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Thursday, 31 March 2016

FED Thinks Outside World is Scary Place - Hmm!


If the U.S. shows healthy signs of job and wage growth, that could convince the Fed to increase rates at its meeting as soon as April. But Yellen's concerns on the global economy might continue to hold the Fed back from raising rates anytime soon.
CNN Money


Janet Yellen: Global 'risks' could hurt U.S. economy

Janet Yellen feels good about America's economy but sees risks rising overseas.

Yellen, the Federal Reserve chair, spoke optimistically on Tuesday about the U.S. economy, particularly the strong gains in the job market and resilient consumer spending. But when she turned to the global economy, it got gloomy.
"Global developments pose ongoing risks," Yellen said at the Economic Club of New York.
Top of her worry list: China and oil. Yellen said uncertainty over China's economic slowdown and the direction of its currency, the yuan, contributed to the market meltdown at the beginning of the year when the Dow lost about 2,000 points.

Companies are facing an £800 billion pensions black hole which has almost doubled in size in the past decade, a report has warned.

The average credit rating for the companies on the S&P 500 has dropped to the lowest level in 15 years, according to Standard & Poor's Ratings Services. Even lower than levels seen during the Great Recession, which was what prompted the Fed to act in the first place. When the average rating drops below the reliable BBB level, it usually signals that a spike in defaults is on the way.

Unemployment in Latin America's largest economy rose to an almost seven-year high of 8.2 percent in February. The deteriorating job market combined with the highest interest rates among major economies has led banks to tighten credit and consumers to shy away from higher-priced items such as cars and appliances.

Hedge funds establish near-record bullish bet on rising oil prices: Kemp

Hedge funds and other money managers have amassed a near-record number of bullish bets on increasing oil prices, helping push the main international benchmark well above $40 per barrel. By the close of business on March 22, money managers held a net long position equivalent to almost 579 million barrels in the three largest crude oil futures and options contracts ( ). Hedge funds have more than doubled their net long position from just 242 million barrels at the end of last year, according to an analysis of data published by regulators and exchanges. The net long position has passed the previous peak of 572 million barrels, set in May 2015, and is closing in on the record of 626 million, set in June 2014, when Islamic […]

Wednesday, 30 March 2016

Shorts Targeting Texas Regional Energy Banks


“There is some uncertainty on how significant these oil credits are going to mean to the credit costs for these banks going forward,” said Daniel Werner, an analyst at Chicago-based Morningstar Inc. “Investors are right to be cautious with names in the Texas and Oklahoma area. That’s a fair assessment by investors until we figure out what’s going on with oil.”


Shorts Crowding Into Texas Banks in Bet Energy Pain Isn’t Over

With energy stocks enjoying the biggest rebound since the beginning of the oil rout, short sellers have shifted their sights to regional banks that do business with the industry. Bearish bets have shot up 35 percent on average this year among the 10 most-shorted stocks in the KBW Regional Banking Index, data compiled by Bloomberg and Markit show. Cullen/Frost Bankers Inc. and Prosperity Bancshares Inc. in Texas have seen short interest surge about 60 percent. As oil prices plunged, concern over energy companies’ ability to pay back loans drove investors to unload or bet against financial stocks judged to have the most at stake in the sector. 
So far, the rebound that pushed oil to around $40 a barrel has done little to dilute that speculation. Stubbornly low interest rates are also squeezing profits in a group that trades at a premium of almost 40 percent to their larger ...

Last year was a record year for the solar industry and the momentum is set to continue. In 2016, the EIA expects the U.S. electricity market to see 26 gigawatts of new capacity installed. Utility-scale solar is expected to capture 9.5 GW of that total, or more than one-third. If that comes to pass, it would be triple the rate of installations of utility-scale solar compared to 2015, and would also equate to more than the combined total of installations from 2013 to 2015. 

In addition, the FTC is asking for an injunction against VGoA. In a complaint filed in the Northern California District Court (PDF), the FTC writes, "Consumers have suffered and will continue to suffer substantial injury as a result of Defendant Volkswagen USA’s violations of the FTC Act. In addition, Defendant has been unjustly enriched as a result of its unlawful acts or practices. Absent injunctive relief by this Court, Defendant is likely to continue to injure consumers, reap unjust enrichment, and harm the public interest."

What we need for this decade, instead of a Misery Index, is an Insanity Index based on measures than indicate how out of balance, crazy, unsustainable, and dangerous our current fiscal and monetary world has become.

Momentum Building Behind U.S. Wind Energy

U.S. wind energy advocates scored a second victory after the federal government gave its support to a transmission line to service the wind power sector. For the fi

rst time, the Department of Energy used authority mandated by the Energy Policy Act of 2005 to foster cooperation between the private and public sectors on new electricity transmission projects by joining a line slated for the U.S. South. The development, led by Clean Line Energy Partners, is aimed at bringing up to 4,000 megawatts of power generated from wind in Oklahoma and Texas through a 705-mile power line that would serve the energy needs of up to 1.5 million homes in the region. Simon Mahan, a director for...  

Tuesday, 29 March 2016

The Game-Changer: "More Electric Cars"


As Oil-Age Comes to Close

Many of Dyson’s devices use small, light and efficient electric motors developed over 10 years by his company, which may find application in developing a new electric car. Dyson is a now worth several billion pounds and in 2014 pledged his company would spend £1.5bn on research and development to create future products, aiming to launch 100 new electrical products by 2018.


Dyson Developing an Electric Car

Dyson is developing an electric car at its headquarters in Wiltshire with help from public money, according to government documents. The company, which makes a range of products that utilise the sort of highly efficient motors needed for an electric car such as vacuum cleaners, hand dryers and bladeless fans, last year refused to rule out rumours it was building one. But on Wednesday, the government appeared to have accidentally disclosed Dyson is working on one, along with other big companies outside of the automotive industry, such as Apple . “The government is funding Dyson to develop a new battery electric vehicle at their headquarters in Malmesbury, Wiltshire. This will secure £174m of investment in the area, creating over 500 jobs, mostly in engineering,” said the National Infrastructure Delivery Plan, published on Wednesday. When Dyson CEO, Max Conze, was asked last year if the company was working on an...

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New Basel rules aimed at reducing the leeway banks currently enjoy on how they account for risk will come into effect over the next two years. The regulations imposed after the global financial crisis already require banks to set aside more capital for every dollar they lend, depending on a borrower's credit standing. The trouble is, global regulators left the decision on creditworthiness mostly to the banks themselves. A 2013 Basel study found variations of as much as 20 percent in the risk weighting attached to similar assets.

In its latest meeting, I saw a continuation of a pattern that we at The Sovereign Society have followed for some time. It’s a pattern that our investment director, Jeff Opdyke, saw as so important that he shared it with a small group of readers last weekend — and I want to share it with you today.

As crude has soared more than 50 percent since Feb. 11, the number of bets on increased prices has barely budged. Instead, the upward pressure on prices appears to have come from traders cashing out of bearish wagers at an unprecedented pace. The liquidation of short positions during the last seven weeks covered by data from the U.S. Commodity Futures Trading Commission was the largest on record. 

Drilling-Induced 'Frackquakes' Threatening Millions Across Central US

For the first time, USGS includes human caused seismicity in predictive map

"Today’s report once again highlights the dangers the fracking cycle poses to our communities," declared Dan Chu, director of Sierra Club’s Our Wild America campaign, on Monday. (Photo: Owen Crowley/cc/flickr)

Oil and gas drilling has made parts of the central United States as dangerous as the most earthquake-prone regions of California, according to the U.S. Geological Survey (USGS), exposing millions of people to the risk of human-induced earthquakes, known as "frackquakes."

According to new maps released on Monday by the USGS, roughly 7 million people who live and work in parts of Oklahoma, Kansas, Texas, Colorado, New Mexico, and Arkansas face "potential for damaging shaking from induced seismicity," which the USGS notes is triggered primarily by wastewater disposal from oil and gas drilling activities.


Monday, 28 March 2016

Europe Under Historical Siege: Survival or Collapse?

A Gathering Storm
"...while in Europe, sentiments long rejected as Fascist swirl into public life once again, even as the shining liberal hopes of European union dissolve in violence, fear and loathing. And once again, Germany sits squarely at the center of European destiny. “The European idea has not been this weak since the march to unity began in the 1950s,” writes Roger Cohen. “If Merkel’s refugee gambit implodes, the reverberations will be felt everywhere.”
With the calamity of last century’s history in mind, it’s hard not to shudder."

 Germany, Eurabia and the End of Europe 

Bear with me as I shift our gaze from the drama of our politics to the even more fractious realities of Europe. Looking over there these days, you wonder if we’re seeing not just widespread problems, but the failure of European union itself. Like some marriages between people, that marriage of nations seems designed for success only: it works fine as long as things go well, but grievous flaws emerge under pressure. Two cataclysms have provided that pressure: the economic meltdown; and the refugee crisis spurred by catastrophe in the Arab world and inflamed – as we saw again last week -- by ISIS terror.  
While the economic crisis can bewilder anyone lacking a PhD in economics, the second crisis is easy to grasp. Take southeastern Europe’s porous gateway to strife-ravaged areas in the Levant, add the erasure of interior border controls wrought by the EU Schengen Agreementplus the liberal asylum policies in prosperous Western European nations... and you get a tidal wave of desperate humanity aimed at Europe. Complicating things, once those refugees arrive, is the hamfistedness many Euro countries have with multiculturalism, and the particularly vexing nature of the European-Muslim encounter.
The case of Germany is both emblematic and crucial, so I’ll focus on it. The Merkel government greeted the refugee influx with exceptional generosity, taking in an astonishing one million asylum seekers last year. Consider the implications of that number. It’s more than the U.S. accepted in the entire last decade -- and remember, the U.S. population is four times greater than Germany’s. Imagine if we agreed to take four million Arab refugees this year. When President Obama pledged to accept a paltry 10,000, all hell broke loose.
In the short film, Life After Water, an interactive documentary by MediaStorm and Verse, the filmmakers utilize stunning, yet worrisome arial drone footage of Jesus’s farm to show the drought’s effect on Terra Bella’s farming community. The film grapples with the inevitable question that will arise if climate change doesn’t stop: what will we do when the water ends?
The Mu Sigma researchers define this in their analysis as “the power of extreme experimentation”, claiming that science can demonstrate that failure drives forward innovation. This approach is echoed by engineers working in the pharmaceuticals, material sciences and automotive industries. “Those at the forefront of technology have to fly into mountains,” explained Ray Gibbs, CEO of Haydale, a material-science company based in the UK, US and South Korea that works with graphene to improve the properties of everyday materials such as inks and coatings. Gibbs believes that in order to develop any successful product you must try lots of different ideas to get to that end result, learning from the failures.
The market for industrial robot installations has been on a skyward trend since 2009, and it is not expected to slow down any time soon. According to the World Robotics 2015 report, the market for industrial robots was approximated at $32 billion in 2014, and in the coming years it is expected to continue to grow at a compound annual growth rate (CAGR) of at least 15%. 

Oil  Prices Mixed on U.S. GDP Data

Crude oil prices are down about 2.4 percent for the week after showing recovery.

NEW YORK, March 25 (UPI) -- Crude oil prices were mixed in the early stages of Friday trading after figures showed fourth quarter growth in the United States had slowed.
The U.S. Commerce Department reported real gross domestic production increased at an annual rate of 1.4 percent during the fourth quarter, compared with 2.0 percent GDP growth during third quarter 2015.
Crude oil prices faced negative pressure earlier this week amid signs of slow hiring in the United States. Brent crude oil was relatively flat in early Friday trading at $40.50 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, was down 0.5 percent to $39.59 per barrel. Trading was light because of observations for the Good Friday religious holiday on the Christian calendar.
While a slight revision upward from previous reports, the Commerce Department said corporate profits declined for the second straight quarter. For full-year 2015, the department estimated the economy grew at a rate of 2.4 percent, the same rate as the previous year.

Friday, 25 March 2016

Funeral for Bears & Bulls - Enter the Bunny!

 “The stock market is about fair value now. In reality we’re not very overvalued because rates and inflation are so low. What we could talk about is a bear in hibernation. We would keep valuations high, but in a decade from now we are about where we are now and our returns have been a lot below average.”

Financial TImes

Market swings: not a bear or a bull, but a bunny

Some believe US share prices have still not emerged from the dotcom crash 

Have equity markets escaped the bears yet again? Global stocks started 2016 with a swift fall of more than 10 per cent — the worst start to a calendar year in history — but have regained all of it. This also happened last summer, with markets performing a similar swan dive followed by a brisk recovery.

The dramatic swings have prompted questions of whether the bull market that started in March 2009 is on its last legs. Both US and world stocks remain below their record set 10 months ago, and the anxiety that drove two sell-offs remains palpable.


According to Bloomberg, Kinder Morgan shareholders have lost $3.44 billion in dividends, followed by the second biggest losses among ConocoPhillips shareholders, at $2.42 billion. Anadarko Petroleum Corp. shareholders have lost $447 million, while Crescent Point shareholders have lost $318 million and Devon Energy shareholders have lost $276 million.

Which is bad news not so much for the Canadian Dollar, which will certainly devalue in the coming months as the market prices in what a massive surge in deficit spending means although so will all other currencies as the global debasement race accelerates once more in a few short months, but for bank depositors, because deep inside the budget announcement, in the section discussing "tax fairness and a strong financial sector", we have official confirmation that Canada has just become the latest country to treat depositors as the bank creditors they are, and as such, they too will be impaired, or "bailed-in" the next time a Canadian bank needs to be rescued.

Currency and debt swaps, market interventions, global currency devaluation, and are windfall taxes coming on gold and silver? The rules are going to be changing! Burack lays out how you can educate yourself to rise above the herd and see the signs ahead of the coming critical events that you need to prepare for now. Get ready for an eye-opening and information-packed deposit of unconventional wisdom - don't miss it!

Oil’s Decline Takes Toll on Saudi  


A construction conglomerate at the center of Saudi Arabia’s petrodollar-fueled economic boom is teetering under billions of dollars of debt, bankers and financial advisers familiar with the matter said, showing the strain of cheap oil on the kingdom and its companies. The Saudi Binladin Group was once among the biggest beneficiaries of Saudi Arabia’s massive spending at home, paid for by the kingdom’s growing oil wealth. But in the…

Thursday, 24 March 2016

NIKE Sales - Just Do It - Swooshing to Doghouse

Investors' Insights 
Famous Doghouse Stocks  
"Puppy of the Week"
"The call got less optimistic when it came to the guidance. Management called for Q4 reported revenue to grow in the mid-single digit range, and for Fy17 reported revenue to grow in the high-single digit range. This is strong guidance, but shy of what analysts were looking for. It also makes the $50 billion revenue target by 2020 rather unlikely."

L&F Management

High-Flying Nike Gets Grounded 

Not even the high-flying Nike can be perfect every time.

Nike (NKE) threw up a bit of an air ball late Tuesday by saying sales jumped "only" 8% last quarter. That failed to meet Wall Street's lofty expectations and sent Nike stock dropping almost 5% on Wednesday.
The "miss" was a sign of rising competition from Steph Curry and the Under Armour (UA) brand as well as the impact of the stronger U.S. dollar. Nike had been on quite the hot streak until this week, with its stock besting not only Under Armour but virtually every Dow stock.
Nike, which recently reached a lifetime sponsorship deal with NBA superstar LeBron James, warned investors it won't always be operating on all cylinders. "Not every dimension of our portfolio will have the same level of momentum in each and every period," Andrew Campion, Nike's chief financial officer, told analysts during a conference call.

The 300 largest global oil and gas companies have also seen $2.3tn sliced from their stock market value over the same period, a 39 per cent slide since oil began its decline, an analysis by the Financial Times has found.

China is studying a Tobin tax as a new policy tool to curb capital outflows, an official at the country's foreign exchange regulator said on Tuesday.

Brazil to rescue states, cities as debt 
costs soar, Barbosa says 
Finance Minister Nelson Barbosa said at a news conference in Brasilia the plan could cost taxpayers about 37 billion reais ($10.2 billion) within three years, because it would stretch out debt maturities for some liabilities by as much as 20 years and concede grace period on some of them.

Trudeau Will Push Canada Into the Red With Unsexy Debut Budget  


Prime Minister Justin Trudeau will put the Canadian government back in business when he introduces a debut budget Tuesday that reverses a decade of restraint.
Trudeau, whose popularity has swelled since his majority victory in October’s election, will push the country deeper into deficit as it grapples with sluggish economic growth. The shortfall will finance new benefits for families and what the Liberal prime minister bills as “unsexy” infrastructure spending, among other programs.

The deficit is expected to be in the range of C$30 billion ($22.9 billion), up from C$2.3 billion in the fiscal year that ends March 31. That amount of red ink will test three decades of fiscal restraint in Canada and underscore the contrast between Trudeau and his predecessors. Stephen Harper, the Conservative who governed from 2006 to 2015, aggressively pursued a balanced budget in recent years while cutting taxes and shrinking the role of government.

Wednesday, 23 March 2016

Clearly Market Values Now Seeking Greater Fools

S&P Portrays HUGE 40-55% Downside

"To summarize, on the basis of valuation measures we find most strongly correlated with actual subsequent market returns across history, we presently estimate zero nominal total returns for the S&P 500 over the coming 10-12 year period, with negative real returns on both horizons. We expect that the completion of the current market cycle is likely to take the S&P 500 down by about 40-55%, which would not be a worst-case scenario but a historically run-of-the-mill outcome given present valuations."

Seeking Alpha 

 The Stock Market Remains Obscenely Overvalued 


The most historically-reliable measures we identify presently consistent with zero 10-12 year S&P 500 nominal total returns, and negative expected real returns on both horizons.
From a cyclical standpoint, I continue to expect that the completion of the current market cycle will likely take the S&P 500 down by about 40-55% from present levels.
The only way to avoid global economic contraction and simultaneously raise the prospects for long-term growth is to expand productive investment at every level of the economy.
From a long-term investment standpoint, the stock market remains obscenely overvalued, with the most historically-reliable measures we identify presently consistent with zero 10-12 year S&P 500 nominal total returns, and negative expected real returns on both horizons.

So, with the backdrop of a sick global economy, what will the Fed do next? Kirby contends, “I think the next move by the Fed is going to be an announcement that will amount to quantitative easing (money printing) because it will take the form of liquidity injections going back into the system. For people who are fans of and enjoy the helicopter money, your prayers are going to be answered, I do believe, in short order. I think you are going to see this roll over accelerate as the year progresses, even though most of Wall Street keeps trying to sell everybody the happy juice that everything is getting better every day. The reality is things aren’t getting better.”

“Today’s analysis suggests that the administration’s efforts to help struggling borrowers are having a positive impact,” U.S. Education Secretary John King Jr. said. “While we see promising signs of progress, we know we have to work to do to ensure that every borrower in distress has a clear path to avoid default. And I will continue to fight to ensure that students have access to an affordable education that helps them get ahead, rather than drowning in debt.”
Many folks, however, simply don’t have the money to make their payments, the Free Press reports.

Eurozone policymakers followed suit earlier this month with a triple whammy of interest rate cuts, €20bn in additional asset purchases a month, and an unprecedented move to allow commercial banks to borrow money at negative rates.
The Federal Reserve has also taken its foot off the pedal by slashing its expected interest rate hikes from four a year to just two.

Puerto Rico Appeals to US Supreme Court for Help Digging Out of Debt

Island territory is seeking permission to restructure some of its debt using Chapter 9 bankruptcy laws, as U.S. cities have done

Puerto Rico will ask the U.S. Supreme Court on Tuesday to validate a law that could let it cut billions of dollars from what it owes in debt at some public agencies, a key test in the island’s efforts to weather a massive fiscal crisis. 

The U.S. territory, facing what its governor has called an unpayable $70 billion debt and a 45 percent poverty rate, will argue its case against financial creditors, including Franklin Advisers and OppenheimerFunds, who want to keep contentious restructuring talks out of court. 

As Puerto Rico leaders, creditors and U.S. lawmakers seek a debt solution in the U.S. Congress, the question before the Supreme Court is whether the island should be allowed to restructure debts under a court-supervised regime similar to Chapter 9 bankruptcy laws used by U.S. cities such as Detroit and Stockton, California.

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