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HAL | Incoming Ecuador President Moreno names finance oil ministers | QUITO Reuters Ecuador s leftist president elect Lenin Moreno on Tuesday said he would name Carlos de la Torre as his finance minister and Carlos Perez as oil minister De la Torre is an economics professor and works as a consultant Perez was for 13 years Ecuador country manager for U S oil services company Halliburton HAL N
Moreno will begin his presidency formally Wednesday |
HAL | Halliburton HAL Q4 Earnings And Revenue Beat Estimates | Earnings Miss World s No 2 oilfield services company Halliburton Company NYSE HAL reported fourth quarter adjusted income per share from continuing operation of 41 cents higher than the Zacks Consensus Estimate of 37 cents Estimate Revision Trend Surprise History Investors should note that the Zacks Consensus Estimate for the quarter has been unchanged in the last 30 daysNonetheless Halliburton have an impressive earnings surprise history Before posting the earnings beat in Q4 the company beat matched estimates in three of the prior four quarters as shown in the chart below Halliburton Company Price and EPS Surprise Overall the company has a positive earnings surprise of 3 89 in the trailing four quarters Revenues Halliburton posted revenues of 5 9 billion which were approximately flat with the year ago quarter and scraped past the Zacks Consensus Estimate by a marginal 1 Key Stats Operating income from the Completion Production segment was 496 million lower than the year ago level of 554 million Our current consensus estimates called for a lower operating income of 466 million Halliburton s Drilling Evaluation unit profit deteriorated from 293 million in the fourth quarter of 2017 to 185 million this year The number was also below the Zacks Consensus Estimate of 220 million Zacks Rank Currently Halliburton carries a Zacks Rank 4 Sell which is subject to change following the earnings announcement You can see Check back later for our full write up on this Halliburton earnings report later Looking for Stocks with Skyrocketing Upside Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look |
C | U S futures decline ahead of Bernanke speech Dow Jones down 0 32 | Investing com U S stock futures pointed to a lower open on Thursday as investors remained cautious ahead of a highly anticipated speech by Federal Reserve Chairman Ben Bernanke on Friday Ahead of the open the Dow Jones Industrial Average futures pointed to a 0 32 loss S P 500 futures signaled a 0 40 fall while the Nasdaq 100 futures indicated a 0 42 decline Investors remained cautious ahead of Bernanke s speech amid ongoing speculation over how close the Fed may be to implementing more economic stimulus measures Revised data on Wednesday showed that the U S economy expanded by 1 7 in the second quarter up from the initial estimate of 1 5 and in line with expectations on the back of higher consumer spending A separate report showed that U S pending home sales rose to the highest level since April 2010 in July increasing by 2 4 after declining 1 4 the previous month Tech stocks were expected to be active after Samsung Electronics became the first handset maker to announce a smartphone using Microsoft s latest mobile software making a surprise announcement only days before the launch of Nokia s own version Shares in rival U S company Apple dropped 0 50 in pre market trade The pharmaceutical industry was also likely to be in focus as Genmab agreed a deal estimated at more than USD1 1 billion with a unit of Johnson Johnson for the rights to a cancer agent giving the U S company a 10 7 stake in the Danish biotech group Elsewhere in corporate news U S lender Citigroup reportedly agreed to pay USD590 million to pay a shareholder lawsuit accusing it of hiding tens of billions of dollars of toxic mortgage assets The agreement was said to be one of the largest settlements on record stemming from the global financial crisis and sent shares in Citigroup down 0 70 in early trading Among earnings Internet radio service Pandora Media said late Wednesday that it broke even on an earnings per share basis in the second quarter sending shares surging 12 60 pre market Separately TiVo saw shares gain 5 77 in early trading after the digital video recorder pioneer posted a second quarter loss that was smaller than analysts estimated after signing more new subscribers Across the Atlantic European stock markets were lower The EURO STOXX 50 dropped 0 69 France s CAC 40 declined 0 53 Germany s DAX retreated 0 84 while Britain s FTSE 100 fell 0 20 During the Asian trading session Hong Kong s Hang Seng Index tumbled 1 19 while Japan s Nikkei 225 Index slumped 0 95 Later in the day the U S was to produce official data on personal consumption expenditures and personal spending |
C | 2014 Another Soft Patch Ahead | Businesses are building their inventories of merchandise and new homes That activity boosted real GDP during Q3 and may be doing it again during the current quarter The question is whether some of this restocking is voluntary or involuntary The recent weakness in producer and consumer prices suggests that some of it is attributable to slower than expected sales To move the merchandise producers and distributors are offering discounts November s surge in housing starts may also be outpacing demand as evidenced by weak mortgage applications In other words the rebound in the Citigroup Economic Surprise Index over the past 10 days might not be sustainable into the start of next year I m not turning pessimistic about the outlook for 2014 I am just raising a warning flag given the remarkable increase in inventories recently and weakness in pricing We will be closely monitoring Bloomberg s weekly Consumer Comfort Index in the coming weeks It dropped from late September through early November but seems to be on the rise again I m thinking that Obamacare could weigh on consumer confidence and spending at the start of the new year as more Americans realize that their out of pocket expenses for health care are likely to be higher in 2014 Today s Morning Briefing Build and They Will Come 1 Restocking for the holidays 2 Voluntary or involuntary 3 Another soft patch ahead early next year 4 Watching consumer confidence 5 Auto dealers using incentives to reduce inventories 6 Housing starts strong but lack confirmation in permits and mortgage applications 7 Pricing is weak reflecting discounts and cheap imports 8 Can the Fed boost inflation |
C | Welcome To The Santa Claus Rally | In the wake of Friday s stock market rally it appears that the seasonal Santa Claus rally is well under way Rob Hanna at produced analysis that initiating a long position in the NASDAQ Composite as of Friday s close until December 20 and held for eight days would have been profitable in 24 out of 26 years shows that a long position in the SPX initiated at the close on Friday December 13 and held for 15 days would have been profitable 25 out of 29 years In addition produced analysis showing the typical seasonal pattern for the DJIA and if history is any guide the rally is just starting and should continue until the first week of 2014 In the past the Dow has advanced roughly 2 from now until the first week of January From a technical perspective an upside potential of 2 makes sense The chart below of the SPX shows upside potential of roughly 1850 based on the convergence of the 2 standard deviation upper bound of the weekly Bollinger Band depicted trend line An advance to the 1850 level represents a gain of approximately 2 A pause in early 2014 If equity prices were to rally that much that quickly short term oscillators would move into overbought readings and stock prices would likely pause or correct from those levels Breadth indicators have been showing negative divergences for the last few months and they paint a picture of a rally that is running out of steam One likely scenario is equity prices pause after the seasonally positive Santa Clause rally As an example of the negative divergence shown by the breadth indicators the Net New High New Low NYSE indicator top panel is showing a pattern of lower highs and lower lows while the SPX bottom panel continues to advance to new all time highs For the bullish case to hold I would be more comfortable with this rally if the Net New High New Low indicator were to rise above the resistance zone shown in yellow Similarly there is a negative divergence in the number of stocks above their 50 day moving average This is a sign of deteriorating breadth and fewer and fewer stocks are driving this rally The resistance band shown in yellow will be more challenging for this breadth indicator to overcome as this market advances A similar pattern of deteriorating breadth can be seen in the number of stocks above their 200 day moving averages The message from these different breadth indicators using different methodologies and look back windows tell the same story of declining breadth Equally disturbing for the bulls who hope that a Santa Claus rally can carry on until well into 2014 is the relative performance of the small cap stocks As the chart below of the small cap Russell 2000 Index compared to the large cap S P 500 Index shows small caps have been underperforming even as the market rallied The failure of a high beta sector like small cap stocks to assume market leadership is a knock against the longevity of this bull move The performance of the mid cap stocks is also confirmation of the relative weakness of small caps Shouldn t higher beta stocks like mid and small cap stocks be leading the market upwards if this bull phase is to be sustainable Q4 Earnings Season holds the key I believe that Q4 Earnings Season will hold the key to the near term direction for stock prices in January and February Even Ed Yardeni who had been relatively bullish recently turned more cautious as he worried about the pace of sales momentum emphasis added
Businesses are building their inventories of merchandise and new homes That activity boosted real GDP during Q3 and may be doing it again during the current quarter The question is whether some of this restocking is voluntary or involuntary The recent weakness in producer and consumer prices suggests that some of it is attributable to slower than expected sales To move the merchandise producers and distributors are offering discounts November s surge in housing starts may also be outpacing demand as evidenced by weak mortgage applications In other words the rebound in the Citigroup Economic Surprise Index over the past 10 days might not be sustainable into the start of next year I m not turning pessimistic about the outlook for 2014 I am just raising a warning flag given the remarkable increase in inventories recently and weakness in pricing
I had seen the strength in the Citigroup US Economic Surprise Index as a positive because top line growth was lacking in Q4 Street estimates which left share buybacks and margin expansion doing most of the heavy lifting in Q4 EPS growth see Is a Fed taper bullish or bearish for stocks The indication that we may see a near term upside surprise in revenue growth is especially positive because I had been concerned about the upcoming Q4 Earnings Season that begins in January recently deconstructed Street earnings forecasts and as the chart below shows consensus 4Q EPS growth depended mainly on share buybacks and other which is mainly margin expansion but little or no revenue growth S P 500 Components of Earnings per Share Growth However if the rebound in the Citigroup Economic Surprise Index is illusory as per Yardeni then all bets are off For now my base case scenario calls for a Santa Claus rally into the first few days of the New Year After that we will have to wait for signs of continued growth from Earnings Season to determine market direction I will be closely monitoring the Manufacturing PMI reports from around the world in the first week of January for early indications of economic strength Disclosure Cam Hui is a portfolio manager at Qwest The opinions and any recommendations expressed in the blog are those of the author and do not reflect the opinions and recommendations of Qwest Qwest reviews Mr Hui s blog to ensure it is connected with Mr Hui s obligation to deal fairly honestly and in good faith with the blog s readers None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument Nothing in this blog constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives financial situation or particular needs of any specific recipient Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions Past performance is not indicative of future results Either Qwest or I may hold or control long or short positions in the securities or instruments mentioned |
C | U S Wages And Egyptian President Employment | Note The following blog post originally appeared on February 3 2011 with an additional reference that was referred to in a February 17 2012 post and is part of a continuing year end best of series calling up old posts that some readers may have not seen before I have removed some of the references to then current market movements and otherwise cut the article down to the interesting bits You can read the original post Rising energy prices if they rise for demand related reasons needn t be a major concern Such a price rise acts as one of the automatic stabilizers and while it pushes up consumer prices it also acts to slow the economy This helps reduce the need for the monetary authority to meddle not that anything has stopped them any time recently It doesn t need to respond to higher demand induced energy prices because those higher prices are serving the usual rationing function of higher prices vis a vis scarce resources But when energy prices or to a lesser extent food prices rise because of supply side constraints say reduced traffic through the Suez Canal or fewer oil workers manning the pumps in a major oil exporting region then that s extremely difficult for the central bank to deal with More costly energy will slow the economy inordinately and higher prices also translate into higher inflation readings so that if the central bank responds to the economic slowdown they risk adding to the inflationary pressures One of the ways that we can restrain ourselves from getting too excited too soon about the upturn in employment is to reflect on the fact that surveys still indicate considerable uncertainty and pessimism among the people who are vying for those jobs or clinging to the ones they have hoping they don t have to compete for those scarce openings This is illustrated by the apparent puzzle that Unit Labor Costs reported yesterday remain under serious pressure and Productivity continues to rise at the same time that profit margins are already extremely fat Rising productivity is normal early in an expansion but the bullish economists tell us that the expansion started a year and a half ago We re about halfway through the duration of the average economic expansion if you believe the bulls And fat profit margins are not as normal early in an expansion Now we don t measure Productivity and Unit Labor Costs very well at all Former Fed Chairman Greenspan used to say that we need 5 years of data before we can spot a change in trend and he may be low But it seems plausible that there remains downward pressure on wages Call it the industrial reserve army of the unemployed effect While job prospects are improving they are apparently not improving enough yet for employed people to start pressing their corporate overlords to spread more of the profits around to the proletariat Fear not however that this restrains inflation The evidence that wage pressures lead to price pressures and conversely the absence of wage pressures suggest an absence of price pressures is basically non existent Let me present two quick charts that make the point simply No surprise tighter conditions in the labor market tend to be associate with wage inflation The chart above Source for data Bloomberg shows the relationship between the Unemployment Rate and the contemporaneous year on year rise in Average Hourly Earnings I have divided the chart into four phases 1975 1982 a period which runs from roughly the end of wage and price controls in mid 1974 until the abandoning of the monetarist experiment near the end of 1982 a transition period of 1983 1984 the period of 1985 2007 the modern pre crisis experience and a rump period of the crisis until now Several interesting results obtain First of all there should be no surprise that that the supply curve for labor has the shape it does when the pool of available labor is low the price of that labor rises more rapidly when the pool of available labor is high the price of that labor rises more slowly Labor is like any other good or service it gets cheaper if there s more of it for sale What is interesting as well is that abstracting from the transition period the slopes of these two regressions are very similar in each case a 1 decline in the Unemployment Rate increases wage gains by about per annum Including the rump period changes the slope of the relationship slightly but not the sign This may well be another transition period leading to a permanent shift in the tradeoff of Unemployment versus wage inflation But clearly then when Unemployment is high we can safely conclude that since there are no wage pressures there should be no price pressures right The second chart puts paid to that myth It shows the same periods but plots changes in core CPI rather than Hourly Earnings as a function of the Unemployment Rate This is the famous Phillips Curve that postulates an inverse relationship between unemployment and inflation The problem with this elegant and intuitive theory is that the facts inconveniently refuse to provide much support Note the above chart is very similar to one appearing in by economist John Cochrane which appeared in the Fall of 2011 Why does it make sense that wages can be closely related to unemployment but inflation is not Well labor is just one factor of production and retail prices are not typically set on a labor cost plus basis but rather reflect a the cost of labor b the cost of capital c the proportion of labor to capital and importantly d the rate of substitution between labor and capital This last point is crucial and it is important to realize that the rate of labor capital substitution is not constant nor even particularly stable When capital behaves more like a substitute for labor a plant owner can keep customer prices in check and sustain margins at the same time by deepening capital This shows up as increased productivity and causes the relationship between wages and end product prices to decouple Indeed in the second chart above the R2s for both periods is zero This isn t some discovery that no one has stumbled upon before Gregory Hess and Mark Schweitzer at the Cleveland Fed wrote that It turns out that the vast majority of the published evidence suggests that there is little reason to believe that wage inflation causes price inflation In fact it is more often found that price inflation causes wage inflation Our recent research which updates and expands on the current literature also provides little support for the view that wage gains cause inflation Moreover wage inflation does a very poor job of predicting price inflation throughout the 1990s while money growth and productivity growth sometimes do a better job The policy conclusion to be drawn is that wage inflation whether measured using labor compensation wages or unit labor costs growth is not a reliable predictor of inflationary pressures Inflation can strike unexpectedly without any evidence from the labor market The real mystery is why million dollar economists who have access to the exact same data continue to propagate the myth that wage push inflation exists If it does there is no evidence of it |
C | Abundant Energy A Game Changer And Gold Killer | Gold bugs can t wait for the year to be over 2013 was truly horrible for them as the following performance chart shows As of this writing gold via the popular SPDR Gold Trust ETF GLD is down nearly 30 for the year Gold miners are down roughly 55 This bloodbath is a result of a complete and total misread as to the macro level impacts of Federal Reserve policy on inflation Namely we didn t get any actual inflation except in risk assets and the Fed never lost control Whether or not inflation comes later the argument for latent QE effects no longer matters from a portfolio management standpoint When it comes to actual trading and investing theory has to synch up with timing to some reasonable degree If you were so wrong in your timing as to have lost half your money there is no reasonable shape or form in which you can claim to have been right And lest anyone accuse us of hindsight bias note we have been vocally bearish on gold for quite a long time as shown here and here and here Ideology is a terrible basis on which to invest If you choose to put your hard earned capital at risk on dubious theories justified by emotion and political belief rather than a hard nosed commitment to detached objectivity and acceptance of the facts then you deserve exactly what you get Which includes no sympathy because plenty of people lack the funds to invest or trade at all 2013 will be the first year since 2000 that gold finishes in the red That in itself should be a glaring sign the party is over But pigs get fat and hogs get slaughtered as the saying goes and many gold bulls are holding out for yet more upside having given away huge chunks of gain already and countless billions in client dollars Here is fund manager Eric Sprott whose assets under management have shrunk from a 3 billion peak to just 350 million on declines of 50 and worse justifying a viewpoint that is seemingly free of adjustment to facts or data
you got to stick to your beliefs that s the other thing I mean yes I ve taken some big down hits this year But when I think of where we could go from here and I ve done it before I ve done it so many times I can t even tell you I might have been bullish and everyone thought we were in a bear market and it turns out to be a bull market I m going back over 40 to 50 years now So that s a lot of time If you believe you re right and the data says hold your ground you hold your ground Normally there s a pretty big payday at the end Eric Sprott via
Holding one s ground with an overlay of risk management and objective assessment of the facts makes sense to us Losing more than half one s money with a total misread of the macro and a total refusal to adjust to obvious realities does not As we touched on in our secular bullish dollar thesis the impact of QE is grossly misunderstood as it is not true money printing at all A lot of the justification used by stuck gold bugs is little more than What are the arguments for being long gold and gold stocks at present levels Let s consider the big ones Because gold and gold stocks are incredibly beaten down and cheap This is the basic look at the charts argument Anyone who went long commodities in the late 1990s or long beaten down internet stocks after the dotcom bust should understand why this is a flawed rationale At the tail end of the commodity bear market cycle dirt cheap commodities became double dirt cheap and then progressed to insanely cheap Many half dead dot com stocks meanwhile failed to ever come back A big and gruesome downtrend is not automatically a reason to buy You need logical justification as to why your purchase is not dead money or naive investment in a value trap Because the Federal Reserve will lose control and all hell will break loose Really There should be a statute of limitations on this argument because how old is it now The notion that things would spiral out of control actually predates the financial crisis We are told over and over Oh it will happen you just wait But the assumptions behind this prediction have proven so flat out wrong the prediction itself is worthless Most predicting a meltdown or gold meltup or what have you do not actually understand the mechanism of QE Nor do they understand the impacts of balance sheet strengths offsetting weaknesses or the realities of cost push and demand pull inflation Because the dollar is doomed This is just plain stupid See here and here as to why The Best Case Scenario Is there any plausible scenario that will make gold and thus gold stocks attractive again Yes and it looks something like this
As the US economic recovery accelerates cost push inflation picks up Wages start to rise for the first time in years even as corporations start increasing spending to increase age old capital stock Monetary velocity increases as banks willingly lend to businesses on an expansion and capex replacement track Consumer borrowing fueled by optimism and solidified balance sheets picks up again too The Federal Reserve observes all this pick up and holds off on tightening for fear of nipping a young recovery in the bud Inflationary pressures gain to the point of becoming serious Still the Federal Reserve holds off Gold and gold sticks rise in anticipation of inflation getting out of control
You know what though Even the best case scenario for gold and gold stocks is still problematic and fraught with problems If the economy is really improving for example there will be more attractive places to invest and better plays on increased consumer and business spending There will also be a mood of optimism that detracts from gold s inherent value as a crisis play And the cycle of progression from too low inflation what we have right now outside risk assets to benign inflation to frighteningly high inflation is likely to take a long long time to play out we re talking multi year time horizon i e much longer than the magical thinking wake up and suddenly it s inflationary type assumptions current goldbugs desperately cling to And the Worst Case Scenario So the best case scenario for gold and gold stocks really isn t that great Note too that gold and gold stocks won t really benefit from a return of macro economic crisis because gold has proven itself to be a speculative risk on risk off asset just like any other If risk assets across the board get whacked again so too will the yellow metal On a broad level gold and gold stocks are showing their true colors to be somewhat like those of the S P 500 VIX Short Term Futures ETN VXX a freaking horrible asset that is just better left alone in favor of other options in most circumstances The worst case scenario on the other hand is very very ugly It is not at all inconceivable gold prices could fall well back into triple digits below 1 000 per ounce and maybe even as low as 700 per ounce on a mass capitulation undershoot Average production cost for gold miners is probably around a thousand bucks and the more efficient miners are well below that Metals Focus analyst Oliver Heathman The bulk of mines are still profitable on a cash cost basis at 1 000 an ounce but not on a prolonged basis These mines have to keep producing to justify their costs and as the US dollar strengthens and investment rationale softens gold could simply outright collapse If you buy gold here in other words you aren t buying at any kind of valuation floor You are standing on a very thin crust of soil directly over a quicksand pit Drowning in North American oil And then you have the oil factor consider the following
The flood of North American crude oil is set to become a deluge as Mexico dismantles a 75 year old barrier to foreign investment in its oil fields Plagued by almost a decade of slumping output that has degraded Mexico s take from a 100 a barrel oil market President Enrique Pena Nieto is seeking an end to the state monopoly over one of the biggest crude resources in the Western Hemisphere The doubling in Mexican oil output that Citigroup Inc said may result from inviting international explorers to drill would be equivalent to adding another Nigeria to world supply or about 2 5 million barrels a day Mexico s landmark decision to open up its oil industry to foreign companies could be the nail in the coffin for gold bugs What do Mexican oil and gold have to do with each other you ask Mexico s liberalization of its oil sector is part of a wider trend in new sources of oil supply a trend that should put pressure on commodity prices and inflation And there is nothing that gold hates more than low inflation Bloomberg
And this for good measure
The U S is on track to reach records for crude oil production by 2016 as hydraulic fracturing and horizontal drilling techniques continue to unlock oil in shale rock The renaissance in the oil sector feeds into the debate of whether the U S should allow crude oil to be exported freely The U S has kept a lid on oil exports since 1973 when the Organization of the Petroleum Exporting Countries stopped selling crude to the U S in retaliation for its support of Israel in a war with Egypt and Syria The rising U S production will weigh heavily on oil prices said Ed Morse head of commodity research at Citigroup He said he believes that in the second half of the decade the global benchmark price will be 15 a barrel below where it is now WSJ
The Mexican oil rush is already on with private firms banging on the doors Jose Antonio Prado a former Pemex official said of the recent measures The Mexican state will be able to incorporate private participants in projects that are already in force as well as new opportunities I can t tell you the amount of banks and investment funds coming from the U S and Europe that have been talking to us and are trying to have an expectation of what s going to happen with the energy reform All those guys are going to be in Mexico next year in various forms trying to seek new opportunities As for the United States outlook the EIA Energy Information Administration expects the U S to become a net exporter of crude oil by 2018 Even in the Middle East where the geopolitical premium has been constant in recent years Iran is starting to look like a more reliable source of oil Stabilization on the US Iran axis also increases the odds of stable flow from Iraq a major oil source The deal between the U S and Iran regarding its nuclear program could lead to another million barrels of oil a day reaching the market in the medium term Oil is a Form of Goldilocks Stimulus Think of oil as a form of goldilocks stimulus The more oil that comes online the better positioned the US becomes to deliver low inflation economic growth Cheaper oil means lower transport and production costs for US companies Cheaper oil also acts as a stimulant to consumers via lower prices at the pump According to Deutsche Bank a 10 fluctuation in oil prices translates to a 25 cent fluctuation in the retail price of gasoline Each penny of increase or decrease in the price of gasoline equates to 1 4 billion in household energy consumption A drop in oil prices to 90 or better yet to 80 would amount to a massive stimulus package for American consumers Gasoline prices are already below where they were this time of year in 2011 and 2012 What is so interesting about this energy stimulus package is that it should not have an inflationary effect or at best a dampened inflationary effect as increased consumer spending would be offset by declining energy prices In a way this could be as close as the Fed and federal government ever get to a free lunch A stimulus package which doesn t raise inflation prospects or worsen the deficit imagine that The U S strength as an energy producer and as eventual oil exporter should also help push up the dollar putting further pressure on oil and gold prices in a virtuous cycle Abundant energy is a game changer There are many ways in which energy is a game changer The ability of the United States to add energy superpower to its long list of superlatives agricultural superpower technology superpower demographic superpower entrepreneurial innovation superpower etc has a huge amount of embedded economic value In respect to gold specifically the positive outlook for North American energy production increases the odds of a prolonged growth period without debilitating inflation which is a completely HORRIBLE outcome for the pessimism fueled precious metals complex and a gold killer What we are seeing here is essentially a worst nightmare confluence of scenarios for die hard goldbugs like Sprott and co who are waiting for the US system to implode and the economic world to end What all of these pessimists have consistently underestimated or overlooked completely is the net value of American wealth as juxtaposed against American debt and in respect to physical and intellectual assets not to mention agricultural and energy assets the United States is the richest country in the history of the world perhaps by a factor of ten The Federal Reserve may be run by bumblers and Washington populated by fools but the core strength of the US economic position is so strong not even the bumblers and the fools could truly dent it Growing awareness of this reality could be a nail in the coffin for gold with the extremely bullish North American energy outlook not just slamming that coffin shut but dumping it in a six foot hole and backing a dumptruck full of dirt on top If you re long gold or gold stocks out of hope consider your hope lost Disclosure This content is general info only not to be taken as investment advice Click here for |
C | Where Will Global Currency ETFs Go In 2014 | Currency markets saw an eventful 2013 with the dollar spiking emerging markets currencies sliding the yen setting multi year lows every now and then and the Euro gaining and losing strength with every move by the central bank A big reason for this movement in the world currency market was the taper talk in the U S that came into the picture in May and the ilikely mpact of the taper on emerging market capital flows Also huge monetary stimulus in developed markets like Japan and the U K as well as the Eurozone regulated the fate of theer respective currencies Let s see how things are shaping up as we approach the New Year Finally Taper Hits And the Dollar Gains After months of speculation the Fed has finally decided on a modest tapering worth 10 billion per month from January 2014 The Fed chairman Ben Bernanke commented that the bond buying program will be curtailed in phases in 2014 if improvement in the labor market matches their expectations and may finally end by late 2014 read The greenback climbed the day immediately after this announcement on December 18 and is expected to move higher in 2014 again a basket of varied currencies Not only the gradual withdrawal of the Fed s monetary stimulus but also the steady U S economic growth will likely spur the value of the greenback In fact last year the PowerShares US Dollar Bullish Fund UUP moved sideways in a very tight range of 21 32 22 98 per share From a technical viewpoint its short term moving averages have presently outpaced the long term ones Also its relative strength index of 55 99 suggests that the fund is way behind the overbought territory UUP currently holds Zacks Rank 2 Buy Volatile Ride of the Euro Meanwhile Euro stumped investors and analysts by gaining strength against the dollar and reached to its 2 year high as of December 27 primarily after European Central Bank governing council member Jens Weidmann cautioned that keeping interest rates low may endanger political reforms
Eurozone returned to growth in Q2 after a two year acute debt crisis and inflation eventually picked up in the region This has helped drive this single currency to some extent Moreover some experts believe that the strength in euro emanates from some year end factors which include liquidity crunch in the euro zone as European banks are repaying crisis loans to the European Central Bank which in turn raised short term interest rates and the currency As a result CurrencyShares Euro Trust FXE designed to reflect the price of the Euro in USD gained 1 21 over the last one month period as of December 27 However investors should be extra cautious before adding long positions in the Euro as the euro zone recovery is still far from reaching the desired level and the region might need stimulus in the coming days putting a strain on Euro On the contrary USD will likely shoot up with each measured QE withdrawal thus marring the appeal of Euro next year read Notably FXE currently has a Zacks Rank 5 Strong Sell The Surge in the British Pound Will it Continue The British Pound Sterling has been awaiting a turnaround for the past few months and finally seems to have got a boost from stronger economic recovery in the U K which in turn spurred the speculation about the central bank s less accommodative monetary policy ahead of the anticipated timing This has provided some relief to the struggling currency with the CurrencyShares British Pound Sterling Trust ETF FXB designed to track the performance of the British Pound Sterling adding 1 15 over the last one month FXB is currently hovering near its 52 week high price with the pound jumping to the highest level in two years against the dollar Citigroup currently considers Sterling as a global safe haven currency in 2014 Here also we would like to highlight some concerns Of late the BOE has decided not to consider a rate hike until the unemployment rate falls to 7 from its current 7 6 indicating that the time to cheer for the British pound is yet to come In any case FXB has a Zacks Rank 5 Strong Sell Slide in the Yen to Continue The most talked currency fact this year was a depreciating Japanese Yen Thanks to the Bank of Japan BOJ s targeted measure to end a long stretched deflationary rut and trigger growth Yen is now trading at its 5 year low level The Bank of Japan follows a policy to increase the country s monetary base at an annual run of about 60 70 trillion yen This injection of artificial liquidity which will continue until the inflation target reaches 2 devalues the Japanese Yen Consequently CurrencyShares Japanese Yen Trust FXY lost 2 89 over the last one month and 17 in the year FXY currently carries a Zacks Rank 4 Sell In fact FXY hit a fresh 52 week low of 92 88 on December 27 With the Fed taper already decided on and the BOJ s stimulus still in place the Yen will likely lose more strength relative to the greenback in the coming days Emerging Market Currencies the Real Loser The going was extremely tough for emerging market currencies this year with the WisdomTree Emerging Currency Fund CEW shedding 5 45 this year The firmness in dollar and a general risk of trade led to this malaise The crisis became more acute with countries having large current account deficit such as Indonesia and India In fact Indian Rupee was the second worst performing emerging markets currency in 2013 plunging more than 10 against the dollar Though the majority of the emerging markets have already priced in the initial taper shock and are not likely to see much volatility in the initial part of 2014 these currencies should witness a major setback in the latter half of the year as the Fed speeds up the QE pullback Hence its better to stave off emerging markets currency exposure in 2014 read If investors at all seek a touch of EM currency in their 2014 portfolio Chinese Yuan could be an intriguing option for them Market Vectors Chinese Renminbi USD ETN CNY has added 3 1 in YTD frame braving the taper fear while WisdomTree Dreyfus Chinese Yuan fell only 0 43 Yuan became the second most used currency in international trade after the U S dollar leaving behind the Euro and Yen The rising use of the yuan also known as renminbi led to a higher demand for the currency thus pushing up its price Both the above said Yuan products presently carry a Zacks Rank 3 Hold Bottom Line In a nutshell the greenback will rule the year 2014 Apart from the dollar no other currency is promising outright appreciation relative to the USD Only investors having long positions in Chinese Yuan Canadian dollar and Euro can take a wait and see approach |
C | Top Stocks With Big Potential Catch Up Moves | Given the recent run up in the market here s a screen I ve been using recently for my own stock picking First it focuses on the top Zacks Ranked Sectors and Industries Then it focuses on the Zacks Rank 1s 2s and 3s which are Strong Buys Buys and Holds respectively But then it selects the outperforming stocks with the smallest percentage price change over the last 4 weeks Why would I do something like that Here s why You ve probably heard the old adage that roughly half of a stock s price movement can be attributed to the group that it s in And that s true In fact oftentimes even a mediocre stock in a top group will outperform a top stock in a poor group for this very reason Now take a look at any top group You ll see plenty of fantastic stocks with some impressive price gains in there But not every stock in every group moves in lockstep at the exact same time Some will move more than others at any given time So by focusing on the stocks with the smallest percentage price change with fundamentals that are just as good as those making the biggest price change you might find yourself getting into the stocks ready to make the biggest potential catch up move Here s how to set up that screen
Best Zacks Ranked Sectors Best 8
We re screening for only those stocks with the best lowest average Zacks Rank With 16 sectors the best 8 sectors give us the best 50 of sectors
Best Zacks Ranked Industries Best 132
Next step is to get only the best Zacks Ranked Industries coming thru Since there are 264 X or expanded industries we look at the best 132 will give us the best 50 of industries But note that only the industries that also happen to be in the top sectors will get thru If an industry is ranked as one of the best but it s outside of the top sector rank it will not get thru
Zacks Rank less than or equal to 3
Now the screen gets narrowed down even more by looking at only the Zacks Rank 1s 2s and 3s No Sells or Strong Sells Zacks Rank 4s and 5s allowed
Price and Avg Volume greater than or equal to 5 and 100 000 shares
Only stocks over 5 with at least an average of 100 0000 shares traded daily will be considered
Relative Price Change 4 Weeks greater than 0
This means we re screening for only those stocks that have outperformed the market S P 500 over the last 4 weeks
Change in Price 4 Weeks Bottom 50
Then finally we re scanning for the bottom 50 stocks with the lowest percentage price change over the last 4 weeks So while all of these stocks have outperformed the market they increased in price less than their peers
So each one of these stocks is in a top Sector and top Industry within that Sector This alone will tip the odds of success in your favor by a great deal when you consider that the best Zacks Ranked groups outperform the worst ones by a factor of 2 to 1 Then by selecting those stocks with the best Zacks Rank along with the best price performance over the last 4 weeks you now have only a list of winners from which to choose from And from that list of winners we re selecting the ones that have gained less than their peers on that list Remember these stocks aren t dogs or unresponsive stocks Quite the contrary they have all outperformed the market It just so happens that they increased less than the others on the list But because they are a top rated stock in a top rated industry we ve singled these out as the ones that could make the biggest move to catch up to the others It s an interesting screen that has generated a lot of great names Here are 5 from that list ATVI Activision Blizzard CIT Cit Group ISIS Isis Pharmaceuticals KSU Kansas City Southern UGI Ugi Corp All great looking stocks that seem to have lots more upside in store for them Get the rest of the stocks on the list and start putting this and other ideas to the test It can all be done with the Research Wizard stock picking and backtesting software |
BMY | Idera Pharma launches late stage study of IMO 2125 in treatment resistant melanoma | Idera Pharmaceuticals NASDAQ IDRA commences a Phase 3 clinical trial ILLUMINATE 301 evaluating intratumoral IMO 2125 combined with Bristol Myers Squibb s NYSE BMY Yervoy ipilimumab compared to Yervoy alone in melanoma patients who have not responded to anti PD 1 therapy e g BMY s Opdivo nivolumab a Fast Track indication in the U S The co primary endpoints are overall survival up to month 48 and overall response rate up to month 36 The estimated completion date is July 2021 IMO 2125 injected directly into a tumor is an agonist of endosomal toll like receptor TLR 9 a cell surface protein that plays a key role in pathogen recognition and innate immunity Previously Idera Pharma s IMO 2125 Fast Track d for treatment resistant melanoma shares ahead 9 premarket Nov 29 2017 Now read |
BMY | Biohaven Pharma restructures license agreement with Bristol Myers shares down 3 on discounted stock deal | Biohaven Pharmaceutical Holding Company BHVN 2 7 has revamped its license agreement with Bristol Myers Squibb BMY 1 related to migraine candidates rimegepant and BHV 3500 Under the terms of the new arrangement the company paid BMY 50M in consideration of a low single digit reduction in payable royalties for rimegepant and a mid single digit reduction for BHV 3500 The deal also removes BMY s first negotiation rights to regain the intellectual property or enter a license agreement with Biohaven after receiving Phase 3 data on rimegepant and enables Biohaven to out license either candidate to a third party with a CGRP antibody program Biohaven funded the restructuring via a 55M private placement of 2M common shares at 27 50 per share with institutional investors The transaction should close on March 14 BHVN shares are currently exchanging hands at 29 70 Now read |
BMY | Bristol Myers Opdivo extends survival in late stage lung study in Chinese population | Results a Phase 3 clinical trial CheckMate 078 assessing Bristol Myers Squibb s NYSE BMY Opdivo nivolumab compared to the chemo agent docetaxel in a predominantly Chinese population with previously treated advanced non small cell lung cancer NSCLC showed a statistically significant improvement in overall survival OS The data will be presented on Monday April 16 at the American Association for Cancer Research Annual Meeting in Chicago Patients receiving Opdivo experienced a reduction of 32 hazard ratio 0 68 in the relative risk of disease progression or death p 0 0006 The OS benefit was observed regardless of PD L1 expression or tumor histology The secondary endpoints of objective response rate ORR 17 4 vs 4 0 and median duration of response mDOR not reached vs 5 3 months also showed the durability of Opdivo treatment compared to docetaxel The company s marketing application seeking approval for Opdivo in previously treated NSCLC is currently under CFDA review Now read |
BMY | FDA OKs Bristol Myers Opdivo Yervoy for first line kidney cancer | The FDA approves Bristol Myers Squibb s BMY 8 4 combination of Opdivo nivolumab and Yervoy ipilimumab for the first line treatment of patients with intermediate and poor risk advanced renal cell carcinoma RCC The data supporting the indication was generated in the Phase 3 CheckMate 214 study that showed treatment with the combination significantly increased survival compared to Pfizer s PFE 0 6 Sutent sunitinib malate Now read |
JPM | EU plans moving bank regulator from London as euro zone eyes City business | By Francesco Guarascio
BRUSSELS Reuters The EU is preparing to move its European Banking Authority from London following Britain s vote to leave the Union EU officials said on Sunday setting up a race led by Paris and Frankfurt to host the regulator
Coming a day after Britain s Jonathan Hill resigned and was replaced as EU financial services chief by the Commission s Mr Euro Valdis Dombrovskis the move underlines how the City of London can expect to be frozen out of EU financial regulation and possibly from Europe s capital markets depending on the terms of Brexit
While those who argued for Britain to leave the EU said the financial industry would thrive without EU shackles some of its biggest employers including JPMorgan N JPM are scouring Europe to find new locations for their traders bankers and financial licenses
The EBA whose 159 London employees write and coordinate banking rules across the bloc is expected to be relocated soon two EU officials told Reuters
All European Union agencies are based in member states EBA chairman Andrea Enria said before Thursday s referendum that the watchdog founded in 2011 to improve regulation after the global financial crisis would have to move if Britain chose to leave
An EBA spokeswoman said on Sunday that the European Union will have to decide on relocation and in the meantime the agency would continue to operate in London
Other European capitals are keen for a slice of Britain s financial services industry which contributed 190 billion pounds 280 billion to the economy in 2014 roughly 12 percent of economic output Ireland said on Friday it had been in touch with firms considering relocating
The industry employs 2 2 million people in Britain including around 90 percent of U S investment banks European staff and 78 percent of capital markets activity by the other 27 members of the EU taking place in the UK
Paris and Frankfurt are the two largest financial centers on the continent and are therefore seen as the most likely new locations for the EBA
Italy s financial capital Milan could also put itself forward
There are several reasons to believe Milan is the right place Competition from Paris and Frankfurt is tough but they may neutralize each other Italy s former prime minister Enrico Letta told Reuters on Sunday
However he said that any change was unlikely to happen quickly as it could fall under the negotiation of Britain s EU exit
NO SPECIAL TREATMENT
The exit negotiations expected to start once Prime Minister David Cameron has resigned will be crucial for London s position as a leading financial center
The leading Leave campaigner and favorite to become the next prime minister Boris Johnson said Britain would continue to have free trade and access to the single market
But in Brussels officials said it would be important to keep a tough line
The UK cannot expect special treatment for the City of London during the exit negotiations said Sven Giegold a German Green EU lawmaker
Without a foot in the EU and the influence of Hill a close Cameron ally London s finance industry now faces a major disadvantage compared to other financial centers as the 19 state euro zone asserts its quasi monopoly on EU financial business
The departure of Jonathan Hill marks the end of the multi currency union one senior EU official said He was the symbol of the multi currency union and the appointment of Valdis Dombrovskis hands his role to the symbol of the euro
Britain is also at risk of losing its prized EU passport if it fails to secure continued access to the bloc s single market
Many U S and Japanese banks rely on the passport to operate across EU capital markets unhindered while basing most of their staff and operations in London
The City could also lose its position as an important center for clearing financial transactions the process of making sure that they proceed smoothly
The European Central Bank has tried before to strip London of its lead role in this market arguing that clearing houses dealing with euro denominated transactions should be in the euro zone The ECB is likely to take up the issue again now that London is no longer in the EU
Britain also faces being shut out of the EU s most ambitious plan in years to tear down barriers to the movement of capital
The Capital Markets Union CMU seen as highly beneficial to the City of London was launched in September by the European Commission under Hill s oversight aimed at freeing up European capital markets by 2019
Securities transactions are expected to surge in the EU as a result of that new financial infrastructure but London now looks unlikely to reap the benefits of this growing market
However among the promises to maintain a tough line in negotiations there are also concerns that if Britain does not manage an amicable separation from the EU including keeping some of its financial access rights London could set itself up as an offshore rival for EU businesses less tolerant to regulation and tax
That is a scenario that cannot at the moment be ruled out an EU official said |
HAL | Halliburton beats estimates as revenues climb | Investing com NYSE Halliburton Q1 earnings from ongoing ops excluding costs from retiring debt beat estimates The U S oil services company reported diluted EPS on that line of 0 04 vs estimate of 0 03 Revenues in the quarter rose to 4 28 bn from 4 20 bn a year earlier as U S shale activity picked up Halliburton s net loss narrowed to 0 04 per share from 2 81 in the first quarter of 2016 Halliburton shares were up 1 15 at 47 60 in pre market trade |
HAL | VTTI Energy Partners agrees to increased offer to be bought by VTTI B V | VTTI Energy Partners NYSE VTTI 4 3 premarket after agreeing an to increased offer to be acquired by VTTI B V at 19 50 unit for an aggregate value of 481M the revised price is 0 75 higher than the 18 75 offer made on March 2 VTTI says unitholders will continue to receive regular quarterly distributions of 0 336 unit for each completed quarter prior to the closing date which is expected in Q3 Now read |
HAL | Why Halliburton HAL Is Poised To Beat Earnings Estimates Again | If you are looking for a stock that has a solid history of beating earnings estimates and is in a good position to maintain the trend in its next quarterly report you should consider Halliburton NYSE HAL This company which is in the Zacks Oil and Gas Field Services industry shows potential for another earnings beat
This provider of drilling services to oil and gas operators has an established record of topping earnings estimates especially when looking at the previous two reports The company boasts an average surprise for the past two quarters of 0 17
For the most recent quarter Halliburton was expected to post earnings of 0 49 per share but it reported 0 50 per share instead representing a surprise of 2 04 For the previous quarter the consensus estimate was 0 59 per share while it actually produced 0 58 per share a surprise of 1 69
Price and EPS Surprise
For Halliburton estimates have been trending higher thanks in part to this earnings surprise history And when you look at the stock s positive Zacks Earnings ESP Expected Surprise Prediction it s a great indicator of a future earnings beat especially when combined with its solid Zacks Rank
Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank 3 Hold or better produce a positive surprise nearly 70 of the time In other words if you have 10 stocks with this combination the number of stocks that beat the consensus estimate could be as high as seven
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
Halliburton has an Earnings ESP of 2 31 at the moment suggesting that analysts have grown bullish on its near term earnings potential When you combine this positive Earnings ESP with the stock s Zacks Rank 5 Strong Sell it shows that another beat is possibly around the corner The company s next earnings report is expected to be released on January 22 2019
With the Earnings ESP metric it s important to note that a negative value reduces its predictive power however a negative Earnings ESP does not indicate an earnings miss
Many companies end up beating the consensus EPS estimate but that may not be the sole basis for their stocks moving higher On the other hand some stocks may hold their ground even if they end up missing the consensus estimate
Because of this it s really important to check a company s Earnings ESP ahead of its quarterly release to increase the odds of success Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported |
HAL | Earnings Preview Halliburton HAL Q4 Earnings Expected To Decline | Wall Street expects a year over year decline in earnings on lower revenues when Halliburton NYSE HAL reports results for the quarter ended December 2018 While this widely known consensus outlook is important in gauging the company s earnings picture a powerful factor that could impact its near term stock price is how the actual results compare to these estimates
The earnings report which is expected to be released on January 22 2019 might help the stock move higher if these key numbers are better than expectations On the other hand if they miss the stock may move lower
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management s discussion of business conditions on the earnings call it s worth handicapping the probability of a positive EPS surprise
Zacks Consensus Estimate
This provider of drilling services to oil and gas operators is expected to post quarterly earnings of 0 37 per share in its upcoming report which represents a year over year change of 30 2
Revenues are expected to be 5 89 billion down 0 8 from the year ago quarter
Estimate Revisions Trend
The consensus EPS estimate for the quarter has been revised 5 34 lower over the last 30 days to the current level This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period
Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change
Price Consensus and EPS Surprise
Earnings Whisper
Estimate revisions ahead of a company s earnings release offer clues to the business conditions for the period whose results are coming out Our proprietary surprise prediction model the Zacks Earnings ESP Expected Surprise Prediction has this insight at its core
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a version of the Zacks Consensus whose definition is subject to change The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
Thus a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate However the model s predictive power is significant for positive ESP readings only
A positive Earnings ESP is a strong predictor of an earnings beat particularly when combined with a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold Our research shows that stocks with this combination produce a positive surprise nearly 70 of the time and a solid Zacks Rank actually increases the predictive power of Earnings ESP
Please note that a negative Earnings ESP reading is not indicative of an earnings miss Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and or Zacks Rank of 4 Sell or 5 Strong Sell
How Have the Numbers Shaped Up for Halliburton
For Halliburton the Most Accurate Estimate is higher than the Zacks Consensus Estimate suggesting that analysts have recently become bullish on the company s earnings prospects This has resulted in an Earnings ESP of 2 28
On the other hand the stock currently carries a Zacks Rank of 5
So this combination makes it difficult to conclusively predict that Halliburton will beat the consensus EPS estimate
Does Earnings Surprise History Hold Any Clue
Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings So it s worth taking a look at the surprise history for gauging its influence on the upcoming number
For the last reported quarter it was expected that Halliburton would post earnings of 0 49 per share when it actually produced earnings of 0 50 delivering a surprise of 2 04
Over the last four quarters the company has beaten consensus EPS estimates two times
Bottom Line
An earnings beat or miss may not be the sole basis for a stock moving higher or lower Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors Similarly unforeseen catalysts help a number of stocks gain despite an earnings miss
That said betting on stocks that are expected to beat earnings expectations does increase the odds of success This is why it s worth checking a company s Earnings ESP and Zacks Rank ahead of its quarterly release Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported
Halliburton doesn t appear a compelling earnings beat candidate However investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release |
C | U S stocks higher amid central bank speculation Dow Jones up 0 05 | Investing com U S stocks opened higher on Wednesday following the release of disappointing U S economic data as global growth concerns added to hopes for fresh easing measures by world central banks During early U S trade the Dow Jones Industrial Average eased up 0 05 the S P 500 index added 0 18 while the Nasdaq Composite index rose 0 29 Data showed earlier that the New York Federal Reserve s index of manufacturing conditions deteriorated significantly more than expected in August slipping below zero for the first time since October 2011 The Federal Reserve Bank of New York said that its general business conditions index fell by 13 2 points to minus 5 8 in August from a reading of 7 4 in July Separately official data showed that consumer prices were unchanged in July for the second consecutive month compared to expectations for a 0 2 rise while core consumer prices which exclude food and energy prices rose 0 1 less than the expected 0 2 increase Data earlier in the week showing that economic growth in Japan and the euro zone contracted in the second quarter kept alive hopes that world central banks will implement more easing measures to spur the global economic recovery Philip Morris was among a number of tobacco companies in focus on Wednesday with shares dropping 0 23 after Australia set a global precedent for tobacco control earlier in the day when its High Court rejected the tobacco industry s argument that the Federal Government s plain packaging laws are unconstitutional Among earnings Staples dove 15 27 after the office supply retailer missed quarterly results and cut its outlook for the year Agricultural equipment maker Deere also tumbled 6 65 after the company missed earnings expectations hurt by weak sales in China India and other emerging markets On the upside Abercrombie Fitch surged 9 84 after the teen retailer posted earnings that topped the tepid guidance it provided two weeks ago but the company warned that sales would be tepid throughout the back to school and holiday seasons Elsewhere in retail stocks Target jumped 1 77 after posting flat earnings However the company boosted its full year forecast thanks to more customers shopping at its expanded food sections In the financial sector stocks were broadly higher led by bank of America up 0 51 and closely followed by Goldman Sachs whose shares climbed 0 50 while Citigroup and JP Morgan added 0 21 and 0 27 respectively Reuters reported earlier that Goldman Sachs CEO Lloyd Blankfein and other bank officials won the dismissal of a shareholder lawsuit accusing them of tolerating poor mortgage practices and quitting a federal bailout program early to boost executive pay Across the Atlantic European stock markets were mixed The EURO STOXX 50 dipped 0 01 France s CAC 40 added 0 10 Germany s DAX fell 0 34 while Britain s FTSE 100 dropped 0 35 During the Asian trading session Hong Kong s Hang Seng Index tumbled 1 18 while Japan s Nikkei 225 Index eased 0 05 Also Wednesday the Federal Reserve said that industrial production in the U S rose by 0 6 in beating expectations for a 0 6 increase and following a 0 1 rise the previous month |
C | U S futures edge higher eyes on data Dow Jones up 0 15 | Investing com U S stock futures pointed to moderately higher open on Thursday as investors awaited the release of U S economic reports later in the day after globally positive data earlier in the week lowered expectations for new stimulus measures by the Federal Reserve Ahead of the open the Dow Jones Industrial Average futures pointed to a 0 15 rise S P 500 futures signaled a 0 14 gain while the Nasdaq 100 futures indicated a 0 11 increase Expectations for additional easing measures by the U S central bank eased after official data on Wednesday showed that industrial production in the U S rose more than expected in July The data came one day after significantly stronger than expected U S retail sales numbers for July damped expectations for another round of quantitative easing by the U S central bank But investors remained cautious after data on Wednesday showed that a gauge of manufacturing activity in New York fell into contraction territory in August for the first time since October 2011 Tech stocks were expected to be active after Cisco Systems pleased investors with a 75 dividend hike as the company posted quarterly results that beat estimates sending shares up 5 59 in pre market trade The company offered little hope that dire economic conditions in Europe would come to an end any time soon however Also in earnings news Applied Materials forecast current quarter revenue below expectations and its chief executive hinted the top chip gear maker could shed poorly performing non core businesses Shares tumbled 3 98 in after hour trade Meanwhile the legal battle between Apple and Samsung continued on Wednesday as the iPhone maker introduced into evidence a pair of documents showing that Google pressured Samsung to redesign its Galaxy products because they were too much like Apple s phones and tablets Separately mobile phone maker Nokia saw shares decline 1 14 pre market after saying on Wednesday that it will hold a joint media event with Microsoft in New York in September boosting hopes that it will unveil its Windows smartphone upgrade before Apple presents its next iPhone Financial stocks were also likely to be in the spotlight as U S lender JP Morgan was reportedly among the seven world banks subpoenaed this week in New York and Connecticut s investigation into alleged manipulation of Libor Also involved in the case Citigroup had received a subpoena earlier this year Other stocks in focus included Facebook as the social media was set to free up 271 1 million of its shares on Thursday boosting by 60 the number that can be traded Across the Atlantic European stock markets were lower The EURO STOXX 50 fell 0 10 France s CAC 40 eased 0 08 Germany s DAX added 0 10 while Britain s FTSE 100 declined 0 19 During the Asian trading session Hong Kong s Hang Seng Index dropped 0 45 while Japan s Nikkei 225 Index jumped 1 88 Later in the day the U S was to publish official data on building permits and housing starts as well as weekly government data on unemployment claims and data on manufacturing activity in the Philadelphia area |
C | EUR NZD A Short Opportunity | On EUR NZD I see five waves up in leading diagonal followed by a five wave decline from 1 6840 which is first leg of minimum three wave retracement As such wave b retracement back to 1 6590 1 6700 could be interesting for shorts in wave c 4h Elliott Wave AnalysisEUR NZD Elliott Wave title EUR NZD Elliott Wave height 598 width 640 |
C | Asymmetrical Bubbles Are We In Denial | Just recently Nobel Prize winning economist Robert Shiller warned that the U S stock market and Brazilian property market were areas of concern Specifically he stated I am not yet sounding the alarm But in many countries stock exchanges are at a high level and prices have risen sharply in some property markets that could end badly I am most worried about the boom in the U S stock market Also because our economy is still weak and vulnerable Bubbles look like this And the world is still very vulnerable to a bubble Bubbles are created when investors do not recognize when rising asset prices get detached from underlying fundamentals which I showed is currently the case in The Market In Pictures However just recently the Mercenary Trader blog reminded me of George Soros take on bubbles First financial markets far from accurately reflecting all the available knowledge always provide a distorted view of reality The degree of distortion may vary from time to time Sometimes it s quite insignificant at other times it is quite pronounced When there is a significant divergence between market prices and the underlying reality I speak of far from equilibrium conditions I have developed a rudimentary theory of bubbles along these lines Every bubble has two components an underlying trend that prevails in reality and a misconception relating to that trend When a positive feedback develops between the trend and the misconception a boom bust process is set in motion The process is liable to be tested by negative feedback along the way and if it is strong enough to survive these tests both the trend and the misconception will be reinforced Eventually market expectations become so far removed from reality that people are forced to recognize that a misconception is involved A twilight period ensues during which doubts grow and more and more people lose faith but the prevailing trend is sustained by inertia As Chuck Prince former head of Citigroup said As long as the music is playing you ve got to get up and dance We are still dancing Eventually a tipping point is reached when the trend is reversed it then becomes self reinforcing in the opposite direction Typically bubbles have an asymmetric shape The boom is long and slow to start It accelerates gradually until it flattens out again during the twilight period The bust is short and steep because it involves the forced liquidation of unsound positions The chart below is an example of asymmetric bubbles Soros view on the pattern of bubbles is interesting because it changes the argument from a fundamental view to a technical view Prices reflect the psychology of the market which can create a feedback loop between the markets and fundamentals As Soros stated Financial markets do not play a purely passive role they can also affect the so called fundamentals they are supposed to reflect These two functions that financial markets perform work in opposite directions In the passive or cognitive function the fundamentals are supposed to determine market prices In the active or manipulative function market prices find ways of influencing the fundamentals When both functions operate at the same time they interfere with each other The supposedly independent variable of one function is the dependent variable of the other so that neither function has a truly independent variable As a result neither market prices nor the underlying reality is fully determined Both suffer from an element of uncertainty that cannot be quantified The chart below utilizes Dr Robert Shiller s stock market data going back to 1900 on an inflation adjusted basis I then took a look at the markets prior to each major market correction and overlaid the asymmetrical bubble shape as discussed by George Soros There is currently a strong belief that the financial markets are not in a bubble despite much evidence to the contrary However it is likely that prices are currently driving fundamentals particularly given the artificial interventions of the Federal Reserve which is something that I discussed back in March in There Is No Asset Bubble The speculative appetite combined with the Fed s liquidity is a powerful combination in the short term However the increase in speculative risks combined with excess leverage leave the markets vulnerable to a sizable correction at some point in the future The only missing ingredient for such a correction currently is simply a catalyst to put fear into an overly complacent marketplace In the long term it will ultimately be the fundamentals that drive the markets Currently the deterioration in the growth rate of earnings and economic strength are not supportive of the speculative rise in asset prices or leverage The idea of whether or not the Federal Reserve along with virtually every other central bank in the world are inflating the next asset bubble is of significant importance to investors who can ill afford to once again lose a large chunk of their net worth It is all reminiscent of the market peak of 1929 when Dr Irving Fisher uttered his now famous words Stocks have now reached a permanently high plateau The clamoring of voices that the bull market is just beginning is telling much the same story History is replete with market crashes that occurred just as the mainstream belief made heretics out of anyone who dared to contradict the bullish bias The Mercenary Trader blog imparted some excellent words of wisdom in this regard In other words you don t have to be theoretically correct in your reasoning You just need to have the right positions on at the right time If you are in this game to win then it is not about being right but making money Yet at the same time as a general rule you want to be theoretically sound if at all possible because if your portfolio is anchored to a foundation of false beliefs or not anchored to anything at all that increases the likelihood of getting your head handed to you And thus for traders especially the ideal is to have the best of both worlds The ability to maintain general theoretical correctness i e the chops to recognize a false trend for what it is coupled with the flexibility and the means to profitably exploit false trends regardless while keeping risk under control There are at least three levels to the game
That which is real
That which is believed
The market s reaction to both
And so we would argue that right now it is more important than ever to understand the nature of false trends feedback loops bubbles and the like and the proper means of handling them all Does an asset bubble currently exist Ask anyone and they will tell you NO However maybe it is exactly that tacit denial that might just be an indication of its existence Originally posted at Lance s blog STA Wealth Management |
C | EUR USD Impulse Could Extend Up To 1 3850 | EUR USD is in a pullback mode within larger uptrend which may resume very soon through 1 3812 and 1 3832 as current retracement can be considered as a minor flat correction in wave iv of incomplete five wave rally in wave c iii From a larger perspective bearish trend is in view because of ending diagonal on a daily chart that can be in final stages However any turning point to the downside can be confirmed if EUR USD will fall back below 1 3620 EUR USD 4h Elliott Wave Analysis EUR USD Elliott Wave title EUR USD Elliott Wave height 604 width 600 |
C | Growing Inequality Powers The Rise Of New America | Summary Five years ago I wrote about the problem of rising inequality in America Now it s become big time following Today we review the evidence about the problem its likely effects and the inevitable pushback Contents
Description of the problem
Effects of rising inequality
Pushback
For More Information
Another perspective
1 Description of the problem Alan B Krueger Chairman Council of Economic Advisers 12 January 2012 Introduces the Great Gatsby Curve Recent work by Miles Corak finds an intriguing link between the Intergenerational Income Elasticity IGE and in come inequality at a point in time Countries that have a high degree of inequality also tend to have less economic mobility across generations We have extended this work using OECD data on after tax income inequality as measured by the Gini coefficient This next figure shows a scatter diagram of the relationship between income mobility across generations on the Y axis measured by IGE and inequality in the mid 1980s as measured by the Gini coefficient for after tax income on the X axis Figure 7 Each point represents a country Higher values along the X axis reflect greater inequality in family resources roughly around the time that the children were growing up Higher values on the Y axis indicate a lower degree of economic mobility across generations I call this the Great Gatsby Curve The points cluster around an upward sloping line indicating that countries that had more inequality across households also had more persistence in income from one generation to the next 2 Effects of rising inequality Jared Bernstein Center for American Progress December 2013 Summary Among the most important economic challenges facing the United States and some other advanced economies today is the increase in the inequality of economic outcomes In the case of the United States the distributions of income wages and wealth are more dispersed than ever Though measurement issues abound it is widely agreed that U S economic inequality is at historically high levels This fact however has different implications for different observers Many critics of higher inequality suggest that it violates basic fairness particularly when considering for example the divergence of median compensation and productivity growth Such trends these critics hold are evidence of working people no longer getting their fair share of the growth that they are helping to generate Others note that inequality serves as a wedge between growth and living standards funneling income largely to those at the top of the scale and thus making it harder at any given level of economic growth for living standards to grow as they have in more equitable times or for poverty to fall during business cycle expansions t so far in this expansion which officially began in the second half of 2009 the stock market is up 60 GDP is up 8 corporate profits as a share of national income are at historic highs yet median household income is down 5 with all figures adjusted for inflation Another more recent line of argument holds that persistently high levels of inequality are eroding opportunity and mobility for those whose living standards and economic well being are negatively affected by the wedge dynamic just described This is a fundamental critique because it is widely held that in America while we do not aspire to equal economic outcomes we believe strongly in equal opportunity If inequality were to thwart the opportunities of the have nots this would represent a significant violation of a basic American tenet In that regard the high level of inequality that we have today requires a policy response leading to a more equitable and inclusive economy Full employment is especially important and given the persistence of weak labor markets since 2000 very much predating the last recession achieving full employment may require public sector job creation either directly through public infrastructure projects or indirectly through public subsidies for private jobs Incentives such as greater union representation increased minimum wages a solid safety net progressive taxation and sectorial policies that lift productive sectors such as manufacturing can help raise the relative incomes of middle and low wage workers Also see these slides Jared Bernstein Center on Budget and Policy Priorities 12 December 2013 b at the Washington Center for Equitable GrowthAnd then there are the political consequences of inequality A more unequal economy is one in which the voice of the rich speak louder in the political debate and the rich want to keep what is theirs Before 1975 the U S made a uniquely large effort to educate its people and win the race between education and technology The result was a middle class society for white guys and alas for white guys alone Then came what Robert Kuttner calls The Revolt of the Haves the great pulling up of the ladder of free public higher education The consequence was another factor pushing for the great widening of income inequality as America began to lose the race between education and technology And the consequence was that 0 3 year of American real economic growth simply vanished as we were no longer making the requisite educational effort to keep our population the best educated in the world Over 35 years that failure has made us another 10 poorer and more unequal to c The real problem Feed the 1 with income wealth and power it s like feeding a fire with gasoline The 1 like fire grows stronger when fed and cannot be satisfied The more income and wealth the more political power Repeat until we have a New America 3 Pushback a From the New Left aka not so Left Leftist darling Ezra Klein plays the logical fallacy bog of the Washington Post 13 December 2013 Excerpt Income inequality is easy to worry about It offends our moral intuitions Its tears into the fabric of the American dream That we re all created equal is the opening line in the American story Obama said And while we don t promise equal outcomes we ve strived to deliver equal opportunity But is inequality really the country s most pressing problem Imagine you were given a choice between reducing income inequality by 50 and reducing unemployment by 50 Which would you choose Steven Randy Waldman reviews Klein s article b About pushback from the Right Sean McElwee Salon 14 December 2013 With President Obama talking about the scourge of low wages conservatives are completely confused by the problem 4 For More Information About inequality
3 November 2008 About social mobility
10 November 2009
7 March 2010
31 March 2010
13 June 2010
30 April 2012
27 September 2012
2 October 2012
18 June 2013
12 July 2013
19 November 2013
27 November 2013
4 December 2013 |
C | Arch Therapeutics A Promising New Life Science Company | A versatile and talented management team is a very important factor for building a great company especially in the life science sector I think Arch Therapeutics Inc ARTH provides a compelling opportunity for high risk investors to profit from an emerging life science company that has the ability to execute A stock price of 0 21 doesn t tell you the whole story The average volume for the last 3 months is relatively low at 197 784 But I think investors that are looking for a rather new company with an experienced management team a great advisory board and a promising lead product candidate may be interested in having a look at Arch Therapeutics The company transferred itself to a life science company from selling automobile spare parts online On the current company saw the light and changed its operations to develop polymers containing synthetic peptides designed to form gel like barriers over wounds to stop or control bleeding and seal wounds This process is called hemostasis Description of HemostasisAccording to hemostasis or haemostasis from the Ancient Greek haim stasis styptic drug is a process that causes bleeding to stop meaning to keep blood within a damaged blood vessel the opposite of hemostasis is hemorrhage It is the first stage of wound healing Most of the time this includes blood changing from a liquid to a solid state All situations that may lead to hemostasis are portrayed by the Virchow s triad Intact blood vessels are central to moderating blood s tendency to clot The endothelial cells of intact vessels prevent blood clotting with a heparin like molecule and thrombomodulin and prevent platelet aggregation with nitric oxide and prostacyclin When endothelial injury occurs the endothelial cells stop secretion of coagulation and aggregation inhibitors and instead secrete von Willebrand factor which initiate the maintenance of hemostasis after injury Hemostasis has three major steps 1 vasoconstriction 2 temporary blockage of a break by a platelet plug and 3 blood coagulation or formation of a clot that seals the hole until tissues are repaired The evolved ability of the human body to stop bleeding has limits when the size and or nature of the wound overwhelms the clotting process Additionally patients with compromised abilities in their clotting process can be at extreme risk from relatively minor wounds As a result hemostasis products have seen and will continue to see strong growth in the overall wound closure and management market Given the opportunity and the relatively low barrier to market entry Arch Therapeutics could become an important player in the hemostasis market Growth in the global hemostasis market is near 10 with some of the highest growth seen in the U S and Asia Pacific markets although driven by different dynamics Lead product AC5 As mentioned before Arch Therapeutics is a life science medical device company that aims to develop products that make surgery and interventional care faster and safer by utilizing a novel approach that stops bleeding hemostasis controls leaking and provides other advantages during surgery and trauma care The leading product candidate AC5 is designed to accomplish hemostasis in minimally invasive and open surgical procedures AC5 is a biocompatible synthetic peptide containing naturally occurring amino acids When applied to the wound AC5 intercalates into the interstices of the connective tissue where it self amasses into a physical mechanical nanoscale structure that provides a fence to leaking substances such as blood The results of early data from preclinical animal tests have shown that AC5 achieves hemostasis quickly and effectively Hemostasis occurred over 30 times faster than control use of saline and 10 times faster than the use of cauterization AC5 can be applied right away as a liquid or a spray making it user friendly and able to conform to irregular wound geometry Because it is not sticky or glue like AC5 is perfect for use in the setting of minimally invasive laparoscopic surgeries Further AC5 is transparent which should make it easier for a surgeon to maintain a clear field of vision during a surgical procedure and prophylactically stop bleeding as it starts This procedure is called Crystal Clear Surgery Business Plan and CatalystsSource In the company s filing we can distillate the long term business plan The plan includes the following goals
Expanding intellectual property portfolio
Conducting successful clinical trials on AC5
Obtaining regulatory approval or certification of AC5 in the European Union the U S and other jurisdictions
Developing appropriate third party relationships to manufacture distribute market and otherwise commercialize AC5
Develop additional product candidates in the hemostatic and sealant field
It s good that the company described their long time business plan but many investors are looking for short term catalysts The following catalysts for the remainder of 2013 and 2014 can be found below
Further developing and securing intellectual property rights
Engaging a large scale manufacturing partner to produce cGMP product for clinical trials
Participating in EU and subsequently U S regulatory meetings
Preparing for initial clinical trials including developing clinical trial protocols
Conducting formal biocompatibility studies
Commencing human clinical trials
A Great Management TeamMaking judgments about management is important before you invest in a company especially when it is a start up A company is nothing without a CEO The CEO of Arch is Terrence W Norchi MD He co founded the company in 2006 Dr Norchi has a medical analytical investment background as a portfolio manager but also as a pharmaceutical analyst at Putnam Investments Citigroup Asset Management and Sanford C Bernstein He earned an M B A from the MIT Sloan School of Management in 1996 and completed internal medicine residency in 1994 at Baystate Medical Center Tufts University School of Medicine where he was selected to serve as Chief Medical Resident He earned an M D degree in 1990 from Northeast Ohio Medical University The Head of Operations and Manufacturing is Mr William M Cotter He has been advising Arch Therapeutics since 2011 and is an industry veteran who brings expertise in operations and product development Mr Cotter has over 30 years of operational experience in Medical Devices Diagnostics Biologics and Life Science companies ranging from early stage startups to large multinationals Mr Cotter has served in senior operations and development roles for companies including Cohera Medical Helicos Biosciences Closure Medical Corporation Johnson Johnson Sanofi Diagnostics Pasteur Beckman Coulter Genetic Systems Corporation Bio Rad and Advanced Technology Laboratories Phillips HealthCare For more on the management team look Final NoteGreat emerging ideas are the lifeblood of investing I think Arch Therapeutics offers a compelling opportunity to those who are patient and are familiar with the life science space The company is currently devoting most all of its efforts toward product research and development In light of that the company will require new financing for its research development and commercialization of its potential products I think the current stock price doesn t reflect the future value of the company Arch Therapeutics lead product AC5 will capture the hemostasis market With a great management team in place we will hear more of this company going forward |
C | I Am Become Debt Destroyer Of Worlds | Note The following blog post originally appeared on January 25th 2010 I have removed the references to then current market movements and otherwise cut the article down to the interesting bits In this case I have also updated the charts and clarified the text for the additional data we have since then You can read the original post However it supports my belief that the slide late last week isn t yet the beginning of a slide into oblivion Also supporting that point Greece managed to sell 8 billion bonds quite easily today I don t really understand why it was so easy I suppose there is a deep reservoir of people who don t want to see a European sovereign go bust for example other Europeans but it isn t as if that 8 billion will carry Greece forever They are in dire straits and as I ve pointed out here before they can t print money and that fact is what makes a default possible I do believe this could be the beginning of the end for the Euro but I don t think that end is imminent Institutions have selfish memes and tend to protect themselves vigorously In this case I suspect that other European central banks big European investors European corporate entities they all have a very strong vested interest in holding the Euro together and they will do so as long as it is possible And it will be possible for a while An interesting factoid that I saw on CNBC today of companies announcing Q4 earnings so far 9 have beaten earnings per share EPS estimates but 65 have beaten revenue estimates What does that mean I think it means that margins have been lower than analysts expected although there s a statistical caveat because the number of misses may or may not correlate to the size of the miss which means that they re buying business through lower prices or on the other hand are holding prices down while input costs rise One is a disinflationary spin and one is an inflationary spin The data suggest the latter as inflation other than housing has been percolating some but wage growth a big input hasn t exactly been robust either I ll call it a tie on that evidence with respect to inflation implications but either way tightening margins are a sign of economic weakness But my bigger worry is that some sharper near term imbalances are brewing Economic weakness we can work through if the basic capital markets and economic structures are left in place and government doesn t take too much of the productive capacity of the country these assumptions are somewhat in doubt these days but let s look past that What worries me in the reasonably short term is that there are some big imbalances that are following on the heels of the imbalances that just blew up and those just about cracked the edifice of Western civilization All of these imbalances are of our own making but none has been created as fast as this one I will do my best to explain it and I hope that somewhere my logic falls down and someone can correct me When the government runs a deficit where does it get the money so that its expenditures can exceed its revenues It borrows from essentially two places domestic savers and foreign savers In recent years domestic savings have been low and the government has financed its deficits more and more with money lured from foreign investors who hold dollars Because the only reason these folks hold dollars is because we are buying more stuff from them than they are buying from us we have a trade deficit If domestic savings is stable then over time the budget deficit and the trade deficit must equal but a better way to think of this is that budget deficit trade deficit plus domestic savings This is why folks talk about the twin deficits trade and budget Large deficits can only be financed entirely from within if there is substantial domestic savings but we have been discouraging savings for a couple of decades now The graphic relationship is sloppy partly because we re not great at measuring these values and partly because domestic savings ebbs and flows but you can see that the larger trade deficit in recent decades seems to be at least of similar magnitude as the budget deficit Source Economagic com Well zowie those last few points are interesting are they not The government is running an epic deficit as we all know but the trade deficit has actually improved since 2008 How is that possible It is possible because domestic savings has been growing by trillions of dollars over the last few years Now you might say that s great news except that it isn t great news at all The largest part of that savings is the money that the Fed has printed by buying Treasuries agencies and other collateral This is where the rise in the money base see chart below is showing up To tie these charts together I will note that the total rise in the balance sheet assets since August 27 2008 has been 3 0 trillion And the cumulative difference in the budget deficit less the trade deficit has been 3 1 trillion That s right the improvement in the trade deficit despite the huge budget deficit comes almost entirely because the Fed has provided the needed savings with its checkbook But now here s the problem The Fed declares that they are not going to keep doing that which means that a they re lying or b there is going to be a massive improvement in the budget deficit soon or c the trade deficit is going to start looking really really really bad pretty soon Any guesses for a b or c Editor s note with hindsight it seems that a really was the correct answer It isn t clear whether that is the correct answer today I suspect there will be come combination of a b and c Assuming that the Fed isn t lying and assuming that the federal government isn t going to find fiscal Jesus and slash a couple trillion from the deficit as I ve noted though if they just don t have any emergencies this year the deficit ought to improve a few hundred billion then the trade deficit is going to start to look ugly Epic ugly Medusa ugly And this leads to the worry if the trade deficit explodes then two other things are going to happen although how much of each I can t even guess I protectionist sentiment is going to become very shrill and fall on the ears of a President who is looking to burnish his populist creds and II the dollar is going to be beaten like a red headed stepchild being a red headed stepchild I use that simile grudgingly Others Warren Buffet is one have publicly toted up the numbers and observed that it s hard to figure out how we finance such deficits unless most of it comes from overseas To entice such largesse the currency unit will need to be cheaper and rates will have to be higher This is my worry not a global meltdown but a U S specific meltdown Higher rates higher inflation lower equities and a lot of volatility And it may happen quickly when it happens Editor s note Thanks to the Fed pursuing the policy in a above it hasn t yet happened When might this happen Putting dates on nightmare scenarios is ordinarily a useless chore It is usually far better to merely be alert to possibilities and to move quickly when the rock looks like it s toppling But in this case there is a particular time period I am especially concerned about the end of March as in about two months from now The Fed is gradually reducing its purchases of MBS with the intention of ending those purchases in March Also Japanese year end is in March and lest we forget the Japanese represent some 20 of the foreign ownership of Treasuries There is a reason that seasonals for the bond market are weak in the spring If we can skate past April 1 without something serious happening then I will breathe a sigh of relief and go back to balanced rock watching But in the meantime I sleep fitfully |
C | Gold Warns Of Reversal | Talking Points
FOMC Announcement in Focus Amid QE Taper Speculation
Crude Oil Likely to Fall if Fed Opts to Scale Back Stimulus Effort
Gold Technical Positioning Hints at a Possible Reversal Ahead
Commodity markets are likely to be singularly focused on today s pivotal FOMC monetary policy announcement On balance the case for tapering the size of monthly QE asset purchases looks compelling
Fiscal drag fears already on the decline since end of the government shutdown in mid October appear to have all but faded after Congress secured a two year budget deal last week
US economic data has increasingly outperformed relative to market forecasts since the beginning of November according to data compiled by Citigroup
Finally near term inflation expectations have started to perk up with the 1 year breakeven rate a measure of the price growth outlook priced into bond yields surging in late November to the highest level since mid April
Still a survey of economists polled by Bloomberg suggests the baseline consensus view still favors a no change outcome with only about 1 out of every 3 respondents looking for some kind of cutback in stimulus That means volatility is in the cards as investors jostle to readjust portfolios in the event that a reduction of QE does materialize
An outright decline in the amount of monthly asset purchases stands to boost the US Dollar This creates a de facto headwind for commodities benchmarked against the greenback including gold and crude oil Precious metals would be likewise vulnerable to erosion of inflation hedge demand Meanwhile the WTI contract may be pulled into a larger risk aversion selloff A panic swept financial markets in the spring and summer when the idea of tapering first emerged if fears of rising funding costs yield the same outcome this time the spectrum of cycle sensitive assets may decline in tandem
A decision to withhold any changes to existing policy this time around that is coupled with taper supportive cues in the Fed s updated set of economic forecasts and or Ben Bernanke s press conference may yield similar albeit probably less dramatic results The move may be likewise diminished if the Fed fearing a repeat of the volatility burst in the first half of the year opts to soften the blow to sentiment by coupling a smaller asset uptake with a lowering of its unemployment or inflation thresholds
CRUDE OIL TECHNICAL ANALYSIS Prices declined as expected after putting in a bearish Dark Cloud Cover candlestick pattern Support is in the 95 36 74 area marked by the 14 6 Fibonacci expansion and the November 6 high A further push below that eyes 93 90 the 23 6 Fib Resistance is at 98 74 the October 28 high
Daily Chart Created Using FXCM Marketscope 2 0
GOLD TECHNICAL ANALYSIS Prices may be carving out a bullish Head and Shoulders bottom chart formation Confirmation requires a close above resistance in the 1260 84 68 84 area marked by the October 11 low and the 38 2 Fib retracement A break higher initially exposes the 1286 57 the 50 level Near term support is at 1211 44 the December 6 low
Daily Chart Created Using FXCM Marketscope 2 0
by Ilya Spivak Currency Strategist for DailyFX com |
BMY | Premarket analyst action healthcare | Intec Pharma NASDAQ NTEC initiated with Buy rating at Ladenburg Thalmann Madrigal Pharmaceuticals NASDAQ MDGL initiated with Outperform rating at Cowen and Company Surmodics NASDAQ SRDX initiated with Buy rating at Needham Celgene NASDAQ CELG downgraded to Hold at SunTrust Price target lowered to 106 11 upside from 139 Endo International NASDAQ ENDP downgraded to Hold at Gabelli Co Atara Biotherapeutics NASDAQ ATRA downgraded to Market Perform at JMP Securities Arcturus Therapeutics NASDAQ ARCT downgraded to Neutral at Ladenburg Thalmann Bristol Myers Squibb NYSE BMY downgraded to Hold with a 70 3 upside price target at DZ Bank Now read |
JPM | Brexit may force ECB into more policy easing analysts | By Balazs Koranyi FRANKFURT Reuters Britain s decision to leave the EU could force the European Central Bank into providing even more stimulus just when it hoped it was done easing policy after years of extraordinary effort analysts said on Friday Plunging confidence and market turmoil will dent investments and growth in Britain and the euro zone weighing on inflation even as the ECB is bending over backwards to boost consumer prices after it undershot its target for more than three years Indeed markets are already pricing in almost 10 basis points worth of rate cuts by the end of the year while a key long term inflation gauge fell to its lowest level at 1 32 percent on Friday far from the ECB s target of almost 2 percent But the ECB is also unlikely to take hasty action waiting at least until the September meeting when new economic forecasts are presented and using its July 21 meeting only to guide markets It has repeatedly emphasized patience with its current measures suggesting it would take its time to assess the impact In the euro zone spillovers from Brexit will materialize through trade financial and confidence channels UniCredit economist Erik Nielsen said Overall we plan to lower our euro zone GDP forecast for 2017 to 0 5 1 0 percent from the current 1 6 percent Quick ECB reaction is also unlikely as the bank s inflation forecast may contain some buffer since the projections unveiled earlier this month did not fully incorporate the expected impact of approved but not yet implemented measures The ECB could cut its sub zero deposit rate even further though its room to maneuver is limited since negative rates weigh on bank earnings and curbing banks ability to lend would counter the very stimulus the bank wants to provide The easiest step could be to extend the bank s 80 billion euro per month asset purchase program beyond next March but new instruments are also possible analysts added Our forecast already anticipated further easing in September in the form of an extension of the current asset purchase program through end 2017 JPMorgan NYSE JPM economist Greg Fuzesi said We now expect additional easing involving a 10 basis point cut in the deposit rate and a further extension of asset purchases into 2018 he added Such measures may need time to be devised since the ECB s asset buys worth 1 74 trillion euros were at risk of running into some of the bank s self imposed limits so an extension could require the adjustment of some parameters Still hinting at its willingness to take action the ECB on Friday repeated that it would continue to fulfill its responsibilities to ensure price stability The fall in oil prices and the weaker economy will drive the economy of the euro zone and Germany back into deflation Marcel Fratzscher the president of the German Institute for Economic Research said I expect that the ECB will ease monetary policy not just in the short term but also on the long term
The referendum means that the period of zero interest rates will probably last significantly longer Fratzscher said |
JPM | JPMorgan post Brexit plan hinges on tone of discourse in Europe | By David Henry NEW YORK Reuters JPMorgan Chase Co N JPM is grappling with how much of its business can stay in Britain and a lot will depend on how well European Union and U K politicians appear to be getting along It is still unclear whether JPMorgan the largest U S bank would need to hive off slivers or chunks of its UK operations after Britain voted Thursday to leave the EU Daniel Pinto who heads the bank s global and investment banking operations said in an interview Pinto and other decision makers will be listening closely to the tone of comments by EU and UK leaders over the next few weeks to see whether they are inclined to achieve a deal that disrupts business the least in the exit he said The outcomes could range from a very small change to a substantial one where you would have to duplicate some of the infrastructure you now have in the UK Pinto said of the changes JPMorgan might have to make It is too early to say what products you are going to be able to provide from where All big banks with UK operations are trying to work out what to do in the aftermath of Brexit It is a delicate topic for them to discuss because of the risk that their words could harm the coming negotiations as well as upset employees Changes will almost certainly have to be made to continue lending trading and dealmaking across the newly fragmented bloc of countries There are a range of cities vying to compete against London as a financial hub but none of them are quite there yet JPMorgan s European headquarters is in London and the bank has offices in the English coastal city of Bournemouth as well as Scotland Those locations helped JPMorgan produce 14 2 billion worth of revenue last year from operations across Europe the Middle East and Africa EMEA It has 16 000 employees across the U K though Pinto said it is very very premature to estimate how many of them will need to relocate JPMorgan is the world s biggest dealer in fixed income currencies and commodities according to research firm Coalition and in the immediate aftermath of the Brexit vote on Thursday evening it handled record foreign exchange trading volumes At times the bank was processing 1 000 trading tickets per second according to a memo Chief Executive Jamie Dimon sent on Friday
Considering the circumstances Pinto said it is going relatively smoothly |
HAL | Halliburton Q4 adjusted EPS 0 04 vs estimate 0 02 | Investing com NYSE Halliburton beat Q4 earnings estimates as revenue fell short Halliburton Monday reported adjusted Q4 EPS of 0 04 on revenues of 4 02 bn Analysts estimated U S oil services firm s adjusted EPA at 0 02 on revenues of 4 06 bn North American Q4 revenues up 9 at 1 8 bn on average increase in U S rig count of 23 Baker Hughes Friday reported a jump in U S rig count in latest week to 551 That was the highest figure in 14 months |
HAL | Halliburton asks workers from banned countries not to travel to U S | Reuters Halliburton NYSE HAL Co has advised workers from the countries named in President Trump s immigration ban not to travel to the U S according to an email from a spokeswoman The U S President on Friday announced a four month hold on allowing refugees into the United States and a temporary ban on travelers from seven Muslim majority countries The Halliburton employees from the banned countries are being notified that travel to the U S is not advisable during the travel restriction period the spokeswoman said Bloomberg on Monday reported about Halliburton s advice to workers from restricted countries against traveling to the U S The ban affects travelers with passports from Iran Iraq Libya Somalia Sudan Syria and Yemen and extends to green card holders who are legal permanent residents of the United States |
HAL | Halliburton warns of first quarter profit miss as costs rise | Reuters Halliburton Co N HAL the world s No 2 oilfield services provider warned that its first quarter profit would likely miss analysts expectations due to higher costs and weak demand in markets outside North America Shares of the company which forecast higher revenue from its U S land operations were up about 1 percent in early trading on the New York Stock Exchange The company expects its earnings per share to be in low single digits in the quarter ending March Chief Executive David Lesar said on a conference call on Friday Analysts on average expect earnings of 13 cents per share according to Thomson Reuters I B E S The rise in costs is essentially because of the company s move to reactivate more equipment and expand its headcount in response to increased activity in shale fields across the United States By doubling this rate of activation and accelerating it to the front half of the year we are in effect front loading much of the hit to income at the beginning of the year Lesar said Halliburton said it planned to hire over 2 000 field employees in its U S land operations by the end of the quarter The company also said it was being impacted by higher costs for sand used to keep wells open after fracking U S shale producers have rapidly ramped up drilling over the past six months encouraged by a near 50 percent rise in oil prices since February 2016 when they hit 13 year lows Halliburton said it expected its first quarter revenue from its U S land operation to surge by 25 percent from the fourth quarter
Activity in international markets in contrast remains sluggish and an inflection is unlikely until later in the year Lesar said |
HAL | 4 Trade Ideas For Halliburton | Here is your Bonus Idea with links to the full Top Ten
Halliburton NYSE HAL pulled back with the market in January It found support at the 200 day SMA and consolidated there for 2 months before a move to the upside That fizzled out at a lower high in May and it reversed lower again It eventually found a bottom at the beginning of September Since then it has moved back up and is pausing at resistance
The RSI is rising and back into the bullish zone with the MACD crossed up and positive Both support more upside The Bollinger Bands have also shifted back higher There is resistance at 42 50 and then a gap to fill to 44 50 followed by 46 and 48 50 then 51 25 then a gap to 52 and the May top at 54 85 Support lower comes at 41 50 and 40 Short interest is low at 1 6 The company is expected to report earnings on October 22nd
The October monthly options chain shows the biggest open interest at the 42 50 call strike with size in the puts at 40 and 37 50 The October 26 Expiry chain the first covering the earnings report has lower open interest but the spikes are at the 42 call and 40 and 38 50 puts The November options have very large open interest at the 35 put and then size at the 45 call December options have biggest open interest at the 35 put and 45 call
Halliburton Ticker HAL
Trade Idea 1 Buy the stock on a move over 42 50 with a stop at 40
Trade Idea 2 Buy the stock on a move over 42 50 and add an October 26 Expiry 42 40 Put Spread 70 cents to protect it through earnings Sell the November 45 Calls 57 cents to cover the cost of protection
Trade Idea 3 Buy the November 42 50 October 43 Call Diagonal 1 00
Trade Idea 4 Buy the December 37 50 45 bull Risk Reversal 40 cents
After reviewing over 1 000 charts I have found some good setups for the week These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which after one week of October sees the equity markets have given up strength with some sectors bleeding red in the shorter frame while holding key levels on the longer timeframe
Elsewhere look for Gold to consolidate in the downtrend while Crude Oil pauses in its move higher The US Dollar Index is moving higher in consolidation while US Treasuries are trending lower The Shanghai Composite comes back from vacation looking like a possible reversal to the upside but Emerging Markets resumed their downtrend
Volatility perked up and may continue making it more difficult for the equity index ETF s SPDR S P 500 NYSE SPY iShares Russell 2000 NYSE IWM and Invesco QQQ Trust Series 1 NASDAQ QQQ The IWM is in full blow short term downtrend but at support on the longer timeframe The QQQ are consolidating on the longer timeframe but also leaking in the shorter view The SPY looks the strongest on that longer timeframe but is also dipping to retest the January highs in the short run Use this information as you prepare for the coming week and trad em well
DISCLAIMER The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment I or my affiliates may hold positions or other interests in securities mentioned in the Blog please see my Disclaimer page for my full disclaimer
Original post |
HAL | Halliburton Put Options Pricey Ahead Of Earnings | Oil name Halliburton Company NYSE HAL is trading up 1 9 at 38 73 today but the shares have been declining since their mid May highs Most recently HAL touched a two year low of 35 75 on Sept 2
More broadly oil stocks are taking a hit this week on oversupply concerns and a sector wide bear note out of J P Morgan Securities yesterday Meanwhile Halliburton is slated to report its third quarter earnings before the market opens Monday Oct 22 and here we ll dive into what the options market has priced in for the stock s post earnings moves
Digging into its earnings history HAL closed lower the day after reporting in six of the last eight quarters including an 8 1 drop after its late July report Looking broader the shares have averaged a 3 2 move the day after earnings over the last two years regardless of direction This time around options traders are pricing in a larger than usual 5 1 swing for Monday s trading
Digging deeper short term traders appear to be betting on a downside move for HAL This is based on the stock s 30 day implied volatility skew of 8 1 which ranks in the 80th annual percentile indicating puts are more expensive than usual relative to calls
Lastly the security s Schaeffer s Volatility Scorecard SVS is 95 out of 100 This lofty ranking shows that HAL has a tendency to make larger than expected moves on the charts compared to what the options market has priced in over the past year |
C | Top Trade Ideas Week Of November 25 2013 Citigroup | Here is your Bonus Idea Citigroup Ticker CCitigroup C ran higher from July 2012 until starting to consolidate in June 2013 The consolidation in a symmetrical triangle has been going on for 6 months With the bank stocks breaking higher and the support of a rising RSI making new 6 month highs and a MACD that is rising it is worth preparing for as it approaches the top of the triangle A move over the top carries a Measured Move higher to 59 75 and then to 73 Support lower comes at 50 and 47 75 followed by 45 30 There is resistance higher at 53 35 53 65 and then it has a lot of free air higher How much Look at the monthly chart to see The price action since the financial crisis bottom has been a tight consolidation A move over 58 would seal the confirmation of a reversal higher and the first strong resistance at 163 and then 215 Do I have your attention now Trade Idea 1 Buy the stock on a break over 53 65 with a stop at 52 Trade Idea 2 Buy the January 52 5 Calls offered at 1 80 on a break over 53 Trade Idea 3 Buy the January 52 5 57 5 Call Spread 1 50 on a move over 53 Trade Idea 4 Buy the December January 55 Call Calendar 55 cents on a move over 53 Trade Idea 5 Buy the January 2015 60 Calls 2 99 or January 2016 60 Calls 5 35 sell the same expiry 45 Strike Put for a bullish Risk Reversal at just the cost of the margin use and 20 cents out of pocket After reviewing over 1 000 charts I have found some good setups for the week These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which heading into shortened Holiday week sees the markets looking healthy In the coming week look for Gold to continue lower while Crude Oil consolidates and may reverse higher The US Dollar Index remains biased to the upside while US Treasuries are biased lower The Shanghai Composite and Emerging Markets are biased to the upside with risk of Emerging Markets running in place Volatility looks to remain subdued keeping the bias higher for the equity index ETF s SPY IWM and QQQ All continue to look better to the upside but the IWM looks the strongest of the Index ETF s with the SPY and QQQ raising some caution flags on the weekly charts Use this information as you prepare for the coming week and trad em well Disclosure The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment I or my affiliates may hold positions or other interests in securities mentioned in the Blog please see my Disclaimer page for my full disclaimer Original post |
C | STTG Market Recap Social Media Stocks Struggle | A very quiet session Monday as we launch into a holiday week This is no surprise as many institutional traders take this week off The S P 500 fell 0 13 while the NASDAQ gained 0 07 Signed contracts to buy existing homes fell for the fifth straight month in October as the government shutdown added to an overall slowdown in the U S housing market So called pending home sales eased 0 6 percent from an upwardly revised September reading and are down 1 6 percent from October 2012 according to the National Association of Realtors This is the lowest sales pace since December 2012 Pending home sales are an indicator of closed sales in November and December No changes to the indexes from the view late last week It was a rough session for social media stocks as they stood out to the downside as a group Meanwhile the incredible year for airlines continues some of these names are up 35 50 in 3 months Financial stocks also continue to be hot Citigroup C is just one example Curious how your property taxes compare versus other parts of the country CNNMoney |
C | EUR USD Rally Could Slowdown | EUR USD is at new high which means that wave 2 B is still underway with a very slow and complex rally but important is that recovery is remains corrective in nature We see a three wave rally from 1 3293 with wave c underway to 61 8 retracement area where pair could turn bearish An impulsive sell off back to 1 3480 would suggest that bearish price action is already underway EUR USD 4h Elliott Wave Analysis EUR USD Elliott Wave title EUR USD Elliott Wave height 591 width 600 |
C | Nikkei Close To 6 Year High | The Nikkei has bounced back from the losses of the last two days during trading today November 28th It closed near a new six year high for the index rising 1 8 per cent up to end at 15 727 12 which was its highest closing level since December 2007 The Nikkei is now up 51 per cent for the year after it cancelled out the losses of 0 7 per cent on Tuesday and 0 4 per cent yesterday Reuters reports Steven Englander global head of G10 FX strategy at Citigroup explained that economic data from the US is pro tapering We have been struck by how much of the market continues to assign a very low probability of a December or January tapering he said Despite the strong rise in the Nikkei s value today financial bookmakers were expecting major European indexes such as the FTSE GDAXI and the FCHI to open flat to modestly higher Learn about the Asian markets and CFD trading at City IndexDisclosure FX Solutions assumes no responsibility for errors inaccuracies or omissions in these materials FX Solutions does not warrant the accuracy or completeness of the information text graphics links or other items contained within these materials FX Solutions shall not be liable for any special indirect incidental or consequential damages including without limitation losses lost revenues or lost profits that may result from these materials The products offered by FX Solutions are leveraged products which carry a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors Ensure you fully understand the risks involved and seek independent advice if necessary |
C | GBP USD Expect Further Gains Towards 1 6450 And 1 65650 | GBP USD Daily Chart title GBP USD Daily Chart width 712 height 552
GBP USD 1 6366Short Term Trend uptrendOutlook Here we are right at 1 6386 Fibonacci level Now there is no indication that wave c is over and therefore the immediate pressure remains on the upside And that s why we expect further gains toward 1 6450 and 1 65650 this week The key level of resistance is the 1 6750 level This 1 6750 level should not be overcome if the larger degree Contracting Triangle scenario is correct On the downside a move below 1 6140 will be the 1st signal that wave c has completed Strategy Stand aside |
C | December Sentiment Summary Bullish Extremes | Equities
Recent AAII survey readings came in at 47 bulls and 28 bears While this survey is more volatile the others bullish readings have been quite elevated for major of the second half of the year Therefore the AAII bull ratio 4 week moving average has also remained at or near bullish extremes At the same time AAII cash allocations remain extremely low indicating that retail community is fully invested into stocks For referencing AAII bull ratio survey chart can been seen by while last months AAII Cash Allocation survey chart can be seen by clicking
Chart 1 Most bullish newsletter sentiment since 1987 market crash
Recent Investor Intelligence survey levels came in at 56 bulls and 14 bears Bullish readings have remained above 50 for five weeks now while bearish readings have now dropped the lowest level on record With hardly any sellers left and plethora of buyers the chart above shows the II bull ratio at extreme levels is giving us a very powerful sell signal
Recent NAAIM survey levels came in at 101 net long exposure meaning managers are all in and then some while the intensity was at 213 Dissecting the survey shows that the more bullish managers hold 163 net long positions while the more bearish managers actually hold no net shorts as they are also 50 net long With such an extreme net long exposure this is yet another clear sell signal For referencing NAAIM survey chart can been seen by
Chart 2 Markets have entered yet another euphoria event
Other popular sentiment surveys are also flashing sell signals These include Consensus Inc Market Vane Bullish Percentage Hulbert Stock Sentiment Index Daily Sentiment Index and so forth Citigroup s own sentiment index is indicating an 80 probability of negative returns in the coming 12 months chart above However during vertical run ups and buying frenzies prices can continue to rise despite such high optimism This is usually known as euphoria and it seems we are expericning one right now
Chart 3 43 billion has flown into equity funds over the last two months
Recent ICI fund flows reports showed that equity funds had estimated inflows of 5 43 billion for the week compared to estimated inflows of 7 26 billion in the previous week Domestic equity funds had estimated inflows of 1 04 billion while estimated inflows to world equity funds were 4 39 billion Looking at the retail investor behaviour of the last two months the chart above shows that almost 43 billion has flown into equity funds over the last two months With the bull market entering its 5th year and almost up triple from 09 lows anyone who tells me we are at the beginning of an uptrend is totally crazy in my opinion The fact that retail investors are piling into equities five years too late lets us know that this most likely isn t a buying opportunity
Rydex fund flows has also risen in recent weeks Nova Ursa flow of funds indicator has jumped towards 0 40 which is usually considered a sell signal Even more worrying is the continued prolonged period of low cash levels in the Rydex Money Markets as discussed last month Now we can also add wild speculation to this as Rydex Leveraged Long funds now carry almost as much as 9 times the assets of Rydex Leveraged Short funds For referencing Nova Ursa Ratio chart can been seen by
Chart 4 Hedge funds remain highly exposed towards tech stocks
Recent commitment of traders reports also known as dumb money showed that hedge funds and other speculators remain heavily exposed towards technology stocks via the Nasdaq 100 index as seen in the chart above Recent positioning is once again above 125 000 net long contracts and has remained above 100 000 for weeks on end That continues to be one of the most extreme exposures since the March 2009 bull market began
Chart 5 Corporate insiders continue to remain heavy net sellers
Recent Corporate Insider reports also known as smart money show that net selling remains the name of the game in recent months While there are no holly grail indicator or tool when it comes to stock market investments I have always been a huge believer in following corporate insiders as they have access to non public information about the company in question Collectively as a group they hold a much better outlook on the stock market index as well as a much better track record then any economists analyst forecaster newsletter writer or trader The chart above shows how well insiders have navigated the market since the Global Financial Crisis GFC always abiding to the old rule of buying low and selling high Even though the market continues to rise for now as they have been selling you won t see this group of smart money investors chase prices higher Now that s discipline
Chart 6 Call activity is dominating but not yet at major extremes
Recent volatility conditions continue to show same old complacency The volatility index VIX remains at extreme lows at the time of writing this the reading is at a very low 14 Simultaneously the Skew Index continues to remain above 130 on the CBOE exchange Such high readings especially when averaged over a 5 or 10 trading days are a strong selling signal higher readings indicating a larger probability of a black swan market sell off Finally the options activity remains quite bullish but not yet at extremes as seen in the chart above Current call vs put ratio buying is about 11 above annual trend but the market usually tends to put in an intermediate peak as the ratio reaches 16 or higher
Bonds
Bond sentiment surveys remain at or close to pessimistic levels similar to previous months The slight recovery in Treasury prices during the months of September and October helped elevate extreme pessimism but not by much In particular Consensus Inc survey still remains at one of the more extreme levels in years other two similar extremes were seen in mid 2009 and early 2011 both great buying opportunities For referencing last months Consensus Inc survey chart can been seen by
Chart 7 Bond funds continue to leak capital for a sixth straight month
Recent ICI fund flows reports showed that bond funds had estimated outflows of 3 24 billion compared to estimated outflows of 7 57 billion during the previous week Taxable bond funds saw estimated outflows of 2 14 billion while municipal bond funds had estimated outflows of 1 09 billion We are now moving into a sixth consecutive monthly outflow out of all major taxable bond funds From a contrarian point of view retail investor selling has almost always given us a good buy signal at least for a short term trade From a technical perspective so far the bond prices have not broken lower as they continue to consolidate
Chart 8 Speculators push net short bets on Treasuries to extremes
Recent commitment of traders report also known as dumb money shows that small speculators have once again pushed their net short exposure on Treasury bonds towards 68 000 contracts This is one of the most pessimistic bets on Treasuries in several years and as the chart shows considerable short positions usually result in a squeeze and an oversold rally Whether we focus on futures positioning discussed here or sentiment surveys discussed above we can conclude that bonds are definitely an un loved and under owned asset classes right now
Chart 9 Stocks vs bonds the old debate continues
Side Note Stocks vs bonds the old debate continues When we zoom out by a couple of decades back towards the late 1990s we should be able to observe an interesting positive correlation between stock market prices and bond yields Essentially despite the fact that both asset classes had their own long term trends from the medium term perspective bond yields would rise in tandem with the stock market and visa versa The general view tends to be that rising long term interest rates are a signal of tightening monetary conditions which tends to slow credit demand and eventually economic activity The chart above shows that a spike in rates has almost always put the brakes on the stock market rally
Commodities Chart 10 Hedge funds remain extremely bearish on commodities
Recent commitment of traders reports also known as dumb money showed that hedge funds and other speculators have been steadily decreasing their commodity exposure towards previous trough in August Cumulative net longs currently stand close to 146 000 contracts custom COT aggregate Almost all sub sectors saw a decrease in positioning as hedge funds de risk out of raw materials Technically the overall commodity index still remains in a downtrend as seen in the chart above
Chart 11 Industrial metals short positioning resembles the mood of Lehman 08 panic
Dow Jones UBS Industrial Metals Index is currently composed of four futures contracts on industrial metals three of which aluminum nickel and zinc are traded on the London Metal Exchange LME and the other of which copper is traded on the Comex The index remains in a downtrend for almost three years and is down close to 45 from its early 2011 peak The chart above shows a huge build in net short positioning by hedge funds for one of its components copper Previous instances where short build this high occurred was during the depths of the Global Financial Crisis Industrial metals eventually bottomed and went onto double in value
Currencies Chart 12 Hedge funds are building US Dollar net longs again
Recent commitment of traders reports also known as dumb money showed a continued increase towards the US Dollar Cumulative positioning by hedge funds and other speculators has risen in recent weeks towards a modest net long position of 20 billion Major US Dollar net long positions are evident against the Japanese Yen and the Aussie Dollar Technically the greenback has broken down below its uptrend line which has been in place for the last 2 and half years
Currency sentiment survey readings on the US Dollar have moved back towards neutral levels At the same time sentiment on the foreign currencies is quite mixed with investors favouring European currencies like the Euro and the Pound while disliking Asian currencies like Yen and commodity currencies like the Canadian and Australian Dollars
Chart 13 Funds have cut their long exposure to the lowest since June
Recent commitment of traders reports also known as dumb money showed hedge funds and other speculators have cut their net long exposure in the precious metals sector to the lowest levels since June of this year Positioning currently stands at 26 5000 net long contracts on Gold and 6 600 net long contracts on Silver Dissecting the report further showed that Gold gross longs are at the lowest level since the Global Financial Crisis of 2008 while This type of positioning also confirms which I recently covered on the blog last week
Chart 14 Discount on the popular PMs ETF is at levels not seen since 2001
With the market sentiment for precious metals sector in panic selling traders have taken the CEF ETF price on the NY stock exchange below its actual true value almost 10 percent over the last 24 hours In other words Gold is being sold for 1 220 and Silver for 19 25 on the Comex however with the discount of almost 10 these market prices within the fund now stand at 1 100 and 17 35 per ounce Contrarians should note that the ETF regularly shifts from premium to discount and back again High premium levels usually but not always occur near intermediate peaks while high discount levels usually but not always occur near intermediate degree bottoms
Chart 15 Gold miners are extremely cheap relative to the S P 500
Side Note While I covered the stocks vs bonds above one even more interesting aspect of mis pricing within the current financial condition is the Gold Miners sector of the stock market Sectors such as Consumer Discretionary Biotech Health Care and Industrials have become overvalued throughout 2013 with S P 500 CAPE10 now nearing 25 one of the cheapest sectors of the market both nominally and relatively is the Gold Miners Index The chart above shows a huge divergence between the two since late 2012 |
C | History Rhymes Discipline Pays Will Equity Markets Suffer a Setback | There is an important distinction to be made between investing where an individual makes decisions and allocates capital based on a longer term outlook and trading That is fairly self evident but I feel the need to clarify because for the most part my ideas are efforts to identify potentially profitable trading shorter term opportunities For our sake let s consider a TRADE a position with a time frame with an expected duration of less than 1 month 30 calendar days A TREND is a position that looks out 3 months at least 90 days Whereas a TAIL or INVESTMENT is expected to be held for at least a year Before ANY capital is put to work it s imperative that you consider the duration percent of overall money dedicated to the idea and your risk parameters Get in the habit of asking yourself
Am I bullish bearish or neutral
Over what time frame
What percent of my capital base am I willing to lose on this idea
The most successful people in this business are not necessarily the smartest or luckiest They are at least in my experience the most disciplined When I started in this business 1999 the market was the place to be Everyone was talking about it and options still had a bit of niche mystique There were plenty of guys that just happened to be in the right place at the right time and made a bunch of money being part of a raging bull market That happens It s happening RIGHT NOW Equities are up about 300 since early 2009 However you slice it that s a pretty good run The major US Indices are up between 25 and 35 year to date However I saw countless guys that had great years in the mid late 90 s looking for jobs by late 2000 It was ugly but that also happens It s how markets work they are in a NEVER ENDING dance between fear and greed At the moment Gordon Gecko s mantra is ringing out from Japan to New York Greed with some help from really cheap money is GOOD There were plenty of exceptions when the dot com boom came to an end and one in particular in my office I worked at a firm that had about 150 guys in Chicago and many others in NY Philly and San Francisco I will never forget how well this particular guy did in 2000 Let s just say his bonus check would make most professional athletes blush He was unequivocally the MOST DISCIPLINED guy at the firm He was in early in the morning and stayed late He knew his market inside and out and boy did he understand how volatility worked Moving on I feel very strongly that Equity markets may suffer a substantial setback in the coming year This is NOT a trading idea it s a trend tail event Those that read me regularly know that I often fall in the Contrarian Camp This is no different I would strongly encourage DE RISKING in the coming weeks and months I would also recommend hedges and owning tail risk cheap 3 standard deviation OTM options out in time As a general rule of thumb Insurance is considerably more expensive after your house is on fire From a TRADING standpoint my inclination is to be SHORT PREMIUM and attempt to operate like the Insurance company However cheap money and long bull runs lends itself to complacency as evidence by the preponderance of optionable products trading at volatilities that are WELL BELOW multi year averages If you would like examples feel free to ask I really enjoy talking about implied vols My wife is less enthusiastic I digress Now for some facts that may or may not change your perspective
Recent AAII survey readings showed 47 BULLS and 28 BEARS These readings have been more skewed in the past but typically 70 is thought to be a potential sell signal
Recent Investor Intelligence survey showed 56 BULLS and 14 BEARS This is the LOWEST Bearish sentiment EVER for this particular survey Going back to the late 1980s
A handful of other sentiment barometers are flashing concern Market Vane Consensus Inc Daily Market Sentiment Hulbert Citigroup s reading just breached the Euphoria zone This measure last pushed to these levels in 2007 and 2008 as well as in 1999 went considerably higher and in 1987 Hot retail money is pouring into the Equity markets and out of the Bond markets
Rydex Fund flows also indicate concentrated bullish behavior on the part of retail investors Very low levels of cash in Rydex Money Market funds coupled with the fact that Rydex Levered Long fund is now 9 times the size in terms of AUM as the Rydex Levered Short fund
Margin Debt at the NYSE is at near all time highs depending on whether you adjust for inflation
Corporate Insiders who in my estimation likely have a more realistic outlook on economic prospects and consumer behavior at the margins than most Economists Analysts continue to sell The did so with greater conviction in the past 2007 but it s still telling especially when you see where Insiders were buying late 2008 early 2009 and late 2011
On the flip side money is moving out of Fixed Income US Treasuries with considerable velocity To be fair this makes a lot of sense given years of low yield and the prospect of the Fed Tapering but when you push further and further out on the risk ladder for yield people have a tendency to wade into waters that are too deep and incongruous with their risk profile
The exodus from US Treasuries began in May when Ben Bernanke insinuated that the Fed could slow their asset purchases before the end of 2013 Money has been consistently moving out of Treasuries ever since which is unusual for the past 5 6 years I must point out that Bonds have been in a bull market for roughly 30 years and at some point we should expect 10 year and 30 year bond yields closer to GDP growth plus expected inflation We work with an incredibly bright CTA with a Treasury market focus who has been growing assets over the past 12 months and perhaps most important the manager has unequivocally put his money where his mouth is considering the percentage of AUM represented by his own investment I rarely advocate for specific Commodity Trading Advisors but I genuinely believe in Jim s trading thesis and ability to execute perform Feel free to send me an email if you would like to know more about Jim Daehler and Infinity Advisors Treasury Trading program The most recent Commitment of Traders report shows speculators with a sizable short position in the US Bond market Current positioning ahead of the November Non Farm Payroll data is one of the most pessimistic in the past 5 years
In conclusion I believe strongly that the nearly 5 year bull market in Equities is long in the tooth and de risking should be a priority At bare minimum consider hedging exposure out in time I welcome the opportunity to speak in greater detail about my big picture outlook or some of the minutiae My primary focus at the firm has been on the Energy and Metals markets which have been volatile and regularly present potential entry and exit points
I find it interesting that Hedge Fund exposure to Commodities is near late 2008 lows The CCI Continuous Commodity Index is clearly declining but the Global Race to debase shows no sign of slowing As a friend of mine is inclined to say when Commodities go up we see inflation but when Equities and Real Estate move 100 300 over the course of a few years we continue to fear deflation Interesting
While the Precious Metals get most of the attention as we plumb near multi year lows in Gold and Silver the Industrial Metals have also come under substantial pressure What does that say about growth prospects in 2014
Copper Commitment of Traders Report with Industrial Metals Index overlay
Finally a look at the Gold selloff compared to other bear markets in the barbaric relic and one time reserve currency pre US Dollar and pre Bitcoin smirk As Mark Twain said History doesn t repeat itself but it often rhymes I agree with ole Samuel Langhorne Clemens At some point in the coming months I expect Equities to make a meaningful top and Gold and Silver to present very attractive LONG TERM buy levels Picking tops and bottoms is a fools errand but being disciplined and being proactive that s often rewarded |
C | U S Economy Back In The Fast Lane | Better than expected economic indicators on Monday November s M PMI and on Tuesday October s car sales depressed the S P 500 which fell 0 6 over the past two days Investors may be taking some profits on expectations that the Fed might start tapering QE sooner rather than later Is this the beginning of a significant correction I doubt it since corrections and bear markets are triggered by mounting concerns about a recession The latest data are pointing more to a boom than a bust I m not sure if the folks at the Economic Cycle Research Institute ECRI have changed their mind yet about the economy being in a recession Their Weekly Leading Indicator sure doesn t show it Neither does the Conference Board s Leading Economic Indicator which rose to a cyclical high during October The Citigroup Economic Surprise Index remains subdued with a reading of 5 1 yesterday However November s M PMI was surprisingly strong causing some economic truthers to question its accuracy I expressed some of my doubts yesterday as well But then auto sales came out for November showing that they spiked up to a new cyclical high of 16 4 million units However this may be partly a rebound from October s sales which were depressed by the partial shutdown of the federal government The two month average was 15 8 million units a slight uptick from the third quarter s 15 7 million units Another upbeat indicator was yesterday s construction report showing that total construction put in place also rose to a new cyclical high though it remains 25 below the record high during March 2006 Today s Morning Briefing A Tablet on Every Table 1 Something is different this time 2 Dow Chemical shedding low margin businesses 3 Trauma of 2008 remains traumatic 4 Improving on the margin 5 IT leading the margin parade 6 There s an app for that even when dining out 7 Industries with rising and falling margins 8 Corrections usually caused by recession fears 9 No correction if QE tapered due to strong economy 10 Car sales and construction spending at cyclical highs 11 Focus on overweight rated auto related S P 500 industries |
BMY | FDA accepts Bristol Myers marketing application for Opdivo Yervoy for intermediate poor risk kidney cancer | The FDA accepts for review Bristol Myers Squibb s NYSE BMY marketing application seeking approval for the combination of Opdivo nivolumab and Yervoy ipilimumab to treat intermediate and poor risk patients with advanced renal cell carcinoma RCC a Breakthrough Therapy indication The agency s action date is April 16 2018 Now read |
BMY | Bristol Myers in licenses Ono s cancer candidate ONO 4578 | Bristol Myers Squibb NYSE BMY inks an agreement with Osaka Japan based Ono Pharmaceutical securing exclusive rights to develop manufacture and commercialize ONO 4578 worldwide except Japan South Korea Taiwan China and ASEAN countries The companies will partner on development and commercialization in Japan South Korea and Taiwan while Ono will retain exclusive rights in China and ASEAN countries Under the terms of the agreement BMY will pay 40M upfront milestones and royalties on net sales ONO 4578 is an orally available selective antagonist of EP4 a Prostaglandin E2 PGE2 receptor PGE2 is an immunosuppressive factor in the tumor microenvironment which promotes tumor progression Controlling PGE2 via a PGE2 receptor antagonist may enhance the effectiveness of immuno oncology therapies like Opdivo nivolumab and Yervoy ipilimumab Now read |
BMY | TARIS and Bristol Myers team up on novel approach to treat MIBC | Privately held TARIS Biomedical LLC enters into a clinical trial collaboration with Bristol Myers Squibb NYSE BMY to evaluate the safety tolerability and preliminary efficacy of TAR 200 GemRIS and Opdivo nivolumab in a Phase 1b study in patients with muscle invasive bladder cancer MIBC who are scheduled for radical cystectomy bladder removal The TARIS System a pretzel shaped silicon tube placed into the bladder via catheter or cystoscope is designed to continuously release drugs over weeks or months BMY also made an equity investment in TARIS Now read |
BMY | FDA OKs adjuvant use of Bristol Myers Opdivo in melanoma | The FDA approves the use of Bristol Myers Squibb s BMY 0 3 Opdivo nivolumab for the adjuvant treatment of patients with melanoma with involvement of lymph nodes or metastatic disease who have undergone complete resection surgical removal of the tumors and lymph nodes Adjuvant use means that the therapy is delivered after the primary treatment to lower the risk of the cancer coming back The data supporting approval was generated in the CheckMate 238 study which showed treatment with Opdivo delivered a 66 4 rate of recurrence free survival RFS compared to 52 7 for Yervoy ipilimumab and reduced the risk of recurrence by 35 Now read |
BMY | Bristol Myers sees 3 billion tax hit in fourth quarter 2017 | Reuters Bristol Myers Squibb Co N BMY will record a 3 billion charge in the fourth quarter of 2017 as a result of the U S tax reform law passed last month the drugmaker said in a regulatory filing on Friday The expense is primarily related to taxes on unremitted offshore earnings the company said Bristol said the charge will affect its previous forecast for net earnings per share and its tax rate but will not have an impact on its outlook after adjusting for one time items In October the company said it expected full year 2017 net earnings per share of 2 36 to 2 46 with an effective tax rate of 25 percent to 26 percent while adjusted earnings were forecast at 2 95 to 3 05 per share with a tax rate of 22 percent Changes under the Tax Cuts and Jobs Act include a permanent reduction in the corporate income tax rate to 21 percent from 35 percent It also exempts U S corporations from U S taxes on most future foreign profits sets a one time tax for U S business profits now held overseas and prevents companies from shifting profits out of the United States to lower tax jurisdictions abroad Bristol Myers said it is still evaluating all the provisions of the legislation and currently estimates that the net impact on its adjusted tax rate will be roughly neutral in 2018
The drugmaker plans an update when it provides a full year outlook on Feb 5 |
JPM | Yellen makes uncertainty new mantra as market doubts Fed view | By Lindsay Dunsmuir and Ann Saphir WASHINGTON SAN FRANCISCO Reuters The U S Federal Reserve s dwindling confidence in its own outlook and resulting confusion among investors are creating a policy problem that may require chief Janet Yellen to lay out her own views more forcefully The Fed chair s next communications test comes on Tuesday and Wednesday during her semi annual testimony to U S lawmakers less than a week after the central bank kept interest rates unchanged near record lows and lowered its projections for hikes in 2017 and 2018 A self described consensus builder Yellen sees her job as reflecting the whole committee s views rather than setting an agenda for others to follow I think that s a very laudable intent but sometimes that produces a lack of clarity said former Fed staffer and current partner at Cornerstone Macro LLC Roberto Perli Sometimes there is a consensus for one reason and then next time there is a consensus for a different reason so the story shifts and people get confused In fact Fed policymakers deepening uncertainty about their own projections has resulted in the central bank sending mixed messages repeatedly ratcheting up rate hike expectations only to tone them down later COMMUNICATION BREAKDOWN At Wednesday s quarterly news conference Fed officials doubts were in plain view with Yellen using the term uncertain or its variations 13 times more than twice as often as in March In December when the Fed raised its rates by a quarter point for the first time in nearly a decade that word only came up twice And on Friday James Bullard a Fed voter this year said the economy may need only one rate hike for the next two and half years and called on the Fed to discard its long run forecasts altogether or risk losing credibility with markets While most Fed officials still see two rate hikes this year markets expect only one in December if at all Graphic This gap is a source of discomfort for Yellen who places a premium on making sure markets can anticipate how new economic data will guide the Fed s decisions on rates The Fed chief expressed surprise last week that markets had missed hints in the Fed s April statement that a rate rise in June or July was possible and only got the message when the minutes of that meeting were published three weeks later The Fed changed tack again barely two weeks later after May s weak jobs report the latest in a string of factors that have repeatedly forced the Fed to pause in its efforts to nudge interest rates further away from zero The risk of data dependency is that it becomes data jumpiness said JPMorgan NYSE JPM economist Michael Feroli TAKING THE LEAD Part of the reason for the Fed s latest change in tune is its assessment of how high rates can rise before they start restraining economic growth Last week policymakers cut their projections for the third time in the last four quarterly projections The level now at 3 percent is well below the 4 25 percent rate policymakers expected when they first began publishing long term forecasts for the Fed s policy rate in 2012 With a lower ceiling for rates policymakers now expect a shallower path upward Policymakers are also lowering their forecasts for those long run rates more often They cut their projections by 0 75 percentage points over the past year compared to a half a point cut over the prior three years Graphic Despite outliers such as Bullard whose views are at odds with the majority the Fed appears to be coalescing around its latest forecasts The central tendency ranges which toss out the three highest and three lowest forecasts show policymakers are projecting a narrower range of policy outcomes and economic indicators than they did in March suggesting a majority is actually less divided over the right path for policy than just three months ago The problem is investors and economists are still not clear what primarily shapes those views The Fed s 17 policymakers have stressed the importance of progress in employment and inflation and yet have repeatedly hit a pause button even as both indicators continue to improve That is where Yellen who is particularly concerned about labor market health could create more clarity on what is now guiding the Fed by being more forthright with her personal views Fed watchers say
It s weird for her to take part in that discussion and push things her way and yet then talk to the press about where the group is but not where she is said Joe Gagnon also a former Fed staffer and now senior fellow at the Peterson Institute for International Economics She should probably be a bit more honest |
JPM | JPMorgan says Britain s EU referendum too close to call | LONDON Reuters JPMorgan NYSE JPM researchers said on Tuesday that Britain s referendum on European Union membership in two days was too close to call We will go into the vote without high confidence in predicting the outturn in either direction JPMorgan researcher Malcolm Barr said in a research note to clients titled Brexit polling update It s close While polls have painted a contradictory picture of public opinion ahead of Thursday s vote betting odds have consistently indicated a high probability of a vote to remain Betting odds on Tuesday indicated a 75 percent probability of a Remain vote according to Betfair
In our view the sub 30 percent odds of an exit vote being implied by betting markets for example are placing more weight than we would on the accuracy of the polling and the magnitude of a status quo bias effect JPMorgan said |
JPM | Brexit vote outcome to close to call JPMorgan | Investing com JPMorgan NYSE JPM said Tuesday the outcome of the Brexit vote is too close to call We will go into the vote without high confidence in predicting the outturn JPMorgan said Polls point to the outcome of the referendum being in the balance Betting odds on Tuesday indicated a 75 probability of a Remain vote according to Betfair JPMorgan said those odds over estimate the accuracy of the polls and the status quo bias effect |
JPM | Sterling hits six month high on last minute boost for Bremain hopes | By Shinichi Saoshiro TOKYO Reuters The pound advanced to a six month high against the dollar on Thursday after the latest polls favored Britain remaining in the European Union just hours before referendum voting was due to open Polls by ComRes conducted for the Daily Mail newspaper and ITV LON ITV television and by YouGov for The Times newspaper in London showed a last minute rise in support for Britain to remain in the EU Reduced Brexit fears have helped sterling gain roughly three percent so far this week although several poll results have been too close to call a definitive outcome The pound was up 0 6 percent at 1 4793 after touching 1 4847 its highest since the beginning of the year A wait and see mood was expected to prevail through the rest of the day dotted by possible bouts of volatility as markets nervously awaited the British poll results It will be hard for the market move until the poll results are released The pound obviously will take center stage But other European currencies and particularly dollar yen also bear watching as the pair will reflect swings in risk sentiment said Shin Kadota chief Japan FX strategist at Barclays LON BARC in Tokyo The polling will take place between 0600 2100 GMT on Thursday with the results expected early on Friday Poll results may not be published during voting hours but financial market prices could be affected by independent surveys conducted by some private institutions analysts said WIDE SWINGS EYED The dollar was up 0 2 percent at 104 645 yen after moving the previous day in a narrow 104 855 104 310 range The greenback has sagged against the yen after Tuesday s testimony by Federal Reserve Janet Yellen was seen to have played down the chances of a U S interest rate increase in July The euro extended overnight gains rising 0 4 percent to 1 1338 A slight ebb in prospects of Britain leaving the EU has helped the common currency Sterling climbed to a two week high of 154 75 yen GBPJPY R JPMorgan NYSE JPM expects sterling would surge towards 1 51 and the dollar rally to around 108 yen if Britons opt to stick with the EU But it saw the pound tank towards 1 32 and dollar yen retreat to around 101 in the event of a Brexit vote The safe haven yen is thought likely to appreciate sharply on a Brexit which would raise the prospect of actual market intervention by Japanese authorities If dollar yen falls below 100 and the yen rises broadly against emerging currencies and the pound Japanese authorities could switch from verbal to actual intervention said Masafumi Yamamoto chief forex strategist at Mizuho Securities in Tokyo They could intervene as it would not be about raising Japan s competitiveness but rather reacting against abnormal market moves that threaten the economy he said The Australian dollar seen as a rough proxy of risk sentiment was up 0 3 percent at 0 7519 not far from a seven week high of 0 7527 scaled overnight
For the latest Reuters news on the referendum including full multimedia coverage click |
JPM | Brexit vote is moment of truth for the last remaining bears | By Simon Jessop and Maiya Keidan
LONDON Reuters Britain s vote on whether to stay in the EU is high noon for the last remaining bears the few fund managers still brave enough to hold short positions betting that share prices will fall who could get swamped by a rally if Britain votes to stay in
Demand to short shares in the FTSE 100 fell 2 75 percent between June 17 and June 21 according to data from FIS Astec Analytics as many traders opted to reduce risk heading into the vote
Short sellers are reducing their exposures to a market bounce in blue chip stocks post the Thursday vote said David Lewis senior vice president at FIS Astec Analytics
That is part of an overall trend to reduce short positions which has been under way since early this year JPMorgan NYSE JPM said in a note to clients on Wednesday
There is a very distinct move from being net short January February to net covered since March 2016 This can be interpreted as a reduction in risk appetite The reduction took place across most sectors the only exception being utilities it wrote
But a handful of hedge funds still have big short positions open That means they could earn a windfall on those bets if Britain votes to leave and share prices tumble but could face big losses if it stays in and shares rise
Data from the Financial Conduct Authority Britain s financial regulator showed 134 asset managers worldwide had 427 short positions on 199 British firms worth more than 0 5 percent of a company s value as of the close of markets on Tuesday
BlackRock was by far the biggest with 51 big short positions followed by AQR Investment Management with 27 and Odey Investment Management with 17 Odey s boss Crispin Odey is a noted pro Brexit campaigner
None of the funds was available for comment on their Brexit exposure
Short sellers borrow shares and sell them betting that the price will fall and they can buy them back more cheaply later to return them to the lender If prices rise the potential losses can be huge since the shares must be repurchased at a loss
Among the targets of short trading recorded by the FCA are services firm Carillion L CLLN and supermarket chains Ocado Group L OCDO Sainsbury L SBRY and WM Morrison Supermarkets L MRW The targets include 37 companies from the FTSE 100
Some of those bets may have been placed months ago based on factors other than Brexit and some of the fund managers may have balanced their short positions with long positions in other securities that would reduce the Brexit risk
The FCA said its data included 99 new short positions above the 0 5 percent disclosure threshold taken in the past week slightly more than the 91 bets placed the week before
The risky short bets have already been more exposed than usual because of the high volatility in the run up to the Brexit vote
Over the last 10 trading days for example 6 have seen the FTSE 100 move more than 1 percent twice to the downside and 4 times to the upside
Graphic by Stephen Culp editing by Peter Graff |
HAL | Oil prices climb nearly 9 on OPEC agreement | Investing com Oil prices rose by nearly 9 today climbing after the Organization of the Petroleum Exporting Countries OPEC agreed to slash production The price of Brent Oil and West Texas Crude Oil both increased on Wednesday with U S crude futures settling at 49 98 and Brent futures settling at 50 45
OPEC ministers said the production pact had been several months in the making Over the past two months this committee has done some excellent work The meetings it has undertaken have been extremely constructive providing us all with a better appreciation and understanding of the various viewpoints among OPEC and non OPEC producers said Mohammed Bin Saleh Al Sada Qatar s Minister of Energy and Industry and President of the OPEC Conference in remarks earlier today The last time we met as a conference was in Algiers on September 28 This historic occasion with OPEC Member Countries unified in approving the already mentioned Algiers Accord saw an agreement on a new OPEC production target range The focus was on accelerating the drawdown of the stock overhang and bringing the market rebalancing forward
The energy minister said that the production cutting agreement will stabilize global oil prices Oil prices have fluctuated at a rate during the last two months that makes OPEC leaders uncomfortable It is vital that stock levels start to fall as the decision taken in Algiers recognized As we have seen in previous cycles once this overhang starts falling on a regular basis then prices start to rise and more stability will return to the market Bin Saleh commented
Oil production remains a growth business he added with oil demand in OPEC s 2016 World Oil Outlook reaching over 109 million barrels of oil a day by 2040 a healthy increase of over 16 million barrels a day
This growth will require significant investments in the upstream midstream and downstream he concluded Overall estimated oil related investment requirements are close to 10 trillion in the period to 2040
Investors in the U S speculated that the oil production slowdown overseas could be good for business in the U S Under incoming President Donald Trump oil exploration is expected to be allowed off the coast of Virginia and off the coast of Florida Artic and Antarctic exploration banned by current President Obama could also be allowed by the Trump White House and expanded U S production is something advocated by former Gov Rick Perry R Texas who is being touted for Energy Secretary Oil field equipment stocks from Halliburton Company NYSE HAL and others could also benefit from the trend analysts said |
HAL | NYMEX Brent hold gains in Asia on OPEC cut China PMIs help | Investing com Crude oil prices held overnight gains into Asia on Thursday as manufacturing figures out of China lifted regional sentiment on demand by the world s second largest importer
On the New York Mercantile Exchange U S crude for January delivery edged up 0 06 to 49 47 a barrel in Asia Brent crude futures traded on London s Intercontinental Exchange were quoted flat at 51 84 a barrel
China reported Thursday that the semi official CFLP manufacturing index came in at 51 7 for November compared with a 51 0 level seen and up from 51 2 the previous month The CFLP non manufacturing PMI came in at 54 7 compared to 54 0 last month subsequent figures from the private Caixin manufacturing PMI rose to 50 9 in November beating an expected 50 8 level
The Caixin index has now been above the 50 point neutral level which separates expansion in activity from contraction for five straight months adding to views that in the world s second largest economy growth has stabilized thanks to a credit and construction boom
Overnight oil prices surged nearly 9 climbing after the Organization of the Petroleum Exporting Countries OPEC agreed to slash production
OPEC ministers said the production pact had been several months in the making Over the past two months this committee has done some excellent work The meetings it has undertaken have been extremely constructive providing us all with a better appreciation and understanding of the various viewpoints among OPEC and non OPEC producers said Mohammed Bin Saleh Al Sada Qatar s Minister of Energy and Industry and President of the OPEC Conference
The last time we met as a conference was in Algiers on September 28 This historic occasion with OPEC Member Countries unified in approving the already mentioned Algiers Accord saw an agreement on a new OPEC production target range The focus was on accelerating the drawdown of the stock overhang and bringing the market rebalancing forward
The energy minister said that the production cutting agreement will stabilize global oil prices Oil prices have fluctuated at a rate during the last two months that makes OPEC leaders uncomfortable It is vital that stock levels start to fall as the decision taken in Algiers recognized As we have seen in previous cycles once this overhang starts falling on a regular basis then prices start to rise and more stability will return to the market Bin Saleh commented
Oil production remains a growth business he added with oil demand in OPEC s 2016 World Oil Outlook reaching over 109 million barrels of oil a day by 2040 a healthy increase of over 16 million barrels a day
This growth will require significant investments in the upstream midstream and downstream he concluded Overall estimated oil related investment requirements are close to 10 trillion in the period to 2040
Investors in the U S speculated that the oil production slowdown overseas could be good for business in the U S Under incoming President Donald Trump oil exploration is expected to be allowed off the coast of Virginia and off the coast of Florida Artic and Antarctic exploration banned by current President Obama could also be allowed by the Trump White House and expanded U S production is something advocated by former Gov Rick Perry R Texas who is being touted for Energy Secretary Oil field equipment stocks from Halliburton Company NYSE NYSE HAL and others could also benefit from the trend analysts said |
HAL | Halliburton shareholder class action to settle for 100 million | By Nate Raymond Reuters Halliburton Co N HAL on Friday said it had reached a 100 million settlement to resolve a long running securities fraud class action lawsuit against the oilfield services provider that twice reached the U S Supreme Court The deal resolves a lawsuit in federal court in Dallas accusing Halliburton of misrepresenting its potential liability in asbestos litigation its expected revenue from certain construction contracts and the benefits of a merger in 1998 Halliburton said the company itself would pay 54 million of the 100 million settlement while its insurer would fund the rest The deal which would be subject to court approval has no admission of liability Halliburton said David Boies a lawyer for the lead plaintiff Erica P John Fund Inc in a statement welcomed the deal which he said was a significant monetary recovery for the class members in this hard fought securities fraud class action The litigation has been pending for the Houston based company since 2002 and came after the U S Securities and Exchange Commission launched a probe of Halliburton s accounting for revenue on long term construction projects Halliburton whose chief executive during the period in question was former U S Vice President Dick Cheney settled that SEC case in 2004 for 7 5 million but the class action litigation lived on for years to follow The class action lawsuit accused Halliburton of misleading investors by understating asbestos liabilities overstating construction and engineering revenue and inflating the benefits of a merger with Dresser Industries The case twice reached the U S Supreme Court most recently resulting in a ruling in 2014 that made it harder for investors to band together to pursue securities fraud lawsuits against publicly traded companies In July 2015 U S District Judge Barbara Lynn certified the class of investors but allowed them to pursue claims related to just one of six dates they said Halliburton made disclosures that corrected misleading statements Halliburton subsequently appealed that ruling and had been awaiting a decision prior to announcing Friday s agreement in principle to settle the case
The case is Erica P John Fund Inc et al v Halliburton Company et al U S District Court Northern District of Texas No 02 cv 01152 |
C | Are Investors Too Bullish On Stocks | Just how far has the bullish sentiment of independent investors recovered since the 2009 bottom Pretty far indeed Below is a chart showing the cumulative AAII investor sentiment going back to 2006 As you can see the typical small investor had a mostly bearish outlook on stocks from late 2007 through the end of 2009 The small traders then turned slowly bullish on equities in 2010 and have been increasingly more enthusiastic about stocks ever since As of last week this indicator made a new multi year high which shows you just how much investor sentiment has rebounded This has caused many to wonder if investors have become too bullish on stocks Yet for all this the public at large is still missing from this remarkable rebound It s mostly high net worth investors that are the driving force behind this bull market The general public has exposure mainly in the form of 401Ks but gone are the days of day trading and direct investment The average retail investor i e the general public never quite regained the same appetite for equities he had in the years prior to the credit crash Yet high net worth investors are as bullish as they have been in years So is the typical Wall Street pro But is this enough to put a top on the market from a contrarian standpoint Consider that in the years since the 2009 bottom there have been at least three notable corrections the flash crash in May 2010 the 2011 mini bear market and the April June 2012 correction while the master weekly Kress cycle was bottoming Each of these setbacks occurred on low public participation It s clear that the stock market has largely become a rich man s playground since the credit crash and Wall Street is basically just playing against itself not the public at large So the answer to that question is yes stocks can correct substantially even without widespread public participation The next question that comes to mind is But doesn t history show that major bull markets don t end until the public has maximum exposure to stocks This is a true observation so there is some question as to whether the recovery that began in 2009 will continue albeit with fits and starts after the 60 year cycle bottoms in 2014 and until the public finally embraces the bull Quite simply this is a matter of speculation and unfortunately technical analysis with its short term focus offers no conclusive answers But the odds are still in favor of 2014 witnessing another broad market correction the first in over a year So while the general public remains ambivalent toward equities the current participants which include large speculators and institutional investors are as bullish on stocks as they ve been all year The CNNMoney Fear Greed Index is currently at 71 its highest reading since the September peak The AAII bull bear ratio is currently at a level which in the past has suggested too much optimism and has heralded market pullbacks see chart below Consider also the current state of investor sentiment as reflected in Citigroup s Panic Euphoria Model The indicator is currently reflecting a state of euphoria as defined by Citigroup s admittedly loose methodology The indicator is not without merit however it correctly predicted the previous pullbacks of February May June and August It must be emphasized that none of the above mentioned sentiment indicators can pinpoint a market top with any precision Rather they should be viewed as heads up indicators to prepare us for a potential market juncture in the near future |
C | On China s Economy And U S Economic Optimal Control | I have long been a proponent of the intelligent use of quantitative models on this site To illustrate my point I compare and contrast the work of two prominent economists Ed Yardeni and Janet Yellen Both are at the top of their respective professions Yardeni has been a Wall Street forecaster for as long as I can remember He is the epitome of the practical market savvy modeler Yellen has a sharp mind and she is about to become the Fed Chair though her thinking appears to be more academic in orientation China bottoming Now consider how these two economists analyzed issues that arose in each of their own realms Recently pointed out a possible positive divergence in China The forward earnings of emerging market equities are correlated to commodity prices he wrote
Emerging markets which account for 20 of the World ex US MSCI have lost their earnings groove The forward earnings for the EM MSCI rose to a new record high during 2009 through mid 2011 However it stalled since then and continues to flat line As I ve noted before the forward earnings of EM MSCI has been highly correlated with the CRB raw industrials spot price index since the mid 1990s The commodity index has been slowly losing altitude since the start of the year
He went on to point out that the forward estimated margins of the components of MSCI China is rising Since China is has a large weight within MSCI EM then by implication this development should provide some positive fundamental backdrop for EM stocks I have the greatest of respect for Ed Yardeni as he has been an insightful Wall Street economist since the time I started to discover girls In this case I would add the following caveats to his analysis of Chinese stocks
How much noise is in the Street s earnings estimates Here are a couple of sources of noise in Chinese companies earnings that are worth thinking about
Chinese stocks have been the source of well known accounting frauds and outfits like Muddy Waters Research have made a good living exploiting this anomaly
The effects of crony capitalism opaque accounting and corporate structures may make profits elusive Consider the case of disgraced party official Bo Xilai who was reputed to be an avowed Maoist How did the family of an avowed Maoist amass a fortune of at least USD 136 million according to this report
Don t forget the effects of government policy China is still a communist country based on a command economy In the wake of the Lehman Crisis of 2008 the government decreed that SOEs some of which are listed on stock exchanges go on a spending spree and state owned banks were told to lend in order to finance this recovery effort All duly followed orders without regard to the profit motive As we await the policy announcements from the Party s Third Plenum see my previous comments What Li Keqiang s 7 2 growth stall speed means and The stakes are rising for China s Third Plenary one wildcard is the effect of direction of government policy on profit margins The key takeaway here is revenue growth does not equal profit growth So be careful about the assertions about profit margins
Sometimes it is easy to forget that when analyzing foreign stocks the companies do not live in America Yellen and optimal control theory By contrast consider the buzz in the last week that arose in some circles about the prospects for a Yellen Fed s implementation of optimal control theory The idea behind this approach was described in a on November 13 2012 where the Fed tests out the effects of different policies and a quadratic penalty e g the square of the distance is imposed from the dual objectives of inflation and unemployment
To derive a path for the federal funds rate consistent with the Committee s enunciated longer run goals and balanced approach I assume that monetary policy aims to minimize the deviations of inflation from 2 percent and the deviations of the unemployment rate from 6 percent with equal weight on both objectives In computing the best or optimal policy path for the federal funds rate to achieve these objectives I will assume that the public fully anticipates that the FOMC will follow this optimal plan and is able to assess its effect on the economy The blue lines with triangles labeled Optimal policy show the resulting paths The optimal policy to implement this balanced approach to minimizing deviations from the inflation and unemployment goals involves keeping the federal funds rate close to zero until early 2016 about two quarters longer than in the illustrative baseline and keeping the federal funds rate below the baseline path through 2018 This highly accommodative policy path generates a faster reduction in unemployment than in the baseline while inflation slightly overshoots the Committee s 2 percent objective for several years
The Street got excited because under such a regime the Fed would be more accommodative than previously thought The Street got doubly excited when William English who is the head of the Fed s director of monetary affairs wrote a discussing different approaches to Fed policy including optimal control theory The combination of these events prompted Jan Hatzius of Goldman Sachs to forecast that the Fed would lower the unemployment threshold range from 6 5 to 6 0 before tapering its QE program via Whoa Don t get so excited yet In a separate speech on April 12 2012 cautioned against the blind use of models like optimal control theory
While optimal control exercises can be informative such analyses hinge on the selection of a specific macroeconomic model as well as a set of simplifying assumptions that may be quite unrealistic I therefore consider it imprudent to place too much weight on the policy prescriptions obtained from these methods so I simultaneously consider other approaches for gauging the appropriate stance of monetary policy
Having worked with models that use quadratic penalties before I know that these models can be highly sensitive to the economic forecasts and the controls can be touchy A small change in the dial can result in huge changes in market expectations In quant speak it means that outputs can be non linear to changes in inputs I believe that Yellen understands that and therefore cautioned against the blind adherence to this model This does not mean that a Yellen Fed will follow the precepts of optimal control just that if it chose to go down that path it would be well aware of the limitations of such an approach had a more sober take on the application of optimal control theory emphasis added
I f you focus on the possibility of lowering the unemployment thresholds to 5 5 you should expect only a minor shift in the timing of the first rate hike The reason for this is obvious everyone already believes that under the current circumstances the 6 5 threshold is no longer meaningful No one expects a rate hike when the 6 5 mark is crossed A threshold of 5 5 is largely just a recognition of the reality of the likely policy path In contrast the 2017 number falls out of the optimal control problem in which the Fed credibily commits to holding rates near zero through that date That is a different policy than the threshold based guidance currently in play And I would say that persistent concerns about financial stability make it difficult for the Fed to credibly commit to such a period of low rates even if policymakers wanted to make such a commitment Hence the exercise with threshold based guidance to begin with it is intended to capture as many of the gains of the optimal control approach as possible assuming the optimal control approach is not a realistic policy option
Who is the more intelligent modeler So having read these accounts who do you think is the more intelligent modeler Yardeni or Yellen There are lots and lots of models out there Any Ph D can build a model but judgement is priceless and how you earn your keep Disclosure Cam Hui is a portfolio manager at Qwest The opinions and any recommendations expressed in the blog are those of the author and do not reflect the opinions and recommendations of Qwest Qwest reviews Mr Hui s blog to ensure it is connected with Mr Hui s obligation to deal fairly honestly and in good faith with the blog s readers None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument Nothing in this blog constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives financial situation or particular needs of any specific recipient Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions Past performance is not indicative of future results Either Qwest or I may hold or control long or short positions in the securities or instruments mentioned |
C | Silver Technical Analysis More Downwards Momentum | Our last analysis of Silver expected more downwards movement which is exactly what has happened The target was 21 158 So far the price has reached down to 20 588 0 57 below the target I have a new alternate for you this week I have continued looking and finally have found an alternate which has a reasonable probability Main Wave Count Intermediate wave B is unfolding as a simple zigzag Minor wave A subdivides as a five and minor wave B is now a complete three a double zigzag At 27 417 minor wave C would reach equality in length with minor wave A Minor wave A lasted 43 days and minor wave B lasted a Fibonacci 34 days I would expect minor wave C to last between 34 and 43 days or thereabouts The parallel channel drawn here is Elliott s technique for a correction Draw the first trend line from the start of minor wave A to the end of minor wave B then place a parallel copy upon the end of minor wave A I will expect minor wave C to find resistance at the upper edge of this channel and it is most likely to end there Within minor wave C minute wave ii may not move beyond the start of minute wave i This wave count is invalidated with movement below 20 512 The key to this wave count and the reason why I judge it to have a higher probability is the triangle labeled minuette wave b This structure looks so typically like a contracting triangle It subdivides nicely into a series of zigzags with the b wave longer lasting and having deeper retracements on the five minute chart If this structure is a triangle then it is either a B wave or a fourth wave It cannot fit as a fourth wave so it may be a B wave Within minute wave ii zigzag minuette waves a and b may be complete Minuette wave c may be very close to completion only the last fifth wave downwards needs to complete If price moves above 21 598 in the next few days then I would have confidence in this wave count At that stage I would expect overall upwards movement for about another 23 days from today s date At 24 756 minute wave iii would reach 1 618 the length of minute wave i Minute wave ii may not move beyond the start of minute wave i This wave count is invalidated with movement below 20 512 Alternate Wave Count My first alternate included a rare running flat I discarded it due to a low probability This idea has a better fit It is possible that minor wave B is an incomplete zigzag Within minor wave B minute wave a subdivides nicely as a leading expanding diagonal Within the leading diagonal all the subwaves are zigzags except the third wave which is an impulse For this piece of movement this structure has the best fit Minute wave b is labeled as an expanded flat correction Within it minuette waves a and b both subdivide as three wave zigzags and minuette wave b is a 106 correction of minuette wave a There is no Fibonacci ratio between minuette waves a and c Minuette wave c is an incomplete impulse At 18 591 minute wave c would reach equality in length with minute wave a If this wave count is confirmed with movement below 20 512 then I would add to the target calculation for minute wave c when there is enough structure within it to use minuette wave degree so this target may change or widen to a small zone Minor wave B may not move beyond the start of minor wave A This wave count is invalidated with movement below 18 215 Although this wave count has a very good fit on the daily chart it does not have as nice a fit on the 2 hourly or five minute charts This wave count cannot see a triangle where the main wave count sees it s minuette wave b This alternate must see this piece of movement as a series of overlapping first and second waves Although this is very common it seems to be a stretch and it seems to be ignoring what looks like an obvious triangle However on the five minute chart it does fit although there is at least a running flat in there for a second wave For this alternate there is so far a slight increase in downwards momentum for the possible third wave of this impulse This does fit but the increase is not convincing If downwards momentum increases further in momentum then this wave count would increase in probability Within this alternate wave count there are three more fourth wave corrections which should unfold during the next few days or so The last of them minuette wave iv may not move into minuette wave i price territory This alternate wave count is invalidated with movement above 21 598 |
C | Elliott Wave Outlook S P Futures Reversed Higher Oil Hit Lows | S P Futures S P Futures reversed nicely higher on Friday from 1737 where we see a completed wave c third leg of a decline from 1773 which was an expanded flat formation As such we think that price is now back in bullish mode that could reach 1780 1800 in the next few days CRUDE OIL Oil is at the lows so obviously corrective bounce has unfolded sooner than we thought Now when we are looking at the whole wave structure from the past 30 days we see prices moving down in wave 5 that could be targeting 90 91 region in the next few sessions Once this zone is met be aware of a corrective bounce GOLD Gold has extended its decline in the last few sessions to 1260 but we still see it moving lower in wave v of i which means that market could find a support soon and ideally it will reverse back up to 1305 1326 with wave ii In that zone wave iv could react as a resistance and send prices lower again |
C | GOLD Upwards Movement Followed By New Lows | A new low for Silver in the last 24 hours changes the situation Yesterday s alternate wave count for Silver was confirmed and so I expect Gold should follow I am swapping the main and alternate wave counts for Gold over today I am still expecting a little more upwards movement but this should be followed by new lows within two to four days Main Wave Count Gold is still within a large fourth wave correction at primary wave degree which is incomplete It is now more likely to continue as a double combination because within it intermediate wave X should be deep The purpose of double combinations is to take up time and move price sideways so I would now expect intermediate wave Y to end about the same level as intermediate wave W at 1 433 83 Double combinations in fourth wave positions are quite common Within the combination intermediate wave X is unfolding as a zigzag Minor wave C downwards must complete as a five wave structure At 1 206 05 minor wave C would reach equality in length with minor wave A There is no lower invalidation point for intermediate wave X X waves may make new price extremes beyond the start of W waves and they may behave like B waves within flat corrections For combinations X waves often end close to the start of W waves I have drawn a parallel channel about the zigzag of intermediate wave X using Elliott s technique for a correction Draw the first trend line from the start of minor wave A to the end of minor wave B Place a parallel copy upon the end of minor wave A I will expect minor wave C to find support at the lower end of this channel and it may end there Primary wave 4 may not move into primary wave 1 price territory This wave count is invalidated with movement above 1 532 90 Within minor wave C minute waves i ii and iii are complete There is no Fibonacci ratio between minute waves i and iii so it will be very likely that minute wave v will exhibit a Fibonacci ratio to either of minute waves i or iii When minute wave iv is complete and I know where minute wave v has begun I will add to the target calculation at minute wave degree so the downwards target may widen to a small zone or change Minute wave ii was a shallow 36 5 regular flat correction of minute wave i Given the guideline of alternation I would expect minute wave iv to most likely be a zigzag and to most likely end about the 0 618 Fibonacci ratio of minute wave iii at 1 301 30 So far within minute wave iv it looks like minuette waves a and b may be complete Minuette wave a subdivides nicely as a five wave impulse and minuette wave b as a zigzag Because minuette wave a is a five it is likely that minute wave iv is unfolding as a zigzag At 1 298 minuette wave c would reach 1 618 the length of minuette wave a Draw a parallel channel about minor wave C Draw the first trend line from the lows of minute waves i to iii then place a parallel copy upon the high of minute wave ii I will expect minute wave iv to find resistance at the upper edge of this channel So far minute wave iv shows up on the daily chart as a green candlestick Minute wave ii lasted four days and I will expect minute wave iv to last at least another one to two days Minute wave iv may not move into minute wave i price territory This wave count is invalidated with movement above 1 306 15 Alternate Wave Count Up to now this has been the main wave count Its counterpart for Silver was invalidated and so I would expect Gold to follow with an invalidation of this wave count within a few days This alternate looks at the possibility that primary wave 4 is a double zigzag and that the second zigzag is underway Minor wave B may not move beyond the start of minor wave A This wave count is invalidated with movement below 1 251 76 For this alternate minor wave B should now most likely be over Within minor wave C no second wave correction may move beyond the start of the first wave This wave count is invalidated with movement below 1 261 15 Only if price moves above 1 306 15 in the next few days would I again use this wave count Otherwise I am expecting now for it to be invalidated |
C | Will Fed Continue QE To Protect Seat At Power Table | Ongoing QE Tailwind For Stocks Using simple principles of human nature we can conclude the Fed and central banks around the world will continue to print money longer than most market participants believe Therefore a bullish tailwind may remain behind stock prices longer than most market participants believe Why Do They Keep Printing The following valid question is often asked by U S investors and taxpayers If quantitative easing QE has not significantly impacted job creation or economic growth why does the Fed keep printing money and buying bonds Before we answer that question it is important to note there is very little difference between QE and normal open market operations used by the Fed to adjust interest rates in all economic climates The difference is QE occurs when interest rates are already hovering near zero Therefore if QE does not work then questions may arise about why we need central banks at all Ego And Self Preservation Are Powerful Forces Let s assume the Fed came out and said After a thorough analysis we have concluded QE has not positively impacted the economy or job creation Therefore we will begin phasing out QE by reducing our bond purchases each month If they admit QE did not work and say it will not be used in the future the governors will have effectively given the Fed a very significant demotion on the global power org chart They would also be admitting that all of their white papers about the importance of monetary policy drew inaccurate conclusions In short central bankers would have to admit a they were wrong and b it is now unclear that central banks can materially impact the economy or business cycle We Are All Human How many people do you know in your personal or professional life that will not go down swinging before they a take a significant power reducing demotion and b admit they were wrong We are all human We all want to be relevant and right We all innately protect our power base Nobody wants to be wrong or less relevant Central bankers are human too According to Self preservation is behavior that ensures the survival of an organism It is almost universal among living organisms Pain and fear are parts of this mechanism Pain motivates the individual to withdraw from damaging situations to protect a damaged body part while it heals and to avoid similar experiences in the future Most pain resolves promptly once the painful stimulus is removed and the body has healed but sometimes pain persists despite removal of the stimulus and apparent healing of the body and sometimes pain arises in the absence of any detectable stimulus damage or disease Fear causes the organism to seek safety and may cause a release of adrenaline which has the effect of increased strength and heightened senses such as hearing smell and sight Self preservation may also be interpreted figuratively in regard to the coping mechanisms one needs to prevent emotional trauma from distorting the mind But If We Keep Printing We have already shown that admitting QE did not work will cause harm to central bankers personally and to their institutions The more reasonable assumption is that central bankers will continue printing money and buying bonds hoping the economy will improve which will in turn a prove they were right and b increase the power of central banks We think it is fair to say printing longer than most expect and hoping things improve is far more likely than throwing in the QE towel anytime soon QE Improves Outlook For Stocks We are not fans of a altering free markets b government intervention or c quantitative easing However as we outlined in detail on the markets do not care what you think and they do not care what we think The corollary is the Fed does not care what you think or what we think Central bankers are going to continue to use the tools they have creating money out of thin air in an effort to meet the objectives outlined in their dual mandate maximum employment and stable prices If you think the concept of the market does not care what you think is inaccurate or harsh keep in mind it helped us draw the following dated conclusions and more importantly begin redeploying cash into stocks on October 10
Fed May Be Digging In How can the Fed not see that QE is not helping the economy nor creating employment opportunities The concepts below may help explain the Fed s stance From We d like to believe that most of what we know is accurate and that if presented with facts to prove we re wrong we would sheepishly accept the truth and change our views accordingly A new body of research out of the University of Michigan suggests that s not what happens that we base our opinions on beliefs and when presented with contradictory facts we adhere to our original belief even more strongly Investment Implications As shown in the weekly chart of the S P 500 below bullish economic conviction continues to trend positively relative to bearish economic conviction The expectation of future Fed policy is reflected in the chart of the market s pricing mechanism Our market model detected an observable improvement in the market s risk reward profile after stocks made an intraday low on October 9 Since then the S P 500 has gained 145 points Our game plan remains unchanged we maintain our risk on allocation as long as the market s risk reward profile allows When the evidence changes we must be willing to reduce our current exposure to U S stocks SPY technology QQQ financials XLF small caps IJR energy XLE foreign stocks EFA China FXI and emerging markets EEM |
C | Citigroup Has A Triangle Upside Breakout | Big move for Citigroup C today as it breaks out of the triangle pattern to the upside Above 51 50 should attract additional buyers as well
There continues to be a huge level of support for the stock at the 200 day moving average so that any move below it should be a strong reason to exit any longs that you might have
But for now it is breaking out and breaking out hard So have at it
Here s The Technical Analysis
Source StockingCiti com |
C | The New Abnormal How Long Can This Market Last | I am writing this post as much for me as for you perhaps even moreso Because this week has left me in a bit of a funk Not just a regular Tim funk But a Soul Train level funk So I need to talk things out a bit I know you ll be patient with me For five solid years now the central planners of the world have executed an unprecedented takeover of financial markets The thing is 99 of the people who follow such things are just delighted with their new masters Why shouldn t they be Assets keep going up And up And then up some more Who cares about economic philosophy when you end each day richer than the day before When the wounds from the financial crisis were still fresh the markets were still vulnerable to sell offs and the investing public was respectful and attentive to the Cassandras of the world Five years is a very very long time though and things have changed radically Markets don t go down anymore Look at the last year from the November 16th bottom I don t even have to refer to a chart to the present day One solid year of up There have been scandals wrecks and disasters all along the way from ObamaCare to the Government Shutdown to everything else and the equity markets haven t given a flying crap The market is at long last utterly conditioned to go up in the face of any risk event Since down charts seem to resonate with me more than up charts I decided to look at an inverted chart of the Dow And here it is So ignoring the y axis values let s just pretend for a moment that for the past five years we had been basking in a glorious bear market my God can you imagine And let s further pretend that Slope was crammed with a bunch of depressed battered bulls ha that were agonizingly desperate to see the market finally turn in their favor Well the graph above wouldn t be the least bit encouraging The broadening formation you see at the bottom bounded by the red and blue lines was shaping up nicely for a while but as of this week barf o it breached its attempt to finishing basing failing to yet another low Thus the market looks weaker than ever Of course let s remember this is upside down so you need to reverse everything I just said Although Slope does have its share of bulls in the comment section they aren t battered they are on the contrary smug snarky and increasingly abusive to anyone who doesn t get aboard Air Yellen I am sickened to even see people beginning to cheer on the albino troll But as the saying goes it s hard to argue with success If I had a cabal in Washington pushing the market down for five years in a row I d probably be a raving asshole myself But the asset mania isn t confined to stocks as I ve mentioned recently Twitter Inc TWTR is worth 25 billion the P E of lame burrito maker Chipotle Mexican Grill Inc CMG is approaching 60 the mainstream media is crammed with shills and former Doctor Dooms proclamiing that there will be another five years of this bull market And grossest of all every stinking one of them utters this is going to end badly one day just to make God damned sure that when things do end badly they can cut n paste that archival clip to show to blinkered audiences in the future that they tried to warn them Let s take another look at the market this time by way of a monthly bar chart As you can see following the financial crisis the market did endure a couple of big shudders There was one in 2010 and even bigger one in 2011 and then nothing The market s trust of the central bankers to Take Care Of Things became so deep there was no need for any more selloffs The Fed s ownership of the market was total If you want to find even a pair of adjacent black candles on the chart you have to go all the way back to the Spring of 2012 During the most recent thirteen months there have been two two black candles There are three tiny corners of the Internet that have behaved as bastions of bearishness One is ZeroHedge which to its credit has shied away from the top is in type writing and focuses more on can you believe this shit articles instead In a just world ZH would get a Pulitzer Prize And I m serious about that The second is the poor guys down in Gainesville who have made being wrong a livelihood The unfortunate thing is that their data and arguments are so damned seductive they convince me every time that This Is It And you want to know something It s never It The most recent Elliott Wave Theorist 11 15 2013 states on page 5 in what surely must be one of the greatest understatements ever written The stock market top has eluded us Prices have repeatedly passed what we thought were terminal junctures They go on to say on page 10 The stock market has been the only major financial sector holding up It s been frustrating but it won t last When wave c in the Dow gets going the rush to the exits across all markets will be both frightening and exhilirating Well yeah I m inclined to agree but I ve got to tell you after five years of this shit I m feeling pretty exhausted There s some irrational part of me that is convinced that I am personally holding up the bear market because until I rip off my clothes and screech out on national television that I am giving up and that this is the most awesome bull market in human history the Market Gods are just going to keep things propped up And again I m being serious about this I keep thinking this is somehow my fault and that until I slice my proverbial wrists the market is going to continue to torture me I still believe that this will end badly some day but I m having more and more doubt as to how far some day is People keep giving assurances that it ll be next year but it s always next year See the trouble is what would need to happen in order to create a lasting inflection point in the market The formula right now is retard simple a central banks create debt b the debt floods the market and pushes equity assets higher c the rich get richer the poor get poorer and nobody really cares I ask again since this is working so well why would someone particularly someone like Yellen change anything Did you see her testimony this week I was able to stomach a little of it although listening to the scratchy granny like voice of the old biddy made me feel like my spine was going to shatter But one Senator in particular was asking her legitimately good questions and she dodged them like a master politician All she managed to say with respect to the bubble is that things didn t appear bubble like as if any Fed official in history has ever made a good prediction or even had the balls to say anything remotely negative The only thing that could cause a change I suppose would be if interest rates made a serious breach of their downtrend and began accelerating upward If interest rates are climbing and the Fed can t seem to stop it well in my professional opinion they are at long last completely hosed But until that time the astonishing astronomically huge debts of the nations of the world have perversely become so gargantuan that people just don t care about them anymore and it all seems like a pile of free money for anyone willing to pluck it up I would have never guessed I would have survived five years of this crap I m actually kind of stunned that I m still here But I have lived a life of persistence and unfortiunately rationality And rationality let me assure you can be the most vexing of enemies during times like these Do you feel like a voice of reason in a world gone mad Then I bet you re feeling as lonely and out of place as I do |
C | S P 500 Elliott Wave Technical Analysis November 19 2013 | Yesterday s analysis expected a fourth wave correction to continue and possibly end at the end of Tuesday s session This is what happened There were several possibilities yesterday for the structure of this fourth wave and the most common flat correction was anticipated This structure did not complete as a flat though and it fits best as a zigzag Click on the charts below to enlarge Main Wave Count This wave count has a higher probability than the alternate Upwards movement over the last 4 1 2 years subdivides best as a zigzag If something is off about the supposed recovery then it must be a B wave because there is plenty that is off in this scenario in terms of social mood Downwards corrections may now find support along the upper edge of the big maroon channel from the monthly chart if the upper trend line is pushed out to encompass all of primary wave A Intermediate wave 5 is incomplete with just minor waves 1 and now probably 2 within it completed At 1 826 minor wave 3 would reach 0 618 the length of minor wave 1 Minor wave 1 is extended so minor waves 3 and 5 may not be Also now at 1 826 minute wave v would reach equality in length with minute wave iii This increases the probability of this target At 1 864 intermediate wave 5 would reach equality in length with intermediate wave 1 This is the most common ratio between first and fifth waves so this target has a good probability Within minor wave 3 minute wave ii may not move beyond the start of minute wave i This wave count is invalidated with movement below 1 746 20 Minute wave iv continued lower ending just below the 0 382 Fibonacci ratio of minute wave iii There is a slight overshoot of the parallel channel I will expect the next wave up for minute wave v to end either midway within the channel or to find resistance at the upper edge Minute wave iv completed as a zigzag this is how it subdivides on the five minute chart There is some alternation between minute waves ii and iv minute wave ii is deeper and its C wave is much longer than its A wave and minute wave iv is shallower with an A wave longer than the C wave Within minute wave iv minuette wave c is 0 64 longer than 0 618 the length of minuette wave a Minute wave iv has now lasted a Fibonacci 13 hours and minute wave ii lasted 16 hours they are reasonably in proportion I expect it is now highly likely that minute wave iv is completed I will expect upwards movement for about two to three days to the target at 1 826 When there is a clear five up on the hourly chart then I will have full confidence that minute wave iv is over Prior to this confirmation the invalidation point must remain at 1 773 44 If minute wave iv continues further sideways and lower it may not move into minute wave i price territory Alternate Bullish Wave Count It is possible that a new cycle degree bull market began at 666 79 So far it is not yet halfway through and I would expect it to last for a few years at least five more years and maybe longer At some stage then the current upwards impulse labeled intermediate wave 5 for the main wave count and minor wave 5 for this alternate will be completed At that stage both wave counts would expect a trend change The main wave count would expect a huge cycle degree trend change and this alternate would expect an intermediate degree trend change If the downwards movement subdivides as a three and remains within the maroon channel then this alternate would be preferred If it breaches the channel this alternate would be discarded The maroon channel is an acceleration channel drawn about primary waves 1 and 2 on the monthly chart I would not expect intermediate wave 2 to breach this channel If downwards movement breaches the channel I would discard this wave count The daily chart shows the structure of minor wave 5 It is incomplete Targets are the same because they are calculated using the same wave lengths as the main wave count This bullish alternate does not diverge from the main wave count at this stage and it will not for some weeks to come Lara provides Ellliott Wave technical analysis of different markets To read more analyses go to |
BMY | Idera s IMO 2125 shows treatment effect in Phase 1 2 melanoma study shares up 4 premarket | Idera Pharmaceuticals NASDAQ IDRA perks up 4 premarket on modest volume on the heels of its announcement of updated data from a Phase 1 2 clinical trial assess the combination of intratumoral IMO 2125 and Bristol Myers Squibb s NYSE BMY YERVOY ipilimumab in patients with metastatic melanoma who failed to respond to a PD 1 inhibitor The results will be presented on Saturday November 11 at the Concurrent Session 207 Clinical Trials Novel Combinations at the 2017 Society for Immunotherapy of Cancer Annual Meeting in National Harbor MD A fifth unconfirmed response has been observed in 10 evaluable patients to date implying a 50 response rate IMO 2125 is an agonist of endosomal Toll like receptor TLR 9 a cell surface protein that plays a key role in pathogen recognition and innate immunity H C Wainwright has initiated coverage with a Buy rating and 4 price target Previously Idera Pharma s IMO 2125 shows encouraging action in early stage melanoma study shares ahead 15 premarket Sept 11 Now read |
BMY | Bristol Myers Odivo BMS 986205 shows positive effect in early stage study in advanced cancers | Results from a Phase 1 2a dose escalation and expansion study CA017 003 evaluating the combination of Bristol Myers Squibb s BMY 1 3 Opdivo nivolumab and IDO1 inhibitor BMS 986205 in advanced cancers showed a treatment effect The data will be presented tomorrow November 11 at the SITC Annual Meeting in National Harbor MD In the bladder cancer cohort heavily pretreated the objective response rate ORR was 32 n 8 25 and the disease control rate DCR was 44 n 11 25 In the cervical cancer cohort ORR was 14 n 3 22 and DCR was 64 n 14 22 In patients with PD L1 expression levels at least 1 ORR rates in bladder and cervical cancer were 46 n 6 13 and 25 n 3 12 respectively In patients with PD L1 expression below 1 ORR in bladder cancer was 22 n 2 9 No response was observed in cervical cancer patients n 0 7 IDO1 is an enzyme that breaks down an amino acid called tryptophan which fuels cancer killing T cells Tumors that overexpress IDO1 resist immune response because T cells lack the fuel to respond adequately Now read |
JPM | Slumping autos weigh on U S manufacturing output inflation tame | By Lucia Mutikani
WASHINGTON Reuters U S manufacturing output unexpectedly fell in May as motor vehicles and parts production recorded its biggest drop in nearly 2 1 2 years suggesting sustained weakness in the sector even as the overall economy appears to be gaining momentum
Other data on Wednesday showed underlying producer prices were subdued last month amid weakness in costs for health services indicating inflation could remain tame for a while
Against the back drop of weak manufacturing benign inflation and a recent sharp slowdown in employment gains the Federal Reserve on Wednesday left interest rates unchanged The U S central bank however signaled it still planned two rate hikes this year
The disappointing manufacturing output points to continued sluggishness in this segment of the economy and will likely remain a source of concern at the Fed said Millan Mulraine deputy chief economist at TD Securities in New York
Manufacturing output fell 0 4 percent last month after increasing by a downwardly revised 0 2 percent in April the Fed said Economists polled by Reuters had forecast manufacturing production unchanged in May after a previously reported 0 3 percent increase in April
The drop in production pushed manufacturing capacity utilization a measure of how fully firms are using their resources to a more than two year low
Motor vehicle and parts production slumped 4 2 percent last month the largest fall since January 2014 But economists said the drop was likely temporary citing strong auto sales and well managed motor vehicle inventories
There were also declines in the output of machinery and wood products Manufacturing which accounts for 12 percent of the U S economy is struggling with the lingering effects of a strong dollar and sluggish overseas demand
Factories also have been hurt by deep spending cuts on capital projects in the energy sector in response to lower oil prices as well as efforts by businesses to reduce an inventory overhang
The manufacturing weakness contrasted sharply with recent fairly strong retail sales and housing data that suggested the economy had regained speed after growth slowed to a 0 8 percent annualized rate in the first quarter
Although production at mines rose 0 2 percent in May after eight straight monthly declines oil and well gas drilling tumbled 7 9 percent
GLIMMERS OF HOPE
There are signs however that the worst for the manufacturing sector is over In a separate report the New York Fed said its Empire State business conditions index increased 15 points to 6 0 in June as new orders and shipments also swung into positive territory
The tone of the Empire State survey suggests that we are moving past the recent weakness in the manufacturing sector said Daniel Silver economist at JPMorgan NYSE JPM in New York
Prices for U S Treasuries rose on the Fed interest rate decision while the dollar DXY fell against a basket of currencies Stocks on Wall Street traded higher
The U S central bank raised its benchmark overnight interest rate in December for the first time in nearly a decade
In a third report the Labor Department said its producer price index for final demand increased 0 4 percent last month as energy costs surged after rising 0 2 percent in April
In the 12 months through May the PPI slipped 0 1 percent after being unchanged in April
A 2 8 percent jump in energy prices accounted for two thirds of the 0 7 percent rise in the cost of goods in May
While overall prices for services rose 0 2 percent healthcare costs slipped 0 1 percent The cost of doctor visits fell 0 3 percent and home healthcare services dropped 0 9 percent Economists believe that could translate into soft healthcare costs in the Fed s preferred inflation measure
As a result of the weak healthcare costs the so called core PPI which excludes food energy and trade services dipped 0 1 percent in May after rising 0 3 percent in April
The core PPI was up 0 8 percent in the 12 months through May after increasing 0 9 percent in the 12 months through April
The underlying move in producer prices points to risks of a more moderate upward path in inflation than expected said Blerina Uruci an economist at Barclays LON BARC in New York |
JPM | Fed internal watchdog to study oversight of cybersecurity at banks | WASHINGTON Reuters The Federal Reserve s internal watchdog plans to study how well the central bank is overseeing cybersecurity practices at financial institutions the U S central bank said on Monday The Office of Inspector General OIG at the Fed s Board of Governors plans to release the audit in the fourth quarter the OIG said in a report on current and upcoming projects Fed Chair Janet Yellen is due to appear before a U S Senate committee on Tuesday and will likely face questions about cybersecurity breaches involving the central bank U S lawmakers have asked the Fed s New York branch for information about how cyber criminals stole 81 million from a New York Fed account held by the central bank of Bangladesh Lawmakers are also probing the Fed s own cybersecurity practices after a Reuters report revealed more than 50 cyber breaches at the Fed between 2011 and 2015 The growing sophistication and volume of cybersecurity threats presents a serious risk to all financial institutions the OIG said in its report released on Monday Cyber thieves have targeted large financial institutions around the world including America s largest bank JPMorgan Chase Co N JPM The chair of the U S Securities and Exchange Commission SEC said last month cybersecurity was the biggest risk facing the financial system The OIG study due later this year could be the first public report on how well the Fed is holding banks to rules that require them to have effective information security programs
Past studies posted on the Fed s website focused on the central bank s overall cybersecurity practices or on the security of particular information technology systems at the Fed |
HAL | Halliburton posts surprise profit as expenses fall | By Anet Josline Pinto Reuters Halliburton NYSE HAL Co the world s No 2 oilfield services provider posted a surprise quarterly profit on Wednesday helped by cost cutting and said it expected a rise in oil prices to boost rig counts U S shale oil companies have started putting rigs back to work with crude prices nearly doubling since their February lows The number of active rigs in the United States rose for the seventh straight week through Oct 14 according to a closely watched report from Baker Hughes Inc North America results improved as we took advantage of the rig count growth by increasing utilization working our surface efficiency model and relentlessly managing costs Chief Executive Dave Lesar said in a statement Halliburton s revenue from North America which accounts for more than 40 percent of its total business rose 9 percent from the second quarter Operating results from the region improved by 58 million representing 41 percent incremental margins Brokerage Simmons Co had estimated margins of 21 percent 3Q margin performance will help provide further confidence in eventually returning margins back to normal levels Wells Fargo NYSE WFC analyst Judson Bailey said in a note However Halliburton said it expected pricing pressure to continue globally and that fourth quarter results from its international business were likely to be flat compared with the latest quarter The company also said activity in the current quarter was expected to be weak due to holiday and seasonal weather related downtimes This does not change our view that things are getting better Lesar said Halliburton like bigger rival Schlumberger has been slashing costs to make up for falling revenue The company said in July it would reduce structural costs by about 25 percent or 1 billion on an annual run rate basis by the end of 2016 Profit attributable to Halliburton was 6 million or 1 cent per share in the third quarter compared with a loss of 54 million or 6 cents per share a year earlier Revenue fell 31 3 percent to 3 83 billion Analysts on average had estimated a loss of 6 cents per share and revenue of 3 90 billion according to Thomson Reuters I B E S Market leader Schlumberger is scheduled to report on Thursday and Baker Hughes Inc the world s third largest oilfield service firm is scheduled to report on Tuesday
Shares of Halliburton the market leader in fracturing cementing and completion services rose marginally to 47 50 in premarket trading |
HAL | Why Is Halliburton HAL Up 4 5 Since Its Last Earnings Report | It has been about a month since the last earnings report for Halliburton Company NYSE HAL Shares have added about 4 5 in that time frame
Will the recent positive trend continue leading up to its next earnings release or is HAL due for a pullback Before we dive into how investors and analysts have reacted as of late let s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts
Recent EarningsHalliburton reported in line first quarter profit after robust North American drilling activity on the back of oil pricing strength were offset by problems in Venezuela and frack sand delivery delays The company s income from continuing operations adjusted for Venezuela write downs came in at 41 cents per share same as the Zacks Consensus Estimate Moreover revenues of 5 740 million missed the Zacks Consensus Estimate of 5 760 million However Halliburton joined fellow oil services majors Schlumberger and Baker Hughes a GE Company in affirming increased activity in U S shale driven by strong oil and gas production in response to an improving crude environment Segmental PerformanceOperating income from the Completion and Production segment was 500 million significantly higher than the year ago level of 147 million The division s performance was helped by continued growth in the North American land drilling business Further Halliburton experienced a bump in the Europe Africa CIS completion services while stimulation activity in the Middle East were higher as well However the segment operating income could not match our consensus estimate of 534 million The shortfall could be attributed to cost inflation triggered by increased fracking sand pricing Rising prices of sand used to hydraulically fracture new wells increased the expense associated with the drilling of a new shale well and put upward pressure on the cost of contractors like Halliburton As it is Halliburton had to shell out more to purchase the sand from spot markets to minimize the impact on client completion timelines after extreme weather and rail shut downs disrupted deliveries Meanwhile Drilling and Evaluation unit profit improved from 122 million in the first quarter of 2017 to 188 million this year The outperformance was on account of higher drilling activity in the Eastern Hemisphere and North America But the segment income was below the Zacks Consensus Estimate of 180 million Results were hampered by lower activity primarily across various product lines in Latin America especially Venezuela Balance SheetHalliburton s capital expenditure in the first quarter was 501 million As of Mar 31 2018 the company had approximately 2 332 million in cash cash equivalents and 10 428 million in long term debt representing a debt to capitalization ratio of 55 4
How Have Estimates Been Moving Since Then
In the past month investors have witnessed an upward trend in fresh estimates There have been five revisions higher for the current quarter compared to three lower
VGM Scores
At this time HAL has a strong Growth Score of A though it is lagging a lot on the momentum front with a D The stock was allocated a grade of C on the value side putting it in the middle 20 for this investment strategy
Overall the stock has an aggregate VGM Score of B If you aren t focused on one strategy this score is the one you should be interested in
Our style scores indicate that the stock is more suitable for growth investors than value investors
Outlook
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising Notably HAL has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
C | U S futures slightly higher ahead of data Dow Jones up 0 05 | Investing com U S stock futures pointed to a slightly higher open on Monday as investors remained cautious after the announcement of new measures to tackle the euro zone s debt crisis and weak economic reports while markets eyed the release of U S data later in the day Ahead of the open the Dow Jones Industrial Average futures pointed to a 0 05 rise S P 500 futures signaled a 0 20 increase while the Nasdaq 100 futures indicated a 0 09 gain On Friday European Union leaders agreed to use the euro zone s bailout funds to support struggling banks directly without adding to national debt and also agreed to set up a joint banking supervisory body for the euro area In addition to the direct recapitalization of Spain s banks euro zone bailout funds will be able to purchase government debt in order to keep down borrowing costs But market sentiment cooled on Monday as details about how and when European leaders can put the newly agreed measures into practice still remained uncertain Meanwhile concerns over global growth resurfaced after official data showed that the unemployment rate in the euro zone rose to a record high 11 1 in May up from 11 0 in April A separate report showed that the final reading of the euro zone manufacturing purchasing managers index came in at 45 1 in June above the preliminary estimate of 44 8 and holding steady at its lowest level since June 2009 Financial stocks were expected to be active following a surge in European lenders In pre market trade Citigroup saw shares advance 0 69 Apple was also likely to be in focus after a U S judge on Friday granted the computer tech company s request for a pre trial injunction against the sale of Samsung Electronics Galaxy Nexus phone The decision handed the iPhone maker its second legal victory against Samsung in a week and sent shares up 0 21 in early trading Elsewhere Bristol Myers Squibb said it will buy biotechnology company Amylin Pharmaceuticals for about USD5 3 billion in cash helping Bristol Myers extend its portfolio of diabetes treatments with the addition of drugs Byetta and Bydureon Shares in Amylin surged 8 51 in pre market trade Also in company news Lincare Holdings skyrocketed 19 05 in early trading after German industrial gas producer Linde said on Sunday it has agreed to pay USD4 6 billion for the Florida based provider of oxygen and respiratory therapy services to patients in the home Meanwhile Dell climbed 0 96 amid reports it was near an agreement to buy Quest Software a maker of programs to manage corporate computer systems prevailing in a bidding contest with Insight Venture Partners Across the Atlantic European stock markets were higher The EURO STOXX 50 jumped 0 92 France s CAC 40 rallied 1 02 Germany s DAX advanced 0 94 while Britain s FTSE 100 climbed 0 54 During the Asian trading session Hong Kong s Hang Seng Index rose 0 9 while Japan s Nikkei 225 Index ended the session little changed Also Monday data showed that China s HSBC PMI posted a reading of 48 2 in June little changed from an initial estimate of 48 1 remaining in contraction territory for the eighth successive month Later in the day the U S Institute for Supply Management was to release a report on activity in the manufacturing sector |
C | Dollar Recovering After Less Dovish Than Expected FOMC Statement | The dollar recovered overnight while stocks pared recent gains as the FOMC statement released overnight was seen as less dovish than expected by some economists Fed let s rate unchanged at near zero level and maintained the 85b monthly pace of asset purchase as widely expected The central bank acknowledged that fiscal policy is restraining economic growth But it also noted that taking into account the extent of federal fiscal retrenchment over the past year the committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program as consistent with growing underlying strength in the broader economy And it reiterated that it will await more evidence that progress will be sustained before adjusting the pace of its purchases And Fed also repeated that it will hold rates near zero at least as long as unemployment staying above 6 5 or inflation kept below no higher than 2 5 Overall the statement gave no additional languages on the dovish side which some market participants are looking for March is still the generally expected time for Fed to taper the stimulus However there are some speculations after the statement that Fed would cut back the asset purchase as soon as in January According to Citigroup the chance of January tapering rose to 45 up from 25 before yesterday s statement But again it should noted that Yellen would likely take over Bernanke s job as Fed chairman in January And seen as more dovish than Bernanke it s more likely for Yellen to keep stimulus longer than currently expected than pushing the tapering schedule ahead S P 500 close mildly down by 8 64 pts after hitting a new record intraday high at 1775 22 DOW also closed down 61 59 pts after hitting a new record intraday high at 15721 00 Treasury yield gained with 10 year yield closing mildly higher at 2 527 Dollar index jumped to as high as 79 90 be failed to take out 80 level and is back at 79 70 at the time of writing Dollar extended recovery against other major currencies But the more notable development was seen in USD JPY which took out 94 48 minor resistance and is likely heading back to 99 level New Zealand dollar has been soft after RBNZ left the OCR unchanged at 2 50 as widely expected An important point to note is that in the statement governor Wheeler noted that sustained strength in the exchange rate that leads to lower inflationary pressure would provide the bank with greater flexibility as to the timing and magnitude of future increases in the OCR Nonetheless Wheeler also mentioned that the exchange rate remains high and is a headwind to the traded goods sector And he also reiterated that increase in rate will likely be required next year On the data front Australian dollar was supported by strong housing data which saw 14 4 mom jump in building approvals in September Import price index rose 6 1 qoq in Q3 New Zealand building permits rose 1 4 mom in September while NBNZ business confidence dropped to 53 2 in October Japan PMI manufacturing improved to 54 2 in October UK Gfk consumer sentiment dropped to 11 in October German retail sales Italian unemployment Eurozone unemployment CPI Canada GDP US jobless claims and Chicago PMI will be leased later today |
C | Economic Depression In Europe Is Getting Deeper | The unemployment rate in the eurozone is higher than it has ever been before This week we learned that eurozone unemployment came in at an all time high of for September Back in January 2012 it was sitting at just 10 4 percent So anyone that believes that things are getting better in Europe is just being delusional In fact the economic depression in Europe just keeps getting deeper The funny thing is that the mainstream media will barely call what is going on in Europe a recession even though the unemployment rates in both Spain and Greece are now much higher than anything that the United States ever experienced during the Great Depression of the 1930s There haven t been as many headlines about the financial crisis in Europe lately because the ECB has been papering over the debt problems of the periphery at least for the moment but the economic conditions on the ground for average Europeans just continue to get even worse Later on in this article you will read about a 25 year old Spanish man with three college degrees that moved to London in a desperate search for a job who is now cleaning up poop for a living The economic collapse of Europe continues to march on and there is no end in sight All you have to do is look at the latest unemployment numbers to realize that things are getting worse in Europe In Italy the unemployment rate is up to 12 5 percent In January 2012 less than two years ago it was sitting at just 8 9 percent In Greece the unemployment rate is up to an astounding 27 6 percent In January 2012 it was sitting at just 21 4 percent In Spain the unemployment rate is up to 26 6 percent In January 2012 it was sitting at just 22 8 percent and all the way back in January 2008 it was just 8 6 percent The youth unemployment statistics in the eurozone Unemployment among the under 25s rose by 22 000 in September to 3 548 000 nudging up youth jobless rate to 24 1 In France the youth jobless rate jumped from 25 6 to 26 1 while in Italy it increased from 40 2 to 40 4 But as bad as those numbers are they are nothing compared to what is going on in Spain and Greece In Spain the youth unemployment rate is up to 56 5 percent and in Greece the youth unemployment rate is up to 57 3 percent And of course unemployment is not the only problem that the European economy is dealing with right now The following are some more facts about the European economy that show that the economic depression in Europe just keeps getting deeper European car sales are on pace to hit a 23 year low in 2013 The percentage of bad loans in Spain has soared to a new all time record high The number of mortgage applications in Spain has fallen 90 percent since the peak of the market Citigroup is projecting that the unemployment rate in Greece will reach in 2015 Over the last several years Italy has experienced the biggest collapse in GDP growth that it has ever seen Overall the GDP of Italy has contracted since 2008 The number of unemployed workers in Cyprus is now five times higher than it was before the financial crisis of 2008 It is being projected that Spain s debt to GDP ratio will rise to nearly 100 percent by the end of next year The debt to GDP ratio of Portugal is already up to 123 percent The debt to GDP ratio of Italy is already up to 127 percent Even though Greece has implemented a whole host of austerity measures the debt to GDP ratio of Greece is now up to But what these numbers cannot really communicate is the tremendous amount of pain and despair that millions upon millions of Europeans are experiencing right now For example consider the story of Benjamin Serra Bosch a 25 year old Spanish man that moved to London in a desperate search for a job He has three college degrees including a Master s Degree from the IEBS Business School in Barcelona The following is a rough translation of a message that he recently My name is Benjam n Serra I have two bachelor degrees and a master s degree and I clean toilets No it is not a joke I do it to pay the rent for my room in London I ve been working in a famous chain of cafes in the United Kingdom since May and for the first time today after 5 months working there I see it clearly I have been cleaning toilets My thought was I received distinction in my two degrees and I clean other peoples poop in a country that isn t my own Well I also make coffee clean the tables and wash cups And I am not ashamed to do so Cleaning is a very decent job What embarrasses me is having to do so because no one has given me an opportunity in Spain Like me there are many Spaniards especially in London You are a plague I was told once here And let s not kid ourselves We are not young people on an adventure to learn the language and have new experiences We are immigrants I ve always been very proud I am not going to deny Those who know me you know And I have to bust out a smile at customers who look over my shoulder as I am simply a barista as they call it here Some are so outrageous that it makes me want to pull out my University and master degrees and put them in their face But it would not really do anything It appears that those titles now only serve to clean the poop that I clean from the toilets in the cafe A pity I thought that it deserved something better after putting so much effort in my academic life It seems that I was wrong As economic conditions continue to decline all over Europe anger and frustration with the European experiment continue to grow UKIP s Nigel Farage expressed these sentiments very eloquently when he stated that what we are saying large numbers of us from every single EU member state is we don t want that flag we don t want the anthem that you all stood so ram rod straight for yesterday we don t want EU passports we don t want political union Unfortunately the elite of Europe are so obsessed with their little experiment that the only solutions to these economic problems that they are even willing to consider involve even more European integration And Americans certainly should not be looking down their noses at what is happening in Europe What is going on in Italy France Spain and Greece will be coming here soon enough In fact even during the midst of this so called economic recovery poverty continues to absolutely explode in the United States Economic conditions in both the United States and Europe have never even gotten close to where they were prior to 2008 and now the next major wave of the economic collapse is rapidly approaching This is just the beginning Things are going to get much worse in the years ahead |
C | Friday s Oil And Gold Analysis | CLCrude oil dropped for a third day trading near a four month low as U S crude stockpiles gained for a sixth week and speculation mounted that the Federal Reserve may reduce financial stimulus Crude lost as much as 0 7 percent heading for a second monthly decline as the dollar strengthened on signs the Fed may curtail bond purchases and of an interest rate cut by the European Central Bank Crude inventories rose by 4 1 million barrels to 383 9 million last week the highest level since June the Energy Department said GOLDGold posted the biggest loss in almost three weeks as the Federal Reserve fueled speculation that it will trim U S monetary stimulus sooner than anticipated The economy shows signs of underlying strength Fed policy makers said The statement pointed to the possibility of reduced bond purchases as soon as December Citigroup Inc and Barclays Plc said The dollar headed for the longest rally in eight weeks against a basket of 10 currencies Gold fell 1 9 percent to settle at 1 323 the biggest drop since October 11 This month the price fell 0 2 percent |
C | Global FX Weekly Wrap | EUR USDThe pair finished the week sharply lower after the release of much softer than expected euro zone CPI estimate as well as higher than expected euro zone unemployment rate prompted market participants to speculate of a potential rate cut by the ECB next week Ahead of the next week s ECB rate decision analysts at Commerzbank suggested that the ECB could make verbal intervention on declining excess liquidity and halt SMP sterilisation to boost liquidity Separately concerns over bank deleveraging ahead of ECB s asset quality review could undermine European stocks according to analysts at Citigroup The move lower was also assisted by comments made by ECB s Nowotny who said that there will be further liquidity provision adding that he wants to avoid sudden effects and must avoid falling off cliff as LTRO comes to an end In other EU related commentary EU s Rehn said that he sees a quite broad based economy recovery in Europe adding that rapid initial fiscal tightening was essential in crisis and that Europe can now afford slower fiscal consolidation Elsewhere Eurogroup head Dijsselbloem said that he sees a clean exit for Spain from it s banking bailout program with no credit line to EUR USD the pair also finished the week lower though losses were capped by the aggressive move lower by EUR GBP cross which was a result of softer than expected Eurozone CPI estimate In turn this prompted market participants to speculate of a potential measures that the ECB could take when the governing council meets next week and through interest rate differential flows assisted GBP In terms of UK related commentary the latest UK mortgage approvals data came in at its highest level since February 2008 while as recorded by the Land Registry for UK as a whole saw property prices rise 1 5 M M and 3 4 Y Y Also of note BoE s governor Carney said that a 7 unemployment threshold is right time to adjust policy The governor also said that the central bank won t tighten policy until recovery is pair finished the week with decent gains supported by a firmer USD which was driven by less dovish than expected FOMC statement and also a weaker EUR after the release of softer than expected euro zone CPI estimate ahead of next week governing council meeting prompted market participants to speculate of a potential rate cut In terms of Japan specific commentary BoJ 2014 Monetary Base Target JPY Oct 31 270trl vs Exp 270trl Prev 270trl Also the latest Japanese Manufacturing PMI came in at its highest level in over three years Also of note IMF s Japan mission chief Schiff said that Japan probably needs a further sales tax rise above 10 and that Japan needs a steady growth path not just stimulus Schiff added that the BoJ needn t change policy right now and that further easing depends on how close BoJ is to target |
C | The Week Ahead Time For A Year End Rally | Two weeks ago I finally got a weekend away last week my WTWA theme was a return to normalcy Less Washington and more market fundamentals This was pretty accurate in the focus on earnings Less accurate was my prediction that good economic news would be good news The market still has a Fed fixation Like others I have looked each week for signs of a significant market correction One by one we have navigated the various threats through the May to October period of seasonal weakness Is it now time for the regular seasonal strength Is it time for a year end rally There is the typical range of perspectives but let us consider two dramatically contrasting viewpoints
Market bubble and or crash The roster is growing It is far beyond the warnings of the leading investment site the one built on fear It is beyond the Faber and Schiff themes Beyond Hussman and Mauldin We now have reached the mainstream of Business Insider and USA Today his conclusion about why the market will crash in the next year or two and provide poor returns over the next decade
Is Fed inflating stock bubble
Bullish From Oppenheimer s fine Chief Investment Strategist John Stoltzfus I cannot provide a link You need an OpCo relationship to get this valuable research
As the kids and those young at heart gear up for Halloween it appears to us that over the last week or so the same faces that successfully discouraged legions of investors from participating in the rallies that have followed the low of March 2009 have returned in force and onto the media landscape with the same argument that the markets advanced is solely attributed to QE and other extraordinary efforts by the Fed We disagree Since March of 2009 when equities began their rally from the lows of the Great Financial Crisis the market as illustrated by the S P 500 performance has reflected domestic and global challenges that ranged from banking sector troubles on both sides of the Atlantic to fiscal and sovereign debt issues and persistent skepticism of the economic and market recovery Anecdotally we recall that fourth quarter angst has been nearly as common as a spring April May market peak over the last two years or so We urge investors to stay focused on the many improvements in the economy that have been realized over the last few years including falling initial jobless claims improved economic growth increased hiring rising earnings improved consumer confidence moderate growth and low inflation higher home prices strong car sales All of the aforementioned have contributed to positive developments in services and manufacturing and have been reflected in the markets Expect progress not perfection Stay tuned Emphasis in the original
I have some thoughts about the rest of the year which I ll report on those in the conclusion First let us do our regular update of last week s news and data Background on Weighing the Week Ahead There are many good lists of upcoming events One source I regularly follow is the weekly calendar from Investing com For best results you need to select the date range from the calendar displayed on the site You will be rewarded with a comprehensive list of data and events from all over the world It takes a little practice but it is worth it In contrast I highlight a smaller group of events including some you have not seen elsewhere My theme is an expert guess about what we will be watching on TV and reading in the mainstream media It is a focus on what I think is important for my trading and client portfolios Each week I consider the upcoming calendar and the current market predicting the main theme we should expect This step is an important part of my trading preparation and planning It takes more hours than you can imagine My record is pretty good If you review the list of titles it looks like a history of market concerns Wrong The thing to note is that I highlighted each topic the week before it grabbed attention I find it useful to reflect on the key theme for the week ahead and I hope you will as well This is unlike my other articles where I develop a focused logical argument with supporting data on a single theme Here I am simply sharing my conclusions Sometimes these are topics that I have already written about and others are on my agenda I am putting the news in context Readers often disagree with my conclusions Do not be bashful Join in and comment about what we should expect in the days ahead This weekly piece emphasizes my opinions about what is really important and how to put the news in context I have had great success with my approach but feel free to disagree That is what makes a market Last Week s Data Each week I break down events into good and bad Often there is ugly and on rare occasion something really good My working definition of good has two components
The news is market friendly Our personal policy preferences are not relevant for this test And especially no politics
It is better than expectations
The Good With the shutdown delayed news coming out there are plenty of items to consider Some of the data is a little old Since this update covers two weeks I am reaching beyond last week for a few key items
ISM manufacturing was very strong the best report in over two years includes analysis and the chart below of GEI is less impressed saying that the index has been in a general downtrend since mid 2011 He includes detailed discussion of the survey items
China s PMI is stronger basically supporting a growth rate of 7 5 Via The independently determined HSBC survey is a touch lower but shows the same pattern Here is Regular readers know that I share the popular skepticism of official data I also discount non quantified assertions about ghost cities I try to stick with the best data we have and it does not support the multi year forecast of a hard landing
Investors are 48 in cash according to Meanwhile BlackRock s Larry Fink joins the bubble camp What conclusion would you draw from this
Earnings beat rate is strong at 74 with most also beating on sales But see the bad below Brian Gilmartin also notes that the overall earnings growth rate has been heavily influenced from 5 9 to 3 3 by JP Morgan s charge
Case Shiller home prices increased 12 8 beating expectations
Business lending is higher Scott Grannis which is important to job creation from small business
Financial conditions are at a new high according to the Bloomberg Index that this has been an excellent recession predictor in the past
The Bad The news updates included plenty of bad news
Michigan sentiment was terrible it as the lowest level since December 2012 and provides plenty of detail
Net Employment growth has declined apparently at a lower plateau The September employment report was a disappointment Last week s ADP private employment gain was only 130K This is approximately the level needed to maintain the current unemployment rate I am scoring this as bad because that is where the data take us There is a bright spot from the improvement in the full time part time question I took up the topic here My friend Doug Short responded to my innocent tweak with a of his analysis of the factors behind the shift to part time jobs Those who insist on confusing their political viewpoint with their investment decisions should definitely read this discussion
Earnings guidance has been weak Lowered guidance from 66 companies versus increases from 13 But see the good above
Little headway from the Congressional Budget Conference Committee Stan Collender but he warns I agree
Bearish sentiment is waning This is popularly viewed as a contrarian indicator from various sources as well as a comment on accuracy Here is a featured chart
Retail Sales disappointed noting that auto sales were probably affected by the early Labor Day holiday There are the great charts we expect at Bespoke as well as this table showing the breakdown by category
The Silver Bullet I occasionally give the Silver Bullet award to someone who takes up an unpopular or thankless cause doing the real work to demonstrate the facts Think of The Lone Ranger This week s award goes to who take on the oft cited current levels of margin debt There are many versions of this chart but the basic thesis is that peaking levels of margin debt are a sign of a market top I have looked carefully at the charts and the variation seems largely coincident with margin levels sometimes leading and sometimes following This has been on my ever growing agenda but it requires some careful research Merrill s Suttmeier includes the margin debt rate of change as an indicator of whether a rising market is peaking or breaking out Barry notes If the rate of change data somehow corresponds to past shifts in secular markets from bears to bulls this is potentially a very significant factor This analysis is much more sophisticated than what you usually see on this topic I would love to see more research here but this provides some needed balance Here is a summary chart of the basic relationship but I recommend reading the entire post The Indicator Snapshot It is important to keep the current news in perspective I am always searching for the best indicators for our weekly snapshot I make changes when the evidence warrants At the moment my weekly snapshot includes these important summary indicators
For financial risk the St Louis Financial Stress Index
An updated analysis of recession probability from key sources
For market trends the key measures from our Felix ETF model
Financial Risk The SLFSI reports with a one week lag This means that the reported values do not include last week s market action The SLFSI has recently edged a bit higher reflecting increased market volatility It remains at historically low levels well out of the trigger range of my pre determined risk alarm This is an excellent tool for managing risk objectively and it has suggested the need for more caution Before implementing this indicator our team did extensive research discovering a warning range that deserves respect We of 1 1 or higher as a place to consider reducing positions The SLFSI is not a market timing tool since it does not attempt to predict how people will interpret events It uses data mostly from credit markets to reach an objective risk assessment The biggest profits come from going all in when risk is high on this indicator but so do the biggest losses Recession Odds I feature the C Score a weekly interpretation of the best recession indicator I found I have now added a where Dr Dieli explains the rationale for his indicator and how it applied in each recession since the 50 s I have organized this so that you can pick a particular recession and see the discussion for that case Those who are skeptics about the method should start by reviewing the video for that recession Anyone who spends some time with this will learn a great deal about the history of recessions from a veteran observer I also feature RecessionAlert which combines a variety of different methods including the ECRI in developing a Super Index They offer a Anyone following them over the last year would have had useful and profitable guidance on the economy RecessionAlert has developed a comprehensive package of economic forecasting and market indicators They have an update on their a method that combines seasonality and recession risk This chart is an example Georg Vrba s four input Based on the historic patterns of the unemployment rate indicators prior to recessions one can reasonably conclude that the U S economy is not likely to go into recession anytime soon Georg has other excellent indicators for stocks bonds and precious metals at Unfortunately and despite the inaccuracy of their forecast the mainstream media features the ECRI Doug Short has of the ECRI recession prediction now two years old Doug updates all of the official indicators used by the NBER and also has a helpful list of articles about recession forecasting Doug also continues to refresh the of the major indicators used by the NBER in recession dating The ECRI approach has been so misleading and so costly for investors that I will soon drop it from the update The other methods we follow have proved to be far superior Readers should review my which explains many of the concepts people get wrong There is now an showing the impact of the government shutdown moving some measures into recession warning territory Here is our overall summary of the important indicators Our Felix model is the basis for our official vote in the weekly We have a long public record for these positions Over the six weeks Felix has ranged over the full spectrum twice The market has been moving back and forth around important technical levels driven mostly by news Felix does not react to news events and certainly does not anticipate effects from the headlines This is usually a sound idea helping the trading program to stay on the right side of major market moves Abrupt changes in market direction will send sectors to the penalty box The Ticker Sense poll asks for a one month forecast Felix has a three week horizon which is pretty close We run the model daily and adjust our outlook as needed The penalty box percentage has decreased dramatically meaning that we have more confidence in the overall ratings For more on the penalty box see For more on the system ratings you can write to etf at newarc dot com for our free report package or to be added to the free weekly ETF email list You can also write personally to me with questions or comments and I ll do my best to answer The Week Ahead There is still a lot of data as the delayed reports combine with timely releases The A List includes the following
Employment report F The October report was delayed by a week since the government shutdown interfered with data collection The survey period is the week of October 6th 12th so the data are less current than usual The Fed s emphasis on employment gives this even more significance than usual
Michigan Sentiment F Watched closely because of the consumer reaction to the 2011 shutdown
The ISM services index T Will service match the strength in the manufacturing data
Leading indicators W Controversial but still a favorite for many
The B List includes
Initial jobless claims Th Less interesting than usual because of the California and shutdown effects
Personal income and spending F Important read on the economy but September data
GDP Th First report for Q3 already seems dated and will get revised
Factory orders M August data
There will also be plenty of FedSpeak in the wake of the FOMC decision as well as more earnings reports How to Use the Weekly Data Updates In the WTWA series I try to share what I am thinking as I prepare for the coming week I write each post as if I were speaking directly to one of my clients Each client is different so I have five different programs ranging from very conservative bond ladders to very aggressive trading programs It is not a one size fits all approach To get the maximum benefit from my updates you need to have a self assessment of your objectives Are you most interested in preserving wealth Or like most of us do you still need to create wealth How much risk is right for your temperament and circumstances My weekly insights often suggest a different course of action depending upon your objectives and time frames They also accurately describe what I am doing in the programs I manage Insight for Traders Felix continues in bullish mode In our trading accounts we have been fully invested and the positions have gradually become more aggressive Felix s ratings have been in a fairly narrow range for several months The rapid news driven shifts are not the ideal conditions for Felix s three week horizon This week we see both higher ratings and fewer sectors in the penalty box It is the best combination in months Insight for Investors I review the themes here each week and refresh when needed For investors as we would expect the key ideas may stay on the list longer than the updates for traders
Headlines The challenge for investors is to distinguish between the major trends and the short term uncertainty The main themes are not related to headlines news even though sentiment may drive market fluctuations Do not be seduced by the idea that you can time the market calling every 10 correction Many claim this ability but few have a documented record to prove it Most who claim past success are using a back tested model Please see
Risk Management It is far better to manage your risk specifically considering the role of bonds and the risk of bond mutual funds As I emphasized You need to choose the right level of risk Right now it is the most important question for investors There is plenty of headline risk that may not really translate into lower stock prices Instead of reacting to news the long term investor should emphasize broad themes
Avoiding the fear trade I covered this pretty carefully a couple of weeks ago Those who participated in our methadone program for gold addiction enjoyed some nice gains in our substitute Freeport McMoRan Copper and Gold FCX This made 35 in a few months counting both dividends and stock appreciation but we have now moved on because of valuation Gold lost 3 last week but Gold traders are intensely focused on the Fed Since I do not expect any big changes in Fed policy nor any major effects from the first moves this is simply a wrong headed trade Individual investors have been chased into gold because of fear of economic collapse via deflation or hyperinflation or sometimes both at the same time Since none of these outcomes is very likely you should have only a small allocation to precious metals
And finally we have collected some of our recent recommendations in a a starting point for the long term investor Comments and suggestions welcome I am trying to be helpful and I love feedback Final Thought If I were to summarize the current market in a single sentence it would be the following When a market theme hits USA Today it is too late for action The bubble theory is so prevalent that investors hold 48 in cash owning neither stocks nor bonds There is so much bad advice for the individual investor that I despair Here are a few conclusions While these are carefully considered I cannot analyze each in the weekly review Feel free to take up the issues in the comments
Those who have been completely wrong abandon past indicators and pick new ones There are good reasons for late year seasonal strength
Think beyond the next two months Do not be a slave to the calendar Many are focused on their annual predictions and bonuses Bullish predictors have already won so they skew to a conservative posture Bearish hedge fund guys need a market decline to meet performance targets
This is not an average cycle not for businesses and not for stocks Usually there is a decline and a rebound This time there was a sharp decline and a gradual rebound The result The Fed will be aggressive for much longer It will probably be 2016 before policy is back to neutral It is silly to create a template based upon a handful of cycles and expect a new case to fit the model
The YTD gains are exaggerated We started the year with fear from the fiscal cliff debate When that was avoided we had an instant gain of 7 We should have asked everyone to re calibrate predictions from that date
There is an epidemic of top calling Everyone who has been completely wrong about the market is finding excuses Since much of the audience for the financial media both print and TV consists of those thinking short term the fear factor is high
The return of the individual investor is just getting started Each week I read about mutual fund and ETF flows The shifts from individual investors are highlighted as late money dumb At some point this will be true but I think it is far in the future Let us revisit the topic when the average investor is all in instead of 48 in cash
We can all argue about the true contrarian trade At the moment I agree with Felix I see stocks as attractively priced with plenty of value opportunities While my predictions for the year have played out pretty well I prefer to think about rolling twelve month periods rather than rest on laurels for this year |
C | Soft November But Wait For The Santa Rally | I have been calling for a short term stock market correction see A time for caution and my view remains unchanged Intermediate term however equities look poised to move higher on cyclical strength Let me explain Short term cautious In the wake of the recent kick the can down the road resolution of the political impasse in Washington I said to focus on the fundamentals that matter see The sun will come out tomorrow
Earnings
Macro outlook
Fed outlook
What does that scorecard look like On the earnings front the earnings and sales beat rate improved considerably this week However the rules of the Earnings Game have changed Getting stock outperformance is less about finding companies that beat Street expectations but knowing what they say about the outlook in the analyst conference call In addition to watching the earnings and sales beat rates and earnings guidance rates I watch the evolution of the forward 4Q Street estimates more closely has done a superb job of reporting and analyzing Street estimates The chart below shows how the forward 4Q estimates have changed since the beginning of August They surged in late September to all time highs but they have been slowly deflating ever since in the past four weeks I would score the earnings dimension a slight negative At a macro level the best news we saw last week were the blowout numbers exhibited by Chicago PMI and the beat by ISM Manufacturing The astounding strength of the Chicago PMI was contradicted by the Markit manufacturing PMI which was weaker However the which measures the beats and misses of high frequency economic releases has been losing momentum Call the economic dimension neutral though arguably it could be slightly positive On the central banking front the market did not take the FOMC statement well thought that it was a bit on the hawkish side The chart below via shows how tapering expectations have evolved over the last few weeks In addition to the shifting sands around tapering expectations the Obama Administration has three governor vacancies to fill at the Federal Reserve At this point it is unclear what a Yellen Fed if indeed it is a Yellen Fed would look like as the other governors have not been named At what point does the market focus on the composition of the Fed governor board Score the monetary policy dimension slightly bearish the market hates uncertainty Summing it all up the three fundamental scores have deteriorated to roughly a neutral reading from slightly bullish in mid October Technical and sentiment picture deteriorating In addition the short term sentiment and technical pictures are deteriorating recently pointed out that his NASDAQ timer index is at a crowded long reading Hulbert went on to say that his studies show that the time horizon of this index as a contrarian indicator is shortening to about a month
Upon subjecting the Hulbert Financial Digest s three decades of historical sentiment data to rigorous econometric testing I discovered that the sentiment data up until about 10 years ago had its greatest explanatory power at the three month horizon That s a short enough horizon already but it has shrunk in recent years and is now little longer than one month
Technically there are a plethora of indicators that point to some equity market softness ahead Market breadth continues to show a negative divergence as evidenced by this chart of the SPX top panel and stocks above their 200 day moving average bottom panel The relative performance of the high beta small caps which had been market leaders has keeled over and violated a relative uptrend line These aforementioned factors along with the rising risk of a growth scare coming from China see Watching for China related volatility in November and The stakes are rising for China s Third Plenary are reasons to believe that November is likely to be a little soft for equities Get ready for the Santa Claus rally Unless we get an ugly accident e g very ugly Chinese developments or unexpected bout of Fed hawkishness my base case continues to be a continuation of the stock market uptrend we have seen in 2013 That s because Mr Market is still telling me that the US and possibly the global economy are undergoing a cyclical upturn Exhibit A is the relative performance of the Morgan Stanley Cyclical Index against the market which remains in a solid relative uptrend The positive relative performance of cyclical stocks is seen mainly in the relative performance of the capital goods heavy Industrial sector and the Consumer Discretionary sector Surprisingly the relative strength of cyclical stocks has not extended to deep cyclical sectors such as mining possibly because of market caution over the outlook for Chinese growth The sailing isn t all smooth ahead however The positive relative uptrends seen in the Industrial sector have not been confirmed outside the US Non US Industrial stocks recently staged a breach of a relative uptrend and appear to be undergoing a period of relative consolidation note that these charts are all in USD so any currency effects are removed Similarly the relative performance of Non US Consumer Discretionary stocks exhibit a minor but unconfirmed violation of their relative uptrend My main takeaway from studying these charts and indicators is that we are poised for a brief period of shallow weakness in equities Barring any serious mishaps stock investors should be positioned for a Santa Claus rally into year end Disclosure Cam Hui is a portfolio manager at Qwest The opinions and any recommendations expressed in the blog are those of the author and do not reflect the opinions and recommendations of Qwest Qwest reviews Mr Hui s blog to ensure it is connected with Mr Hui s obligation to deal fairly honestly and in good faith with the blog s readers None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument Nothing in this blog constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives financial situation or particular needs of any specific recipient Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions Past performance is not indicative of future results Either Qwest or I may hold or control long or short positions in the securities or instruments mentioned |
C | GOLD Elliott Wave Technical Analysis November 5 2013 | Yesterday s analysis expected downwards movement to a minimum of 1 308 before upwards movement Price moved lower as expected reaching down to 1 305 97 The corrective structure of minute wave b is still incomplete The structure for primary wave 4 cannot be a flat correction because what would be the B wave is well less than 90 of what would be the A wave That is why I have labeled it as a double Because intermediate wave X is quite shallow I would expect primary wave 4 is most likely a double zigzag rather than a double combination Double combinations move price sideways and their X waves are usually deeper than this one is Double zigzags trend against the main direction and their purpose is to deepen a correction when the first zigzag did not take price deep enough So I will be expecting intermediate wave Y to subdivide as a zigzag and to take price comfortably above 1 433 83 It should last about 35 to 45 days or sessions in total Within the zigzag of intermediate wave Y minor wave B may not move beyond the start of minor wave A This wave count is invalidated with movement below 1 251 76 The structure of minuette wave b is closer to completion but it is still incomplete Minuette wave b is a 101 correction of minuette wave a which indicates a regular flat is unfolding for minute wave b Regular flats most commonly have C waves which are close to equality with A waves I would expect minuette wave c to overshoot the parallel channel slightly Minuette wave b is now a complete zigzag Within it subminuette wave c is 0 71 short of 1 618 the length of subminuette wave a The final wave upward of minuette wave c needs to unfold as a five wave structure Minuette wave c is highly likely to make a new high above the end of minuette wave a at 1 322 68 to avoid a truncation and a very rare running flat At 1 323 minuette wave c would reach just over equality with minuette wave a Alternate Daily Wave Count It is possible that a large contracting triangle is unfolding for primary wave 4 but it has a lower probability than the main wave count Double zigzags and combinations are in my experience more common structures than triangles However triangles are not rare they are just less common Triangles are very tricky structures to analyse I normally only consider them when they show themselves clearly which is close to the end of the structure At this stage within a possible triangle only waves A and B would be complete One of the five subwaves should subdivide into a double zigzag be more time consuming and have deeper corrections than the other subwaves Within a contracting triangle intermediate wave C may not move beyond the end of intermediate wave A and intermediate wave D may not move beyond the end of intermediate wave B Within a barrier triangle intermediate wave D should end about the same level as intermediate wave B which in practicality means it may move slightly lower than 1 251 76 As long as the B D trend line remains flat The triangle is invalidated with any movement above 1 438 83 or with much movement below 1 251 76 |
C | Apple Analysis Downwadrd Sideways Movement | Last analysis expected downwards and sideways movement on the hourly chart for a fourth wave correction which is what has happened The wave count remains the same I can now calculate a target for this fourth wave to end Click on the charts below to enlarge A large zigzag structure for a fourth wave correction at supercycle degree may be unfolding Within the zigzag cycle wave a is a complete impulse Within cycle wave a there are no adequate Fibonacci ratios between primary waves 1 3 and 5 Cycle wave b is unfolding as a zigzag Within the larger zigzag cycle wave b may not move beyond the start of cycle wave a This wave count is invalidated with movement above 705 07 At 600 primary wave C would reach 2 618 the length of primary wave A The daily chart shows the structure of cycle wave b Within primary wave B there is no Fibonacci ratio between intermediate waves A and C Within intermediate wave 1 there are no adequate Fibonacci ratios between minor waves 1 3 and 5 Within intermediate wave 2 there is no Fibonacci ratio between minor waves A and C Within intermediate wave 3 minor wave 3 has no Fibonacci ratio to minor wave 1 Minor wave 4 has breached the parallel channel about intermediate wave 3 drawn using Elliott s first technique Sometimes fourth waves do this When they do the channel should be redrawn when they have ended I will be able to do this next week for you Minor wave 4 is incomplete and should move a little lower When it is complete minor wave 5 should make new highs and move toward the target at 572 Minor wave 4 may not move into minor wave 1 price territory This wave count is invalidated with movement below 496 91 At 572 intermediate wave 3 would reach equality in length with intermediate wave 1 When minor wave 4 within intermediate wave 3 is completed I will add to this target calculation at minor wave degree so it may change or widen to a small zone The hourly chart this week shows the structure of minor wave 4 It is unfolding as a zigzag Although minute wave a within it looks like a three wave structure on the hourly chart it has an impulsive wave count on the five minute chart The fourth and second waves within it are out of proportion Minute wave b was a sideways moving zigzag Minute wave c is unfolding as an impulse The final fifth wave down is required to complete the structure This should be over within 24 hours At 513 61 minute wave c would reach 0 618 the length of minute wave a At 515 minuette wave v would reach equality in length with minuette wave i I favour the lower end of this small target zone because it would avoid a truncation It is most likely that minute wave c will end below the end of minute wave a at 514 54 This would see minor wave 4 end just slightly below the 0 382 Fibonacci of minor wave 3 I would expect minute wave c to end midway within the downward sloping channel drawn about minor wave 4 When this channel is clearly breached by subsequent upward movement then I would have confidence that minor wave 4 is over and minor wave 5 upwards is underway |
C | FTSE Analysis Further Downwards Movement | Last analysis on 14th October 2013 expected more upwards movement for the start of a third wave The mid term target at 7 406 has not been reached but the structure is still incomplete Click on the charts below to enlarge Within intermediate wave 4 it is possible to see this structure as a completed zigzag The following upwards movement for minor wave 1 of intermediate wave 5 is ambiguous It can be seen as either a three or a five This wave count sees it as a five Downwards movement for minor wave 2 is now a complete double zigzag The second zigzag in the double made only a slight new low below the first but did move price lower At 7 406 minor wave 3 would reach 1 618 the length of minor wave 1 This target is about 30 trading days or sessions away Within minor wave 3 no second wave may move beyond the start of the first wave This wave count is invalidated with movement below 6 316 91 Within minor wave 3 so far minute waves i and now ii should be complete This wave count expects an increase in upwards momentum over the next one to two weeks Minute wave ii is a complete zigzag and very shallow ending just short of the 0 236 Fibonacci ratio of minute wave i Within it there is no Fibonacci ratio between minuette waves a and c It is possible that minute wave ii may continue lower as a double zigzag because this first zigzag is so shallow If price moves below 6 708 52 then I expect this is what would be happening At that stage I would expect more downwards movement for a few days to either of the 0 382 Fibonacci ratio at 6 628 or the 0 618 Fibonacci ratio at 6 509 When there is a very clear channel breach of the downwards sloping channel containing minute wave ii and also a clear five upwards on the hourly chart then I would have confidence in the short mid term target at 7 211 for minute wave iii While price remains within the channel and there is no clear five up then the possibility of further downwards movement will remain If minute wave ii is to continue yet further then it would be either as a flat double zigzag or combination All three of these possibilities would require a three wave structure upwards on the hourly chart at this stage |
C | Silver Analysis Upward Momentum | Last week s analysis of Silver expected downward movement for a second wave correction which is exactly what has happened With more of this structure now to analyse I can now calculate a target for it to end for you Click on the charts below to enlarge Intermediate wave B is unfolding as a simple zigzag Minor wave A subdivides as a five and minor wave B is now a complete three a double zigzag At 27 417 minor wave C would reach equality in length with minor wave A Minor wave A lasted 43 days and minor wave B lasted a Fibonacci 34 days I would expect minor wave C to last between 34 and 43 days or thereabouts The parallel channel drawn here is Elliott s technique for a correction Draw the first trend line from the start of minor wave A to the end of minor wave B then place a parallel copy upon the end of minor wave A I will expect minor wave C to find resistance at the upper edge of this channel and it is most likely to end there Within minor wave C minute wave ii may not move beyond the start of minute wave i This wave count is invalidated with movement below 20 512 Within minor wave C minute wave i is complete and minute wave ii is unfolding as a deep zigzag which is incomplete I will expect more downwards movement for another two to three days before minute wave ii is completed At 21 158 minuette wave c would reach 0 618 the length of minuette wave a This would bring minute wave ii to just below the 0 618 Fibonacci ratio of minute wave i at 21 496 Ratios within minute wave a are subminuette wave iii is 0 033 short of equality with subminuette wave i and subminuette wave v has no Fibonacci ratio to either of subminuette waves i or iii Minuette wave b is an expanded flat correction subminuette wave a subdivides as a three subminuette wave b subdivides as a three and is a 115 correction of subminuette wave a subminuette wave c is just 0 021 short of 1 618 the length of subminuette wave a and it subdivides as a five wave impulse We can now use Elliott s technique to draw a channel about this downward zigzag of minute wave ii Draw the first trend line from the start of minuette wave a to the end of minuette wave b then place a parallel copy upon the end of minuette wave a If it gets down that far I would expect minuette wave c to find support at the lower trend line but I would expect it to be more likely to end mid way within this channel I would expect minuette wave c downward to take about two or three days to complete When it is done I will expect a trend change and the resumption of the upward trend The next wave up should be a third wave and should show strong upward momentum When this channel is breached by subsequent upwards movement then I would have confidence minute wave ii is over and that minute wave iii would have begun Minute wave ii may not move beyond the start of minute wave i This wave count is invalidated with movement below 20 512 |
BMY | Halozyme out licenses ENHANZE to Roche and Bristol Myers for up to 455M raises guidance shares up 12 premarket | Halozyme NASDAQ HALO is up 12 premarket in response to its announcement that it has out licensed its ENHANZE drug delivery technology to Roche OTCQX RHHBY for exclusive development of an undisclosed therapeutic target Under the terms of the deal HALO will receive 30M upfront up to 160M in milestones and tiered mid single digit royalties on net sales The companies have had a business relationship since 2006 Roche has already developed two subcutaneous formulations of cancer drugs Recently the partnership included the clinical study of HALO s PEGPH20 with TECENTRIQ atezolizumab The company has also out licensed ENHANZE to Bristol Myers Squibb NYSE BMY in a deal valued up to 265M with the potential for an additional 1 6B if BMY chooses 10 additional targets HALO will receive 105M upfront milestones up to 160M and royalties on net sales ENHANZE is based on HALO s patented recombinant human hyaluronidase enzyme rHuPH20 It enables certain biologics and other compounds to be delivered via injections under the skin with the aim of providing a more patient friendly experience Halozyme has raised its 2017 financial guidance to include the upfront payments Net revenue should be 245M 260M up from 115M 130M Cash flow ops will be positive 50M 60M up from cash consumption of 75M 85M Operating expenses of 240M 250M will remain unchanged Now read |
BMY | Infinity Pharma and Bristol Myers Squibb add TNBC patients to clinical evaluation of IPI 549 and Opdivo | Infinity Pharmaceuticals INFI 3 5 and Bristol Myers Squibb BMY 0 3 expand their clinical collaboration assessing the combination of IPI 549 and Opdivo nivolumab to include patients with triple negative breast cancer TNBC who have not been previously treated with a PD 1 or PD L1 inhibitor
TNBC patients are generally treatment resistant with only a very few who respond to a checkpoint inhibitor
IPI 549 is an orally available inhibitor of an enzyme called phosphoinositide 3 kinase PI3K gamma that plays a key role in inflammation immunity and cancer
Previously Infinity Pharma s lead product candidate IPI 549 shows encouraging results in preclinical cancer testing shares ahead 21 Jan 20
Now read |
JPM | U S economic outlook brightens on upbeat job inventory data | By Lucia Mutikani WASHINGTON Reuters The number of Americans filing for unemployment benefits unexpectedly fell last week pointing to sustained strength in the labor market despite a sharp slowdown in hiring last month Other data on Thursday showed wholesale inventories recording their biggest increase in 10 months in April prompting economists to raise their second quarter economic growth estimates The rise in inventories came even as sales at wholesalers rose for a second straight month Initial claims for state unemployment benefits declined 4 000 to a seasonally adjusted 264 000 for the week ended June 4 the Labor Department said The drop confounded economists expectations for an increase to 270 000 The hand wringing over the May jobs report may be misplaced said Joel Naroff chief economist at Economic Advisors in Holland Pennsylvania Claims have dropped by 30 000 since surging to 294 000 in early May They have now been below 300 000 a threshold associated with a strong job market for 66 straight weeks the longest streak since 1973 The four week moving average of claims considered a better measure of labor market trends as it irons out week to week volatility fell 7 500 to 269 500 last week The claims report offered the latest sign that the labor market remains strong even though the economy added only 38 000 jobs in May the smallest gain since September 2010 A report on Wednesday showed job openings hitting a nine month high in April and layoffs falling to their lowest level since September 2014 The underlying trend to a tighter labor market remains intact It seems clear that the problem with the jobs market is hiring new employees that are suitable for available positions which in itself is a sign of labor market tightness said John Ryding chief economist at RDQ Economics in New York Prices for U S Treasuries rose as a broad decline on commodity and stock markets boosted the appeal of low risk assets The dollar DXY rose against a basket of currencies while U S stocks fell ECONOMY REGAINING MOMENTUM The claims report also showed the number of Americans still receiving benefits after an initial week of aid fell in the week ending May 28 to the lowest level since October 2000 The insured unemployment rate fell one tenth of a percentage point to a record low of 1 5 percent The health of the labor market will likely determine the timing of the next Federal Reserve interest rate increase Fed Chair Janet Yellen this week reiterated the U S central bank s desire to raise rates but gave no hints on when that might happen Before May s dismal jobs report Yellen had signaled rates would rise in coming months if economic data continued to suggest that growth was picking up in the second quarter The Fed lifted its benchmark overnight interest rate in December for the first time in nearly a decade So far reports on consumer spending industrial production and housing suggest the economy has regained speed after growth slowed to a 0 8 percent annualized rate in the first quarter Growth prospects for the second quarter received a further boost from a separate report from the Commerce Department on Thursday showing wholesale inventories increasing 0 6 percent in April the biggest gain since June last year after rising 0 2 percent in March Sales at wholesalers jumped 1 0 percent in April the largest increase since April 2015 after advancing 0 6 percent in March With sales increasing solidly for a second straight month it would take wholesalers 1 35 months to clear shelves down from 1 36 months in March The component of wholesale inventories that goes into the calculation of GDP wholesale stocks excluding autos increased 0 8 percent in April As result economists raised their second quarter GDP growth estimates by as much as three tenths of a percentage point to as high as a 2 7 percent rate While the stronger inventory data should boost growth in the first and second quarters relative to what we previously had been expecting it also should be more of a headwind for growth in the future said Daniel Silver an economist at JPMorgan NYSE JPM in New York
Inventories have been a drag on GDP growth since the third quarter of 2015 |
JPM | Two charged in cyberfraud against JPMorgan and others plead not guilty | By Brendan Pierson NEW YORK Reuters Two Israeli citizens pleaded not guilty on Thursday to orchestrating a massive computer hacking and fraud scheme that included an attack against JPMorgan Chase Co NYSE JPM and generated hundreds of millions of dollars of illegal profit Gery Shalon 32 and Ziv Orenstein 41 entered their pleas in Manhattan federal court before U S Magistrate Judge Nathaniel Fox They were extradited from Israel this week Shalon Orenstein and a third defendant Joshua Samuel Aaron all from Israel were charged in November in a 23 count indictment with alleged crimes targeting 12 companies including nine financial services companies and media outlets such as The Wall Street Journal Aaron has not been arrested by U S authorities prosecutors said and his whereabouts were not immediately clear Prosecutors said the scheme dated back to 2007 and compromised more than 100 million people s personal information The alleged enterprise included pumping up stock prices with sham promotional emails running online casinos operating an illegal bitcoin exchange and laundering money through at least 75 shell companies and accounts around the world It involved a massive attack on JPMorgan affecting 83 million customers the largest theft of customer data from a U S financial institution authorities said A separate indictment unveiled in Atlanta against Shalon Aaron and an unnamed defendant said the brokerages E Trade Financial Corp and Scotttrade Inc were also targets and personal information of more than 10 million customers was compromised The counts in the New York indictment include counts of computer hacking securities and wire fraud identity theft illegal internet gambling and conspiring to commit money laundering carrying possible prison sentences ranging from two to 20 years Not all counts were brought against all defendants The case is U S v Shalon et al U S District Court Southern District of New York No 15 cr 00333
Clarifies headline to show cyberfraud involved other companies |
JPM | U S retail sales point to strong domestic demand | By Lucia Mutikani WASHINGTON Reuters U S retail sales rose strongly in May as Americans bought automobiles and a range of other goods even as they paid more for gasoline suggesting that economic growth was gaining steam despite a sharp slowdown in job creation Other data on Tuesday hinted at a steady build up of inflation pressures with import prices recording their largest increase in just over four years in May as the drag from a strong dollar and lower oil prices fades As has been the case in the prior two years the modest first quarter disappointment in consumer spending now appears to be a short lived soft patch said Michael Feroli an economist at JPMorgan NYSE JPM in New York This number also lends credence to the idea that the big miss on May payrolls may have been sending an overly pessimistic signal on growth The Commerce Department said retail sales increased 0 5 percent last month after surging by an unrevised 1 3 percent in April The second straight month of gains boosted sales 2 5 percent from a year ago Excluding automobiles gasoline building materials and food services retail sales rose a solid 0 4 percent last month after an upwardly revised 1 0 percent increase in April These so called core retail sales correspond most closely with the consumer spending component of gross domestic product They were previously reported to have risen 0 9 percent in April Economists had forecast both overall retail and core sales gaining 0 3 percent last month In a separate report the Labor Department said import prices increased 1 4 percent last month the largest rise since March 2012 after advancing 0 7 percent in April In the 12 months through May import prices fell 5 0 percent the smallest decline since November 2014 The dollar s surge and a plunge in oil prices between June 2014 and December 2015 had dampened inflation But with the dollar weakening 1 5 percent against the currencies of the United States main trading partners this year and oil prices near 50 per barrel that drag is starting to lift The signs of fairly healthy domestic demand and rising imported inflation will likely be welcomed by officials at the Federal Reserve who convene for a two day meeting starting on Tuesday While May s weak employment report has all but ruled out an interest rate increase at this meeting the steady flow of upbeat economic reports keeps a hike in July on the table The economy added only 38 000 jobs in May the smallest gain since September 2010 This won t spur the Fed to raise interest rates tomorrow but it could cast a more positive tone on the statement setting the stage for an increase in July said Sal Guatieri a senior economist at BMO Capital Markets in Toronto The dollar rose against a basket of currencies while U S stocks fell Prices for U S government debt rose marginally STRONG CONSUMER SPENDING EYED Economists said based on May s broad increase in retail sales consumer spending in the second quarter was growing between a 3 percent and 4 percent annualized rate As a result the Atlanta Fed raised its second quarter GDP growth estimate by three tenths of a percentage point to a 2 8 percent rate The economy grew at a 0 8 percent rate in the first quarter Strong sales are also helping businesses reduce an inventory overhang While that will hurt GDP growth in the short term it should give businesses room to order more goods from factories in the future and boost production In another report the Commerce Department said inventories gained 0 1 percent in April after rising 0 3 percent in March Business sales rose 0 9 percent in April the largest increase since February 2014 advancing for a second straight month Retail sales in May were buoyed by a 0 5 percent increase in auto sales Receipts at service stations increased 2 1 percent reflecting recent increases in gasoline prices Americans also bought clothing and spent on online purchases They boosted discretionary spending splurging on sporting goods and hobbies frequenting restaurants and bars and buying electronics and appliances
But households cut back on purchases of building materials and garden equipment as well as furniture |
JPM | Wall Street falls as Brexit vote becomes major fear | By Noel Randewich Reuters Wall Street dropped for a fourth straight session on Tuesday as central bank policymakers weighed the health of the U S economy and investors worried about an upcoming vote in Britain on whether to leave the European Union Investors launched a late day rally but the major indices still ended with losses The U S Federal Reserve began its two day meeting to decide whether the U S economy has recovered enough to absorb an interest rate hike While traders have discounted a rate increase this month they will parse Fed Chair Janet Yellen s comments on Wednesday for clues on the health of the economy and the trajectory of hikes Among banks that tend to benefit from higher interest rates Wells Fargo N WFC and JPMorgan Chase N JPM took a hit and weighed most on the S P 500 Adding to angst on Wall Street recent opinion polls indicated growing support for Britain s exit from the European Union creating a rush by investors to safe haven assets like gold and the yen The CBOE Volatility index VIX or Wall Street s fear gauge reached its highest in over three months Over the past four sessions the S P 500 has lost 2 percent We re trading on the Brexit polls said John Canally chief economic strategist for LPL Financial Markets are better priced for it today than a week ago but they are still not fully priced for a leave vote Four of the 10 major S P sectors lost ground with financials SPSY falling 1 45 percent Wells Fargo declined 2 27 percent and JPMorgan Chase lost 1 88 percent Traders see virtually no chance of a rate hike on Wednesday according to CME Group s FedWatch tool They are pricing in a 21 percent chance of a rate hike in July a 40 percent chance in September and a 59 percent chance in December The focus will be on the number of hikes Federal Reserve participants see through the year said Bill Northey chief investment officer at Private Client Group of U S Bank One bright spot was a better than expected 0 5 percent rise in U S retail sales in May The Dow Jones industrial average DJI fell 0 33 percent to end at 17 674 82 points and the S P 500 SPX lost 0 18 percent to 2 075 32 The Nasdaq Composite IXIC declined 0 1 percent to 4 843 55 About 7 4 billion shares changed hands on U S exchanges above the 6 7 billion average for the past 20 trading days according to Thomson Reuters data Declining issues outnumbered advancing ones on the NYSE by 1 988 to 1 044 On the Nasdaq 1 719 issues fell and 1 122 advanced
The S P 500 index showed 11 new 52 week highs and six new lows while the Nasdaq recorded 24 new highs and 78 new lows |
HAL | U S crude falls over 1 to below 45 as Halliburton sees rig count pick up | Investing com Oil fell sharply after Halliburton NYSE HAL predicted a rig count pick up U S crude was down 72 cents or 1 58 at 44 71 at 09 30 ET while Brent shed 1 24 to 46 08 We believe the North America market has turned Halliburton CEO Dave Lesar said Lesar predicted a modest uptick in the U S rig count in the second half The EIA is forecast to report Wednesday a 2 1 million barrel fall in U S crude stocks Oil services firm Halliburton Wednesday reported a Q2 EPS loss of 0 14 |
HAL | Oil holds on to gains after U S crude stocks draw | Investing com Oil continued higher early Thursday as U S crude stocks fell more than expected in the latest week U S crude was up 12 cents or 0 20 at 45 87 at 06 45 ET while Brent crude added 0 19 to 47 26 Futures rallied from sharp losses Wednesday after U S Energy Information Administration EIA inventory data The EIA said U S crude stocks fell by 2 342 million barrels in the week ending July 15 Forecasts were for a drop of 2 1 million barrels Stockpiles have fallen for nine weeks in a row However inventories of gasoline surprisingly rose by 911 000 barrels despite the peak U S driving season Despite the draw in crude stocks inventories remain historically high at 519 5 million barrels That underscored concerns about a glut of crude and refined products Oil rigs operating in the U S also continue to rise Oil services firm Halliburton NYSE HAL expects a further modest pick up in the second half The dollar came off four month highs A stronger dollar weakens demand for oil |
C | Asia stocks retreat on global growth concerns Nikkei sheds 0 7 | Investing com Asian stock markets retreated on Monday as investors turned cautious ahead of a critical European Union summit later in the week while ongoing concerns over faltering global growth further weighed During late Asian trade Hong Kong s Hang Seng Index dipped 0 2 Australia s ASX 200 Index shed 0 5 while Japan s Nikkei 225 Index declined 0 7 Concerns over the health of the global economy intensified last week after data showed weak U S manufacturing activity a shrinking Chinese factory sector and slowing business activity across the euro zone Investors also remained cautious ahead of a European Union summit due to begin later in the week amid hopes progress on greater fiscal integration and allowing the bloc s rescue funds to buy government debt Elsewhere Spain s government was expected to make a formal request for aid for its banking sector later in the day after reports on Thursday indicated that Madrid would need a rescue package of as much as EUR62 billion In Tokyo shares in troubled chipmaker Renesas Electronics dropped 2 7 after a Nikkei report said the company will issue nearly JPY50 billion worth of new shares to U S investment firm Kohlberg Kravis Roberts Co Shares in NEC slumped 3 15 after a Kyodo News report that tax regulators found the firm concealed more than JPY10 billion in income from 2007 to 2010 On the upside shares in Panasonic climbed 0 65 after Citigroup raised its rating on the shares from neutral to buy Meanwhile in Hong Kong shares in raw material producers were lower amid concerns over a slowdown in demand for commodoities such as copper and oil Oil giants PetroChina and Sinopec fell 1 2 and 2 6 respectively while aluminum producer CHALCO dropped 2 75 and copper miner Jiangxi Copper Company slumped 2 25 On the upside shares in Evergrande Real Estate Group jumped 2 6 after falling sharply last week amid allegations of fraud from stock commentary website Citron Elsewhere shares in Australia were dragged lower by losses in mining firms BHP Billiton and Rio Tinto slumped 1 45 and 0 5 respectively while Newcrest Mining declined 3 1 Shares in troubled retailer Billabong plunged 47 5 after a heavily discounted share sale Last week the company announced a share entitlement offer of six new shares for every seven held at a 44 discount to the price before the offer Looking ahead the outlook for European stock markets was downbeat as fears over a slowdown in global growth and broad concerns over the ongoing sovereign debt crisis in the euro zone weighed on investor confidence The EURO STOXX 50 futures pointed to a loss of 0 85 France s CAC 40 futures fell 0 4 London s FTSE 100 futures declined 0 4 while Germany s DAX futures pointed to a drop of 0 45 at the open Later Monday the U S was to release official data on new home sales |
C | Copper falls to session low after Spain Italy bond sales | Investing com Copper futures fell to the lowest levels of the day during European morning trade on Tuesday after Spain and Italy both saw borrowing costs spike higher at debt auctions earlier in the day On the Comex division of the New York Mercantile Exchange copper futures for September delivery traded at USD3 313 a pound during European morning trade shedding 0 35 It earlier fell by as much as 0 5 to trade at a daily low of USD3 306 a pound Prices touched a three week low of USD3 256 a pound on June 22 Copper prices held on to losses after Spain s Treasury auctioned slightly more that the targeted amount of EUR 3 billion selling EUR1 6 billion worth of three month government bonds at an average yield of 2 36 up sharply from 0 84 at a similar auction last month Spain also sold EUR1 48 billion of six month debt at an average yield of 3 23 up from 1 73 in May Following the auction the yield on Spanish 10 year bonds climbed to 6 69 nearing the critical 7 threshold which is widely viewed as unsustainable in the long term On Monday rating s agency Moody s downgraded 28 Spanish banks citing concerns over Madrid s ability to support its banking sector which the agency said was vulnerable to further losses from Spain s real estate bust Earlier Monday Spain s government formally requested aid of up to EUR100 billion for its banks from its euro zone partners Spain s economy minister said the amount should be enough to cover the needs of all banks and provide an additional security buffer Meanwhile Italy s Treasury sold EUR2 99 billion worth of two year government bonds maturing in May 2014 at an average yield of 4 712 earlier in the day the highest since December and up from 4 037 at a similar auction last month Meanwhile investor sentiment remained fragile amid doubts over whether an upcoming European Union summit will result in fresh measures to tackle the region s debt crisis On Monday after German Chancellor Angela Merkel crushed any hopes that euro zone countries will eventually issue common Eurobonds to help indebted nations calling such an idea economically wrong and counterproductive Meanwhile Greece s new finance minister was forced to resign due to health issues while Prime Minister Antonis Samaras said he would not be able to attend this week s EU summit given that he had just undergone eye surgery Europe as a region is second in global demand for the industrial metal Prices have tracked investor sentiment toward the euro zone s debt crisis in recent months Meanwhile ongoing concerns over the health of the global economy further weighed Copper is sensitive to the global economic outlook because of its widespread uses in construction and manufacturing HSBC Holdings joined Citigroup in cutting growth forecasts for China HSBC cut its forecast for China s 2012 growth to 8 4 from 8 6 That came a day after Citigroup lowered its estimate for China s growth this year to 7 8 from 8 1 China is the world s largest copper consumer accounting for almost 40 of world consumption last year Copper prices have been on a rapid decline since the start of May losing nearly 14 amid growing fears over an escalating debt crisis in the euro zone and a deeper than expected slowdown in China A deeper slowdown in China the world s second biggest economy would impair a global expansion that is already faltering because of debt crisis in the euro zone Elsewhere on the Comex gold for August delivery shed 0 35 to trade at USD1 583 05 a troy ounce while silver for September delivery declined 0 65 to trade at USD27 40 a troy ounce |
C | Citigroup Downtrend Continues | Long term head and shoulders pattern in place followed by a nice confirmed downtrend as well keeps plenty of downward pressure on the stock going forward 48 seems to be the likely destination Here s the technical analysis |
C | FX At Week s End EUR USD At 2 Yr Low | EUR USDThe euro briefly reversed gains after an index based on a survey of purchasing managers in the euro area manufacturing and services industry dropped in September The dollar slid to a two year low versus the euro as weaker than forecast economic data and concern that U S growth was hurt by a government shutdown added to bets the Federal Reserve will delay slowing stimulus until next year Euro had little width 623 height 467 GBP USDU K inflation expectations for the year ahead rose to 3 2 percent this month from 2 5 percent in September as Citigroup Inc The Bank of England has a 2 percent inflation target Sterling gained 2 8 percent in the past three months the best performer among 10 developed nation currencies A report will show the U K economy expanded 0 8 percent in the third quarter compared with 0 7 percent in the previous three months according to the median of 40 analyst estimates Sterling was little changed at 1 6160 after rising to 1 6250 yesterday the highest since Oct width 623 height 467 USD JPYJapan s currency was little changed at 97 35 per dollar after climbing to 97 20 The yen has gained versus the greenback five of the past six days adding 0 4 percent over the past week It last touched 100 on September 11 The yen has declined 11 percent this year making it the worst performer out of 10 developed nation width 623 height 467 USD CADThe Canadian dollar had the biggest two day slump in four months after the central bank dropped language about the need for future interest rate rises that had been in place for more than a year as risks of a worsening economy increased The currency reached a six week low against its U S counterpart after the Bank of Canada said inflation will remain less than its 2 percent target until the end of 2015 two quarters longer than forecast in July with the risks of further weakness taking on increasing importance USD CAD width 623 height 467 |
C | Reading This Week s ETF Tea Leaves | Optimism About Monetary Stimulus If you are relatively new to the markets it is important that you take the time to understand how the Fed impacts asset prices Clients often scratch their heads trying to understand how to match up tepid economic growth and high unemployment with financial markets that seem to keep going up and up The Fed continues to inject billions of dollars of freshly printed money into the global financial system as shown in this A familiar reason was cited by the press for Thursday s advance in the equity markets From
U S stocks resumed their move higher on Thursday as optimism about monetary stimulus for the foreseeable future helped to offset mixed news on the economy and earnings PulteGroup Inc PHM N was among the day s biggest gainers after the homebuilder reported results and said a slowdown in new home orders would be short lived Its shares jumped 7 3 percent to 17 90 while shares of D R Horton Inc DHI N rose 3 2 percent to 20 09 and Beazer Homes Inc BZH N added 1 8 percent to 19 47
ETF Leadership This Week Have investors bought into the QE until October 2014 scenario we covered Wednesday If we review the flow of investment dollars this week the answer is yes The table below shows ETFs that a have an established bullish weekly longer term demand profile relative to the S P 500 and b have seen greater buying pressure than the S P 500 SPY this week shorter term ETF leadership tells us investors a are concerned about a weak dollar foreign stocks popular b have some confidence in future economic outcomes cyclical and small caps and c are more concerned about future inflation relative to future deflation metals such as XME Noteworthy defensive ETFs that were unable to earn their way into the table above consumer staples XLP Treasuries TLT aggregate bond AGG and inverse stock SH The defensive ETFs are not in the table above because investors still believe stocks are the place to be What Can We Learn From The Fear Index The VIX is often referred to as the Fear Index since it is typically used to hedge against future stock market volatility Volatility is the nice way of saying stocks are going down If you are a believer in contrarian investing then could the big bearish VIX bet described below be twisted into a bullish signal From
An investor paid 6 7 million for a trade that will pay off if the Chicago Board Options Exchange Volatility Index more than doubles by February The trader today bought 160 000 bullish contracts on the VIX expiring in February with a strike price of 24 while selling the same number of February 29 calls in a strategy known as a call spread according to New York based Trade Alert LLC The trade profits if the volatility gauge rises above 24 42 from the current level around 13 data compiled by Bloomberg show It has a maximum payoff if the VIX jumps 115 percent to 29 This is probably an investor with a portfolio of stocks who is using the VIX to hedge against an increase in market volatility Frederic Ruffy a Chicago based senior options strategist at Trade Alert said in a phone interview The focus is on the February options so it expresses concern over what will happen during the next three months which coincides with the next deadlines on the government budget
Taking the VIX VXX analysis to action this week the table below shows the VIX made its intraweek high of 14 21 midweek Thursday s session saw the VIX drop by 1 94 Also noteworthy was the intraday high which showed waning fear relative to Monday Tuesday and Wednesday blue arrow Portfolio Allocation Implications Friday Will Make Or Break Week While many were jumping onto the a major top is right around the corner bandwagon the visible evidence from the battle between bullish economic conviction and bearish economic fear prompted us to postulate last weekend After Wednesday s ugly session you may be surprised to learn that as of Thursday s close the S P 500 is up 7 57 points this week and the Dow has tacked on 109 points Since our market model relies heavily on the weekly demand balance between economic confidence and economic fear we respect a 7 point S P 500 gain could be wiped out Friday Therefore we sat tight Thursday and will see how the big picture looks heading into the weekend For now the supply and demand balance on the ETF front continues to point to many of our holdings as being prudent risk reward options broad U S VTI technology QQQ small cap IWM foreign developed EFA Europe FEZ financials XLF and emerging markets EEM We will hold our current positions until the observable evidence shifts in a meaningful way |
C | Update NYSE Margin Debt Rises To All Time High | VIX rose up to weekly Short term resistance at 14 23 this week before partially correcting the move The VIX had a very important cyclical anniversary last Friday which coincided with its low This appears to be a fulcrum for an unexpected reversal over the next several weeks SPX jammed Cycle Top resistance SPX jammed up against its Weekly Cycle Top resistance and trendline at 1760 00 at the close on Friday Trendline resistance held the last three times an attempt was made at the top and there is good reason to believe it may hold this time as well rose nearly 4 8 in the month of September to an all time high of 401 239 000 000 00 ZeroHedge Of course it wouldn t be Friday if we didn t melt up into the close helped by a VIX slammer and sure enough the S P tagged its all time highs as panic buying ensued with just minutes left in the week Headlines will crow of new all time highs for the S P but credit remains a non believer not buying the rip NDX slams into the Broadening Top trendline NDX extended its throw over of its Ending Diagonal formation to make another attempt the upper trendline of its Broadening Wedge formation The Broadening Wedge formation has the same lower trendline as the Ending Diagonal suggesting an average decline to 2344 00 once it declines beneath 3100 00 A decline beneath the Diagonal formation may quickly lead to a break of the formation as well triggering multiple bearish formations ZeroHedge As we head into the vinegar strokes of 2013 with the world awash with liquidity and ever ready to BTFATH we note that the last time the S P 500 saw two consecutive years when the index did not go negative year to date was 1975 1976 As Bloomberg notes just as in 2012 and 2013 we have not seen one day close below the previous year s closing level but as Marketfield s Michael Shaoul comments eventually circumstances will change sufficiently to make the equity market a treacherous place The Euro meets its Cycle Top TheEuronearly hit its Cycle Top resistance at 138 60 The uptrend in the Euro over the past six weeks has been amazing but it may not last The Cycles suggest a change in trend may happen over the weekend The summer is past and European summits return Europe s leaders gather in Brussels on Thursday with the markets becalmed and some economic statistics to celebrate Even the threat a few weeks back of the Italian government falling scarcely ruffled the markets The promise by the president of the European Central Bank Mario Draghi a year ago to do whatever it takes to defend the euro continues to act as a shield against the bond market vigilantes No one it seems is prepared to bet against the ECB Famous last words TheYenis finishing its consolidation The Yen may have ended its Triangle formation which indicates a continuation of its prior trend The Cycles Model suggests an imminent sharp decline that may challenge the Head Shoulders neckline at 96 00 As the Yen loses its supports the decline may shortly resume beneath the neckline in a Cycle Wave V carrying it to new lows A magnitude 7 1 earthquake struck off the Fukushima region of Japan on Saturday local time triggering tsunami driven waves that hit three cities along a 200 mile stretch of the east coast that was briefly under a tsunami advisory The epicenter was located 231 miles east of Japan s Honshu Island at a depth of 6 miles The tremor was felt 300 miles away in Tokyo The US Dollar throws under a Falling Wedge USDthrew under a Falling Wedge formation indicating a final thrust in its decline This may be the completion of a 16 month long Expanded Flat correction before moving considerably higher For now the long term uptrend is still intact and a reversal back above the Falling Wedge will keep it that way The dollar traded at almost the weakest level in two years versus the euro after U S consumer sentiment fell to a 10 month low adding to bets the economy is struggling and the Federal Reserve will delay cutting stimulus The greenback slid for a second week versus the yen as orders DGNOXTCH fell for U S durable goods other than transportation equipment The Fed which meets next week will put off slowing bond purchases until March economists forecast Goldmeets its trendline Gold continued its rally up to trendline resistance near 1360 00 If it breaks through the next resistance may be Long term resistance at 1441 26 Gold still holds considerable attraction for investors and it may provide a temporary safe haven for hot money However there is some evidence that the rally may be over If so this may be one of the shortest recovery rallies since mid April Gold may make a lot of people look foolish see below ZeroHedge Just two weeks after Goldman s Slam Dunk Sell report the price of gold is surging once again Goldman s Currie in direct opposition to BofAML s Curry argument that post debt ceiling with significant recovery in the U S tapering of QE should put downward pressure on gold prices seems like another round of wishful thinking as physical premiums for gold around the world surge to record highs and spot prices reach one month highs Of course while Goldman had a few days of positive reaction after their call it is none other than Dennis Gartman who provided the bottom tick in the latest exuberance Treasuries probe higher USB appears to have reached the top of its trend channel If so it may be due for a reversal beneath its Broadening Wedge and Ending Diagonal formations There may be another day or two of testing the channel trendline then USB has an appointment with an important low in mid November U S Treasury bonds ended the week on a high note as the latest U S data releases raised concerns over economic growth and bolstered speculation the Federal Reserve would be in no rush to dial back its bond purchases In late afternoon trading the benchmark 10 year Treasury note was 4 32 higher yielding 2 505 according to Tradeweb Bond prices rise when their yields fall The yield fell by about 0 09 percentage point this week Treasury bonds have handed investors 0 5 in total return in October through Thursday though they still suffered a 1 5 loss so far this year according to Barclays Crudebounced at mid Cycle support Crudemade a credible bounce at weekly mid 0cycle support this week Should it gain ground above its Long term support resistance at 98 59 it may be able to complete the formation suggested on the chart The Cycles Model suggests an important high may be coming around the last week of October or early November If so we could see crude priced near 125 00 130 00 by the end of the year China stocks lose critical support The Shanghai Index has now lost all but the weekly Intermediate term support at 2106 08 It appears that the rally attempts are at an end The Cycles Model suggests thedecline may extend through mid November Meanwhile s biggest banks tripled the amount of bad loans written off in the first half cleaning up their books ahead of what may be a fresh wave of defaults ZeroHedge The reason why the Chinese Shanghai Composite again can t catch a bid and why the Baltic Dry is sliding and will continue sliding from recent highs is the same as the main event yesterday the concerns that while the Fed punchbowl is and will continue to be filled beyond the point of overflowing China where inflation has once again taken a turn for the worse as it did this summer when after much repo pain the PBOC killed it early on in order to not repeat the scary episode of 2011 may be actively engaging in monetary tightening The India Niftyturns away from its Cycle Top The India Nifty indexmay be making a very fast decline to its Cycle Bottom in short order It has completed its final reversal and thetrigger to activate the Orthodox Broadening Top formation lies at the bottom trendline at 5400 00The probable target for Intermediate Wave C appears to be the Lip of the Cup with Handle near 4550 00 The decline from this top may be very fast Identifying India as one of the five fragile economies of the world a senior US official has predicted an uncertain outlook for its future in view of the next year s general elections The big question about India now is what happens in the election next year and who will be the new government That s a very complicated question assistant treasury secretary for international finance said India s the world s largest democracy It has a multiple of political parties There s one party on the right the which would certainly try to push forward pretty aggressive reforms The Bank Indexgives back its gains BKXhas given back some of its gains from the prior two weeks It closed just above its support cluster from 63 56 to 64 37 but could easily lose that support Aside from Lang term support at 59 54 there is little to keep it from a 50 decline to its Cycle Bottom ZeroHedge In a tougher than expected proposal the Fed has decided that internationally active banks raise their minimum liquidity standards more than some expected it would seem by the reaction in stocks ZeroHedge Across the board we are seeing European bank stocks most notably Italian trading halted The 5 7 plunge in prices just when everyone is proclaiming victory in Europe reflects an apparent concern that the tougher than expected European bank stress tests will expose the Italian banks for the bloated sovereign debt issuance soaks that they have become As Draghi himself noted in a desperate plea to maintain some credibility banks do need to fail to prove the credibility of the exercise adding if they do have to fail they have to fail There s no question about that |
C | Dollar Up Against Yen | The yen lost value against the US dollar during trading in Asian markets today October 28th With the Nikkei up by 2 2 per cent to erase some of the 2 8 per cent losses it sustained last Friday the yen was in a weaker position According to a report by the Wall Street Journal analysts have predicted November is going to be a tough month for the greenback Toshihiko Sakai a senior manager of foreign exchange at Mitsubishi UFJ Trust and Banking said As we can t expect much in terms of new trading factors I think the market will be in an adjustment phase in November at least Mr Sakai added that he believes the US dollar could fall as low as Y95 over the next four weeks while Osamu Takashima head of G10 FX strategy for Japan at Citigroup thinks it will trade between Y94 and Y99 The dollar dropped near a two year low compared to the euro on Friday indicating a difficult period could be in the offing for the greenback Learn about the Asian markets and CFD trading at City IndexDisclosure FX Solutions assumes no responsibility for errors inaccuracies or omissions in these materials FX Solutions does not warrant the accuracy or completeness of the information text graphics links or other items contained within these materials FX Solutions shall not be liable for any special indirect incidental or consequential damages including without limitation losses lost revenues or lost profits that may result from these materials The products offered by FX Solutions are leveraged products which carry a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors Ensure you fully understand the risks involved and seek independent advice if necessary |
C | EUR USD Continues To Consolidate Around Key Level Of 1 38 | EUR USD for Tuesday October 29 2013Earlier last week the Euro enjoyed a strong surge higher to move through to its highest level in nearly two years just above 1 38 before spending several days since including early this week content to consolidate around this level It has generally moved well over the last couple of weeks after breaking higher from its sideways range Since the middle of September the Euro has traded within a narrow range between 1 3450 and 1 3650 before the range narrowed down to between 1 35 and 1 36 The former level of 1 35 was strongly tested a couple of weeks ago and stood tall as the Euro fell heavily a couple of times and was able to receive some solid support from 1 35 before rallying a little higher Several weeks ago the Euro surged higher through the resistance at 1 3550 to its then highest point since February just shy of 1 3650 only to fall back and receive solid support from 1 3550 For several days the 1 3550 level reinforced itself as one of significance as it provided solid support for the Euro and helped it back to resistance at 1 36 Throughout August the 1 34 level had been causing the Euro headaches however several weeks ago it surged higher and moved through there to its then highest level since February just shy of 1 3570 which was past a couple of weeks ago moving to just shy of 1 3650 About a month ago the Euro fell strongly away from the resistance level at 1 34 back to below the support level at 1 32 and in doing so traded to its lowest level in seven weeks very close to 1 31 Looking at the bigger picture the Euro spent a lot of August and September trading within a range between 1 32 and 1 34 before recently pushing its range to between 1 3450 and 1 3650 Back in early July the Euro was content to maintain the level above 1 31 and settle there as it received solid support from both 1 30 and 1 31 On a couple of occasions it made an attempt to move within reach of the longer term resistance level at 1 32 and finally it finds itself trading on the other side of this level and being well established there Throughout May and most of June the Euro surged higher to a four month high above 1 34 Before that in the first half of May the Euro fell considerably from near 1 32 down to six week lows near 1 28 Back at the beginning of April the Euro received solid support around 1 28 and this level was called upon to provide additional support Throughout this year the Euro has moved very strongly in both directions Throughout February and March the Euro fell sharply from around 1 37 down to its lowest level since the middle of November around 1 2750 Sentiment has completely changed with the Euro over the last few weeks and the last couple of months has seen a rollercoaster ride for the Euro as it continued to move strongly towards 1 34 before falling very sharply to below 1 29 and setting a 6 week low A top European Central Bank official says the euro currency union needs U S style centralized banking oversight so that individual countries don t have to deal with busted banks alone Joerg Asmussen said Friday in the text of a speech in Milan Italy that during the crisis in the U S it was federal institutions that stepped into the breach Asmussen who sits on the ECB s six member executive board cited the role of the Federal Deposit Insurance Corporation which has overseen the sale or restructuring of hundreds of unviable banks He also pointed to support from the U S Treasury Department for banks to raise capital through the Troubled Asset Relief Program or TARP No single U S state he said could have dealt with such burdens Imagine if the state of New York would have had to provide guarantees to Citigroup he said The lesson for the euro area is clear federal institutions can prevent local crises from becoming systemic EUR USD Daily Chart title EUR USD Daily Chart height 248 width 550 EUR USD 4 Hourly Chart title EUR USD 4 Hourly Chart height 248 width 550 EUR USD October 28 at 21 45 GMT 1 3786 H 1 3817 L 1 3775EUR USD Technical title EUR USD Technical height 248 width 550 During the early hours of the Asian trading session on Tuesday the Euro is settling on a short term support level at 1 3785 Current range right around 1 3785 Further levels in both directions Below 1 3780 1 3650 and 1 3500 Above 1 3830 OANDA s Open Position RatiosEUR USD Open Position Ratios title EUR USD Open Position Ratios height 27 width 530 Shows the ratio of long vs short positions held for the EUR USD among all OANDA clients The left percentage blue shows long positions the right percentage orange shows short positions The EUR USD long position ratio has remained steady as the Euro has remained around 1 3800 The trader sentiment remains strongly in favour of short positions Economic Releases
23 30 Mon JP Unemployment Sep
23 50 Mon JP Retail Sales Sep
09 30 UK M4 Money Supply Sep
09 30 UK BoE Mortgage Approvals Sep
09 30 UK BoE Net Consumer Credit Sep
09 30 UK BoE Secured Lending Sep
12 30 CA Industrial product price index Sep
12 30 CA Raw Materials Price Index Sep
13 00 US S P Case Shiller Home Price Aug
14 00 US Consumer Confidence Oct |
C | Talking Forex Daily Wrap October 29 2013 | EUR USDThe pair finished the session in minor negative territory as market participants positioned for the upcoming FOMC rate decision as well as a slew of other macroeconomic releases In terms of EU related commentary Eurogroup head Dijsselbloem has proposed an adjustment to the stability pact in which a country receives more time to correct excessive deficits on the condition that the country is bound to particular reforms within the time period in question Ahead of the next week s ECB rate decision analysts at Commerzbank suggested that the ECB could make verbal intervention on declining excess liquidity and halt SMP sterilisation to boost liquidity Separately concerns over bank deleveraging ahead of ECB s asset quality review could undermine European stocks according to analysts at Citigroup Finally technical support levels are seen at the 10DMA line at 1 3731 and then at the psychologically important 1 3700 level On the other hand resistance levels are seen at the 2013 high at 1 3833 and then at 1 3859 which is also November 11th 2011 high GBP USDSimilarly to EUR USD the pair failed to benefit from another encouraging round of housing data and settled the session in minor positive territory as market participants positioned for the release of the upcoming FOMC rate decision Of note the latest UK mortgage approvals data came in at its highest level since February 2008 while as recorded by the Land Registry for UK as a whole saw property prices rise 1 5 M M and 3 4 Y Y In terms of technical levels supports are seen at the 61 8 Fibonacci retracement of the 1 5894 to 1 6258 move at 1 6033 and then at the 76 4 retracement of the 1 5894 to 1 6258 move at 1 5980 On the other hand resistance levels are seen at 1 6207 and other major pairs which settled lower on the back of a firmer USD the pair benefited from interest rate differential flows and settled the session with modest gains The release of less than impressive US Retail Sales data failed to weigh on the Greenback which instead advanced as market participants positioned for the upcoming risk events In terms of Japan specific commentary IMF s Japan mission chief Schiff said that Japan probably needs a further sales tax rise above 10 and that Japan needs a steady growth path not just stimulus Schiff added that the BoJ needn t change policy right now and that further easing depends on how close BoJ is to target Technically support levels are seen at the 200DMA line at 97 43 96 94 and then at 96 50 On the other hand resistance levels are seen at the Ichimoku Cloud Base at 98 43 and then at 98 48 |
C | Gold Elliott Wave Technical Analysis | Movement below 1 340 90 invalidated yesterday s hourly wave count I have gone back and re analysed this recent upwards movement from 1 251 76 because something else must be happening The wave count at the daily chart level remains mostly the same I have two hourly wave counts for you today which both expect the same movement next The structure for primary wave 4 cannot be a flat correction because what would be the B wave is well less than 90 of what would be the A wave That is why I have labeled it as a double Because intermediate wave X is quite shallow I would expect primary wave 4 is most likely a double zigzag rather than a double combination Double combinations move price sideways and their X waves are usually deeper than this one is Double zigzags trend against the main direction and their purpose is to deepen a correction when the first zigzag did not take price deep enough So I will be expecting intermediate wave Y to subdivide as a zigzag and to take price comfortably above 1 433 83 It should last about 35 to 45 days or sessions in total Within the zigzag of intermediate wave Y minor wave B may move beyond the start of minor wave A This wave count is invalidated with movement below 1 251 76 Main Hourly Wave Count Minor wave A can be counted as a complete five wave impulse Ratios within minor wave A are minute wave iii is 3 86 short of 1 618 the length of minute wave i and minute wave v is 3 43 short of equality with minute wave iii Within minor wave A minute wave ii is a flat and minute wave iv is a double combination providing nice alternation This wave count agrees with MACD The strongest upwards momentum is within the third wave and the second and fourth waves correspond to MACD coming very close to or touching the zero line The channel drawn here is Elliott s first technique This channel is clearly breached by downwards movement Minor wave A should be over and minor wave B should be close to completion now I would expect minor wave B to end within the next few hours At 1 325 minute wave c within minor wave B would reach 1 618 the length of minute wave a This would bring minor wave B to just above the 0 382 Fibonacci ratio of minor wave A Minor wave B may not move beyond the start of minor wave A This wave count is invalidated with movement below 1 251 76 Alternate Hourly Wave Count Alternatively this downwards movement may be a fourth wave correction instead of a B wave This wave count does not agree with MACD though which is why it is my alternate I want to consider all possibilities even those with a low probability For this alternate the strongest upwards momentum is within the first wave of the third wave For this alternate minor wave A is incomplete Minute wave iii is 2 90 short of 2 618 the length of minute wave i The target remains the same At 1 325 minuette wave c within the zigzag of minute wave iv would reach 1 618 the length of minuette wave a This would bring minute wave iv down to the 0 382 Fibonacci ratio of minute wave iii Minute wave iv may not move into minute wave i price territory This wave count is invalidated with movement below 1 288 18 |
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