Posts Tagged ‘Public Policy’

Japan’s Demographic Time Bomb Is Imploding

Mark suggests that Japan’s poor demographics are the cause of its "death spiral," whereas Ambrose Evens-Pritchard argues that too much government spending resulting in too much debt is at the heart of the problem. Could it be combination rather than an either-or? – Ilene

Japan’s Demographic Time Bomb Is Imploding

Hinamatsuri (Doll festival)

Courtesy of Mark Sunshine of the Sunshine Report

According to Ambrose Evans-Pritchard Japan is quickly turning into developed world’s sickest economy and could soon tip into an uncontrolled downward spiral. Evans-Pritchard reported last week in the Telegraph that Japan is reaching the point of no return where it won’t be able to meet its obligations and could enter a debt death spiral.

While Evans-Pritchard is one of my favorite writers, at the end of the article he comes to the wrong conclusion about what the West should learn from Japan. Evans-Pritchard suggests that too much government spending resulting in too much debt is the root cause of Japan’s problems and that the West needs to take notice and get government spending under control. While Evans-Pritchard is correct that Japan’s debt habit is unsustainable, the country’s debt problems are the result of its population imploding and the fuse finally burning out on its demographic time bomb. The Land of the Rising Sun is in trouble because it suffers from an insular society that discourages immigration and implicitly encourages low birth rates. For the last 50 Japan has been slowly committing demographic seppuku and now the inevitable is taking place, i.e., Japan’s population is crossed the tipping point so that its work force is both relatively old and shrinking and as a nation Japan can’t sustain its standard of living.

It shouldn’t be a surprise to anyone that Japan is facing deflation, falling domestic demand, stagnant to shrinking GDP and, as of recently, a low national savings rate. They are all the result of Japan’s bad demographics.

Virtually all economics students learn that when the work force of a nation shrinks it is difficult if not impossible to sustain economic growth and a vibrant economy. Also, retirees tend to consume less than families that are raising children and as each generation ages towards retirement it tends to consume less and less causing domestic demand to shrink. Aging populations also have low savings rates because most retirees continue…
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Another Big Win For Energy Economics 101

Another Big Win For Energy Economics 101: Demand Destruction Isn’t Good For New Investment

Courtesy of Mark Sunshine of The Sunshine Report

Oil Refinery Workers Walk Out In Protest Over Foreign Workers

On Monday the Wall Street Journal ran an article that described the end of the golden era for oil refiners. It is a great article that, unfortunately, was published many years too late to be considered news. Just as gravity is a force that brings all objects to earth, public policy that destroys the demand for gasoline will hurt the refinery business. Not surprisingly, President Obama’s public policy initiatives that increase car and truck fuel efficiency have the side effect of hurting oil refinery and distribution businesses.

Just to be clear, I am not against the Administration’s effort to increase fuel efficiency in the vehicle fleet. Quite the contrary, it is a matter of national and economic security that we burn less imported fuel.  Increasing transportation fuel efficiency is a “must” for the United States. However, I don’t think that it is realistic to believe that the energy industry is act like an old trusted dog that knows when it it time to walk into the woods and die. And, it isn’t fair to the refinery and distribution businesses to ask them to effectively subsidize the rest of the economy’s shift to more fuel efficient vehicles and alternate energy without compensation.

The Wall Street Journal reported that over the next few years there is going to be global overcapacity among oil refiners. Not only is demand being reduced for refined products (particularly in the U.S.), but there is a lot of new and efficient capacity that is coming on line in Asia and the Middle East. That isn’t a prescription for a lot of new investment in refinery capacity or for good returns for existing refiners.

I have a couple of news flashes about the future of oil refinery and distribution that I am pretty sure are big news scoops (at least for most major media outlets).

  1. As gasoline demand drops refineries won’t be the only businesses whose investments are underperforming. There is going to be a lot of excess distribution and retailing capacity. So far the Wall Street Journal has only reported on excess refinery capacity. Distribution and retailing are the next segments of the industry that will experience overcapacity and the end of its


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How Much Longer Can This Bear Market Rally Last?

How Much Longer Can This Bear Market Rally Last?

bear marketCourtesy of Kevin Depew at Minyanville

How long, O Lord, how long? It’s always good to remember that the stock market is not the economy. Every day I come into the office to find literally dozens of emails complaining that the market is ignoring the relentlessly bearish news flow. But that doesn’t bother me. What will bother me is when we start getting good news. Markets tend to reach exhaustion on good news, not bad. And these days it’s hard to discern between what’s merely bad and what’s actually disastrous. So, let’s take a look at what the difference between the two really is, and what it means going forward.

A recently released Societe Generale report outlined a "Worst-Case Debt Scenario," one which they believe is a very low probability. Their central scenario assumes a slow global recovery, with private debt being transferred to governments. Fair enough. We’re well on our way there.

Comparing US and Japan, albeit from SocGen’s more sanguine standpoint, there’s some reason to believe the US could feasibly accommodate a Japan-esque 200% of GDP debt burden, which would essentially double 2010′s projected 100% of GDP debt burden. The reason this might not collapse the dollar is because there are no attractive alternatives. Government debt is a global problem, and when you look at the US government debt on a comparative basis, the figures, while high, aren’t extraordinary — at least within that context. More on this momentarily.

As a brief digression, I don’t believe that all government debt is bad by definition. Some are dogmatic on that point. While I do find a framework for understanding economics through the Austrian school, the reality is that no one is going to be able to squeeze pure, free-market toothpaste back into the tube. In fact, Ron Paul’s quixotic quest to end the Federal Reserve could actually succeed… only I can promise you it would soon be replaced by a similar central bank mechanism with a different name, slightly altered agenda, and new cast members. In other words, more of the same; let’s be realistic.

Also, remember that governments worldwide have a long history of supporting failed industries only to turn around and re-privatize them at a later date. It’s the government version of the private-equity game (buy ‘em, repackage ‘em, sell…
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Banks Don’t Intentionally Overcharge Credit Card Customers…Or Do They?

This is not sun-shiny news, but a few words of caution about your bank statement from Mr. Sunshine. - Ilene

Banks Don’t Intentionally Overcharge Credit Card Customers…Or Do They?

sunshineCourtesy of Mark Sunshine of The Sunshine Report

Have you ever tried to recalculate the finance charges on your credit card bill? I am betting that few American’s know if their bank is overcharging them or not. 

I have to confess, for the last 28 years I was one of the people who trusted my bank and didn’t bother to check the interest calculation. After all, in 1966 when I opened my first bank account my mother told me that I could trust my bank and that they would never try to rip me off. 

But, this month my wife (she is a lot more attentive to details than me) appeared at the door of my home office (where I was busy watching a football game) and demanded that I recalculate the interest on one of our credit card bills.  Of course I didn’t want to do it. However, after a lot of spousal pushing (and during half time) I did what I was told. And, guess what? My wife was onto something. When I looked at the bill I was able to quickly confirm that we had been overcharged. The amount wasn’t much, $4.57, but then again, since we had a $0.00 balance subject to finance charges, $4.57 seemed like a lot. 

On Monday my wife called our bank and they immediately admitted their error and reversed the charge. But, the overcharge on one credit card bill made me wonder; could we be getting overcharged on all our credit cards and how would we know? 

So, I got the other credit card bills from my wife (she takes care of all of the finances in our family and pretty much everything else that is important). I discovered that despite paying the entire balance each month on our other cards we still were incurring finance charges. So, I read the rules on the back of the credit card bill. While I am a trained attorney, I haven’t practiced law in a while and am rusty in the arcane art of interpreting legal hieroglyphics. It took me a little while to decipher the credit card agreement and after working on it for about an hour I still wasn’t sure what it meant. My wife was much quicker (after all, she
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W, V, U, L or Z: What Direction Is The Economy Going?

Mark Sunshine discusses the possible shape of the eventual economic recovery – pick a letter, any letter.  Welcome Mark!

W, V, U, L or Z: What Direction Is The Economy Going?

Economic Nostradamus, predictions on economyCourtesy of Mark Sunshine at The Sunshine Report

Almost every day I am asked about the economic recovery and whether or not it is sustainable.

People ask because there is a constant barrage of economic predictions by economists that pretend that they know what will happen in the future even thought they still can’t figure out what happened in the past. Listening to economists and TV talking heads it’s clear that while everyone has an opinion, no one really knows if the recovery will take the form of a “W”, “V”, “U”, “V” or “Z” (I am not really sure what a “Z” recovery is but some really confusing economists are predicting it).

This time around almost all of the TV pundits are going be able to claim that they are the economic Nostradamus of our time because sooner or later graphs of economic growth are going to have the profile of most, if not all, of the letters of the alphabet. For the foreseeable future, economic growth is going to be volatile and somewhat random and almost every prediction will be right.

Rorschach test There is going to be a level of randomness to the growth trajectory of the economy as it inevitably grows, then grows at a slower pace, then grows at a faster pace, then shrinks a little, and then grows again. Unfortunately, given the seriousness of the economy’s problems, I think it will be a while before the U.S. is back on a sustainable high growth trajectory that is sustainable (thereby making the L crowd right as well).

So, like a Rorschach Test, for the next few years there will be something for everyone in the economic statistics.

The U.S. economy is starting to bounce back because of the positive cumulative effects of (i) an inventory rebuilding cycle (i.e., production of new inventory is rising because inventory stocks in many industries are depleted and need to be replenished), (ii) a lot of fiscal and monetary stimuli and (iii) productivity growth (one tiny, positive side effect of layoffs). The bounce from inventory restocking will be temporary and, as a result, if all other things remain constant, growth will taper off to a much slower pace late in the 4th quarter
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Phil's Favorites

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...



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Zero Hedge

'Islamist Attack Plot' Foiled By German Police; 11 Arrested For Planning "To Kill As Many Infidels As Possible"

Courtesy of ZeroHedge. View original post here.

German police arrested 11 people on Friday during a series of raids on a terror cell planning an "Islamist terrorist attack" using guns and a vehicle, prosecutors said. 

The goal, according to police, was to "kill as many "infidels" as possible."

According to thelocal.de, t...



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ValueWalk

Tax Receipts Decline As Budget Deficit Reaches Record

By Gary St. Fleur. Originally published at ValueWalk.

The U.S budget deficit has widened as the corporate and individual tax receipts and other revenue declines in the face of federal spending reaching new heights.

geralt / Pixabay

Last year’s fiscal gap for February was $215.2 billion. It has now grown to $234 billion. This is larger than the last budget deficit record set in 2012. This increase is due to declines in tax receipts for October-February. The period saw a decline of 1 percent (1.3 trillion ) from the prior year while growth in federal spending rose upwards of 9 percent to 1.8 t...



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Chart School

Palladium Action Review

Courtesy of Read the Ticker.

Palladium is near its peak, or at least a consolidation. Russia and South Africa are the producers of palladium, and it looks like Putin has been able to play US Futures market for a lot of Russia gain! Which metal is next?


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Fundamentals are important, and so is market timing, here at readtheticker.com we believe a combination of ...

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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:

 

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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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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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