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Gfp old chap, how do you be? How is our resident science nerd, conspiracy theorist, and gun enthusiast doing (and fellow music appreciator)? Glad to see you keeping up with things.
My latest venture is etrm. They just got fda approval for a novel medical device to treat obesity. The device (the "Maestro", in part) is placed in the abdomen and has electrodes which send nerve impulses to your brain to tell you that you're full. With pills and riskier invasive surgeries the primary medical options, this could really find a niche. I bought at 1.38, after it spiked to 2.04 on the approval, and now it is practically trading at the pre-approval price. The stock has mostly been a dog for years. The market is underwhelmed, but I think they could be a sleeper.
My handle is haysaw, and I too, am a cortex loser :)
We are the Confederacy of Dunces, welcome...
Hi gfp:
Curious to know if you own CTIX? It seems off the radar for most, and abhorred by others as a "scam". I've owned since August and am rather excited about Brilacidin prospects.
My credentials, however, are pretty bad... I still own some Cortex stock and initially bought in 2004, so I recognize your alias.
US Dollar (UUP) - Jim Rickards' take on the situation with the surging dollar -
He said the US Fed is fearful of deflation and desperate to re-inflate the world's economies, and therefore has engineered the higher dollar as a helping hand to other countries to get their export economies moving again via a lower exchange rate for their currencies.
That makes some sense, although as an intelligence asset and quasi 'spook', Rickards only goes so far in his various analyses. In his discussions there are a lot of areas he chooses to either obscure or not go into at all, but you can sense that he knows a whole lot more. He talks freely about the IMF bailing out the Fed during the next financial crisis, the SDR replacing the dollar as the world's reserve, etc. But he never hints that any of this could be orchestrated, only that it will be a bonafide massive crisis and there will be no other choice.
But rather than waiting for the inevitable, and risk an out of control situation, more likely they have a preemptive plan to transition to the SDRs before some unplanned black swan event comes along. There's a lot less risk of losing control if you induce a crisis early and then guide the transition process to the desired outcome.
Oil (OIL) - As a contrarian play, it looks like we're being presented with a big opportunity once the oil price finally reaches bottom.
The US and the Saudis have apparently not intervened to stop the oil price collapse, so there are numerous theories out there -- the US wants to punish Russia over Ukraine, the Saudis want to punish Russia for supporting Syria and Iran, the Saudis are trying to make US shale oil production unprofitable, etc. These all make some sense, but being ever the conspiracy buff, I'm still trying to figure what higher goals the nefarious gnomes of the NWO might be shooting for. Beyond just punishing Russia, the US may have in mind an actual regime change in Russia to force Putin out.
But the goal may be much bigger than that. With all the high yield bonds and energy related derivatives out there (trillions), it would seem highly risky to allow an oil price collapse of this magnitude, unless it might be used as the trigger to bring in the IMF/SDR scheme. Or perhaps the oil collapse will be used by the Saudis to start accepting payment in non-dollars, thus ending the petrodollar system, also leading to the IMF/SDR scenario. In any event, it's tough to imagine that a collapse in oil this huge won't eventually produce major fallout within the highly leveraged financial world.
Jim Rickards recounts how the Long Term Capital hedge fund collapse (1998) almost brought down the world's financial system (Rickards was the general counsel for Long Term Capital, and was chief negotiator for the bailout). He said it snowballed out of the Asian and Russian financial crises of 1997/98, so the current collapse in oil could produce a similar collapse in some hedge funds or bond portfolios, which then snowball into a major global meltdown. This would be the perfect excuse for the financial crisis that leads to the IMF bailout of the Federal Reserve and the forced adoption of the SDR system.
>>> The Swiss Franc Chaos Shows Why Negative Interest Rates Don't Work
http://finance.yahoo.com/news/swiss-franc-chaos-shows-why-181200415.html
Not long ago, a theory was floated that to avert an economic crisis, all central banks had to do was cut interest rates below zero and this would boost growth. That theory was then put to the test in the eurozone and Switzerland. And now, it's failing.
In June 2014, the European Central Bank (ECB) decided to cut its deposit rate (the interest rate that it pays on reserves held by the central bank) to -0.10%. In September, this was cut again to -0.20%.
The theory was that charging banks for holding money with the central bank would force them to seek better returns elsewhere, either through investing in productive assets in the monetary union or transferring their money to safe assets overseas. In the first case, the additional productive investment would help drive up growth directly whereas in the second the capital outflows would help weaken the currency and make the region's exports more competitive — also improving its growth prospects.
So what happened?
Well the investment channel didn't exactly deliver. Data released in December showed Euro-area investment contracted for a second consecutive quarter, falling 0.2% in the three months to the end September after a 0.6% fall over the previous period.
But that was only one of the possible ways in which negative rates might be expected to boost growth. As the theory suggested, negative rates did have an impact on the currency helping to force the euro down. Here's how it performed against the dollar:
The precipitous falls against other major currencies did seem to have an effect. For example, Germany, Europe's largest and strongest economy, has been able to maintain a substantial trade surplus (meaning the value of exports has been greater than the value of imports) despite the ongoing weakness of some of its regional trading partners in Southern Europe as well as slowing growth in major emerging markets including China and Russia.
As far as the theory went, it seemed things were going (roughly) to plan. All that needed to happen now was to wait for the growth to come through and the eurozone crisis would finally be over.
Except, the growth prospects for the eurozone weren't getting any better. In fact, they appeared to be getting worse. Why? Well, much of the money being generated from this trade appeared to be going back into foreign safe assets such as US Treasury bonds or into local safe havens such as German government debt.
This helped drive down the interest rates on that debt, driving a large chunk of it into negative territory. That is, investors have started paying the German government to hold their money for them.
Below is a chart of the German 5-year government bond yield:
Yet instead of using this effectively free money to invest, the German government has decided in its wisdom to squirrel the money away using it to run a budget surplus. In essence it is saying that it can't find any major projects in the whole of the monetary union where it is likely to get a return greater that zero. Hardly a ringing endorsement of the region's prospects.
Meanwhile much of Southern Europe is being forced to try and run budget surpluses in order to put government debt dynamics back onto a sustainable path — and so have little scope to invest themselves.
But, although the positive aspects of negative rates failed to materialise, the negative spillover effects are certainly in evidence. The money flooding out of the eurozone needed a new home and much of it ended up moving into Switzerland, helping to drive up the value of the Swiss franc against the euro.
Why the Swiss central bank removed its CHF peg: Inflows had just begun once again, after stopping in 2012.
— Evan Soltas (@esoltas) January 15, 2015
This poses big problems for the Swiss central bank. As they said in 2011 when they imposed a cap for how much the Swiss National Bank (SNB) would allow the currency to appreciate against the euro: "The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development."
Interestingly, the SNB also imposed negative interest rates on deposits in December last year to -0.25% — though this time in an effort to halt the pace of capital inflows into the country. In other words, they were signalling that they would charge investors even more than the ECB was prepared to for their safe haven status.
Today it attempted to offset the impact of abandoning the currency cap, which was becoming prohibitively expensive for the central bank to maintain with market expectations of ECB quantitative easing weakening the euro further, by jamming down interest rates on deposits even more — to a historic low of -0.75%. And here's how that went — the currency still surged:
As long as there is a risk of further major shocks in the eurozone it will be extremely difficult to stem capital flows into perceived safe havens such as Switzerland — indeed they might well increase from here. After all, what is losing 0.75% on your Swiss franc savings compared with the erosion of your euro purchasing power as the latter weakens?
The lesson here? Beware those advocating one easy answer to all your problems. Negative rates are great in theory, but in the messy reality of financial markets they can prove highly disruptive and counterproductive. If it is going to get itself out of its current mess, Europe will need more coordination between the central bank and governments. <<<
>>> “Ides” by Bill Gross
http://yfceditorschoice.tumblr.com/post/107325954946/ides-by-bill-gross
This article was originally posted on Janus Capital Group’s site. Yahoo Finance received permission to publish it here:image
A January Investment Outlook should normally be filled with recommended “do’s and don’ts,” “picks and pans” and December 31, 2015, forecasts for interest rates and risk assets. I shall do all of that as usual when I travel to New York City for the annual Barron’s Roundtable in a few weeks’ time. That is always an opportunity for me to engage in verbal jousting with Marc Faber, Mario Gabelli and the usual bearish forecast from the Gnome of Zurich, Felix Zulauf. So I’ll leave the specific forecasting for a few weeks’ time and sum it up in a few quick sentences for now: Beware the Ides of March, or the Ides of any month in 2015 for that matter. When the year is done, there will be minus signs in front of returns for many asset classes. The good times are over.
Timing the end of an asset bull market is nearly always an impossible task, and that is one reason why most market observers don’t do it. The other reason is that most investors are optimists by historical experience or simply human nature, and it never serves their business interests to forecast a decline in the price of the product that they sell. Nevertheless, there comes a time when common sense must recognize that the king has no clothes, or at least that he is down to his Fruit of the Loom briefs, when it comes to future expectations for asset returns. Now is that time and hopefully the next 12 monthly “Ides” will provide some air cover for me in terms of an inflection point. Manias can outlast any forecaster because they are driven not only by rational inputs, but by irrational human expressions of fear and greed. Knowing when the “crowd” has had enough is an often frustrating task, and it behooves an individual with a reputation at stake to stand clear. As you know, however, moving out of the way has never been my style so I will stake my claim with as much logic as possible and hope to persuade you to lower expectations for future returns over the next 12 months.
My investment template shares a lot in common with, and owes credit to, the similar templates of Martin Barnes of the Bank Credit Analyst and Ray Dalio of Bridgewater Associates. All three of us share a belief in a finance-driven economic cycle which over time moves to excess both on the upside and the downside. For the past few decades, the secular excess has been on the upside with rapid credit growth, lower interest rates and tighter risk spreads dominating the long-term trend. There have been dramatic reversals as with the Lehman Brothers collapse, the Asia/dot-com crisis around the turn of the century, and of course 1987’s one-day crash, but each reversal was met with a new and increasingly innovative monetary policy initiative on the part of the central banks that kept the bull market in asset prices alive.
Consistently looser regulatory policies contributed immensely as well. The Bank Credit Analyst labels this history as the “debt supercycle,” which is as descriptive as it gets. Each downward spike in the economy and its related financial markets was met with additional credit expansion generated by lower interest rates, financial innovation and regulatory easing, or more recently, direct central bank purchasing of assets labeled “Quantitative Easing.” The power of additional and cheaper credit to add to economic growth and financial asset bull markets has been underappreciated by investors since 1981. Even with the recognition of the Minsky Moment in 2008 and his commonsensical reflection that “stability ultimately leads to instability,” investors have continued to assume that monetary (and at times fiscal) policy could contain the long-term business cycle and produce continuing prosperity for investors in a multitude of asset classes both domestically and externally in emerging markets.
image
There comes a time, however, when zero-based, and in some cases negative yields, fail to generate sufficient economic growth. While such yields almost automatically result in higher bond prices and escalating P/E ratios, their effect on real growth diminishes or in some cases, reverses. Corporate leaders, sensing structural changes in consumer demand, become willing borrowers, but primarily to reduce their own outstanding shares as opposed to investing in the real economy. Demographics, technology, and globalization reversals in turn have promoted a sense of “secular stagnation” as economist and former Treasury Secretary Larry Summers calls it and the “New Normal” as I labeled it as early as 2009. The Alice in Wonderland fact of the matter is that at the zero bound for interest rates, expected Returns on Investment (ROI) and Returns on Equity (ROE) are capped at increasingly low levels. The private sector becomes less willing to take a chance with their owners’ money in a real economy that has a lack of aggregate demand as its dominant theme. Making money by borrowing at no cost for investment in the real economy sounds like a no-brainer. But, it comes with increasing risk in an environment of secular stagnation, demand uncertainty, and with the ROI closer to zero itself than an entrepreneur is willing to bear.
And so the miracle of the debt supercycle meets a logical end when yields, asset prices and the increasing amount of credit place an unreasonable burden on the balancing scale of risk and return. Too little return for too much risk. As the real economy of developed and developing nations sputter, so too eventually do financial markets. The timing – as mentioned previously – is never certain but the inevitable outcome is commonsensically sound. If real growth in most developed and highly levered economies cannot be normalized with monetary policy at the zero bound, then investors will ultimately seek alternative havens. Not immediately, but at the margin, credit and assets are exchanged for figurative and sometimes literal money in a mattress. As it does, the system delevers, as cash at the core or real assets at the exterior become the more desirable holding. The secular fertilization of credit creation and the wonders of the debt supercycle may cease to work as intended at the zero bound.
Comprehending (or proving) this can be as frustrating as understanding the differences between Newtonian and quantum physics and the possibility that the same object can be in two places at the same time. Central banks with their historical models do not yet comprehend the impotence of credit creation on the real economy at the zero bound. Increasingly, however, it is becoming obvious that as yields move closer and closer to zero, credit increasingly behaves like cash and loses its multiplicative power of monetary expansion for which the fractional reserve system was designed.
Finance – instead of functioning as a building block of the real economy – breaks it down. Investment is discouraged rather than encouraged due to declining ROIs and ROEs. In turn, financial economy asset class structures such as money market funds, banking, insurance, pensions, and even household balance sheets malfunction as the historical returns necessary to justify future liabilities become impossible to attain. Yields for savers become too low to meet liabilities. Both the real and the finance-based economies become threatened with the zero-based, nearly free money available for the taking. It’s as if the rules of finance, like the quantum rules of particles, have reversed or at least negated what we historically believed to be true.
And so that is why – at some future date – at some future Ides of March or May or November 2015, asset returns in many categories may turn negative. What to consider in such a strange new world? High-quality assets with stable cash flows. Those would include Treasury and high-quality corporate bonds, as well as equities of lightly levered corporations with attractive dividends and diversified revenues both operationally and geographically. With moments of liquidity having already been experienced in recent months, 2015 may see a continuing round of musical chairs as riskier asset categories become less and less desirable.
image
Debt supercycles in the process of reversal are not favorable events for future investment returns. Father Time in 2015 is not the babe with a top hat in our opening cartoon. He is the grumpy old codger looking forward to his almost inevitable “Ides” sometime during the next 12 months. Be cautious and content with low positive returns in 2015. The time for risk taking has passed.
-William H. Gross
Jan 6, 2015
<<<
TSLA - Tesla just had a 'death cross', the first one since it's 'golden cross' in late 2012 which started its meteoric 10 fold rise. Elon Musk recently said they won't reach profitability until 2020.
The main indices (SPY, DIA) have formed a bearish Head and Shoulders pattern over the last several months. Currently trading right near the neckline support area (which is sloped), which is right near the early Jan lows. After that the next support is the Dec low and then the 200 MA.
The charts have been looking toppy for some time, barely making the news highs and then quickly falling back. So a choppy / toppy looking market.
Will be interesting to see if the breakout in Gold will hold, and if the dollar will continue its climb. At this rate the dollar and Euro will be at rough parity by Summer, and from a conspiracy angle that parity might help in the transition to the new SDR system, similar to the currency harmonization process that led up to the establishment of the Euro.
Motif Investing - make your own ETF for $9.95 -
>>> Addicted to Caffeine, Love Drones, Scared of Ebola? There's a Motif for that!
Yahoo Finance
By Milanee Kapadia
November 7, 2014
http://finance.yahoo.com/news/addicted-to-caffeine--love-drones--scared-of-ebola--there-s-a-motif-for-you-211121895.html
Motif Investing is a company that gives investors a low-cost way of creating their own portfolios or motifs - disrupting the traditional broker model. The company has JP Morgan (JPM) and Goldman Sachs (GS) as backers and cracked CNBC’s 2014 Disruptor 50, coming in at number 4.
Motif allows investors to create their own fund by selecting up to 30 stocks or ETFs based around a theme or an idea. Some of the Motifs available include “Caffeine Fix“ (coffee stocks), "Modern Warfare” which focuses on companies that make smart bombs and drones and “7 Deadly Sins" which includes fast-food companies, cigarette makers and gun manufacturers. The most recent is “Fighting Ebola.” The basket contains stocks that rallied heavily from the spread of the virus such as hazmat-suit maker Lakeland Industries (LAKE) and other drug makers (some money earned from the Motif will be donated to Doctors Without Borders).
Hardeep Walia, the CEO of Motif Investing and a former Microsoft (MSFT) executive says Caffeine Fix is doing quite well (see chart below). “It’s up 40 points for the year. That’s compared to 17 points for the S&P 500 (^GSPC) index. It's those kinds of motifs -- that are ideas that you’ve probably thought about, but it takes time," says Walia. "It’s expensive to invest in this; we try to make it super easy,” he explains. Walia says it took the brain trust in his company a year to build 120 pre-made Motifs after the firm launched in 2013. In the same time period, his customers built 75,000.
The main difference between a motif and an ETF is price. If you built a 30-stock portfolio on your own, each trade could cost around $10, totaling $300. But Motif Investing charges you a flat price of $9.95 for the entire basket. The company also allows investors to dollar invest -- they can plug in as little as $250 or as much as a million dollars.
Motif Investing also has a royalty fee system in place. Walia says once an investor creates a custom motif, they can share it on their social media and get paid if someone else buys their motif.
Walia says the beauty of Motif Investing is that folks are actually making money on quirky ideas. “If you go to our site, you’ll see people making 50-60 percent returns on their motifs, a lot of them are actually professional money managers and they’re doing this for fun. Even an average investor can do well. It’s all about finding something you care about.”
<<<
CTIX - more dumping today, down to 2.90 currently. Listening to last week's investor presentation, I didn't notice any obvious problem other than the FDA had apparently requested more data analysis from the Brilacidin Phase 2 prior to their giving the OK for the Phase 3.
CTIX only had $7 mil in cash at the end of Q3, so the current selloff is most likely related to an upcoming financing. Looking at the SEC filings, in Nov they had a registration related filing, so one would expect some type of financing to be announced soon.
Gold (GLD) blew right thru the 200 MA today, so an impressive move, especially considering the dollar is also up.
Silver also making a big move, up almost 5% today. Silver had formed a double/triple bottom since Nov, and is now back up to the upper edge of the October trading range. Next resistance is the 200 MA (17.75 for the SLV, with current price of 16.97.
So looking like Gold and Silver have put in bottoms, at least for now. Will undoubtedly get some back/filling and re-testing in the weeks ahead, but chartwise it looks like a new uptrend might be in the works after the 3 year downtrend.
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