Consumer sentiment up in June, Nike (NKE) on the rise after World Cup exposure and General Motors (GM) recalls after lawsuit

Markets were heading lower after the final reading for June’s consumer sentiment data came in showing a gain. The Thomson Reuters/University of Michigan’s reading for June showed an increase to 82.5 from May’s 81.9. This surpassed analysts’ expectations of 82. The barometer of current economic conditions crept up from May’s 94.5 to 96.6 in June. This was above expectations of 96.0. There was, however, a drop in one section of the report. The gauge of consumer expectations fell from 73.7 to 73.5. The survey’s director, Richard Curtin, said, “Consumers believe the first decline in economic activity was due to the hard winter weather, and that the economy has already returned to positive economic growth.” Shares of Nike, Inc. (NKE) were on the rise after the company reported a giant leap during their fourth-quarter. The company reported $698 million in profits and $7.43 billion in revenue. Both of these numbers beat out analysts’ expectations. There was a large increase in their soccer revenue of 21% to a grand total of $2.3 billion for the year. Nike has been getting massive global exposure at the World Cup. Nike has been dressing 10 teams during the World Cup, including the U.S. team. They…

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Why the Financials? A Multitude of Reasons (FAS)

Let’s kick off this week with a word about earnings multiples. We’ve said it before, and we’ll say it again – multiples are Wall Street’s great fungible. They’re the gravy that gives the potatoes flavor, the gown that gives the old, torn-down hussy her lure. When Wall Street wants to keep a bull market alive, she stretches multiples – Price to Earnings, Price to Book, Price to Sales – whatever you got, Wall Street pulls and pries it to the full extent to justify the purchase of stocks. Because Wall Street is a moneymaking enterprise like no other. It works like this: Brokerage X has a large and growing clientele that’s buying stocks. Brokerage X is therefore making lots of commissions. But Brokerage X’s analysts see that many stocks, like, say, Microsoft and Caterpillar, are trading with P/Es of 16 and are reporting earnings no better than they did a year ago. Brokerage X worries that if clients get anxious about Microsoft and Caterpillar – and maybe the rest of the market – because earnings aren’t growing, they’ll stop buying stocks altogether. Brokerage X doesn’t want commissions to dry up. Or bonuses. So they say, “Don’t worry, friends – Microsoft…

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On the One Hand… On the Other… (GLD, SLV, GMCR)

There have been some tremendous developments in the precious metals’ market this week and we’re therefore obliged to start our discussion there. To begin, let’s just say that the jump higher in both gold and silver last Thursday was exceptionally large and equally unexpected. It caught a tremendous number of shorts off-guard and also spurred a good bit of independent buying. But whether or not it marks a final bottom for the three-year bear market in the PMs is a question whose answer we don’t yet have. We’re perfectly ready to jump back on the gold bandwagon if the technical evidence is on offer and advises as such. But for three full years, it’s been absent. Let’s see what it says now. We’ll start with silver, because the chart there is somewhat easier to read. Here it is – This is the iShares Silver Trust ETF (NYSE:SLV) for the last six months and it shows clearly a bullish break above three of the four most important moving averages in just the last seven trading sessions (in red). Two of those MAs were hurdled in a single day, as SLV rallied nearly 5% late last week. But we should be quick…

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Keep Cool, Bro (XOP, ZJO)

There’s a little known bit of trading advice that we were given as relative newcomers to the world of finance some 25-years ago that we still hold dear. It’s not the kind of advice that the best trained MBAs and CFAs of Wall Street will admit to, but that’s not our problem here. Fact is, it works. And there’s not a whole lot more that you need in this game. Way Back When… To be honest, we heard something similar while still in college, from an upperclassman whose insights into matters academic were as sharp as they come. On seeing us a tad worried before an upcoming final exam, this same fellow approached, sat down and under the grand vaulted ceilings of the college’s Widener Reading Room, he intoned thus – “Matt,” he said. “An exam is a test of the mood you’re in when you take it.” “Oh, yeah?” I thought, figuring that wouldn’t hold much water with Professor Mindblister of ‘Buddhist Philosophical Tradition’. Yet it wasn’t until we entered the brokerage some seven or eight years later and heard something similar from a wizened elder in the office that we came truly to appreciate that upperclassman’s words. The…

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Taking Stock As the Second Half of the Trading Year Approaches

It’s once again time to look back at several of our recent picks, evaluate their performance, and speculate on their prospects going forward with the second half of the trading year right around the corner. In general, it’s been tough sledding for true penny plays, while several small cap issues we’ve highlighted have been charging ahead from our entry points — propelled in part by record bullishness in the Dow and S&P 500 indexes. Enservco (ENSV) Selected as a potential breakout candidate less than a month ago, when the issue was trading at $2.54, this fracking-related infrastructure support company has performed beautifully — taking out our $3.25 target in less than four weeks, ultimately touching a new 52-week high of $3.29. Catalysts for this issue have included good earnings and higher open market oil prices. Currently, ENSV shares are sitting at about $3.05 each, and I wouldn’t be surprised to see the stock sit in a $2.90 – $3.30 channel prior to the company’s next earnings release. There’s no reason to believe that more good times won’t keep rolling for Enservco’s earnings trend, however, which leads me to believe that this issue remains a solid buy and hold candidate. Company…

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Homage to the Aged (MSFT, CSCO, INTC, ORCL)

We’re not so big on popular culture as we once were. Movies and music used to be our lifeblood back in high school and college. Today, we’re more apt to agree with that highbrow critic who opined nearly twenty-five years ago that the “movies are just dog-sh*t. Can’t be bothered to go. As for music, we don’t listen anymore, though we still hold a soft spot for some of the older balladeers, among who we count Bob Dylan and Gordon Lightfoot to be among the cream. And it’s precisely to these two songsters that we make reference today, as we turn our attention back to our current market predicament. Why these two? Because Bob Dylan’s Hard Rain is the destiny that we believe awaits us all at the end of the current synchronized round of global central bank meddling (listen here). And Lightfoot’s Early Morning Rain, aside from being an all-time popular folk classic, also indicates where we currently sit vis-à-vis the ultimate flood that portends. That is, the Dylanic washout will eventually come, will be brutal and will provide the world with the necessary financial (and moral?) reset to correct the system’s current excesses. While Lightfoot’s ditty, for its…

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Shorting the Final Frontier (FM, TYX)

Gonna to take a moment to discuss the bond market, which, if you’ve been paying attention, has not rolled over and played dead as fast as we said it would. Remember, we’ve been of the opinion that the bull market in bonds – a thirty-year affair that brought long yields down from over fifteen percent to two and a half – has ended and that owning these securities as a long-term investment was a losing proposition. For those who want to trade the swings in the Treasury market, go ahead. We wish you the luck of the Irish. We just warn you not to be in it for the long haul. And yet the bond market has defied us. Since New Years, the yield on the 30-year has fallen from 4% to a recent 3.26%, a move that has led many to reconsider their position vis-à-vis the profit making potential of Treasuries. Here’s a chart of the most recent moves on the long bond – This is two years worth of data for TYX, the CBOE’s thirty year interest rate index. As you can see, the latest retracement (in red) is but a blip on the longer-term chart, but in…

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The Next Wave Higher (XLF, SPY)

We’ve spoken a number of times in the past about the advantages and use of technical analysis in the study of markets. And we’ve also discussed the limitations that we currently face using those same tools as we attempt to navigate what we believe is an unprecedented market reality – one of global super-hyper-liquidity. [click on image to listen] Truth is, we’re not so sure the term ‘super-hyper-liquidity’ genuinely captures the essence of the existing and potential number of dollars (and Euros and Pounds and Yen and Renminbi, etc.) that are floating about the world’s financial system. We might have to add another ‘super-duper’ or ‘mega-colossal’ to actually do the idea justice. Have a look here – This is a chart you’ve no doubt seen many times before. It’s the U.S. money supply charted for the last 100 years, and it gives a reasonable graphic depiction of what we’re trying to convey. Let every liar, swindler and cheat now step up and tell you that it’s all business as usual and that we’re not facing something qualitatively different than we have in the past. In a ninety-year timespan, the money supply grew at a relatively even pace, and then, in…

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Fan Appreciation Day (TLT, XLF, SPX)

Where would a king be without his vassals? Where would a shepherd be without his flock? A prison guard without criminals? Answer – Why, they’d be nowhere. They’d be nothing! Nobody! And so, too, with us scribblers. With no readers, we’d be whipped about like a batch of scrambled eggs, salted, eaten and as quickly forgotten. So we want to take a moment to formally thank the several hundred thousand of you who open our weekly rantings and give also a warm and hearty hug to those who take the time occasionally to pen a few words and send them our way. In particular, we want to thank our good reader Frank, who late last week took the time to send us his thoughts on a number of timely and important issues. And we’re also going to invest a moment now in looking at a couple of them more closely. The Future of Investing Frank, we’re going to splice and sift here, so please inform us if we’ve in any way misrepresented what you wrote. We’ll do our darndest to stay true to what we believe you intended. And we’ll start like this. Frank wrote – I expect SPY and…

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Don’t be a ‘Hoper’ (EPI, GLD)

High school football coach used to yell at us something fierce for not being in on every tackle. “Don’t be a hoper,” he’d yell. “Don’t just stand there hoping someone else gets it done, Ruminov! You get in there yourself – you be the one! Cement head.” Never had to convince me, though. I always took pleasure in running over would-be fame seekers. Even fancied myself the second coming of mean smilin’ Jack Lambert of the Pittsburgh Steelers. Had an entire scrapbook of pictures devoted to the man that I surreptitiously tore out of Sports Illustrated back issues at the local library. Now that we’re older, though, we see that selfsame tendency in our chosen field of investment education, where ‘hope’ is everywhere, is patently not a virtue, and where the price of failed objectivity is nothing less than a disaster that leads to anger, depression and in severe cases, a whole lot worse. And nowhere is this phenomenon more evident than in the gold market, where a full 99% of investors are of the emotional, believing type – ‘hopers’, as it were, whose objectivity was long since thrown to the dogs. Only the wishful, would-it-were-so fantasy world of the…

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