***Official*** 2016 Stock Market Thread

[holden j caufield]

I looked at NUGT again, it split a few times last year?

Anyone keep track of 3D printing stocks they are all going crazy today.

 

[JEDI]

Well, good luck and hold onto your butts...

http://www.reuters.com/article/us-oil-hedgefunds-kemp-idUSKCN0WV240

Nothing beats some good old commodities speculation. Monday is going to be so fun...

hm.. hedge funds are now at record LONG for oil but...:
Instead of a short-covering rally, the main risk in the short term is now long liquidation if funds try to take some of their profits following the rise in prices.

The biggest price risk comes from long liquidation, either because hedge funds try to book some of their profits or because data on supply and demand fail to live up to expectations.


come on long liquidation at firesale prices.

drop drop drop! (pleaase)

 

[FelixDeCat]

I think there will be disagreement in Doha, oil will back to the 30s. Long next week $5.50 puts on Chesapeake.

 

[JEDI]

I think there will be disagreement in Doha, oil will back to the 30s. Long next week $5.50 puts on Chesapeake.

oh I wish 30s.

I think the market doesn't expect much from Doha and has priced that in already.
so, unfortunately, no upside for shorts in Doha

drop drop drop! (pleaase)


edit:
well someone just dumped 900k contracts a couple of min ago.
that instantly caused a 1% drop in oil.

beginning of the long liquidation?

 

[Imp]

Isn't Singapore some sort of economic indicator for China because one is more trustworthy than the other?

Well, Singapore is having some fun... Their GDP is still positive around 1.8% though.

The Monetary Authority of Singapore moved to a neutral policy of zero percent appreciation in the exchange rate, causing the local dollar to slide...

...the decline in net new businesses for the first time since 2009 signals a possible recession.

Auto-play VIDEO alert:
http://www.bloomberg.com/news/artic...ic-growth-grinds-to-halt-as-services-contract

 

[FelixDeCat]

I only have 5 CHK puts worth about $100 so even if oil goes down a tad after Doha then back UP on a reported inventory shortage next week to $45, I wont lose that much.

I have no other positions at the moment.

 

[FelixDeCat]

:sneaky:

 

[Imp]

Saw a report earlier, apparently the IEA thinks U.S. production will fall off a cliff in the second half of the year. So much so that the current ~1.5M barrel/day surplus will only be a few hundred thousand.... Sounds like bullshit?

Meanwhile, economic indicators everywhere are looking shittier and shittier. S&P 500 looks ready to fall off a cliff. But it's all good...

 

[FelixDeCat]

Saw a report earlier, apparently the IEA thinks U.S. production will fall off a cliff in the second half of the year. So much so that the current ~1.5M barrel/day surplus will only be a few hundred thousand.... Sounds like bullshit?

Meanwhile, economic indicators everywhere are looking shittier and shittier. S&P 500 looks ready to fall off a cliff. But it's all good...

Unemployment keeps falling tho in the US. More workers, more pay, more consuming, good for all of us - right?

I think $40 might be new norm if not higher. (Im cheering for cheap oil, believe me, but I don't see it).

 

[JEDI]

I think $40 might be new norm if not higher. (Im cheering for cheap oil, believe me, but I don't see it).

im gambling for cheap oil and 4 my sake, I better see it! :hmm:

drop drop drop! (pleaase)

 

[Charmonium]

Saw a report earlier, apparently the IEA thinks U.S. production will fall off a cliff in the second half of the year. So much so that the current ~1.5M barrel/day surplus will only be a few hundred thousand.... Sounds like bullshit?

Meanwhile, economic indicators everywhere are looking shittier and shittier. S&P 500 looks ready to fall off a cliff. But it's all good...

Do you recall which indicators?

Concerning oil, I've never really understood how the rig count could go down and production go up. Apparently it has something to do with how productive different drill sites are. It also might have to do with the number of horizontal wells drilled. Again, I don't know how this works but I would guess that you have multiple drill holes per drilling rig. You drill in one location, frack it and while you're fracking one hole you're off drilling another.

Last I heard, the rig count was going up. Not by much, maybe a couple of rigs per week. But if that's true, I don't see how production could fall off a cliff. I'd be interested in hearing more about that though.

 

[Imp]

Do you recall which indicators?

Concerning oil, I've never really understood how the rig count could go down and production go up. Apparently it has something to do with how productive different drill sites are. It also might have to do with the number of horizontal wells drilled. Again, I don't know how this works but I would guess that you have multiple drill holes per drilling rig. You drill in one location, frack it and while you're fracking one hole you're off drilling another.

I have no idea how the rig count works. I thought that was a measure of oil pumps operating, but it's of drilling rigs (hence "rig" count?) drilling new wells? So if I had a super amazing drill rig, I could have a count of one but 500 new wells a week?

Newest "indicators" I was thinking of...
U.S. retail sales:
http://www.reuters.com/article/us-usa-economy-retail-idUSKCN0XA1DO

Singapore economic info linked a few posts up.

Corporate profits falling:
http://www.bloomberg.com/news/artic...ta-is-reason-for-recession-worry-weak-profits

High-yield bond defaults up (watch for the video):
http://www.cnbc.com/2016/04/05/bad-news-bond-defaults-are-on-the-rise.html

Atlanta GDP estimated GDP for Q1 was 0.1%, now 0.3%:
http://www.wsj.com/articles/the-fed-fights-itself-over-gdp-data-1460503606

Not quite "official indicators" but other news: Japan interest rates going negative, EU going negative, Fed keeps avoiding another rate bump, and U.S. federal student loan delinquencies but this lean thing has been going on for years, apparently.

Job numbers do look good though...

 

[Charmonium]

Well, first of all, the Atlanta fed GDP Now is just an estimate and they've been known to be wrong. If you want a more bullish picture, take a look at the NY fed's forecast. It's quite a bit more sanguine.

Retail sales isn't that much of a surprise. The savings rate has been going up since late last year. So if an increase in savings is the reason for the disappointing numbers, that's actually positive in the long run.

Corporate profits isn't much of a surprise either. Capex in the energy sector has been sharply down and with the increase in the savings rate, that means that there is less economic activity than one would expect at this point in the cycle.

Banks are increasing their loan loss provisions for energy sector lending but a lot of that is based on 30 dollar oil. That changes as the price goes up. And as we already know, it's not high yield per se that is the issue but the sector that is. A large portion of HY is energy.

 

[Imp]

Hey man, I'm just here for the show.

The Fed just keeps me guessing: if we're doing so good, why are we still at 0.25% to 0.50% interest? After like 7 years at 0 to 0.25%. And why do you keep cutting the number of planned hikes...

P.S. Are we celebrating 1.1% GDP annualized...

 

[Charmonium]

Hey man, I'm just here for the show.

The Fed just keeps me guessing: if we're doing so good, why are we still at 0.25% to 0.50% interest? After like 7 years at 0 to 0.25%. And why do you keep cutting the number of planned hikes...

P.S. Are we celebrating 1.1% GDP annualized...

GDP has been trending down since the 80's. So there are probably systemic reasons for this, but the proximate cause is still the credit crisis. Financial/credit recessions are fundamentally different from a 'normal' recession because they call into question the trust people have in the system. As a result, both people and companies are less willing borrow and more willing to save.

W/o the sort of spending we normally get coming out of a recession, there is no multiplier effect, money velocity stagnates and you anemic growth. But this is "normal" and the reason why 8 years later we are still in the midst of a "recovery."

But another issue has been the fact that the US govt hasn't done jack to stimulate the economy. The way fiscal policy is supposed to work is that you save money during the booms and spend during the busts. Spending, whether govt, business or individual is what causes the money supply to increase (via borrowing).

But since the crisis, the only increases in the MS have been from the fed. And that doesn't work if people don't take the money they get from selling assets to the fed and turnaround and spend it.

Just take a look at the money multiplier and velocity.

 

[Kwatt]

GDP has been trending down since the 80's. So there are probably systemic reasons for this, but the proximate cause is still the credit crisis. Financial/credit recessions are fundamentally different from a 'normal' recession because they call into question the trust people have in the system. As a result, both people and companies are less willing borrow and more willing to save.

W/o the sort of spending we normally get coming out of a recession, there is no multiplier effect, money velocity stagnates and you anemic growth. But this is "normal" and the reason why 8 years later we are still in the midst of a "recovery."

But another issue has been the fact that the US govt hasn't done jack to stimulate the economy. The way fiscal policy is supposed to work is that you save money during the booms and spend during the busts. Spending, whether govt, business or individual is what causes the money supply to increase (via borrowing).

But since the crisis, the only increases in the MS have been from the fed. And that doesn't work if people don't take the money they get from selling assets to the fed and turnaround and spend it.

Just take a look at the money multiplier and velocity.

Thanks for that explanation.

My only concern is that outside of their retirement savings (401, IRA, or whatever) only ~ 10% of the people own stocks or bonds. So they aren't gaining from what the FED is doing so they can't sell and spend. And with the growing part time job numbers, real income on a down trend, and low participant rate who is going to do the needed spending?

.

 

[Imp]

And with the growing part time job numbers, real income on a down trend, and low participant rate who is going to do the needed spending?

.

According to a lot of people in my country, corrupt rich Chinese nationals.

For some reason, they can get their money out of China but instead of bee-lining to the Isle of Man, Cayman islands, Switzerland, or Panama, they need to buy overpriced houses in Vancouver and Toronto to launder it.

 

[Charmonium]

Thanks for that explanation.

My only concern is that outside of their retirement savings (401, IRA, or whatever) only ~ 10% of the people own stocks or bonds. So they aren't gaining from what the FED is doing so they can't sell and spend. And with the growing part time job numbers, real income on a down trend, and low participant rate who is going to do the needed spending?

.

The participation rate is increasing, just as Yellen had predicted. That was her main reason for continuing QE as long as she did. It's also one reason why the fed is so cautious about raising rates.

Even before she was nominated, Yellen believed that the unemployment rate had to fall far enough that people who had been discouraged and left the job market would want to re-enter. And it looks like that's happening.

https://research.stlouisfed.org/fred2/series/CIVPART

As far as savings, it's definitely a good thing that the rate has increased. Not in the short run but longer term. The real question though is whether this is just a blip and we soon go back to our spendthrift ways.

More people are investing in the stock market and other financial markets. But that might be as big a problem as it solves. Individual investors are notorious for being lemmings. That's not a problem as long as the market isn't dominated by them.

 

[Imp]

China GDP for Q1 came in at 6.7% if you believe it.

VIDEO alert:
http://www.cnbc.com/2016/04/14/chinas-economy-expanded-67-on-year-in-q1-versus-68-in-q4-reuters.html

Singapore was 1.8% yesterday, IIRC.

P.S. If you don't hear from me, FBI has me from googling "money laundering" for an hour.

 

[FelixDeCat]

ruh roh oil

 

[JEDI]

im gambling for cheap oil and 4 my sake, I better see it! :hmm:

drop drop drop! (pleaase)

hm.......... oil down 3.5% despite the dollar falling .3%?

also, any better way to short oil than dwti (triple short)?

drop drop drop! (please)

 

[Hugo Drax]

I looked at NUGT again, it split a few times last year?

Anyone keep track of 3D printing stocks they are all going crazy today.

no. I do not like to gamble and throw money away on bets.

 

[Imp]

Welcome to the life of FOMO and peer pressure:

The vast majority of Torontonians, 89 per cent, believe housing is unaffordable in the city. But 20 per cent of those who rent still plan to put a foot on the property ladder this year.

http://www.thestar.com/business/2016/04/15/high-prices-no-barrier-to-property-dreams-forum-poll.html

I'm sure running up credit cards and credit lines, and getting "loans" from mom and pops isn't facilitating this.

And I'm double sure the dozens of businesses in my area that have closed and are listed for sale haven't been affected by people cutting back on everything for their mortgage payments...

 

[Imp]

Just so I remember to look back a the rumors tomorrow or weeks later. Draft agreement supposedly leaked from Doha:

http://www.cnbc.com/2016/04/16/draft-doha-agreement-would-freeze-oil-output-until-october.html

So, Iran was apparently disinvited or didn't even show. I also saw somewhere that it's a "gentleman's agreement" with no enforcement.

If oil prices do go up, I'm sure this big collection of the world's "best" regimes will all play fair -- especially considering none of them have money troubles and crazy inflation.

 

[FelixDeCat]

If oil can stabilize between the $35-$45 dollar range for a year, I think Chesapeake could go back to $10, so Im thinking about shorting the January 2017 CHK $10 put option. The current share price is $6.

The initial investment will be $1100. The contract will deliver $500 in premium (50%). With the premium I will buy 100 shares (using the last $100 of the $1100 to do it).

Assuming oil stabilizes and CHK reaches $10 in January 2017, the return may be:

$500 up front cash payment and
$400+ capital gain (ride from $6 to $10+ on the additional 100 shares)
=
$900+ net gain on $1100 invested (81%), due in 9.5 months
------

If CHK is $5 or less in Jan 2017, your cost basis for the 200 shares considering the premium is only $1100 or $5.5 per share. Another risk is that you could be required to take delivery at $10 per share before expiration (this has happened to me before). That usually comes into play if the stock price collapses or for simply no reason at all.