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ent bonds (or ETFs like SHY, TLT, IEF and AGG). They're currently yielding 4.2-4.9% in dividends (actually, inte
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What's up with ZYNEX?
My take is that Anthem Blue Cross and Blue Shield has declared certain of Zynex's Devices as medically unecessary and seeks a refund of over $1 million dollars, a significant amount (2007 revenues were approx. $8 million). See quotes below:
Tags: Stock, prospects on 2008-11-05 -All Annotations (1) -About
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Zynex,
Inc. declined on October 31, 2008 a settlement offer regarding a refund request
by Anthem Blue Cross and Blue Shield (“Anthem”), a major health insurance
provider. The refund claim concerns payments previously made by
Anthem for certain medical devices (the “devices”) rented or sold to insureds of
Anthem by Zynex from September 1, 2007 through July 31,
2008. Despite Anthem’s paying claims for such devices, including some
that were individually subject to an Anthem review process and resulted in
decisions favorable to Zynex, Anthem claimed in a retrospective review that the
devices were considered investigational or not medically necessary under a
medical policy statement of Wellpoint, Inc. (the parent entity) and therefore
not eligible for payment. As a result, Anthem now claims that it
should receive a refund of approximately $1,065,000.
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Bill Cara: Cara's Commentary & Community Chat, Tues., Oct. 28, 2008, 8:29am ET
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Silver Wheaton (SLW US$2.59) will be ok.
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If you check the 6-month correlation of SLW to FXA, FXC, FXE and FXS, you will see it is 98%. If you check the prices of the Australian and Canadian currencies in the past week, you will see a blow-off similar to that in SLW.
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If you think the $USD is over-bought (and the international currencies except for the Yen, over-sold), then SLW ought to be bought here. If you think the price of silver, like gold, cannot drop a further -10% without significant global production stopping, then you would buy it here. Production halts will push the price back up.
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traders need to consider buying it here at the bottom of the cycle – after a fall in a month from a high of US$11.09.
In fact, I will be doing the same today.
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Stock Chartist
- Here's what I'm trying to accomplish with my screens. This process will be effective when the market bases and turns upward.post by will_dabbler on 2008-10-18
I see several stocks, LPHI and DMND that are on my screens showing up on Stock Chartist's also...
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Yahoo! 360° - The Dabbler's Blog
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- Observations on the Housing Market
I've noticed that a sizable number of houses have gone up for sale in my neighborhood recently. This is a fairly new neighborhood, still under construction in October of 2003 when we moved into it. I'm not sure of the reasons for the moves, but I have a few guesses.
I remember the sales agent aggressively pushing adjustable rate mortgages tied to the LIBOR with interest only payments on the mortgage during the first several years of the mortgage. Sounded enticing, but I stood with a fixed rate conventional at 6 %.
These ARM's are a recipe for financial disaster, since they encourage residents to purchase more real estate than their cash flow can accomodate. It's a great financial sales gimmick.
The LIBOR rate, looking at the chart above, was 1.455 % in October of 2003, but recently has sharply escalated to 5.153 % as of February, 2006.
I suspect that some of these residents who fell for the bait are getting caught up in escalated monthly payments now. And I could tell them they are wise to jump right now, since I estimate that the housing prices in our neighborhood have risen from 11% to 20 % in these three years. If the market here starts to slow while rates rise, then they'll be bailing out in droves. And if they refinance in the future, I would encourage them to please consider a fixed rate mortgage.
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I’m Going Long Right Now « blog maverick
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Im going long.
Im not going to give you some historical perspective. The SEC killed any historical relevance when they stopped shorts on 900 stocks. Im buying because the only real uncertainty I see remaining is from the economy. So when you hear the talking heads giving you historical facts, stand up, yell at the screen “You are full of BS”
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I love shorts. Short create a foundation of demand for their positions. If a good company gets shorted, whether as a hedge, or because someone thinks the company will underperform, that short will need to be covered at some point. If the company outperforms, or the demand for the stock exceeds the supply, the price of the stock, like any baseball card, iwll go up.
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One thing I know is that starting tomorrow the shorts can get back in the market.
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I have no idea what the economy will do other than the fact that it wont be good. How bad it will get, I dont know. But I can look at a company, discount what the projections are, then discount them some more, and come up with what I think is a fair price.
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My first stomping grounds are MLPs. They have been getting killed. KILLED. They build pipelines, ships, whatever, and they do contracts to provide service via those assets. The assets are very long term, and the cash flows are very consistent. I am putting together a big porfolio that will pay me more than 10pct yield.
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Im also short DIAmond puts (which track the dow jones). Why sell puts ? With market volatility (VIX) at an all time high, I wanted to take in some of the volatility premium in this bullish move.
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I’m also looking at stocks in industries that I know very well that yield 6pct or more. Dividends that I think are safe in companies that I think are very strong. This wont be a big part of my portfolio. Just a tasting.
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Unless you know a company and industry as well as anyone, PUT YOUR MONEY IN A CD. Buying and holding a CD that you renew every 6 months or so, and letting interest compound lets you sleep at night AND lets your money go up.
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If you are willing to approach the stock market like your baseball card or stamp collection, where you realize value is about supply and demand. Then I think it might be the time to dip your toes in the water.
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Bill Cara: Daily Report for Wed, Oct 08, 2008
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Overall, though, this is the time to be buying stocks. Averaging the S&P 500 and NASDAQ, the US equity market has dropped -40% in the past 52-weeks. I think the gain from here in the next 52-weeks will be +20% to +25%. With effective option strategies and purchases of stocks of the highest quality companies in Energy, Basic Materials, Industrials and Technology in particular, I believe your portfolios will lift +30% to +40% across the board.
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Zignals blog: S&P Moving Average Behaviour revisited
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Back in June I did a study on the relationship between the S&P to its 20-, 50-, and 200-day MAs.
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The take home lesson is for the next month or two further downside is not just likely but probable
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As of Friday's close the S&P was 9% off its 20-day MA, 13% from its 50-day MA, and 21% from its 200-day MA. Have there been situations in the past which closely mirrored this - and if so, what happened next?
There were five periods since 1951 which matched this set-up in the S&P
How did markets perform after these periods? -
The greatest number of matches came in 2001. This time the relationship between the moving averages and the S&P came within a week of the lows, although the attempted retest failed and new lows were posted in 2002. It was in 2002 that another matched relationship was made between the MAs and a positive retest was posted 3 months later. This eventually led to the cyclical bull market completed in 2007:
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- What do these historical comparisons tell us?
- We are likely a couple of weeks from a bottom, but it is not impossible for this to take longer
- During this period the market will see sharp losses, perhaps trimming 10-20% off where the markets lie now (Monday will be the start)
- The subsequent rally will be short lived and will morph into a retest of the low
- The retest will be the time to buy heavy
- A significant bull market has a good chance of emerging from the quagmire - remember markets lead economic news.
- We are likely a couple of weeks from a bottom, but it is not impossible for this to take longer
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Brad Setser: The worse the US does, the better the dollar does …
Predicting the path of the USD is a little more complex than on the surface analysis....
Tags: economics on 2008-10-05 -All Annotations (10) -About
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The dollar hasn’t fallen along with the US stocks, US Treasury yields or US employment. There is now a broad consensus that the US is currently in a recession, something that might be expected to lead to a fall in the dollar.
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But the dollar, instead, has rallied. Against the euro. But also against a host of Asian currencies and commodity plays like Brazil and Russia. And it is soaring against the Icelandic Krona …
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Of course, there is now a new dynamic at play as well — namely mounting evidence of a broad global slowdown, and a sharp slowdown in Europe.
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But there is also reason to think that the dollar’s current strength reflects something other than the United States relative economic fundamentals. A recent research piece from Sophia Drossos and Yilin Nie of Morgan Stanley argues that global deleveraging is a major current source of support for the dollar.
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Drossos and Nie note that US banks have grown reluctant to lend to banks abroad — and many banks abroad have significant holdings of dollar debt and thus need dollar financing.
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As US-based institutions have scaled back their overseas lending, the premium for USD LIBOR has increased significantly.”
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The solution to a world where US banks won’t lend to the global funding market? Simple, the US central bank lends dollars to European central banks who lend dollars to their banks — dollars that European banks can no longer get from US banks.
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In other words, the US became the new Japan after the Fed’s rate cuts — despite a large current account deficit.
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The net result, though, has been rather surprising in a lot of ways: dollar strength amid US economic and financial weakness. I at least don’t think we really know what the long-term impact of the current crisis will be on the dollar.
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We still don’t know what will happen once the forced buyers of dollars by actors scrambling to repay dollar debts ends. The US will likely still have a sizeable external deficit that needs to be financed for a while longer, which could drag the dollar down. On the other hand, the US won’t be the only country in a recession.
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Bloomberg.com: Senator Bunning Says Paulson Acts Like Socialist
Tags: no_tag on 2008-09-20 and saved by2 people -All Annotations (6) -About
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Sept. 9 (Bloomberg) -- Senator Jim Bunning said Treasury
Secretary Henry Paulson, by rescuing Fannie Mae and Freddie Mac,
is acting like China's finance minister and both Paulson and
Federal Reserve Chairman Ben S. Bernanke should step down. -
Paulson and the federal regulator for Fannie and Freddie
placed the two largest U.S. mortgage-finance companies in a
government-operated conservatorship on Sept. 7, ousting their
chief executives and eliminating their dividends. Treasury also
may purchase up to $200 billion of stock in the firms to keep
them solvent. -
We no longer have a free market in the United States, we
have a government controlled free market,'' Bunning said in an
interview. -
``When I picked up my newspaper yesterday, I thought I woke
up in France. But no, it turned out it was socialism here in the
United States,'' he told Paulson at a July 15 Senate Banking
Committee hearing. -
Bunning accused Paulson of deception when he told Congress
in July that the Treasury's plan would instill such confidence
among investors that it would never have to be used. -
When asked if he expects more multibillion dollar rescues by
Treasury, Bunning said, ``You bet I do.''
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Mish's Global Economic Trend Analysis: Treasury Bull Alive And Kicking
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the Fed has no idea where interest rates should be and that micro-management of interest rates by the Fed is exactly what has been causing bigger asset bubble after bigger asset bubble.
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The banking system itself is insolvent. I listed 25 reasons in You Know The Banking System Is Unsound When.... Here are reasons 1, 24, and 25.
1. Paulson appears on Face The Nation and says "Our banking system is a safe and a sound one." If the banking system was safe and sound, everyone would know it (or at least think it). There would be no need to say it.
24. There is roughly $6.84 Trillion in bank deposits. $2.60 Trillion of that is uninsured. There is only $53 billion in FDIC insurance to cover $6.84 Trillion in bank deposits. Indymac will eat up roughly $8 billion of that.
25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.
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Commodities | Endurance test | Economist.com
....and here's a very insightful comment from a reader of the preceding artcle.....
Tags: economics on 2008-08-23 -All Annotations (0) -About
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You say when OPEC last cut production prices doubled in a year, the implication being that they can somehow control the price. The fact is that OPEC has a lot of heavy, sour crude oil that not many refiners can refine. Most want the light, sweet stuff like WTI. In fact the whole market trades off WTI which is why the DOE inventory numbers every Wednesday have such a large influence on the market.
Prices have risen not because of OPEC but because:
- Funds have moved into commodities and out of stocks and currencies. They buy commodity indices or call options and the banks that sell these need to go into the underlying market to BUY the future.
- Consumers (airlines and any one else exposed to oil prices) BUY call options or the future to protect themselves against price rises. It's a self-fulfilling act because...
- Producers don't hedge. Why would they need to? If they're worried about falling prices they hold back supply. In fact, more often than not you'll find producer / traders BUYing the future, especially during the infamous Platts Window.
Thank heavens for speculators who have picked up on the US demand destruction theme and are now trying to push the price down with momentum trading. Unfortunately momentum flows two ways. All the BUYers above know this all too well and are keeping their powder dry for when it turns back up.
Most thermal coal traders (hence coking coal and steel prices) are also following oil prices now so where oil goes the economy will go in the opposite direction.
Who said anything about the fundamentals?
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Commodities | Endurance test | Economist.com
Excellent article on factors influencing commodities prices, and a key reason why I still have $DBC and other commodities equities on my long term radar.....
Tags: economics on 2008-08-23 -All Annotations (0) -About
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DURING the six months to the end of June commodities posted their best performance in 35 years, rising by 29%. In July they had their worst month in 28 years, falling by 10%. The slide continues: an index compiled by Reuters, a news agency, shows that prices are almost a fifth below the pinnacle reached in early July.
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They cite various reasons for the recent drop in prices, chief among them the darkening economic outlook in rich countries.
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Marius Kloppers, the boss of BHP Billiton, a huge mining firm presenting its results this week, argued that emerging markets were much more important to the firm’s fortunes than rich ones were. Developing countries, he said, consume four to five times more raw materials per unit of output than rich ones do.
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As Mr Kloppers pointed out, emerging markets, and China in particular, now account for the lion’s share of growth in global demand for raw materials, and a good chunk of overall consumption (see chart).
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The IMF expects developing countries to grow by almost 7% this year. That should be enough to keep demand for most commodities expanding briskly.
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In terms of supply, however, the picture is more mixed. Farmers, encouraged by high prices, have been planting more grain.
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The world’s output of industrial metals is also expanding, and prices have been dropping for over a year. But progress has been fitful. At many mines, the quality of the ore is falling as the richest seams are exhausted.
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Mr Kloppers spoke of BHP’s woeful shortage of tyres for its huge trucks, big mechanical shovels, bearings and all manner of other equipment. Such bottlenecks have been hampering the opening of new mines and the expansion of existing ones.
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The Chinese government has started to discourage the expansion of energy-intensive industries, including aluminium and steelmaking, in an effort to ease the burden on its grid. All this is hampering the production of metals around the world, and so slowing the fall in prices.
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Nonetheless, the output of most metals is still growing much faster than that of oil—which is barely expanding at all. The oil industry, too, is suffering from shortages of equipment and engineers.
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Despite a rise in American inventories, global stocks do not appear to have grown much, suggesting that buoyant developing economies absorbed most of the increase in supply.
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Other factors also influence commodity prices. Some see commodities in general, and gold in particular, as a hedge against inflation, and so may sell if their fears about rising prices abate.
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Commodities also tend to move in the opposite direction to the dollar, which has risen of late.
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Predicting the Bottom in Gold - Seeking Alpha
Here's Bill Cara's take on the current state of Gold and Commodities:
Tags: stock, Journal on 2008-08-17 -All Annotations (0) -About
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Now that my price objectives have been met, I’m going to say that the cycle bottom for GG will likely be hit within 30 days. I recommend that everybody study the Monthly RSI-7 data for the gold miners that I list in the WIR. The Monthlies are quickly catching up to the Daily and Weekly RSI-7 values that have fallen below 30, but the Monthlies are still above 30. I feel if there is a rally here, it will be a short-term rally because the technical damage needs to be corrected before a new Bull phase for these stocks can begin. But if the current cycle grinds out a bottom as Crude Oil continues to plunge, that bottom could occur in the next month.
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n any case, traders know that, whether it is the US or Europe or many other countries, governments are not being (as kaimu says) honest with the money. They are still printing excessively. Governments are still not prepared to drop key interest rates in advance of the onset of deflationary pressures because they are too scared that commodity price inflation will suddenly reappear. So, there will be a break in the commodity Bull, but it will be fairly short-lived. Oil is a consumable so the price, in a period of economic contraction, will drop further than the precious metals. Traders like me will be looking ahead and figuring that gold and silver is not a bad place to be later this year.
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I have very little evidence that shows me that financial assets and government budgets deserve our support.
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Portfolio Review: Welch Favors Water, Singapore, Currency ETFs - Seeking Alpha
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Anthony Welch isn't jumping on the rally in financial stocks that started after regulators clamped down on naked shorts on some of the sector's biggest stocks.
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The ETF technically still appears to be in a downtrend that began last July. "XLF broke below its 200-day moving average, which is a key long-term technical measure, then and hasn't come anywhere near it since," Welch said.
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The independent money manager and advisor to high net-worth and institutional investors would like to see financials at least move about their 50-day moving average for share prices. That's a key short-term metric. XLF is just a few percentage points below that level of just below $22 per share. "It stuck its head above that price several times in the past week," Welch said. "But it keeps meeting resistance and hasn't been able to break through."
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But he's sticking with PowerShares Water Resources (AMEX: PHO). So far this year through Tuesday, it remained in the black.
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The fundamentals are driving that outperformance, he adds. Demand for water treatment systems, technology related to water consumption along with a host of other components of PHO makes both short- and long-term prospects for the alternative energy fund strong, Welch says.
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Another long-term holding he's planning to keep is the iShares MSCI Singapore Index (NYSE: EWS).
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"Singapore is right in the middle of the action in Asia's economic development," Welch said. "It's a safer way to play China's growth and we really like the country's highly educated employment force. And it has a much more stable banking system than most of the rest of Asia."
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He's also holding onto the PowerShares DB G10 Currency Harvest (AMEX: DBV).
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On his radar is the PowerShares DB U.S. Dollar Index Bullish (AMEX: UUP). "It has technically held support at about $22.10 per share and remained in a tight trading range since March. If UUP breaks above about $23.25, we'll probably go long on it," Welch said.
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Fannie Mae and Freddie Mac | End of illusions | Economist.com
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Only six months ago, politicians were counting on Fannie Mae and Freddie Mac, the country’s mortgage giants, to bolster the housing market by buying more mortgages. Now the rescuers themselves have needed rescuing.
After a headlong plunge in the two firms’ share prices (see chart 1), Hank Paulson, the treasury secretary, felt obliged to make an emergency announcement on July 13th. He will seek Congress’s approval for extending the Treasury’s credit lines to the pair and even buying their shares if necessary. Separately, the Federal Reserve said Fannie and Freddie could get financing at its discount window, a privilege previously available only to banks.
The absurdity of this situation was highlighted by the way the discount window works. The Fed does not just accept any old assets as collateral; it wants assets that are “safe”. As well as Treasury bonds, it is willing to accept paper issued by “government-sponsored enterprises” (GSEs). But the two most prominent GSEs are Fannie Mae and Freddie Mac. In theory, therefore, the two companies could issue their own debt and exchange it for loans from the government—the equivalent of having access to the printing press.
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The belief in the implicit government guarantee allowed the pair to borrow cheaply. This made their model work. They could earn more on the mortgages they bought than they paid to raise money in the markets. Had Fannie and Freddie been hedge funds, this strategy would have been known as a “carry trade”.
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It also allowed Fannie and Freddie to operate with tiny amounts of capital.
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The duo focused on mortgages to borrowers with good credit scores and the wherewithal to put down a deposit. This was not subprime lending. Howard Shapiro, an analyst at Fox-Pitt, an investment bank, says the pair’s average loan-to-value ratio at the end of 2007 was 68%;
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Of course, this strategy only raises another question. Why does America need government-sponsored bodies to back the type of mortgages that were most likely to be repaid? It looks as if their core business is a solution to a non-existent problem.
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However, Fannie and Freddie did not stick to their knitting. In the late 1990s they moved heavily into another area: buying mortgage-backed securities issued by others
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Sometimes the mortgage companies were buying each other’s debt: turtles propping each other up. Although this boosted short-term profits, it did not seem to be part of the duo’s original mission. As Mr Greenspan remarked, these purchases “do not appear needed to supply mortgage market liquidity or to enhance capital markets in the United States”.
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This left them exposed to the very subprime assets they were meant to avoid. Although that exposure was small compared with their portfolios, it could have a big impact because they have so little equity as a cushion.
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Clearly, if the pair continue to lose money for much longer, their capital base will be eroded. And, of course, Congress wanted their businesses to expand—meaning that more, not less, capital would be needed. That would require shareholders to stump up more money. But investors tend to anticipate a big equity-raising by selling the shares, and a falling share price makes an equity issue less likely. The fall was sufficiently speedy in mid-July to prompt Mr Paulson to step in. The stockmarket had called the government’s bluff.
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In the end, the turtle at the bottom of the pile is the American taxpayer. But that suggests that, if Americans are losing money on their houses, pensions or bank accounts, the right answer is to tax them to pay for it. Perhaps it is no surprise that traders in the credit-default swaps market have recently made bets on the unthinkable: that America may default on its debt.
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Market.view | All eyes on the carry trade | Economist.com
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When the line is near the peak, a lot of currencies are outperforming the yen, indicating that investors are feeling confident. When the line is low, the yen is beating most other countries and investors are nervous.
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What makes the yen so special? There seem to be two reasons. One is that investors usually have a currency they regard as safe, preferably one from a country that has low inflation and a trade surplus. The yen fits the bill on that count while the dollar definitely does not. The second is that Japan has very low interest rates. This makes the yen a perfect vehicle for the “carry trade”, in which investors borrow money in a low-yielding currency to invest in a higher-yielding asset. Those assets are more risky, so when aversion rises, investors end up buying back the yen they have borrowed.
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Indeed, while a lot of people were worrying about the potential for a carry-trade collapse 18 months ago, it has largely disappeared from investors' radar screen as a topic for discussion. The health of the banking system and high commodity prices have seemed like more important things to worry about
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Perhaps this is a sign that there is more liquidity than we might think, despite the credit crunch. The crunch is certainly having an impact in Europe and America, where consumers and (more recently) companies are having difficulty getting access to capital. But there is plenty of money sloshing around in Asia and in the oil-producing nations of the Middle East. That is hardly surprising since real interest rates are negative in most of those countries (in other words, short rates are below the inflation rate).
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Gold above $900 on record oil | Markets | Hot Stocks | Reuters
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SINGAPORE (Reuters) - Gold rose to its highest level in almost two weeks on Monday, moving back above $900 as speculative buying picked up after oil hit a record high, lifting the metal's appeal as a hedge against inflation.
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Gold <XAU=> rose as high as $904.10 an ounce, its highest level since May 28, up from $896.80/898.20 late in New York on Friday and off a three-week low of $864.45 on Thursday.
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"It looks like we could head higher. Gold remains on a steady 1-month uptrend. Thursday's reversal off the supports indicated that we could see higher gold prices," said Adrian Koh, an analyst at Philip Futures in Singapore. "Nearby uptrend support will probably be around $880."
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A weaker dollar helped gold as it boosted the metal's appeal as an alternative investment to stocks and bonds. The euro was barely changed at $1.5770 <EUR=> after edging up to $1.5800 on trading platform EBS.
Record high oil and uncertainties in the dollar outlook pushed up gold to a record high of $1,030.80 in mid-March.