Posted November 22, 2011 at 10:55 pm
by Paul Weisbruch
This time of year, as we approach colder weather in much of the United States, natural gas exchange traded funds and notes often become more active than usual as traders posture themselves for potential moves in the gas futures markets, which are historically highly related to weather patterns.
Volumes have accelerated recently in these exchange traded products with potential hedging or directional trading strategies being enacted, but largely the funds are toiling at multi-year lows.
For instance, the largest fund that tracks natural gas from an assets under management standpoint with $1.3 billion, U.S. Natural Gas Fund (NYSEArca: UNG), which is structured as an ETF, is down a whopping 34.47% just year to date and is down 92.08% since inception in April of 2007.
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Posted November 18, 2011 at 2:00 am
by Ken Fisher
Today’s biggest investor fear boils down to one thing: recession. While there’s no guarantee that there won’t be a double dip, I can tell you with certainty that another recession now would be unprecedented when you consider the historical evidence.
We have never had a recession after the traditional leading economic indicator (LEI) index has been high and rising for five months. But that’s what is happening today on an absolute and year-over-year basis. For those keen on comparing 2011 with the ugliness of 2007–09, note that the LEI back then had been falling for three years.
One component of the leading economic indicators is the yield curve. Bond investors keep a close eye on this as it illustrates the spread or difference between long-term interest rates and short-term ones. It’s always been low or gone negative before a recession. Now the spread is 220 basis points, or 2.2%. In 2007 it was negative. The Fed is foolishly trying to push the spread down by selling short-term bonds and buying the same amount of long-term, but it’s not working.
Here is another little-noticed piece of evidence [continue]…
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Posted November 17, 2011 at 1:59 am
There’s more than enough room in the tablet space for Amazon’s Kindle Fire and Apple’s iPad because each serves a very different market.
by Michael Comeau
Before we get into today’s hot topic — the supposed war between the Apple (AAPL) iPad and Amazon’s (AMZN) newly released Kindle Fire — I wanted to provide a quick update to my short play on Activision (ATVI) (see “Call of Duty” Blows Up, But Activision Still a Risky Bet).
As I mentioned on the Buzz & Banter this morning, Activision traded down to the ~$12.20 level on news that Vivendi was dumping a 35 million share block on the market.
While I didn’t catch the absolute low, I took advantage of the artificial supply and demand imbalance to lock in a solid gain on my puts. I will look to reload on the short side after the market digests that block.
Remember folks, in a market like this, it’s often better to be lucky than good!
So let’s get down to the fun stuff [continue]…
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Posted November 14, 2011 at 12:22 am
by Charles Sizemore
Twice per year Barron’s runs its Big Money survey in which it asks large money managers their opinion on the market in general and on specific sectors and companies in particular. I get a lot of value from studying the results. I like to see how my own thinking lines up with the Big Money — but not for the reasons you might think.
While institutional managers are often sharper than the average investor, they can be every bit as prone to herding behavior. And when I see signs that the Big Money are all on the same side of a trade — particularly when that trade looks long in the tooth — I look for opportunities to bet the other way.
This is the essence of contrarian investing.
It can be lonely taking the other side of a popular trade, particularly when you’re early or, alas, just wrong. But take comfort in the words of the late Sir John Templeton:
“By definition, you can’t outperform the market if you buy the market. And chances are if you buy what everyone is buying, you will do so only after it is already overpriced.”
Well said, Sir John.
Alas, it appears that we humans are hardwired to think and act as a tribe, rather than as individuals. And money managers in particular are motivated to do so. Think about it. If you bet against the crowd and you’re right, you look like a rock star.
But if you’re wrong, not only do you look like an idiot but you might be out of business. When your performance is based on a benchmark like the S&P 500 you have every incentive to play it safe and match the index. The risk of being wrong is simply too much for most managers to bear.
This is why truly great managers are so rare. Few are [continue]…
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Posted November 13, 2011 at 10:44 pm
from Top Foreign Stocks
The Global Finance magazine has published its first-ever ranking of the Safest Banks in Emerging Markets. While the banking industry in the developed world is struggling to gain some credibility, investors are increasingly focusing their attention on emerging market banks which are much more risk-averse and have better potential for growth.
In fact, many developed banks such as HSBC plc (HBC), Bank of Nova Scotia (BNS), etc. are expanding their operations in emerging countries to earn higher profits.
From the Global Finance report [continue]…
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Posted November 10, 2011 at 2:18 pm
Via MarketMinder.com
Small businesses are a critical component of the US economy. They employ the majority of American workers, innovate, pay taxes and provide products and services critical to daily life.
So it makes sense economists and business groups attempt to put their finger on the pulse of American small business. One such effort, the National Federation of Independent Business (NFIB) Small Business Optimism Index, polls business owners as to their future plans for hiring, expansion, capital spending and general economic conditions.
In October 2011, NFIB found small business owners are, on average, rather glum. The index showed a minor improvement, gaining 1.3 points to 90.2—but that’s below the year-to-date average 91.1, and both are well below the index’s long-term average.
Sentiment regarding planned hiring was particularly dour—only 3% of net respondents indicate they expect to increase employment. In fact, the survey’s employment component has been mired in a range between -3% and +6% since positive private hiring data began in February 2010.
But over the same period, small and medium businesses led US job creation. ADP’s private hiring report indicates small and medium businesses have added 1,126,000 and 1,034,000 jobs, respectively—far eclipsing large employers’ hiring. So like consumer sentiment surveys, it seems watching what small business owners do in aggregate is more important than surveying what they say.
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Posted November 7, 2011 at 12:49 am
by Dimitra Defotis
Next time you need a nice, big bag of alfalfa seeds, head right over to Barnes & Noble.
Quietly, Barnes & Noble’s Website has begun selling all manner of stuff—gardening supplies, high-end blenders, area rugs, you name it. Old-fashioned books and electronic Nooks are only part of the long-term game plan. Evidently, there will also be a place for $29.95 sacks of seeds.
If this strategy sounds familiar, it is. Online books pioneer Amazon.com (ticker: AMZN) is now thriving on products beyond the printed word—everything from kayaks to pearl necklaces. That stuff now accounts for more than half of its revenue.
BN.com is taking exactly the same route as Amazon, offering other sellers’ wares and taking a cut of the sales. It’s a complete copy-cat strategy, and for good reason: Amazon is the Internet bookseller to beat.
Scratch that. Amazon is the company to beat in all of Internet retailing. Barnes & Noble (BKS) is probably smart to follow the leader in these tumultuous times for books. The alternative, as Border’s learned, is to get trampled by the leader.
INVESTORS, TOO, SHOULD WISE UP to the extraordinary power of Amazon. They badly underestimated it last week after the [continue]….
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Posted November 2, 2011 at 12:57 am
by Chris Poindexter
The dollar surged against the Euro as the news surrounding the collapse of MF Global hit global markets like a sledge hammer. Equity markets around the world cratered and trading in grain futures was suspended in many countries, leaving traders holding positions they were suddenly unable to cover.
The European stock market lost over 3 percent in a single day, the U.S. Dow Jones Industrial Average was off 2.26 percent. Futures in U.S. equity markets point to more red ink today.
With the collapse in equities and the stalled trading in commodities, money flowed into the U.S. dollar, sending it sharply higher against the euro and the yen.
The rising dollar combined with interruptions in commodities trading sent precious metals and crude oil prices on a tumble of their own. Gold dipped below $1,700 this morning, dropping $26.94 to $1,687.31, while silver was down $2.00 to $32.20.
The collapse of MF Global revived memories of the collapse of Lehman Brothers in 2008, although it’s too soon at this point to know if there will be a ripple effect collapse of derivatives as there were in U.S. markets. Most experts do not think MF Global represents nearly the threat to markets that Lehman did in 2008.
The biggest problem will be organizing the return of customer assets, but first regulators have to find it. The New York Times reported earlier this week that customer money, supposedly segregated from the trading business, had gone missing.
Not to sound too much like a ghoulish harpy ready to capitalize on the misfortune of others, but the short-term turmoil in the markets could represent a prime buying opportunity for gold and silver collectors. With the commodities markets in turmoil short-term prices could fall even farther before returning to something resembling technicals.
Instead of trying to catch the proverbial falling knife, a series of small buys as prices continue to drop may be a better choice. If you’re planning on just adding to what’s already in your safe, then the timing isn’t as critical. Such obvious opportunities don’t come along in the market every day.
Chris Poindexter, Senior Writer, National Gold Group, Inc
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Posted November 1, 2011 at 3:09 am
by Brian O’Connell
Got $100?
That’s enough for the Department of Housing and Urban Development to approve you to buy a new foreclosed home.
The deal isn’t good for everyone — just certain states are green-lit for the program — but the $100 down payment is a clear sign that the federal government is getting aggressive, maybe even desperate, to unload the foreclosed properties.
Insiders say the government is bracing for a new wave of foreclosed homes that were owned by Countrywide Mortgage, which was bought out by Bank of America. That alone could mean up to 40,000 new foreclosures on the market.
Here’s the deal:
From now until October 2012, consumers can plop down $100 and buy a HUD-owned foreclosed home (the previous minimum down payment amount was 3.5% of the home’s assessed value). If you buy, you have to actually live in the residence (that’s to discourage house flippers) and get financing for the home through the Federal Housing Administration.
There isn’t necessarily a discount on the home purchase, though, as HUD says buyers have to [continue]…
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Posted October 31, 2011 at 2:33 am
by Charles Rotblut
Bullish sentiment, expectations that stock prices will rise over the next six months, reached a six-month high in the latest AAII Sentiment Survey. Optimism jumped 7.0 percentage points to 43.0%. This is the second time in three weeks that bullish sentiment has been above its historical average of 39%.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 2.6 percentage points to 32.0%. This is the first time in 15 weeks that neutral sentiment has been above its historical average of 31%.
Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 9.6 percentage points to 25.0%. This is the lowest level of pessimism since July 7, 2011. Bearish sentiment had been above its historical average of 30% for the previous 14 consecutive weeks.
This week’s numbers are a significant change from the trends we have seen. Bullish sentiment is above average for only the fifth time out of the last 28 weeks. Bearish sentiment is below average for only the fourth time in the past 36 weeks. The spread between bullish and bearish sentiment (the bull/bear spread) is the most positive it has been since February 17, 2011.
Whether this is a distinguishing change in sentiment or just a temporary shift remains to be seen. Pessimism has declined for five consecutive weeks as October’s rebound in stock prices has helped to calm nerves. On the other hand, individual investors remain concerned about [continue]…
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