Posts Tagged ‘STD’

Monday Morning: Might Moody’s, Merkel & Meltdowns Matter?

[GERPOL]Oh, where to begin this morning?  

We already covered "Big Trouble in Little Tokyo" in our Weekend Reading post so we’ll just say things are still sucking in Japan.  The Nikkei lost 0.6% in this morning’s trading but it was Angela Merkel who lost control of Germany this weekend as nuclear concerns gave a huge victory in a state election to the Green (environmental) party who, along with the Social Democrats (what it sounds like) now control 47.1% of Germany’s coalition-based Government vs just 44.3% held by Merkel’s Christian Democrats and her allies in the Free Democrat party

As a stand-alone, Germany’s GDP is about $3.5Tn, the World’s 4th largest economy, behind Japan’s $5.4Tn (maybe less at the moment) and China’s $5.8Tn and, of course, our $15Tn juggernaut of an economy.  Together with the EU, however, Germany is part of a $16Tn economic union where it is followed by France ($2.5Tn and Sarkozy also took an electoral hit this weekend!), Italy ($2Tn), Spain ($1.4Tn) and then you drop down to The Netherlands at $770Bn.  We know what kind of shape Italy and Spain are in so keep in mind that it’s Germany and France who run the EU – no matter who is "in charge."  

Moody’s put another nail in Spain’s coffin this morning, downgrading 30 Spanish banks by one or more notches.  Interestingly, they left STD and BBVA alone  and I’m liking STD with their 9% dividend as money is likely to be drawn away from the smaller banks and moved to the relative safety of STD.  STD is trading at $11.94 and they can be covered with Sept $11 calls at $1.60 for a net $10.34 entry or paired with the sale of the Sept $11 puts at $1.05 to drop the basis to $9.29.  That gives you a net on the buy/write at $9.29/10.14, which is a 15% discount if put to you at $10.14 or called away with an 18% profit if called away at $11 in 9 months – PLUS the 9% annualized dividend!  

Not surprisingly, Germany and the rest of the EU rushed through the final approval of their now $987Bn bailout fund as that was the number one issue that was crushing Merkel’s party and it’s not entirely sure Germany will have the will, going forward, to commit any more capital.  The agreement requires 80Bn euros…
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Yentervention Wednesday – Kan Baffles Bulls

Kaaaaaaannnnnn! 

As we discussed yesterday, it was meet the new boss, same as the old boss in Japan as Naoto Kan’s re-election sent the Yen to new highs as he was considered the least likely candidate to back intervention.  Well surprise, surprise this morning as Japan officially intervened in the FOREX markets and sent the Yen down a full 2.5% as they used their Yen to purchase an undisclosed basket of currencies.   

Since the Dollar is up today against both the Pound ($1.55) and the Euro ($1.29), we can assume the dollar is one of those currencies and demand for Dollars means upward pressure on rates so that should be the end of the TLT bounce for the moment.  Stock boys want bonds to die so the money can come this way and bond boys want you to fear the stock market so you will let them hold your money (and charge you fees) at ridiculously low rates of interest.  That’s they Yin and Yang of the markets. 

Investors were starting to doubt the government’s commitment to its pledge that it would take bold action,” said Yoshimasa Maruyama, a senior economist at Itochu Corp. in Tokyo. Kan and Noda in recent weeks repeatedly said that Japan was ready to take “bold” measures to stem the currency.  The Japanese government official said European and U.S. officials were informed of the move in an effort to avoid a negative reaction. It took a while to convince Europe because authorities there didn’t like the idea, the person said.

We’ll see if the stronger Dollar today puts pressure on commodities but we’re in pretty good shape as this rally, for a change, has not been led by commodities as the market is now flat to the August despite an 8% drop in oil prices (see USO on chart):

I often complain about rallies that are led by Financials and Commodities as those are things that suck money OUT of the economy and are not long-term drivers of growth.  The entire 2006-7 rally was this kind of rally and I bitched about it all the way up.  We also had housing back then, another type of commodity, but that’s so dead now it’s hardly worth mentioning, is it?  Actually housing is where we used a lot of commodities like lumber and copper etc.  33 months after the onset of the Great Recession, new home sales are still down 70% and non-residential construction is down 36% – that market is dead, dead, dead

We get housing starts next week but who really cares? …
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Love Letters (Weekend Reading on Valentine’s Day)

Happy Valentine's Day!

Last Valentine's Day was as Saturday, following a frightening Friday the 13th, where we had fallen through the 8,000 line on the Dow.  I wrote a very interesting post that morning discussing how I came about my political views, which is good for new Members to check out.   We also flipped short that day on SKF, too early at $130 but that ended well as we kept after them and it was our biggest bet by March 6th, which eventually returned over 1,000%.  We also stopped shorting GOOG at $350 (it did keep going to $300 but the upside was nice too).  I closed the morning post with:

For us, it’s all about the levels as we try to remain unbiased as investors, no matter how voraciously we defend our political views.  Dow 7,800, S&P 820, Nas 1,460, NYSE 5,100, Russell 437 and SOX 203 all better continue to hold today but, even if they do, we’re nowhere near where we want to be and we’re going to take some bearish covers into the weekend – just in case.  So whether you are a witch celebrating the horrors of the 13th or waiting for a rose from your true love the next day, remember to be careful out there – we are certainly still deep, deep in the woods!

That Tuesday (Monday was President's day) we fell 300 points and another 300 points by the end of the week!  That was a fitting way to mark the 80th anniversary of the St. Valentine’s Day Massacre when Al Capone’s "South Side" gang, dressed as cops, rousted a garage run by Bugs Moran’s "North Side" gang and had them stand against the wall and then executed all 7 men.  They shot them 70 times with machine guns and made their escape by using the Capone men dressed as cops to "arrest" the other Capone men and drive them away from the scene in broad daylight.  Now that's what I call a good plan! 

Here's a great chart that summarizes our year to date. Someone else found this, I wish I knew how to use StockCharts this well, they have tons of good things in there:

 

It's a bit worrying that XLU is doing so poorly – so much for diversification keeping you safe…  It's going…
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Phil's Favorites

NY Times: OPERATION INFEKTION

 

This is a three-part Opinion Video Series from NY Times about Russia’s meddling in the United States’ elections as part of its "decades-long campaign to tear the West apart." This is not fake news. Read more about the series here.

OPERATION INFEKTION

RUSSIAN DISINFORMATION: FROM COLD WAR TO KANYE

By Adam B. Ellick and Adam Westbrook

EPISODE 1

MEE...



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Members' Corner

NY Times: OPERATION INFEKTION

 

This is a three-part Opinion Video Series from NY Times about Russia’s meddling in the United States’ elections as part of its "decades-long campaign to tear the West apart." This is not fake news. Read more about the series here.

OPERATION INFEKTION

RUSSIAN DISINFORMATION: FROM COLD WAR TO KANYE

By Adam B. Ellick and Adam Westbrook

EPISODE 1

MEE...



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Zero Hedge

As Of October 2018, The US Is Now Energy Independent

Courtesy of ZeroHedge. View original post here.

While the main event this weekend was the latest OPEC+ meeting which saw member states of the oil cartel and their allies scramble to promise that oil production will be cut if oil prices continue to drop due to excess supply now that Iran's oil exports may rebound thanks to waivers granted to its main trading partners by the Trump administration, a just as important event to take place was the news of record oil production levels in North America.

Helped by higher prices, total oil production has hit a record level in the US, reaching a combined 15.9 million b/d (crude oil and NGLs) in the past month and al...



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Kimble Charting Solutions

Is a 1,000% rally in 5-years enough?

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

This chart looks at the yield of the 2-year note and its 5.5-year performance since 1999. The 2-year yield looks to have double bottomed in 2013 and since then it has been swiftly moving higher inside of rising channel (1). The 2-year yield is currently up over 1,100% since the lows in 2013. This rally has yields testing the top of rising channel (1) and 18-year falling resistance at (2) at the same time.

Is the 2-year yield the only interest rate testing a long-term inflection point?

The 4-pack below looks at patterns of  2, 5, 10 and 30-year yields-

...



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Insider Scoop

Things Are Going From Bad To Worse For GE

Courtesy of Benzinga.

Related GE Putting GE's Horrible 3-Week Run Into Perspective Bulls & Bears Of The Week: Apple, Disney, Ford, Target And More ...

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Chart School

Weekly Market Recap Nov 11, 2018

Courtesy of Blain.

This past week was saw another positive move up by bulls – especially in the Dow and S&P 500; the NASDAQ was not quite as enthusiastic.   Wednesday’s rally was on the legs of an election that was seen as market friendly or at least not as bad as it could have been.   Essentially – paying people a lot of money to get nothing done the next 2 years – woo hoo!

The market is interpreting Wedneday’s result as insuring that “no big things will get done,” in Washington between now and 2020, Craig Birk, chief investment officer at Personal Capital told MarketWatch. “The market appreciates the relative certainty of the slow legislative agenda.” he said.

“As President Trump plans his 2020 reelection campaign, a gridlocked Congress is unlik...



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Digital Currencies

Bitcoin's high energy consumption is a concern - but it may be a price worth paying

 

Bitcoin's high energy consumption is a concern – but it may be a price worth paying

Shutterstock

Courtesy of Steven Huckle, University of Sussex

Bitcoin recently turned ten years old. In that time, it has proved revolutionary because it ignores the need for modern money’s institutions to verify payments. Instead, Bitcoin relies on cryptographic techniques to prove identity and authenticity.

However, the price to pay for all of this innovation is a high carbon footprint, created by Bitc...



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ValueWalk

Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...



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Biotech

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

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

 

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Breast cancer type 1 (BRCA1) is a human tumor suppressor gene, found in all humans. Its protein, also called by the synonym BRCA1, is responsible for repairing DNA. ibreakstock/Shutterstock.com

By Jay Shendure, University of Washington; Greg Findlay, ...



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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



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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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All About Trends

Mid-Day Update

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

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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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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