With reference to an earlier public post showing the EEM breakout today, you may recall that I use EMF for Emerging Market investment and TDF for China/Asia. Both are managed by Marc Mobius of Templeton.
So is that what went on? Markets will be back to positive tomorrow? Well a positive for the gold bugs is that the precious metals did not try to do any popping on Ukraine hype. They are busy fulfilling downside objectives and it is best they get that done sooner rather than later.
But the interest rate fundamentals must be married with the technicals. They are interesting today.
In other news, I guess the question of why Europe and Emerging are strong is answered by the ECB and China stimulus hype going around. I swear, without hype we would not have a financial market. It’s what makes the (financial) world go round.
Guest Post by Doug Noland
[admin note] And just like that, comments are turned off again. There was a format issue messing with the look of the site that I could not get around.
 Still not thrilled about Doug’s focus on Ukraine, but that’s what the internet is, readily accessible ideas and opinions. If you agree with them all, including mine, something’s wrong. Noland taught me a lot over a decade ago.
Putin takes Crimea, China devalues and Yellen has a shaky debut.
Last week I posited that “Ukraine and China pose clear and present dangers to global financial markets.” At least for the week, Russian troops stayed put on their side of the Russia/Ukraine border. And while the West ratcheted up sanctions against Russia, at this point leaders on both sides of this crisis appear keen to avoid actions with real economic impact. At the same time, Putin’s chilling speech Monday supported my view of a darkening geopolitical backdrop – a potential inflection point of historical significance.
Guest Post by Doug Noland
[edit: Biiwii.com does not agree with the 'Ukraine as macro economic fundamental' reasoning in this post, but we post guest articles based on the quality of the messenger, not any individual post's premise.]
Ukraine and China pose clear and present danger to global markets.
March 13 – Financial Times (Miles Johnson): “In the ‘Truman Show’, the late nineties Hollywood film, the eponymous character lives a seemingly charmed world, snuggled comfortably into an American suburbia of white picket fences and crisply cut lawns. But gradually Truman starts to notice something is not quite right. He is actually trapped inside a film set controlled by hidden directors, and discovers to his horror that he is the unknowing star of the world’s most popular reality TV show. The question some of the world’s biggest hedge funds are starting to ask is whether overly placid investors will also wake up to discover they are living in a ‘Truman Show market’ – where central bankers’ ultra loose monetary policy has manufactured a fake reality that is bound to end. For Seth Klarman, the manager of the $27bn hedge fund the Baupost Group who recently coined the analogy in a letter to clients, investors have been lulled into a false sense of security that is creating an ever greater risk of a sharp correction. ‘All the Trumans – the economists, fund managers, traders, market pundits – know at some level that the environment in which they operate is not what it seems on the surface,’ Mr Klarman wrote. ‘But the zeitgeist is so so damn pleasant, the days so resplendent, the mood so euphoric, the returns so irresistible, that no one wants it to end.”
Guest Post by Michael Ashton
The last month or two has provided a wonderful illustration of why a diversified commodity index is a better investment than an investment in any given commodity. Since mid-February, April Lean Hogs has rallied 23%. Since late January, May Wheat is up 23%. March Coffee is up 80%. Gold is up 9%. But Crude Oil is 6% off its highs. Copper is 12% off its highs (8% since Thursday). April Nat Gas was up 42% from November through late February, but has lost 10% since then.
Ha ha ha… people bought last year because of China’s insatiable demand and the price of gold dropped. Now people get hysterical about a demand drop in China (as if gold is subject to the same macro economic issues as copper) and boink, it pops.
It still says here that you should immediately tune out anyone going on about Indian Wedding season, Central Bank buying and selling, mine supply and most of all… China’s gold demand.
Gold will be driven by investment demand and specifically investment demand that comes in the face of a loss of confidence in the way that money and interest are manipulated in the effort to promote certain economic signals and agendas.
Now we will get to test the theory that little of what most people consider fundamentals for gold actually matters. That would be things like Indian wedding season, jewelry demand, central bank buying/selling and the one hyped in the gold “community” more than any other, China gold demand.
From Hard Assets Investor: Gold Flat Amid China Demand Drop
According to the China Gold Association, demand in the world’s largest No. 1 consumer may fall 17 percent this quarter from a year ago. An official for the trade group said the decline wasn’t unusual given the huge spike in demand last year.
“Last year was a peculiar year when we saw a big fall in prices,” Zhang Yongtao, vice chairman of the CGA, said. “People bought a lot of gold, and I think demand will start climbing again once the festive and marriage season begin later this year.”
‘But but… China gold demand is strong!!’ kept people bullish last year as gold got blown up. Marriage season? Please. For me it is investment demand that matters.
In the current policy and media stoked market environment, anything is possible. It’s the wonderful, magical world of hands-on policy making. 5 years after the financial crisis, but still not enjoying a ramping economy like the good old (and long gone) days of the last great secular bull market (RIP 2000)? Just sit back, relax and let the man in charge control the image.