The Business Of Finance Thread!

Although the world's most valuable fruit has disappointed badly in terms of top and bottom line, it most surely did not disappoint when it comes to total cash and investment holdings which as of the latest quarter has surged to an eye-watering $232.9bn! An amount enough to pay off Greece's entire national debt more than one time over!

Even excluding debt in the form of marketable securities issued to find stock repurchases, which has also been bumped higher, net cash and investments stop stand near record levels at $153bn for the latest quarter! With so much current assets, one has to wonder what grand plans #Apple has.

Oh, we forgot, taxes. The one reason why the world cash richest company wouldn't repatriate foreign earnings to its Cupertino headquarters is primarily because it wishes to continue enjoying an effective tax rate lower than what the average American small business pays each year.

Refer to our full narrative 3 posts earlier for the entire story on the just released earnings report.

#Business #Tech #Google #Facebook #Investing #Stocks #Trading #iPhone

Crude prices are back at 2016 highs and seem poised to break them on the heels of a weaker USD ahead of the awaited April FOMC statement and rate decision less than 20 hours away. A slight surprise draw in API inventories catalyzed the latest swing higher.

‪#‎Oil‬ ‪#‎OPEC‬ ‪#‎Forex‬ ‪#‎Trading‬ ‪#‎Investing‬ ‪#‎Stocks‬

Bulletin headline from April's FOMC statement:
• FED REMOVES REFERENCE TO GLOBAL EVENTS POSING RISKS TO OUTLOOK
• FED SAYS LABOR MARKET IMPROVED EVEN AMID SIGNS OF SLOWER GROWTH
• FED REPEATS ECONOMIC SITUATION WARRANTS ONLY GRADUAL RATE HIKES
• FED SAYS HOUSING SECTOR IMPROVED FURTHER SINCE START OF YEAR
• FED TO WATCH INFLATION, GLOBAL, FINANCIAL DEVELOPMENTS CLOSELY
• FED: INFLATION BELOW TARGET DUE TO CHEAPER NON-ENERGY IMPORTS
• FED SEES MODERATE GROWTH, STRENGTHENING LABOR MARKET AHEAD
• FED REPEATS ECONOMIC SITUATION WARRANTS ONLY GRADUAL RATE HIKES
Basically as expected. Markets got what they wanted — A "patient" FOMC. The dollar, gold, equities, and bonds in chopping trading post event.

Fun fact: The number of words in each respective FOMC statement since the start of 2015 (end of QE3) has averaged at about 560, and has remained so for at least 11 statements since.
Is the Fed running out of things to talk about?

Markets Post April FOMC

The reaction across stocks, USD, gold, and U.S. treasuries post a quasi-dovish FOMC, or what we call a "hawkishly-dovish" statement.

Equities are higher post event as risk flows turn positive after the initial knee jerk lower. SPX is attacking the week's highs as we go to print.

The U.S. dollar is weaker post event after initially ramping, again on a knee jerk. It seems market participants view the April statement as more bearish the dollar than bullish, despite FOMC having removed the emphasis on negative global risks, and reasserting that the labor market is on track to reaching full employment.

Bonds are higher (yields lower) post event, and are perhaps the single most directional asset class here other than equities. Markets clearly view the statement as dovish — Bullish for equites and bonds, bearish for dollar.

And lastly, Gold remains confused after dumping on a knee jerk, then rallying to unchanged, then dumping again before somewhat stabilizing slightly lower pre-FOMC. We note that silver is trading much stronger than gold is.

We talked about all these here, pre-FOMC:

http://www.businessoffinance.com/sni...-fed-this-week


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Fed Leaves Rates Unchanged & June Open For Hike

Following our pre-FOMC primer on what to expect during today's April Fed event, the Fed has once again left the Federal Funds target rate unchanged at 0.25% - 0.50%. We managed to cover the entire event live on our Facebook page, and will therefore be posting content from that venue along with some supplementary comments.


"The aftermath of April's FOMC snoozer. Interestingly, despite all the intraday volatility, crude oil is outperforming every asset class by leaps and bounds, soaring right out of the hole after an initial dip.
Fed funds futures are now pricing in a 23.5% chance (up from 21.6% pre-FOMC) of a June rate hike. Rate hike odds rise rather steeply thereafter for the months of July, September, November, and December, respectively."

READ HERE:
http://www.businessoffinance.com/sni...-open-for-hike

Chinese industrial profits surged the most in almost 2 years on what seems to be a one off event. Remember those soaring commodity prices pumped up by nothing more than speculative demand? Once those bubbles pop in earnest, let's see where this chart heads to next.

#China #Faux #Forex #Business #Stocks #Trading #Investing

What goes up, will come down. What goes up insanely quickly, will come down in a straight line.

This is exactly the tale of the farcical commodities speculation bubble in China where mum and pop "investors" who know absolutely nothing about actual trading or investing jump on board the death trap thinking it's a way forward to riches. Oh how wrong were they. Poor souls.

Aggregate Chinese commodity trading volumes plunged in a day more than they rose in almost 4 weeks. Next, we await the aftermath of carnage once prices crash back to reality. Nothing is really real in China, this point just proves it.

#China #Joke #Forex #Stocks #Trading #Investor #Depression

USDJPY is down some 300 pips in the last 3 hours of trading along. The Nikkei 225 stock index is down some 1000 points in the same period. Why?

During its monetary policy meeting today, the Bank of Japan (BoJ) decided to do absolutely nothing other than utter a few words that we've all already grown used to. Remember that the markets were greatly expecting a boost in the BoJ's asset buying program (QQE), a boost in ETF purchases (we've discussed this 2 days back), and/or even lower negative rates. None of that happened.

So it is no surprise that the yen and Japanese equities have reversed about 70-80% of their move over last 6 days in a matter of hours. Such moves based on hope, hope that a central bank would do something, or hopes that were catalyzed by a rumor that a central bank would do something when there is zero concrete evidence that it would actually be true.

We offer our condolences to those traders and pundits who sold heavily into yen weakness or bought Japanese stocks on the basis of that hope. Their ashes are reflected in today's move. RIP.

#Forex #Japan #QE #USDJPY #Stocks #Trading #Investing

The "most hated" equity bull market in history is now the second longest running one ever. At the current 2,609 days since finding its nadir in April 2009, the S&P 500 has rallied rather relentlessly (especially during the days when the Fed was still busy monetizing bonds via its 3 main QE programs, not even counting in Operation Twist and QE2-Extended).

Only one rally lasted longer closing in at more than 3,500 days. As at where we stand, it's hard not to shudder at the notion that the current rally could beat that.

Lastly, remember how we have too (like the market) relentless bashed broad sellers of equities for this brazen cynicism for not wanting to believe in the market's justification for higher prices, or their outright dumbness of selling and worse still, shorting into the second longest bull market ever? Bulls are now thanking these very folks for selling stock to them at way lower prices when the SPX was still trading way below 2000.

#Forex #Stocks #History #Trading #Investing

Renting is a big trend in the U.S. it seems as more homes are now renter-occupied rather than owner-occupied. While the nation-wide average home price has been creeping higher, albeit with higher than before variance, it is no where near the pace of which rental prices are soaring.

Home ownership rates in America are at multi-decade lows. While this seems more a decline trend than cyclical, it doesn't add credence to the so called economic recovery consumers are peddled to believe.

Higher than average demand for rental properties means pretty damn high rental prices, and therefore uber high inflation in rents, now brushing the 8% mark! So this is where the shadow inflation is. One wonders if the Fed has taken this into account, or swept this fact under the rug as usual.

#Forex #Housing #Property #Rent #Economy #Investing #Inflation #Stocks

At -8%, the S&P 500 as a whole is having the worst EPS growth rate since 2009. With more than a third of U.S. companies having already reported their first quarter earnings, 1Q16 is set to be a terrible earnings season, firmly putting the broad market in an earnings recession (something we've harped on for quite awhile now).

More details from JPM:

In the US, 80% of S&P500 companies beat EPS estimates, surprising positively by 3%. The actual EPS is running at -8% yoy for the overall market and at -7% ex-Energy. The S&P500 blended Q1 EPS is tracking at $26.5, down from $29.1 at the start of the year. The proportion of US companies beating sales estimates, at 58%, is up from previous quarters but top-line growth remains soft, at -1% yoy.

80% of US companies beating EPS estimates is above the historical average. However, we note that in the last 10 years, the proportion of EPS beats was always well above the 50% threshold, suggesting that companies typically do a good job at managing analysts’ expectations. The actual delivered EPS growth is a better indicator of the underlying earnings backdrop, in our view. At -8%, the S&P500 Q1 EPS growth is the worst since ’09.

#Forex #Stocks #Business #Tech #Energy #Investing #Recession #Finance

Are we in the early stages of a longer term down trend in the U.S. dollar? It certainly looks to be the case.

As the Fed meanders around with uneven monetary policy and varying language at each of its policy meetings, the dollar has taken the cue by heading lower, pulling commodities higher in the process.

Traders clearly buy into the fact that commodities have mostly always been good plays against dollar strength and or weakness.

Notice how on a beta-adjusted basis it takes a much weaker dollar to even support slightly higher commodity prices? This is also despite the ferocious rally in crude prices...

#Forex #Stocks #Trading #Investing #FOMC #Economy

Trading done well brings results like this. Again it's not about being right, but going through the right process. Congrats to those who profited on this signal.

Trade documentation here: http://www.businessoffinance.com/tra...-pays-off-well

#Forex #Stocks #Investing #Trading #Psychology #Mentality #Winning #Attitude

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+6% THIS WEEK!

As with most other traders and fellow market participants, we were looking to the U.S. FOMC Meeting in mid-week to see what lies ahead for the markets. So far, so nothing new. We learned that the U.S. Federal Reserve has little intention to raise interest rates, although bets are open for a June rate hike. The economic indicators are not too supportive of that at the moment, with only unemployment indicators showing an improvement in the labor market. Still, as always, trade what you see, trade what you understand.

Of course, our Premium Signals Service subscribers benefit greatly as usual

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The U.S. energy sector as a whole is currently trading at 100x forward earnings! That's 100 times. or more than 5 fold the 5-year average. Bubble territory when the underlying commodity, crude oil, remains well under $50 (although the black gold is up 63% from January lows), and energy companies are largely operating at a loss (contributing to much of S&P 500 negative EPS growth). Are trading a betting that spot prices rebound to sustained levels where the entire energy sector becomes profitable once again? Maybe. But this seems to be way more outlandish than what a mean reversion looks like.

Contrasting to consumer staples which although has attained a forward price/earnings of nearly 22x (above their 2001 pre 9/11 terror attacks peak, has risen with more gradualness.

So in the grand scheme of value, where would you place your money?

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New trading week is beginning in a few hours, thought it'd be great to share this...

We kick things off with one of our most popular pieces, Treating Trading Like A Business.

Trading, especially for the retail trader, isn't usually an easy thing. Most traders fail to make any significant return on their investment, with most losing close to or all of their initial capital! Failures are a dime a dozen in this business.

So what separates the successful, consistently profitable traders from those who don't make it?

Are you having a clear mind when you trade?
Do you maintain a trading journal? (including one on this forum!)
Do you have a PLAN when you trade?
Do you treat TRADING like a BUSINESS, and not as a hobby or plaything?

These are serious questions to ask of any aspiring trader.

We answer your questions, all here:
http://www.businessoffinance.com/tra...ike-a-business