Sunday, July 24, 2016
I win a lot. About
Joined Nov 10, 2007
13,601 Blog Posts

Markets Shrug Off Munich Terror Attack, Restaurant Stocks, Leisurely, Climb Higher


I’d like to remind you, terror is good for stocks. It gets people riled up, forcing more QE. Bear in mind, we’re all gonna end up in pods, like in the matrix, powering robots. But, in the interim, the virtual reality, created by our central banks, is all that matters.

Does it make sense for eatery stocks to trounce higher after a gunman shoots up a Mcdonald’s in Munich? Of course not. But if you try to understand the pretzel logic of all this, your heads might explode. It’s perverse and done almost in a mocking manner.


This is the ultimate wall of worry. Nothing can surpass the menace of Islamic terrorism at malls, beaches, celebrations of life. As such, stocks are rallying, squeezing the heads of all those shorting into this news flow. This is the very worst dislocation of stock prices with reality I’ve ever seen.

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Reports suggest at least a dozen are dead. German officials aren’t giving many details at the moment.

All we know now, multiple shooters, at least 3, killing innocent people. First thing that comes to mind is tet offensive. The barbarians from ISIS are conducting operations on a wide scale.

The men, who are still at large, were wearing all black and black mask. Although the identity of the killers hasn’t been revealed yet, dollars to donuts, the religion of peace has inspired these lunatics to kill in the name of their God.

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Wealth Bubble or Break Out in Prosperity?


Americans have never been richer. Household wealth stands at $20 trillion, mostly in the well to do coastal cities of this great steak’d nation. There are some who believe this peak wealth statistic is a harbinger of doom, one that speaks to excess in the financial cycle, disconnected from the economics.


Since 2009, households have seen their holdings of stock and mutual funds nearly double, to $20.6 trillion. Only 6 percent of that gain can be ascribed to new flows of money into the funds or share purchases, according to calculations by Carson, director of global economic research at AllianceBernstein LP in New York. The rest is due to price appreciation.

As a share of disposable personal income, household net worth hit a record high 652.7 percent in the first quarter of last year. (For comparison purposes, the high during the housing boom was 648.3 percent at the end of 2006.) It’s since slipped, to 640.4 percent on March 31 of this year, as equity and house price gains have slowed

Does this graph mean anything? Trying to not be such an intolerable cynic here, isn’t it entirely possible that household wealth, the very thing the Fed has been trying to buoy, might continue to surge upwards to new levels? Or, does that way of thinking fall into the ipso facto world of ‘this time is different’, which we both know rarely happens?

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Deutsche Bank: Give Recession a Chance


Some might argue the data points Joe Lavorgna are worried about are completely useless stuff, backward looking subterfuge. However, Joe wants all of us to give recession a chance.

Hey, anything can happen, right?

According to the firm’s Chief U.S. Economist Joseph LaVorgna, looking at the index of leading economic indicators — a measure by the Conference Board that includes economic indicators believed to change before the broader business cycle — brings cause for concern.

“While consumer spending was relatively sturdy in the second quarter and nonfarm payroll growth rebounded solidly last month, the downward trend in the growth rate of the LEI indicates that near-term risks to growth remain to the downside,” he writes.

Here’s a chart from the note, where recessions are shaded in grey. “As the chart below illustrates, in the past two business cycles, an outright year-over-year decline in the LEI after a prolonged period of growth has presaged recession,” LaVorgna says.


As of right now, recession doesn’t look likely. However, should we dive lower towards the end of 2016, fueled by energy prices falling to levels that place a sundry of American oil companies in financial distress, the narrative will quickly change from one of recovery to wrought with panic.

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Wedbush Out With Note, Talking Extreme Shit About $NTDOY


It’s hard to take such a bad firm seriously. I mean, really, Wedbush Morgan is the Rodney Dangerfield of investment banks. You know it. I know it.

Their scatter brained skepticism on Nintendo and Pokemon Go are, generally, incomprehensible. We all knew that Nintendo had a partner and everyone knew the revenue split. What exactly is new here, other than valuation?

Wedbush is skeptical about the game’s staying power and economics with Nintendo booking only modest profits from Pokémon Go and likely struggling to achieve its FY:17 guidance given its bullish 3DS software expectations and the potential for NX to slip out of the year Niantic is the publisher of the game and likely pays The Pokémon Company a royalty for the underlying IP. In addition, mobile revenues are split 70% / 30% between the publisher and the applicable storefront. Assuming Nintendo owns 32% of Niantic, matching its stake in The Pokémon Company, they believe that in a best case scenario Nintendo would be entitled to 22.4% of revenues or profits (70% times 32%), and any benefit will likely show up in non-operating income.

I’m not a fan of buying into a 100% melt up. But I do recognize when something special takes hold of people. Pokemon Go is something Nintendo will profit from, immensely. The question is, how sustainable is the hype?

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BTIG Downgrades $FB on Risk-Reward Assessment

A woman checks the Facebook Inc. site on her smartphone whilst standing against an illuminated wall bearing the Facebook Inc. logo in this arranged photograph in London, U.K., on Wednesday, Dec. 23, 2015. Facebook Inc.s WhatsApp messaging service, with more than 100 million local users, is the most-used app in Brazil, according to an Ibope poll published on Dec. 15. Photographer: Chris Ratcliffe/Bloomberg via Getty Images

They’ve been bullish on the stock since 2013. However, their price target has been achieved and they feel the risk reward no longer favors investors at these levels. As such, they’ve downgraded the stock and have quietly removed a price target.

BTIG Research downgrades FB to Neutral from Buy noting “While we were SELL rated on Facebook after its IPO due to concerns over it ability to pivot to mobile, we reversed to a BUY rating in October 2013, with the stock at $49.40. With Facebook stock now over $120, exceeding the $117 price target we set one year ago this week, we believe the risk/reward is no longer compelling. Facebook remains one of the only ways to play the shift of legacy media ad dollars to mobile and its advertising growth rate remains staggeringly high, especially for a $348 billion market cap company. However, investor expectations over the past year have risen dramatically and we now feel the bar is simply too high. In turn, we are downgrading the stock to Neutral from Buy and removing our price target.”


The company has been the dominant recipient of ad dollars for social media, period. BTIG would like nothing more than for them to suffer a pig’s death now, in order to look right and the lecture all of us about the virtues of risk analysis.

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Bob Parker Offers Investment Suggestions on How to Play a Trump Presidency


I agree with everything he said here. Look for domestic companies with little to no Chinese exposure. I like X and have said so inside Exodus. Also, I like military and infrastructure plays. I’ll provide the plebs here with a far reaching list of stocks the closer we get to the election.

A Hillary Clinton administration will be status quo and probably be better for stocks in the near term. Longer term, her Presidency will light the fire to the keg that blows us all to smithereens, however.

God bless Robert Parker

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Bob Parker: Italian Banks Need to Be Bailed Out; They Might Fail


Admittedly, I’m a bit of a Bob Parker fan. For years, whenever Bob is on the radio or on my teevee, I stop whatever I’m doing to listen and hang onto every word her says, like a child. Most of the people on the teevee or radio get a Bronx cheer from me. I’ve been known to throw things at the teevee and have often had long, one sided, debates with my car stereo, where I’d tell whichever fuckhead was on the radio how truly stupid he/she was.

But Bob has never disappointed, ever. Like me, he’s always right and he is a blessing to the investment world as one of the few true great minds in all of finance.

In this clip, he describes the magnitude of the Italian banking crisis and how they need a bailout. He also wouldn’t rule out a banking failure of a very large magnitude in the meat ball’d state.

God bless Robert Parker.

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