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Dow Jones Industrial Average Wavers Ahead Of Fed Decision; Oil Prices Rise On Lower US Inventory Data

Dow Jones Industrial Average Wavers Ahead Of Fed Decision; Oil Prices Rise On Lower US Inventory Data

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The Investing Implications of Negative Interest Rates

–BlackRock’s Russ Koesterich and investment strategist Terry Simpson explain how negative interest rates may impact various asset classes.

Its hard to miss all the media mentions lately surrounding negative interest rate policy (NIRP).

A handful of developed countries across the globe–including Japan–have implemented negative interest rates lately, as the chart below shows, and the Federal Reserve (Fed) is analyzing the implications of moving the U.S. Federal Funds rate into negative territory too.

It’s no wonder, then, that many investors are asking how negative rates could impact portfolios.

The technical details of negative interest rates

Simply put, when rates are negative, a depositor (think a retail bank) has to pay a central bank for the benefit of parking cash at the nation’s central bank coffers. Or put another way, negative rates mean lenders pay borrowers for the privilege of lending (think of a bank paying you to take out a mortgage).

The theoretical aim of such policies is that since banks would have to pay to store their cash, they would be motivated to lend any extra cash to businesses and consumers, propelling the economy.

How negative interest rates affect equities, bonds and currencies

While it still remains to be seen whether negative rates will have this intended economic effect, from a portfolio standpoint, negative interest rates are likely to continue impacting various asset classes.


From a sector standpoint, the banking sector is most vulnerable to negative rates, not only because retail banks have to pay central banks to park their reserves. The sector’s business model is built around borrowing at the short end of the yield curve (think deposits) to lend at the long end (think loans). Since the long end of the curve tends to be anchored from years of quantitative easing purchases, NIRP tends to hurt banks’ profit margins on the short end, especially since many banks are reluctant to charge depositors.

As such, the financial sector has struggled in countries with negative rates and could struggle further. This is one of the reasons why we recently downgraded our view of the global financial sector to neutral.

According to Bloomberg data for Stoxx Europe 600 indices, since the June 2014 introduction of below-zero rates in the eurozone, the region’s retail and housing-related sectors are down in absolute terms -3 percent and 0 percent respectively. But they’re outperforming the European banking sector and the broader European market, which are down -39 percent and -7 percent respectively over the same time period. (As of 2/26/2016)

Meanwhile, from an overall market perspective, negative interest rates should, in theory, function the same way as the lowering of rates to zero percent has since the crisis, benefitting stocks overall. But in practice, this unique round of stimulus may not be as rewarding.

For one, valuations still remain elevated, even amidst this year’s selloff. For instance, via Bloomberg, while the price-to-earnings ratio for the S&P 500 has fallen 5 percent in 2016, it still remains 25 percent higher than it was at the start of 2012. Second, negative interest rates could be seen as an attempt to drag down long-term rates further, but the efficacy of this unconventional policy has had only limited success in encouraging businesses and households to borrow and spend.

Lastly, there’s some evidence that global markets will perform not on the depth of negative rates, but rather on how well communicated the policy is to the public and if it appears to have truly lasting effects for the real global economy. This helps to explain why markets reacted unfavorably to the news out of negative interest rates out of Japan. The negative reaction may also have been because the negative rate only applies to a small percentage of Bank of Japan (BOJ) reserves.


Negative rates are a sign of central bankers’ concerns about slowing economic growth and deflation. In such an economic environment, government debt prices are likely to rise, while government debt yields fall (bond prices and yields work inversely). In fact, according to Bloomberg data, as major central banks promised or delivered more stimulus support and interest rate cuts, yields of long-dated government bonds have fallen across the world.

Meanwhile, fixed income credit sectors, such as U.S. high yield and emerging debt, are suffering from idiosyncratic factors such as lower oil prices and slower economic growth, and thus may be more challenged in a period of high market uncertainty. For this reason, we recently suggested investors consider adding back some interest rate exposure into portfolios, as a hedge against equity risk.

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Will The Fed Move GLD?

Will The Fed Move GLD?

BY–Lior Cohen
Utilities, gold & precious metals, oil &
The gold market cooled down in the past week.

The FOMC is expected to meet this week and publish its revised economic outlook and dot plot chart.

How will the FOMC impact the price of GLD?

The gold market cooled down a bit over the past week even though the U.S. dollar devalued against Euro and Japanese yen. But the latest decision of the ECB to introduce additional monetary stimulus is likely to depreciate the Euro. And this week, Bank of Japan may also decide to up its ante and slash rates again. So while the major central banks aim to devalue their local currency, the same can’t be said of the Federal Reserve. This week the FOMC will convene for the second time this year. The Fed isn’t expected to raise rates but this meeting is still likely to move markets. How will this meeting impact the price of the SPDR Gold Trust ETF (NYSEARCA:GLD)? Let’s explore this issue.

The Fed and gold

The upcoming FOMC meeting will include a revised outlook of the U.S. economy, the dot plot and a press conference. So far, the dot plot didn’t serve well as a reliable projection of the Fed’s cash rate as you can see in the table below.

Source: FOMC

Up to the middle of 2015, Fed officials’ median target cash rate for the end of 2015 still implied two rate hikes. Eventually the Fed raised rates only once in 2015 – in the December meeting – and it came after the Fed prepared the market for a hike well in advance. And currently a target of 1.375% by the end of 2016 also seems very unlikely, unless the Fed were to surprise the market and start raising rates in the next meeting. In the updated dot plot chart, the Fed isn’t expected to slash a lot its target to keep its options open for several rate hikes this year. So the Fed is likely to present a median cash rate target of around 1.125%. If it comes down even further to say below 1%, this could signal the Fed isn’t expected to raise rates more than twice this year – more likely to be only a single hike at most.

Currently, while the market doesn’t expect any change to the rate in March, the chances of a bump up in the rate in the coming months have risen, as estimated by Fed-watch.

Source: Fed watch

The chart shows that the chances of a rate hike (even just one raise) went up in the past few weeks: The odds of a hike by the end of the year rose to 75%. And if the Fed maintains its stance of hiking this year, this could curb down the recent recovery of GLD. Furthermore, long term treasury yields have also changed direction, much like gold, and start to rise again – the 10 year treasury yield rose to 1.98% by the end of last week. If this trend persists, and a hawkish or even a well-balanced statement by the Fed could be enough to bring back up long term rates.

The Fed is likely to refer to the slower growth in wages, ongoing low inflation and weaker economic environment – all factors that should pressure the Fed to pause and not raise rates anytime soon.

The ECB decided to lower its deposit and cash rate along with raising its QE program by a third didn’t have an adverse reaction on the Euro, mostly due to ECB president Draghi’s statement that additional rate cuts aren’t needed. Despite this statement, the Euro is still likely to depreciate against the major currencies. And this means a relative strong U.S. dollar, which doesn’t help gold prices. Moreover, Bank of Japan may also decide to introduce new monetary measures to boost the Japanese economy, which faces very low inflation and negative growth. If the BOJ lowers rates again or augment its QE program, this could pressure down the yen. So while central banks provide more liquidity, the Fed is expected to stay on course and perhaps even raise rates, which is likely to appreciate the U.S. dollar.

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Biotech stocks are getting hammered today (which happens to coincide with the kickoff of the J.P. Morgan Healthcare Conference). Case in point, the iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB) has slid 4.2% to trade at $289.50, on pace for its eighth straight drop. Not surprisingly, put traders have set their sights on the exchange-traded fund (ETF), in hopes of more drugmaker downside.

By the numbers, 11,000 IBB puts are on the tape versus 6,500 calls. For some more perspective, consider that at this point in a typical session, fewer than 5,000 puts would have been traded. Digging deeper, the most active option is the January 2016 280-strike put, and traders buying to open positions foresee a move south of $280 — and into annual-low territory — by this Friday’s close, when the options expire.

Put buying is nothing new for IBB speculators. During the past two weeks across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 2.55 puts have been bought to open for each call. Relative to all comparable readings taken in the prior year, the current put/call volume ratio registers in the high 84th percentile. Stated simply, traders have rarely initiated long puts over calls at a more rapid rate, looking back 12 months.

It isn’t a bad time to buy premium on short-term IBB strikes, either. The ETF’s Schaeffer’s Volatility Index (SVI) of 32% ranks below 69% of all other readings taken in the past year, suggesting options in the front three-months’ series are relatively inexpensive, from a volatility perspective.

Meanwhile, from a technical standpoint, it’s no wonder traders are placing downside bets on the iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB). Since hitting a record high of $400.79 last July, the shares have surrendered over one-quarter of their value, though the $285 region has contained the ETF’s pullbacks.
Article by
Alex Eppstein

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TWTR Stock: Is Twitter, Inc. Headed Down to Penny Stock Levels?

TWTR Stock: Is Twitter, Inc. Headed Down to Penny Stock Levels?
-Palwasha Saaim, B.Sc
twitter stockHas TWTR Stock Finally Bottomed?
Twitter Inc (NYSE:TWTR) has been on a perennial decline since Dick Costolo bid farewell to the company. While the worst for TWTR stock was witnessed at the beginning of this year, there’s a piece missing in the puzzle here that once in place will change your perspective on the stock.
Investors must take note of the recent shifts in the global markets. What we’re witnessing now is a 2000-like sell-off in technology stocks. In fact, this has been the worst ever beginning for the U.S. stock market in history!

Now, take a look at the iShares Global Tech ETF (NYSE:IXN) shown in black below. The index that trails prices of technology big guns like Apple, Alphabet, Facebook, and Microsoft took a much steeper plunge than Twitter stock. So to say the crash in the stock was Twitter’s doing, is absolutely unjustified. If anything, it was a macro event that we analysts call a market correction.
twitter stock chart 21 jan 2016

Having said that, I must bring my readers’ attention to a lesson I learned from the greatest investor of all times—Warren Buffett. The legendary investor gave away the secret to his successful investing. We know that the man is known for his long-term value holds, but when it comes to picking these investments, his mantra is to look for troubled companies undervalued by Wall Street.
As Warren Buffett once said, “The best thing that happens to us is when a great company gets into temporary trouble. We want to buy them when they’re on the operating table.”
I cannot think of another company that fits that description more aptly than Twitter. Company skipper Jack Dorsey has faced a lot of criticism for having his feet stuck in two boats. Managing affairs as a CEO of both Twitter and Square at the same time has done more damage to the two company stocks than good. But take a look at their businesses and you’ll realize that he’s been doing way more than what he’s being credited for.
Twitter, in particular, is undergoing an evolution. The social media company is getting a fresher look under Jack Dorsey—a new “Highlights” feature, video integration, Periscope integration and live streaming, a Google search partnership, reverse chronological feed, no character limit, and so on and so forth.
But that’s not all!
Dorsey has also found new ways to make ad dollars to turnaround its unprofitable fate.
The latest is “Conversational Ads,” allowing companies to directly interact with Twitter users and drive traction through call-to-action buttons. Prior to that, video advertising was introduced through “Promoted Moments.” Plus, an effort to achieve conversion on unregistered and logged-out users has been launched through “Promoted Tweets.”
The Bottom Line on TWTR Stock
All in all, Twitter is on its way to recoup all those lost dollars and achieve a better monthly active user (MAU) growth through a revamped platform.
To understand how big of a phenomenon Twitter is, take note that the platform faced a short outage for a few hours on Wednesday and the world went berserk. I, for one, would not bet against this company.
I rest my case with another piece of investment advice from none other than the great Buffett himself: “If you are not willing to own a stock for ten years, don’t even think about owning it for ten minutes.”

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Stats for this week 10 Wins, 1 Miss 91% Accuracy, Portfolios up 48%

Hello Folks,

Had a EPIC Week of trading this week with 10 winning picks and 1 Miss. Portfolio up 48% with $2650 profits in 11 picks in play with 500$ each on each play. please check the buy and sell fills at my twitter profile.


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Autotrade getting 1 miss with 10 Wins.

Overall stats in past 64 Picks read : 58 Wins, 6 Misses

Accuracy of 91%

$ FB 106 P DEC 18 EXP Entry at .47 Exit at.64 with accuracy of 36%, 180$ profits

$V 79 P DEC 18 EXP Entry at .30 exit at .47 with accuracy of 60%, 300% profits

$SLV 13.5 P dec 18 exp entry at .19 and exit at .42 accuracy of 125%, 625$ profits

$AAPL 115 C is loss for 70%, 350$ lost

$SLV 13 C DEC 18 EXP entry at .33 exit at .40 22% gains , 110$ profits

$SLV 12.5 C DEC 18 EXP entry at .62 exit at .65 with 5% gains, 25$ profits

$SPY 205 C DEC 18 EXP entry at 1.65 exit at 1.94 profits of 20%,100$ profits

$BAC 17 C DEC 18 EXP Entry at .32 and exit at .35 profits of 10%,50$ profits

$UVXY 35 P DEC 18 EXP ENTRY AT 4.1 EXIT AT 5.62 profits of 37%,185$ profits

$UVXY 32 P DEC 18 EXP Entry at 3.34 exit at 3.8 profits of 15%,75$ profits

$V 78 C DEC 18 EXP Entry at .47 exit at 1.74 profits of 270%, 1350$ profits.

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$TWTR Stock: Here’s Why the Bears are Wrong on Twitter, Inc.

New Features Are Bullish for TWTR Stock

Palwasha Saaim, B.Sc

Times have never been more turbulent for Twitter, Inc.(NYSE:TWTR) as rival Facebook, Inc. (NASDAQ:FB) continues to grow its stronghold over the social media industry. However, Twitter is finally stepping up its game under CEO Jack Dorsey’s leadership and the latest turn of events makes me optimistic on TWTR stock.

Back in July, when Dorsey was still an interim CEO, he indicated that the company will be questioning its fundamentals and going forward, it would not shy away from trying new things. Dorsey is making it evident that he’s serious about what he said and really wants to make the product more user-friendly.

Starting with the replacement of the “favorite” button with a “like” button and increasing the character limit beyond 140, followed by the addition of a highlights feature called  “Moments,” it seems as though the company’s skipper is trying anything and everything to make things work for the company.

The latest feature that Twitter is testing once again contrasts its fundamental model. It’s an algorithm-based newsfeed that shows posts based on relevance or popularity, instead of Twitter’s standard reverse-chronological feed that goes from the newest to the oldest posts.

Critics are barraging Twitter with criticism that the latest move replicates Facebook’s newsfeed. Many are saying that this attempt to “copy” Facebook will bomb, but I beg to differ. I, for one, am welcoming the move and take it as a healthy sign that Twitter is finally showing some willingness to experiment. Besides, all the little moves have hit the target so far, despite the initial skepticism of each.

Rewind to 2006, when Facebook, Inc. (NASDAQ:FB) first introduced its “News Feed” feature and recall that the site was flooded with hateful status updates, followed by groups lobbying to boycott the platform. The criticism eventually grew so big that Mark Zuckerberg had to personally respond to users’ concerns. (Source: “Calm down. Breathe. We hear you,” Facebook, September 5, 2006.) But did he take down the feature? No! Fast-forward to this day and everybody seems to have made peace with the idea.

Twitter’s introduction of a heart icon for the “like” button, in place of the star icon for the “favorite” button, was met with similar criticism just a month ago. Just as users got accustomed to the hearts, they’ll grow accustomed to the Twitter newsfeed, too. It would, however, make sense for Twitter to provide its users with the option to choose between sorting their newsfeed either for relevance or for most recent, just as Facebook does.

As for the critics who say that this microblogging platform has run out of ideas and is now copying Facebook, the irony is that Facebook has been doing the same. Facebook has copied Twitter’s news-sharing model on so many levels that one often loses count. From “Instant Articles” to “Search FYI” and now the “Notify” app, Facebook has been making repeated attempts to substitute Twitter’s utility by providing a real-time news reading and sharing service. I don’t see why Twitter can’t do the same.

The Bottom Line on TWTR Stock

There may have been a lot of criticism over the platform’s latest moves, all of which have been very experimental and bold, but Twitter is finally doing things right. The fact that Jack Dorsey’s focus on Twitter hasn’t wavered despite his dual-CEOship (of both Twitter and Square) bears glad tidings for the company.

In a nutshell, I believe all the latest moves will turn out to be fruitful for the company in the long run. I’m bullish on TWTR stock.

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98% Accuracy in Last 49 Picks.

Folks who have started there 1 week trial last week and this week, i have already given 25+ option plays with full accuracy.

This week 17/17 Wins so far and last week we got full Hits/Wins.We are now running with 47/48 Wins., only 1 miss in 48 picks. Pls check the fills(Buys/Sells) at my twitter feed for all the picks
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FB Stock: Mark Zuckerberg Says This Could Be Big for Facebook, Inc.

Mark Zuckerberg Says Big for FacebookThe Upside for FB Stock

Despite being only 19 years old when he createdFacebook, Inc. (NASDAQ:FB), Mark Zuckerberg has grown into one of the most competent and successful chief executives officers (CEOs) alive. His success is clear when you look at the value of Facebook stock, but also at what he has planned for the company. So long as Zuckerberg is with Facebook, I will remain bullish on FB stock.

Trust in the founder, that’s my motto. Think about what it takes to conceive companies like Facebook or Tesla Motors, Inc. We tend to mythologize founders/CEOs, as if their success was inevitable, but Zuckerberg and Elon Musk weren’t guaranteed success when they were dreaming up their companies; instead, they willed these firms into existence.

Both Zuckerberg and Musk spotted problems that needed solving or gaps that needed filling and acted to fulfill their vision. By using their passion as fuel and their intellect as a compass, they were able to gain enormous wealth, fame, and success.

And neither seems to be slowing down. That’s the beauty of Facebook; it is continuing to benefit from the vision and skill of Mark Zuckerberg. He has extended the idea of a social persona, of sharing your experiences, to the emerging realm of virtual reality.

Oculus Rift and Facebook Stock

Most of the market still perceives virtual reality (VR) technology as a niche item. Facebook stock rose 36% this year, but it was off the strength of its publishing business and advertising revenue. Investors still haven’t priced in the potential of “Oculus Rift,” Facebook’s VR headset, but they will.

There are two practicable business lines for Oculus Rift and both could spell enormous returns for FB stock. The first is entertainment.

As early as 2016, Facebook is releasing a version of its VR headset as a gaming console that will compete against Microsoft’s Xbox One and Sony’s PlayStation4.

From movies to video games, Oculus Rift would provide users with an immersive experience that is unparalleled. For instance, Facebook just signed an exclusive deal with Harmonix Music Systems for Rock Band VR. That’s right, you could soon step onto a VR stage and rock out in front of thousands of people—or at least it’ll feel like you’re doing that. (Source: “Why ‘Rock Band VR’ Matters to Facebook and Oculus,” Fortune, December 8, 2015.)

Another potential entertainment use may be to watch a sporting event and walk around in the arena, seeing the play from multiple angles and pausing the action whenever you want.

To experience all of these entertainment options via virtual reality, consumers will have to buy the hardware, opening a huge and immediate revenue stream for Facebook.

Beyond the entertainment aspect, however, Oculus Rift has huge potential as a communication tool.

Social Sharing Could Keep Pushing FB Stock Higher

Mark Zuckerberg often says that Facebook is more than a company to him; it is a mission to foster unity in the world by connecting people. In that spirit, I can see him turning Oculus Rift into the ultimate tool for communication.

Technology to create immersive content is pivotal to the rise of virtual reality. By capturing 360-degree views in a video, Facebook would be able to recreate a moment that can be shared with family, friends, or the world at large. (Source: “Facebook – Press Release,” Facebook, Inc., March 25, 2014.)

Picture two people, on opposite sides of the globe, putting on VR headsets and launching a Skype-like app. The magic of Oculus Rift could virtually put them in the same room, giving a sense of intimacy that’s lost via two-dimensional screens.


Gaurav S. Iyer, IFC

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Netflix, Inc. To Double Its Original Production For The Upcoming Year

By Mark J. Guillen ⋅ Posted on

It is believed that Netflix Inc. has decided to nearly double its original content production next year. 2015 was, without a doubt, one of the best years for the streaming giant as well as a great and busy year for its viewers. The content provided to the viewers is more than enough as the company already had big name movies and TV shows on its platform and now it has included original programming as well. From Master of None to Jessica Jones, the company has put out great shows for its viewers throughout the year.

However the company wants its subscribers to know that the next year will be bigger and better in terms of content quantity and quality. Netflix stated that subscribers who think that they have done a lot of binge watching this year have no idea what we have in store for them for the upcoming year. Thestreaming service is all set to double its original programming in the coming times as it plans to increase the number of drama and scripted comedies to at least 31.

Recently the Chief Content Officer (CCO) of the company, Ted Sarandos, said that the company will be putting out at least 31 scripted shows next year when he was talking at the UBS Media Conference. This also includes the new seasons of previous shows. In 2015, Netflix only had 16 shows overall which means the company will be working on 15 more shows. It is believed that the Netflix will now have 10 feature films, 10 stand up specials, 12 documentaries, and 30 children shows added in its original programming list as it plans to move a step further in 2016.

The company tapped the original programming market 3 years ago when it wanted to compete with the likes of HBO and FX who are currently leading the original programming market. Back then, the company started with three shows that include Arrested Development Season 4, House of Cards, and Orange is the New Black. Later on, the company added BoJack Horseman and Marco Polo in its original programming list as well. However, the numbers of original scripted series did not touch double digits. This year, it has achieved that as well.

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