• Tag Archives ETF
  • “Mr. Carlson Said One Of His Clients Had 40% Of His Net Worth In Apple”

    The WSJ has a good article explaining how schizophrenic the tech rally this year has been, with shares of giant tech firms “cropping up everywhere” in the universe of factor-based strats, even contradictory ones. Some examples: “Apple is in five low-volatility ETFs with a collective $14 billion and nine momentum ETFs with $17.7 billion, according to data firm XTF. Alphabet resides in seven low-volatility ETFs and three momentum ETFs, while Microsoft is in 11 low-vol ETFs and four momentum ETFs.”
    That’s not all: Apple is also the fourth-largest position in the iShares Quality Factor ETF , which invests in firms with high returns on equity, low debt and stable earnings growth. At the same time, Apple is a large holding in a separate BlackRock ETF that aims to capture momentum, and it is also the top holding in BlackRock’s iShares Edge Value Factor ETF, representing nearly 10% of the portfolio.
    While in the past different factors offered different investment styles, and at least superficial diversification, the tech juggernaut has made some of the most popular quant strats virtually overlapping.
    This “style creep” means investors holding a mix of seemingly disparate funds in the name of diversification “could be surprised to find heavy concentrations in the same group of in-favor stocks, making them vulnerable in bouts of selling. Rules-based funds and strategies that gradually added tech stocks could sell them in a downturn, adding to price declines.”
    The biggest risk may be volatility itself.

    This post was published at Zero Hedge on Jun 19, 2017.

  • FANG Falters As Best-Performing Tech Fund Manager Warns “When Things Are This Elevated, It’s Best To Be Cautious”

    Joshua K. Spencer has managed his T. Rowe Price Global Technology Fund to become the best-performing mutual fund in the past five years with big bets on Amazon and Tesla is now selling some big winners… and it’s sending FANTASY stocks lower…
    FANG stocks are rolling over…
    And FANTASIA (Facebook, Amazon, Netflix, Tesla, Alphabet, SalesForce, Intel, and Apple) stocks are falling back from their 50% retracement…

    This post was published at Zero Hedge on Jun 19, 2017.

  • The Rise Of Robots & The Risk To Passive

    Authored by Lance Roberts via RealInvestmentAdvice.com,
    In Tuesday’s post, ‘A Shot Across The Bow,’ I discussed the recent ‘Tech Wreck’ and the warning sign that was delivered when trading algorithms begin to run in the same direction. To wit:
    ‘The plunge was extremely sharp but fortunately regained composure and shares rebounded. A ‘flash crash.’ One day, we will not be so lucky. But the point I want to highlight here is this is an example of the ‘price vacuum’ that can occur when computers lose control. I can not stress this enough.
    This is THE REASON why the next major crash will be worse than the last.’
    Of course, it generally isn’t long after publishing commentary about the dangers of the current crowding into ETF’s, that I receive some push back.
    Shocker: For fee broker advises against indexing — JiveJoseph_Duarte (@JiveJoey_D) June 13, 2017

    This post was published at Zero Hedge on Jun 16, 2017.

  • What Happens When the Machines Start Selling?

    The death of fundamental analysis.
    The infamous FAANG stocks – Facebook, Apple, Amazon, Netflix, and Google’s parent Alphabet – along with other ‘tech’ stocks have been getting ‘hammered,’ to use a term that for now exaggerates their ‘plight.’ The FAANG stocks are down between 1.7% and 2.5% at the moment and between 5.5% and 11% since their peak on June 8. Given how far these stocks have soared over the past few years, this selloff is just a barely visible dip.
    But fundamental analysis has long been helpless in explaining the surge in stocks. The shares of Amazon now sport a Price-Earnings ratio of 180, when classic fundamental analyses might lose interest at a PE ratio of 18 for the profit-challenged growth company that has been around for over two decades. For them, the stock price might have to come down 90% before it makes sense.
    Or Netflix, with a PE ratio of 195. Or companies like Tesla. Forget a PE ratio. There are no earnings. The company might never make any money. Its sales are so minuscule in the overall US automotive market that they get lost as a rounding error. It bought Elon Musk’s failing solar-panel company as a way to bail it out. And the battery-cell technology Tesla uses comes from Panasonic. So what should a company like this be worth? Fundamental analysis has been completely irrelevant: Tesla’s current stock price gives it a market capitalization of $61 billion.

    This post was published at Wolf Street by Wolf Richter /Jun 15, 2017.

  • It’s All About The Grift

    When insanity rules all sorts of things that are fiscally impossible to actually “work” suddenly seem not only possible but reasonable.
    It was recently pointed out that Amazon among other “high flying” tech stocks is basically a 2-n-20 hedge fund for its higher-level employees. That is, the cash flow of the company has turned from a source of innovation and advancement into a means to funnel billions of dollars to those people via stock-based compensation. That cash flow is supposed to inure to the benefit of all the shareholders but instead is being taken up to a huge degree by a handful of insiders.
    This isn’t illegal, but it’s something that the market would normally not allow because it would be met by immediate and severe selling pressure in the shares, destroying the ability to promulgate the scheme. In a hyped “market” however this doesn’t happen because nobody thinks anything “bad” will come from the practice.
    Likewise, companies like Tesla and Netflix could not exist as public firms, say much less those with the sort of market caps and stock prices they have. Why? Because neither is able to return any sort of profit at all on a pure operating cash flow basis. Netflix has forward obligations for content that make this impossible at any time in the reasonable future and Tesla has never managed it without ridiculous levels of subsidy on a per-car-sold basis from the government. Both firms exist solely because people believe their respective paradigms can exist forever. This is a demonstrably false belief and has never worked in the history of markets on an indefinite forward basis but today that does not matter as both firms have nice stock prices instead of being zeros.

    This post was published at Market-Ticker on 2017-06-14.

  • The Tech-Wreck – A Shot Across The Bow For “Passive Indexers”

    I wanted to pick up on a discussion I started in this past weekend’s missive, with respect to both Friday’s rout in technology stocks as well as Monday’s rather nasty open. While the issue seemed to be a simple short-term rotation in the markets from large capitalization Technology and Discretionary stocks into the lagging small and mid-capitalization stocks, the sharpness of the ‘Tech Break’ on Friday revealed an issue worth re-addressing. To wit:
    ‘Both Discretionary and Technology plunged on Friday as a headline from Goldman Sachs questioning ‘tech valuations’ sent algo’s running wild. The plunge was extremely sharp but fortunately regained composure and shares rebounded. A ‘flash crash.’
    One day, we will not be so lucky. But the point I want to highlight here is this is an example of the ‘price vacuum’ that can occur when computers lose control. I can not stress this enough.
    This is THE REASON why the next major crash will be worse than the last.’
    I am not alone in this reasoning. Just recently John Dizard wrote for the Financial Times:
    ‘The most serious risks arising from ETFs are the macro consequences of too much capital being committed in too few places at the same time. The vehicles for over-concentration change over time, such as the ‘Nifty Fifty’ stocks back in 1973, Mexican and Argentine bonds a few years after that, internet shares in 1999, and commercial property every other decade, but the outcome is the same. Investors’ cash goes to money heaven, and there is a pro-cyclical decline in productive investment.

    This post was published at Zero Hedge on Jun 13, 2017.

  • SWOT Analysis: Gold’s Strength Is Justified Says UBS

    The best performing precious metal for the week was palladium, up 5.10 percent. Grant Sporre, an analyst at Deutsche Bank, noted there is a genuine physical tightness in the market, but the spike had all the hallmarks of someone being caught short and being squeezed. Bullionvault’s Gold Investor Index, which measures the balance of client buyers against sellers, rose the most in two years reaching a high of 55.3 in May versus 52.1 in April, reports Bloomberg. In India, gold imports jumped fourfold in May to 126 metric tons from 31.5 metric tons in the same month last year. In a report by the World Gold Council, consumption in India could climb dramatically this year as a ‘simple’ nationwide Goods Services Tax will boost the economy, making the gold industry more transparent to benefit buyers, reports Bloomberg. Amid unease over a congressional hearing on possible links between Russia and the Trump campaign, holdings in SPDR Gold Shares (the world’s largest gold-backed ETF) climbed to the highest this year on the back of safe-haven demand, reports Bloomberg. In the two weeks through the end of May, hedge funds and other large speculators boosted their bullish bets on the precious metal by 37 percent, notes another Bloomberg article, the most since 2007 according to government data. Japanese investors sold a record amount of U. S. debt in April, reports Bloomberg. ‘Political turmoil in Washington and uncertainty about French elections pushed down Treasury yields, diminishing their attractiveness,’ the article continues. Japanese investors cut holdings of U. S. debt by $33.2 billion in April, the most in data going back to 2005, according to a Ministry of Finance balance-of-payments report.

    This post was published at GoldSeek on 12 June 2017.

  • Goldman: “The Last Time The Market Acted Like This Was At The Tech Bubble Peak”

    Yesterday’s dramatic “rotational” divergence between tech stocks and the rest of the market, which as Sentiment Trader pointed out the only time in history when the Dow Jones closed at a new all time high while the Nasdaq dropped 2% was on April 14, 1999, stunned many and prompted Bloomberg to write that “a crack has finally formed in the foundation of the U. S. bull market. Now investors must decide if any structural damage has been done.”
    This year’s hottest stocks, companies from Facebook Inc. and Apple Inc. to Netflix Inc. and Nvidia Corp., buckled Friday, spurring losses that sent the Nasdaq 100 to its biggest drop relative to the Dow Jones Industrial Average since 2008. An alternative explanation is that the purge in tech stocks, responsible for half the market’s gains in 2017…

    This post was published at Zero Hedge on Jun 10, 2017.

  • Doug Noland: Crowded Longs, Shorts and a New Z1

    This is a syndicated repost courtesy of Credit Bubble Bulletin . To view original, click here. Reposted with permission.
    It was a week that saw Mario Draghi cling stubbornly to ultra-dovish monetary policy, the UK’s Brexit strategy thrown into even greater disarray after Prime Minister May’s failed election gambit, and the former Director of the FBI essentially testify that our President is a scoundrel. And then there’s the Middle East…
    In the midst of it all, after trading at a 24-year low 9.37 Friday morning, an abrupt reversal had the VIX ending the week at 10.70. Looking at the S&P500’s slight (0.3%) decline for the week, one might be tempted to think comfortably ‘boring.’ Market internals, though, were anything but boring or comforting. Friday’s session saw the Nasdaq 100 (NDX) swing wildly. After trading to an all-time high 5,898 in the first hour of U. S. trading, the index sank over 4.0% to 5,658 before closing the session down 2.44% at 5,742. Amazon traded in an intraday range of 1013 to 927. Looking at ‘FANG’ plus Microsoft and Apple, major market cap was evaporating in a hurry. By the end of Friday’s session, Facebook had declined 3.3%, Apple 3.9%, Amazon 3.2%, Microsoft 2.3%, Netflix 4.7% and Google 3.4%. The semiconductors (SOX) traded at a multi-year high 1,149 early in Friday’s session, then sank 7.0% before recovering somewhat to close the day down 4.3% at 1,090. Biotech (BTK) rose 1.5% in the morning to an all-time high and then closed the session slightly lower.

    This post was published at Wall Street Examiner by Doug Noland ‘ June 10, 2017.

  • Chinese gold demand falling, not rising — Lawrie Williams

    One measure of Chinese gold demand which we follow is the level of gold withdrawals from the Shanghai Gold Exchange. With the publication today of the figure for May of 138.08 tonnes it appears that withdrawals to date this year are marginally down on those of a year ago – and substantially below the record seen in 2015. This is contrary to some other reports which suggest Chinese gold demand is stronger this year than last and may again be approaching record level.
    Even though SGE gold withdrawals may be down on 2016 and 2015, though, they do remain substantial by world levels, being equivalent to around 60% plus of all global new mined gold, and with Indian demand as represented by imports making a strong recovery this year (some reckon the annual Indian total may reach 1,000 tonnes again), these two nations alone will account for around 90% of all new mined gold – and gold flows into Asia as a whole, particularly if one adds in smuggled gold into India which some estimates put at over 200 tonnes, look like exceeding the global new mined total alone.
    With the major gold ETFs adding to their gold tonnage totals so far this year, and taking into account gold consumption throughout the rest of the world – notably in Europe – then we could be heading for a substantial undersupply of new physical gold which, logically, should drive the gold price higher. Scrap supply will probably make up much of this balance, but the major analytical consultancies see this as continuing to drop which should be a positive for gold’s fundamentals.

    This post was published at Sharps Pixley

  • Bill Gross: “Market Risk Is Highest Since Before The 2008 Crisis”

    Speaking at the Bloomberg Invest summit in New York, Bill Gross (of the recently merged Janus Henderson) who may or may not have been talking his bond book, issued a loud warning to traders saying U. S. markets are at their highest risk levels since before the 2008 financial crisis “because investors are paying a high price for the chances they’re taking.” Well, either that, or simply ignoring the possibility of all ETFs having to sell at once.

    This post was published at Zero Hedge on Jun 7, 2017.

  • In Gold We Trust

    With the U. S. dollar taking another hit last Friday on a weaker-than-expected jobs report, gold closed up 1.12 percent for the day today. A Bloomberg gauge of 72 junior miners, however, has lost 15 percent since the end of January, and the rebalance of the VanEck Vectors Junior Gold Miner ETF (GDXJ), which I previously wrote about, is also having a depressing effect on many gold names.
    This was a major concern among investors at the International Metal Writers Conference in Vancouver, which I presented at last week. Despite gold gaining 9 percent so far this year, junior gold miners have not followed through with those gains as the GDXJ is set to cut in half its exposure to the junior mining space on June 16.
    We’ve Only Just Begun
    Other investors aren’t so pessimistic. Every year for the past 11 years, Liechtenstein-based investment firm Incrementum has issued its closely-read ‘In Gold We Trust’report. The 2017 edition, released last Thursday, raises a number of interesting observations that add some shine to gold’s investment case.
    For one, its analysts firmly believe that gold’s price turnaround last year ‘marked the end of the cyclical bear market,’ adding that ‘the rally in the precious metals sector has probably only just begun.’ To illustrate this, the group tracked the performance of every gold stock bull market going back to 1942, using the Barrons Gold Mining Index. The bull market that began last year, highlighted in red below, does indeed look as if it has much more room to run.

    This post was published at GoldSeek on 7 June 2017.

  • Gold and Silver ETF Demand Lacking as Prices Jump, Yuan Leaps vs. Dollar

    Gold prices jumped to new 7-week highs at $1291 per ounce on Tuesday, again testing the 6-year downtrend line in place since the metal’s 2011 record highs as Western stock markets fell with longer-term interest rates.
    After the ISM Prices Paid measure of inflation in manufacturing costs “tanked” in Friday’s report for May, 10-year US Treasury yields today fell again to post-Trump election lows of 2.15%.
    Crude oil also extended its drop despite the “freezing out” of Qatar by other Gulf states over what Saudi Arabia and now US President Trump call the “funding of radical ideology.”
    British police meantime said they and the MI5 security service had one of Saturday night’s 3 suicide-murderers in London Bridge under close surveillance back in 2015 when he appeared on a national TV documentary entitled The Jihadi Next Door.
    “Gold is not just for turbulent times, it has been a good source of returns over the last 10, 20 and 30 years,” said former UBS and then Paulson & Co. strategist John Reade, now chief market strategist for the mining-backed World Gold Council, at the Asia Pacific Precious Metals Conference in Singapore.

    This post was published at FinancialSense on 06/06/2017.

  • Doug Noland: Liquidity Trade

    It’s not quite 1999 at this point, but it’s been moving in that direction. In about five months’ time, the Nasdaq 100 (NDX) has posted a gain of 20.5%. NDX stocks with greater than 50% y-t-d gains include Vertex Pharmaceuticals (74%), Activision (64%), Tesla (60%), JD.com (58%), Wynn Resorts (54%), CSX (53%), Autodesk (52%), Liberty Ventures (51%) and Lam Research (50%). Amazon’s 34% 2017 rise has increased market capitalization to $481bn (P/E 189). Apple’s 33% gain pushed its market cap to $806bn. Facebook has gained 33% y-t-d, Google 26%, and Netflix 32%.
    There’s an interesting similarity to the 1999 backdrop: A Federal Reserve (and global central bank community) way too timid in implementing a ‘tightening cycle’ despite bubbling asset markets. Fed funds began 1999 at 4.75%, after rates were slashed 75 bps late in 1998 in response to the Russia/LTCM financial crisis. Despite clearly overheated securities markets, rates ended 1999 at 5.5% – the same level they were for much of 1998. The Fed was content to let the speculative Bubble run, with memories of the previous year’s near financial meltdown clear in their minds. Moreover, Y2K uncertainties provided a convenient excuse to accommodate the raging Bubble.
    On the back of the People’s Bank of China’s forceful interventions, the renminbi traded this week to the strongest level since November. Speculative markets have come to welcome heavy-handed Chinese intervention. The assumption is that Chinese officials are absolutely determined to hold bursting Bubble dynamics at bay.

    This post was published at Credit Bubble Bulletin

  • Gold and Silver Market Morning: June 5 2017 – Gold consolidating with a positive bias!

    Gold Today – New York closed at $1,278.20 Friday after closing at$1,270.10 Thursday. London opened at $1,281.00 today.
    Overall the dollar was weaker against global currencies, early today. Before London’s opening:
    – The $: was weaker at $1.1264 after Friday’s $1.1222: 1.
    – The Dollar index was weaker at 96.77 after yesterday’s 97.20.
    – The Yen was stronger at 110.51 after Friday’s 111.51:$1.
    – The Yuan was stronger at 6.8036 after Friday’s 6.8153: $1.
    – The Pound Sterling was stronger at $1.2905 after yesterday’s $1.2875: 1.
    Yuan Gold Fix
    New York closed $4.17 lower on Friday than the Shanghai Gold Exchange was trading at today ahead of Monday’s opening. London opened at around $1 lower than Shanghai was trading earlier today. These are very small price differences evidencing arbitrage operations at very professional levels [likely banking operations]. We have been watching these markets, as you know, very carefully over the last year. Our conclusion is that we are watching global gold market developments that are much more significant than the 2005 ‘de-hedging’ operations by gold mining companies and the establishment of gold ETFs by the World Gold Council. These changes not only bring structural changes to the global gold market but demonstrate where gold is going in the future. As China has integrated gold into its financial system, the weight of physical gold trading is being brought to bear on global gold prices. As theemphasis moves to physical dealing in gold, so its importance as an international reserve asset as well as an asset in support of global finances will increase in the months and years to come.

    This post was published at GoldSeek on 5 June 2017.

  • Central Banks Now Own A Third Of The Entire $54 Trillion Global Bond Market

    Two weeks ago we asked a question: maybe behind all the rhetoric and constant (ab)use of sophisticated terms like “gamma”, “vega”, CTAs, risk-parity, vol-neutral, central bank vol-suppression, (inverse) VIX ETFs and so forth to explain why despite the surging political uncertainty in recent years, and especially since the US election…
    … global equity volatility, both implied and realized, has tumbled to record lows, sliding below levels not even seen before the 2008 financial crisis, there was a far simpler reason for the plunge in vol: trading was slowly grinding to a halt.
    That’s what Goldman Sachs found when looking at 13F filings in Q1, when it emerged that the gross portfolio turnover of hedge funds had retreated to a record low of just 28%. In other words, few if any of the “smart money” was actually trading in size.

    This post was published at Zero Hedge on Jun 4, 2017.

  • Lance Roberts: This Market Is Like a Tanker of Gasoline…and passive ETFs and margin debt will set it afire

    Lance Roberts, chief investment strategist of Clarity Financial and chief editor of Real Investment Advice has authored a number of impressive recent reports identifying potential failure points in today’s financial markets.
    In this week’s podcast, Lance explains how the massive flood of investment capital into passively-managed ETFs, along with record amounts of margin debt, has the potential to set the markets afire:

    This post was published at Peak Prosperity

  • Are Stock Traders Actually More Pessimistic Than Bond Traders?

    Authored by Kevin Muir via The Macro Tourist blog,
    As a former equity guy, it pains me to say that when the bond and equity markets are at odds, it usually pays to go with the bond guys. Let’s face it, the bond guys are better at math, often smarter, and less likely to fall for a story. Therefore I am a little at a loss regarding this next chart, as it appears the stock jockeys are more sanguine about rates than the fixed income crew.
    Yesterday the SPDR Utility ETF closed at a new all-time high. With all the excitement regarding the FANG stocks, along with the manic chasing occurring in TSLA and bitcoin, you would figure that sentiment would be bubbling over. Shouldn’t investors be dumping utility stocks like University students returning on Thanksgiving weekend to their old high school sweethearts? Instead, we find investors gobbling up utilities like rates are never going higher.

    This post was published at Zero Hedge on May 31, 2017.