Category Archives: Stock market

The new economy will intensify

Have a look at Radio Shack (RSH). Price: $0,24. Wow, pretty impressive eh? A very cheap stock you think, but no way. Radio Shack said to file for bankruptcy yesterday (chapter 11). I wrote about Radio Shack in an article called «retailer dead», 11th March, 2014, so this is no surprise. RadioShack have $1,2 billion in assets and $1,39 billion in debts. As widely expected: RadioShack is finish. Sorry shareholders. Everything is lost.

What`s going on? What we see now is just the start of a new era; The new economy. This is something we talked about in the late 90`s and early 2000`s. everybody was talking about the new economy at that time, and investors bid up stock prices to unprecedented highs.

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You all know the end of that history. The investors didn`t look at macroeconomic factors at that time, and it all blew up to a gigantic bubble. A tech bubble. And that bubble has long since burst. Since then many companies have remained very innovative.

Many companies in the new economy are heavily involved in the internet and biotech industries, and the ripple effects of the new technologies has spread out to all other industries as well. But obviously not to Radio Shack.

When I wrote about the retailer dead in my article last year, Radio Shack was down -38,5%. I said they were doomed, and things have changed. It`s all about time and money. Why take the bus to the shop in town and buy a product that is twice as expensive as the same product on Amazon, Ebay, Best buy or Wal-Mart?

I also wrote about it in 2013. This will affect other shops like Starbucks, and their sales was declining in the holiday season in 2013, and this is just the beginning. I think we will see this trend spread all around the world. Fast.

RadioShack`s business model failed last year and they had no reason to open the doors and throw good money after bad money. The time is over for RadioShack. Just like Mervyn`s, who had 189 stores in 10 states. Mervyn`s was the eight-third largest retailer in the U.S based on 2005 revenue. Many of the company`s stores were in shopping malls.

Mervyn`s closed the doors December 31, 2008, but the Morris family having bought back intellectual property rights to the company in 2009. They are planning to relaunch Mervyn`s as an internet-based enterprice. The new economy is here.

It is the high-tech tools like internet and powerful computers which is penetrating the consumer and business marketplace that really drives the new high growth industries. The tools are getting better and better. Add sharing economy and driverless cars to this and the new economy is here to stay.

If your shopping mall in your town is crowded today, it may change tomorrow. At one time it can be more employees than customers, and bookstores are the first to fail. Clothing chains will follow, consumer electronics stores, air-ticket booking offices and in the future; bank branches and other traditional services facilities will follow. The impact from online sales is massive.

Alibaba`s Jack Ma said they have created 14 million new jobs. McKinsey said the shift online could contribute up to 22 percent of the China`s productivity growth by 2025 and make up 7 percent to 22 percent of the total increase in GDP from 2013 to 2025.

Clashes between the old and new economies will intensify.

 


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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Cautious Stock Market Investors

U.S markets will be closed today in observance of the Martin Luther King Jr holiday. Some markets will be open like futures, but I will stay away from the market today because of the lack of volume and liquidity.

I will follow oil and gold prices and all the commodity traders should keep in mind that Crude Oil inventories will be released on Thursday at 11:00am, instead of the normal Wednesday 10:30 am release due to Monday`s holiday.

Gold is on the move and can go up about 25%, and the precious metal is the best performing asset class so far this year. It`s golden days for day traders. Take a look at the oil price. It`s like roller coaster, jumping up and down, and oil had the biggest gain in 2 1/2 years, ending the trading session of friday 5,82% higher.

The reason why the stock market didn`t follow the oil price on friday can be the disappointing retail sales report in early trading on friday. Retail sales dropped 0,9% vs a 2% forecast. The S&P ended Friday with a 27 point gain, and ended the week 25 points lower. That`s down 1,24% for the week.

The Dow saw triple digit profits on Friday with a 191 point gain, and it closed at 17511,57, wrapping up the week with a 226 point loss. Friday`s Preliminary Consumer Confidence report was a beacon of hope for the bulls. The report not only beat expectations. That`s the highest level in 11 years!

A number of questions marks seem to have investors leaning back on their heals this year. This is; plummeting oil prices, geopolitical turmoil and continued divergence between the world`s major economies like Japan, China, U.S and the Euro zone.

All the investors eyes are on the world`s central banks. The Davos meeting later on this week will be interesting, and the ECB is expected to deliver a stimulus package later this month. Investors will wait for definitive word from the ECB regarding its widely anticipated stimulus plan.

Bond market rose across the board as interest rates dropped lower, with the 10-year Treasury rate falling below 2%. The downtrend in rates is not good, and is a symptom of deflationary pressures which is worse than inflation. Plummeting energy prices are adding fuel to the fire.

The U.S dollar continued its bullish climb last week, putting downward pressure on the commodity sector as a whole. This trend can last awhile longer.

Investors are cautions and it seems everyone is a bit hesitant to commit to new, bullish positions until some questions are resolved. I will wait for a clearer trend to emerge and 1,200 in small-cap stocks need to break before I call the bullish trend in equities alive.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Low oilprice is good for oil tankers

The oil price continue to decline and brent oil is now trading at $47, and that is bad for someone and good for others. The supply in the oil-market are pushing the prices down and China will profit from that drop.

China said that the first phase of its oil inventory buildup is over. They revealed that they have 91 million barrels stored at four different sites, and it doesn`t stop there. Now they have a second phase of oil inventory accumulation, and has already stockpiled an additional 80 million barrels.

They have revealed that they want to have a reserve of at least 500 million barrels of oil in the next five years. USA`s oil reserves has a capacity of 700 million barrels. It`s good to know their strategic oil reserves because someone will benefit from that.

Oil tanker companies are happy for the declining oil prices and only a few months ago many of them couldn`t even cover their operating cost which is about $20,000 a day. Rates on the Asian route have gone straight up, trading at an average near $100,000 per day. Spot rates is about $60,000 to $70,000 a day.

This is a level not seen since 2008, and some of the world largest oil traders are hiring supertankers to store crude at sea, Reuters reports. In 2009 at least 100 million barrels of oil ended up being stored at sea. Some of the biggest trading firms have booked crude tankers for up to 12 months.

Storage

Some shipping sources consider the flurry of long-term bookings unusual and suggest that traders could use the vessels to store excess crude at sea until prices rebound. A strategy that was popular in 2009, trading gambit when prices last crashed.

The oil is floating at sea and it`s all stored on oil tankers that is waiting for the oil prices to go up again. When will the oil price turn up again and how long will those tankers wait out there in the sea?

Frontline (FRO) is up 243% in just three months amid speculation that a plunge in crude prices is spurring demand for the vessels to store cargoes. Nordic American Tankers (NAT) is up 65,1%, which owns 20 Suezmax crude oil tankers.

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If you think that the oil prices will go up again, then you must set a stop-loss on your Velocity Shares 3X Inverse Crude ETN (DWTI), which is up 380,5% in three months. An ETN you should buy in July last summer, trading at $22,25. It`s up 2,38% so far today, trading at $185,32. This is one of my favorite ETN`s.

Frontline Ltd is a shipping company that is engaged in the ownership and operation of oil tankers and oil/bulk/ore, or OBO, carriers, which are configured to carry dry cargo. It operates oil tankers of two sizes; VLCC`s and Suezmaxes. The stock is down -11,23% so far today, so when to jump in is the big question.

It can be too early right now. The selloff in oil was sparked in part by lower estimates from Goldman Sachs, which slashed its 3 and 6 months Brent forecasts to $42 and $43 a barrel respectively from $80 and $85. Goldman also cut its longer-term estimates on Brent.

Goldman sees crude bottoming in Q2, which means jumping in now could be too early. In a report, they said $2 trillion of future oil investments are threatened due to falling crude prices. That`s up 100% from December 2014.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Other predictions for 2015

Spending a few minutes reading the headlines today can make you feel bad. It feels like the world is on fire. Ebola, ISIS, Ukraine and some extremely currency movements. In a world like that, the U.S is seen as a safe harbor and the greenbacks is the safest, most reliable currency on the planet right now.

2015b

We witnessed a fantastic corporate earnings season, which was one of the best in the last decade. It is still a lot of work on jobs and housing, but the economy is well underway. How is it gonna be in the markets next year? No one knows, but there is a lot predictions out there. I will refer from two different investors today. One is positive and one is negative. Let`s take a look at the positive first;

No doubt, there is a market shift ahead, but it isn`t what you think it is. Based on different analysis, many indicators shows us that next year will be another fantastic year in the stock market. It will be another year to make money and the bull market will continue.

The bull market will not be what we have seen so far. It`s not gonna be another broad market rally like the rally we`ve seen the last few years. Stock picking will still be important, as there is a lot of stocks you should sell in 2015.

What you should buy is high-quality stocks with great fundamentals. You should buy one type of stocks next year.

Look at the truth about the economy. It took seven years to finally rebound from the Great Recession, and here are some key reasons why some investors expect the economy to keep charging ahead next year;

Fist of all; the oil shale revolution. According to the International Energy agency, the U.S will become the world`s leading oil producer next year. The energy boom will create jobs and lowering the gas and utility costs for consumers. That`s good news for the economy next year.

In addition; there will be low-interest rates. It may rise in the next 12 months, but the Fed will manage that rise slowly, which means it will remain ultra-low by historical standards, and that`s also good news for M&A activities, stock buybacks and cheap corporate borrowing that fuels stock prices, and business expansion.

Consumers are more positive to the economy and consumer confidence soared in October. Household net worth is back above 2007 levels, and consumer spending are rising at a moderate clip.

It looks safe in the U.S compared to the rest of the world. England`s housing market is collapsing. The Euro zone is on a brink to a deflationary disaster. Germany`s economy is deteriorating, and the growth has stalled in the once-hot BRICS. The U.S economy is surging. GDP was much stronger than expected 3,5% in Q3.

Chairwoman Janet Yellen has made it clear she intends to do whatever it takes to keep the economy and job growth strong. We survived the end of the Fed`s QE program and that was just one of the weapons in her arsenal.

The other one I talked about is negative. He expect the stock market to crash any time soon. It did in 1929, 1987, 2000 and 2008. The next crash will be next year he says. The bull market we have had over the past years is one of the longest, and most generous bull markets in history.

But, no bull markets lasts forever he says, and this one has about run its course. If you look at key long-term measures, U.S stocks are about 80% overvalued he says. There have been only five times when stocks have been more than 50% overvalued, and that is 1853, 1906, 1929, 1969 and 1999.

He said that each one of those years marked the peak of a massive, once-in-a-generation stock-market bubble. Only two of those bubbles were bigger than today`s, and that was in 1929 and 1999. This is the end of the line for this bull market he says.

You have to be sceptical about everything you read and it is very important to make up your own mind. I have heard about a 1929-stock-market-crash in ten years now. Many talked about a stock market crash all months this year. Same people talked about it in 2013 and 2012, but what we saw was a strong bull market.

But I can promise you one thing; one day they will have right!

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Outrageous predictions for 2015

On December 18 last year, I wrote about Saxo Bank`s outrageous predictions for 2014. It`s funny to read those predicions one year later. Every year Saxo Bank comes out with their outrageous predicions which is very funny and interesting to read. These are ten unlikely events, even if their risk is underappreciated, that would have significant consequences for global markets if Saxo Bank have right with their predicions.

Outrageous

This time they predict that Mario Draghi quits the European Central Bank to become Italian president. They predict that the U.K housing market to collapse, and a U.K exit from the EU. Furthermore; they predict China devalues yuan 20% and inflation of 5% in Japan.

Saxo Bank`s Chief Economist Steen Jakobsen said this about their predicions;
“2015 will be a tough year, but potentially also the year we look back at as the low point in everything. Inflation has fallen to its lowest in decades, interest rates have followed and energy prices are sharply lower.

The lack of volatility in data and in asset markets has given investors a false sense of security and that could lead to the biggest upset in 2015. We saw a possible preview of coming attractions during one week of mayhem in October of 2014. If that’s anything to go by, we are in for a rollercoaster ride in 2015.”

“Saxo Bank’s Outrageous Predictions remain an exercise in finding ten relatively controversial and unrelated ideas which could turn your investment world upside down. By imagining the most negative scenarios and events, whether a Russian default, volcanoes spreading havoc, or an internet Armageddon, investors have a chance to stress test their assumptions about the future and what these events might mean for their own investments. We must remember that while the predictions outline rather extreme market scenarios, over the years, a number of them have unfortunately come true.”

Saxo Bank’s Outrageous Predictions 2015

1. UK housing sector to crash
Surveys are already showing that momentum is fast leaving the UK housing market, particularly in London. The impending Bank of England rate hike will see the UK suffer a housing crash with prices falling as much as 25% in 2015.

2. Japanese inflation to hit 5%
Incessant Bank of Japan money printing crushes confidence in the yen as Kuroda-san finds that his policy to bring inflation back to his country is met with too much “success” – a symptom of Japan losing control of its currency.

3. China devalues yuan 20%
China will be looking for any way it can to ease the enormous deflationary pressures that are the downside of a credit boom. As deflationary risks loom China tears a page from the BoJ policy playbook and moves to devalue the yuan by 20%, joining Japan in its fight to import inflation and demand.

4. Draghi quits ECB
To bring the Germans fully on board with the European Central Bank’s move to QE, Draghi steps aside to allow for full ECB quantitative easing to proceed under a new president, Jens Weidmann of the Bundesbank. Draghi sees greater opportunity for his skills in Italy, where President Napolitano requests that he succeed him.

5. Russia defaults again
Plunging oil prices and a cold financial shoulder from Russia’s geopolitical antagonists see large Russian companies or the government itself defaulting on foreign debt. A default, like in 1998, is what is needed to secure the country’s future, together with a diplomatic solution on the Ukraine question.

6. Internet hacks smash e-commerce
In 2015, new attacks on e-commerce’s largest players become even more widespread and aggressive, sending shockwaves through the web and cloud service providers. Amazon.com, the largest e-commerce retailer and dominant player in web-based services, suffers a decline of 50% on the widespread fallout to the e-commerce industry and also because of its overvaluation.

7. Volcanic eruption cancels Europe’s summer
Like the volcano Laki in the year 1783, the already active Icelandic volcano Bardarbunga erupts in 2015, leading to a massive release of noxious sulphur dioxide and other gases that cloud the skies over Europe. The eruption shifts weather patterns and brings fears of a weak harvest across Europe, with grain prices doubling even as the volcano’s fallout proves more modest than feared.

8. Cocoa futures hit a record USD 5,000/tonne
Demand for chocolate is rising globally as Western preferences shift towards darker chocolate and Asian appetite increases. With supply affected by concerns over the Ebola virus and underinvestment in key West African production regions, the world is consuming far more cocoa than it is producing. This leads to a record high price for cocoa above USD 5,000 per tonne in 2015.

9. UK seen leaning toward 2017 exit from the EU (Brexit) on UKIP election landslide
The UK Independence Party (UKIP) wins 25% of the national vote in Britain’s general election on 7 May, 2015, sensationally becoming the third largest party in parliament. UKIP joins David Cameron’s Conservatives in a coalition government and calls for the planned referendum on Britain’s membership of the EU in 2017. UK government debt suffers a sharp rise in yields.

10. High-yield corporate bond spreads double
After a sentiment shift on high yield bonds, investors heading for the exits in 2015 discover sparse liquidity and steep price declines. With an ultimate washout in high-yield credit, shock waves will once again shake the foundations of Europe’s weak economy. The Markit iTraxx Europe Crossover doubles to 700 basis points in 2015.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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