The Week Ahead: Ed’s Daily Notes for June 9th   Leave a comment

Another quiet weekend, and a quiet week ahead:

MONDAY: Hertz Global Holdings (HTZ) earnings report
TUESDAY: Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) earnings report
WEDNESDAY: H&R Block (HRB) earnings report
THURSDAY: Weekly U.S. Jobless Claims report
FRIDAY: U.S. Producer Price Index for May released

Bloomberg: Shorts Reload in S&P 500 Ritual That Signaled Gain Before

Thank the short sellers for this seemingly eternal bull market:

For five years it’s been the fate of American short sellers to be wrong, as the biggest rally since the Internet bubble steamrolled defensive trades.

They’re loading up again, sending bearish wagers in the SPDR exchange-traded fund tracking the Standard & Poor’s 500 Index (VIX) to almost 11 percent of its shares, the highest proportion since 2012, according to data compiled by Bloomberg and Markit Securities Ltd. Bets against a technology ETF are 67 percent above the 12-month average.

One of the best things you could do in the stock market over the last three years has been to buy shares from short sellers, who borrow stock with the aim of replacing it once the price falls. After bearishness peaked in 2011 and 2012, the S&P 500 rallied more than 14 percent within six months. With U.S. valuations approaching levels not seen since 2007 and the Federal Reserve scaling back stimulus, the bears are back again.

“That, from a trader’s standpoint, is a bullish sign, because you don’t have too much optimism in the market,” Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama, said by phone. “That there isn’t unbridled optimism shows that there could be more upside.”

Here’s a scary thought for you: What happens when the short sellers quit reloading?

Business Week: Transatomic Power’s Safer Reactor Eats Nuclear Waste

The article above describes an interesting company with an interesting new nuclear power technology:

Transatomic’s design has several advantages over conventional reactors, Dewan says. Molten salt reactors can tap more energy in fuel and use it for decades, compared with four or five years in reactors today. That means they need less enriched uranium, reducing the risk of fuel being stolen to make bombs. Transatomic’s reactor would cost half as much per gigawatt of electricity as conventional reactors, Dewan says.

Of course, there is bad news:

Transatomic also faces hurdles in Washington. The U.S. Nuclear Regulatory Commission, which approves current generation reactors in the U.S., has no procedure to green-light advanced designs. “Innovation means slower review at the NRC, and that means death” for novel proposals, says Sam Thernstrom, executive director of the Energy Innovation Reform Project in Washington.

Leave it to Washington to screw up a good idea.

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Posted June 9, 2014 by edmcgon in Economy, Market Analysis, News, Technology

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