Posts Tagged ‘cheap money’

Of Bubbles and Busts: Which Way for China?

Jesse, at Le Cafe, reports on the bubble made in China.  (If you missed my interview with Jesse, it’s posted here and here, my space on Seeking Alpha.) – Ilene

Of Bubbles and Busts: Which Way for China?

Courtesy of Jesse’s Café Américain

"Mischief springs from the power which the monied interest derives from a paper currency which they are able to control, and from the multitude of corporations with exclusive privileges…which are employed for their benefit." Andrew Jackson

While the crowd has been chortling over the anticipated decline and fall of the American Empire, they may also be overlooking the dangerously unstable bubble in China, and the implications for that phenomenon when the global economy shifts again.

Shanghai Stock Exchange There has been little doubt in our minds for a long time that China was in an impressive growth cycle that was fueled by overly cheap money and a spectacular equity bubble. This is why we posted that documentary about the Crash of 1929 yesterday, in commemoration of the 80th anniversary of Black Thursday. The collapse of bubbles will not be in the US alone, and the description and atmosphere as described in that film sounds much more like China today than it does the US.

The reasoning behind this is fairly straightforward.

It may be hard to remember from the current lofty heights of the ‘China miracle’ but their economy was a train wreck in the latter part of the 20th century. Prior to 1980 the state owned People’s Bank controlled all the financial resources of the command driven economy. The government created State Chartered Banks (SCB’s) in the 1980′s, but their business activities were still driven by state policy initiatives, and they quickly became burdened by bad debts. A speculative push and some tax breaks for foreign direct investment helped to further distort the economy, which led to a severe domestic slump, with banks burdened by Non-Performing Loans. But it was still a centralized economic regime, with a reminder served by the brutal suppression of the student demonstrations in Tiananmen Square in 1989.

In 1994 China tried to cure the serious problems in their domestic economy by devaluing the yuan from 5 to 8.3 to the US dollar in order to facilitate an export driven recovery. That is a 40% devaluation! All your costs were just marked…
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Kimble Charting Solutions

Is the Nasdaq 100's Out-Performance Nearing a Top?

Courtesy of Chris Kimble

Is the latest ramp higher and Large-cap tech stocks have been the clear market leader, out-performing the broad market for months.

In today’s chart, we look at the Nasdaq 100 to S&P 500 performance ratio in an effort to answer the question: Is the ramp higher in tech stocks and severe out-performance sustainable?

While we may not be able to answer that question today, the ratio IS at an inflection point. And following today’s ratio chart should help us answer that question.

As a reminder, the ratio rises when the Nasdaq 100 is out-performing the S&P 500. Note also that it is a longer-term “monthly” price chart.

Important Br...

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Zero Hedge

Homebuilder Optimism Explodes Higher As Mortgage Rates Plunge To Record Lows

Courtesy of ZeroHedge View original post here.

US Homebuilders’ Confidence index soared higher in July (to 72 from 58 last month), back to March (pre-COVID) levels.

  • Measure of present single family sales rises to 79 vs 63 last month

  • Future single family sales gauge rises to 75 vs 68 last month

  • Prospective buyers traffic measure rises to 58 vs 43 last month

...

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Phil's Favorites

Was that the Top?

 

Was that the Top?

Courtesy of  (originally posted on July 13, 20) 

That was one heck of a reversal today in tech stocks. At one point the Nasdaq-100 was up more than 2%, but it gave up all of those gains and then some, finishing the day down over 2%.

After a 60% move off the March lows, the question on many investor’s minds tonight is, “was that the top?”

This type of reversal is rare and is only seen in volatile markets. It happened at the bottom in March 2020, and before that you’d have to go all the way back to the bottom of March 2009.

It’s happened at the bottom, but it also ha...



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Biotech/COVID-19

How 'good' does a COVID-19 coronavirus vaccine need to be to stop the pandemic? A new study has answers

 

How 'good' does a COVID-19 coronavirus vaccine need to be to stop the pandemic? A new study has answers

The lower the vaccine’s effectiveness, the more likely social distancing in some form may still be necessary. Gopixa via Getty Images

Courtesy of Bruce Y. Lee, City University of New York

The U.S. is pinning its hopes on a COVID-19 coronavirus vaccine, but will a vaccine alone be enough to stop the pandemic and allow life to return to normal?

The answer depends on a how “good” the vaccine ends u...



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ValueWalk

Whitney Tilson Is Bullish On Bank Stocks

By Jacob Wolinsky. Originally published at ValueWalk.

Whitney Tilson’s email to investors disucssing him being bullish on bank stocks; the bear case; Doug Kass with the bull case.

Q2 2020 hedge fund letters, conferences and more

Earnings Season For The Big Banks

1) It's earnings season for the big banks this week.

Citigroup (C), JPMorgan Chase (JPM), and Wells Fargo (WFC) reported this morning... Goldman Sachs (GS) is up tomorrow... and Bank of America (BAC) and Morgan Stanley (MS) round things out on Thursday.

The sector has been decimated this year. The Invesco KBW Bank Fund (KBWB) is down 35% year to date, vast...



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Digital Currencies

Bill Gates, Elon Musk, Jeff Bezos, Bloomberg, Kanye, Apple Twitter Accounts All Hacked In "Nigerian" Bitcoin Scam, Over $100,000 Stolen In Minutes

Courtesy of ZeroHedge

The twitter accounts of two of the world's richest men, Bill Gates and Elon Musk (and perhaps others) were hacked late on Wednesday, in what appears to be a version of a "Nigerian" bitcoin scam.

At 440pm ET, Musk tweeted the following:

Microsoft founder Bill Gates had a similar tweet.

As did Jeff Bezos:

...



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The Technical Traders

Second Phase Real Estate Collapse Pending

Courtesy of Technical Traders

Real estate, especially commercial real estate, is likely to be the first segment of the real estate market to enter the second phase of an extended collapse.  The COVID-19 virus has created an atmosphere where continuing operations for retail, restaurants, and many other business segments is virtually impossible to maintain.  Without the ability to earn sufficient income, thousands of restaurants and other retail businesses have already closed or are in the process of closing.  This has pushed the commercial real estate market into turmoil.  We believe the residential real estate market will follow the commercial market because consumers are going to suffer as commercial real estate collapses....



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Chart School

Dow 2020 Crash Watch - Update

Courtesy of Read the Ticker

Like 1929 the markets have bounced. This time it is on the back of the FED $6.5T money printing.

Previous Post: Dow 2020 Crash Watch 

But can the FED blow $6T every time the market rolls down to test support.

Yes, maybe before the US 2020 elections the FED will do 'what it takes'. But post elections not so much, the year 2021 is a long way from the next election (presidential or congress) and defense of the markets may not be so supportive at $6T or $10T per market smash. The FED may hesitate, and that will be window for stocks to break lower.

The 36 month simple moving a...

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Lee's Free Thinking

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

 

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

Courtesy of  

The COVID 19 pandemic is, predictably, worsening again in much of the US. Only the Northeast, and to a lesser extent some Midwestern states, have been consistently improving. And that trend could also reverse as those states fully reopen.

The problem in the US seems to be widespread public resistance to recommended practices of social distancing and mask wearing. In countries where these practices have been practi...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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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.
...

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Promotions

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

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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