Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Mega Corporate Earnings Monday, 1000 Reports This Week!

Stock-Markets / Corporate Earnings Apr 26, 2010 - 09:37 AM GMT

By: PhilStockWorld

Stock-Markets

Best Financial Markets Analysis ArticleWhat a crazy week this is going to be!
Pre-Market we’re hearing from BLK, CAT (are we building stuff?), EXP, HTZ, HUM, LO, TUES and TZOO and later we will hear from BSX, CHH, OLN, RSH, RCII, TXN (major) and my "friendbuddypal" Cramer’s TSCM (if they are not delayed).  Revenues at The Street have crept back up this year in a recovery that pretty much mirrors the market. 


The company does pay a nice 2.6% dividend, which works out to a nice $200,000 bonus on Jimmy’s 2.1M shares (6.7% of the company) so you know that bonus will be a priority for the company.  Cramer was BUYBUYBUYing his own stock at $2.41 in January but sadly they have no options to hedge…  They might make a nice pick-up after earnings if they disappoint and head back to $3 or less.

I’m full of useful information on hundreds of stocks right now because I’ve been researching our new Buy List but I’m not pleased with what I’ve been seeing so far and this week’s tidal wave of earnings, with 1,000 companies reporting means we’re in no hurry to dip our toes in the water.  I told Members this morning I should probably be working on a Sell List, as it’s much easier to find companies I want to short than ones I want to buy.  Even in the Weekly Wrap-Up, we featured a 1,900% downside hedge on the Russell to offset the 566% plays and other bullish plays we’ve begun to reluctantly take, just so we don’t feel too silly in this runaway market. 

If you have never watched Jim Cramer discussing the sleazy, manipulative ways he used to game the markets - you really must take 10 minutes and watch this video, where Jim explains how any immoral bastard with $10M can yank the entire futures market around at will.  He prefaces one of his favorite strategies with "this is blatantly illegal but.. I think it’s really important… these are things you MUST do on a day like today and if you are not doing it, maybe you shouldn’t be in the game."  Are you playing the game or are you being played? 

The biggest game ever played may be unwinding as we speak.  Bloomberg reports that foreign-exchange profits from carry trades are disappearing as differences in central bank interest rates fail to increase fast enough to compensate for swings in currency rates, threatening to crash (oops, don’t say "crash") a 20-year run in money movement that has fueled dozens of global bubbles.  Royal Bank of Scotland Plc’s index tracking the strategy of tapping cash where borrowing costs are low and investing where rates are higher, rose 0.57 percent in the first quarter, the smallest amount in a year, and down from 9.8 percent in all of 2009.

“There is no easy money left in the carry trade,” said Henrik Pedersen, the London-based chief investment officer at Pareto Investment Management Ltd., which oversees $45 billion in currency assets.  “Most of the high-yielding currencies are overvalued and the low-yielders are undervalued,” he said. “The gains you can make on the interest-rate differentials are not going to make you 20 percent a year, it’s probably only going to make you about 2 or 3 percent.”  

As you can see from this chart, cheap Fed funds are FREE MONEY which is used to pump up emerging market bubbles and then (and this would be so funny if not so mind-bogglingly dangerous) the pumped-up emerging market stock is used as collateral for the banks to get MORE FREE MONEY to buy more emerging market stocks at even higher prices.  And it’s not just stocks that are bubblicious to carry traders - bonds and commodities get their love too.  No more free money could set off a chain of events that skyrockets global borrowing rates and initiates a mad cash scramble between governments that need to borrow a dwindling supply of cash (that would be pretty much all of them). 

We’re already seeing the effect in the energy markets as oil futures have gone into deep "contango," where longer month contracts are getting much more expensive than front-month contracts, reflecting an increased storage cost as carry traders attempt to cash in their oil tankers and have pushed global storage to their upper limits.  This makes oil storage hellishly expensive for speculators and if a rising dollar forces them to cash in at front-month prices, they force the price even lower as the full storage means the oil MUST be pushed out into the consumer market and the only way to do that is to drop prices far enough to actually influence demand - and that has not been working lately.  It is also murder on ETFs that MUST keep buying oil futures every month: 

Refineries are already running at just 85.9% of capacity, well below the 10-year average at 88% and total U.S. fuel demand, averaged over four weeks, fell 1.1 percent to 18.9 million barrels, the biggest decline since the week ended Jan. 8th.  All the speculators’ hopes are currently pinned on the summer driving season - I think if we organize a motorist strike on Memorial day weekend we can wipe these guys out!  Would that be wrong?  Let’s ask Cramer…

Cramer’s old firm, Goldman Sachs, is still in hot water as the Senate held hearings this weekend with key witnesses and more documents came to light, like an Email showing that, As the U.S. housing market began its epic fall nearly three years ago, top executives at GS cheered the large financial gains the firm stood to make on bets it had placed (allegedly!).  After making nice on Thursday last week, Obama went back to being the bad cop and sharply rebuked Wall Street in his radio address Saturday. "In the absence of common-sense rules, Wall Street . . . hurt just about every sector of our economy," he said.  After a weekend of testimony, Senator Carl Levin was able to sum things up nicely:

Investment banks such as Goldman Sachs . . . were self-interested promoters of risky and complicated financial schemes that helped trigger the crisis.  They bundled toxic mortgages into complex financial instruments, got the credit rating agencies to label them as AAA securities and sold them to investors, magnifying and spreading risk throughout the financial system and all too often betting against the instruments they sold and profiting at the expense of their clients.

See, not too complicated, is it?  Also going badly for GS this weekend is testimony by former Moody’s analyst Ted Kolchinsky, who said he didn’t know about hedge- fund titan John Paulson’s involvement in engineering the deal.  "It just changes the whole dynamic of the structure," Kolchinsky told the Senate subcommittee about not knowing that Paulson helped put together the collateralized debt obligation in question. It was "something that I would have wanted to know."  In addition to Kolchinsky’s testimony, the subcommittee released e-mails showing how analysts at both Moody’s and Standard & Poor’s had misgivings about the CDO involved in the SEC’s case, but faced pressure by Goldman to put those reservations aside.

I know - Blah, blah, blah, Goldman is evil, blah, blah.  As I said in the wrap-up, I’m sick of it myself but I see a lot of Members trying to bottom-fish GS and I’m still more in favor of shorting them at least down to $140 and, of course, last week we highlighted some plays that will do very well if we break below that mark.  If this GS case does blow up, that affects the financials which then effects the entire market and we’ve all seen this movie before so, tedious as it is, we will be following the GS news in progress.  We are also long on GS and the Financials in case it turns out to be business as usual and they end up with a slap on the wrist or maybe even another bailout!

Asia rallied with the Hang Seng jumping 1.6% (mainly a gap up at the open) but we’re not impressed with any move under 22,000 (now 21,587) and we expected a good reaction from China to our fabulous Friday rally.  What’s surprising is that the Shanghai FELL half a point, dropping 25 of the 14 points it lost for the day right into the close.  The Nikkei flew up 2.3%, also pretty much all on a gap open and finished their day back at 11,165, still another 250-point day off the April 5th highs.  We’re trying to get bullish this week so I will refrain from comment and pretend everything is real, like TM’s 3.4% gain that led the Nikkei based on the dollar testing 95 Yen again and the Nikkei English News reported that the company the carmaker "probably" had a profit of $50Bn Yen, despite the company’s Feb. 4 forecast for an operating loss of 20 billion Yen.  This is what Mr. Cramer calls fomenting a stock by playing the media, which is very effective (as Jim explained) when you do it with a key stock like TM that drives the indexes. 

Greece is still the word in Europe and Greek bonds are out of control this morning on speculation that Germany may refuse to guarantee an early release of bailout funds.  I can just picture Jim Cramer on the phone spreading this story to his media buddies while he shorts the 9.5% ten-year rate this morning.  Not Jim himself, of course, he’s retired now and only "influences" 20 or 30 stocks a night now and I’m sure he’s completely reformed and only has his viewers’ best interests at heart and would never mislead them in order to do favors for his hedge fund buddies or his former masters at GS.

Europe, on the other hand, firmly believes Greece WILL be bailed out and the markets there are up about 1% led by miners as BHP raised it’s metals prices in London.  “We remain bullish,” Gang of 12 Member JPM’s head of European equity strategy Mislav Matejka wrote in a report to clients today. “The recovery will prove sustainable.” He maintained an “overweight” stance on European stocks relative to U.S. equities.  Per-share earnings at western European companies have topped analysts’ estimates by an average of 14 percent since the U.S. earnings season began on April 12, according to data compiled by Bloomberg.  

It’s all earnings, earnings, earnings this week but we also have a Fed Meeting tomorrow and Wednesday with the rate decision at 2pm on Wednesday and that’s our big data-point for the week.  Tomorrow morning we have Cash-Shiller (which is always painted positive no matter what the numbers are) and Consumer Confidence (which will probably come off all-time lows) and Thursday we get our first look at the Q1 GDP, which I think will miss the 3.2% expected by expert economists as I think we’ll be more likely in at about 1/2 last Q’s 5.6% pace on inventory changes. 

We shall see what’s what and, meanwhile, we have our levels to watch and our upside plays to ride but I’ll be looking for some shorts into the 10 am top.  The 1% move in Europe is simply a catch-up play to our own big move on Friday so it will take more than that to impress us.  Once the EU markets close, the excitement may fade for US equities as the S&P hits the 5% rule for the month (meaning we’re looking for a 1% pullback). 

Be careful out there!

By Phil

www.philstockworld.com

Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)

© 2010 Copyright  PhilStockWorld - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules