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Tag Archives: Companies & Markets

For Stocks, a Reality Too Ugly to Behold?

The magic of Consensual Hallucination. The simple fact is that corporate earnings data is out there for everyone to see, but no one wants to see it. Instead, everyone wants to see and believe the sweet fairy tale that Wall Street and Corporate America spin with such skill just for us, because if everyone believes that everyone believes in this fairy tale, even knowing that it is a fairy tale, it will somehow lead to ever higher stock prices. This is part of a phenomenon we’ve come to call...

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What Concerns Me about this Rally in Oil

“Zombie producers” are getting new money. By Christine Hughes, Chief Investment Strategist, OtterWood Capital: Since energy has played a pivotal role in market gyrations the past year, I think it’s important to look at crude oil now with it up 47% in the last 20 trading days. See the 18 day rate of change in the chart below to understand how extreme a move it’s been. Last year at this time, oil rallied 48% in about 30 trading days only to roll back over and eventually take out the prior...

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Secret Monetary Group Warns a Catastrophe Is Coming

This is just the tip of the iceberg. By Harry Dent, author of the new book, How to Survive (and Thrive) During the Great Gold Bust Ahead: The Bank for International Settlements is nothing if not obscure. As the central bankers’ bank, it seems little-more than a back-door, private club for monetary elites to rub shoulders. And it’s located in Switzerland which has always carried a reputation for financial secrecy. Then it has this going for it – John Keynes of “Keynesian economic theory”...

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Desperate “Dumb Money” from China Arrives in the US

Every now and then we get a sign. Money creation in China has gone bonkers. Authorities have opened the valves, and new credit is surging through money pipelines, including state-owned banks and the “shadow banking” system, and so loans in just the first two months this year soared by $1 trillion. Where did this money go? We don’t know, but we’re getting indications that some of it is showing up right here in the US. At the same time, “China is getting into the venture capital business in a...

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This is Why I Don’t Short Anything Anymore

The moment of maximum pain. Goldman Sachs called for the end of the epic short-covering rally that had whipped crude oil, oil & gas drillers, and the broader markets into froth over the past three weeks. As if on cue, the rally started to unwind today. But it was scheduled for demise from get-go. When oil fundamentals are this terrible, they eventually rule. And here is what that rally did: It inflicted maximum pain and destruction on the short sellers that had piled into the trade....

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OK, I Get it, this Stock Market Is Going to Be a Mess

With actual P/E Ratios Blowing Out Like this. Just how overvalued are stocks, particularly small-caps? According to Wall Street, even the question is wrong. Stocks are never overvalued. They’re always a buy. The future looks bright. And even if it doesn’t look bright, analysts come up with “adjusted” earnings that are so brilliant that they blind even innocent bystanders. That’s how Wall Street justifies high stock prices. Our miraculously visionary analysts see on average an “adjusted”...

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This Is Bear Market 2.5 of my Career

Time to be taking some chips off the table? By Christine Hughes, Chief Investment Strategist, OtterWood Capital: This is bear market 2.5 of my career. The half-bear is for the quick one in 1998 during the Asian crisis. It wasn’t the end of the US business cycle but if the Fed hadn’t dropped rates in a hurry back then, it would have been. Today, we’re still in a “bounce” within an ongoing bear market, and as one market pundit put it, “It’s the bounce that never ends.”In reality though,...

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Another Private-Equity LBO Queen Bites the Dust

When a PE firm is through strip-mining a company. Sports Authority, which had skipped a $20-million interest payment in January while trying to arm-twist subordinated bondholders into accepting a haircut, and which filed for Chapter 11 bankruptcy on Wednesday, isn’t the only retailer in the US that was taken over by private equity firms before the Financial Crisis. The list is long: Neiman Marcus, Albertsons, Safeway, J. Crew Group, 99 Cents Only Stores, Bon-Ton Stores, Claire Stores, the...

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We’re at the Tail End of the Relief Period for Markets

“Intrigued by gold and its price action.” By Christine Hughes, Chief Investment Strategist, OtterWood Capital: I expected February to be better than January for the simple reason that January was so bad, and markets don’t go down in a straight line. Markets in North America were barely able to eek out a gain during February, and now I think we’re at the tail end of that relief period for markets. Much of the recent rally has been spurred by short covering, which forces buyers into the...

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ECB Unveils Ingenious Strategy to Reduce Banking Stress

Trying to prop up confidence by hook or crook. By Don Quijones, Spain & Mexico, editor at WOLF STREET. Things have been pretty stressful of late in Europe’s banking sector. The introduction of the banking union’s bail-in rule has caused bondholders and stockholders to have second thoughts. The Euro Stoxx Banks Index has plunged 20% year-to-date despite the recent rally, and is down 38% since July. Many of the worst affected bank stocks are those of so-called systemically important...

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