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Stocks & Equities

This Used Car Empire is Shifting Into Overdrive


Posted by John Markman - Pivotal Point

on Monday, 18 June 2018 13:07

UnknownMost investors don't know it, but wholesaling used cars is a red-hot business. The effort by the Barack Obama administration to get older, less fuel efficient and higher polluting cars off the street by offering incentives to trade them in triggered a huge response. The unintended consequence of Obama's move was it made used cars harder to come by since the older models couldn't be resold in the U.S. Cleverly Companies like Copart rode this opportunity from its humble roots in California to a global used vehicle seller to all manner of customers in 200 locations in 11 countries. It now has 125,000 vehicles up for auction every day online and its making money. This year Copart as returned 30%-Plus YTD in competition with its 20 or so competitors listed HERE. R. Zurrer for Money Talks

This Used Car Empire is Shifting Into Overdrive

That business is about to get even hotter. No need to spend all day at the car dealer anymore. You can attend online auto auctions and get a treasure that was relegated to the trash heap. And Copart is making a mint in the meantime.. Twenty years ago, the used car business consisted of trade-ins. Buyers traded their old car for a new one. And then the dealer put it at the back of the lot, or wholesaled it at a small local auction. It was an ecosystem ...

......read more HERE 



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Economic Outlook

Angela Merkel Down for the Count?


Posted by Martin Armstrong - Armstrong Economics

on Monday, 18 June 2018 08:07

Merkel-ConfusedThere are some saying that Angela Merkel will be overthrown in a matter of weeks and others saying that there is no plot to remove her. Nevertheless, scandal rising in Germany over the refugee crisis keeps brewing behind the curtain. Cyclically, 2018 may be a peak in Merkel’s career despite what people are trying to deny.

Angela Merkel was born in Hamburg, West Germany, on July 17, 1954, and was actually trained as a physicist. She entered politics after the 1989 fall of the Berlin Wall. She eventually rose to the position of chairwoman of the Christian Democratic Union party becoming Germany’s first female chancellor. Moreover, Merkel has actually become the best-known politician in Europe whose face is more recognized than anyone else in Europe no less Brussels.

Merkel grew up in a rural area of the German Democratic Republic or East Germany. She studied physics at the University of Leipzig, earning a doctorate in 1978, and later worked as a chemist at the Central Institute for Physical Chemistry, Academy of Sciences from 1978 to 1990. She has obviously not made the connection between physics and the economy for if she just looked at the laws of thermodynamics she would have an epiphany and realize that there MUST be a business cycle.



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Currency

Oil, The Petrodollar, And The Next Emerging Market Crisis


Posted by DollarCollapse.com

on Sunday, 17 June 2018 19:06

Oil prices are up over the past year, which is bad if you’re, say, a developing country that imports a lot of the stuff. But the US dollar (aka the petrodollar) is also up, which compounds the problem because oil is priced in dollars. So Brazil, for instance, finds itself buying an appreciating necessity that’s priced in an appreciating currency. The result is serious trouble for at least some countries in that position. From Saturday’s Wall Street Journal: 

Steep Oil and Strong Dollar Make Toxic Brew for Global Economies

‘Brutal’ rally in dollar-priced crude hammers governments, strains consumers from U.K. to Brazil.

For Americans, rising oil prices are threatening $3-a-gallon gasoline and pushing up prices for plane tickets. In many other parts of the world, today’s crude rally is more painful—sparking protests, gas lines and emergency subsidies to quell unrest.

That is because many consumers outside the U.S. face a double whammy when—like now—the dollar gets stronger at the same time that oil prices rise. While petroleum is produced all over the globe, when it is sold to refiners and other buyers it is almost always priced in dollars.

It is, in the words of Brazilian Finance Minister Eduardo Guardia, “a challenging external scenario.”

After Brazil’s military brought an end to a crippling strike by truck drivers over high fuel prices, Mr. Guardia called the oil rally “brutal” for his country.

Brazil is among the handful of oil-dependent countries in Latin America and Southeast Asia that have turned to costly fuel subsidies. Across swaths of Africa, higher fuel costs and weakening local currencies have hit prices for food and electronics.

Fast-rising crude, on its own, has been pressuring global growth for months. Swiss bank UBS figures that today’s international crude price, around $75 a barrel, would boost global inflation by more than half a percentage point, compared with the $50 barrels the world enjoyed as recently as last year.

Brent crude, the international benchmark, has eased off a recent 3½-year high of around $80, on expectations that the Organization of the Petroleum Exporting Countries will boost output when it meets this week. Before that retreat, oil was up more than 20% this year.

There are global winners, along with losers. The U.S., squeezed over the decades in past oil rallies, is looking pretty comfortable this time. In recent years, America has boosted production significantly, making it much less dependent on imports.

Oil-prices-in-emerging-markets

Fuel prices can be  articularly painful for specific swaths of any economy. This month, Chinese truckers refused to move goods and blocked roads in a handful of cities, protesting higher fuel costs.

Exacerbating the pain in many countries is a strengthening dollar. The WSJ Dollar Index, a measure of the dollar compared with a basket of 16 major currencies, has strengthened 6% since February.

In Europe, dollar strength against the euro has helped make crude today about 30% more expensive than when oil was at a low in February.
For European consumers, gasoline-price shocks are often dampened by the continent’s generally steep taxes on the fuel. That makes the cost of oil a smaller percentage of the overall price of a liter of gas.

This year’s price increase, though, has been so steep that many drivers are feeling the squeeze. Gasoline prices in Britain rose faster in May than in any month on record, according to RAC, a drivers’ lobby group, which called it a “hellish month.” A lower pound against the dollar and higher oil prices were a “toxic combination,” an RAC spokesman said.

Brent crude is still well below the $100-plus a barrel it fetched from 2011 through 2014, and prices probably aren’t high enough to knock the European economy from its recent upward trajectory.

Still, the oil and dollar rally act like a tax, limiting consumers’ discretionary spending. That threatens a pullback in consumption that can eventually hit growth. It can also feed into inflation and pressure central banks to boost borrowing rates. Inflation in Spain jumped to an annualized 2.2% last year from minus 0.2% in 2016, largely due to higher energy prices.

The pain has been greatest in economies where dollar strength has been even more pronounced. In Brazil, gasoline is up 28% and diesel fuel for trucks more than 27% over the past year. The Brazilian real has fallen 11% this year against the dollar.

The two-week strike by Brazilian truckers stranded goods across the country, triggering warnings about possible shortages from grocery stores, hospitals and McDonald’s outlets. To end the walkout, President Michel Temer rolled out the military and promised truckers $3 billion in diesel-fuel subsides and tax cuts.

Brazil’s government has restricted how often fuel suppliers can raise prices, at once a month. As energy prices rose, economists polled by the central bank slashed a full percentage point of growth off Brazil’s forecast output this year, to 2%.

In Indonesia, where the rupiah has fallen to its weakest level against the dollar in more than two years, fuel prices are an election issue. President Joko Widodo has promised not to raise prices of subsidized fuels and electricity through 2019, when he is expected to run for a second term. In April, he required fuel retailers, including foreign firms Royal Dutch Shell PLC and Total SA, to seek government approval before raising prices they charge at the pump.

Jakarta also said it would dramatically increase diesel subsidies. Thailand and Malaysia—where newly elected Prime Minister Mahathir Mohamed made it a campaign pledge—have both ramped up spending to stabilize pump prices.

To sum up the dynamic: Rising oil prices lead to disruptions which force the local government to increase fuel subsidies, which weakens the local currency versus the dollar, which raises oil prices further, which causes disruptions, and so on, until the country turns into Argentina.

So if you’re tracking the “crises move from the periphery to the core” thesis, one good guide is the flow of oil. If a country is a big net importer of oil and both the price of oil and the petrodollar exchange rate are rising, it might be the next domino to fall.



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Energy & Commodities

Energy Efficiency is Paying Big for Investors


Posted by MoneyTalks Editor

on Friday, 15 June 2018 15:22

We had the pleasure of meeting Ted Konyi, President and CEO of Smartcool Systems, a Canadian company that is selling it's proprietary energy saving technology around the world. In the "you can never be a prophet in your own land" school of business Ted and his team have found success where high temperatures meet even higher electricity prices. It was a shock to see what other jurisdictions are paying. Have a look at this report from Texas. ~Ed

electricity rates

Electricity Prices Expected to Skyrocket This Summer

Consumers hoping to find better deals when their electricity contracts expire are in for a shock as retail prices have soared in anticipation of hot weather, potential power shortages and spikes in wholesale electricity prices.The low teaser rates for consumers available just a month ago have disappeared, making it impossible for buyers who average about 1,000 kilowatts a month to lock in a three-month rate for less than 18 cents a kilowatt-hour, according to... CLICK HERE for the complete article



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Timing & trends

The Miss America beauty pageant & the hemline indicator — this is next level stuff


Posted by Jeff Greenblatt - Futures

on Friday, 15 June 2018 09:08

This great article exposes how far the "hemline indicator" has gone recently. The "hemline indicator" methodology says women’s hemlines rise with the stock market. So what does it mean when the Miss America beauty pageant has declared it was no longer a "beauty pageant" & eliminated the swimsuit competition altogether - R. Zurrer for Money Talks

So, what about that wedge in the Nasdaq I was looking at last week? The upward momentum stalled 61 days from the prior high. Oddly enough, it was tech stocks that stalled last week while McDonald's had that big day on Thursday which drove the Dow. MCD is rated seventh in the Dow in terms of its weighting. A lot of other Dow names started well but backed off. On the same day all the FAANGs got hit. The SOX got hit while oil stocks were strong.

Even financials under the BKX recovered as the situation stabilized in Italy. Right now, markets could be in wait and see mode as history is made this week in Singapore. History of another kind may have been made over the weekend with the G-7 meeting. I’m not going to weigh in on the controversies of trade wars, press conferences and mean tweets. Upon deeper observation, I’ve discussed what cycle experts call the fourth turning, which has happened every 70-80 years since the American Revolution. What we are witnessing here is a dissolution of old alliances and a transition to something new. The architecture set up in the post-World War II era is crumbling. The Europeans have threatened to come up with an agreement without the United States. The new Prime Minister of Italy Conte tweeted that he agreed. We may also be front seat observers to a new alignment this week as Trump attempts to bring Kim Jong Un into the world of nations.

Also on tap is the big Fed meeting as well as the European Central Bank meeting a day later. All of this comes a week before the all-important seasonal change point where markets tend to change direction. This year the calendar falls a little different as the Fed meeting is usually the same week as the seasonal change point. What does that mean to us? We could see added choppiness given the cycles and the degree of important events materializing at the same time.

In a major new development, the Transports broke through the congestion zone of the past two weeks to the upside. Since there was a key balance line sitting in that zone, whichever way the worm turned was going to be important. I told you if they broke below congestion it was over for the Transports. But the market bounced back and now it appears we can get a leg up at least through the week and the door is open for a Transport rally into the seasonal change point next week. Next week is a long time from now. My indicators suggest the Transports can stay on the current path for another 5 trading days. Even housing broke out of its congestion to the upside. All this is happening while the bond market stays flat. Prices are no longer going up providing interest rate relief in the near term, but at least they aren’t going down.

Crude oil has remained flat around its low after a decent amount of technical damage on the recent downtrend. Oil stocks have outperformed and if you are an oil bull, its always better to see the stock lead the commodity.

Gold is also in a holding pattern after a decent low and pinballing inside tight trend lines.

But the most important news item of the week might not have been Italy, G7 or even North Korea. The Miss America beauty pageant announced it was eliminating the swimsuit competition and it was no longer a "beauty pageant." Are you familiar with the "hemline indicator?" This was first observed by University of Pennsylvania economist George Taylor in 1926. Prechter’s Socionomics correctly points out "hemline indicator" methodology says women’s hemlines rise with the stock market. If a hemline is an indication of an expanding or contracting social mood, what are we to make of America’s most popular beauty pageant completely changing its mission? This is next level stuff.

A WWD.com article from Feb. 7, 2018, also projects the fall collection in fashion has lower hemlines projected. I’ve heard experts and those with ‘animal spirits’ suggest the swimsuit competition will return within three years or the Miss America pageant will be gone within five years. That may be the case but keep in mind it’s the rising or sinking social mood that will be driving the bus. What is the takeaway for those of us who observe, analyze, invest and trade these markets? This is an indication of a contractionary social mood and should lead to a be bear phase or a complete bear market. This is not a "today" indicator but something to keep in the back of your mind as time goes by.

For our part, we’ll be keeping close tabs on the next 610-day window coming up in July. The first 610-day window to the August 2015 low already fired off in January. There is a very good chance we’ll see another reaction in July. With the NDX and Russell 2000 at new highs and the Dow barely beyond the middle of the range, there is a divergent market for certain. This is an indication of a topping process but this one is a very long process. For now, it’s not going to hurt that sectors like transportation and housing are catching second winds. That’s the good news.

With that, I leave a word of caution. There could be an important turn by the middle of next week. Not all the market could turn, it might turn out to be a narrowing of the advance. We could see something top by next week which we will only recognize in hindsight. The turn window in July? Let’s take this one step at a time.

About the Author

Jeff Greenblatt is the author of Breakthrough Strategies For Predicting Any Market, editor of the Fibonacci Forecaster, director of Lucas Wave International, LLC. and a private trader for the past eight years.

Lucas Wave International (https://www.lucaswaveinternational.com) provides forecasts of financial markets via the Fibonacci Forecaster and other reports. The company provides coaching/seminars to teach traders around the world about this cutting edge methodology.



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