Tag: finance

In the aftermath of the volatility from the past week, there is one question on everyone’s lips: is this the bottom and, corresponsidnly, was the BABA IPO the top? Because if nothing else, all the churning action from the past week has only provided a great opportunity for banks to pad their flow business revenues since collapsing trading volumes over the past few years have finally reversed and in fact, exploded higher, if only for the time being.

Still, few are the market makers that make money no matter what the market does (especially since HFT firms, long since exposed for merely frontrunning big order blocks instead of providing liquidity, are now disappearing at an accelerating pace), and there are those who, rigged casino analogies notwithstanding, still want to place their money in the market betting on either more upside or downside. For their benefit a few days ago we posted “The “Crazy Ivan” Playbook: How To Time A Near-Term Market Bottom” however, we realize that most people are visual learners, so for them, here is the Investor Business Daily’s compendium of the most notable market tops and bottoms in recent market history.

First, the market bottoms:

Market bottoms are deciphered by your observing the daily price and volume action on the four major indices: the S&P 500, Nasdaq Composite, New York Stock Exchange (NYSE) Composite and Dow Jones Industrials. After the market makes a low, look for the first day the market closes up from the previous day. This is normally day one of a rally attempt. As long as the index is able to remain above the previous low, the attempted rally is in place.

The next step is to wait and watch for one or more of the four market indices to show a “follow-through day.” This is a day where the index closes up significantly on volume heavier than the previous day. The S&P 500 or NYSE Composite typically need to close up 1.7% or either the Nasdaq Composite or Dow Industrials need to close up 2.2% or more. The first three days of an attempted rally are too soon to judge if the market confirms its new uptrend by having a follow-through day. Follow-through days can happen on the fourth day or later of the rally attempt.

It is important to note that not all follow-through days lead to sustained new market uptrends. About 20-30% of the time they may fail fairly quickly. However, no bull market has ever started without a follow-through day…and it will occur when most people are unsure and afraid because the news during the decline was so negative that people become doubtful and hesitate to act on the confirmed new uptrend.

1974

 

1990

 

1998

 

1999

 

2003

 

2007

 

And the the market tops:

After a sustained market uptrend, there will always be signs when the advancing phase is over. These signs will come as the market is still advancing. The key signal the market may be in a topping process is an increase in the number of distribution days in at least one major market index. A typical distribution day is one that closes down from the previous day (at least -0.2%) on higher volume than the prior day. This is your first clue institutional investors are selling stocks.

Up to five distribution days over a period of four or five weeks usually signals that the market is beginning to top. In addition to days down, you should also look for stalling days. When you suspect a stalling day, be sure to observe the price action for the previous day. The day before a stalling day will show a significant price increase when compared to its previous day. The stalling day will show only a tiny amount of price progress compared to its previous day and volume either increases or remains heavy. This I call heavy volume without further price progress up.

Another thing to watch is the action of the leaders. As the market is topping many of your market leaders may also show topping signs themselves. In addition, you may find you need to sell a stock because it drops 7-8% below your purchase price. Pay attention when the market starts forcing you out; it can help you protect your capital.

1929

 

1987

 

1990

 

2000

 

2007

 

And now that you read and saw all of that… forget everything and remember: in this rigged, manipulated “market” the only thing that matters is what the central banks do, which in turn only matters until the central banks finally destroy what little credibility they have left.

via Zero Hedge http://ift.tt/1vFyqd9 Tyler Durden

Via ConvergEx’s Nick Colas,

If U.S. stocks have stabilized – granted, a big “If” – you can thank the fact that markets don’t believe the Federal Reserve’s outlook on interest rates.

 According to the latest CME Group’s contract pricing, Fed Funds rates will end 2015 at 43 basis points. That essentially signals a less-than-100% chance of being at 50 bp in 14 months; the Fed’s own estimates are for Fed Funds to reach 127 basis points by that time. Only three of 17 Fed officials who submit estimates for inclusion in the now-famous “Dot Plot” are lower than the market’s own estimate of future monetary policy.  Looking at 2016, the disparity between market expectations and Fed estimates is even broader.  Policy makers at the Fed believe rates should be at 2.17%; the Fed Funds futures contract sits at 1.27%. In the everlasting debate about whether markets want good or bad economic news, we seem to have a winner. Bad news will keep the doves “Fed” (yes, a pun…  it’s Friday) and the hawks at bay. A spate of good U.S. news while the rest of the developed world slows is the worst potential outcome in this narrative.

When should you bluff while playing poker?  Common wisdom has it that you should only occasionally – and randomly – bet as if you have a superior hand even if you don’t. The logic is straightforward: you want to induce some persistent sense of doubt among your competition.  Maybe you have a strong hand, and maybe you don’t.  The incremental uncertainty will drive pots higher and, when you do have that full house kings high, the payoff will be that much greater.

Of course, calling another player’s bluff has its own psychic rewards. You tell them that they have a lousy ‘Poker face’ and recommend they never, even lie to their spouse. Maybe you also mess with them by saying they always sneer subconsciously when they pretend to have a stronger hand than they actually do. Then watch them try to keep their face absolutely still over the next dozen hands. Good times… Good times…

If you’re wondering why equity markets have stabilized in the past 24 hours – after a fashion, anyway – you can chalk a large part of the rebound to the market essentially calling the Federal Reserve’s bluff on the future path of interest rates. Sure, the Fed has been fairly bold though 2014, throwing its Rolex into the pot and even threatening to find the title to the Ferrari if it comes to that, just to show it is serious about staying in the game. “Short term rates will begin to normalize in 2015 and beyond…  You can bet on it.”

For much of 2014, markets accepted the Fed’s take on the U.S. economy and the future path of interest rates. But in the last two weeks – not so much.  A few points here:

As of the date of the last Federal Open Market Committee meeting (September 17), futures contracts pegged the most likely Fed Funds rate as of the end of 2015 at just over 75 basis points (77.5 to be exact). This was lower than the Fed’s own consensus estimate of future rates, which the dot plot of “Appropriate pace of policy firming” in the minutes of the meeting showed to be 127 basis points. Still, it reflected the belief that the Fed would move several times to increase interest rates in 2015, with some possibility of getting to an even 1 percent before year end.

 

Since the beginning of October, the Fed Funds futures contract for December 2015 has repriced its expectations – the new point estimate is 43 basis points. Since the Fed typically moves in 25 point increments, this essentially points to a market belief that the Fed Funds rate will be less than 50 bp in 14 months.  Looking at the different expiration dates for Fed Funds futures contracts, it appears that the market is discounting one move of 25 bp at the August 11-12 meeting.  And then maybe – but just maybe – another 25 basis points at either the September 22-23 meeting or the November 3-4 meeting.  And that’s it for rate hikes in 2015. 

 

Looking out further to 2016, the disparity between market expectations and Fed projections widens considerably.  Fed Funds futures peg the expected rate at 1.275%; the Fed’s “Dots” averaged 2.70% at the September Fed meeting.  At the beginning of October – before all the drama in capital markets really hit its stride – Fed Funds futures were expected year end 2016 rates at 1.8%. No, not at the Fed’s projections. But closer than today’s price of essentially 1.3%.

 

When Wall Street Journal reporter Jon Hilsenrath asked Fed Chair Yellen at the FOMC meeting press conference what she made of the disparity between market prices of future Fed policy and the central bank’s own guidance, she said “I don’t frankly think that it’s completely clear that there is a gap”.  That was in September, when the difference was smaller.  Now, the gap presumably appears more obvious.  She did go on to say that markets may simply have a different economic forecast than Fed members. That certainly does appear to be the case – in spades, actually.

The bet that markets are making is clear: global economic weakness and concurrent threats of cross-border deflation will temper the Fed’s ability to increase short term interest rates.  Recent data from China to Germany to the U.S. support that thesis, and the weakness in capital markets this week buttresses that perspective even further.  Equity investors know that periods of rising interest rates can engender price volatility.  Now, Fed Funds futures seem to hold out the hope that the Fed will make only token moves to increase interest rates in 2015 and 2016. Some simple math shows that Fed Funds futures only expect 5 increases of 25 basis points apiece over the next 18 FOMC meetings.  Not much headline risk there…

This analysis also solves the most-asked capital markets question of the last 7 years: “Do we want good economic news, or bad?”  The answer is (for now) unequivocally “Bad news, please”.   Equity markets want the Fed to back away from the table – the stabilization in stock prices over the last 2 days as Fed Funds futures repriced the cadence and amplitude of rate increases shows that relationship.  So does the rally in the long end of the yield curve, for that matter.  The yield on the 10-year Treasury note was 2.60% at the last FOMC meeting. It is now 2.15%.

 To be fair to the poker analogy at the top of this note, the Fed never actually has to lose a hand.  There is ample reason to believe that the FOMC will raise interest rates in line with their current projections.  Just consider how weak the U.S. central bank’s hand is if there is a sudden economic shock to the system.  Short rates at zero are like that Spinal Tap guitar amp that goes to 11 – once you are the extremes, there is nowhere else to go.  Consider one example from recent history.  At the end of August 2001, Fed Funds were 3.52%. They got to 1.00% in early 2004, and it was great that the Fed could play a role in stimulating the U.S. economy at a time of tremendous national need.  What would happen now in a similar situation?  The monetary toolbox is empty, and the Fed would very much like to fill it as quickly as possible.

In short, one side of this debate/card game is going to win, and one will lose.  And it isn’t so clear who is bluffing.  Also don’t forget the old maxim: the house always wins.

via Zero Hedge http://ift.tt/1rJ6M7n Tyler Durden

Arlington County Fire Department and Fairfax County HAZMAT Teams are on the scene after a woman – alleged to have recently traveled from Sierra Leone – fell ill and started vomiting in The Pentagon parking lot this morning. Arlington Public Health has activated its Emergency Operations Center to manage the incident.

Police, Feds, Health officials holding bus passengers after W Africa passenger vomited. #dc #ebola @wusa9 http://ift.tt/1sQZ8gx

— Bruce Leshan (@BruceLeshan) October 17, 2014

Bus from possible #Ebola case now held at 7th & I SE DC. http://ift.tt/1rIR8c1

— Bruce Leshan (@BruceLeshan) October 17, 2014

As WUSA9 reports,

“During the response, the individual allegedly indicated that she had recently visited western Africa. Out of an abundance of caution, all pedestrian and vehicular traffic was suspended around the South Parking lot, while Arlington County responded to the scene,” Arlington officials said.

 

The situation started at around 9:10 a.m. when the woman started vomiting in the Pentagon Parking Lot around lanes 17-19, officials said.

 

Arlington County Fire Department transported the woman to the Virginia Hospital Center, but she did not exit the ambulance there. She was then taken to Fairfax Inova Hospital, officials said.

*  *  *

PHOTOS possible #Ebola patient moved to #Fairfax hospital from the Pentagon #BREAKING #BreakingNews http://ift.tt/1rIRb7L

— Brad Freitas (@NewsChopperBrad) October 17, 2014

As ARL Now reports, just before noon, the county issued the following press release.

Arlington Responds to Possible Ebola Case

 

At about 9:10 a.m. today, Pentagon Police officers identified a woman in the Pentagon South Parking Lot, around lanes 17-19, who was ill and vomiting. Arlington County Fire Department (ACFD) was notified and responded immediately with both emergency medical aid and HazMat response team.

 

During the response, the individual allegedly indicated that she had recently visited western Africa. Out of an abundance of caution, all pedestrian and vehicular traffic was suspended around the South Parking lot, while Arlington County responded to the scene. At 9:53 a.m, the patient was taken to the Virginia Hospital Center; however she did not exit the ambulance. ACFD then transported the patient to Fairfax Inova Hospital.

 

Arlington Public Health is directing the public health response to this incident. Arlington County has activated its Emergency Operations Center (EOC) and a Joint Information Center (JIC) to manage the incident.

 

At the Pentagon

 

Out of an abundance of caution and to allow the investigation to proceed, pedestrian and vehicular traffic around the Pentagon South Parking lot’s lanes 7-23 will remain restricted until further notice. The Corridor 2 entrance to the Pentagon is also closed.

 

More information will be released when it becomes available.

*  *  *

via Zero Hedge http://ift.tt/1rIR8sO Tyler Durden

“If you like your phone secretly spied on, you can keep it,” appears to be the message from the FBI, as Bloomberg reports, FBI Director James Comey said yesterday that companies like Apple and Google should be required to build surveillance capabilities into their products to help law enforcement with their probes. Technology has become “the tool of choice” for terrorists and other dangerous criminals, Comey fears(and so Americans should willingly give up their privacy?) “we are struggling to keep up with changing technology and maintain our ability to actually collect communications we are authorized to collect.” Concluding with his M.A.D. “it’s for your own good” propaganda, Comey warned “if the challenges of real time data interception threatened to leave us in the dark, encryption threatens to lead us all to a very dark place.”

 

As Ars Technica reports,

The expanding options for communicating over the Internet and the increasing adoption of encryption technologies could leave law enforcement agents “in the dark” and unable to collect evidence against criminals, the Director of the FBI said in a speech on Thursday.

 

In a post-Snowden plea for a policy more permissive of spying, FBI Director James B. Comey raised the specters of child predators, violent criminals, and crafty terrorists to argue that companies should build surveillance capabilities into the design of their products and allow lawful interception of communications. In his speech given at the Brookings Institute in Washington DC, Comey listed four cases where having access to a mobile phone or laptop proved crucial to an investigation and another case where such access was critical to exonerating wrongly accused teens.

 

All of that will go away, or at least become much harder, if the current trend continues, he argued.

 

“Those charged with protecting our people aren’t always able to access the evidence we need to prosecute crime and prevent terrorism even with lawful authority,” Comey said in the published speech. “We have the legal authority to intercept and access communications and information pursuant to court order, but we often lack the technical ability to do so.”

And as Bloomberg adds,

Technology has become “the tool of choice” for terrorists and other dangerous criminals and default encryption settings on devices and networks are becoming an obstacle for law enforcement, Comey said.

 

Providers of new communication services should create a “front door” method to intercept data as certain technology isn’t covered by legislation that requires telecom companies to have monitoring capabilities, FBI Director James Comey said yesterday at a Brookings Institution event in Washington.

 

“We are struggling to keep up with changing technology and maintain our ability to actually collect communications we are authorized to collect,” Comey said.

 

“If the challenges of real time data interception threatened to leave us in the dark, encryption threatens to lead us all to a very dark place,” Comey said.

Not everyone is buying into the idea that we all need to sacrifice our privacy for the good of the whole… (as Bloomberg reports)

Some data security experts, including Jonathan Turley, a constitutional-law professor at The George Washington University Law School, say assertions that new technology hampers law enforcement are exaggerated because police can still obtain evidence through traditional court warrants. Much of the data sent to or from the devices can also still be captured and investigators can hack software to collect evidence.

 

“Now, more than ever, we need strong security to combat malicious hackers and deter overly intrusive government surveillance,” Nuala O’Connor, president of the nonprofit Center for Democracy and Technology in Washington, said in response to Comey’s speech yesterday. “Law enforcement already has many legitimate ways to obtain the data stored on our devices,” O’Connor said in a statement.

*  *  *

Google have not responded (yet) but Apple’s Tim Cook wrote:

“We have never worked with any government agency from any country to create a backdoor in any of our products or services. We have also never allowed access to our servers. And we never will.”

via Zero Hedge http://ift.tt/1sQZ807 Tyler Durden

This is a riot: watch the gubernatorial debate in Florida as the two candidates have a pissing match over………….a fan. One of the candidates wanted a fan for a little bit of cooling, and the other guy insisted it was against the rules of the debate (in point of fact, the rules forbid “electronics” like, oh, say, having a personal computer or iPhone during the debate, which makes sense – – – most folks agree a small electric fan does not qualify as “electronics”). Pull up a chair, grab a Coke and popcorn, and enjoy:

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/rItx7eR0Jmw/story01.htm Tim Knight from Slope of Hope

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

For those who doubt that America is ruled by a narrow elite: three charts.

The book Why Nations Fail: The Origins of Power, Prosperity, and Poverty neatly summarizes why nations fail in a few lines:

(A nation) is poor precisely because it has been ruled by a narrow elite that has organized society for their own benefit at the expense of the vast mass of people. Political power has been narrowly concentrated, and has been used to create great wealth for those who possess it.

Sound like any countries you know? Perhaps we should flip this question around and ask: how many nations don't fit this profile?

I submit that this dynamic of failure–the concentrated power and wealth of self-serving elites– is scale-invariant, meaning that it is equally true of communities, towns, cities, states, nations and empires alike: all fail when they're run for the benefit of a narrow elite.

There is a bitter irony in the ease with which American pundits discern this dynamic in developing-world kleptocracies while ignoring the same dynamic in America. One would imagine it would be easier to see the elites-inevitably-cause-failure in one's home country, but the pundits by and large are members of the Clerisy Upper Caste, well-paid functionaries, apparatchiks, lackeys, factotums, toadies, sycophants and apologists for the very elites that are leading America down the path of systemic failure as the ontological consequence of their self-serving consolidation of wealth and power.

For those who doubt that America is ruled by a narrow elite: I don't have charts for standard-issue third-world kleptocracies, but I doubt the concentration of wealth and political power is much more extreme than in America:

In a simulacrum democracy where the highest bidders control the state, who do you think can readily buy political power?

And the policies of the elites have really spread the prosperity around in the past few years (sarcasm-off):

What's truly interesting about the authors' exhaustive survey of the inevitability of failure in elite-dominated nations is how cities dominated by narrow elites fail, states controlled by narrow elites fail, and indeed, any organization that serves the interests of a few at the expense of the many fails for the same reasons.

via Zero Hedge http://ift.tt/1qJe4ZG Tyler Durden

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via Zero Hedge http://ift.tt/1qJe2kq williambanzai7