Category Archives: Financial Markets

Around the Web

  • Ukraine/Russia back in the news from Bloomberg.  As usual, market players tune this out and gold players, that goes double for you.  There is still a tout or two out there willing to play to the cheap seats.
  • Zero Hedge seems to think GOFO still matters.  I think GOFO didn’t matter when I first heard the term years ago and I don’t think it matters now.  But that’s just me, an anonymous internet news compiler robot.

 

Around the Web

  • Across the Curve channels Buffalo Springfield and sees the commodity Armageddon as bond friendly, to the point where Yellen can take the rate hike for 2015 off the table.  Who’d be surprised about that?
  • Reformed Broker on 9 surprising things the subject of my favorite book on trading/investing/markets said.

 

Around the Interwebs

  • October ISM is out and it boomed up to 59%.  What’s more, cost inputs are dropping w/ the decline in commodities.  This is a benefit on the input, for now… ISM: PMI @ 59% as posted by our friends over at NFTRH. ;-)

 

Around the Interwebs…

  • While I am on the subject and now that the damage is being done, let’s excerpt some of NFTRH 314, beginning with the charts that have kept us very aware the bad technical situation that could not be spun any other way…

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2 Horsemen Ride Again

Today the 2 Horsemen rode newly brave bulls back out of town.

gsr.uup

Stocks Not Over Valued*

* [edit] This is a 5 year relative view.  Longer-term, the S&P 500 remains over valued per its historical corporate profits metrics.

Pretend with me that we are in Wonderland, where policy inputs can keep everything on the macro in control forever and allow conventional mainstream financial industry people to twittle their P/E ratios and growth metrics for individual stocks and sectors as if it is a normal recovery of a normal economy.  In this scenario the S&P 500 is no longer over valued, at least by the corporate profits data compiled by this SlopeCharts graph.

It’s the same one we used to illustrate the over valuation that even a buttoned down Wall Street analyst could see (or should have seen) in the run up to the recent correction.  Well, it’s fixed now.  Again, we’re talking about what the financial services industry will want to promote to its clients, not the macro.

sp500

Semi Support?

Here is the monthly chart of the Semiconductor index (SOX), updated.  Still thinking about a bounce in the 540 o 550 range, but I think odds are it is going to the mid 400’s sooner rather than later.

sox

Uncle Buck the Foil

The US dollar has been the anti market to so many items lately, with just one of them being the SPY in the lower panel of the chart.

uup.spy

Here is USD fund UUP making a hard reversal on volume on its daily chart.

uup

Don’t they say that traders don’t care if the market goes up or down, just as long as it moves?  Well, I find burning commissions pretty annoying, but I find this market very interesting.  All shorts were covered at the first sign of the reversals because so many things were at support levels.

It’s the old dry kindling just needs a match sort of deal.

2 Horsemen Ride Again

Today is the kind of day when you’d do well to tune out any cartoon characters ranting about any sort of manipulation.  The simple fact is that the 2 Horsemen, the gold-silver ratio and the US dollar (GLD-SLV & UUP) are riding together today in opposition to most asset markets.  Period.

gsr.uup

Going Gray

Going Gray

Aside from some hilarious observations about Chinese Politburo members’ jet black hair helmeted mojo, Ben Hunt of Salient lays out an interesting view of policy making and the global macro.  He ends with this bit on gold…

“As for my third point – the implications of monetary policy divergence on gold – I’m always reticent to write about gold because it incites such passion (and I don’t just mean the gold bug camp … poke pretty much any academically-trained economist and you will unleash a furious anti-gold tirade). To be clear, I believe that the meaning of gold today is NOT as a store of value but as an insurance policy against central banks losing control. With market faith in the Narrative of Central Bank Omnipotence at an asymptotic top, the price of that insurance policy – call it $1,200/oz – is as low as it’s going to go. And now with a schism in the High Church of Bernanke, monetary policy divergence, and growing pressures on the tectonic plates of exchange rates we have catalysts for both a generic and geographically specific central bank loss of control. Now I understand that gold means different things to different people, and to the degree that gold trades as a commodity or a dollar-denominated store of value it can trade cheaper as the dollar advances. I get that. But I don’t think that’s been the principal meaning of gold for the past 5+ years, and if you think as I do that this is the beginning of the end for the Golden Age of the Central Banker (or at least the end of the beginning), gold is pretty interesting here.”

Thanks to PJ for sending me this link.

GSR & US Dollar

So our thesis has been that a concurrent rise of USD and the Gold-Silver ratio (GSR) would not be a good thing for markets.  Stick it in the blender and mix with several other indicators (we have not even mentioned weak junk bonds and junk to quality credit spreads, at least not publicly) and you have ‘so far, so good’ on a coming bear case.

To review, a rising GSR means that speculative liquidity is coming out of the markets, as in risk ‘OFF’.  The rise in USD is a fundamental consideration that would hit manufacturing first.  Here again, I tell you that the biiwii guy, a former manufacturing person, was the first to project coming US manufacturing strength for NFTRH subscribers.  Just to counter a few wise guys who would finger point and yell ‘perma bear!’  Today’s firm bulls were all hiding under rocks as Congress did the Fiscal Cliff Kabuki Dance at the time.

To put things in non-technical terms, I think some shit’s happenin’ out there folks.  We’ll see.

gsr.uup