Capitalogix

Chinese Yuan Enters Top 10 Most-Traded Currencies

The Chinese yuan has vaulted into the Top-10 of most frequently traded currencies for the first time, the Bank for International Settlements said in its foreign exchange survey.

In a rapidly growing global currency business, which now generates $5.3 trillion a day in flows, up from $4 trillion in 2010, the yuan climbed to ninth place from 17th three years ago ... and up from the mid 30s in 2001.

 

Clearly, this is a trend worth noting.

Related articles

Every Politician Who Whines About China Undervaluing Its Currency Needs To Look At This Chart

Singapore Overtakes Japan as Asia's Top Foreign-Exchange Hub - Bloomberg

Bank for International Setttlements: Yuan now one of world's most tradable currencies

Here Are Some Links for Your Weekend Reading

Sometimes confusion precedes a breakthrough - other times ...

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• Fail Cheaper, Fail Better. (NYTimes Bits)
• Stop Telling Your Employees What to Do. (HBR)
• Carl Sagan on the Meaning of Life. (Brainpickings)
• In Japan, Adult Diapers Are Expected to Outsell Infant Diapers by 2020. (TheGist)
• What English Sounds Like Foreigners. (BusinessInsider)

 

Trading Links:

• 3 Reasons Markets Should Expect A September To Remember. The perfect storm? (The Week)
• Lew Tells Congress Treasury to Hit Debt Limit in Mid-October. (Bloomberg)
• Like Betting On a Horse Race After It's Over. How HFT affects the average investor.  (CNN)
• Attack on Syria Could Start CyberWar. Expanded their hacking attacks expected. (Money)
• Obama's Tightrope Walk. The World both demands that he do something, yet will condemn him for doing it. | (Stratfor)

Big Outflows: Flight to Safety - or Just Temporarily Spooked?

Talk about a flight to safety ...  August saw the biggest cash withdrawal from all U.S. exchange-traded funds in over three years.  Likewise, scared investors triggered the largest outflows from US equity funds in the last five years.  

Think of it as a flight to cash as retail investors dump risk assets.

The question is whether this marks the beginning of a new trend, or just nimble trading in the face of perceived danger?

Joshua Brown, who blogs under the moniker "The Reformed Broker," tries to put things in perspective with this handy guide to market pull-backs. 

 

 

With less than a five percent pull-back, it is a little early to trot out words like "correction."

As to whether we could see a correction (or worse, a bear market or even a crash), the answer is that it is always possible. Nonetheless, most corrections do not become crashes, and over time, every single one of them turned out to have been great buying opportunities.

Apparently not everyone is worried. 

According to Bespoke's Bank and Broker CDS (credit default swap) Index, however, credit traders do not seem too worried.  

The chart below measures default risk for the major financial firms around the world.  Default risk for the financials typically spikes when stocks fall and vice versa.

 

 

 

Throughout 2013, the credit markets have become as comfortable with financial stocks as they've been since before the financial crisis of 2008/09.  During the stock market pullback we saw in June, default risk picked up a bit, but during the most recent pullback, we've seen default risk trade sideways.  Over the last month, the S&P 500 Financial sector is down 4.47%, but Bespoke's CDS Index is actually down 0.45% as well.  So, for whatever the reason, the credit markets don't think there's reason to be concerned just yet.

What about you?

Here Are Some Links for Your Weekend Reading

As we head into Labor Day, think about Steve Ballmer ... By retiring (or the Market's response to the announcement of his retirement), he made himself nearly $1 billion richer.  Nice job.

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• Peter Diamandis: Find Wealth in the Things You Love. (WSJ)
• 13 Epic Battle Speeches That Will Inspire Greatness. (Mashable)
• 47-Story Skyscraper Forgets Elevator - Boondoggle in Spain set to open this year. (Newser)
• Why Men Need Women. (NYTimes)
• 15 Corporate Logos That Contain Subliminal Messaging. (BusinessInsider)

 

Trading Links:

• For the Rich, $5 Million Is the New $1 Million. (WSJ)
• Signs of the Top. (John Mauldin)
• Soros's biggest holding? A huge short position on the S&P 500. (MarketWatch)
• 9 Insights from George Soros. (StockTwits)
• U.S. Exports Hit Record and Shrink Trade Deficit. Pessimists argue the U.S. doesn’t make anything the world wants. The latest trade data show otherwise (TDB)

Here Are Some Links for Your Weekend Reading

There is Good and Bad News ... Which do you want first?

 

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• Here’s How the NSA Analyzes All That Call Data. (GigaOM)
• 10 Most Powerful Militaries In The World. (BusinessInsider)
• A Little Friction Can Add a Creative Spark to Brainstorming Sessions. (Harvard Biz Review)
• Age-Defying. Master key of lifespan found in brain - tests on mice promising. (NewScientist)
• Meet Microsoft, the world's best kept R&D secret. (PCWorld)

 

Trading Links:

• How Much Are the NSA and CIA Front Running Markets? (NakedCapitalism)
• Computer Glitch Brings Down Nasdaq for 3-Hours: What Do We Know? (Slate)
• Are the Super Wealthy Buying Stocks Again? (Wall St. Cheat Sheet)
• Deep-Pocketed Funds Give Up on Speed Game Move Towards Deep Insight. (WSJ)
• Early Exit for Ballmer Amid Course Change at Microsoft. (NYTimes)

Related articles

The Steve Ballmer Legacy: A Very Bumpy Ride

MICROSOFT: 'We Are Well Down The Path' To Finding Steve Ballmer's Replacement (MSFT)

LEAKED: German Government Warns Key Entities Not To Use Windows 8 - Links The NSA

Dow Jones Industrial Average Relative Strength Sinks to Bull Market Lows

When you hear a reference to how the market is doing on the news, it is pretty common for the report to reference the performance of the Dow Jones Industrial Average.  The Dow is a price-weighted measure of 30 U.S. blue-chip companies. It covers all industries with the exception of transportation and utilities. While this index is not as broad a representation of the US economy as the S&P 500, the Dow's performance typically tracks the S&P 500 pretty closely. 

Recently, however, the blue-chip Dow has been a notable laggard compared to the broader S&P 500. 

The chart below shows the relative strength of the DJIA vs. the S&P 500 over the last ten years.  When the line in the chart is rising it indicates the DJIA is outperforming, and when the line is falling the DJIA is lagging.

 

via Bespoke Investment Group.

 

As you can see, in the last several months the DJIA has been underperforming to such a large degree that the relative strength vs. the S&P 500 is at its lowest levels since the depths of the Financial Crisis.

Do you take that as a bullish sign for the broader market, or early indicator that we are in for a lull before the next move up?

Related articles

What's Driving the Dow Lower?

The Case for Dow 20,000 - One Year Later

Microsoft Corporation (MSFT): Ballmer's Retirement Keeps Dow Jones Industrial Average (.DJI) Moving Higher

How the Dow Jones Industrial Average Did Friday

Smart Money Seriously Short the Market

The CFTC releases data on the positions of "Smart Money" commercial hedgers in the Dow Jones Industrial Average and Nasdaq 100 futures contracts.

According to SentimenTrader, extremes in hedgers' positions in the futures have been good clues to the future prospect for stocks in the intermediate-term.

For example, the chart below shows that there were heavy short positions last September, immediately preceding a correction.  In addition, there was a near net long position last November, immediately preceding a rally.  Finally, look at the record net short in May right before another rough few weeks for stocks.

Obviously, we are close to those levels again.

 

Neither of the recent record short positions by commercials marked a major market peak.  At its worst point during the next 4-8 weeks, the S&P 500 lost 4% - 6% before recovering ... painful but not damaging.

Still, it is prudent to notice these kind of early indicators.  However, remember that the trend has been bullish recently.  Price is the primary indicator, and until it breaks down, expect dips to be met with buying.

Related articles

Hedge Funds Tripled Their Bets Against Treasuries Over The Past Week

Why is the Smart Money Selling?

Here Are Some Links for Your Weekend Reading

Some people are reacting like Bernanke said "On the count of three ... run."

 

Here are some of the posts that caught my eye. Hope you find something interesting.

Lighter Links:

• Audible Inspiration: Work Smarter by Listening to These 7 Great TED Talks. (Mindjet)
• The World’s Top 100 Most Innovative Organizations. (Thomson Reuters)
• What Could the NSA Do With a Quantum Computer? (NewStatesman)
• Mmm Mmm Good? First taste of test-tube burger declared 'close to meat'. (Reuters)
• The Vitamin Myth: Why We Think We Need Supplements. (The Atlantic)

 

Trading Links:

• Could Geithner End Up the Next Fed Chairman? (Bloomberg)
• Wall Street Pros Believe a Fall Taper is Already Priced Into Markets. (CNBC)
• 80 Percent of U.S. Adults Face Near-Poverty, Unemployment: Survey. (HuffingtonPost)
• The Undisputed Champion? Guess who won the post-crisis recovery? Banks. (ReformedBroker)
• Goldman Sachs: Creative Destruction. The 8 Extraordinary Technologies Forcing Businesses To Adapt Or Die (BusinessInsider)

Is the Dow Struggling with Its Inflation-Adjusted Resistance Level?

This chart displays the price of the Dow going all the way back to 1885 -- and adjusts it for inflation. Clearly, if you do that, it is lower now than it was 13-years ago.

 

via Global Financial Data via Kimble Charting.

But, does the series of lower highs (marked at the far right of the chart) imply a meaningful technical analysis resistance level?   Moreover, can you safely infer that the Dow is 'struggling' with that level?  I don't think so. 

Technical analysis is supposed to help you understand, and respond intelligently, to what is happening in the market.  This pattern seems more coincidental, rather than causal.

Support and resistance zones supposedly reflect meaningful price points where a genuine disagreement between the Bulls and Bears is contested.  I doubt this pattern was caused by Traders making big bets based on inflation-adjusted charts.

Consequently, I view this as interesting, but not tradeable, information ... What about you?

 

Related articles

Chart o' the Day: The Inflation-Adjusted Dow

Global Inflation - Where You At?

Real World Inflation Crushes Middle Class

Here Are Some Links for Your Weekend Reading

Time flies when you are having fun. 

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• How to Find Your Purpose and Do What You Love. (Brain Pickings)
• Economies of Scale as a Service. (TechCrunch)
• A New Twist That Could Speed the Internet. (Businessweek)
• Peeling Back the Label. 10 things vitamin makers won’t say. (Marketwatch)
• Former Microsoft Exec Aims to Create National Marijuana Retail Chain. What Starbucks has done for coffee he hopes to do for marijuana (Mashable)

 

Trading Links:

• Recognizing the End of the Chinese Economic Miracle. (Stratfor)
• What Happens If the BRICs Sink Like One? (Bloomberg)
• Spain's Jobless Rate Falls For First Time In Two Years. (BBC)
• Tom Friedman: A New Ayn Rand for A Dark Digital Future. (HuffingtonPost)
• Can You Name the One Nation in the World with a Higher Corporate Tax Rate than the United States? (International Liberty)