Posts Tagged ‘hoarding cash’

The Fallacy Of “Record Corporate Cash”

The Fallacy Of "Record Corporate Cash"

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Courtesy of Karl Denninger of The Market Ticker 

How many times have you heard that: "Corporations are flush with cash; they have record amounts of free cash on their balance sheets"?

Dozens, right?

It’s touted as a positive thing.

Baloney.

Corporations hoard cash when they are convinced that things are going to get bad.  No corporation hoards cash if it has somewhere better to deploy it - that is, somewhere it is convinced it can invest and produce a return for the business.

So what does a "record level of cash" tell us about business prospects?  Simple: Business sucks today and forward prospects are deteriorating, not improving.

Simply put, businesses not only fear the need for all that cash, they have no compelling places to invest in the growth of the company’s revenues and profits.  They can’t make the argument for expanding their plant, hiring, an M&A deal or even a stock buyback.  They expect a hard rain or worse, an outbreak of tornadoes, not smooth sailing and fair skies.

Don’t be suckered by the mainstream media. 


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Meltup “Abysmal Volume” Summer Approaches, Even As Americans Now Openly Shun Stocks

Meltup "Abysmal Volume" Summer Approaches, Even As Americans Now Openly Shun Stocks

Courtesy of Tyler Durden

As algos now focus exclusively on gaming the EURJPY and other funding currency pairs, the stock market is completely dead and trades purely as a correlation and hedging pair. With under two hours into the trading day, we are already at 40% below average volume: don’t be surprised to see a 5%, 15% or 50% market up move if we drop to below 50% of cumulative.

In other news, the LA Times reports that Americans, for the most part, have now officially said goodbye to stocks. With a broken market such as what is evident every single day, who can blame them. Bernanke has officially failed to lead the lemmings into a risky asset reflation, as primary dealers, HFT algos and mutual funds will need to take profits occasionally, and every time this happens we will see another, ever flashier crash.

The amount Americans have in basic savings accounts at banks and thrifts rose to a record $5.06 trillion at the end of May, a jump of $209 billion since the start of the year.

But even as bond portfolios now hold a record $2.4 trillion, individuals and institutions still sit with $2.8 trillion in money market mutual funds that pay next to nothing. The average annualized fund yield is a barely detectable 0.04%.

The world’s richest people, too, are hoarding cash. You might imagine that they got wealthy by taking risks, not by playing it safe with their money. But they’re playing it safe now: The annual Boston Consulting Group report on the world’s millionaires, issued this week, estimated that those households (there are 11.2 million of them) overall hold 48% of their financial assets in cash accounts, up from 44% in 2007.

We all know where to affix the blame for this state of affairs. In the wake of the world’s worst financial crisis since the Great Depression, and the devastation it wrought on stocks and real estate values, fear has triumphed over greed. For many investors, capital preservation now trumps all else.

Some large portion of the population that was comfortable in 2007 having, say 60% of their money in stocks, 30% in bonds and 10% in cash now has significantly lowered the amount allocated to stocks. Watching the market drop 50% in six months


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Zero Hedge

"I'll Die For Hong Kong": Students Transform Campuses Into Armories As Protests Rage For 4th Straight Day

Courtesy of ZeroHedge View original post here.

The situation in Hong Kong went from bad to worse on Thursday, as the unprecedented weekday protests - a violation of the tacit agreement between the pro-democracy movement and the business community not to disrupt weekday commerce -continued for a fourth day on Thursday.

After a squad of HK police officers earlier this week raided the campus of the Chinese University of Hong Kong, but purportedly found nothing, protesters accused them of unjustly harassing students, many of whom are simply trying to get through the semes...



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Phil's Favorites

Disney Did In 1 Day What Took HBO 4 Years: 10 Million Streaming Subscribers

Courtesy of ZeroHedge

Somewhere Netflix and Amazon video are sweating.

Disney announced today that Disney+ has reached a stunning 10 million plus subscribers just 24 hours after its launch yesterday in the U.S., Canada, and Netherlands; the figure surprised analysts who had expected a much slower rollout for Disney to reach that level, although let's just ignore that most of the new "subs" are only there thanks to one of the various free streaming offers (perhaps someone should launch WeStream).

Separately, Apptopia reported 3.2 million mobile app downloads in the first 24 hours, with an estimated 89% of mobile downloads in the U.S., 9% in Canada, and 2% in the Netherlands. In just one day, users spent 1.3 million hours watching it, Apptopia said, more th...



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The Technical Traders

Great Cycles Article PG 9 in TradersWorld Mag - Free

Courtesy of Technical Traders

  1. How to Use Price Cycles and Profit as a Swing Trader
  2. Geodetics and the Affairs of Men – USA, and China
  3. Cosmological Economics
  4. Time Machine
  5. Trading Means Pr...


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Digital Currencies

Is Bitcoin a Macro Asset?

 

Is Bitcoin a Macro Asset?

Courtesy of 

As part of Coindesk’s popup podcast series centered around today’s Invest conference, I answered a few questions for Nolan Bauerly about Bitcoin from a wealth management perspective. I decided in December of 2017 that investing directly into crypto currencies was unnecessary and not a good use of a portfolio’s allocation slots. I remain in this posture today but I am openminded about how this may change in the future.

You can listen to this short exchange below:

...



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Kimble Charting Solutions

Silver Testing This Support For The First Time In 8-Years!

Courtesy of Chris Kimble

Its been a good while since Silver bulls could say that it is testing support. Well, this week that can be said! Will this support test hold? Silver Bulls sure hope so!

This chart looks at Silver Futures over the past 10-years. Silver has spent the majority of the past 8-years inside of the pink shaded falling channel, as it has created lower highs and lower lows.

Silver broke above the top of this falling channel around 90-days ago at (1). It quickly rallied over 15%, before creating a large bearish reversal pattern, around 5-weeks after the bre...



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Insider Scoop

Analysts Upbeat On Skyworks' Fundamentals

Courtesy of Benzinga

Skyworks Solutions Inc (NASDAQ: SWKS) reported better-than-expected fiscal fourth-quarter earnings and revenues, but the stock is slipping in reaction to the year-over-year declines in both metrics.

The Analysts

Bank of America analyst Vivek Arya reiterated an Underperform rating and $92 price target for Skyworks shares. (See his track record ...



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Chart School

Gold Gann and Cycle Review

Courtesy of Read the Ticker

Gold has performed well, golden skies are here again. In fact it has been a straight line move, and this is typically unusual and a pause can be expected.

It seems the markets are happy again, new highs in the SP500, US 10 year interest rates look to re bound, negative interest may soften. The US FED has reversed their QT and now doing $250BN (not QE) repo. The main point is the FED has stopped QT, and will do QE forever. The evidence now is the FED put is under market risk and the possibility of excessive losses do not exist. 

Point: If in future if there is market risk, the FED will print it's way out of it.
Subject To: In this blog view. The above is so until the amount required rocks confidence in the US dollar as a reserve currency.&n...



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Lee's Free Thinking

Today's Fed POMO TOMO FOMC Alphabet Soup Unspin

Courtesy of Lee Adler

But make no mistake, if the Fed wants money rates to stay down by another quarter, it will need to imagineer even more money.

That’s on top of the $281 billion it has already imagineered into existence since addressing its “one-off” repo market emergency on September 17. This came via  “Temporary” Repo Man Operations money, and $70.6 billion in Permanent Open Market Operations (POMO) money.

By my calculations that averages out to $7.4 billion per business day. That works out to a monthly pace of $155 billion or so.

If they keep this up, it will be more than enough to absorb every penny of new Treasury supply. That supply had caused the system to run out of money in mid September.  This flood of paper had been inundati...



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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...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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Promotions

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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.

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