Category: zerohedge

Authored by Lance Roberts via RealInvestmentAdvice.com,

In this past weekends newsletter, I discussed the issues surrounding “dollar cost averaging” and “buy and hold” investing. That discussion always raises some debate because there is so much pablum printed in the mainstream media about it. As we discussed:

“Yes, a ‘buy and hold’ portfolio will grow in the financial markets over time, but it DOES  NOT compound. Read this carefully: “Compound returns assume no principal loss, ever.”

To visualize the importance of this statement, look at the chart below of $100,000, adjusted for inflation, invested in 1990 versus a 6% annual compound rate of return. The shaded areas show whether the portfolio value exceeds the required rate of return to reach retirement goals.”

“If your financial plan required 6% “compounded” annually to meet your retirement goals; you didn’t make it.”

Does this mean you should NEVER engage in “buy and hold” or “dollar-cost averaging” with your portfolio?

No. It doesn’t.  

However, as with all things in life, there is a time and place for application. 

As shown above, when markets are rising, holding investments and adding to them is both appropriate and beneficial as the general trend of prices is rising. 

There is a reason why not a single great trader in history has “buy and hold” as an investment rule. Also, when it comes to DCA, the rule is to never add to losers…ever. 

17. Don’t average trading losses, meaning don’t put ‘good’ money after ‘bad.’ Adding to a losing position will lead to ruin. Ask the Nobel Laureates of Long-Term Capital Management.” – James P. Huprich

That reason is the permanent impairment of investment capital. By investing fresh capital, or holding current capital in risk assets, during a market decline, the ability of the capital to create future returns is destroyed.

“17. Don’t focus on making money; focus on protecting what you have.” – Paul Tudor Jones

Investing is about growing capital over time, not chasing markets. 

This is also why all great traders in history follow the most simplistic of investing philosophies:

“Buy that which is cheap, sell that which is dear” – Ben Graham

It’s Getting Very Late

When trying to navigate markets, and manage your portfolio, you have to have a reasonable assumption of where you within the investment cycle. In other words, as Jim Rogers once quipped:

“It’s hard to buy low and sell high if you don’t know what’s low and what’s high.”

This is the problem that most individuals face during late-stage bull market advances. Following a “bear market,” most individuals have been flushed out of the markets, and conversations of “armchair investing methods” vanish from the financial media.

However, once the “bull market” has lasted long enough, it becomes believed that “this time is different.” It is then you see the return of concepts which are based on the assumption:

“If you can’t beat’em, join’em.” 

That is where we are today and we have created a whole bunch of sayings to support the idea of why markets can’t fall:

• BTFD – Buy The F***ing Dip

• TINA – There Is No Alternative

• The Central Bank Put

• The Fed Put

• The Trump Put

You get the idea.

However, there is little argument that valuations are expensive on a variety of measures, as noted by Jill Mislinksi just recently.

Importantly, markets are also grossly extended on a technical basis as well. The chart below shows the S&P 500 on a quarterly basis. Note that the index is pushing rather extreme levels of extension above its very long-term moving average, and is more overbought currently than ever before in history. 

Note that a reversion to its long-term upward trend line would take the market back to 1500 which would wipe out all the gains from the 2007 peak. Such a correction would also set back portfolio returns to about 2% annualized (on a total return basis) from the turn of the century.

As a portfolio manager, however, I can’t sit in cash waiting for a “mean-reverting” event to occur. While we know with absolute certainty that such an event will occur, we don’t know the “when.” Our clients have a need to grow assets for retirement, therefore we must navigate markets for what “is” currently, as well as what “will be” in the future. 

The question then becomes how to add equity exposure to portfolios particularly if one is in a large cash position currently.

How To Add Exposure In A Late Stage Bull Market

The answer is more in line with the age-old question:

“How do you pick up a porcupine? Carefully.”

Here are some guidelines to follow:

1. Move slowly. There is no rush in adding equity exposure to your portfolio. Use pullbacks to previous support levels to make adjustments.

2. If you are heavily UNDER-weight equities, DO NOT try and fully adjust your portfolio to your target allocation in one move. This could be disastrous if the market reverses sharply in the short term. Again, move slowly.

3. Begin by selling laggards and losers. These positions are dragging on performance as the market rises and tend to lead when markets fall. Like “weeds choking a garden,” pull them.

4. Add to sectors, or positions, that are performing with, or outperforming, the broader market. (We detail these every week at RIAPRO.)

5. Move “stop-loss” levels up to current breakout levels for each position. Managing a portfolio without “stop-loss” levels is like driving with your eyes closed.

6. While the technical trends are intact, risk considerably outweighs the reward. If you are not comfortable with potentially having to sell at a LOSS what you just bought, then wait for a larger correction to add exposure more safely. There is no harm in waiting for the “fat pitch” if the current market setup is not viable.
7. There is nothing wrong with CASH. In investing, if you don’t know what to do for certain, do nothing. There is nothing wrong with holding extra cash until you see the “fat pitch.”
8. If none of this makes any sense to you – please consider hiring someone to manage your portfolio for you. It will be worth the additional expense over the long term.

The current rally is built on a substantially weaker fundamental and economic backdrop. Therefore, it is extremely important to remember that whatever increase in equity risk you take, could very well be reversed in short order due to the following reasons:

1. We are moving into the latter stages of the bull market.
2. Economic data continues to remain weak
3. Earnings are beating continually reduced estimates
4. Volume is weak
5. Longer-term technical underpinnings are weakening and extremely stretched.
6. Complacency is extremely high
7. Share buybacks are slowing
8. The yield curve is flattening

It is worth remembering that markets have a very nasty habit of sucking individuals into them when prices become detached from fundamentals. Such is the case currently and has generally not had a positive outcome.

What you decide to do with this information is entirely up to you. As I stated, I do think there is enough of a bullish case being built to warrant taking some equity risk on a very short-term basis. We will see what happens over the next couple of weeks. 

However, the longer-term dynamics are turning more bearish. When those negative price dynamics are combined with the fundamental and economic backdrop, the “risk” of having excessive exposure to the markets greatly outweighs the potential “reward. “

While it is certainly advisable to be more “bullish” currently, like picking up a “porcupine,” do so carefully.

Electric carmaker NIO announced on Tuesday morning that it would be slashing its global headcount by more than 20% to 7,800 by the end of the third quarter. This is down from over 9,900 in January 2019, according to Bloomberg. The company said the slashing of jobs was “in response to the overall tempered market conditions” in a statement. We have routinely documented the ongoing collapse of the global automotive industry – not just in China, but also in key markets like Europe and North America – over the last 18 months. 

Meanwhile, Nio stock, which had already been decimated by more than 80% over the last 12 months, continued its descent on Tuesday, falling about 22% as of the time of this writing. 

As part of its announcement, Nio said it has implemented “comprehensive efficiency and cost control measures” as a result of market conditions. The company will also aim to pursue more restructuring, including spinning off some non-core businesses by year end.

According to Bloomberg, the company also offered the following financial guidance:

• 2Q revenue 1.51 billion yuan, estimate 1.31 billion yuan (range 1.12 billion yuan to 1.50 billion yuan)
• 2Q adjusted loss per share 3.11 yuan, estimate loss/share 1.66 yuan (range loss/share 71 RMB cents to 2.40 yuan) 
• Sees 3Q rev 1.59b yuan-1.66b yuan, “representing an increase by approximately 5.6% to 10.3% from the second quarter of 2019”
• Sees 3Q vehicle deliveries to be between 4,200 and 4,400 units, “an increase of approximately 18.2% to 23.8% from the second quarter of 2019”
• 2Q loss per share 3.23 yuan
• 2Q gross margin -33.4%

In a note out early Tuesday afternoon, GLJ Research analyst Gordon Johnson said the news was bad across the board for automakers in China: “While some may be (incorrectly in our view) viewing this as a positive for everyone who isn’t NIO, NIO’s 2Q19 numbers and 3Q19 guidance suggest demand in China for EVs is very bad.”

He explained his reasoning: “Why? Well, simply put, while NIO recently launched its ES6 model (their least expensive car), they are guiding to a sequential decline of -20% when looking at deliveries in September vs August. And August deliveries of 1,943 missed their guided range of 2,000-2,500.”

Nio’s collapse also dragged down Tesla stock, which had slumped more than 5% as of the time of this writing. 

Johnson explained why the Nio news could also be material for Tesla and its shareholders:

“Against this backdrop, NIO competitor TSLA is currently spending billions to increase capacity/supply in the struggling Chinese EV market. When considering large TSLA holder Baillie Gifford is a large NIO shareholder as well, should BG have to start selling to maintain liquidity, it could be quite ugly for all publicly traded EV stocks.”

Recall, days ago, we posted that S&P was predicting that global light vehicle sales would fall by 2%-3% in 2019 and, to add insult to injury, there would be “no growth” throughout 2020 and 2021. In a research note out last Tuesday, S&P said that sales in China will decline by 7%-9% this year and that U.S. sales will see a 3% decline. It also predicts a 2% drop for European sales for 2019. 

The note’s base case assumptions for 2020 and 2021 are 0% to 1% growth in global light vehicle sales. S&P also expects weakness in “all market regions except China, which may see a modest rebound, not before 2021”. S&P believes that manufacturers will grapple with margin erosion in the mass market segment and will struggle to pass through increased costs of connectivity, electrification and autonomous driving. 

A few weeks ago we noted that the world’s biggest auto market, China, plunged deeper into contraction, with the country’s China Passenger Car Association releasing preliminary data for August that in no way indicates that the trend could be reversing. The CPCA reported that sales of sedans, SUVs, minivans and multipurpose vehicles in August fell 9.9% to 1.59 million units. 

It has been the industry’s largest downturn in three decades. China has tried to roll out several stimulus measures to help the industry, including loosening car purchase restrictions, but they have done little to encourage consumption thus far. 

After two consecutive tailing auctions, now that the Fed is cutting rates, moments ago the US Treasury sold $40 billion in 2 year paper in what was the best 2Y auction in years.

Stopping at a high yield of 1.612%, the high yield stopped through the When Issued by 0.1%, ending the streak of two tailing auctions, and just above last month’s 1.516% yield, which was the lowest going back to the summer of 2017.

The Bid to Cover rebounded from last month’s 2.598 to 2.636, the highest since May 2019 and above the six auction average of 2.59.

Finally, the internals were solid as well, with Indirects taking down a whopping 57.01%, the highest since January 2018, and higher above the recent average of 48.24%. And with Directs taking down 15.93%, below the recent average of 21%, meant Dealers were left holding 27.1% of the auction. The question is how much of this was bought by liquidity-challenged dealers, and will be quickly repoed back to the Fed in the coming days.

After a whirlwind few weeks during which he cancelled a long-expected IPO after media reports suggested that equity market investors believed WeWork’s valuation to be closer top $10 billion than the Soft Bank-backed $47 billion announced earlier this year, WeWork’s “charismatic” but “unorthodox” CEO Adam Neumann is reportedly stepping down from the CEO role. This follows earlier reports that said he was considering it.

Also, the Information reported earlier this afternoon that WeWork’s bankers discussed ways to cut costs with the company, which centered around layoffs of as many as 5,000 employees one-third of CEOs.

Neumann will remain chairman of the We Company.

Authored by Sven Henrich via NorthmanTrader.com,

The Key

Markets keep flirting with new highs following the recent rate cuts by the ECB and the Fed and keep rallying on trade optimism in the face of disappointing global economic data. While the bear case remains challenging in face of a stubborn bid, the market script, for now, remains similar to 2007. And that script does not preclude new highs. Recall in 2007 markets rallied to new marginal new highs following the September rate cut before peaking in early October.

One sector may be key to watch in the days and weeks ahead: $BKX, the bank index. While it recently rallied along with markets it remains stuck inside its larger range:

The bank index has horribly underperformed $SPX in 2019, a very pronounced divergence:

Blame falling yield and an inverted yield curve. But buy doing so one must acknowledge that we can observe another similarity to the bull run in 2006-2007:

Back then $SPX disconnected from the banking index for most of 2007 as $SPX has done in 2019.

For new highs to convince and give sense of sustainability the banking index needs to follow suit. A bull market without banks participating is suspect.

Now one may make a counter argument and point to a bank such as $JPM which is breaking out to new highs:

Is that in itself indicative of anything? Allow me to retort by pointing to Goldman Sachs as an example in 2007:

It too broke out to new highs in October 2007 even after the market had already peaked. Did it mean anything? No.

How’s Goldman stock doing these days?

For now it looks to be forming a bearish rising wedge in 2019 following a topping pattern built in 2018.

Bottomline: Nothing’s proven one way or the other. The banking sector as a whole has to convince here and so far it hasn’t. And until it does any new highs, if they materialize, have to be viewed with extreme caution. Continued failure on the side of the banking sector to break higher would suggest that new highs won’t sustain. The bank index may hold the key to the bull market’s future.

*  *  *

For the latest public analysis please visit NorthmanTrader. To subscribe to our market products please visit Services.

The S&P is back to post-Powell lows (before his QE4 hint) following weak macro data, Trump’s China comments, and increasing likeliness of a Trump impeachment proceeding. Bonds and bullion are bid…

Nasdaq and Small Caps are testing their 50-day moving-average…

30Y Yields are tumbling…

Source: Bloomberg

And gold is soaring…

Since Jay Powell dropped his rate-cut promises, things are not going well…

 

Canadian Prime Minister Justin Trudeau is clearly hoping to minimize his time in the spotlight after being hit with an embarrassing “blackface” scandal just one month before election day. In that spirit, the PM has decided to skip a debate on foreign policy with his rivals, prompting the organizer, Munk Debates, to cancel the event.

The chairman of the organization, Rudyard Griffiths, told the Globe and Mail that the debate was cancelled because of Trudeau’s refusal, seeing as he would be the only one on stage with any foreign policy experience.

“It’s really unfortunate that Canadians are not going to have a standalone debate on foreign policy this election,” Mr. Griffiths said.

It’s not difficult to imagine how Trudeau’s rivals might use a debate about foreign policy to attack Trudeau about his ‘blackface’ scandal. At this point, any events that aren’t tightly controlled by Trudeau and his campaign are probably off limits, or best avoided, as Trudeau and his party struggle to regain their lead in the polls with only weeks to go until election day.

In that spirit, Trudeau has only agreed to participate in three debates this campaign season, down from 5 during the 2015 campaign, and has already refused to take part in the Maclean’s/Citytv debate earlier this month.

Instead, Trudeau will participate in two televised debates organized by a government commission (established by Trudeau’s Liberal government, so there’s a good chance he might be able to get the questions in advance) – one in English, and one in French – as well as another debate hosted by French-language network TVA.

But as Griffith said, it’s truly unfortunate that Trudeau forced the cancellation of the foreign policy debate. Because if there was ever an election where foreign policy was relevant to the lives of Canadians, this is it.

“With everything that’s going on the world, if there ever was a moment, if there ever was a time, to really focus on the competing foreign-policy platforms of the various parties contending for government, now is that moment.”

Griffin also criticized the ‘commission’ that will organize two of the debates, saying it has become a tool for the PM to avoid real scrutiny. 

“It seems like the commission has become a vehicle for an incumbent prime minister to actually avoid other debates and that it’s actually working against this whole process of opening the election,” he said.

During his first run, Trudeau was criticized for his debate performances, during which he came off as amateurish and unprepared.

Conservative campaign spokesman Simon Jefferies also criticized Trudeau for pulling out of the foreign policy debate: “It’s a shame that voters won’t have the opportunity to hear political leaders discussing issues of global importance because Justin Trudeau was too afraid to defend his record of failure.”

But will it be enough for Trump to overcome the two major scandals weighing on his campaign? That remains to be seen.

Authored by Simon Watkins via OilPrice.com,

Saudi Arabia’s comments about its hydrocarbons industry have long been regarded by industry experts as being as believable as China’s comments about its economic growth: that is, not at all. Saudi Arabia’s skill in lying is definitely improving, though, from the outright transparent lies about its level of oil reserves, spare capacity, and why the omni-toxic Aramco should nonetheless be valued at US$2 trillion.

Its latest lies – along the lines of ‘everything is fine after the attacks and we will be back to full production really quickly’ – are relatively nuanced.

“The Saudi statements may not contain any direct falsehoods as such but nor are they entirely being fulsome with the truth,” Richard Mallinson, senior energy analyst for Energy Aspects, in London, told OilPrice.com last week.

The stage was set for the Saudis’ latest lying extravaganza with the aerial attacks on its massive Abqaiq oil processing facility and Khurais oil field launched, according to various sources, by Houthi ‘rebels’ in Yemen or by Iranian operatives in Yemen or in Iran. The effect of the combined attack on Abqaiq and Khurais caused the temporary suspension of 5.7 million barrels per day (bpd). This equates to well over half of Saudi Arabia’s actual crude oil production capacity, not the capacity figure that Saudi has plucked out of nowhere for geopolitical power purposes in recent years, and resulted in the biggest rise in oil prices in a single day ever.

Once the hedge funds, who had handily positioned themselves long some days before the attacks, had taken their profits, and younger traders remembered that the U.S. can release vast amounts of oil at the drop of a hat from its Strategic Petroleum Reserve to keep the price of oil – and, crucially ahead of an election year, the highly correlated and politically enormously sensitive gasoline pump price in the U.S. down – oil prices came down again, obviously.

A number of interesting things happened from the Saudi Arabian side as the prices went up and then went back down again. The first of these, as OilPrice.com was informed repeatedly by senior oil traders throughout the day, was the lack of real understanding that senior Saudi officials seem to have on how the oil market works or any details of Saudi’s own oil industry.

“I used to think the Saudis thought all of us [oil traders] were idiots, with all the rubbish they used to come out with and thought we’d believe, but recently it’s occurred to me that they genuinely don’t know anything about the oil industry, so they don’t understand that other people actually do know what they’re talking about and this has also been one of the reasons for the constant delaying of the Aramco sale, by the way,” one senior oil trader based in Asia told OilPrice.com.

The Aramco sale to one side for another time (although OilPrice.com has exclusively previously highlighted all of the lies pertaining to it), one particularly striking comment came from Saudi Arabia’s new oil minister, Prince Abdulaziz bin Salman, just after the attacks. He stated that the Kingdom plans to restore its production capacity to 11 million bpd by the end of September and recover its full capacity of 12 million bpd two months later.

“It was extremely telling that he spoke of ‘capacity’ and later of ‘supply to the market’, as these are terms that Saudi tends to use in order to avoid talking about actual production, as capacity and supply are not the same thing at all as actual production at the wellheads,” said Energy Aspects’ Mallinson.

“What Saudi is trying to do by not revealing the true picture is to protect its reputation as a reliable oil supplier, especially to its target clientele in Asia, so we have to take all of these comments with a hefty pinch of salt,” he added.

So hefty a pinch of salt as to be mountainous in the case of its capacity and corollary spare capacity figures. The country has stated for decades that it has a spare capacity of between 2.0-2.5 million bpd, implying – given actual production during virtually all of this time averaging less than 10 million bpd – total production capacity of 12.0-12.5 million bpd. This level, though, or anywhere near it, has never been even remotely tested, with the highest production ever recorded being just over 11 million bpd in November last year.

This is despite the all-out oil price war that Saudi started in 2014 against U.S. shale producers to try to destroy the industry through low prices caused by flooding the markets with oil.

“If the Saudis had anything near 12 million barrels per day capacity, that would have been the time to pump it but all it managed was just under 10 [million bpd] with 10.5 [million bpd] managed for just one month over that two-year period [2014-2016 before Saudi reversed it strategy],”

Additionally, the EIA defines spare capacity specifically as production that can be brought online within 30 days and sustained for at least 90 days, whilst even Saudi Arabia has said that it would need at least 90 days to move rigs to drill new wells and raise production to the mythical 12 million bpd or 12.5 million bpd level. Many serious oil market players now do not believe that the Saudis have anywhere near 2 million bpd of spare capacity, as it would imply production of 12 million bpd plus. Instead, many now believe that the Saudis have sustainable spare capacity of no more than around 0.5-1.0 million bpd.

Whatever Saudi’s actual capacity, there is absolutely no way that it can have made any accurate assessment of how long it would take to get back to any particular capacity level either – another lie. “Engineers we have spoken to have said that following an incident like this it would take several weeks just to assess the damage, never mind to begin doing anything about it, rather than the few days that the Saudis have taken and then announced the actual timeline – and a very short timeline at that – to bring back various stages of capacity,” said Energy Aspects’ Mallinson. 

“Instead, what the Saudis will do to keep exports up is draw down supplies to its domestic industry and reduce the amounts it is sending to domestic refineries – one big refinery, SASREF, is conveniently bringing forward its planned maintenance for later in the year to now – and we hear very mixed reports which of the other refineries are operating at regular rates,” he added.

“But some buyers are already being warned of delays, some are being offered swaps with other grades and so on,” he underlined.

Specifically, a number of customers of Saudi’s Arab Light and Arab Extra Light grades – the grades most affected by the recent attacks – have been offered Saudi’s Arab Medium or Arab Heavy as substitute grades. OilPrice.com understands from oil trading sources. This even applies to Saudi’s number one target country, China. A number of refineries have been told by Aramco that their rolling orders for Arab Extra Light crude cannot be supplied for the time being but can be switched for either Arab Medium or Arab Heavy, depending on the set-up of the refinery. Others, looking for their usual monthly supply of Arab Light have been told that this will be switched to Arab Heavy as a substitute for September loading at least.

The other measure that Saudi is taking – which it has vehemently denied but OilPrice.com can confirm from various oil trading sources and from sources in the Iraq Oil Ministry – is looking to buy Iraq oil grades, which are close to the key export grades that Saudi ships to various destinations, including Asia. “Aramco Trading Company has been aggressively checking prices and lot sizes for Iraqi crude with various [oil] trading houses since the attacks and are looking are shorter-term potentially rolling contracts,” one trading source told OilPrice.com last week.

“A number of the Iraqi grades are close in specifications to their Saudi counterparts, and part of this activity by Saudi to fill customer supply quotas for these grades is to make sure that the demand we are still seeing for such Iranian grades from Asia, but mainly China, is not boosted to make up for the shortfall from Saudi.,” a senior source who works closely with Iraq’s Oil Ministry told OilPrice.com.

The supreme irony, of course – as OilPrice.com has repeatedly underlined, and as many in the oil markets now know, although apparently not the Saudis – is that a cornerstone strategy used by Iran to circumvent current U.S. sanctions against it (as was also the case in the previous period of sanctions) is to rebrand its oil into Iraqi oil, which is extremely easily done, both at the massive and porous border between the two or via various pipeline and shipping routes.

It may well be, then, that Saudi Arabia ends up boosting the bank accounts of the very people that it thinks was behind the attacks on its own oil infrastructure, the Islamic Revolutionary Guards Corps – a staunch and active supporter of Yemen’s Houthis – through its various oil-industry associated businesses by buying Iranian oil, albeit with the stickers changed on the barrels.

When it comes to the “fair value” of stocks, nobody knows it better than insiders, who tend to aggressively offload shares any time they see the price of their equity holdings as generously high. This, however, may be a problem for the broader market because according to research from Smart Insider, the market is now the most overbought since the first dotcom bubble, as “executives across the US are shedding stock in their own companies at the fastest pace in two decades, amid concerns that the long bull market in equities is reaching its final stages.”

As the FT reports, corporate insiders – typically CEOs, CFOs, and board members, but also venture capital and other early state investors – sold a combined $19BN of stock in their companies through to mid-September. Annualized, this puts them on track to hit $26BN for the year, which would mark the most active year since 2000, when executives sold $37bn of stock amid the giddy highs of the dotcom bubble. That 2019 total would also set a post-crisis high, eclipsing the $25bn of stock sold in 2017.

For those wondering which insiders are scrambling to part with their equity holdings, the answer is simple: virtually everyone – from the VCs behind bungled, rushed IPOs of companies such as WeWork, Uber and Lyft, to iconic stakeholders including members of the Walton family, who have sold a combined $2.2BN of shares in the Walmart retail empire. Executives at Estée Lauder, the cosmetics giant, and clothing group Lululemon Athletica also appear among the most active sellers, according to Smart Insider.

The reason investors care about insider stock sales is that it has traditionally been a handy marker for the confidence of executives in their own companies’ prospects, and the broader valuation of the market. Spikes in selling indicate that top figures in boardrooms around the country are taking advantage of high valuations in the US stock market.

Troy Gayeski, co-chief investment officer for SkyBridge Capital, said that recent moves by central banks to ease monetary policy, in response to deteriorating economic data, are a sign that companies can expect profits to fade.

“In management, you know the boom times are over in terms of record profitability. Why wouldn’t you take money off the table?” Mr Gayeski said.

For those countering that insiders tend to always sell, the truth is that insiders not only paused stock sales late last year when the worst December for US stocks since 1931 sent the market to a brief -20% drop, which ended the year down about 6 per cent, at which point insiders turned buyers. However, since then, the S&P 500 has come roaring back, rising by almost 20% as central banks around the world turned dovish, cut rates and have expanded their direct liquidity injection; and the insider selling has exploded.

But if the insiders are selling who is buying? The answer will come as a surprise to exactly no one. As Bank of America explains, “despite what is usually a seasonally weak time for buybacks, corporate buybacks remained strong last week, driven by Tech for the fourth week in a row.” As a result, cumulative buybacks YTD are already up +20% YoY compared to 2018 which was already a record year for stock buybacks, meaning 2019 will be another record, while rolling 4-wk avg. buybacks are +122% YoY, the highest of any point this year.

To summarize:

1. Companies issue record amounts of debt
2. Companies use the debt to repurchase record amounts of stock
3. Insiders sell (near) record amounts of stock to their own company, even as retail investors buy everything with the S&P at all time high

And that’s why billionaires – like Jamie Dimon – are richer than you.

 

Authored by Marie Huillet via CoinTelegraph.com,

Bitcoin’s network hash rate dipped a record 40% yesterday, Sept. 23, in a sudden shock for the network.

Bitcoin network hash rate, Nov. 2018-present. Source: Coin.dance

Data from Coin.dance – corroborated by other sources – indicates that the network’s hash rate plummeted yesterday from over 98,000,000 TH/S to 57,700,000 TH/s.

Mystery flash crash remains unexplained

The flash drop remains unexplained as of press time and is all the more striking given the Bitcoin network’s record-breaking string of new all-time high hash rates throughout summer.

Just five days ago, Cointelegraph had reported that Bitcoin’s hash rate had passed a record 102 quintillion hashes in a historic milestone.

As previously noted, the hash rate of a cryptocurrency — sometimes referred to as hashing or computing power — is a parameter that gives the measure of the number of calculations that a given network can perform each second. 

A higher hash rate means greater competition among miners to validate new blocks; it also increases the number of resources needed for performing a 51% attack, making the network more secure.

By press time, Bitcoin’s hash rate has somewhat recovered back to almost 88,300,000 TH/s — yet remains well below its earlier records.

Throughout summer, cryptocurrency analysts had argued that the network’s record-breaking streak of all-time hash rate highs was a bullish indicator for the top coin’s price performance. 

In a tweet posted this August, Bitcoin investor Max Keiser had claimed that:

“Price follows hashrate and hashrate chart continues its 9 yr bull market.”

But, sure enough, Bitcoin is sliding today after that drop in the hash-rate:

Source: Bloomberg

Altcoins are getting hit worse however…

Source: Bloomberg

Back in November 2017, Bitcoin had seen a sudden hash rate downturn of almost 50%, accompanied by slowed transaction processing times, a price dip, and even miners’ short-lived switch over to the forked network, Bitcoin Cash (BCH).