Archives for December 2014

China’s Zombie Factories Provide Illusion of Work and Prosperity; Rebalancing Chinese Style

Courtesy of Mish. China has zombie malls and even zombie cities, so zombie factories can hardly be a surprise. And as the malinvestments pile up, so do unrealized shadow bank losses. The Financial Times reports China Zombie Factories Kept Open to Give Illusion of Prosperity. In the shadow of a group of enormous smokestacks and […]

Here’s Why Trendlines are Your New Best Friend, Part 3

Here’s Why Trendlines are Your New Best Friend, Part 3 See how trendlines help you make calculated trading decisions Courtesy of Elliott Wave International Have you ever seen Donald Duck play pool? Trust us, it isn’t pretty. An expert pool player, on the other hand — well, he can just look at the billiards table and […]

Supply, demand and the price of oil

Supply, demand and the price of oil Courtesy of James Hamilton of Econbrowser A few weeks ago I offered some calculations suggesting that lower demand for oil might account for about $20/barrel of the dramatic decline in the price of oil since last summer. Here I point to some other evidence consistent with that conclusion. Last week […]

Spain to Issue €55 Billion in New Debt, 72% to Roll Over Existing Debt; Interest Rate Perspective

Courtesy of Mish. Spain’s regional and local governments are struggling to pay back debts. The central government has not made much progress either. El Economista reports 72% of Treasury Issuance in 2015 to Refinance CCAA and Municipalities. Of estimated €55 billion debt increase for 2015, 72 percent of that amount will be to regional governments […]

Update Feb. 15, 15

Market Shadows features a variety of articles about the financial markets as well as interesting materials for traders and investors. To receive original articles when posted, please enter your email at the top left of this page. Visit me at Phil’s Stock World (PSW) for instant access to my posts.   Options trading: Phil Davis constructs option trades to “be the […]

GDP is not a predictor of stock market performance

GDP is not a predictor of stock market performance There may be no correlation between economic growth (GDP) and the stock market in the US; and in China too, as Joshua M Brown shows below. This is because GDP only partially reflects corporate earnings and because earnings are only one factor affecting the performance of the stock […]

The Wall Street-ization of Everything: Airline Edition

The Wall Street-ization of Everything: Airline Edition Courtesy of Joshua M Brown Tim Wu at the New Yorker: This fall, JetBlue airline finally threw in the towel. For years, the company was among the last holdouts in the face of an industry trend toward smaller seats, higher fees, and other forms of unpleasantness. JetBlue distinguished itself […]

The Burning Questions For 2015

John Mauldin makes an unusual recommendation: a face cream containing skin stem cells. I don't see how a topical application of stem cells could possibly work to make skin look younger. Please comment if you've tried the product (link) and let me know how (if) it works. ~ Ilene  The Burning Questions For 2015 By John Mauldin, Outside the Box Louis […]

The Keynesian End Game Crystalizes In Japan’s Monetary Madness

Courtesy of David Stockman via Contra Corner  If the BOJ’s mad money printers were treated as monetary pariahs by the rest of the world, it would at least imply that a modicum of sanity remains on the planet. But just the opposite is the case. Establishment institutions like the IMF, the US treasury and the other major central banks urge them on, […]

January seasonals after a good year

January seasonals after a good year Courtesy of Joshua M Brown Savita Subramanian reminds investors that Januarys are a seasonally strong month – especially after the prior year. January is seasonally strong, especially after a strong year Since 1929, January has been one of the seasonally strongest months for the S&P 500, with average and median price […]

The Most Hated Rally Ever That Everyone Loves

Some might argue that record fund inflows corresponding to record market highs is a bad sign for the future of the bull. Time to buy an emerging market ETF? The Most Hated Rally Ever That Everyone Loves   Courtesy of Joshua M Brown A gigantic statistic surfaced this weekend about fund flows this past week, which shattered […]

2014: The Year Propaganda Came Of Age

Courtesy of The Automatic Earth. Dorothea Lange Drought hit OK farm family on way to CA Aug 1936 From just about as early in my life as I can remember, growing up as a child in Holland, there were stories about World War II, and not just about Anne Frank and the huge amounts of […]

Russia Debt One Grade Above Junk With Downgrades Coming, How Likely is Default?

Courtesy of Mish. All three rating agencies are expected to downgrade Russia's debt to junk soon and bailouts to Russian banks are on the rise, but how likely is default? The Financial Times reports … Russia trebled the size of its bailout of troubled lender Trust Bank to Rbs99bn ($1.9bn) on Friday, laying bare the […]

“Hookers & Blow” Lift Britain Over France As World’s 5th Largest Economy

Courtesy of ZeroHedge. View original post here. Britain has inched out France as the world's fifth-largest economy thanks to what The Telegraph calls "a shake-up" of the national accounts this summer. UK gross domestic product (GDP) is expected to total $2.828 trillion (£1.816 trillion) this year, compared with French GDP of $2.827 trillion, as The […]

Things That Make You Go Hmmm: Signing Off

Things That Make You Go Hmmm: Signing Off By Grant Williams On Christmas Eve 1979, 27 days before I became a teenager, in a surburban street in Moseley in Britain’s West Midlands, a group of musicians put the finishing touches on their debut album. The musicians — Brian Travers, Astro, James Brown (no, not that […]

Future Shock – The Unsustainable Often Ends Abruptly

Courtesy of Adam Taggart via Peak Prosperity Here at the penultimate chapter of The Crash Course, everything we've learned comes together into a single narrow range of time we'll call the twenty-teens.  What this chapter offers is a comprehensive view of how all of our problems are actually interrelated and need to be viewed as such, […]

Dollar Outlook at the End of 2014

Courtesy of Marc To Market The US dollar closed higher against all the major currencies during the holiday shortened week. The lack of liquidity may have exaggerated the weakness of Swedish krona and Norwegian krone, the poorest performing major currencies.  Both lost about 1.5% against the greenback.  The least weak currencies were in the dollar-bloc. The […]

North Korea Internet, Cell Phones Go Dark

Courtesy of ZeroHedge. View original post here. When it comes to crude attempts at humor, The Interview may (and should) have been a stunning flop, but meanwhile the real comedy continues in the real world, whose absurdity has made any IPO of The Onion impossible. According to Reuters, North Korea's Internet and 3G mobile networks […]

Drilling Cutbacks Mean Service Companies Forced To Scrap Rigs

Courtesy of Nick Cunningham via OilPrice.com Despite the decline in oil prices, the U.S. is expected to boost production by 300,000 barrels per day in 2015, up to a yearly average of about 9.3 million barrels per day, according to the most recent government estimates. But the number of oil and gas rigs in operation is […]

My reading of the FT on China’s “turning away from the dollar”

My reading of the FT on China’s “turning away from the dollar” Courtesy of Michael Pettis  The Financial Times ran a very interesting article last week called “China: Turning away from the dollar”. It got a lot of attention, at least among China analysts, and I was asked several times by friends and clients for my response. The authors, James […]

We Just Enjoyed the Last Christmas In America

Courtesy of Charles Hugh-Smith of Of Two Minds The end of rising wages = the end of mass affluence: we just enjoyed the Last Christmas in America (TLCIA). As unemployment topped 10%, the January 1975 cover of Ramparts magazine blared: The End of Affluence: The Last Christmas in America. (TLCIA) The government responded to the high unemployment, rampant inflation and […]

Russia’s Overnight Lending Rate Hits 19%, as Mistrust of Banks Spreads; Ruble Up Again

Courtesy of Mish. In Russia, the overnight lending rates between banks has soared to 19%, a sign of widespread and warranted mistrust between banks, as one bank has failed. To stabilize the situation, Putin is considering bank deposit insurance up to an amount equivalent rate of about $26,000. Meanwhile, and although Russia is still burning […]

Nat Gas Tumbles Below $3 For The First Time Since 2012, Plunges 30% In 2014

Courtesy of ZeroHedge. View original post here. For the past few months, the one silver lining to the energy complex – with crude oil plummeting to levels not seen since 2009 – was nat gas, which soared to the mid-$4s in early November on expectations of a brutal polar vortex for the second year in […]

Pettis on Strains in China’s Banking System; Avoiding the Fall

Courtesy of Mish. In his last email of the Year Michael Pettis takes stock of the current state of China's rebalancing. It's an 18 page PDF, with no online link. Taking Stock of China’s Transition by Michael Pettis Special points to highlight in this issue: While policymakers almost certainly understand that the interest rate cuts […]