Dairy Futures Continue to Escalate

Ukraine Conflict Crushes Stocks

News that the Ukraine military attacked a Russian convoy of 300 semi-trucks sent stocks from bullish to bearish within minutes.

Consumer Confidence Slips

And Stocks Rise on This News

Copper Futures Offer Dour Warning!

"Copper futures slid more than 1 percent Wednesday, falling to the lowest level since late June as investors looked at an increasingly dour picture for global growth.
According to data released Wednesday, China's industrial production rose 9 percent in July, and its retail sales rose 12.2 percent. Both numbers missed expectations. And in more bad Chinese news, new loans for July fell nearly 70 percent from June." CNBC

Stocks Plunge on War Worries

Russia is massing troops on the border of Ukraine. Invasion may be imminent!

Trading ETFs Vs Futures

by Jeff Carter:

In the comments, and in my email I received corrections on my math.  That 500 SPY equal 1 ES.  That changes the calculation on my profit/loss.   Also in calculating the emini profit, I made the mistake of calling a 5 lot emini trade a “one lot” trade.  My confusion came from 5 ES=1 SP.
The advantages of futures are these:
1.  lower commissions
2.  little or no slippage, no trading against your order, no internalization of your order.
3.  more bang for the buck, you are able to control a lot of stock for smaller money.
4.  ability to trade 24/7
5.  Faster electronic systems. Futures platforms are speedier for the retail trader.
6.  Better taxation
ETF advantages
1.  Less volatility; the market isn’t as highly leveraged
2.  More accessible through more retail platforms.  Your broker might not offer futures.
3.  If you decide to step up your size, your commission rate can go down.  In futures to get rates down you must lease or purchase a seat at a futures exchange.
Original Post with corrections below (corrections in italics)
There are a lot of fund manager’s that recommend ETF’s. There are a lot of traders that like trading them, and the retail public seems to like them. ETF’s can be pretty innovative. They allow you to take a flyer on a market segment, while still incorporating Eugene Fama’s efficient market hypothesis(EMH) because you aren’t picking a single stock, but a basket of them.
If you adhere to the EMH, you will be invested in a mutual fund or ETF that replicates that broader market. Buying sector ETF’s allow you to raise the “beta” in your portfolio, assume a little more risk, without assuming the risk of holding one single stock.
However, if you are looking to increase your beta on the entire market, you’d be better off trading futures. If you want to cash in on the commodities craze don’t trade a commodities ETF.  You’ll be better off in the futures market.
Let’s compare and contrast a popular futures contracts with it’s ETF. Everyone knows about the S+P 500. It is the fund manager’s index. The ETF that replicates that index is called the $SPY or “spider”. The futures contract that replicates it is the S+P 500, but there is a bite sized contract called the emini S+P that is exclusively traded electronically.
For this example, assume that you thought the market was going up. We will also assume you are clairvoyant, and bought the low of the day and sold the high of the day.
If you buy a $SPY, the commission rate for a normal trader is $9.99. Some discount houses don’t charge you a commission at all! Of course, that means they are trading in house against your order and giving you a worse price than you would have gotten in the market. Or, they are selling your order to a hedge fund or bank and you still are getting a worse price. Let’s assume your slippage is only one penny, it’s probably a bit more.  There is no free lunch anywhere in the market.  If you are buying 1000 contracts though, it’s still costing you an extra $10 on each side of your trade, or $20 all day.
Yesterday’s $SPY range (2/4/2011) was 130.23-131.20, or .97. If you bought the low and sold the high you made $970. Nice trade! Of course, your commission costs were $19.98, slippage costs $20, leaving you with a profit of $930.02. Uncle Sam wants his piece. That will cost you 35% in the top tax bracket. $325.51 bucks. Your net/net is $604.51. You can still buy the first round of beers at the close.
But, what if you did the same thing in the futures market using an eMini S+P? The cost to trade 1 eMini future is $2.01.  To compare apples to apples, you would have executed a two lot.   2 ES=500 SPY Commission=$4.02. In futures, there is no internalization or payment for order flow.  You play in the same pool with everyone else.  Advantage here is the futures market by $35.97 all in on commissions and slippage.
The range yesterday was 1298-1308.50 If you bought the low, and sold the high you made 10.50. On a  2 lot trade, you made $525.  Less commissions, you made $520.98.  Uncle Sam still wants his piece, but he wants it in a different manner.  Futures are taxed at 60/40.  This means 60% of your gain is taxed at the capital gains rate, 15%, and 40% at whatever the highest tax bracket rate is.  In this case, the highest rate is 35%.  The blended rate works out to be roughly 23% or $119.83.  Your net profit is $401.15.
ETF profit, 604.51.  ES profit $401.15.   $203.36 in favor of the ETF. For every future you add, you get $262.50 added to your profit.   It costs you $2.01 to add.  If you trade 3 futures, the profit is equivalent.
Already I can hear the critics and retail brokers screaming.
Here are some other differences in the markets.  Futures trade 24 hours, and are more volatile than ETF’s.  I’d readily concede that point. Because futures are traded on margin, they have more volatility.  ETF’s margin can only be 50%.  A futures contract will always have more intraday volatility than a cash equity contract.
They will say the ranges of the two products are different, so of course the money will be different.  However, dollar for dollar the all in costs of trading+taxes are significantly higher in the ETF world than the futures world.  Let’s assume I made $1000 bucks in each.  After commissions, slippage and taxes, my take in the ETF would be $624.01.  In futures, $754.52.  You are giving up 21% of your profits for the same analysis that goes into the trade!
You might say, I don’t trade 1000 lots in the stock market.  That’s cool.  You can assume as much or as little risk as you want in the futures trading.  Just remember 1 eMini~ 250 500 shares.  As you trade less, the advantage swings to futures even more, because commission rates get even cheaper by comparison.
The bang for the buck you get with futures, lower all in commissions, and lower taxes gives you incentive to take on that volatility.  Plus, virtually all futures are traded electronically.  You are not waiting to find out if you are filled.  You are filled in the blink of an eye.
The nice thing about ETF’s is that there are so many of them.  They are pretty versatile so you can use different ones to try and take on more risk.  The federal government via the SEC prohibits trading of narrow based indexes.  Exchanges like CME Group and ICE can’t offer a futures contract based on a narrow basket of stocks.  There are ETF’s that you may want to trade that cannot be replicated by futures.
But, if you are going to trade Gold ETF’s you can see from the above example you’d be far better off trading Gold eMini’s.  If you want to trade an Oil ETF, you are far better off trading an Oil eMini.  Take a flyer on a currency?  You are better off trading eMicro’s or eMini currencies at $CME.
You get the picture.  Expand your horizons and you will expand your profitability.

Deteriorating Market Internals

"Historically-informed investors are being given a hint of advance warning here, in the form of a strenuously overvalued market that now demonstrates a clear breakdown in internals. We observe these breakdowns in the form of surging credit spreads (junk bond yields versus Treasury yields of similar maturity), weakness in small capitalization stocks, and other measures. These divergences have actually been building for months, but rather quietly. Note, for example, that as the S&P 500 pushed to new highs in recent weeks, cumulative advances less declines among NYSE stocks failed to confirm those highs, while junk bond prices were already deteriorating. We don’t take any single divergence as serious in itself, but the accumulation of divergences in recent weeks should not be ignored." John Hussman, PhD

"Whatever the crowd wishes to do about it, historically-minded investors should think carefully about whether a strenuously overvalued market with deteriorating market internals is a desirable environment for risk taking. For our part, the answer is a resounding “No.” John Hussman, PhD

See-Saw Day On Wall St

It was up. Then it was down. Now, it's up again, but not enough to push stocks into the green for the day!

Stocks Collapse Following Good News?

This may seem strange, but one day after GDP growth of 4% was announced, the stock market plunged 317 points. Is this the beginning of the consequences for so much market manipulation by the Fed?

"U.S. stocks sustained heavy losses on Thursday as traders ditched a wide swath of assets, leading the blue-chip average to hit the flat-line for 2014." Fox Business

Cost of Beef Goes Parabolic

This is hard to believe, but it's real.
Jason Lusk:

• "That leaves supply-side issues.  Cattle inventories are at their lowest level since the 1950s. Because of technological advancement, we don't need as many cattle today today to produce the same amount of beef as we did in 60 years ago.  Still, fewer cattle numbers means less beef, and less beef supplied means higher prices.  Contraction in cattle supplies can be explained by a number of factors, such as drought in the plains states that limited the amount of grass and hay available and higher feed (mainly corn) prices due to drought, ethanol policy, etc., which pushed pushed more cattle to slaughter several years ago, leading to smaller inventories today.  Feed prices have now come down off their highs but cattle prices are still rising, partially because producers are holding back breeding stock to rebuild inventory.  Still, if high feed prices were THE answer, I would have expected chicken prices to rise in tandem with beef and pork (at least over part of the period), but as the above graph reveals, they didn't."

"In short, the reasons are: (1) supply and demand, which has been affected by weather and increased Asian demand, (2) government intervention, and (3) crony capitalism."
Why Beef Prices Are So High

Bad News, Stocks Drift Modestly Lower

"Crippling Blow" to Obamacare

From CNBC:
"In a potentially crippling blow to Obamacare, a federal appeals court panel declared Tuesday that government subsidies worth billions of dollars that helped 4.7 million people buy insurance on HealthCare.gov are illegal."

Why Collapse Becomes Inevitable!

Charles Hugh Smith:
"It's easy to see what's happening with debt and the real economy (as measured by GDP, gross domestic product): debt is skyrocketing while real growth is stagnant. Put another way--we have to create a ton of debt to get a pound of growth."

Signs of An Approaching Stock Market Top?

Wall St insiders know that once John and Mary Mainstreet pile into the market, the time is now to get OUT. They're jumping ship like rats, while the small investors on Main St piling into the market. One reason for this is that there's not big piles of cash left to keep pushing the market still higher. Once John and Mary pile in, who's left with mountains of cash to keep buying and pushing the market higher?

Look at the chart in this article that shows that just as the Wall St bankers are jumping OUT, small "retail" investors from Main St are finally (foolishly) piling in. This phenomenon has existed for generations in history. Many on Wall St know that this is a sign of an impending top. That's why this article was written to talk about it.

 "Individual investors are plowing money back into the U.S. stock market just as professional strategists say gains for this year are over. About $100 billion has been added to equity mutual funds and exchange-traded funds.
Professional investors, such as Nick Skiming of Ashburton Ltd., say that individuals investors are attracted to stocks after seeing others getting rich from a big rally, a time when equities are usually overpriced. The bursting of the technology bubble in March 2000 was marked by mutual funds absorbing a record $102 billion in the first quarter."

It's a commonly-understood phenomenon on Wall St that as the "dumb" money, as they often call it, or "retail" investors -- unshophisticates -- pile into the market, a market top is soon coming. These small investors tend to wait far to long to get in, and far too long to get out! They tend to lose lots and lots of money.

Goldman Sachs, by the way, internally refers to these people -- their own clients -- as "muppets". A Goldman insider blew the whistle on this a few years ago and revealed the true collusion on Wall St against small investors.

What A Bubble Looks Like!

While Janet Yellen can continue in denial, just as her predecessors have done, in perpetuity, just about any reasonable person would look at this chart of the current S&P 500 stock index and see a market priced in bubble territory.

Dose of Reality Hits Wall St?!

This morning, as the National Federation of Independent Business released its survey showing that 6 of the NFIB's 10 indicators decreased, with about half of the decline in the overall index due to less confidence in future business conditions, perhaps a dose of reality is hitting Wall St.
We're now in the 2nd half of 2014, and for the first six months, Wall St has been bidding up the stock market in expectation of a break-out higher for the global economy. This morning may be the first of a forced dose of reality for the Fed-pumped delusions of Wall St. It's not going to happen!

Beef Prices Hit Velocity Higher

US Economy Stagnates Even As Inflation Accelerates

Stagnation is here! And the Fed created it!

Go Vegetarian or Starve

I don't buy beef any more. I'm not vegetarian, but I don't buy beef. It's too expensive. This chart shows why. This is the price of cattle futures over the past year. And the price of beef is only accelerating higher!