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Saturday, June 6, 2015

Some weekend insightful market commentary

Here's some insightful market commentary, so you can compare it to Mila Kunis pics:

Calculated Risk - May unemployment report. It was a great number, so quit piddling your panties and reading Zerohedge doomers.

New Deal Demoncrat - more on the May jobs report. Quote:
This was an almost perfect report. Almost everything moved, significanlty, in the right direction. About the only negatives were an increase in part time for economic reasons employment, and a slight increase in the unemployment rate, but that was due to an increase of people entering the workforce.
So just buy the damn QQQ and quit piddling yourself.

Calculated Risk - comments and graphs. Note, btw, that the Fed jumping to raise rates at a sign of wage growth means they're going to hold wages down to CPI or lower. That sort of Fed policy explicitly keeps working people poor.

Meanwhile, letting inflation go up will mean that rich people who derive income from capital gains and interest income will see more of their after-tax wealth lost to inflation. So a low-inflation target benefits the rich at the expense of workers.

John Quiggin - profit and public health. Another example of rent-seeking.

Noah Smith - economic arguments as stalking horses. Of course the right wing is against Keynesianism - it helps the poor! How can we enslave the proletariat when they still have education and health care?

Progressive Economics - in Canada, an election recession. That's a great market call there, Brodrick! How much better do you think the TSX will do once Mulcair is the new PM?

Friday, June 5, 2015

Here's your insightful market commentary

Mila Kunis post!

Let's see how many of my readers click through for more!

Poll progress

Well, it's been less than a day, but already it seems my blogative readership is making its blogulous desires clear:

You all want more Mila Kunis gifs.

Unfortunately I'm at work now, and they're paying me $45/hr to do actual work.

Maybe later.

Wall Street Whitey: an example of his cluelessness

So Wall Street Whitey's robots puked gold instantaneously at 8:30 AM on the US jobs report, thinking that because blah blah blah therefore sell gold.

Apparently it has something to do with the "opportunity cost of holding gold", which supposedly depends on US interest rates, which assumes the people who buy and hold gold care about US interest rates, which is untrue at least to the tune of 2000 tons, which is about what east Asia buys in phyzz, and moreover that assumes the Fed is raising rates this year, which is doubtful considering the recent expressed opinions of Hilsenrath and Williams and everyone else, and also the inflation data, which they've already explained is guiding their decision, which has also been very tame, and anyways the US has been below its 2% inflation target for 36 straight months, and anyway even if US interest rates did have an actual effect on the gold price then why should they also affect silver which is an industrial metal, so therefore you'd think silver should go up on good jobs data, because that would suggest a global economic recovery gaining steam, but even if that were the case then gold should go up too because it would mean more money for the EMs to buy gold with, and so on and so on....

And meanwhile, as he diddled around with his marketbots, trying to smash gold with instantaneous market sell orders, Whitey missed the most important gold news of the summer:

Summer music video series: Ellie Goulding

Yeah, she's the female Coldplay, but you have to admit it's a good summer song:

Thursday, June 4, 2015

New poll up at the top

So apparently 16 people who aren't me will happily subscribe to my stock newsletter when I start writing it! Yay me!

I have another poll over there up at the top of the posts, regarding this blog. You may select multiple answers this time. And I will, truly, absolutely, try my hardest to satisfy my readers according to the feedback provided!

A bit of news

I've been kinda working my ass off these past few days, but here's some news:

WSJ RTE - Fed's Evans sees no rate hike til 2016. So quit piddling your pink panties.

FRBSF - path for monetary policy going forward. John Williams has this interesting comment regarding the lack of wage growth:
Wage growth in particular has been sluggish. There’s been some upward movement, but not what one would consider representative of a fully recovered economy.

There are a few reasons for that.

My research staff has been studying a feature of the last recession with the imaginative name “downward nominal wage rigidity.” Put simply, employers were loath to cut pay during and after the Great Recession. As a result, wages remained stagnant to make up for the pay cuts that never came, but businesses wanted to impose (Daly and Hobijn 2015). As the economy picks up, these pent-up wage cuts will dissipate, the gap will close, and we should see wages start to rise more strongly.

This lagging effect of economic recovery on wage growth is a recurring pattern (Daly and Hobijn 2014). We’ve seen in prior recessions that wage growth doesn’t tend to really pick up until the economy nears full employment. I’m therefore not particularly surprised that the acceleration in wage growth has been slow to materialize.
This fits in with the idea of "labour stockpiling" that I remember someone writing about a few years back (Kruggers maybe). The various FRB websites have a lot of great US macro articles free to read, by the way, in case you're into getting an education in that sort of thing.

WSJ RTE - Bernanke says stocks aren't expensive. Of course they're not, and only a dumbass like Shiller would say they are. Quote:
“Stock prices have risen rapidly over the past six years or so, but they were also severely depressed during and just after the financial crisis,” Mr. Bernanke wrote on the website of the Washington think tank. “Arguably, the Fed’s actions have not led to permanent increases in stock prices, but instead have returned them to trend.”
Goddammit it's been a secular bull market for years! Now can you all please stop piddling your frilly little pink panties?

Chronicles of Brodrick - check out the bullish action in Canada. Huh? Canada, you say? Pity!

Tuesday, June 2, 2015

Many news items

Here's some stuff you need to catch up on:

Calculated Risk - ISM of 52.8 in May. New orders was 55.8%.

Calculated Risk - construction spending increased 2.2% in April. Also it's up 4.8% yoy. So there still is growth in capital investment.

Calculated Risk - preliminary May vehicle sales at 17.7M SAAR. Again, still looks like the US economy is growing, mister doomer.

Calculated Risk - hotels have best April ever. So obviously the US economy is still growing.

WSJ RTE - inflation misses 2% target for 36th straight month. So the Fed really should have no problem with inflation overshooting, since that 2% is a target and not a limit. In fact, Krugginator was saying over a year ago that the Fed should have acted "credibly irresponsible" to increase inflation expectations.

WSJ RTE - developed-country inflation hits fresh low. Gee, WSJ is really concerned about inflation all of a sudden, eh? Don't they realize their plutocrat bosses like low inflation?

Krugman - the age of derp, Kansas edition. Do read up on Kansas: it's a dismal failure of supply-side Republican economics. - the real value of gold in the ground. A presentation from Mickey Fulp.

der Spargel - interview with a paid Kremlin troll. This bit was interesting:
SPIEGEL ONLINE: If there are no contracts, then how are salaries paid?

Savchuk: Under the table, with cash. They don't pay any taxes or make any pension contributions. But it is good money: 50,000 rubles a month, or about €800. But nobody knows exactly where the money comes from. As a concerned citizen, what upsets me is that there is no money in Russia for important social projects right now, but there is for this nonsense, for hundreds of trolls.
You think maybe they might be getting their money from the Interior Ministry?

OMG India monsoon collapse! - not really UPDATE

Reuters - India downgrades monsoon forecast, stokes drought fears. The author only says that "India" has downgraded the forecast, which means their government meteorologists have downgraded the forecast.

However, Skymet is another organization involved in Indian weather forecasting, and they're gaining a rep for superior forecasting. A quick check in the comments on their webpage shows that they disagree heartily:

Anonymous June 2, 2015 at 5:47 PM
Do you still stick to your 102% average monsoon prediction considering the fact that IMD today ( June 2, 2015) downgraded the average to 88% from 93%.

Skymet June 2, 2015 at 5:51 PM
Yes, we still stand by our prediction of normal Monsoon this year.
We’re preparing a story to explain why we believe so, which will be posted by 9 pm tonight on our homepage.

Thank you

Skymet Editorial

My god! I'm overcome with anticipation! They're an hour late already!

Come on guys, hurry up!

UPDATE: right on time better late than never, here's Skymet's CEO on why they're sticking to a normal forecast! Quote:

First, let's look at this problem statistically. El Nino, which leads to abnormal warming of the equatorial Pacific Ocean, triggers both floods and droughts in different parts of the world. Yes, it is true that El Nino is linked to poor Monsoon rains in the Indian sub-continent, (60% of all evolving El Nino years are droughts). Since 2000, all drought years (02,04, 09, 14) have been in evolving El Nino years. But, there are exceptions.

We’ve had four El Nino years from 1953 to 1963 and all the four years witnessed normal or above normal rainfall. Second, if the El Nino episode is a continuing El Nino from last year, the Monsoon in the second year does not fail as often as it fails in the first year of evolution. 2014 was a year that had an evolving El Nino and had a drought (88% of the LPA). The El Nino of 2015 is continuing from last year. It is less likely to fail.

Climatologically, the probability of back to back droughts are very rare. In the last 140 years, it has been witnessed only four times - in 1904-05, 1965-66, and 1985-86-87. The previous year experienced drought due to an evolving El Nino and this year is most likely to receive normal Monsoon rains.


Skymet has been working on dynamic models for a decade and it has been put to test since 2012. In each year since 2012, Skymet’s monsoon forecast has been right. Skymet has been able to catch one deficit and one drought well in advance in the past. We have also back tested our models for the Monsoon for the past 30 years and the success rate is 74%. It is these models that since January are consistently showing a normal Monsoon. They are considering the strong El Nino.

I need to make a confession. We [Skymet] since March have been saying that this El Nino is a continuing El Nino from last year, and something that will devolve over the season. We are correct on the first part but incorrect on the second. The El Nino in the Eastern Pacific has actually strengthened. But I must say that we are cognizant of the fact and our models are taking the strengthening into consideration.

Our models and statistics are converging, we do not have space for doubt yet. I suspect, the reason for this convergence is the India Ocean Dipole (IOD).

The IOD refers to a phenomena in the equatorial waters of the Indian Ocean. It is defined by the difference in the sea surface temperature between the two areas – a western pole near the Arabian Sea and an eastern pole closer to the Bay of Bengal. If the sea surface temperature of the western end rises above normal and becomes warmer than the eastern end, it leads to a positive IOD. This condition is favourable for the Indian Monsoon and carries the potential to somewhat neutralize the adverse effect of El Nino.

I believe in looking closer home and would like to give more weightage to the systems in the Indian Ocean. There are indications that the Arabian Sea will be warm throughout the Monsoon months, leading to sufficient convection and thereby, enhancing the Monsoon rains.

The year 1997 was a strong El Nino year but due to a positive IOD we received normal rains to the tune of 102% of the LPA. In other words a postive IOD might insulate us from the El Nino. I think that is what is happening here. The year 1987 was also a strong El Nino year, which brought drought in India. Most of the weather agencies across the world are possibly relating this year to 1987 but, I think 2015 is more like 1997.

Does our resident climatologist want to wade in?

Monday, June 1, 2015

Turns out I was right

No, not about the gold, though this might just be a first-of-the-month selloff by people (Whiteys mainly) who don't want to hold gold through the summer.

I was right about Japan versus the Qs:

That's the chart of a (CAD-hedged, I think) TSX-listed Japan ETF versus the TSX-listed double-long Nasdaq ETF.

It's very noisy, but if you look at the SMA(50) it tells you that it's been wiser for me to hold currency-hedged Japan than for me to be double-long Nasdaq, since the winter at least.

So I feel good that (at present, anyway) my instinct was rewarded.

Cashed up a bit today, but I have to transfer money over to my sheltered accounts, so I can't actually buy anything, I have to wait for settlements.

Will be light on posting til maybe Tues night: have a test tonight, then work tomorrow.

One more chart: SLV

Here's SLV:

 Gee, isn't it awfully convenient that:

1. SLV is printing what looks at this moment like an island reversal (circled)?
2. The island reversal happened at the end of the month because of a PM OpEx smackdown?
3. That SLV didn't continue lower after the smackdown, but stayed well-behaved?
4. That the island reversal just happened to be at the previous late-April-early-May pivot (horizontal line)?
5. That the island reversal also happened right on the SMA(50)?

It could still end in tears, of course. $16.50-$16.75 is where SLV has failed constantly since February.

But as long as silver acts like this, I'm going to use it as a tell against gold price moves.

BTW Indians start buying round now, don't they?

Dalradian: riddle me this

IKN - look at that big fat finger buying Dalradian at the close!

I dunno if it was a fat finger. This silly buying happened on the last day of the month, and IKN notes there was other silly junior miner buying at 3:59 on Friday too.

I'm no market professional, but could it have been some junior gold fund (ETF or otherwise) who was seeing inflows this month, but which wasn't putting the cash into their stock basket because volume had disappeared, and for some reason had an "oopsie" moment  at 3:59 and decided they had to fill the basket then? Is that possible? Permashave Dave, you wanna weigh in here?

I guess it's a stupid theory. But Sprott are stupid, aren't they? And they're known for letting fund price run away from NAV, right? And it's not like a fundmonkey cares what price he pays for basket stocks, right? He makes money off the management fees, he could care less about performance.

In any case:

It seems that silly spike has attracted above-average volume into the stock today. Maybe it's just stupid retail people thinking there's some big story. But, again, at this point in the junior gold miner cycle, stupid can pay the bills, no? And I guess if you bought Dalradian at $0.88 weeks ago, or at $0.65 months ago, you probably know enough about the stock that you don't want to sell it to some newcomer. It's not like DNA has a reason to suck in the future, beyond perhaps a coming collapse in the gold price.

I guess Friday wasn't enough of a kick to break it above the handle formation though. Unless the Friday 3:59 pop was a giveaway that there are entities out there still intending to accumulate more DNA this summer, but who aren't seeing the necessary volume. I'll enjoy watching this play out, anyway.

B2Gold: riddle me this

Here's BTG:

If gold was going to go down to $1050 in a final washout, then why would the market spend May buying up BTG, then only let it drop down to the Bollinger mean before buying it up again today? BTG isn't attractive at $1050 gold, what with all their share emissions to buy big properties that are going to eat cash for capex.

Any more strength, even a marginal higher high to mid-May, and the chart's threatened MACD crossover gets negated, and that will make the chart look nice. We'll see how this plays out.

Disclosure: I own some of this, but I own more Dalradian.

And gold ex-USD is still fine....

Here's gold ex-USD:

It's still spent all May going up slowly. And people buy things that are going up, remember. And non-Americans are people too.

Gold chart is interesting

Saw some doomy gold commentary this weekend from a certain TA who will remain nameless.

So I laugh at the chart we're presented with this morning:

Because, if gold holds up today, then those 4 candles circled in pink are what is called an "island reversal".

Especially cos they're under that thar blue line.

So, if it happens that gold holds and goes up from here, very soon we can all laugh as we watch Mr. TA walk back his gloomy gold outlook.

Far as I'm concerned, this chart is showing me a 3-month channel of higher highs and higher lows.

And looking at the rest of the world, here's a fun story

Well, listening to what Michael Shaoul has to say does pay off, as long as you completely ignore his opinions on monetary policy which are founded on a grossly flawed neocon misunderstanding of basic economic theory and stick with his useful commentary on economic indicators:

Turns out that following US fund flows into the racist neocon long-Germany trade wouldn't have made you much money this year. And now it looks like that market is going right back down where it came from.

Meanwhile Japan continues putting out data that suggests Abenomics may work, despite all that "OMG money-printing!"* nonsense you hear from people who don't know what causes a 20-year depression.

I wonder where all that hot US money is going to reallocate to, now that the Europe trade is dead?

They've even used the word "money-printing!!1!" in the first-year macro class I'm taking now. I wanted to embarrass the prof by putting my hand up and asking "are they talking M1+ or M2? Did someone change the reserve ratio? Why have banks all of a sudden increased lending? Why hasn't it showed up in inflation" but she's only a sessional, it would have only been met with stony silence.

The inscrutability of the US market in two charts

On the one hand, here's $TRAN:

My god look at that horrible chart, the US economy is in decline, it's the collapse of the Transports, all you Dow theory people need to sell sell sell!

On the other hand, here's $SOX:

My god look at that beautiful chart, the semiconductor market is on fire, it's the dawn of a new era in the US economy, all you tech people need to buy buy buy!

This sorta reminds me of 2000, and how the best trade in the world back then was to puke your QQQ and buy stocks like CNI, CSX and UNP. Because, as it turned out, the market had forgotten that you can't ship wheat or cattle by stuffing them down a fiber optic line.

I have no clue what's the story behind the above two charts, except that I'm safer holding QQQ than holding SPY, which is what I'm doing anyway, but not much because I'm more into holding junior golds and Japan right now.

A reminder about summer gold seasonality

This post is just a reminder - written and scheduled back in Feb - that sometime around June or July, gold and miners tend to pop for a month or two.

It's not as great as the Jan-Feb seasonality, but sometimes you can make some decent money.

So keep watching the charts!

Sunday, May 31, 2015

YOU CAN'T HANDLE THE TRUTH! - here's the truth you can't handle





A few Sunday reads

Two reads, that's it. Really not even reads, just snarky comments.

Calculated Risk - business executives are not experts in economics. Quote:
Excuse this pet peeve, but for some reason, when a business executive is interviewed on CNBC (and elsewhere), they are asked about economics in addition to their assumed areas of expertise. News flash: Business executives are NOT experts in economics (This should be called the "Jack Welch rule").
No kidding. And yet people still hang on every word from clowns like Kyle Bass and that crazy guy who got fired from Pimco. - Jojo's still waiting for gold. Must really suck to be a TA and spend an entire two years saying "no trade here yet".