Mark Cuban: Artificial Intelligence ‘Will Cause a Lot of Unemployment’

Billionaire Mark Cuban said this weekend that AI will cause mass unemployment.
And soon.
The ‘Shark Tank’ star took to the stage at multimedia celeb festival OZY yesterday to warn that ‘however much change you saw over the past 10 years with the Apple (Nasdaq: AAPL) iPhone, that’s nothing. There’s going to be a lot of unemployed people replaced with technology and if we don’t start dealing with that now, we’re going to have some real problems.’
Indeed, in September 2016, business trends think tank Forrester Research released an exhaustive report anticipating that robots will eliminate 6% of all U. S. jobs by 2021 – 10% of which will occur in the retail industry alone.
And this is where Money Morning Capital Wave Strategist Shah Gilani takes Cuban’s cautionary statement a step further…

This post was published at Wall Street Examiner on July 24, 2017.


GOLD: $1254.50 DOWN $0.25
Silver: $16.45 DOWN 4 cent(s)
Closing access prices:
Gold $1255.50
silver: $16.50
Premium of Shanghai 2nd fix/NY:$8.71
LONDON FIRST GOLD FIX: 5:30 am est $1255.85
For comex gold:
For silver:
85,000 OZ/
Total number of notices filed so far this month: 3027 for 15,135,000 oz

This post was published at Harvey Organ Blog on July 24, 2017.

The Death Of Equity Research Hasn’t Been Greatly Exaggerated

From my vantage point, the career prospects for Equity Research analysts look dismal. The decade-long shift from active to passive management isn’t new, but it appears to be reaching a tipping point as seen in the rash of announcements from high-profile buy-side and sell-side firms closing their doors, merging or outsourcing to bots.
I’m not sure if we should be more troubled by the fact that so little is being done within our industry to fix the problem or by the lack of acknowledgement there even is a problem. I don’t claim to have all the answers, but I can see one major dilemma leading to our demise. Clients are asked to pay 1%-2% active management fees because ‘Research is in our DNA’ and ‘Research defines us and distinguishes our firm’ (direct quotes from sell-side and buy-side marketing content) and yet I find over 80% of analysts are relying almost entirely on company management for their financial forecasts (or relying on the sell-side, who too often rely primarily on company guidance).
How can we tell our clients we can consistently beat passive indexes if everyone is using company guidance to drive our collective thought process? There are thousands of buy-side firms that pay $1,000 to $10,000 to take a single meeting with company management during non-deal roadshows and yet most of these firms don’t have a budget or a process to rigorously develop an independent view for the stocks being researched. Moreover, I find too many analysts ‘covering’ well over 50 stocks, stretched too thin to consistently derive out-of-consensus insights.
The simple truth is if we’re going to ask clients to pay us 1%-2% of AUM for ‘excess’ or ‘abnormal’ returns, we need to spend an excessive amount of time seeking insights from abnormal sources (not just company management and the sell-side).

This post was published at Zero Hedge on Jul 24, 2017.

Can Financials Lead With A Flattening Yield Curve?

The financial sector has been getting a lot of attention recently with earnings announcements so we thought we’d weigh in on one aspect of financial stock relative performance that is making it difficult for financials to truly lead this market higher: the flattening yield curve.
As most of our readers are aware, one way financials in general and banks in particular make money is by capturing the spread between short-term funding costs and long-term lending returns.
A nice proxy for the margin that is earned is the 10-year minus 3-month US Treasury yield spread. When the spread is expanding (curve steepening) it implies bumper times for financials and vice versa when it is contracting (curve flattening). Well, after the brief steepening episode that occurred between the middle and end of 2016, the yield curve is back to the flattest it’s been all cycle, and flattening still further. That has, so far in 2017, been an impediment to financial stock relative performance and has kept the group from breaking out of its range-bound trend (chart 1).

This post was published at Zero Hedge on Jul 24, 2017.

Leading Indicators Not Suggesting Imminent Market Peak, Recession

Several skeptics responded to our piece last week looking at the yield curve as a leading indicator (see Yield Curve Not Suggesting Imminent Market Peak, Recession) by saying that the yield curve is no longer reliable because of the Fed’s distortions on the market.
This was essentially the same view given by Bill Gross in his July newsletter where he wrote: ‘the reliance on historical models in an era of extraordinary monetary policy should suggest caution.’ Gross highlighted the yield curve as a specific example.
Assuming the yield curve has lost its predictability, what is the message coming from other leading indicators?
One we cite regularly on our site and podcast is the Conference Board’s US Leading Economic Index (LEI), which has averaged a 6.5 month advance warning prior to recessions since 1965. It is a composite of ten different indicators and, as they write on their website, is ‘designed to signal peaks and troughs in the business cycle.’ It is currently at a 4% annual growth rate (positive growth in green, negative in red) and, in agreement with the yield curve, is not warning of a major market peak or recession in the US (click any chart to enlarge).

This post was published at FinancialSense on 07/24/2017.

These Are The 10 Most Crowded Long And Short Trades According To UBS

In this market where fundamentals long ago ceased to matter, and where positioning remains one of the few remaining sources of alpha, investors have been focusing on lists showing the most over and under-owned stocks. However, contrary to the narrative that the most heavily owned stocks outperform the most shorted, or underowned ones, and vice versa, recently BofA calculated that for the third year in a row, “the Top 10 most overbought stocks have trailed the S&P for each of the past three years, while the Top 10 “most neglected” stocks outperformed the S&P on average by 11.6%.”
This is what BofA’s quant team found:
As flows from active to passive funds have accelerated, one strategy that has worked unusually well for the last several years is a simple positioning trade of selling the 10 most overweight stocks and buying the 10 most underweight stocks by active managers. This single trade has yielded over 16ppt of alpha year-to-date. And implied derisking/ outflows on Brexit alone have been fierce, with the same strategy generating 5.2ppt of alpha just since last Thursday’s close. Even if Brexit’s impact on funds is limited from here, we believe that crowded stocks will likely continue to underperform neglected stocks: a whopping two-thirds of US large cap AUM still resides in active funds – there is likely a lot more to go in the rotation from active to passive.

This post was published at Zero Hedge on Jul 24, 2017.

Is the Silver Price Going Higher in 2017 After Last Week’s 3.7% Rally?

The silver price has bounced back strongly from its low over two weeks ago. The price of silver is coming off a strong 3.7% gain last week and is now up 7.4% to $16.51 from its July 7 low of $15.37. Not to mention, silver futures have suffered only one down day in the last 10 trading days.
The 7.4% rebound since July 7 has come in small increments, but it’s been steady and stealthy. The average daily gain for silver prices since the July 7 low has been 0.6%, and that stealth growth may be most helpful for looking at where silver is headed in 2017. As silver climbs quietly higher, it continues to ‘feel’ like sentiment is still against it.
Yet those are often the times when a price advance is the easiest to achieve, because it goes mostly unnoticed, bringing along fewer bulls for the ride higher.
I’m one of those bulls, which is why I’m going to share my bold silver price prediction with you today.
But first, let’s look at the price of silver’s big week last week…
Silver Price Rises 3.7% on the Week (July 14 – July 21)
After closing at $15.88 on Friday, July 14, the silver price opened Monday, July 17, higher at $16.11. Although it trended lower throughout the day, the metal still closed at $16.08 for a 1.3% gain on the day.

This post was published at Wall Street Examiner on July 24, 2017.

IMF Sharply Lowers US Growth Forecasts As Hopes For Fiscal Boost Fade

Bullish traders who insist that US economic fundamentals remain rock-solid despite tepid growth, inflation and other signs the postelection ‘Trump bump’ in consumer confidence is already beginning to fade should take a look at the International Monetary Fund’s latest batch of quarterly forecasts for global growth.
The fund left its all-world forecasts for 2017 and 2018 unchanged from its previous quarterly update, which was released in April: It anticipates 3.5% and 3.6% growth, respectively.
However, those numbers mask a sharp decline in the fund’s forecasts for US growth, which have been lowered sharply to reflect expectations that President Donald Trump’s promised fiscal expansion package likely won’t arrive until next year, according to a report published by the IMF. In an update that shouldn’t surprise anyone who’s been following US macro data since the start of the year, the fund revised its forecasts for 2017 and 2018 down 0.2% to 2.1% and 0.4% to 2.1%. It continues to expect the US economy to expand by 1.6% in 2016.
The fund said its decision to lower US growth forecasts reflects in part the weak growth experienced during the first quarter. But what it calls the ‘major factor’ behind the revision, especially for 2018, is the assumption that ‘fiscal policy will be less expansionary than previously assumed, given the uncertainty about the timing and nature of U. S. fiscal policy changes. Market expectations of fiscal stimulus have also receded.’

This post was published at Zero Hedge on Jul 24, 2017.

Does the Mainstream Have the Definition of Recession All Wrong?

Pundits and government officials keep telling us the economy is strong. Everything is great. After all, GDP is growing.
But a lot of people recognize things aren’t all that great. Some prominent economic analysts have said a major crash is looming. Nobel Prize winning economist Robert Shiller called stock market valuations ‘concerning’ and hinted that markets could be set up for a crash. Several other notable economists have recently expressed concern about surging stock markets, particularly in the US. Marc Faber has predicted ‘massive’ asset price deflation – possibly of a drop of as much as 40% in stock market value. Billionaire investor Paul Singer recently said the financial system is not sound. And former Ronald Reagan budget director David Stockman said we should get ready of ‘fiscal chaos.’
So, how is it that some see a meltdown on the horizon while most of the mainstream sees nothing but unicorns and roses? If the economy is growing, how can anybody things recession is right around the corner?
Well, what if the mainstream doesn’t understand a recession?
In the following article originally published at the Mises Wire, Frank Shostak explains why the standard ‘two consecutive quarters of negative GDP’ is not a good definition for recession.

This post was published at Schiffgold on JULY 24, 2014.

Existing Home Sales Tank This Summer: Fact vs Fiction

Existing home sales declined nearly 2% in June from May on a SAAR basis (Seasonally Adjusted Annualized Rate). (SAAR is the statistically manipulated metric used by industry organizations and the Government to spin bad monthly economic data into an annualized metric that hides the ugly truth).
Here is the NAR-spun fiction: ‘Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that’s straining their budget…’ – Larry Yun chief ‘economist’ for the National Association of Homebuilders.
This has been Yun’s narrative since home sales volume began to decline last year. His headline mantra of low inventory is mindlessly regurgitated by Wall Street and the financial media. But here’s what the truth looks like (click to enlarge):

This post was published at Investment Research Dynamics on July 24, 2017.

“Hunter Harrison Is Out Of Control” – What’s Really Going On At CSX?

Hunter Harrison, what exactly is going on at CSX? I’m hearing lots of voices. They’ve become loud and frequent and as such are nearly impossible to ignore. They’re the voices of railroaders, from the executive to the train and engine service level. They’re former and present CSX employees. They’re people who have worked for you at other railroads. And they’re all saying basically the same thing: That the changes you are making at CSX aren’t the right thing to do, or aren’t working.
Herewith is a collection of accounts from various sources. Some of it is hearsay. Some of it has been published. Suffice to say that all these sources are credible. I name no names. I pass no judgment. My opinion, as a railroad industry trade journalist with 25 years of experience but who has never lined a turnout, pulled a coupler pin, laid a section of rail or devised a service plan, is irrelevant.
So, I leave it up to you, the reader, to draw your own conclusions. I’ll share one opinion: Much of this material may be disturbing to you. And based upon this publication’s previous experiences with Hunter Harrison – a two-time Railroader of the Year – it’s disappointing, even sad (though he is no less deserving today of these past awards as when they were given, in 2015 and 2002). Take these bullet points for what they’re worth – with a grain of salt, or a bottle of Pepto-Bismol.

This post was published at Zero Hedge on Jul 24, 2017.

Countries Are Ramping Up On Gold Purchases As The Dollar Takes A Dive – Episode 1340a

The following video was published by X22Report on Jul 24, 2017
Existing home sales slump, this is the weakest summer since 2011, this is not a good sign. Caterpillar sales increase because of the purchases from China and the Asian sector, this is fading already. Obama’s economy was one of the weakest economies we have seen since 1971. IMF forecast for US growth has been revised lower, it also revised global growth. Visa and other credit card issuers are pushing a cashless society to increase profits through transaction fees. Turkey and many other countries are purchasing a huge amount of gold. Janet Yellen confirms that the US dollar is collapsing.

Why A Dollar Rebound May Be Imminent Even As Crash Insurance Costs Hit Nosebleed Levels

Is the bottom in for the dollar yet?
After hitting a 14 month low, the Bloomberg Dollar Index saw a modest gain of 0.1% as markets awaited this week’s FOMC meeting and kept a wary eye on Capitol Hill hearings which involve close members of the Trump administration. Quoted by Bloomberg, traders described flows as modest amid the elevated event risk we laid out earlier this morning. Besides another potential surprise from the suddenly dovish Fed, traders were keeping a weary eye on Capitol Hill hearings Monday and Wednesday that include Jared Kushner, Donald Jr and Paul Manafort, and what these could mean for Trump’s fiscal agenda. At the same time, the Fed is expected to keep rates and policies on hold, though it may elaborate on balance-sheet reduction or the timing of any future rate increases.
To be sure, negative sentiment against the dollar has been pervasive, and as we noted yesterday when looking at the latest CFTC Commitment of Traders update, net specs are now the most short they have been the USD doing back to 2013.

This post was published at Zero Hedge on Jul 24, 2017.

The ECB’s Impact On The Bond Market In One Chart

Earlier today, the ECB updated the list of corporate bonds it bought in the latest week. While no individual bond purchase amounts were given, the ECB has bought into 980 issuances with a total of 683bn in amount outstanding (from 245 issuing entities). For the week ending 21st Jul, bond purchases stood at 0.7bn across sectors, bringing total Corporate Sector Purchase Program holdings to 101.1 Billion, an increase of 720MM in the past week. The complete list of ISINs can be found here courtesy of UBS. According to Dealogic, for week ending 21st Jul, 8.8bn was issued in EUR IG space, of which 3.2bn was CSPP eligible. In the month of Jun, the central bank purchased 7bn of corporate bonds, versus 7.6bn in May. 85.6% of the 96.6bn total CSPP holdings were purchased on the secondary market.

This post was published at Zero Hedge on Jul 24, 2017.

Existing Home Sales Slump In June – Weakest Summer Selling Season Since 2011

On the heels of homebuilder optimism tumbling to 8-month lows in July, existing home sales slumped in June (down 1.8%, more than the 0.9% decline expected) to the second lowest SAAR this year. Existing home sales are now unchanged since September, but we note that average prices are up 6.5% YoY.
Total existing-home sales , decreased 1.8 percent to a seasonally adjusted annual rate of 5.52 million in June from 5.62 million in May. Despite last month’s decline, June’s sales pace is 0.7 percent above a year ago, but is the second lowest of 2017 (February, 5.47 million).
Since rates surged, exisitng home sales have gone nowhere (but prices have risen)…

This post was published at Zero Hedge on Jul 24, 2017.

ECRI: “All Signs Point to a Cyclical Slowdown in Inflation”

Today’s release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 144.8, up from the previous week. Year-over-year the four-week moving average of the indicator is now at 4.99%, down from 5.12% last week. The WLI Growth indicator is now at 2.6, up from the previous week.
“All Signs Point to a Cyclical Slowdown in Inflation”
ECRI’s most recent headline article states that their US Future Inflation Guage indicator is signaling a downturn in inflation. They claim that using the Phillips curve does not give a full picture of cyclical upturns and downturns. Rather than use the Phillips curve or extrapolate inflation data, ECRI says their Future Inflation Guage is a better indicator and has correctly anticipated the late 1990s growth without inflation and last year’s reflation trade.

This post was published at FinancialSense on 07/24/2017.

Greece Returns To The Bond Market With A Present To Its Last Group Of Bond Buyers

On the same day that Greek PM Alexis Tsipras triumphantly announced to The Guardian that “The worst is clearly behind us“, Greece just as triumphantly announced that its long-rumored bond issue, the first after a three year hiatus which saw its last bond issue crash then surge, is now a reality. Just like in 2014, Greece is looking to sell another batch of five-year bonds, according to an Athens Stock Exchange filing. The bonds will be sold in benchmark size via a legion of banks, and are expected to price on Tuesday. In terms of total size, it will ultimately depend on client demand – recall that the the 2014 issue was 8x oversubscribed – with UBS expecting a possible size of 2BN-4BN while JPMorgan anticipates roughly 3BN in new bonds.
But the biggest surprise in today’s announcement was the present for its latest batch of bond buyers: a cash tender offer for its existing 4.75% bonds due in 2019 – the same bonds that were issued in 2014 – which will be bought back at a price of 102.6. The 2019 bond have jumped in recent weeks, with the yield dropping around 15bps, though as Bloomberg notes “hardly anything has traded as is usual in Greek bonds.” The bond was priced around 102.25 ahead of the announcement, before rising another 30c.

This post was published at Zero Hedge on Jul 24, 2017.

Stocks and Precious Metals Charts For the Week Ending 21 July – No Fear

“He who sows good seed is the Son of Man,
the field is the world, the good seed the children of the kingdom.
The weeds are the children of the evil one,
and the enemy who sows them is the devil.
The harvest is the end of the age, and the harvesters are angels.
Just as weeds are collected and burned up with fire,
so will it be at the end of the age.
The Son of Man will send his angels,
and they will collect out of his kingdom
all who cause others to sin and all evildoers.
They will throw them into the furnace,
where there will be crying and grinding of teeth.
Then the righteous will shine like the sun
in the kingdom of their Father.
Whoever has ears let them hear.”
Matthew 13:30-43
“No place so sacred from such fops is barred,
Nor is Paul’s church more safe than Paul’s churchyard:
Nay, fly to altars; there they’ll talk you dead:
For fools rush in where angels fear to tread.”
Alexander Pope, Essay on Criticism

This post was published at Jesses Crossroads Cafe on 23 JULY 2017.

A Pro-Growth Move

When President Trump was elected last November, the stock market threw a pro-growth party that resulted in a robust year-end rally for the major indices. Stock market participants were enthused by the prospect of reduced regulations, increased infrastructure spending, the repeal and replacement of the Affordable Care Act (aka Obamacare), and, most importantly, tax reform.
That enthusiasm manifested itself in the outperformance of value stocks, but in more recent months, growth stocks have flexed their muscle and have been leading the major indices to new record highs.
The shift in leadership has been plain to see and it plainly suggests that the stock market isn’t as hopeful as it once was that the assumed pro-growth legislation will come to pass.
That has been discouraging in an economic sense because the real-time economic data have served as a reminder that the US economy is still stuck in its low-growth rut.

This post was published at FinancialSense on 07/24/2017.

3-Month Treasury-Bill Auction Prices At Highest Yield Since Lehman On Debt-Ceiling Concerns

It seems Morgan Stanley was right when they said “the debt ceiling worries us most,” as today’s 3-month T-Bill auction surprised the market with its highest yield since the fall of 2008, as investors continue to price concerns that the U. S. government will exhaust its borrowing authority around mid-October.
As SMRA details:
The 3-month bill auction stopped at 1.180%, with a 67.70% allocation at the high yield. The 3-month auction bid/cover ratio was 2.87. The average 3-month bid/cover over the past three months was 3.13. The WI was last trading at 1.165% at 11:30 AM. Indirect bidders took down 38.44% of the 3-month bill auction and Direct bidders took down 5.61%.

This post was published at Zero Hedge on Jul 24, 2017.