• Phoenix Capital...
    10/07/2015 - 18:54
    If you think this sounds like some kind of conspiracy theory, consider that France just banned any transaction over €1,000 Euros from using physical cash. Spain has already banned transactions...


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The Stock Market's Ugly Truth - Only 6 Stocks Matter

When we first exposed the shockingly dire lack of breadth in US equity markets, it was shrugged off by the mainstream media as yet another 'worry' in the wall to climb. It seems, however, that facts inevitably force their way to the surface and so both Bloomberg (more than 100% of this year’s increase in the S&P 500 Index is attributable to two sectors, health-care and retail. That’s the tightest clustering for an advancing year since at least 2000) and The Wall Street Journal (Amazon, Google, Apple, Facebook, Gilead and Walt Disney Co. account for more than all of the $199 billion in market-capitalization gains in the S&P 500) have been forced to expose the ugly truth about US equities... it is not a stock market - it's a market of 6 tail-chasing momentum stocks.

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There Is No Exit: Why China's Plunge Protection Is Here To Stay


As Beijing pledges to remain supportive amid a harrowing decline in Chinese stocks, China may find itself with no exit strategy for its plunge protection program. As BofAML notes, "An 'indefinite' holding period is certainly possible – it’s how the government had dealt with the last round of bad debts in the banking system, i.e., by shifting them to bad banks and never crystalizing the losses. But even under such a scenario, there may be unintended consequences."

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The Big, Bad Bear Case

The purpose of this article is to outline, with facts, large global structural issues that everyone, bulls and bears alike, should be fully aware of.  This article will focus on much larger structural issues that have been building for years and decades. And no this article is not so much about central banks, debt issues, Greece, China, deficits, etc. While all these are important as part of the overall picture, they are mere current symptoms of a much larger issue that is at the core of all that is already in play and will only deepen in our societies in the decades to come.

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Russia, China Delay "Holy Grail" Gas Pipeline Sequel As China's Economy Swoons

In May, Chinese President Xi Jinping visited Moscow, where Gazprom Chief Executive Alexei Miller and China National Petroleum Corp Vice President Wang Dongjin signed a gas export deal which paves the way for 30 bcm/y to China via a new "Western Route." Now, slumping Chinese demand (a pervasive problem at the heart of the global commodities downturn), threatens to undercut the agreement.

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Earnings And Guidance Suddenly Matter? Say It Ain't So...

We are seeing a kind of flight forward by investors – promises of future returns that may or may not eventuate continue to be highly rewarded – no price seems too high. This is actually a fairly typical bubble phenomenon. It is impossible to say for how long it will continue and how far it will go, but it is possible to say how it will end: in tears, especially for Johnny-come-lately investors.

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Frontrunning: July 24

  • Gunman kills two, wounds seven in Louisiana theater before killing himself (Reuters)
  • Health insurer Anthem to buy Cigna in $54.2 billion deal (Reuters)
  • Murder, Poisoning, Raids: It’s Election Season in Russia (BBG)
  • Lagarde Push for Greece Debt Relief Challenges Merkel (Bloomberg)
  • Fund Boss’s Gamble on Health Law Pays Off Big (WSJ)
  • Wall Street Cranks Up Its Outlook for Amazon After It Delivers Monster Earnings Report (BBG)
  • China's Richest Man Marks Push Into Hollywood With Jake Gyllenhaal Movie (BBG)
  • West Africa's alarming growth industry - meth (Reuters)
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The Hard Truth: For Retail Investors, The NYSE Is Always Out Of Service

The real reason why retail investors weren't impacted by the NYSE's halt is a hard truth... to retail investors, the NYSE is always dark

Where Do Retail Investor Orders Go? The simple answer: to the highest contracted bidder. Stock "wholesalers" or internalizers like Citadel or Knight pay retail brokers lots of cash to execute retail trades, essentially creating a "third market". Why? Because in a high frequency trading world, where stock prices have never been more fuzzy to the end user, but crystal clear to those that spend enormous sums on colocation and PhD employees, it's never been easier to print money (not unlike Bernie Madoff's scheme in the 90's). But that is the subject of a much, much longer story. Someone should write a book.

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Has The Land War Begun: Turkish Tanks Are Firing Into Syria

As the following clip from Turkey's DHA news agency shows, one may wonder if NATO-member Turkey's land invasion of Syria, which many have said was long overdue following months of rhetoric and belligerent posturing, under the pretext of ISIS "liberation", has just begun.

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Retail Investors' "Cult"-est Stocks

We always keep a weather eye on the state of retail investing in the U.S.  There is, of course, the old saw that this batch of buyers doesn’t get involved until the top; therefore, it makes sense to see if they are getting too “Bulled up”. Then there is the fact that retail “Cult” stocks can hold premium valuations far longer than those without such sponsorship.

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Perhaps It Wasn't Such A Good Idea To Leave The Fate Of The Tech Bubble In The Hands Of Apple

Apple is expected to be the largest contributor to earnings growth for the Information Technology sector for Q2 2015. The blended earnings growth rate (combines actual results for companies that have reported and estimated results for companies yet to report) for the Information Technology sector is 0.2%. Exclude Apple, and the sector would report a year-over-year decline in earnings of 6.0%.

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Frontrunning: July 22

  • Stocks sour as Apple results leave bitter aftertaste (Reuters)
  • Awkward Alliance Running Germany Exposed by Greek Crisis (BBG)
  • Apple Faces Old Question of What’s Next After Record Profit (BBG)
  • Lawmakers, White House Explore Tax Revamp for U.S. Firms Overseas (WSJ)
  • Digital Misfits Link JPMorgan Hack to Pump-and-Dump Fraud (BBG)
  • More Debt Traders at Risk as European Banks Report Results (BBG)
  • Iran rejects sanctions extension beyond 10 years (Reuters)
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Apple Plunges Despite EPS Beat On iPhone Sales Miss, Drop In China Sales, Weak Guidance And Strong Dollar Warning

The company which was carrying the fate of not only the Dow Jones and the S&P 500 on its shoulders had taken the stairs up, and just took the elevator down.

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The One Trick Pony Market

You don’t hear it much, but the S&P 500 has been a bit of a “One trick pony” in 2015. No, it isn’t the 4% weighting in Apple that makes it such; it is the combination of a 15% weighting in Health Care AND that sector’s 12.9% return year to date.  When you compare the S&P 500’s price return year to date of 3.37%, you can see that the Health Care sector’s contribution is essentially just over half the market’s price return for 2015 (12.9 times 15% is 1.90 of that 3.37). Layer on the fact that 5 of the 10 industry sectors in the S&P 500 are still down on the year: Materials (-2.7%), Industrials (-2.9%), Telecomm (-0.7%), Utilities (-8.6%) and Energy (-9.7%). 

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Take Cover - Wall Street Is Breaking Out The Bubblies

This charmed circle includes Google, Amazon, Baidu, Facebook, Saleforce.com, Netflix, Pandora, Tesla, LinkedIn, ServiceNow, Splunk, Workday, Ylep, Priceline, QLIK Technologies and Yandex. Taken altogether, their market cap clocked in at $1.3 trillion on Friday. That compares to just $21 billion of LTM net income for the entire index combined. The talking heads, of course, would urge not to be troubled. After all, what’s a 61X trailing PE among today’s leading tech growth companies?

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