Posts Tagged ‘asset classes’

John Williams Discusses The Reasons For The Upcoming Dollar Dump

Courtesy of Tyler Durden

Lately, anywhere we look, there seems to be a pattern emerging: those economic thinkers who actually construct and run their own macro models (not the glorified powerpoint presenter variety) and actually do independent analysis and tracing of the money flow, instead of relying on Wall Street forecasts that have as much credibility as a Moody’s home price hockey stick from 2006, almost inevitably end up having a very dire outlook on the economy. One such person is and has pretty much always been Shadowstats‘ John Williams, whose "shadow" economic recreation puts the BLS data fudging dilettantes to shame. That said any reader of Zero Hedge who has been with us for more than a few weeks, knows all too well our eagerness to ridicule the increasingly more incoherent lies coming out of the US department of truth, so no surprise there. Yet another aspect over which there is much agreement is that no matter how one slices the data, the outcome for the US currency is a very grim one. Which is why Williams over the past several years has become a major fan of the shiny metal. Below we recreate portions of his latest observations on the upcoming currency collapse, courtesy of King World News.

John Williams today was dispatching information regarding gold, silver, M3, nearby massive selling of dollars and inflation.  Here is a portion from his commentary, “Despite November 9th’s historic high gold price of $1,421.00 per troy ounce (London afternoon fix) and the multi-decade high silver price of $30.50 per troy ounce (London fix) on December 7th, gold and silver prices have yet to approach their historic high levels, adjusted for inflation.”

Real Money Supply M3:  The signal of the still unfolding double-dip recession, based on annual contraction in the real (inflation-adjusted) broad money supply (M3), continues and is graphed (above).  Based on today’s CPI-U report and the latest estimate on the November SGS-Ongoing M3 Estimate, that annual contraction in November 2010 was 4.0%, narrower than October’s 4.5% contraction, and May’s post-World War II record annual decline of 7.9%.

Incidentally, if there is one thing we disagree with John on is that the broadest aggregate (M3 for Williams, Shadow Banking for Zero Hedge) is declining. That said, an expansion in the most critical broad money signal is merely the missing piece of the puzzle that we…
continue reading


Tags: , , , , , ,




Gross isn’t buying corporates, high yield or equities even with zero rates

Gross isn’t buying corporates, high yield or equities even with zero rates

Courtesy of Edward Harrison at Credit Writedowns

I pick up Bill Gross where I left him on Friday.  He said in his monthly newsletter that the Fed is going to keep interest rates at zero percent through 2010. But, he is not willing to stick his neck out in a liquidity seeking return kind of way even though this is what reflation is all about. He advises lower risk assets over higher risk ones cognizant that this could mean under-performance.

What I found interesting is that Gross highlighted only two bits in his piece. That should lead you to believe these are the most important points he makes.  The first bit is the rationale behind why he thinks the Fed is on hold through 2010:

The Fed is trying to reflate the U.S. economy. The process of reflation involves lowering short-term rates to such a painful level that investors are forced or enticed to term out their short-term cash into higher-risk bonds or stocks. Once your cash has recapitalized and revitalized corporate America and homeowners, well, then the Fed will start to be concerned about inflation – not until.

This is what’s called an asset-based recovery and is exactly the same model we followed in 1992 and 2002. the Federal reserve lowers rates so much that the cash in your pocket burns a hole in it. Grandma may be stuffing her dollars in a mattress, but investors judged against an investment benchmark get fired if they don’t seek returns.  How did Chuck Prince put it: When the music’s playing…

If you are an insurance company, you have a ton of money invested expecting 6-7% nominal returns.  But, in a deflationary environment you have to be smoking something if you think you’ll get that return in low risk assets. So everyone is running the liquidity-seeking-return play. 

The Wall Street Journal mentioned this today:

Though insurers continue to buy bonds, the rally does "make it challenging in terms of getting yield," Steven Kandarian, chief investment officer at MetLife Inc., told analysts in an Oct. 30 earnings call.

Life insurers have long been one of the nation’s biggest bond buyers, currently holding about $1.78 trillion in corporate debt, or 16% of the total outstanding, according to industry


continue reading


Tags: , ,




Of Oil and Equities

Of Oil and Equities

Oil (as represented by USO) and Stocks (as represented by SPY) Year-To-Date 2009

I had an interesting conversation with a colleague this morning on the counterintuitive concept of higher energy prices being “good” for equities.

For most of my career, the oft-repeated maxim was that higher energy prices were, on balance, a negative for the S&P 500.  Essentially, higher energy prices translate into lower margins for companies that have to pay shipping costs and utility bills.  The fact that consumers would have higher gasoline and heating/ ac costs was also looked at as a drag on profits as people had less money to spend.

So what’s changed?

First, the makeup of the S&P 500 has shifted to accomodate the fact that energy stocks have much greater market capitalization, hence a larger weighting n general.

Another factor worth noting is that in a DEflationary environment like the one we’ve been in all year, higher oil prices tend to be looked at as signs of economic strengthening, hence the correlation with strengthening stock prices.  During INflationary environments, however, the old rule of thumb that oil is not great for stocks may in fact have more truth to it. 

One other thing to consider is that global trade, the burgeoning economies of the BRIC nations and the more widespread belief in Peak Oil Theory are currently playing havoc with all of the old and trustworthy relationships between asset classes.  This is playing out as we speak, and as a result, to the old-timers, what they’re seeing on their screens looks ludicrous – even impossible.

With all of these corollaries in flux, I am reminded of something that Socrates said (as recorded by Plato), “The only thing I am certain about is that I can be certain of nothing.”

 


Tags: , , , , ,




 
 
 

ValueWalk

Senate approves $1.9T bill, but changes coronavirus stimulus checks eligibility

By Aman Jain. Originally published at ValueWalk.

Democrats moved one step closer on Saturday to pass the next coronavirus relief package. On Saturday, the Senate approved the massive stimulus package, but with several amendments. One of the amendments was related to the eligibility for the $1,400 coronavirus stimulus checks.

Q4 2020 hedge fund letters, conferences and more

Senate makes three crucial changes to relief package

On Saturday, the Senate made several changes to the relief package legislation. There were, however, three notable c...



more from ValueWalk

Zero Hedge

CDC Says "Fully Vaccinated" People Can Stop Wearing Masks, Distancing In Private

Courtesy of ZeroHedge View original post here.

Update (1100ET): As federal health officials including Dr. Fauci chide states for easing COVID restrictions, the CDC has just released new guidelines proclaiming that fully vaccinated people can spend time together indoors without masks or social-distancing.

The CDC's highly anticipated report cites early evidence suggesting vaccinated people are less likely to have asymptomatic infections, and are less likely to transmit the virus to other people.

For the record, according to the CDC ...



more from Tyler

Kimble Charting Solutions

China Creates Back To Back Bearish Patterns At 6-Year Resistance!

Courtesy of Chris Kimble

Could China be sending an important message to stocks around the world? Very possible!

This chart looks at the Shangai Index on a monthly basis since the early 2000s.

The index has peaked twice in the past 6-yeas at its 50% Fibonacci retracement level. These peaks took place in 2015 and 2017 and were followed by declines of at least 25%.

The past two months it has tested this 6-year resistance line/50% Fibonacci level, where it created back-to-back monthly bearish reversal patterns.

If the index closes much below risi...



more from Kimble C.S.

Phil's Favorites

How the world ran out of semiconductors

 

How the world ran out of semiconductors

Courtesy of Hamza Mudassir, Cambridge Judge Business School

There’s a global shortage in semiconductors, and it’s becoming increasingly serious. The US is currently reviewing of its supply of the technology, following a landmark executive order from President Joe Biden.

The president also pledged US$37 billion (£26 billion) to cover the short-term costs of rebuilding and securing America’s supply of ...



more from Ilene

Chart School

Who is King? The Bond Market or the FED

Courtesy of Read the Ticker

The King Arthur story is battle between a false KING and the true KING. Generally the movie involves surprises, love and violence, and all this coming to the risk on markets very soon. 

The financial blog space expects the FED to do some sort of Yield Curve Control (YCC) to hold interest rates down while inflation moves higher, this is allowing inflation to run hot. The FED wishes to do this over time to deflate the debt away. Very similar to the 1940's post WW2, yields were pegged to 2% and risk on assets went sky high.

However Peter Boockvar suggest the FED may soon learn it is not in control and the true king of the markets is the BOND MARKET. Peter says simply the bond market is telling the FED to bite me!

The FED is not us...

more from Chart School

Biotech/COVID-19

88% Of COVID Deaths Occurred In Countries Where Over Half Of Population Overweight

Courtesy of ZeroHedge View original post here.

A new report by the World Obesity Federation found that 88% of deaths in the first year of the pandemic occurred in countries where over half of the population is classified as overweight - which is defined as having a body mass index (BMI) above 25. Of note, BMI values above 30 - considered obese - are associated with 'particularly severe outcomes,' accor...



more from Biotech/COVID-19

Politics

Why repressive Saudi Arabia remains a US ally

 

Why repressive Saudi Arabia remains a US ally

A demonstrator dressed as Saudi Arabian Crown Prince Mohammed bin Salman with blood on his hands protests outside the Saudi Embassy in Washington, D.C., on Oct. 8, 2018. Jim Watson/AFP via Getty Images

Courtesy of Jeffrey Fields, USC Dornsife College of Letters, Arts and Sciences

Saudi Crown Prince Mohammad bin Salman “approved an operation … to capture or kill Saudi journalist Jamal Khashoggi,” according to a...



more from Politics

Mapping The Market

Which Governments Ordered Johnson & Johnson's Vaccine?

 

Which Governments Ordered Johnson & Johnson's Vaccine?

Courtesy of Niall McCarthy, Statista

On Wednesday, U.S. regulators announced that Johnson & Johnson's Covid-19 vaccine being developed by its subsidiary Janssen Pharmaceuticals in Belgium is effective at preventing moderate to severe cases of the disease. The jab has been deemed safe with 66 percent efficacy and the FDA is likely to approve it for use in the U.S. within days.

The Ad26.COV2.S vaccine can be stored for up to three months in a refrigerator and requires a single shot, ...



more from M.T.M.

Digital Currencies

Crypto - It Is Different This Time

 

Crypto – It Is Different This Time

Courtesy of Howard Lindzon

?I have been astonished as you know by the growth of crypto.

I remember back in 2017 when I noticed that Stocktwits message volume on Bitcoin ($BTC.X) surpassed that of $SPY. I knew Bitcoin was here to stay and Bitcoin went on to $19,000 before heading into its bear market.

Today Bitcoin is near $50,000.

Back in November of 2020, something new started to happen on Stocktwits with respect to crypto.

After the close on Friday until the open of the futures on Sunday, all Stocktwits trending tickers turned crypto. The weekend messages on Stocktwits have increased 400 percent.

That has continued each weekend...



more from Bitcoin

The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



more from Tech. Traders

Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



more from Lee

Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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

Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

...

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. Contact Ilene to learn about our affiliate and content sharing programs.