Juggling With Knives: Profits, protection and planning for volatility in stocks, bonds, real estate, and real life.
This website is based on my book, Juggling with Knives. Both the book and website are about volatility in everything from stocks and bonds to real estate, and real life topics such as jobs and education.
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This market’s volatility puzzle–it’s as if investors and traders don’t think risk is climbing in the general market
Facebook (FB) falls almost 20%. Netflix (NFLX) tumbles 14%. Twitter (TWTR) is down 21% on earnings. Intel (INTC) finished today down 9%. And yet the CBOE Volatility Index (VIX), which measures the price that traders are willing to pay to hedge risk VIX, the so-called fear index? Here’s my best shot at making sense of the divergence.read more
The Netflix (NFLX) drop yesterday (14.27%) and today (5.24%, which actually showed a recovery from the after-hours tumble) on the company’s disappointing guidance for the third quarter says that we’re still on track for a test of the earnings rally. But the test has become a bit more focused after the Netflix news. While that individual stock dropped on the disappointment, the market as a whole crept higher with the Standard & Poor’s 500 up 0.4% today. The more focused test has now become, Does the market treat any miss as limited to the individual stock (as it has with Netflix) or does it begin to generalize any disappointment in the third quarter to the market as a whole?read more
I picked the Utilities Select Sector SPDR ETF (XLU) as one of my five buys in my recent Special Report: “Five Places to Hide from a Downturn and Still Make Some Money” on my JubakAssetManagement.com site. And today I’m adding it to my Perfect 5 ETF Portfolio. As I wrote in my Special Report, “Don’t know whether you’ve noticed but recently utilities stocks have climbed, mostly, when the Standard & Poor’s 500 has dropperead more
Not so long ago major economic forecasts such as the GDPNow forecast from the Atlanta Federal Reserve Bank were calling for second quarter U.S. GDP to grow at an annual rate of better than 4%. That was extraordinarily strong growth and it fit in with forecasts from Wall Street analysts for better than 20% earnings growth for the companies in the Standard & Poor’s 500 index during the quarter. Needless to say (but I’ll say it anyway) those two numbers fed into a belief that we would see a summer rally on earnings reports. Now, however, those GDP forecasts are coming back to earth.read more
Yesterday after the close of trading Judge Richard Leon gave the go-ahead to AT&T’s (T) acquisition of Time Warner, the owner of HBO and other content. The ruling is a green light to other vertical mergers in the media sector. The judge rejected the government’s attempt to block the deal. The Trump administration made a very traditional argument that the merger would stifle competition and lead to higher cable bills–which it almost undoubtedly will. But the judge sided with AT&T’s assertion that it had to grow to survive against the competition posed by Amazon, Netflix, and Google. The ruling, then, is a blue print for a wave of vertical media mergers in which distribution companies, such as cable operators, buy up content creators.read more
Maybe you missed it amidst all the noise about the G7 meeting and the summit with North Korea, but… Argentina has asked the International Monetary Fund (IMF) for a $50 billion loan to support the country’s economy and currency. The IMF is expected to approve the request at its June 20 meeting. Approval would release 30% of the loan, or $15 billion. And in Italy new Finance Minister Giovanni Tria said that Italy’s new government has no intention of leaving the euroread more
Of the five ETFs in my Perfect 5 ETF Portfolio only one has outperformed the S&P 500. Since I added it to the portfolio on October 5, 2017 the PowerShares KBW Bank Portfolio ETF (KBWB) has gained 11.01% through 3:30 p.m. on May 22.read more
This market indicator is signaling trouble ahead–in 2020 (Strange: That’s the same year the CBO estimates the annual U.S. budget deficit will hit $1 trillion.)
Earlier this evening I wrote about the unusual inversion in the VIX Fear Index which had futures for the CBOE S&P 500 Volatility Index (VIX) priced to show more risk in the near future than in the far future. Normally the price curve runs in the other direction since the near future is usually more predictable than the far future. Near future and far future are relative terms in the financial markets. In this case we aren’t talking about the difference between short-term 3 month Treasury bills and 10-year Treasury notes. The VIX curve stretches out from future contracts that expire in a couple of weeks to contracts that run for 40 days or more. But a market indicator that does focus on a longer time horizon is also indicating trouble ahead for 2019 or more likely 2020.read more
In a post earlier today I argued that the plunge in U.S. stocks on March 22 was due to investor’s and trader’s suffering from an exhaustion of sentiment. They simply couldn’t see enough reason to the upside to stay in the market against a tide of pessimistic sentiment. I should have called it an exhaustion of good news. But “exhaustion” is also a pattern familiar to technical analysts who look for these periods when all the buyers or sellers are committed to the current trend so that there are no new buyers or sellers to drive the market higher or lower.read more
If you spend a significant part of your day staring at your computer to watch the markets, you know that, perplexingly, the traditional safe havens for mitigating portfolio risk haven’t been working very well. Now Goldman Sachs has put its computers and data crunchers to work and has reached the same conclusion as the anecdotal evidence suggested. Goldman has tagged this a period of “diversification desperation.”read more