Friday, March 20, 2015

It's good to know the smart money is as dumb as the dumb money


I see Canaccord is back on the bid buying up every last share of Minera IRL that they can.

They didn't want to buy during the last couple weeks of weakness in gold, but now they're back buying with every other clown in existence.

So it's good to see the smart money is just as dumb as the dumb money.


Friday morning news


Here's some news:


Bespoke - breadth holding up. I think Brett Steenbarger has fallen victim to "market indicator cerebro-anal transposition syndrome". Bespoke, on the other hand, has always been good at boiling everything down to the simplest and making you money doing it.


FT Alphabits* - have we seen the last dollar spike? It was HSBC who had the brainwave:
David Bloom and Daragh Mayer at HSBC note that if you strip out the dollar mega-rallies of the early 1980s and mid-1990s, regular dollar rallies tend to come in pretty regular sizes: 20 per cent in dollar-index terms, typically over no more than 12 months. But we’ve now seen a move of 25 per cent since last June alone.
Here's HSBC themselves, injecting a bit of common sense:re
Monetary policy divergence has clearly been a key driver to the shift in exchange rates, and offers a clear rationale for the movements we have already seen. But much of it is in the price. There may be a debate over the timing of the first Fed hike, but the market generally accepts that it will happen this year, and that rates will move up only slowly thereafter. One argument is the USD will continue to rise because US interest rates will rise a lot more than the market expects. Our view on this line of thinking is: if you think you know what is going to happen in the interest rate markets why are you trading the USD? Just trade the interest rates market instead. In Europe, the ECB has laid out its plan for QE so they are effectively on auto-pilot. In Japan, the ‘shock and awe’ of QE has long since passed. The drama offered by policy divergence has already run its course. The USD rally will stall as the market demands “tell me something I don’t know”.
Seems a sensible position to take. Now only if sensible positions made a profit!


The American Conservative - how Bobby Jindal wrecked Louisiana. And with the universities and hospitals all closed, and the state bankrupt, the white-ass Jesus freaks will proudly vote for him again. Cos universities are for liberals and homosexuals, and hospitals are for negroes, so destroying them is good for America!


i09 - could the death star destroy a planet? They say no, because the energy required to blow up a planet equals an amount of energy equal to a week's worth of total solar output. I say, they should just put Bobby Jindal in charge.



* - "Alphabits" is a reference to this:



Where does gold go from here?


Well, there was apparently a research note out from someone who stated that, outside of exceptional secular dollar bull moves in the 80s and 90s, the usual dollar move is around 20% in a year, and we've already seen 25% in something like 6 months.

That, with the dollar chart's recent couple days of action, plus the idea that any possible pro-dollar news must already be priced into the dollar, gives weight to the suggestion that the USD move is done.

So what does that mean for gold?

Well, if there were a lot of dollar-gold pairs, people must think there's nothing left to wring out of them now, so now's the time people would want to close the trades, which means buying gold.

Then again, maybe not. So let's look at the gold ex-US chart, keeping in mind what gold ex-US actually means:


Wednesday saw a false breakdown which got reversed by Janet Yellen. Well, that's positive, but now we want to see gold move upward on that false breakdown, else this is still a touch-and-go chart. I want a large slope here, not March's crappy shallow rise.

Would you think we should be able to anticipate gold's next move by watching silver?


Well, silver ex-US doesn't look that bad at all, so far today.

It'd be nice to see gold follow that same trajectory.

As for the gold miners, well they're a leveraged short when you're long-dollar-short-gold. So maybe a lot of shorts have to be cleared out: I mean, that was one heck of a big dollar move.

We'll see. I feel stupid wanting to suggest being long gold miners today, since it's still March and the proper play is June. But I think we can agree that the gold puke we saw this month was utterly stupidated, and stupidated market conditions sometimes unstupidate.


Friday videos: Tove Lo's "Stay High", on the misery and sadness of junior mining investors


Fuck, the Swedes really nail it when it comes to writing pop songs about sucky junior miners.



Also, I mean girls making out and stuff.

How this stuff doesn't get a Grammy and yet they manage to dig up the rotting corpse of Beck is beyond me.


Thursday, March 19, 2015

And because the new Game of Thrones season is just around the corner....


All GoT fans need this subtle reminder:


As far as I'm concerned, the show went downhill after this guy left:


A strong US economy is independent of the US dollar.


IKN - the question "Is a Strong Dollar Good for the U.S. Economy?" is a waste of time. Not exactly. Quote:
A correct affirmative statement is "A strong U.S. economy is good for the dollar".
To some extent, but you're still failing to see that it's a negative feedback.

Sure, if the US economy is doing well, people have to buy US dollars to move capital into its economy. But the rise in US dollar price then turns around and reduces the improvement in the US economy. The question is whether the economic situation remains net positive or not.

Also, as long as capital is still seeing a better deal in the US, the flows continue and the dollar remains strong, but at some point the flows stop and you're left with an economy fighting against an overly-strong currency. So at some point someday it becomes bad.

But to see where you are at this point in time, best is to take SPY (or $TRAN or whatever) as a proxy for the US economy, then divide out USD to see what it's doing ex-USD. And the chart you get:


Says that, certainly, the US economy is indeed doing quite fucking fine right now ta v. much. Fine to the tune of something crazy like a 25% appreciation in the past 6 months, in fact.

UPDATE: IKN sends me this response:


Everyone hates US stocks - because they're morons


Bloomberg - everyone hates US stocks. Let's whip out the derp and play with it:

With interest rates poised to rise and Europe ascending, the percentage of global money managers who are underweight American equities is the highest since 2008, a survey by Bank of America Corp. shows. At the same time, clients of exchange-traded funds have pulled about $14 billion from U.S. equities this quarter and added $29 billion to international stocks, data compiled by Bloomberg show.

How did that underweight-US position play out for you in 2008, Whitey?

Europe, in particular, has gained favor, as the Stoxx Europe 600 Index has rallied 16 percent so far in 2015, with benchmark indexes in Germany, Portugal and Denmark rising more than 20 percent. The gains came as European Central Bank President Mario Draghi introduced a 1.1 trillion-euro ($1.2 trillion) quantitative-easing program aimed at spurring growth and thwarting deflation.

That's a big fucking mistake right there. Yes, Draghi has brought in QE, but all of Europe is fighting against this with boneheaded contractionary fiscal policy. Doesn't anyone remember when Merkel tried to piss off Draghi and make him quit his job?

But, I guess the white-ass honkies in the US are still entranced with that tiny bit of fantasy economics that they read off the back of an Ayn Rand book, and so they'll plow money into a Republican-style European economic clusterfuck in the hopes that it gets better despite all European governments except Greece's wanting to drive their continent into a permanent economic depression.

You gotta wonder if these guys remember how shitty the European market's returns were even when they were in the middle of its real estate bubble. There's never been a European stock worth owning, bar maybe Nokia for a bit, and yet Whitey thinks he can make more money on European equities in the middle of a conservativism-driven permanent liquidity trap than he can in the US, which is seeing 3-4% growth so far and the beginning of a demographic boom.

A net 35 percent of respondents in Bank of America’s survey picked the U.S. as the worst place to invest in the next 12 months, the most in almost a decade, while the proportion of those favoring Europe jumped to a record 63 percent.

Wow. most negative in a decade. That includes 2007 and 2008. That includes the gloom and doom of 2009, when people were taking sideshow geeks like Marc Faber seriously.

I really think Whitey is on the wrong side of the boat here.

Wednesday, March 18, 2015

What did I tell you?


So according to the Fed statement and Yellen's press conference, she's not a fucking retard with no comprehension of economic indicators, unlike what all the CNBC-watching Republican fuckwits have been saying.

So we'll see what happens to gold here. The move this aft was just because of a move in the price of USD, which itself may continue or may not.

Failing a really certain fat pitch in the chart, I'm gonna stay out of gold and the miners til June when the Indians start buying, because all your white-ass honky cracker theories about the gold price pale in significance to 900 tons of buying every year in India.

In the meantime I'll ride the S&P pop to 2100.


Morning news


Not much worth reading til the Götterdämmerung this afternoon, but here's what I've scraped off the floor in the past 24 hours:

New Deal Demoncrat - US consumer prices may have dropped by 1.2% in Feb. He notes this means that real retail sales actually went up 0.4% in Feb. Which, well, I still can't see how unadjusted sales being down is still a good thing.

Reuters - German union calls for higher public sector wages. Which is what they need to be given, and quickly, in order to fight deflation and constructively balance productivity across Europe.

Reuters - Indian CAD below 1% in 2015 says Jaitley. So that'll reduce pressure on the government to crush gold imports. Yay oil!

Mining.com - top gold producer's margins are getting squeezed. Here's a chart of "all-in sustaining costs":


Now tell me how gold's price can drop below $1000 and we'll still have gold being produced.



Copper price ex-US


IKN's posted another copper price chart today, so I thought I'd add this in as food for thought:


The copper price indeed puked recently, but:


Only in US dollars. And I guess renminbi too, since that's pegged to US dollars.

Which means copper is cheaper for the US and China, so since they're now getting a deal you'd think they'd consume more. But it's still the same price it's been for the past 2 years in all other world currencies, so that means other countries are not benefiting from a "lower" price of copper.

Which I guess would be yet another way in which the US benefits from a strong dollar. And China too, if they decide to remain pegged and still want to gobble up loads of it as they modernize.


Tuesday, March 17, 2015

Market comment - HYG rolling over again


HYG is rolling over again:


Which is maybe happening cos oil is tanking further:


And the question is whether this carries through yet again to a generalized selloff of the US equity markets:


I don't see why that should happen, since we already had this selloff in equities a month ago, driven by the same crap, and you'd have to think Whitey sold off SPY because of the January trajectory of oil and not the January price of oil.

And in any case, Janet Yellen will change everything tomorrow afternoon.

So I'm not going to worry. In any case, a further 5% drop in US equities would mean a further long position from moi.

As for gold, I think the $1.2 billion notional spike at 10AM was probably some hedge fund dumbass closing out his long-USD-short-gold position (with piss-poor execution) on what seems like a finishing climax in the USD move. Either that, or maybe some dumbass sees the weakness in USD and wanted to squeeze the gold shorts with a new long position (with good execution).

Doesn't matter cos India doesn't buy gold til June and July.

But at least it makes this chart suddenly look bad:


Cos now gold ex-US has lost the SMA(50). Losing the Bollinger mean next might mean a whole world of pain for gold longs, because gold will start to look like crap in Euros.


Monday, March 16, 2015

IS THE MOON REAL? you won't believe what you need to know next!


Here's some news:


FT Alphaville - this Euro depreciation thing is getting stupid. Yeah, and I called it days before you did, Keohane.

IKN - I love Clive Johnson. IKN defends B2Clive. One mean drunk deserves another, I guess.

Mining.com - hedge funds super bearish gold now. Great! Now I can watch them all get raped on Wednesday afternoon when the Fed releases its statement.

Gawker - is the moon real, or just a Jewish Illuminati conspiracy? Here's a great example of the arguments put forth about the nonexistence of the moon:
Do an experiment: take a rubber ball and suspend it above a bathtub full of water. Now slowly move the ball closer to the water. Does the level of the water change? Not even slightly. So much for the tides myth.
Study it out, libtards!

Business Insider - Argentina, Iran, Venezuela conspiracy revealed to trade nuclear secrets for... I dunno, coke and sex and... sex? Wow. Just wow. Argentina really does do cray-cray better than any other country.


Thought on the India ETF


Well, this chart shows a nice long sedate rise:


And it's even CAD-hedged, which means a rupee collapse will not hurt you. Heck, you can make a fortune on a rupee collapse if the equity market spikes in rupee terms to compensate, right?

Let's list the pros and cons:

Pros

1. They'll apparently have a good monsoon this year, according to the data so far.
2. Oil is down and it's a big part of their current account deficit.
3. White-ass honky crackers love Modi because he wields the Holy Handbag of Margaret Thatcher and they think it actually will help him modernize a medieval economy that functions on the level of sub-Saharan Africa.


Cons

1. The majority of India's economy is farming, so this ETF is essentially a play on business, not on the Indian economy at all.
2. It's dumb money.


The pros above are the reasons you'd invest in gold miners in June, by the way.

So I guess I'll just leave this alone.

Nice to see BMO making the move and providing an India ETF, though. Hopefully this one won't suck as bad as the China mutual fund they ran for a decade without making anyone a single fucking cent.


Sunday, March 15, 2015

Some Sunday news



Here's some reading for you for tonight.


New Deal Demoncrat - weekly indicators. Rails is back to positive, tax withholding is still positive. But Q1 GDP will be weak, so watch out when it's reported in April. Then again, that's close to June, and maybe the market will go up on a weak GDP report cos it's back to selling good news and buying bad news?

Calculated Risk - energy expenditures as % of consumer spending. Going down.

New Deal Demoncrat - the 3-dimensional Phillips curve as a forecasting tool. Basically, ignore all the mathematical conceptualization stuff and just believe him when he says the NAIRU changes depending on the commodity inflation environment. So NAIRU right now is probably closer to 3%. Now, do you think the Fed chair is too stupid to already know this?

der Spargel - interview with Thomas Piketty. Wherein Spargel shows their conservative stripes: they're just not as Nazi as Bild, is all.

Jojo - short-term bounce but danger looming. He thinks there's a chance of an ultrapuke in gold and the miners. I think he should pay more attention to gold ex-US.