacologist looks at the untapped healing compounds

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

 

Marijuana is a lot more than just THC - a pharmacologist looks at the untapped healing compounds

Assorted cannabis bud strains. Roxana Gonzalez/Shutterstock.com

Courtesy of James David Adams, University of Southern California

Medical marijuana is legal in 33 states as of November 2018. Yet the federal government still insists marijuana has no legal u...



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Digital Currencies

Facebook's cryptocurrency: a financial expert breaks it down

 

Facebook's cryptocurrency: a financial expert breaks it down

Grejak/Shutterstock

Courtesy of Alistair Milne, Loughborough University

Facebook is reportedly preparing to launch its own version of Bitcoin, for use in its messaging applications, WhatsApp, Messenger and Instagram. Could this “Facecoin” be the long-awaited breakthrough by a global technology giant into the lucrative market for retail financial services? Or will...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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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 ...



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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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