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  • Finance 0

    How Stupid Do You Have To Be, Part 2: 100-Year Bonds

    << Read Part 1: How Stupid Do You Have To Be To Let This Happen? “Of course there are true copper bottomed mistakes, like spelling the word “rabbit” with three m’s, or wearing a black bra under a white blouse, or, to make a more masculine example, starting a land war in Asia.” — John Cleese We all make mistakes, but some are bigger than others. An example of a serious one that’s both potentially catastrophic and easily avoided is to lend money for long periods during a time of rising debt and financial instability. Who, for instance, would commit capital for 30 years to Italy by buying that country’s long-dated governme...
    On May 16, 2016 / By
  • Finance 0

    SP 500 And NDX Futures Daily Charts – Purposeful Mispricing Of Risk

    The charts seem fairly clear. The mispricing of risk continues. The rationales for this are increasingly thin and self-serving. The consequences are going to be historic. Have a pleasant evening.  ...
    On May 16, 2016 / By
  • Finance 0

    Escape The Earnings Meltdown With Utilities

    Sometimes I hate being right. As first-quarter earnings season was getting under way in April, I warned that weakness in corporate earnings that was supposed to be confined to the energy sector had now infested the broader economy … and I was right. So far, 87% of S&P 500 companies have reported earnings, and corporate profits are expected to decline by 7.1%. This will mark the first time since the 2008 global financial crisis that we have seen four straight quarters of negative earnings growth. But it won’t end here… Earnings are a broad indicator of the economy. So, with four straight quarters of decline, I would expect to s...
    On May 16, 2016 / By
  • Finance 0

    Is VIX Too Low Based On Fundamentals?

    In a word… “yes,” VIX is too low based on the fundamentals underlying the economy, according to Goldman Sachs. Mapping VIX back to the economy: Our research indicates that changes in the unemployment rate, ISM new orders and consumer spending are three macro variables with explanatory power for modeling S&P 500 realized volatility and VIX levels across the business cycle. Although the VIX is often considered a “sentiment indicator”, a regression of average calendar month VIX levels on these three factors explains 58% of the variability in VIX levels back to 2000. The economic data currently suggests VIX levels of 18....
    On May 16, 2016 / By
  • Finance 0

    Longs Setups To Stick The Market Rally

    I have to level with you all… I find this market rally extremely skeptical. It is another one of those market-hijacked rallies based off of a headline from left-field.  Two weeks ago, oil jump started its rally when an oil community in Canada was set ablaze. Today it is the market rallying off news Warren Buffett (my biggest problem with him though is whether its 1 “t” or 2 “t’s” – I have to google it every time) staked out a position in Apple back in Q1. So while his own purchasing couldn’t do anything to stop the stock dropping over 20%, realization after the fact is supposed to inspire longs...
    On May 16, 2016 / By
  • Finance 0

    History Says A Big Move Is Coming For Stocks

    What Can We Learn From Last Three Years? The chart of the NYSE Composite Stock Index below shows equities have been indecisive since the second half of 2013. The lack of sustained progress in either direction tells us the battle between the bulls and bears has been fairly evenly matched. 1993-1995 Bullish Example A similar indecisive period took place in the mid-1990s. Periods of consolidation are often followed by big moves once the market “breaks out of the box”. In the 1993-95 case, the resolution was to the upside. 2006-2008 Bearish Example A similar period of indecisive investor behavior took place between the fall of 2006 and summer...
    On May 16, 2016 / By
  • Finance 0

    E The Daily Shot And Data – May 16, 2016

    Greetings, We start the week with the United States where we continue to see signs of economic improvement in the second quarter. 1. US retail sales in April grew at the fastest rate in over a year, beating economists’ forecasts. Note that much of that improvement was driven by online sales. Source: @WSJ, h/t Jake 2. Consumer sentiment also unexpectedly rose to the highest level in a year. 3. The ECRI index of leading indicators has been rising at the fastest rate in about two years. Source: ECRI 4. The AtlantaFed GDPNow Q2 GDP tracker also rose sharply. At this point, it seems to be on the high side although not nearly as bad of an ov...
    On May 16, 2016 / By
  • Finance 0

    What Is Gold?

    “On a final note, what was the one asset you did not want to own when I started Duquesne in 1981? Hint … it has traded for 5000 years and for the first time has a positive carry in many parts of the globe as bankers are now experimenting with the absurd notion of negative interest rates. Some regard it as a metal. We regard it as a currency and it remains our largest currency allocation.” – Stan Druckenmiller Stan Druckenmiller made headlines at the Sohn conference saying the bull market in stocks had “exhausted itself” and that Gold remains his “largest currency allocation.” “Largest currency allocation.” Interesting choi...
    On May 16, 2016 / By
  • Finance 0

    Phony Retail Sales Report

    Before the start of trading, the Commerce Department released a report showing much stronger than expected retail sales growth in the month of April. The Commerce Department said retail sales surged up by 1.3 percent in April after slipping by 0.3 percent in March. Economists had expected sales to climb by 0.9 percent. Look, we have just come off week after week of companies reporting terrible Q1 Earnings, including many big retailers. How is it that the government can report such a major improvement on the heels of earnings failures? You will not hear this in very many places but the government uses somewhat arbitrary seasonal adjustments ...
    On May 16, 2016 / By
  • Finance 0

    Silver Prices: Traders Fail To Break The Range

    Silver prices upheld the sideways trading pattern of last week as trading resumed after the weekend, much like when we published our silver outlook on Friday. However, the range has expanded somewhat since Friday as prices made an attempt to break lower, a move that failed and has subsequently placed the pricenow relatively near the middle of the range. The current range keeping silver prices trapped is $16.78 to $17.56 and these two price levels appear to be the only two that silver traders respect at this moment. Within the above-mentioned range, there are nostrong levels which price is respecting. Below the April 25 low of $16.78,...
    On May 16, 2016 / By