Finance Trends Letter

Nike ( NKE ) and Under Armour ( UAA ) are two big-name stocks caught up in this month's retail stock slide. We'll examine the ir charts in detail, but first an overview of the recent price d ecline s in this sec tor . As noted on Twitter earlier today, we are seeing major price deterioration in a number of retail stocks this week and in the month of December.  Seeing a real deterioration in retail stocks this week. $RL , $BBBY , $BIG , $M among those sliding lower. pic.twitter.com/BPVUCeh7SO — Finance Trends (@FinanceTrends) December 22, 2016 No doubt, a part of that weakness may be tied to fears of taxes on imports from China and Mexico, given President- e lect Donald Trump's decision to name economist Peter Navarro as head of a new White House National Trade Council . More on this from Reuters:  " ...U.S. President-elect Donald Trump named Peter Navarro, an economist who has urged a hard line on trade with China, to head a newly formed White Hous...

Global stock market returns for 2015 (yearly gains) via Trading Economics .  China's Shanghai Composite index leads (+48%) the major indices on a yearly basis, despite the sharp plunge from June's highs above 5,000. Brazil's Bovespa (-6%) lags, the worst performer of the major indices. You can find the full global list, covering Asia, Africa, Europe, and the Americas, at Trading Economics (link above). Here's a quick rundown of the best performing global markets for 2015. 1. China's Shanghai Composite up 48% for the year. The SSEC and new A-Share market ETF, ASHR had a huge run from late 2014 into mid-2015.  2. Russia Stock Market MICEX is up 26% on a 1-year basis. This ruble-denominated index is moving in on its all-time highs, while the dollar-denominated RTS index sits near 5-year lows. 3. Iceland's SE ICEX is up 51% over the past year. The Icelandic market has been steadily gaining ground the last 5 years after falling off a cliff in the...

Update (May 2017): Bitcoin has recently reclaimed the $1000 price level and moved on t o new price highs . As Bitcoin, blockchain technolog y, and altcoin s such as Ethereum have surged to new levels of adoption, we revisit our original 2013 posts on Bitcoin and the rise of cryptocurrencies . Bitcoin has recently zoomed past the $200 mark and is approaching its all-time highs. What better time to update you on the developing virtual currencies trend and to offer you new price data and insight into this growing market? Here are the latest Bitcoin charts using Mt. Gox data (denominated in US dollars) and BTC China (denominated in Chinese Yuan) via bitcoincharts.com . Note that prices are fast approaching the 2013 "pre-crash" highs.  I have been tweeting about B itcoin and its price uptrends on Twitter and StockTwits throughout the year. Those of you follow me may recall this tweet from March 2013 when Bitcoin was trading at $43.  Bitcoin quickly...

Marc Faber offers some forecasts for the global economy in this recent Dubai hedge funds world conference video.  Faber makes 2 important points at the outset of this talk. First, he notes that at the start of his career (1970) investment banks were all private partnerships. Not a one was a publicly traded corporation, whereas today most large banks are listed corporations. As a result, the risk profile at investment banks has completely changed from the days when partners at investment banks were personally liable for other people's mistakes. Today, bankers risk other people's money and face no real consequences for their mistakes. In fact, they are often bailed out with taxpayer funds when they go bust. Secondly, Marc points out that the (neo-) Keynesians want to make interventions in the capitalist economy and "smooth out" the business cycle with fiscal and monetary measures.  In Faber's view, these interventions have actually made fluctuations i...

Came across this clip of Apple CEO, Tim Cook complaining that the ongoing tech patent wars are a "pain in the ass" . Granted, this is a topic that's recently been covered by Mark Cuban , or going farther back, by Bastiat in his "Three Stages of Invention" . However, one could look beyond Tim Cook's complaints to examine the very idea of the supposed necessity of patents and copyrights. The book, Against Intellectual Monopoly does just that, arguing: "Patents and copyrights do not promote economic progress but impede it." Note this passage, from the same book, which calls attention to the fact that patents can block the market's progress by preventing product imitation, development, and refinement:    "Imitation is a great thing. It is among the most powerful technologies humans have ever developed … imitation is a technology that allows us to increase productive capacity. Innovators increase productive capacity directly......

Nassim Taleb on Antifragility , interview at EconTalk (Hat tip: Nancy Miller ). Key early point from Russ Robert's chat w/ Taleb on fragility vs. "antifragility":  "...Art [Devany] gave me a lot of ideas and suddenly everything flashed together, when I made the distinction between two types of systems, the organic and the non-organic . The organic has the property that the difference between the living and the dead, the living and the non-living; the living, between living and a machine for example, requires stressors. That's how the complex systems communicate with their environment. You need a stressor . As with the bones, with your muscles, a lot of things. And usually overcompensate for the stressors--there is a mechanism in biology called hormesis. This table I have in front of me will never get better if I bang on it. Use it and lose it. On the other hand, the human body gets better if it is exposed to the right amount of stressors. Of ...

While catching up with Chris Puplava's latest market update last night, I had to stop and share some of his words with our followers on Twitter .  Read the opening of Chris' article, "Stop Talking and Start Listening!" . You'll find some worthwhile comments on interpreting data and the importance of maintaining accountability in one's market calls.  " ...Far too often investment managers and economists spend more time espousing their views and then defending them until eventually proven right (“I was just early”), rather than spending more time analyzing their assumptions and being honest enough to say, “I WAS WRONG!” and then moving forward.  Part of the problem is that they create a view and then find evidence to support their views rather than starting from the bottom up by collecting an exhaustive amount of data and then summarizing the collective message rather than their views.  Basically, listen to the message of the markets and the...

F.A. Hayek discusses John Maynard Keynes in this 1978 interview clip.

" The law perverted! And the police powers of the state perverted along with it!  The law, I say, not only turned from its proper purpose but made to follow an entirely contrary purpose! The law become the weapon of every kind of greed! Instead of checking crime, the law itself guilty of the evils it is supposed to punish! If this is true, it is a serious fact, and moral duty requires me to call the attention of my fellow-citizens to it. " - Frederic Bastiat , The Law (e-book, English translation). Related articles and posts :  1. Biography of Frederic Bastiat (1801-1850) - Mises.org. 2. The Law by Frederic Bastiat (audio book) - Free Audio.  3. Works of Bastiat and web links - Bastiat.org.

"The United States has lost its way" . Greg Simmons at ScopeLabs riffs on the rise and fall of nations and our bailout society in this excellent six minute YouTube video .  Greg hipped me to this clip after I mentioned how I had enjoyed some of his Skype interviews with Matt Davio. From the moment I saw their first taped discussion , with Greg standing there in his Black Flag t-shirt, ready to talk trading and current events off the cuff, I knew I had found someone on my wavelength.  This clip is a must-see, plain truth indictment of our societal decline. Will America wake up from its national brain-coma in time to right itself? Watch and learn, friends...watch and learn.

Excellent article from Foreign Policy entitled, "The Shadow Superpower" , which examines the world's $10 trillion underground economy. "You probably have never heard of System D. Neither had I until I started visiting street markets and unlicensed bazaars around the globe.System D is a slang phrase pirated from French-speaking Africa and the Caribbean. The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards. To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of "l'economie de la débrouillardise." Or, sweetened for street use, "Syst...

Victor Sperandeo makes 5 "Frightening Market Predictions" , as well as a few policy prescriptions for the USA in this Real Clear Markets piece. Here's a taste:  "... 1. The U.S. is going into recession. This is being entirely caused by the woefully misguided fiscal policies of the Obama administration. Their anti-business, socialist agenda is killing the "Golden Goose" (i.e. Capitalism). Raising the costs for small and big business via tax hikes, Obamacare, and massive regulation is in effect causing a capital "strike" by entrepreneurs. As a result, GDP is going to decline..."  Recession is not the only thing on Trader Vic's mind. Head on over for a few thoughts on gold, the future of the EU, hyperinflation, and the global bubble in debt.  Plus, a few key changes that may help the US fix its problems and change our course for the future (only wish Victor had some more time and space to really flesh these out). Check it out....

Earlier this afternoon on Twitter, I noted that the long bond ETF, TLT was up over 10% (then quoted near $114.60) since S&P downgraded the USA's debt rating to AA+ on August 5, 2011. Well, it looks like we'll have to update those stats already, thanks to the pop in 30 year bonds (ZB_F) and in TLT on news of Operation Twist , the Fed's telegraphed scheme to sell $400bn of short maturity bonds and reinvest in longer (6 to 30 year) bonds by June 2012.  Here's how the market reacted to that news. Note the flagpole move up in TLT and the 30 year Treasury futures, ZB_F on the intraday charts.   Above: 5 minute chart of the 30 year Treasury futures, via Finviz.com . Here's an intraday chart of TLT, courtesy of freestockcharts.com . The updated daily chart of the TLT, marking the August 5th closing price to today's action on the Twist announcement. Chart via freestockchats.com . So in the space of 20 minutes, we had to recalculate that 6 week retur...

"Their stupid and profligate stimulus did not work."  That's the verdict of Jeffrey Tucker's new Mises.org article, "Did the Recession Ever Really Go Away?" . As Tucker points out, the massive stimulus programs and bailouts of the past three years (under Bush and Obama) haven't amounted to a hill of beans in terms of actual economic improvement.  Has the average American's lot in life been improved due to these measures? No, but they have helped save some politically-connected institutions (banks, unions, insurers) and given the appearance of government doing something to "help" matters.  Here's an excerpt from that piece:  "The screaming pleas from the political class in 2008 weren't really about finding a cure. They were about saving the top players (banks, unions, insurers) in a system that was built on illusion. According to official dating, the recession lasted only 18 months, and then recovery began. Th...

Mises Institute's Jeffrey Tucker interviews hedge fund manager, Kevin Duffy (Bearing Asset Mgmt.) to discuss Austrian economics and navigating the financial markets with an Austrian perspective. This is a must watch, must hear discussion on basic economic principles and the problems of crony capitalism and the "political economy" that have grown out of the bailouts and stimulus-fueled responses to the 2007-2008 financial crisis. QE and QE2 have helped spur a two year rally in the stock market, but Duffy argues that these easy money policies have created many harmful unintended consequences. Check out the full interview for insights into how Duffy and his firm use their Austrian viewpoint to analyze economic trends and invest in the capital markets. Related articles and posts: 1. Marc Faber at Mises Circle: final crisis is yet to come . 2. Navigating the Financial Markets with an Austrian Compass (w/ Kevin Duffy) .

Must read note from Keith McCullough at Hedgeye on the government shutdown : "Finally, we’re here. This week we’re finally going to see US Professional Politicians face the door that’s closing on their conflicted and compromised careers of debt-financed-deficit-spending. This isn’t the time to give into their fear-mongering. This is going to open he door for a generational opportunity in America. This is great news. On Friday, the stop-gap bill to keep the US Government open for business expires. With $14,272,778,776,442 in US Debt + another $55,800,000,000,000 in unfunded Medicare and Medicaid liabilities, I say shut these politicians down. The biggest risk to America today isn’t what’s happening in the Middle East or Japan – it’s the 112th Congress..." Keith just linked to this Monday research note on Twitter and I had to post it here. Hope you'll take a moment to read it and pass it along.

Is the Federal Reserve's quantitative easing policy fueling inflation in asset prices, including the price of commodities and foodstuffs? That seems to be the big question in recent days, as civil unrest in Egypt and in other parts of the Middle East and Asia demonstrate how long-simmering tensions can quickly boil over when grain prices rise and the spectre of food shortages looms over a population. The recent situation recalls the commodity and grain price surges of 2007-2008 , when food stocks were diminishing and shortages and worries over food riots were a global phenomenon (and news item). Then, as now, grain ethanol and "excess speculation" were offered up as contributing causes to rising food prices. Image via: FAO Food Price Index . So what about the role of quantitative easing and increased money creation by the Fed and other central banks? Might that sort of liquidity operation be fueling a rise in asset prices across the globe? Or are prices rising due to...