Tuesday, May 27, 2014

Kyle Bass On China's "Contraction" And "The Fed's Worst Nightmare"

With the Fed tapering and both China “I don't think the markets are discounting what’s really happening in China,” and Japan’s currencies likely to weaken, the net impact on the U.S. will be deflationary, Kyle Bass warned in a recent presentation. That trend will be accelerated by the improvement in the balance of trade for the U.S., which had its current account deficit shrink due to increased hydrocarbon production. Bass warns, the crucial moment will come when the U.S. reports a sub-6% unemployment rate, meeting the target it has set for normalizing its monetary policy by ending QE and raising rates. He predicted that will come in July. That will be the Fed’s “worst nightmare,” he said. Raising rates would stifle growth and recreate unemployment problems, which would be disastrous politically, according to Bass.  (more)

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Ferro Corporation (NYSE: FOE)

Ferro Corporation produces and sells specialty materials and chemicals in the United States and internationally. The company operates in five segments: Pigments, Powders, and Oxides; Performance Colors and Glass; Performance Coatings; Polymer Additives; and Specialty Plastics. It offers various performance materials, including frits, porcelain and other glass enamels, glazes, stains, decorating colors, pigments, inks, polishing materials, specialty dielectrics, electronic glasses, and other specialty coatings; and performance chemicals comprising polymer additives, engineered plastic compounds, and pigment dispersions. The company’s products are used in appliances, automobiles, building and renovation, electronics, household furnishings, packaging, and industrial products. It sells its products primarily to the manufacturers of ceramic tiles, appliances, construction materials, automobile parts, glass, bottles, and wall coverings directly, as well as through agents and distributors.
Please take a look at the 1-year chart of FOE (Ferro Corporation) below with my added notations:
1-year chart of FOE (Ferro Corporation)
FOE has held a very important level of support at $12 (green) since October of last year. No matter what the market has done lately, FOE has not broken $12. Now the stock is approaching $12 again and that might provide another bounce higher. However, the stock’s recent creation of lower highs could lead to an impending breakdown on the horizon.

The Tale of the Tape: FOE has a key level of support at $12. A trader could enter a long position at $12 with a stop placed under the level. A break though the trendline resistance, which currently sits near $13, would also be an opportunity to get long on the stock. If the stock were to break below the support, a short position would be recommended instead.
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How to Play Platinum’s Rise

In April, Investment Director Karim Rahemtulla wrote an informative article explaining why platinum prices are set to rise.

Like so many things in the economy, the situation boiled down to supply and demand.

You see, as Karim explained, the platinum supply is shrinking thanks to the depletion of Russia’s Norilsk mine and labor unrest in South Africa’s platinum sector.

Since Karim posted his article, the situation in South Africa, the world’s largest supplier of platinum, has only gotten worse. (more)

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This Legendary Guru Is Focusing On Double-Digit Yielders

If you are hoping to be a savvy stock picker when you're in your 70s, I've got good news for you. Seventy-one-year-old legendary fund manager Leon Cooperman, who I profiled last year, remains on top of his game.
As I noted then, Cooperman was wrapping up a successful year of investment returns in 2012, and I decided to see how his February 2013 investments turned out. Excluding his investments in yield plays Linn Energy (Nasdaq: LINE), Kinder Morgan (NYSE: KMI) and Atlas Pipeline Partners (NYSE: APL), which are in the portfolio for income and not capital appreciation, the rest of his top holdings are handily beating the market.
Cooperman's Hot Hand
Yet recent adjustments in his portfolio suggest Cooperman now views the market in a different context. According to recent filings, Cooperman appears to be eschewing growth stocks and chasing yield -- very high yield. Three of his picks sport dividend yields in excess of 10%. Here's a closer look. (more)

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Wells Fargo & Co (NYSE: WFC)

Wells Fargo & Company provides retail, commercial, and corporate banking services to individuals, businesses, and institutions. The company’s Community Banking segment offers checking and market rate accounts, savings and time deposits, individual retirement accounts, and remittances; and lines of credit, auto floor plan lines, equity lines and loans, equipment and transportation loans, education and residential mortgage loans, and credit and debit cards. Its Wholesale Banking segment offers commercial loans and lines of credit, letters of credit, asset-based lending, equipment leasing, international trade facilities, trade financing, collection, foreign exchange, treasury management, investment management, institutional fixed-income sales, interest rate, commodity and equity risk management, insurance, corporate trust fiduciary and agency, and investment banking services, as well as online/electronic products. The company’s Wealth, Brokerage, and Retirement segment offers financial advisory, wealth management, brokerage, retirement, trust, and reinsurance services.
To review Wells’ stock, please take a look at the 1-year chart of WFC (Wells Fargo & Company) below with my added notations:
1-year chart of WFC (Wells Fargo & Company)
WFC has been trending higher since October, and during that time, the stock has been climbing a trendline of support (blue). Over the last 2 months though, the stock has formed at 52-week high resistance at $50 (red). At some point WFC will have to break one of those two levels.

The Tale of the Tape: WFC has a $50 resistance and an uptrend line of support to watch. A long trade could be made on either a pullback down to the trendline, which currently sits near $48, or on a break through the $50 resistance. A break below the trendline support should lead to lower prices.
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