Troubling Headlines

The Lay-Offs Begin

US Macro Data Weakens, Even As Stocks Rally!

THE TRUTH! While the Prevaricator President and Fed Chair Janet Yellen tell us that the US economy is strengthening, the economic macro data tells us the opposite is true. This shows the weakening macroeconomic data (shown in red), overlaid with the S&P 500 stock index (green).
Meanwhile, the percentage of American adults with jobs is at 38-year LOWS!

Wall St Rejoices at Higher Crude, Gas Prices!

The Dow is up over 350 points in two days, due to the rise of crude oil prices above $51/barrel, up more than $7/barrel since last Thursday. In their short-sighted way, they view high gas prices to consumers as good because it helps to keep high-paying jobs alive in the energy sector. But did they miss the impact on the rest of the economy?

Price of Crude Oil Explodes Above $50

The price of crude oil has exploded higher in the past two trading sessions, and Wall St is viewing this as good news!

Stocks Drop, Then Rally Following Bad News

 So naturally, with a QE-addicted market now, stocks RISE following such news.

But perhaps investors didn't hear also the news that corporate earnings are also collapsing. But who cares? After all, we have printed prosperity now!

Stocks Plunge Sharply

There was a rally, but in the end, stocks closely sharply lower -- Dow down 291 points.

Stocks Leap on ECB Plan to Monetize More Debt

Stocks rise 275 points based on nothing but the announcement of central bankers to print even MORE money to monetize European government debt!
This is the new entitlement for the super rich on Wall St. Free money for Wall St!

After all, if you can create money out of thin air to monetize debt and create asset bubbles ad infinitum, then why not? Who cares if all those bubbles eventually crash?

Who needs an economy? Who needs jobs? Who even needs reality? We have PRINTED prosperity now!

 

What Are the Bond/Debt/Credit Markets Telling Us?

This chart shows the US 10-year treasury futures for the past 15 months. The steady rise is one that depicts worry -- lots of it! Savvy investors buy bonds as a place of refuge when they're worried. The huge spike at the far right suggests that big money investors are gravely concerned about the safety of their money. That's why they buy what they view as a "safe bet" investment.

The message here? Be afraid! Be very, very afraid!

Stocks Crash Following Jobs Report

Stocks Sink!

So Which Economy Is It?

It's the Obamalaise Economy! Perpetual malaise! Even while the Propaganda Press tells us it's all great!

More news you WON'T hear in the Propaganda Press!

This morning, the US Bureau of Labor Statistics told us that job growth last month was the most in almost 3 years. Not so fast! Look at the jobs created! Low-wage, temporary, retail! Ie., SUBSISTENCE jobs, not breadwinner jobs!
We should always remember that payrolls are one of the MOST lagging of indicators. Often payrolls rise at the start of a recession. Payrolls typically only crash months after a recession begins.

"But, but, but payrolls data was awesome!! /He was saying that in satire./ US Factory Orders tumbled 0.7% in October (missing 0.0% expectations) for the 3rd month in a row (for the first time since June 2012). Rather notably, the only other time we had 3 straight months of factory orders declines was in the recession..." Tyler Durden @ Zero Hedge.

Gold Soars As US Government Prints Money

from Sputnik Int'l:
“We have seen a lot of the physical gold go from the West to the East and I’m sure that the central banks do not have anywhere near the gold they should have,” Egon von Greyerz said, explaining that China has been one of the largest buyers of gold recently, and asked for a physical delivery.
“It will be significantly high, definitely,” he said commenting on the price of gold in the future. “And the wise countries in the world, which is Russia, China, India – they understand this and they accumulate gold and buy more. Russia is continuously buying more, they understand what is happening.”

Gold has soared $67/oz today off it's lows! Wow! 

Wheat Soars

from Reuters:

"...wheat hovered near three-months highs, supported by concerns over
potential supply disruptions from Russia."

from Agrimoney:

"Wheat futures soared to $6 a bushel for the first time since June, boosted by concerns of a squeeze on Russian exports, and stealing
thunder from a Rabobank recommendation of the grain as a bullish bet." 

Tumbling Treasuries

This will NOT help the weak housing market!

Wall St Sees Cheap Labor

...and Obama sees 5 million new marxists -- er, I mean Democrats! The pink line is yesterday's close!

Is This a Bubble?

The last two stock market crashes since the year 2000 were bubbles. Yet today, we're told that this isn't a bubble. Despite that during both previous stock market rallies, the US economy was much stronger than it is today, we're being told that this is no bubble today! Those who tell us this are part of the cheerleader group, which itself is a sign of a bubble!

Crude Oil Collapses

As the world economy stagnates, demand declines, and production produces a glut, the price of crude oil is collapsing.

Wall St Plunges On Global Growth Concerns

from Fox News:

Crude Crushed, Corn Clobbered

Corn hit multi-year lows today. I believe this is the lowest price for corn I've seen in two years!

Crude oil declined $3 today. That's a sizeable drop!

Record Corn, Soybean Crops Crush Prices

from Yahoo Finance:

New York (AFP) - US corn and soybean crops could break records this year, but for farmers the bounty has a dark side: falling prices and a logistics nightmare getting crops to market...

" The US Department of Agriculture is forecasting record crops this year for corn and soybeans, the two largest US crops in terms of production. Unless there is a devastating freeze or torrential rains before the harvest ends, corn production is projected at 366 million tonnes and soybeans at 106.5 million tonnes."

Corn:

 Soybeans:

Crude Spikes on OPEC Threat to Restrict Production

from Business Recorder:

NEW YORK: Brent and US crude futures rose more than a dollar on Tuesday on the prospect of a possible OPEC production cut and on news that Libya curbed output after rockets hit an area near a refinery.
Oil prices received more lift when Russia said deploying troops in Crimea, which Russia annexed from Ukraine in March, was a top priority with NATO holding military exercises in the Ukraine near its border with Poland.

Weak Economic Data Suppress Crude Prices

And this, despite bellicose talk and acts from Russia.

Fin24:
New York - Brent crude fell below $100 a barrel on Monday, the first time in nearly 15 months, before returning to close in three-digit territory but down on the day as fear of Opec output cuts helped the market recover from weak Chinese and US data.
Slower-than-expected growth in the world's top oil consumers, and ample supply, has pushed prices down from a high for the year above $115 in June, complicating central banks' efforts to ward off deflation.

Global Weakness Collapses Copper Prices

Copper tends to be a bellwether commodity because prices tend to reflect overall supply and demand. Here is the headline from FT yesterday:

This chart doesn't show broad-based weakness, at least not yet!

Corn Continues Weak

Bloomberg:
Corn extended a slump to trade near the lowest level in four years on speculation yields in the U.S., the biggest grower, will be bigger than the government estimated last month. Soybeans and wheat also declined.

Sugar Prices to Go Higher

CNBC:
Cutbacks in the world's largest sugar producer could end a multi-year supply glut, sending prices higher next year, according to traders.

 But there is no sign of a price shift yet in this chart!

No Bubble Here. Nope!

ECB Initiates QE

If the economy is so great that the stock market merits new all-time record highs today, then why does the ECB need QE? 

from CNBC:
"U.S. stocks rose on Thursday, lifting the Dow and S&P 500 to records, after the European Central Bank unexpectedly reduced its key rate and announced plans to purchase asset-backed securities to spur economic growth."

ISM Does "Seasonal Adjustments" Too!

And I thought that only the government manipulated the economic data!

from Zero Hedge:

Moments ago, the Institute for Supply Management, reported some blistering numbers in the August Non-Manufacturing Report, whose headline print rose once again, this time to 59.6, or the highest since August 2005. Not only that, but the all-important employment component, ahead of tomorrow's NFP report, which also rose to 57.1, printed at what, at least on the surface, was the highest number since February 2006!


Superficially, this is great news. And yet, remember: this is the seasonal-adjustment challenged ISM, the same ISM which for some inexplicable reason believes that survey responses (not hard, or soft data), have to be seasonally adjusted.
So what happens when one looks below the seasonally-adjusted surface. Well, then things get uglier.
In fact, if one looks at the two most important data series that comprise the ISM report, New Orders and Employment, one sees that the number of respondents who reply with "Higher", i.e., are optimistic about current conditions, is actually sliding at the fast pace in a year!
Specifically, the number of respondents who saw "Higher" employment dropped to just 22, a plunge from the 26 in July and 29 in June. This is happening as the actual number, net of seasonal adjustments, rose to, as noted above, the highest since 2006! It was also the lowest number since February when the unadjusted % of respondents seeing "Higher" jobs was at 16.

What about New Orders? Pretty much the same thing: at 29 responding "Higher", this was the drop from the 32% in July, the 31% in June and 36% in May. In fact, a print of 29% was matched for lowest since March of 2014! Quite a bit of difference from a headline, adjusted number which is near the highs of a decade.

So, if for some reason you lose your job because your employer doesn't share the S&P's enthusiasm about the economy, just tell them to seasonally adjust the pink slip to a bonus check - the strategy seems to be working for everyone else, so why not for Joe Sixpack?

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