Did Amazon Just Eat Walmart’s Lunch?

Walmarts Earnings Disaster

This post Did Amazon Just Eat Walmart’s Lunch? appeared first on Daily Reckoning.

Amazon upending brick and mortar retail is the worst-kept secret on Wall Street.

We all know how Jeff Bezos’ mall-crushing romp has forced investors to ditch vulnerable retail plays as the sector continues to slide.

But lately, we’ve seen signs of life from some well-established traditional retailers. The old-school stores that have successfully built their online offerings to compete with Amazon have held strong against the e-commerce king’s onslaught.

Walmart (NYSE:WMT) is one of these companies. The biggest brick and mortar retail operation in the country has maintained a healthy rivalry with Amazon over the past year. The company made all the right moves. It even bought e-commerce upstart Jet.com as part of a bigger campaign to boost its online footprint. If any retailer could go toe to toe with Amazon, it’s Walmart. The gloves were off…

Naturally, we were paying close attention as Walmart released earnings to kick off the short trading week.

The results weren’t pretty.

Walmart topped sales estimates. But the retailer shocked investors with a rare bottom-line whiff, posting earnings far below consensus estimates. The stock gapped down below $100 at the open and continued to drift lower. By the closing bell, Walmart shares had fallen more than 10%.

Before Tuesday’s drop, Walmart hadn’t gapped down 5% post-earnings since 2001, per Bespoke Investment Group. By midday, the stock was having its fourth-worst session since 1980.

The effects of Walmart’s plunge reverberated throughout the other big-box retailers. Target Corp. (NYSE:TGT) dropped 3%. Dollar General Corp. (NYSE:DG), which has mostly avoided Amazon’s wrath, also fell more than 3% on the day.

Despite yesterday’s disastrous performance, Walmart’s efforts aren’t a complete failure. The company finished the 2017 fiscal year with e-commerce sales growth of 40% — a huge boost for a massive commercial operation. But the brick and mortar retailer is now dealing with the growing pains of its online excursion.

The action we’re seeing in the stock is the result of fickle investors cashing out. They don’t want to wait around for Walmart’s plan to mature.

But I’m not ready to bury Walmart just yet. In fact, I believe the competition between Walmart and Amazon is just beginning to heat up — which should be good for shareholders of both stocks.

Just last month, we discussed how Walmart is ratcheting up its grocery operations. The mega discounter filed a new patent that looks to solve one of the biggest issues with online grocery shopping.

Walmart knows customers ordering groceries online don’t want bruised apples and wilted lettuce arriving at their homes. That’s why the company is developing a system that will allow its online customers to browse scanned images of actual fresh items and select which ones they want to buy. The venture could remove one of the biggest obstacles to the mass adoption of online grocery shopping, potentially giving Walmart a leg up over Amazon.

We’re less than a year removed from Amazon’s $14 billion Whole Foods acquisition. Yet despite slashing prices on everything …read more

Ray Blanco: “Blockchain Will Be as Profitable as the Internet Boom”

This post Ray Blanco: “Blockchain Will Be as Profitable as the Internet Boom” appeared first on Daily Reckoning.

The biggest blockchain stock explosion of 2018 is set to erupt, unleashing a tsunami of wealth for investors.

Blockchain stocks are just like bitcoin when it was first invented.

But while bitcoin has already matured, the demand for blockchain technologies has only just begun.

Any company investing heavily in blockchain technology will skyrocket as we watch the tech transform our technological landscape.

Emerging blockchain applications include securities exchanges, voting systems, cryptographically secure property registries, peer-to-peer insurance, supply chain management, smart contracts and anti-counterfeiting payment and remittance systems.

Blockchain tech touches everything!

Investing in blockchain today is like investing in internet stocks at the beginning of the tech boom.

The profits will be unbelievable!

Blockchain and Beyond

All major cryptocurrencies rely on blockchain networks to function.

But the future of blockchain technology will extend far beyond financial applications to include everything from big data to robotics and artificial intelligence.

It will be the most disruptive financial technology since the birth of the internet — and a road to huge profits for investors.

One company in particular is leading the pack as the most active corporate blockchain investor in the world.

The company is Tokyo-headquartered Softbank (OTCBB: SBTBY).

Softbank has identified blockchain as the foundation for a new era of technology and is investing heavily to establish a blockchain-based technological ecosystem.

This makes the stock a great way to play the explosive cryptocurrency and blockchain trend.

Softbank: One Step Ahead of The Rest

It isn’t surprising that Softbank is a great blockchain play.

As a fundamental technology, blockchain touches everything — and crypto is really hot in Japan.

In 2016, the company announced a contest to develop a decentralized fundraising platform built on blockchain.

Also in that year, SoftBank seeded an AI and cloud computing company called CloudMinds that uses blockchain to connect devices and robots to the cloud, as reported by Technode.com.

More recently, the company partnered with another startup to create a blockchain-based personal finance management system that it plans to market in 2019.

SoftBank is also heavily invested in the telecommunications industry including a partnership with Sprint to create blockchain solutions for that industry.

The telco consortium aims to create blockchain-based applications to help customers top up their services, create mobile wallets, remit funds and pay for roaming and IoT services.

On the back end, blockchain will be used to help telecommunications companies transact with each other faster and more securely, as reported in a recent Softbank press release.

Also last month, SoftBank led a $120 million round of investment into insurance startup Lemonade, as reported by Venturebeat.com.

Lemonade bills itself as the world’s first peer-to-peer home insurance company.

The company uses AI to underwrite policies and chat with policyholders, and it builds on blockchain to create algorithms to determine payout conditions and create smart contracts.

Insurance is a huge industry and by reducing overhead and improving service, Lemonade has the potential to be incredibly disruptive.

And this type of exposure to various blockchain applications is why Softbank is such a great play.

With Softbank, you get access …read more

SpaceX Investor: “We Can’t Find An Exit!”

Zach Scheidt

This post SpaceX Investor: “We Can’t Find An Exit!” appeared first on Daily Reckoning.

“Zach, our biggest challenge here is that there’s simply no way to exit!“

No, this wasn’t one of those “escape room” games where you try to solve clues to win the challenge.

This was a conversation with my new friend Chris — who has found himself trapped in an increasingly risky situation.

Fortunately for Chris, there’s help on the way.

And fortunately for you and me, that help could be very lucrative. That is, if you know how to jump in alongside Chris as new exit opportunities turn up…

A Private Problem Hindered By Regulations

I met my new friend Chris while doing work at Starbucks last week.

It all started when I heard him talking on the phone about Elon Musk and the SpaceX highly publicized rocket launch earlier this month. As it turned out, Chris is an investor in SpaceX and many other high-tech companies that are working on some amazing cutting edge projects.

You don’t normally just “bump into” investors in SpaceX at Starbucks.

That’s because SpaceX — and many of the other firms Chris is invested in — are private companies that are not listed on U.S. stock exchanges.

In order to buy a piece of these companies, you have to be invited to invest.

And by law, you must have a net worth in the tens of millions of dollars. So that narrows the playing field by a significant amount.

Chris works for a private equity investment firm that helps affluent investors find and invest in some of the hottest private companies. In particular, Chris focuses on firms developing new space technology — which is an intriguing and fast moving industry.

I could see the excitement in Chris’s eyes when he talked about some of the sci-fi sounding ideas that his companies were working on. But then when we started talking about numbers and the investment side of his business, that excitement turned into frustration.

“Many of the companies we’re investing in are finding huge breakthroughs…” Chris told me. “But even with these breakthroughs, it’s extremely challenging to find a way to sell part of our position and lock in a profit!”

In the past, investors like Chris would be able to lock in windfall profits when private companies listed shares on the New York Stock Exchange for regular investors like you and me to buy. This way, there would be a vibrant market for Chris and his investors to sell shares for lucrative profits.

“But today, no one wants to go public,” Chris said.

“There are too many regulations. It just doesn’t make sense! My companies would rather stay private forever than have to wade through all the red tape the SEC would throw at them.”

And that’s the sad truth… With today’s regulatory environment so strict, individual investors (who are supposed to be protected by these rules) are being shut out of exciting new opportunities. And private investors are less likely to help new startup companies because there is no exit available when they …read more

A Tale of Two Markets, Continued

This post A Tale of Two Markets, Continued appeared first on Daily Reckoning.

Political dysfunction in the United States is at an all-time high.

Republicans and Democrats are fighting pitched battles on immigration, Obamacare, tax cuts, regulation, infrastructure and just about every other major policy issue you can name. These fights are bitter, involve a lot of name-calling and show no signs of abating soon.

The stakes could not be higher. These policy fights are a prelude to the congressional elections in November 2018 when the entire House of Representatives is up for grabs. Right now the Republicans are in control, but a loss of 24 seats will put the Democrats in charge and hand the gavel over to Nancy Pelosi as the speaker of the House.

Once that happens, the impeachment of Donald Trump will begin within a matter of weeks.

In this toxic environment, it seems that Republicans and Democrats cannot find common ground on anything. It turns out that’s wrong; they can agree on something. More spending!

The Republicans have thrown in the towel and given up any pretense of being fiscally conservative. Republicans have joined forces with Democrats to eliminate budget caps on defense and domestic spending.

Entitlements were already out of control because they’re on budget auto-pilot and don’t require new appropriations or votes. Now even the budget items that were subject to votes are out of control.

The bad old days of $1 trillion annual government deficits of the Obama administration (2010, 2011, 2012) are back under a Republican administration. Of course, none of this spending is paid for, because the recent tax cuts already increased the deficit before the new spending spree took effect. Many economists try to find a silver lining by saying spending will be stimulative for the economy.

This is part of the “tale of two markets” narrative I relayed last week.

The first narrative could be called “Happy Days are here Again!” It’s being offered by much of the mainstream.

It goes like this: We’ve just had three quarters of above trend growth at 3.1%, 3.2% and 2.6% versus 2.13% growth since the end of the last recession in June 2009. The Federal Reserve Bank of Atlanta GDP forecast for the first quarter of 2018 is a stunning 5.4% growth rate.

This kind of sustained above-trend growth will be nurtured further by the Trump tax cuts. With unemployment at a 17-year low of 4.1%, and high growth, inflation will return with a vengeance.

This prospect of inflation is causing real and nominal interest rates to rise.

That’s to be expected because rates typically do rise in a strong economy as companies and individuals compete for funds. The stock market may be correcting for the new higher rate environment, but that’s a one-time adjustment. Stocks will soon resume their historic rally that began in 2009.

In short, the Happy Days scenario expects stronger growth, an improved fiscal position due to higher tax collections, higher interest rates, and stronger stock prices over time.

Don’t believe it.

We’re past the point of no return. With …read more

The Great Tug of War Behind Today’s Market

This post The Great Tug of War Behind Today’s Market appeared first on Daily Reckoning.

Our hold on reality dangles by a fraying thread… and the psychologist’s couch awaits.

The stock market is to blame.

Consider…

The recent correction was (at least in part) triggered by rising long-term interest rates.

Yields on the 10-year Treasury nicked 2.88% on Feb. 5 — a whisker from the 3% red line many feared could send stocks on a merry fall.

That is the point at which debt begins to weigh… and investors seek higher returns in the bond market.

But the 3% theory came in for hard sledding last Wednesday…

The 10-year yield glided right past 2.88% — all the way to 2.92% — and that much closer to the red line.

How did stocks take it?

With a hearty belly-laugh.

The Dow Jones ended last Wednesday 253 points higher.

The S&P closed 36 points higher; the Nasdaq 130.

Hence our psychic distress… hence our pending journey to the head shrinker.

As we noted in gobsmacked amazement:

Stocks roared even as 10-year yields eclipsed the mark that supposedly triggered last week’s sell-off… How could this be?

It “does not add up,” read analysis from One Bank, also floored.

Desperate for answers, we suggested that falling volatility — yes, falling volatility — may have won the day for stocks.

Stocks have leapt to record highs recently as volatility has sunk to record lows.

And for reasons likely technical in nature, VIX — Wall Street’s “fear gauge” — fell steadily last Wednesday.

It ended the day beneath 20… miles below the 38.8 spike that threw markets into retreat Feb. 5.

We even sucked a hypothesis out of our thumb as a result…

A tug of war between VIX and the 10-year yield may determine the course of the market this year.

If VIX stays below 20, stocks win.

If the 10-year yield crosses 3%, stocks lose.

We admit, our theory may contain a hole or two — or 327.

But we grope in darkness… as we must in these unlit days.

And our fragile psyche requires some explanation, some tethering to reality, however tenuous.

Today offered another experiment for our theory…

Ten-year Treasury yields spiked again this morning — briefly to 2.93% before settling around 2.90%.

Why?

The United States Treasury is floating a record $258 billion in government bonds this week.

Recall, Congress recently agreed to a spending resolution that raises federal outlays $300 billion over the next two years.

Also recall that Congress recently passed Trump’s tax cuts.

The result is what high-falutin men call a shortfall. And Uncle Sam needs to make the shortage good.

But with the new flood of bonds up for sale — and its implications — bond holders are demanding higher yields in compensation.

Reuters:

Analysts worry the combination of a rising budget deficit, faster inflation and more Fed rate increases have ratcheted up the risk of owning Treasuries.

Here is your explanation for today’s surging 10-year yield.

Did our VIX versus the bond market theory withstand the day?

Largely… yes.

The Dow Jones fell triple digits early in the day as 10-year yields swelled.

It ended the day down 255 points.

The S&P …read more

The Only Safe Way to Buy the Dip

This post The Only Safe Way to Buy the Dip appeared first on Daily Reckoning.

Buying the dip is suddenly back in fashion again just one week after stocks ripped off their lows.

We’re not surprised. After all, traders have tossed around the term “buy the dip” so much during this bull market that it has taken on a life of its own. The short saying has morphed into a cheesy market meme all the pundits trot out whenever stocks drop.

Not sure what to do as the major averages get volatile? Just buy the dip and your troubles will melt away.

But what does “buy the dip” really mean?

It’s certainly not a sound piece of investing advice. It’s vague and misleading, causing most investors to twist “buy the dip” into a catch-all excuse for their careless behavior.

Today, I want to spare you some pain and suffering by making sure you know how to successfully (and safely) buy the dip.

That’s why I’ve made a list of three rules you need to master. Not only will these buy the dip rules help you figure out how to translate investing’s most misunderstood mantra — they’ll also show you exactly how to avoid mistakes and execute the perfect trade.

Let’s get started.

1. No Knife Catching!

Just because a stock has dropped does NOT mean it’s putting in a buyable dip.

If successfully buying the dip was as easy as finding a stock that has gone down a lot, buying it, and waiting to collect your money, you wouldn’t be reading this note. I would be retired and living on my own private island somewhere in the Caribbean.

So when you’re looking to buy a dip, don’t go chasing after a stock with a chart that looks like a train wreck…

Look at that terrible chart!
Buying any of those “dips” would only lead to pain and losses. Just because a stock has gone down a lot doesn’t mean it will immediately reverse course and launch higher.

2. Find a Long-term Winner   

Now it’s time for the next step: Finding a stock that has a good shot at rallying off its recent lows.

You want stability and a solid trend. Take 30 seconds and pull up a simple long-term chart of a stock you like going back at least one or two years. If the stock is moving bottom left to top right, you’re on the right track. No fancy technical analysis required.

Your best bet is a stock that’s proven itself and has a relatively strong chance to continue its trend higher. In the flip side, it’s probably not wise to buy the dips on some speculative garbage stock. Those are the kinds of plays that force traders to get in and out before they get chopped in half by wild sentiment swings. That’s not buying the dip. It’s a disaster waiting to happen.

3. Confirm the Bounce

You’ve thrown out all the falling knives and you’ve found a stock you like in a prolonged uptrend. Now you have to figure out …read more

Special Edition – A Must-Read Crypto Alert

This post Special Edition – A Must-Read Crypto Alert appeared first on Daily Reckoning.

I’m liking what I see from the crypto markets lately.

It may sound foolish or dangerous to say this, but hear me out.

If you look at the myriad attacks on crypto over the last month, the return to November 2017 pricing and the recent settling and smoothing of the market, I can understand your skepticism.

Look, I get it. Recently, there have been a lot of negative forces beating down the crypto market:

JPMorgan Chase, Bank of America and Lloyds in England all stopped allowing their customers to use credit cards to buy crypto (although debit cards appear to work just fine)

The stock market dropped 12–13%, and because the people with money saw a steep decline in their portfolios (and hence, their crypto spending money), the crypto markets were pulled down right alongside the stock market

The SEC/CFTC launched several new lawsuits against unscrupulous ICOs and hinted at more regulation of the crypto markets to come

More saber rattling from South Korea and China on squelching crypto and tightening up regulations to the point of absurdity.

But guess what?

ALL of these negatives were not enough to crush crypto’s heart — or its prices to under November 2017 levels.

The resiliency of crypto is amazing.

And I believe this bodes very well for crypto traders in 2018.

But one of the most immediately confusing things for a new crypto investor to do is figure out how and where to buy these coins.

Tackling Crypto Exchanges

Over the past few weeks I’ve had a number of readers write in stating they’re having trouble opening an account with the many different crypto exchanges.

I understand this is frustrating.

But it’s important to know… your best bet at crypto profits is to have as many options to profit from as possible.

It’s always a good strategy to have accounts on multiple exchanges, for a couple of reasons.

One is that it takes time to verify your identity.

Even if you do submit your credentials, some of these exchanges are so backlogged it could take 30 days — sometimes longer — to get yourself properly verified.

In light of this I recommend you have accounts on two exchanges, maybe even three.

If you’re actively trading crypto already, you may have already seen some exchanges have stopped taking new customers only to start accepting new users all of a sudden.

We’re in the Wild West here, folks.

But not to worry, I’m right here with you and will see you through the wilderness.

No one has all the answers to the current exchange delay issues, but the best thing you can do to minimize the impact is to go with multiple exchanges.

Popular Crypto Exchanges

Coinbase — Website: https://www.coinbase.com/
Gemini — Website: https://gemini.com/
Bittrex — Website: https://bittrex.com/
Binance — Website: https://www.binance.com
GDAX — Website: https://www.gdax.com/
Kraken — Website: https://www.kraken.com

Now a Final Word

Although the recent sentiment on crypto has been bearish, the recent icing on the cake was positive comments from the SEC and CFTC on the future of …read more

Bitcoin vs. Gold [3 Must-See Charts]

Bitcoin 10k

This post Bitcoin vs. Gold [3 Must-See Charts] appeared first on Daily Reckoning.

That was quick!

Late last week, I said most investors were too scared to buy the dip. Boy, was I wrong…

Traders are gobbling up stocks, pushing the major averages higher for five days in a row. Eager buyers have all but erased the market’s double-digit pullback. As of this morning, the Dow, S&P 500, and Nasdaq Composite are all back above their respective 50-day moving averages.

Futures are up once again this morning. If the gains hold to the closing bell, MarketWatch reminds us that we’ll clock the best weekly performance stocks have seen in more than a year.

Here’s what’s happening under the surface of the major averages as we wrap us this exciting trading week:

1. Is this bitcoin comeback the real deal?

Thanks to the return of volatility in the stock market, bitcoin and other cryptocurrencies have completely fallen off the financial media’s radar.

After getting chopped in half, bitcoin quietly bottomed out in early February and began its comeback journey. It briefly topped $10,000 last night for the first time since late January. It’s now up more than 60% off its recent lows and consolidating near $9,900.

The parabolic rise we witnessed in bitcoin during the fourth quarter was unsustainable. But the crypto faithful are quick to remind us that bitcoin has endured more than a handful of crashes during its short existence. Each time, bitcoin has recovered and pushed to new highs.

Is this time different?

2. A beautiful biotech bounce

Before this month’s market meltdown, we noted that the biotech sector was outperforming the averages to kick of 2018 trading. Merger madness had taken hold, pushing shares of many promising companies in the sector to new highs.

More importantly, the SPDR S&P Biotech ETF (NYSE:XBI) has proven resilient during the volatility spike and selloff.

In fact, XBI never closed significantly below its 50-day moving average as investors dumped stocks last week.

XBI is now up more than 9% this year, compared to a year-to-date gain of 5% in the Nasdaq Composite. I suspect we’ll see more than a few profitable trade ideas come out of this sector as earnings season wraps up…

3. Gold pushes higher

Stocks aren’t the only asset class pushing higher this week. Precious metals are also perking up. Gold exploded higher on Wednesday and made a run at its January highs near $1,360 as the dollar retreated toward 3-year lows…

We don’t have to search far to find a catalyst for gold’s sharp bounce. Remember, the U.S. dollar is now off to its worst start of the year since 1987. And it doesn’t look like it’s going to recover anytime soon.

A breakout here could boost gold to prices we haven’t seen in more than four years. With the threat of inflation growing and the dollar tumbling, conditions are ripe for an extended rally in precious metals.

Sincerely,

Greg Guenthner
for The Daily Reckoning

The post Bitcoin vs. Gold [3 Must-See Charts] appeared first on Daily …read more

Since When Is $44 Billion For American Patriots A Shame, WSJ?

Zach Scheidt twitter

This post Since When Is $44 Billion For American Patriots A Shame, WSJ? appeared first on Daily Reckoning.

Earlier this week, I saw a politically motivated quote in the paper that just about made me lose my cool.

Not only was it incredibly misleading, but it also disparaged one of the programs that I’ve been encouraging retirees to take advantage of for years now!

Now, when it comes to politics and the different opinions that everyone is entitled to, I try to be understanding. Even when I disagree with a person’s position, I usually just smile and nod. It’s not my nature to get mad about stuff like this.

So it’s a pretty big deal that this one riled me up. It’s so far off the mark, I feel compelled to set the record straight about the billions of dollars flowing into the country right now.

You don’t have to agree with me, or anyone else when it comes to politics. But please don’t let political persuasions get in the way of you understanding the truth!

A $44 Billion Payday for American Patriots

This was a great week for retirees who are signed up to receive what I call “Cash for Patriots” payments. These are the dividend payments that American investors are receiving from U.S. corporations — dividends that are quickly expanding thanks to windfalls from the new tax bill.

On Wednesday afternoon, Cisco Systems (CSCO) reported quarterly earnings that beat investor expectations.

Much more importantly, as I noted in a tweet yesterday, Cisco will bring $67 billion in overseas cash back to the United States this quarter.

Of that cash, $44 billion will go to shareholders through larger dividends and share buybacks. Exactly the type of “Cash for Patriots” that we’ve been expecting from this new tax bill.

I was thrilled when I read the news.

And then I saw the following quote, which made my blood boil…

“…increases in share repurchases and dividends show money saved from the [tax] law is going to shareholders instead of being invested in new U.S. jobs, infrastructure, research and development and related areas.”1

Wait just a second. So just because the cash is being paid to investors — the literal OWNERS of the company, many of whom are American patriots who need this cash for day-to-day life expenses — the company isn’t adding jobs, infrastructure or other benefits?

That’s absolute bullshit! (Pardon my French.)

I’m sorry… That’s not how I usually talk.

But this line of reasoning is so biased… so ignorant… and so inaccurate that I can hardly stand it!

And it really worries me that so many Americans will see this type of “logic” in print and accept it at face value. When in fact, this $44 billion is being put to work in a way that will benefit American patriots — and grow our economy in a very effective way.

What’s Wrong With Good Old Fashioned Cash Payments?

The way the media is treating this $44 billion in payments to investors is preposterous.

They want us to believe that if Cisco returns this money …read more

The Stock Market Is Not Out of the Woods

PLACEHOLDER

This post The Stock Market Is Not Out of the Woods appeared first on Daily Reckoning.

As the Dow Jones industrial average fell over 2,600 points between Feb. 2 and Feb. 8, 2018, a decline of over 10% from the all-time high of 26,616 on Jan. 25, and officially a market “correction” as defined by Wall Street, one question kept repeating in investors’ minds: Where is the “Powell Put?”

A bit of explanation may be in order.

The name “Powell” is a reference to Jay Powell, the newly installed chairman of the Federal Reserve Board. The term “put” comes from options trading. The holder of a put has protection from market declines. When markets are collapsing, put owners can close out stock positions at levels set by the put contract and avoid losses below those levels.

The Powell Put is simply a reference to the fact that Jay Powell and the Fed will bail out stock investors at some level to avoid extreme losses.

Jay Powell was selected by President Donald Trump to be the new chairman of the Board of Governors of the Federal Reserve. Now that Powell has been confirmed and sworn in, stock markets are looking to Powell for relief from the current turmoil.

The Powell Put is the latest in a long line of bailouts offered to the stock market by the Fed.

The “Greenspan Put,” named after Fed Chairman Alan Greenspan, was exhibited in September and October of 1998 when Greenspan cut interest rates twice in three weeks, including an emergency rate cut not at a scheduled FOMC meeting, to control the damage from the collapse of hedge fund Long-Term Capital Management.

The “Bernanke Put,” named after Fed Chairman Ben Bernanke, was exhibited on numerous occasions, including the launch of QE2 in November 2010 after QE1 had failed to stimulate the economy and the delay of the taper in September 2013 after the emerging markets meltdown resulting from Bernanke’s “taper talk” in May 2013.

The “Yellen Put,” named after Fed Chair Janet Yellen, was also on display many times. Yellen delayed the “liftoff” in rate hikes from September to December 2015 or order to calm markets after the Chinese shock devaluation and U.S. market meltdown in August 2015.

The Yellen Put was used again starting in March 2016 when the Fed delayed expected rate hikes until December 2016 to deal with another China devaluation shock and U.S. market meltdown in January–February 2016.

In short, there is a long history of the Fed cutting rates, printing money, delaying rate hikes or using forward guidance to calm nervous markets and pump up asset prices. Over the past 20 years, the Fed has practiced the mantra of ECB head Mario Draghi, “Whatever it takes,” as its response to disorderly market declines.

Now that U.S. stock markets have experienced a drawdown as severe as those of August 2015 and January 2016, the need for the Fed to possibly exercise the Powell Put is back on the table.

There can be no doubt …read more

The Great Mystery of Yesterday’s Stock Rally

PLACEHOLDER

This post The Great Mystery of Yesterday’s Stock Rally appeared first on Daily Reckoning.

The “most-watched data point in history” came out yesterday.

January’s Consumer Price Index (CPI) would inform markets if inflation was at last slipping its leash.

Inflationary murmurs — and the aggressive rate hikes they might portend — were at least partly responsible for last week’s “correction.”

Further inflation omens meant the Fed could tug hard on the leash… and choke off the stock market in the process.

“It would be impossible,” says blogger The Heisenberg, “to overstate how laser-focused traders were on that number.”

Yesterday morning at 8:30… the Labor Department released the number.

Consensus was that January CPI would rise 0.3%.

What was the actual figure?

0.5% — a substantial beat — and its strongest showing in five months.

The market odds of three rate hikes this year immediately leapt from a coin-tossed 50% — to 62%.

The prospect of four rate hikes swelled from 17% to 23%.

And sure as sugar, Dow futures plunged 500 points on the news:

Source: Bloomberg

The bears had landed the day’s opening licks.

Meantime, the inflationary news set 10-year Treasury yields marching for the 3% Maginot Line many believe could trigger a market capitulation.

They began the day around 2.82%.

Recall, markets sold off last week when the 10-year Treasury yield nicked 2.88%.

How much more territory could the bears lose before another taking another trouncing?

But around 10 a.m. yesterday, the battle tide suddenly turned in favor of the bulls…

As Shakespeare’s Henry V counseled his men, they stiffened their sinews… summoned their blood… and took to the offense.

The Dow Jones, the S&P, the Nasdaq, all began to surge.

By midday, they broke the bearish center.

The ensuing rout continued all afternoon.

The Dow ended the day 253 points higher. The S&P closed 36 points higher and the Nasdaq 130.

Strangely — and this is what staggered us — stocks roared even as 10-year yields eclipsed the mark that supposedly triggered last week’s sell-off.

They’d risen to 2.92% by 3 p.m. — beyond last week’s triggering 2.88%.

How could this be?

On the day when inflation came in hotter than expected…

On the day when the 10-year yield cracked 2.92%…

Stocks record a roaring victory.

Analyses at One Bank were likewise stumped:

“On a day when inflation beats in the U.S… stocks are up, yields are up… [it] does not add up.”

Puzzled too was Peter Boockvar, chief investment officer at Bleakley Advisory Group:

“The market’s celebrating like there’s something good about higher inflation and interest rates.”

Ah, but we fail to mention another actor in yesterday’s drama…

VIX — the barometer of market volatility.

VIX spiked hundreds of percent last Monday.

Stocks sold off massively on the volatility, resulting in the Dow’s largest one-day point drop ever.

But yesterday, something like the reverse occurred — if on a scale less grand.

VIX fell on the day.

It shrugged its shoulders at the inflationary news that initially sent Dow futures plunging 500 points.

From over 25 the afternoon before, VIX broke below 20 by midmorning.

It ended the day around 19.

Did markets rise because falling volatility overpowered the bear …read more

Ray’s Little Known Secret to BIG Biotech Profits

This post Ray’s Little Known Secret to BIG Biotech Profits appeared first on Daily Reckoning.

Today I want to pull back the curtain and explain how I use a little known Federal Drug Administration secret to identify the best biotech stocks that could trigger big profits in months.

One that tells me exactly when drug companies expect to receive approval from the FDA.

This information is an incredibly valuable first step when I begin researching a biotech stock.

Because if a company’s drug gets a thumbs up from the FDA, they’re free to start marketing its drug.

And share prices could soar.

Now you should know that there’s literally pages upon pages of this data to monitor.

It’s not as simple as throwing a dart at the FDA calendar and landing on a winner.

But this information allows me to target my research to find the very best stocks that the biotech sector has to offer.

In short, I start with the FDA’s PDUFA dates.

PDUFA stands for the Prescription Drug User Fee Act, most recently reauthorized by Congress in 2012. It’s a promise the government makes to companies to approve or reject new drugs much faster than in the past.

And it forces the FDA to get new lifesaving drugs to the market faster and in a more predictable fashion.

The biotech company pays the FDA a fee to review their drug. And in turn, the FDA gives the company an exact date when they plan to approve or deny the drug.

For us investors, these PDUFA dates create an absolute trader’s paradise.

Here are two examples from last year.

Amgen (NASDAQ: AMGN) for example, announced FDA approval of its heart-attack prevention therapy on Dec 1. Immediately after, the stock popped 15% in less than two months, moving from $177.20 to $199.

Another prime example is Puma Biotechnology Inc. (NASDAQ: PBYI). On July 17 last year, the company announced it received FDA approval for its new breast cancer treatment.

In the two weeks that followed, the stock steadily rose from $86.10 to $97.60.

An increase of 13% in two weeks.

And if you held on through the brief sell-off that followed you could have cashed out in December at $132.45 per share.

That’s a gain of almost 54% in 5 months!

All off one good trial result.

The point is, following FDA trials can instantly put you into position for potentially enormous market returns.

In fact, one of my favorite biotech’s for 2018 is currently on deck for FDA approval.

The date is set for April 27, and with a positive result this tiny biotech could soar.

It’s your best chance to get in on the ground-floor of what could be the single hottest biotech play of the year.

For Technology Profits Daily,

Ray Blanco
Chief Technology Expert, Technology Profits Daily

Editor’s note: Ray’s identified a biotech stock that, according to a secret document, could score you up to 1,500% in profits.

Believers and non-believers alike will be shocked when they see this. But this opportunity will strike on April 27. Get your insider access today by clicking …read more