Inflation? Core PCE Deflator YoY Hits 2.0% For April…

By Anthony B. Sanders

…As Sears Closes Another 72 Stores

The inflation numbers are out for April and the numbers show that the Core Personal Consumption Expenditure Deflator remained the same as March at 2.0% YoY. Although increasing, “inflation” remains tepid since The Great Recession ended (mostly under the 2% Fed inflation target).

coreinfl

While inflation remains tepid, things are anything but “business as usual” at Sears.  Sears’ stock price never quite recovered from The Great Recession and, like many big box retailers, has been “Bezos’d”.

Continue reading Inflation? Core PCE Deflator YoY Hits 2.0% For April…

Notes on Heartache and Chaos

By James Howard Kunstler

I was interviewing a couple of homesteaders on an island north of Seattle at twilight last night when they noticed that the twelve-year-old family dog, name of Lacy, had not come home for dinner as ever and always at that hour. A search ensued and they soon found her dead in the meadow a hundred feet behind the house with two big puncture wounds in her body. Nobody had heard a gunshot. We’d just been talking inside and a nearby window was open. They suspect the dog met up with a black-tailed deer buck out there and was gored to death. We hadn’t heard a yelp, or anything. A week ago, an eagle got one of their geese, and some land-based monster got its companion just the other day.

Nature is what it is, of course, and it’s natural for human beings to think of its random operations as malevolent. That aspersion probably inclines us to think of ourselves as beings apart from nature (some of us, anyway). We at least recognize the tragic side of this condition we’re immersed in, and would wish that encounters between its denizens might end differently — like maybe that two sovereign creatures meeting up by sheer chance on a mild spring evening would exchange pleasantries, ask what each was up to, and go on their ways.

Continue reading Notes on Heartache and Chaos

Waiting on the Echo of Crude Oil’s Big Drop

By Tom McClellan

Oil's leading indication for DJIA
May 31, 2018

10 years ago in June 2008, oil prices were making a top above $140/barrel, which turned out to be an exhaustive blowoff top.  A steep collapse ensued, taking oil prices down to below $40 in January 2009.

Crude oil gives us a 10-year leading indication for what the stock market is going to do.  It is a phenomenon which has only been working for the entire 122-year history of the DJIA, so that may not be long enough yet for some people to believe in it.  Making things more complicated, it is not a precisely perfect model of future stock market action.  It is merely very good.

Continue reading Waiting on the Echo of Crude Oil’s Big Drop

Novo Resources (NVO.v): A NR, a Chart and a No Comment

By Otto Rock

A NR Here.

A chart here:

As for comment, this humble corner of cyberspace has nothing further to add to this post and message of late November 2017. Here’s how that ended:

4. The issue: how to prove QH is right. And it’s here where I have my major issue with NVO as an investment today because for the life of me, I don’t know how anyone can prove what’s there under the sand without digging it all up first. We’ve already seen drill assays are going to be a non-starter to get to an accurate resource because of quite literally the nugget effect (x100). We’re about to get results from one small area and they’ll be talked up/down by both sides of the argument no matter what they contain, they will not provide any sort of resolution. So, Large Scale Bulk sampling? Yup, take 500kg from here there there and here. Process it. Then tell me all the areas between the samples are the same. Okay. Time for that? Expense? F___ dude, suddenly you’re just mining!

5. Now I know you like the play geologically. All good, but where’s the investment? Honestly, I see this stock trading where it is for years (or diluted as new paper becomes treasury) because it simply doesn’t have any way of proving anything. It’s ultimately risk management and the de-risking of the NVO equity is going to be very difficult.

Bottom line: I have no issue with the geological arguments, no matter which side is eventually proven right. But the key word is “eventually”, I see years of price inertia as the most probable near, medium and long-term future for NVO.

And nothing has changed since, either. Neutral NVO, staying that way, not falling for the BS hype being slathered all over the unwitting fools by people with hidden agendas over at CEO dot CA, either.

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Weakness and Strength

By Tim Knight

Well, “BTFD” has worked for the 1,730th time in a row. It’s no surprise people believe in that simple strategy so much.

The market continues to be a mixed bag. Utilities, for example, my favorite index short, is still looking picture perfect from a moving averages perspective (which is all I am showing in this post). The crossovers are exactly what I want to see.

The Major Market Index is just scraping right along – – we’ve already got a bearish crossover, and it might just hold – – but today’s powerful rally is putting it at-risk. It won’t be clear until day’s end to see if this crossover survives or not.

Continue reading Weakness and Strength

Global Equity Fundamentals

By Callum Thomas

Equity market fundamentals are looking pretty strong around the world.  Key indicators like interest coverage ratios and profit margins have improved to cyclical highs.  Interest coverage has also been helped by a couple of notable trends such as lower borrowing costs.  But, somewhat counter-intuitively, it looks like investors in global equities were rewarded more over the medium-long term when these indicators were in a cyclical downturn…

The main points on the cycles/trends in global equity fundamentals are:

-As a result of low borrowing costs and improved profitability, global interest coverage ratios are looking healthy.

-Globally, profit margins have improved since the earnings recession (EM + Commodities) of 2015/16.

-It all looks pretty good, although the chart shows that investors were usually rewarded more for buying when profit margins were cyclically low vs cyclically high.

1. Global Equities – Interest Charge Coverage:  Globally there has been a noticeable uptrend in interest coverage ratios over the past 30 years.  As with many fundamental indicators, there is a clear cycle around the trend as well.  During the 2015-16 earnings recession there was a deterioration in interest coverage ratios, which has since unwound as the indicator has recovered to a cyclical high.

Naturally factors like the level of interest rates and leverage/debt loads likewise have a significant impact.  So from a cyclical stand point, you would expect the interest coverage ratio to rapidly deteriorate towards the end of a business/market cycle as profitability comes under pressure and policy tightening pushes up borrowing costs.  We saw this in the last two cycles, and thus it’s something worth monitoring.

Continue reading Global Equity Fundamentals

The Bullish Tendency of the Thursday after Memorial Day

By Rob Hanna

Thursday after Memorial Day has been a day that has exhibited a bullish bias for many years. I last showed this on the blog last year. The chart below shows updated results.

2018-05-30

Single-day seasonality can certainly be overrun by other forces, but the Thursday after Memorial Day has been a good one for many years. That may be something that traders want to keep in mind for Thursday.

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The ‘Alt-Right’ Has New Theme Song, And It Is Everything You Want It To Be!

By Robyn Pennacchia

Conservatives, to put it lightly, are not good at art. They want to be, of course, because they enjoy the way art has influence over people, but they don’t want to invest the actual time it takes to become good at it, like some hippie loser.

To that end, a bunch of talent-free White Nationalists have established the “White Art Collective” — a sad, Geocities-style website devoted to promoting the work of a grand total of eight Nazi “artists.”

One of the musicians showcased on the site is one Bryn Dolman, who has written and produced what may be the most goddamned pathetic song I have ever heard in my entire life, titled “It’s OK To Be White.” Bryn manages a café near a cemetery and also does “life coaching.” Because who doesn’t want to get life advice from a Nazi Barista?

The song has already proved popular with the kind of creeps who write for for Christopher “Crying Nazi” Cantwell’s website, because of course it has.

PREPARE TO CRINGE.
Continue reading The ‘Alt-Right’ Has New Theme Song, And It Is Everything You Want It To Be!

The Hidroítuango Dam in Colombia: Things Are Getting Worse

By Otto Rock

Authorities call for emergency evacuation

Maybe ten days ago, this humble corner of cyberspace brought you news of a potential disaster in Colombia. The Hidroítuango hydroelectric dam near Medellín in Antioquia is a new civil works project, was supposed to go online late last year but because of serious miscalculations in its design along with abnormally heavy rains is now under serious threat of collapse. If that happens, the houses and around 130,000 people living downstream could quite literally be wiped out (the boffins talk about a 26m high wall of water rushing down the river valley…not funny in the slightest).

Well people, news from Hidroítuango this morning tells us this story hasn’t gone away. The latest is that the the danger level has been risen to Red Alert (highest level), the reservoir is full to overflowing, mountain peak overlooking the dam is now unstable and engineers expect landslides in the next few hours into the dam and reservoir area, roads 13km below the dam have been closed and local authorities are now calling for the evacuation of everybody downstream. Yup, 130,000 people.

Apart from that, they’re having a great day.

PS: I’ve been asked so here’s the answer. The dam was built by a Brazil/Colombia consortium known as CCC, a JV between Brazil’s private capitals company Camargo Correa (which has been closely linked in several of the Odebrecht bribery scandals), Colombia’s Conisa Ramón HSA and Colombia’s Constructore Concreto SA. They won the tender for the contract back in 2012.

UPDATE: An evacuation order has just been signed by the mayor of the local area, affecting 30 regions.

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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.

The Return of the PIGS: 10Y Italy, Greece Yields Spike Over 40 BPS

By Anthony B. Sanders

2Y Italian Yield Spikes 153 BPS

A general rule of thumb is that whenever sovereign yields spike by over 10 basis points, it is a big deal.

So Italy and Greece 10-year sovereign yields spiking over 40 basis points this morning is a big deal! The third PIG (Portugal) is up 11.3 BPS.

sov10

For the 2-year sovereign debt, Italy is up over 153 BPS.

Continue reading The Return of the PIGS: 10Y Italy, Greece Yields Spike Over 40 BPS

Overwriting Madness

By Kevin Muir

Closed-end funds are an interesting sentiment indicator. Although there are individual factors that determine whether a specific closed-end fund trades at a premium or discount, there can be no arguing with the cold hard reality of what investors are willing to pay above (or below) NAV to gain exposure to a particular asset.

Therefore it was with great interest that I dug into the following tweet by my pal Adam Collins at Movement Capital (a must follow on twitter):

CEF stands for Closed-End Fund and the product in question is the Nuveen Nasdaq 100 Dynamic Overwrite Fund – symbol QQQX.

Continue reading Overwriting Madness

ECB’s Turn for a Disappointing Account

By Jeffrey Snider

Earlier this week the FOMC published the minutes of its April policy meeting, disappointing “dovish” in them which more properly suggests skepticism about the state of economic affairs. Yesterday, it was the ECB’s turn. Releasing the “Account” of also its April gathering, Europe’s central bank began it by noting Germany’s federal securities. Specifically, it mentions yields falling back on them.

With regard to recent bond market developments, a gradual decline in the ten-year German government bond yield, which started in mid-February, had pushed yields back to levels not far from those observed for most of 2017.

So much for growing evidence of Europe’s boom hysteria. In fact, most of the Account is written to convey growing uncertainties about it all. Germany’s bund market is therefore a very good place to start.

We can do so, however, in a manner in which authorities never do. They quite intentionally frame any discussion about bonds, bunds, or whatever in as short of a perspective as possible. As the quote above demonstrates, that way they can make it seem like progress if yields rise more in 2018 than in 2017 (until even that stops) without having to explain why those same yields remain still nowhere close to 2014, 2011, or normal.

Not being so narrow of focus, instead we can better appreciate just how little German yields have changed in comparison to where they were or would be if there was anything like an economic boom afoot. Sustained economic weakness is therefore consistent not surprising or unexpected.

Continue reading ECB’s Turn for a Disappointing Account