The Glacial Taper Continues!

By Anthony B. Sanders

Fed’s Treasury Note and Bonds Holdings Back To April ’14 Levels While Agency MBS Holdings Back To August ’15 Levels

It took the Fed five-and-a-half years to amass $3.4 trillion in Treasury securities and mortgage-backed securities (MBS) during Quantitative Easing (QE). The Fed is now reversing that process, including the opposite of “tapering,” as it is “ramping up” its QE unwind. Call it “the glacial tapering.”

The Fed’s balance sheet for the week ending June 6, released Thursday afternoon, shows a total drop of $141 billion since October, the beginning of the era officially called “balance sheet normalization.” At $4,319 billion, total assets have dropped to the lowest level since May 7, 2014, during the middle of the “taper.”

If the Fed continues to follow its plan, it will shed up to $420 billion in securities this year, and up to $600 billion a year in 2019 and each year in the future, until it considers its balance sheet to be “normalized” — or until something big breaks. For May, the plan calls for the Fed to shed up to $18 billion in Treasuries and up to $12 billion in MBS.

On the Treasury note and bond side, we are back to April  2014 levels.

treaswith

On the agency MBS side, The Fed’s holdings are also dropping and are back to August 2015 levels. But they are not declining that rapidly.

Continue reading The Glacial Taper Continues!

Sir Chop-A-Lot

By Tim Knight

I was amused – and a little amazed – to see this item this morning:

For the two or three of you unfamiliar with John McAfee’s famous bet, allow me to summarize it with one sentence and photo; as you can see, the former tech titan is looking a bit out of sorts these days:

See, I was convinced that this man has stumbled only publicity gold, because he made a provocative, amusing statement that swept the airwaves, but the prediction was far enough out that he could enjoy the fruits of this weird publicity stunt for a while without risk or bodily harm.

Continue reading Sir Chop-A-Lot

The Summer of Discontent

By James Howard Kunstler

The ill-feeling among leaders of the G-7 nations — essentially, the West plus Japan — was mirrored early this morning in the puking financial market futures, so odious, apparently, is the presence of America’s Golden Golem of Greatness at the Quebec meet-up of First World poobahs. It’s hard to blame them. The GGG refuses to play nice in the sandbox of the old order.

Like many observers here in the USA, I can’t tell exactly whether Donald Trump is out of his mind or justifiably blowing up out-of-date relationships and conventions in a world that is desperately seeking a new disposition of things. The West had a mighty good run in the decades since the fiascos of the mid-20th century. My guess is that we’re witnessing a slow-burning panic over the impossibility of maintaining the enviable standard of living we’ve all enjoyed.

Continue reading The Summer of Discontent

And Now He’s Off to Parts Unknown

By Biiwii

Last week I watched as System of a Down’s Serj Tankian and Anthony Bourdain ate and talked their way through a country I actually knew little about. That would be my ancestral homeland, Armenia.

He did not shy from the topic that defines Armenia, a Christian country struggling not only with the Muslim neighbors it’s surrounded by, but a century of official government (including the US) denial about a genocide that most definitely occurred. This denial hurts the whole world, not just one country and its people. Evil lives and even thrives until light is shone upon it to put it to rest.

How gently, respectfully and inquisitively he handled his host countries and societies.

With local cuisine as a baseline topic Anthony Bourdain brought out the richness and humanity of people we may have known little or nothing about, all around the world. But more than that, he was a guy I thought was just really cool and completely comfortable in his own skin. In short, a success on several different levels.

Just yesterday I went to do a skim of the fundamentals of a company on my watch list, Tapestry (TPR) and in that research found out Kate Spade (a name I’d heard, but had no clue the details about) had hung herself in her Park Avenue apartment. Another success, another suicide.

Back on Bourdain, in doing a little reading up on him I found out he had similar musical taste to mine. Roxy Music, Johnny Thunders and… BJM! Okay, I am sad and I am also wondering ‘WTF?’ with respect to the number of brilliant people going down this path (let’s not forget Chris Cornell and so many others). It seems to be becoming epidemic, and while the disease known as Depression is at the center of much of it, the hatred and evil gaining a media-amplified foothold in the world cannot be ruled out as an underlying pressure as well.

My Favorite Songs: Anthony Bourdain

Investor Cash Allocations

By Callum Thomas

When I look at charts like this, sayings such as “cash is trash” or “there is no alternative” come to mind.  The chart uses data from the AAII survey and ICI mutual fund statistics to give two views on US investor portfolio allocations to cash.  The bottom line is cash allocations are at rock bottom.  Interestingly though, the AAII surveyed allocation has rebounded from the low-point in January this year.  Question is, how many Fed rate hikes will it take until cash looks attractive again?  …but then again, interest income isn’t always all that matters, when the core job of cash in a portfolio is typically to do the heavy lifting as a defensive asset for capital preservation purposes.  So contrarians: take note.

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A Novo Resources (NVO.V) Request

By Otto Rock

As we had so much fun on Twitter today with this request, it’s only fair that it gets an airing here as well. Here’s how the Tweet went:

“Request for Novo Resources longs. Please provide either an explanation on how NVO gets to a 43-101/JORC compliant resource or if not, a reasonable path to production of enough size to justify current mkt cap. As without one of those, imo all long theses are pure hot air.”

And unlike the thin-skinned CEO.ca pump artist “hhorseman” who thought this was all unfair and about him (more on that tomorrow), you should be clear that this isn’t a loaded question. Yes, I’d agree that it’s an uncomfortable question for longs because it brings into focus the obvious weak point of the whole NVO story, but it’s in no way loaded. Experience has taught me that it’s only the promo pump end of the junior world that shies away from the tough parts, companies and supporters of who tackle the weak points to the satisfaction of the world see their share prices and portfolio values really move up.

So quite seriously, I as a neutral on this stock (a well-documented position) would like an answer to this. How does NVO justify its virtual $1Bn market cap (those cheap warrants must be counted in).

  • If it can put together a compliant resource, good because that may well do it. But how?
  • If it cannot put together a 43-101 or JORC compliant resource, then I can only presume it would need to go into production as stands. So what reasonable production scenario can value this at C$1Bn?
  • And if I’m wrong and there’s some third way of placing a tangible valuation on NVO, then what is it? (because for the life of me I’m stumped).

FWIW and to try and help a little, some answers and comments on Twitter today show there are people in (or at least interested) this stock that don’t really understand what company equity is.

PS: The “Because we think there are X million ounces” argument doesn’t work, that’s why third party resource counts under rules and regulations exist.

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Bullish Setups

By Chris Ciovacco

ODDS MORE FAVORABLE FOR BREAKOUT ATTEMPT

The term setup speaks to probabilities.  There are several positive setups on the chart of the Vanguard Total Stock Market ETF below, telling us patience over the past 124 calendar days may be on the verge of being rewarded with higher highs and higher profits.  The annotations are described in more detail below the chart.

short-takes-ciovacco-capital-management-stock-blog-vti-3.png

The annotations are described in more detail below:
Continue reading Bullish Setups

Serving Suggestion

By Tim Knight

Yeah, I know, it’s January 2018 all over again. Market is up every day. VIX is heading to the single digits. Bulls are ecstatic. Bears are suicidal. I get it.

All the same, I’d like to offer one possible pathway for the NASDAQ Composite, shown below. Because we’re experiencing the same kind of lifetime high in tech stocks that we did back around March 13, and it pretty much shot its wad at that point. Just a suggestion:

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Subscribe to NFTRH Premium for an in-depth weekly market report, interim updates and NFTRH+ chart and trade ideas. You can also keep up to date with plenty of actionable public content at NFTRH.com by using the email form on the right sidebar. Or follow via Twitter @BiiwiiNFTRH, StockTwits or RSS. Also check out the quality market writers at Biiwii.com.

Boots on the Ground for the Next Economic Leg Up

By Kevin Muir

[biiwii comment: okay macro tourist, you got me with your most disturbing pic yet!]

We’re now eight years into an economic expansion. Not only that, the financial system is far from a shining beacon of stability. Global central banks are trying to push and pull at the same time with the Federal Reserve desperately trying to raise rates and wind down their balance sheet. All the while, the ECB and the BOJ continue their monumental quantitative easing.

With good reason, as the moment the ECB even hints at slowing down their purchases, the EU economic train comes off the rails. Japan has been stuck in a perpetual state of quantitative easing that seems even longer than sitting through your least favourite boring movie. On top of it all, the root cause of the last crisis (too much debt), has been met with more debt. Add it all up and it’s easy to see why veteran market strategists like David Rosenberg are preaching caution.

I must confess being partial to Rosie’s view of the current environment. It feels late in the cycle with the risk/reward increasingly looking less and less favourable. I find myself looking for signs confirming the economy is sputtering from US rate hikes.

Continue reading Boots on the Ground for the Next Economic Leg Up

“It is their job to entertain. It is your job to ignore…”

By NFTRH

Agree 100%, Charlie.

See: Buy in May and Stay Invested

Now, I am not of that ilk personally. My closely held biases are that a) the market’s cycles can be interpreted and managed (although my bias also has led me astray at times, in my execution) and b) that the economy, and by extension the markets, are not normal; not your grandpa’s economy and markets because they are ginned and steroidally goosed by off-the-charts (i.e. experimental) central bank meddling. That’s my bias in line with my entire history of public writing since 2004.

So I am not a stock market apologist, bull wise guy or ‘buy ‘n hold stocks for the long’ run tout. But I am the guy who is frequently nonplussed about the mainstream media fanning the flames of investor/trader sentiment during inflammatory news cycles. As Charlie says “it is their job to entertain” and “your job to ignore”.

But this applies not only in the major media. It applies to the minor media as well. Led by Zero Hedge, a whole raft of blogs and other entities are going to fan your flames with all sorts of opinionated, agenda driven or just plain biased information. And what Charlie has right is that it is absolutely imperative to tune it the hell out. That is because the bias never changes because it is promoting emotional viewpoints, promoting sides, teams. In the market the only side is the right side, whether your little heart of hearts agrees with it or not.

Continue reading “It is their job to entertain. It is your job to ignore…”

No Disloyal Eagle-Men Will Taint Donald Trump’s America First Super Bowl Celebration!

By Doktor Zoom

This bird of prey was an excellent judge of character.

Donald Trump took another vital step toward making America great again yesterday by disinviting the Philadelphia Eagles from Trump’s White House celebration of the Philadelphia Eagles winning the Super Bowl. In a truly bizarre statement, the Very White House made clear the move was punishment for protesting the killings of black men by police:

The Philadelphia Eagles are unable to come to the White House with their full team to be celebrated tomorrow. They disagree with their President because he insists that they proudly stand for the National Anthem, hand on heart, in honor of the great men and women of our military and the people of our country. The Eagles wanted to send a smaller delegation, but the 1,000 fans planning to attend the event deserve better. These fans are still invited to the White House to be part of a different type of ceremony — one that will honor our great country, pay tribute to the heroes who fight to protect it, and loudly and proudly play the National Anthem. I will be there at 3:00 p.m. with the United States Marine Band and the United States Army Chorus to celebrate America.Yep, the entire team was banished from Donald Trump’s America Party because quite a few of the players “disagree with their President,” who is the boss of them now, and indeed of all of us, and we like it very much. Christ, don’t these people understand the simplest thing about America, where Trump rules us all? Such lèse-majesté was not to be tolerated, because America is about standing when told to stand, putting your hand on your heart, and singing the national anthem as loudly as possible. This is, as we all know, a land of mandatory displays of patriotism, and if you dare suggest that it’s not truly equal, you may as well self-deport, commie.
Continue reading No Disloyal Eagle-Men Will Taint Donald Trump’s America First Super Bowl Celebration!

Fate Of ECB QE Hangs In The Balance…

By Heisenberg

…As Policymakers Say Decision On When To End Program Could Come Next Week

Apparently, the deceleration in eurozone economic activity in Q1 and the political turmoil in Italy isn’t enough to prompt the ECB to take next week’s meeting off the table when it comes to making a potentially momentous announcement about when APP will ultimately be wound down.

Reports on Tuesday confirmed that next week’s pow wow is indeed “live” and that gave the euro a boost. Well fast forward to Wednesday and a trio of ECB officials were out noting that the debate will be front and center next week.

There was Chief Economist Peter Praet, who said “it’s clear that next week the Governing Council will have to make the assessment on whether the progress so far has been sufficient to warrant a gradual unwinding of our net asset purchases.”

There was Weidmann who, in a video call following Praet’s speech, said the following:

It doesn’t come as a surprise that for some time now, financial market participants have been expecting net asset purchases to end before 2018 is out. As things stand, I find these market expectations plausible.

This will be the first step on a long path towards monetary policy normalization. Inflation is now expected to gradually return to levels compatible with our definition of price stability.

Then there was Klaas Knot (who back in January was a bit reckless with the hawkishness) who told Dutch members of parliament in The Hague that “it’s reasonable to announce the end of the net asset purchases soon.”

All of that has the euro at a two-week high:

EURUSD

Continue reading Fate Of ECB QE Hangs In The Balance…