Stocks & Equities
Shares in Tesla Motors, the electric carmaker, hit another new high in after-hours trading on Wednesday, despite a quarterly dip in revenues, as sales of its Model S beat expectations and deliveries began in Europe.
Elon Musk, Tesla’s chief executive, said the California-based manufacturer had delivered 5,150 electric vehicles in the three months to June 30, above its forecast of 4,500, as Tesla expands into Europe and Asia.
….read more HERE
August is traditionally Europe’s holiday month, with many government officials taking several weeks off. In the process, important initiatives are put on hold until the “great return” at the beginning of September.
Yet no one should be fooled. This summer’s sense of normality is neither natural nor necessarily tenable in the long term. It is the result of temporary and – if Europe is not attentive – potentially reversible factors. If officials do not return quickly to addressing economic challenges in a more comprehensive manner, the current calm may give way to renewed turmoil.
First, joblessness continues to spread. The overall unemployment rate (12%) has yet to peak, led by an alarming lack of jobs among the young (24% joblessness in the eurozone as a whole, with highs of 59% and 56% in Greece and Spain, respectively).
Second, adjustment fatigue is widespread and becoming more acute.Long-struggling European citizens – especially the long-term unemployed – have yet to gain any sustained benefit from the austerity measures to which they have been subjected. And the result is not just general disappointment and worrisome social unrest. In the last few weeks, political stability in Greece and Portugal has been threatened as governments struggle with declining credibility and a rising popular backlash.
Third, bailout fatigue is apparent. Citizens in the stronger European economies are increasingly unwilling to provide financial support to their struggling neighbors; and their elected representatives will find it hard to ignore growing resentment of repeated diversion of national tax revenues, which has yielded only disappointing outcomes. Meanwhile, high levels of past exposure and weakening creditor coordination are undermining the availability of external funding, including from the International Monetary Fund.
Finally, little oxygen is flowing to the private sector. While Europe has succeeded in stabilizing its sovereign-bond markets, financial intermediation for small and medium-size enterprises remains highly disrupted. With most credit pipelines already partly blocked, the shortage of corporate credit will become more severe as regulators finally force banks to embark on a proper mobilization of prudential capital and shrink balance sheets to less risky levels.
…..read more HERE
Richard Russell: “I’m exiting this market”
“When things get this crazy, one has to go by the seat of one’s pants. According to Gene Epstein in this week’s Barron’s, the US jobless rate is not 7.6%, it’s actually 7.9%. Since the 2009 lows, the nation’s Gross National Product has swelled by $1.3 trillion, but the stock market has gained $12 trillion in value.
Meanwhile, the VIX has dropped to a multi-month low under 12, meaning that option traders see low volatility in coming months. And I’m thinking, after the calm comes the storm. For all the above reasons plus a churning in my stomach, I’m exiting this market (good-bye DIAs), and I suggest that maybe my subscribers might do the same. But it’s up to the individual. You might stick around with a mental stop loss on your DIAs if they break below 154.
The drivers of this market are the money managers who are playing the upside for all it’s worth. After all, where else are they going to go? Some bears are predicting that the economy is not through deflating and deleveraging, and therefore the Treasuries should head higher.
There are just too many “ifs” in the stew for me, so I am happy to retire to the sidelines. Sure, with the Industrials and Transports at new record highs, technical analysis and the Dow Theory say that this market “should” go higher. But for me, it’s a case of the weird getting weirder, and it’s all a little too much for my tired nerves. The Dow Theory does emphasize VALUES, and the D-J Industrials now sell at 16.83 times earnings while dividends are a micro 2.35%.
… The markets are now trading on manipulated information (CPI and GDP) about the economy, and manipulated stimulus from the Federal Reserve. I will say that in the 60 years I’ve been studying markets, I’ve never, ever seen anything like the situation the markets and the economy now find themselves in. I have only one comment and prediction — It will not end in a good way.
In the meantime, gold has formed a sort of misshapen head-and-shoulders bottom pattern, as you can see in the chart below.
Today the dollar broke through 80.40. This is a major development as it signals that the current daily cycle topped in only 2 days, thus confirming that the intermediate cycle has also topped.
…..read what Toby thinks is going to happen over the next 3-4 months HERE