The Fed’s Black Swan

This CNBC article starts off with the usual pablum about interest rates and how the Fed may decide to hold off beyond next spring given the lack of inflation expectations and effects in the economy.  It’s brain melting mainstream media Pap 101.

Fed now expected to stay lower for a lot longer

Really?  Ya think?  As if its ears were burning here comes my favorite US market related macro chart…

sp500
Mark-up of a chart created at SlopeCharts

There is no decision for the Fed to make.  They must keep interest rates at ZERO or what has been constructed out of ZIRP ingredients (with periodic injections of QE) is going to come down with a withdrawal of those ingredients.

The article goes on to get a little more intelligent as it considers the view of a rabble rouser named Dick Bove.  What he discusses below is in line with the NFTRH view that there are so many pieces in motion now, the world over, that it is impossible to work up traditional market analysis and apply it to traditional forecasting methods.  It is in line with what I have been saying since they began phasing out QE3 (as expected), which is that they will not or cannot dare repeal ZIRP, which has been the real policy mechanism at work for 6 years now.  Read…

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When a Bubble Isn’t… ?

Guest Post by Capitalist Exploits

Many are arguing that startups, and more specifically hi-tech startups are in a bubble. I’ve argued it myself herein and with colleagues over the past several months. Accelerators and Angel groups are popping up everywhere, from Akron to Auckland and everywhere in between. Money is flowing like champagne on an oligarchs yacht!

To the casual observer, and even to some of the VC world’s most prominent insiders the exuberance is creating some concern. On September 25th Marc Andreessen tweeted this (amongst 17 additional posts on the same subject):

When market turns, M&A mostly stops. Nobody will want to buy your cash-incinerating startup. There will be no Plan B. VAPORIZE.

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GOFO Squeeze

Guest Post by Tom McClellan

1-month GOFO rate
November 28, 2014

There is a big squeeze under way in the gold leasing market, a condition which is usually followed by a meaningful gold rally in the weeks that follow.

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Every Day is Black Friday

Guest Post by EWI

Every Day is Black Friday in the World of Forex

Gain the ultimate advantage with our FREE eBook “How to use the Wave Principle to Boost Your Forex Trading”

The foreign currency exchange market, known as forex, is the most liquid financial market on the planet — liquid to the tune of $5.3 trillion traded per day!

That basically means every single day in forex is the day after Thanksgiving — a.k.a. “Black Friday” — with a stampede of traders pounding at the front door come opening bell, and then frantically racing up and down the market aisles in search of opportunities.

It’s madness. Market turns are lightning fast. You have to be faster. You have one single goal: Get there before they’re gone.

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Pivotal Events

Guest Analysis by Bob Hoye

pivotal.events
Click for full report

Around the Web

A quick follow up AtW hot on the heels of the last…

  • The Brutal Monotony of All Time Highs  –Josh Brown; ‘precursor to a blow off?’ I continue to ask.  It’s not likely just going to end on its own and gently roll over into a normal correction.

 

My best wishes dear readers on Thanksgiving!

Around the Web; Economic Data Fest

Well, we have been thinking that the strength in USD could start to take the top off the party here in the US.  Today’s data, combined with the Semi Equip. book-to-bill data is backing that up.  The caveat is that no one day, week or month should be taken in a vacuum.  But still…

Huey, Dewey & Louie

huey.dewey.louieLooking around the gold sector at some of those who have tried to keep ‘em bullish all the way down.  The peddlers of hope are irrepressible.

Huey writes that gold stocks are well supported by the enormous expansion in the global gold jewelry business.  In fact, according to Huey Western mining stock shareholders stand to reap substantial reward from the relentless growth in gold jewellery demand.

Do you hear that?  Not just have an end put to their misery but if they will just hang in there a while longer they will be in line for a substantial reward… all due to a supposed fundamental underpinning that has nothing to do with the investment case for gold miners… and is not nearly the best driver for gold either.  Keep bafflin’ ‘em with bullshit Huey.  All the way down… unbelievable.

Dewey is getting excited about the Switzerland gold vote.  This has less to do with a fundamental case on gold than Huey’s constant hair brained babbling about Modi, Indian Weddings, China’s demand and whatever else he throws at the wall that sticks.  Dewey recently got some serious play at MarketWatch and indeed is often seen in the mainstream media.  He also sells gold.  How convenient.

As to the Swiss vote, if it goes positive any hype driven upside will not last.  If it goes negative as I think it might, any downside based on that would be bogus as well.

Louie (who I have never heard of before but works with a key silver figurehead who I have heard a lot of) is going on about the streams of gold leaving Western vaults and heading east.  Yes, it’s the old China demand thing.  The same China demand thing that we had to ignore in 2013 and 2014 to our benefit.  Unfortunately, people who keep grasping at these straws laid out by promoters keep finding disappointment after the hype wears off.

A peak in bullshit was during the summer with all the Ukraine/global geopolitical tensions hype.  They will try to find anything to promote a bullish case for gold.  Ebola?  That was a low point as someone I thought reputable allowed himself to get tangled up in a headline about Ebola being the thing that would finally drive gold and silver prices.  It’s a sickness with this sector.  It’s dumb, dumber and dumberer.

I have tried to lay out some signs to look for with respect to the propped up US economy and even further propped up stock markets.  Gold is not going anywhere until economic signals start to come in (it’s why I posted about something as boring as the Semi sector’s book-to-bill ratio).  Some signs are coming, but not nearly to the degree needed.  Meanwhile, these clowns with their theories that have long-since been discredited, ply their trade.

Now of course, as we have been noting all along, technicals may precede a full fundamental engagement and so technicals I shall continue to use.  There is improvement and being a long-term gold bull I’ll keep on it every step of the way.

But what we will do is real charting (i.e. charting that does not pretend to predict the future), that explains the positive and negative probabilities; not this charting I often see that portrays what the chartist wants it to portray.  Huey actually wrote that “silver bulls need to put on their cheerleading uniforms, and cheer for a breakout.”

You can’t make this up.

[edit]  It is not lost on me that on the internet the delivery of easy to digest content is king.  I sometimes get propositioned about mutually beneficial relationships and what it takes to really rake in the eyeballs.  I get advice like you get X% more opens if you put a shiny picture of gold in an article (seriously). 

I get asked to write bullish things about silver to mutual benefit (i.e. I’d be positioned as a ‘featured’ writer on a given website).  Yes, a lot of the sites you visit that have featured writers – as if they are above the other writers – is simply because those writers took a deal of some sort. 

I have even been labeled an “expert” (which I find a little embarrassing) simply because I write a lot, I guess.  There’s a lot of bullshit out here on the internet folks.  A ton of it.  As I try to become better at marketing my services, I am constantly faced with making decisions to avoid this crap.  Not that there is really any decision to make.  Integrity wins ultimately or else we are all just bunch of tools.

I’ve written the word “bullshit” a few times in this post and that speaks for itself.  Information may be free but it is well massaged and thoroughly evaluated for its potential… to sell something… to somebody.

Around the Web

  • Saving Credit (PDF) by one of my personal heroes, Raghuram Rajan, head of the Reserve Bank of India.
  • Updated Thanksgiving week breakdown from QuantEdges.  Just as one little human in the machine, I have noticed over my years in the market that Black Friday almost always seems to be bullish.

 

Another Keynesian Debt Boondoggle

Guest Post by Stealthflation (David Stockman)

Another Keynesian Debt Boondoggle: How Brussels Plans To Turn $26 Billion Into $390 Billion

The desperation and fraud of the Keynesian policy apparatus gets more stunning by the day. Apparently, the pettifoggers in Brussels will soon be announcing a new $400 billion bazooka to blast the euro-economy out of its lethargy. This massive new “stimulus” is supposed to spur all manner of infrastructure and private investment that is purportedly bottled-up for want of cheap capital in the private markets.

Are they kidding? Thanks to the Draghi Put (“whatever it takes”) and the hedge fund gamblers who have gone all-in front running the promised ECB bond-buying campaign, this very morning the corrupt and bankrupt government of Spain can borrow all the money it could possibly need for infrastructure at hardly 2.0% for ten years. And any healthy German exporter or machinery maker can borrow at a small spread off the German 10-year bond which is trading at 73 basis points. For all intents and purposes, sovereigns of any stripe and reasonably healthy businesses in most parts of Europe can access capital at central bank repressed rates which are tantamount to free money.

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Buy the All Time High

Guest Post by James Howard Kunstler

Wall Street is only one of several financial roach motels in what has become a giant slum of a global economy. Notional “money” scuttles in for safety and nourishment, but may never get out alive. Tom Friedman of The New York Times really put one over on the soft-headed American public when he declared in a string of books that the global economy was a permanent installation in the human condition. What we’re seeing “out there” these days is the basic operating system of that economy trying to shake itself to pieces.

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