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Semiconductor Slump
The big pop that took place because of the massive tax fraud being rammed up the middle class’ backside has, shall we say, lost its potency over in NASDAQ-land. In particular, semiconductors are getting whacked. This has been an area of massive strength until recently. ... -
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Trump Tax Plan, Greatest Gift Establishment Ever Got
As soon as President Trump put his Goldman boys, Gary Cohn and Steven Mnuchin, in charge of his tax plan, I knew Trump’s tax plan would never fulfill his and his henchmen’s promises of helping the middle class and of not giving additional tax breaks to the rich. The Trump Tax plan, as it now exists, proves those conjoined promises to be the greatest lie Trump ever told. After two decades with Goldman Sachs, Munchkin (as he shall hereinafter be known for he lives on the Goldman-bricked road) bought his own bank, IndyMac. He renamed it OneWest and turned it into a mega repo machine in 2009, whirring out huge amounts of crash cash during th... -
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Cyber-Monday: Venezuela, UK, CME/CBOE
While investors are musing about the final form the US tax changes and the Brexit negotiations, cyber-currency interest has been bolstered by Venezuela’s announcement over the weekend. President Maduro said that Venezuela would issue a digital currency. It could be the first sovereign to do so, which would seem to undermine the decentralized nature of crypto-currencies. Maduro did not provide details, except to endorse the blockchain methodology and indicate that the new currency (“petro”) would be backed by the country’s oil, gas, gold, and diamond reserves. The digital nature of it may be noteworthy, but being ... -
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More On Interest Rates And Time Preference
In a recent column for Mises Wire, Doug French raised very important issue of negative interest rates. Quoting Fleckenstein Capital He wrote, Yesterday a Parisian BBB-rated company (i.e., quasi junk) issued $500 million in three-year notes yielding negative 0.026%. We have been peppered with so many absurdities, nothing seems absurd anymore… French continues with his own observations: [The French utility company] Veolia Environnement S.A. floated €500 million of debt, rated just 2 notches above junk, with a three year maturity priced to yield negative 0.026%. As Grant’s Almost Daily writes, “Even better: Investor demand for the ... -
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What I Learned About The S&P500 From Studying The US IPO Market
The US IPO market shows a familiar ebb and flow to the stock market price cycle. Studying the trends in IPO activity can yield interesting sentiment signals and provide extra context on the overall market environment. This article talks through US IPO trends, and includes some of the insights from a discussion on US IPO market statistics in the latest Weekly Macro Themes report. The key chart shows US IPO market activity (filings and withdrawals) against the S&P500, and here are a few things worth noting. The graph shows 3-month smoothed IPO filings and withdrawals activity vs the S&P 500. There is a clear cycle of action on filin... -
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Is Low Market Volatility Good Or Bad For The Bullish?
VIX, the widely followed market volatility index, is still near record lows most days. But VIX only goes back to 1990. So a low VIX tells us volatility is only low compared to what it’s been in the past 27 years. Stock market data goes back much further than 1990. Data for the Dow Jones Industrial Average, for example, dates back to 1896. However, there is an indicator that duplicates the VIX. It’s called the VIX Fix. Technically, it’s a stochastic model of the lows. Visually, the VIX Fix is a perfect match to the VIX Index. It lets us calculate market volatility for any stock over any time frame. The chart below includes the VIX Fix... -
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5 Best-Performing Stocks Of November
Markets enjoyed another month of strong gains, boosted by encouraging economic data and hopes surrounding tax reforms. Additionally, the Fed chose not to hike rates in November and offered a positive view about the U.S. economy. Significant progress was made on President Trump’s much-vaunted tax legislation. Ultimately, the House of Representatives finally passed the much awaited tax cuts legislation now named as the Tax Cuts and Jobs Act. November’s Performance For the month of November, the Dow, the S&P 500 and the Nasdaq surged 3.87%, 2.8% and 2.2%, respectively. The blue-chip index posted its eighth consecutive month of gains — ... -
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Interview On Bitcoin, Gold, And Uranium
I had the pleasure to be part of a year-end interview series on The Next Bull Market Move. Below is a reprint of the interview: Hi Justin, welcome back to The Next Bull Market Move. It’s been a while since we last spoke and as it’s nearing the end of the year I thought it would be great to get your thoughts regarding the markets in 2017. Let’s start with Gold. It looks as though we are still consolidating since the run up we had last year and sentiment is looking bearish. How is Gold looking to you? Gold is still moving sideways right on top of its 30-week moving average. The gold stocks are acting slightly weaker than gold if you ta... -
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Is The Stock Market Cheap? – Monday, Dec. 4
Here is the latest update of a popular market valuation method using the most recent Standard & Poor’s “as reported” earnings and earnings estimates and the index monthly average of daily closes for the past month. For the earnings, see the table below created from Standard & Poor’s latest earnings spreadsheet. TTM P/E ratio = 23.1 P/E10 ratio = 31.3 The Valuation Thesis A standard way to investigate market valuation is to study the historic Price-to-Earnings (P/E) ratio using reported earnings for the trailing twelve months (TTM). Proponents of this approach ignore forward estimates because they are often base... -
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Junk Bond Myths
What are high yield bonds? I don’t mean the textbook definition (corporate bonds with a credit rating below BBB), but how they actually behave in terms of risk and return. In attempting to answer this question, let’s address some common myths surrounding the asset class affectionately known as “junk bonds.” Myth #1: High Yield Bonds Act More Like Bonds than Stocks Junk bonds are bonds, so they should act more like other bonds than stocks, right? Wrong. With a correlation to stocks of 0.58 and a correlation to bonds of 0.24, junk bonds are more likely to move with the U.S. stock market than the aggregate bond market. Note: Throughout t...
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