It’s the “Las Vegas of Asia.” Sitting at the mouth of the Pearl River Delta — about an hour’s ferry ride from Hong Kong on the south end of mainland China, the former Portuguese colony of Macau is the only place in China where gambling is legal. And in the past decade, it has developed into one of the world’s biggest gambling destinations.  #-ad_banner-#In 2013, gaming revenue in Macau hit $45 billion — nearly seven times larger than Las Vegas.  Many of the large casino players, like Wynn Resorts (Nasdaq: WYNN) and Las Vegas Sands (NYSE: LVS), were among the… Read More

It’s the “Las Vegas of Asia.” Sitting at the mouth of the Pearl River Delta — about an hour’s ferry ride from Hong Kong on the south end of mainland China, the former Portuguese colony of Macau is the only place in China where gambling is legal. And in the past decade, it has developed into one of the world’s biggest gambling destinations.  #-ad_banner-#In 2013, gaming revenue in Macau hit $45 billion — nearly seven times larger than Las Vegas.  Many of the large casino players, like Wynn Resorts (Nasdaq: WYNN) and Las Vegas Sands (NYSE: LVS), were among the first companies to secure a gambling license in Macau, opening their first casinos there in 2006. The timing couldn’t have been better as gaming revenues soared.   And you can see, shares of those stocks climbed right along with those revenues:     The Wild West Of The 21st Century There was just one problem… Prior to 2014, it wasn’t only gambling that took place in Macau… As signs began to creep up in 2014 that China’s economy was not growing as fast as it once was, and the government… Read More

The S&P 500 is trapped in a nasty earnings recession. Earnings have now declined for five consecutive quarters. The last time that happened was during the financial crisis in 2009. In the elusive quest for earnings growth, more companies are turning to a controversial strategy: replacing humans with robots to help cut costs and increase productivity. #-ad_banner-#For example, Amazon (Nasdaq: AMZN) has more than 30,000 Kiva Robots buzzing around its global network of warehouses. According to Dave Clark, Amazon’s SVP of Worldwide Operations and Customer Service, the robots helped reduce operating expenses by 20%. Just five years ago, those tasks… Read More

The S&P 500 is trapped in a nasty earnings recession. Earnings have now declined for five consecutive quarters. The last time that happened was during the financial crisis in 2009. In the elusive quest for earnings growth, more companies are turning to a controversial strategy: replacing humans with robots to help cut costs and increase productivity. #-ad_banner-#For example, Amazon (Nasdaq: AMZN) has more than 30,000 Kiva Robots buzzing around its global network of warehouses. According to Dave Clark, Amazon’s SVP of Worldwide Operations and Customer Service, the robots helped reduce operating expenses by 20%. Just five years ago, those tasks were being performed by people. Deutsche Bank estimates that adding a fleet of robots to a new warehouse saves $22 million in fulfillment expenses. Other S&P 500 companies are following Amazon’s lead. Drug store leader CVS Health (NYSE: CVS) has replaced cashiers with self-checkout kiosks in most of its stores. Fast food leaders McDonalds (NYSE: MCD) and Pizza Hut are experimenting with replacing human labor with automated machinery in their restaurants. As Amazon, CVS, McDonalds and Pizza Hut demonstrate, robots can have a huge impact on a company’s profitability. Not only do they have the ability to operate 24/7, robots… Read More

If there’s one lesson that stands out among all those I’ve learned in my 20 years of trading, it’s that even the best research, resources and skills can’t guarantee success. When I was coming up as a pit trader, I was fortunate enough to work alongside and learn from some of the best traders that have every played the market. Many generously revealed their favorite metrics and secret tips to finding market trends and picking the best stocks.  #-ad_banner-#But the thing we never talked about was how often or how badly they lost on trades. Unbeknownst to me, this was… Read More

If there’s one lesson that stands out among all those I’ve learned in my 20 years of trading, it’s that even the best research, resources and skills can’t guarantee success. When I was coming up as a pit trader, I was fortunate enough to work alongside and learn from some of the best traders that have every played the market. Many generously revealed their favorite metrics and secret tips to finding market trends and picking the best stocks.  #-ad_banner-#But the thing we never talked about was how often or how badly they lost on trades. Unbeknownst to me, this was a critical part of the equation, and one that most market gurus never address. I remember feeling inadequate because, as hard as I tried, I still couldn’t pick winners 100% of the time. It wasn’t until I became an options market maker that I learned how to add real odds to my trading. As a market marker, I was required to trade hundreds of contracts on a daily basis. For every trade I took, I was trying desperately to time the market so I could gain a sliver of an advantage. One of my competitors, a trader named Brett, noticed… Read More

The S&P 500 continues to trade within a relatively narrow four-month range, as investors await indication of when the Federal Reserve’s next interest rate hike will be and who will win the presidential election in November. The major U.S. stock indices closed only slightly lower last week, led down by the small-cap Russell 2000, which lost 1.2%. But a sector breakdown looks much worse, with every sector of the S&P 500 finishing the week in negative territory except for financials and energy. #-ad_banner-#The strength in financials was directly attributable to a big jump in long-term interest rates. The yield of… Read More

The S&P 500 continues to trade within a relatively narrow four-month range, as investors await indication of when the Federal Reserve’s next interest rate hike will be and who will win the presidential election in November. The major U.S. stock indices closed only slightly lower last week, led down by the small-cap Russell 2000, which lost 1.2%. But a sector breakdown looks much worse, with every sector of the S&P 500 finishing the week in negative territory except for financials and energy. #-ad_banner-#The strength in financials was directly attributable to a big jump in long-term interest rates. The yield of the benchmark 10-year Treasury note jumped from 1.56% on Sept. 27 to 1.75% on Oct. 6 — a 19-basis-point rise in just seven trading days. This move was apparently triggered by Fed Chair Janet Yellen’s semiannual testimony to the House Financial Services Committee, in which she said she expects the unemployment rate to move even lower but will not hold interest rates low for much longer.  Fear Continues to Act as an Invisible Lid on the Market I try to bring different charts and metrics into Market Outlook each week so it can be a learning tool as well… Read More

My dad is an attorney who’s practiced for over 50 years and has specialized in commercial real estate law on the builder and developer side. Many of my clients are part of successful, multi-generational, family real estate businesses. Being around it for as long as I have, I know enough to be dangerous mainly through osmosis. #-ad_banner-# Real estate investment trusts (REIT’s) are a bit of a different animal than traditional real estate investing, because the investors only hold a securitization of physical real estate. However, the idea is the same: a steady income stream derived from rents and leases… Read More

My dad is an attorney who’s practiced for over 50 years and has specialized in commercial real estate law on the builder and developer side. Many of my clients are part of successful, multi-generational, family real estate businesses. Being around it for as long as I have, I know enough to be dangerous mainly through osmosis. #-ad_banner-# Real estate investment trusts (REIT’s) are a bit of a different animal than traditional real estate investing, because the investors only hold a securitization of physical real estate. However, the idea is the same: a steady income stream derived from rents and leases with capital appreciation thanks to sales and increased property values. In the current, multi- year, sub-basement interest rate environment, REITs have been a default go to sector for yield hungry investors. Naturally, the sector has performed well. The other day, I stumbled across (literally) a recent research report from Lazard’s (NYSE: LAZ) asset management arm. Looks like REITs have delivered some strong as rope five year numbers. So does it make sense to put new money to work in the sector? I believe so. Drilling down a bit more into the report, Lazard sees net operating income (NOI)… Read More

Headline risks can strike at any time and can hit even the best investments. Most companies have felt the pain of a news story that sent shares plunging, and when the issue results in little more than a humiliation for management, it can turn out to be an opportunity for investors. #-ad_banner-#That’s the case with my favorite bank stock, Wells Fargo (NYSE: WFC), which is the largest bank in the country by deposits and underwrites more than a third of the nation’s home loans. The bank’s focus on lending rather than asset management has helped it outperform other large banks… Read More

Headline risks can strike at any time and can hit even the best investments. Most companies have felt the pain of a news story that sent shares plunging, and when the issue results in little more than a humiliation for management, it can turn out to be an opportunity for investors. #-ad_banner-#That’s the case with my favorite bank stock, Wells Fargo (NYSE: WFC), which is the largest bank in the country by deposits and underwrites more than a third of the nation’s home loans. The bank’s focus on lending rather than asset management has helped it outperform other large banks with nearly 60% of its $1.7 trillion in balance sheet assets in consumer and business loans. News broke in early September that more than 2.1 million fake deposit and credit card accounts had been opened by employees of the bank. This was done primarily as a way to meet high quotas for cross-selling products, and only about 5% of the fake accounts generated any fee income, which totaled $2.4 million. Aggressive cross-selling of products is nothing new in banking. The problem is that Wells didn’t have the oversight structures in place to catch employees committing the fraud.  — Recommended Link… Read More

You can’t be a little pregnant, and you can’t have a little inflation. It’s the old axiom about rising prices that the market seems to have forgotten over the last several years. Stubbornly weak economic growth and deflationary pressure on global trade from low-cost producers in Asia have kept U.S. inflation well under the Federal Reserve’s 2% target since April 2012. The benign threat of higher prices has emboldened the central bank to keep rates low and money cheap. But there’s a growing disconnect between the Fed’s preferred measure of inflation and others. #-ad_banner-#In fact, another measure of inflation points… Read More

You can’t be a little pregnant, and you can’t have a little inflation. It’s the old axiom about rising prices that the market seems to have forgotten over the last several years. Stubbornly weak economic growth and deflationary pressure on global trade from low-cost producers in Asia have kept U.S. inflation well under the Federal Reserve’s 2% target since April 2012. The benign threat of higher prices has emboldened the central bank to keep rates low and money cheap. But there’s a growing disconnect between the Fed’s preferred measure of inflation and others. #-ad_banner-#In fact, another measure of inflation points to price increases that are 70% higher than the rate the Fed is watching. Combine that with the fact that prices on one of the biggest downward factors on recent inflation are surging and the market may soon be reminded of what it’s like to have a ‘little’ inflation. Is The Fed Looking In The Wrong Place? Several regional Fed presidents have expressed concern about rising inflation and the need to raise interest rates. Philly Fed President Harker told Bloomberg in late September that rising energy prices have convinced him that we will see target inflation, “sooner rather than… Read More