Archive for March 2014

March 31st: Ed’s Daily IRA Summary   1 comment

EUM: -0.21 to $26.45 ( -0.79% , -3.61% overall)– bought at $27.44

OVERALL: -0.12%

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Posted March 31, 2014 by edmcgon in Open Thread, Portfolio

Sell iShares iBoxx High Yield Corporate Bond (HYG)   Leave a comment

I decided to sell my iShares iBoxx High Yield Corporate Bond (HYG) etf in my 401k, mainly for safety reasons. It did ok for a place to park my cash for slightly over a month. The final line on it:

HYG: -0.02 in March, +0.01 overall to $94.44 (-0.02% in March, +0.01% overall, +0.50% with dividend)–bought at $94.43

Posted March 31, 2014 by edmcgon in 401(k), Portfolio Moves

Traders Corner   31 comments

I have decided to follow the KISS rule for this post going forward, and just summarize what I see in the technical indicators.

S&P 500 Daily Momentum: Bearish
S&P 500 Daily Overbought/oversold: Neutral
S&P 500 Weekly Momentum: Bearish
S&P 500 Weekly Overbought/oversold: Neutral, leaning overbought
S&P 500 Futures (June): Slightly up
Overall: Look for our usual opening pop, followed by a drop.

The S&P 500 levels to watch today:

UPSIDE: 1862-1863 (3 data points and the 20 day moving average), 1866-1877 (15 data points and February’s high), 1881-1883 (4 data points and the all-time high), and 1885 (top of the Bollinger Bands).
LAST CLOSE: 1857, inside the 1849-1858 (11 data points and January’s high and December’s high) range.
DOWNSIDE: 1839-1842 (4 data points and the bottom of the Bollinger Bands), 1833 (March 3rd’s low and the 50 day moving average), 1819 (100 day moving average), 1779 (150 day moving average), 1775 (October’s high), 1770 (January’s low), 1767 (December’s low), and 1748 (200 day moving average).

The Week Ahead: Ed’s Daily Notes for March 31st   Leave a comment

This should be a big week for markets (good or bad remains to be seen). We kick off the week today with the last day of the month and quarter, as well as Federal Reserve Chairman Janet Yellen giving a speech this morning around 10 am EST. Tuesday, we get the ISM Manufacturing Index. Finally, we will receive the March U.S. Employment Report on Friday.

The big earnings report will be from Monsanto (MON) on Wednesday.

International Business Times: Vladimir Putin ‘Wants to Regain Finland’ Says Close Adviser

One of Russian President Vladimir Putin’s closest ex-advisers has claimed that the ex-KGB agent ultimately wants to reclaim Finland for Russia.

Andrej Illiaronov, Putin’s economic adviser between 2000 and 2005 and now senior member of the Cato Institute think tank, said that “parts of Georgia, Ukraine, Belarus, the Baltic States and Finland are states where Putin claims to have ownership.”

“Putin’s view is that he protects what belongs to him and his predecessors,” he said.

When asked if Putin wishes to return to the Russia of the last tsar, Nicholas II, Illiaronov said: “Yes, if it becomes possible.”

Illiaronov admits that Finland is not Putin’s primary concern at present but, if not stopped in other areas of Eastern Europe, the issue will one day arise. Russian troops are currently massing on the eastern border of Ukraine, following Russia’s recent annexation of Crimea.

At least we know what to expect…

Associated Press: KOREAS TRADE FIRE; ISLAND RESIDENTS IN SHELTERS

Just when you thought the Korean peninsula was getting dull…

North and South Korea fired artillery shells into each other’s waters Monday, a flare-up of animosity between the rivals that forced residents of five front-line South Korean islands to evacuate to shelters, South Korean officials said.

The South Korean artillery fire came after shells from a North Korean live-fire drill fell south of the Koreas’ disputed western sea boundary, an official with South Korea’s Joint Chiefs of Staff said. No shells from either side were fired at any land or military installations, said the official, who provided no other details and spoke on condition of anonymity because of office rules.

I think it’s safe to ignore this for now, but it does demonstrate the hair trigger these two nations have for each other.

Posted March 31, 2014 by edmcgon in Economy, Federal Reserve, News, Politics

Weekend Open Thread   4 comments

I am going to be busy for most of the day, so I probably won’t be making any trades. So I am going to cheat and post the weekend open thread early. Feel free to discuss whatever you like.

I will throw in my normal musical topic, but this week I am featuring one of my favorite 1980’s singers, Taylor Dayne. I saw her live in concert back in the early 90’s, and she put on a good show. Of all the 80’s singers, Dayne had one of the most unique sounds, as well as some powerful vocals, which gave her songs an intensity which many singers lack. My favorite three Dayne songs (although I enjoy all of her songs):

1. Don’t Rush Me (1988): If you listen to the lyrics, this song isn’t really all that special. It is really Dayne’s stong vocals that make it work:

2. Can’t Get Enough of Your Love (1993): How many female singers would dare to take on a Barry White classic? Dayne did, and she was more than up to the task:

3. Love Will Lead You Back (1990): I would be remiss if I didn’t include one of Dayne’s slow songs, and this one is her best, in my opinion. Ironic note from Wikipedia: “On American Idol it has been covered three times, by Carmen Rasmusen (season 2), Mikalah Gordon (season 4) and Karen Rodriguez (season 10). All three were eliminated the next night after their performances of that song.” Take my advice, covering Taylor Dayne can be hazardous to your career. She OWNS her songs!

Have a good weekend folks!

Posted March 28, 2014 by edmcgon in Music, Open Thread

Traders Corner   18 comments

Yesterday was a continuation of bearish momentum in the S&P 500. The only technical note is the oversold/overbought indicators have moved closer to oversold, although they aren’t there yet. However, yesterday’s flirting with the bottom of the Bollinger Bands could be a hint of the next market direction, which would be down. But futures are positive this morning, so expect a move up at the open today. With month and quarter end on Monday, the markets could easily see a bullish move here, as the professionals try to dress up their quarterly numbers. But a Russian invasion of Ukraine could push the markets lower, so sentiment could end up working in two directions. Overall, I lean towards the same kind of market action we have seen lately: Early move up, followed by a fall for the rest of the day.

The S&P 500 levels to watch today:

UPSIDE: 1862-1863 (3 data points and the 20 day moving average), 1867-1877 (14 data points and February’s high), 1881-1883 (4 data points and the all-time high), and 1885 (top of the Bollinger Bands).
LAST CLOSE: 1849, inside the 1849-1858 (10 data points and January’s high and December’s high) range.
DOWNSIDE: 1839-1842 (4 data points and the bottom of the Bollinger Bands), 1834 (March 3rd’s low), 1833 (50 day moving average), 1818 (100 day moving average), 1777 (150 day moving average), 1775 (October’s high), 1770 (January’s low), 1767 (December’s low), and 1747 (200 day moving average).

Ed’s Daily Notes for March 28th   Leave a comment

Sorry, I got busy last night and didn’t post my results yesterday:

EUM: -0.38 to $26.82 ( -1.40% , -2.26% overall)–bought at $27.44
FXP: -1.02 to $69.69 ( -1.44% , -2.05% overall)–bought at $71.15

OVERALL: -0.38%

Now back to the news…

Financial Times: Facebook works on drones and lasers

Facebook is working on drones, satellites and lasers to deliver the internet to far-flung corners of the world, in its second big bet on future technology in a week.

Mark Zuckerberg, Facebook founder and chief executive, said the company was working with leading experts from Nasa and acquiring a team from Ascenta, a five-person UK-based company whose founders helped create an early version of a solar-powered unmanned aircraft.

I look at this and get two feelings about it:

First, is Facebook the next Google? Doing things like this reminds me of some of Google’s far-flung research. Perhaps I underestimated Facebook?

The leads me to my second feeling, where is the dividend? Just like I am anticipating a Google dividend, a company with the money to chase crazy, albeit potentially useful, ideas, also has the money to start paying a dividend. Time to pony up, Zuckerberg.

Bloomberg: Fed of 1970s Shows Capacity May Mislead: Cutting Research

The decision of central banks to focus more on economic slack as a barometer of when inflation will become a problem could backfire, if history is any guide.

The Federal Reserve, Bank of England and European Central Bank have started using the level of spare capacity in their economies as a way to foretell when they will start reversing easy monetary policies. The more capacity, the bigger the output gap between actual and potential economic growth and the longer officials can keep interest rates low because price pressures will be sluggish.

“While this sounds plausible, past experience suggests that central banks tend to hike rates too slowly, with corresponding risks for price inflation,” Christoph Balz and Bernd Weidensteiner, economists at Commerzbank AG in Frankfurt, said in a March 21 report.

…The initial impression was of an output gap of minus 1 percent for 1974, which would have encouraged the U.S. central bank to be “moderately expansionary,” said Balz and Weidensteiner.

In reality, the economy was later shown to have been slightly over-stretched in 1974. Repeating the exercise for 1983, the output gap the Fed would have calculated at the time was minus 1 percent, versus the minus 4 percent it proved to be.

“In other words, a more restrictive policy would have been appropriate in 1974, but in 1983 a more expansionary policy was required,” said Commerzbank. “This demonstrates the uncertainty prevailing when monetary policy conclusions are drawn from the current data set.”

With the Fed’s new lines of communication aimed at damping expectations of rate hikes, the risk is the Fed “will again probably raise rates too late and too cautiously,” said the economists. This time the “greater danger” may be that loose monetary policy fans inflation in asset prices.

In summary, expect the central banks to either over or under-estimate what they should be doing. Whether their miscalculation will show up today, or several years from now, is the only part that remains to be seen.

Bloomberg: U.S. House Poised to Clear Sanctions Called Putin Warning

It seems the U.S. isn’t finished with sanctions on Russia:

The U.S. House of Representatives is ready to clear legislation that would provide aid to Ukraine and impose additional sanctions on Russian officials for the annexation of Crimea.

The House’s next opportunity to act on the bill, which the Senate passed yesterday with broad bipartisan support, would be in a session scheduled for 11 a.m., Washington time, today.

The measure includes about $1 billion in loan guarantees and authorizes $150 million in direct assistance to Ukraine. It would impose sanctions against Ukrainians and Russians deemed responsible for corruption and violence.

…President Barack Obama said in Rome yesterday that the U.S. and its allies are looking at Russia’s military, energy and finance industries as possible further targets if the country moves deeper into Ukraine.

Yet additional sanctions would inevitably also hit the U.S. and European economies, Obama said at a news conference.

“None of them, to have a powerful impact on Russia, are going to have zero impact on us because Russia is part of the world economy,” he said, appearing with Italian Prime Minister Matteo Renzi. “Everybody owns a piece of everything.”

Under the Senate-passed bill yesterday, Russian officials, as well as their close associates or family members, also may be subject to sanctions, which could include blocking access to assets held in the U.S. and prohibiting travel to the U.S.

Meanwhile:

The Daily Beast: Putin Could Invade Ukraine ‘At a Moment’s Notice’

The U.S. State Department believes the Russian army is now prepared to launch an invasion of eastern Ukraine if President Vladimir Putin decides to pull the trigger, according to a senior adminstration official.

“At this point, they are amassed and they could go at a moment’s notice if Putin gave the go ahead,” the official said.

…Top Ukrainian security officials said Thursday that Russia now has 100,000 troops on its side of the Russia-Ukraine border. Other estimates put the number much lower, around 30,000, but still enough to overpower the undermanned and undersupplied Ukrainian armed forces.

CNN reported Wednesday that U.S. intelligence assessments have increased the likelihood that Russia will invade Ukraine in the past week. This has been based on a number of worrying indicators about the Russian military buildup on the Ukrainian border. “This has shifted our thinking that the likelihood of a further Russian incursion is more probable than it was previously thought to be,” one official told CNN.

Russian forces are currently positioned in and around the cities of Rostov, Kursk, and Belgorod and could try to establish a land corridor from Russian to Crimea by attacking the Ukrainian cities of Kharkiv, Luhansk and Donetsk. Russian agents have already been active in that region of Ukraine.

The fact the Russians have increased their military forces on the Ukraine border in the face of so-called sanctions, tells you all you need to know about what Putin is planning. He WILL be invading Ukraine, in order to establish a land corridor to the Crimea.

I would avoid adding any long positions until this happens, because the markets will have a bad reaction.

Posted March 28, 2014 by edmcgon in Economy, Federal Reserve, News, Politics, Portfolio