Tag Archives: economy

Around the Web

By Biiwii

Market Analysis & News From Around the Pipes…

 

Gold Ratios Today; Ag-Au & Au-Pd

By Biiwii

A couple of our most recently watched gold ratios..

Silver-Gold ratio bounced today, keeping the hopes of the ‘inflation trade’ alive.

sgr

Gold was down hard today, but the problem for the Palladium-Gold ratio is that the cyclical metal, Pd was down harder.

pall.gold

Here’s the weekly view, showing what looks like a shoe-in that a negative macro signal is going to come about.

pall.gold.wk

<Insert here > the usual caveats about tolerances on timing and individual indicators not being taken in a vacuum; but if this indicator is going to work as it has before, it’s message is not a pleasant one.  And no, I don’t have a clue about how this squares with the bullish things I am seeing in the Semi Equipment sector, another ‘canary’ that chirped the post-2012 up cycle.

It’s why you’ve got to love this market I guess.  It’s wonderfully dysfunctional IMO mostly thanks to the historically vigorous levels of policy input post-2008.

NFTRH 348 Out Now

By Biiwii

A good report, as usual.  That may sound smug but #348 is another report helped me personally because as usual I don’t go into these things so much trying to put what I think down on virtual paper.  I go into them seeking answers or at least, clarity.  Check.

nftrh348

Gold’s Ratio Signals

By NFTRH.com

A brief snapshot of counter-cyclical gold’s macro signals vs. other metals (and broad commodities) that are more positively correlated to economies, using weekly charts…

Each week NFTRH updates many charts of nominal US and global stock markets, commodities, precious metals and currencies over multiple time frames.  But we also cover economic data and indicators, with the first macro chart below (Palladium vs. Gold) still barely holding its economic ‘UP’ signal from January, 2013.  At that time a coming economic up phase did not seem likely, but PALL-Gold and fundamental information gleaned from a personal source in the Semiconductor Equipment sector gave us a good risk vs. reward on that stance.

While it can be argued that using an indicator like Palladium (positive economic correlation) to Gold (counter cyclical) is subject to the discrete supply/demand fundamentals of the two assets, it has worked to signal up and down economic phases, with the most recent shown in Q1 2013 (green arrow).  This indicator has been whipsawing since topping out a year ago and the moving averages are near a trigger point.

pall.gold

A related indicator is Gold vs. Commodities.  Gold-CRB made an impulsive rise in late 2014 as the global deflationary phase topped out.  As policy makers (ECB, BoJ, China Central Planning and US with ongoing ZIRP) continue to promote inflation 24/7, 365 Gold-CRB has dropped as it should when inflation is starting to ‘work’ and inflation expectations start to take hold.  But a problem for hopeful inflationists is that so far at least, counter-cyclical Gold-CRB appears to be in a bullish consolidation.

gold.crb

If cyclical PALL-Gold were to break down and counter-cyclical Gold-CRB to hold support and resume its uptrend the indication for the global economy would be negative.

Another chart worth considering is Gold vs. Copper, the traditionally cyclical red industrial metal.  A series of higher highs and higher lows began in late 2013 and is still in play.

gold.copper

To put perspective on this, behold how bearish nominal Copper is and has been by viewing this monthly chart similar to those we have reviewed in NFTRH for years now to maintain a big picture bearish outlook on this metal.  We have allowed for the current bounce/rally/bear flag, but until $3/lb. is exceeded and held, this is a very bearish picture.

copper

Finally, let’s review Gold vs. its primary running mate, Silver.  Actually, flipping Gold vs. Silver over to the Silver-Gold ratio works best visually at this time.

We are allowing for a bounce in Silver vs. Gold.  This could come about if the Fed rolls over again today and plays nice with its language.  Or it could just come about simply because it is due.  This would go hand in hand with a resumption of the mini inflation bounce implied in TIPs vs. regular Treasury bonds and in nominal Treasury bond yields.  The message of Silver-Gold however, is similar to the charts above on the bigger picture because it is locked below very strong resistance.

sgr.wk

Bottom Line

I consider Gold vs. Palladium and Gold vs. Copper to be indicators on the global economy whereas Silver vs. Gold is more an early indicator on inflationary pressure.

The conclusion is that the economy is in danger of decelerating (Pd-Au, Au-CRB, Au-Cu) amidst a dis-inflationary environment (Ag-Au).  The timing could be by this fall.  First, a resumed bounce in the ‘inflation trade’ has a chance to get reanimated.  But that is not the dominant longer-term trend.

Redefining Anomaly Through Inventory

By Alhambra Investment Partners

While the latest business inventory estimates are not yet updated for May, only through April, there is still a great deal of consistency provided by the top to bottom shifts in the economic supply chain. It usually takes an inventory build of tremendous disproportion to trigger the kinds of cutbacks and downstream negative pressures that amount to a recession. The estimates for inventory building provided from the GDP statistics certainly qualify, as do the Census Bureau’s own data.

ABOOK June 2015 Inventory Total Busn Ratio Continue reading Redefining Anomaly Through Inventory

Around the Web

By Biiwii

It’s been a while since we went around the intertubes for some market analysis…

  • Mortgage Rates at 35 Week High but Purchase Applications Picking Up  –GaveKal  [biiwii comment: a rush to ‘get in’ before the big bond bear (interest rate rise)? but this is the public we are talking about (the same public that was convinced about $200 oil).  that could be bullish for bonds (bearish for interest rates) after our target of 3.6% to 3.7% on the 30 year is registered on the ‘continuum’, though there’s a 1st time for everything, so we’ll avoid overly rigid thinking…]

 

NFTRH 347 Out Now

By Biiwii

There is short-term and there is long-term.  Short-term, an indicator of positive inflationary cyclicality looks set to bounce.  Long-term, it is locked well below key resistance.  Joining this long-term Gloomy Gus indicator is another that we used in 2013 to gauge an oncoming economic UP cycle.  It is working its way toward economic DOWN, slowly but surely over many months.

There’s lots of other valuable stuff in #347 as well, including market calls/opinions, stock highlights, interest rates and well, the most comprehensive kit and kaboodle you’re going to find out there.  But then, I am biased.

NFTRH 347 really helped me get my orientations focused.  That’s why I love doing this work.

nftrh347

Consumers in Recession…

By Alhambra Investment Partners

Consumers Stay In Recession Which Is Taken As A ‘Surge’?

I honestly don’t know where to begin:

U.S. retail sales surged in May as households boosted purchases of automobiles and a range of other goods even as they paid a bit more for gasoline, the latest sign economic growth is finally gathering steam.

The Commerce Department said on Thursday retail sales increased 1.2 percent last month after an upwardly revised 0.2 percent gain in April.

If you can find anything in that first paragraph as holding true, then numbers no longer have any meaning. The “gathering steam” is not steam at all but the thick, black smoke of household conflagration that has not only failed to arrest but gets worse with every passing month (and revision).  The revisions to April were almost exclusively in automobiles, which accomplished only moving the order in which the last five months end up on the list of the 20 worst months in the entire series – rearranging the deck chairs on the Consumer Titanic. Overall retail sales in May were estimated at an atrociously low +0.96%, including autos, which is the second worst showing of the entire “cycle” (marginally better than February 2013). April’s upward revision took that month from the second worst all the way to the third worst.

Continue reading Consumers in Recession…

Eurodollar Decay…

By Alhambra Investment Partners

The Global Downside to Eurodollar Decay

It is exceedingly difficult these days to detect where finance ends and the economy begins. That was intended, of course, as it was believed that greater intrusiveness on the part of the financial ends were consistent with greater, and better, economic control. Certain strains of economics have been obsessed since the dawn of the discipline with finding “optimal” outcomes. More recently, especially since the 1960’s, that has been transformed into not just understanding them or their potential but actually creating them through commandment of finance.

The generalized view of the current global predicament is simply that those seeking “optimal” outcomes through “optimal” control don’t have any real appreciation for how their efforts have transformed pretty much everything. The Federal Reserve in the United States still operates as if the US dollar were the US dollar, applying narrowly to just the circumstances within the US. Only recently (somehow it took until 2010!! for them begin thinking of unifying federal funds and eurodollars; one of many massive mistakes in 2008) has the eurodollar system become even a small topic of interest.

Continue reading Eurodollar Decay…

NFTRH 346 Out Now

By Biiwii

Here is the note from the email to subscribers that accompanied the full report…

“I thought is was time to bulk up a bit to a 30+ page report this week. We review some of the key indicators and try to clearly define the status of US and global stocks, precious metals, commodities, currencies and even interest rates. In fact, I think US long-term interest rates are a key so many other items. The ‘Continuum’ AKA the monthly view of the 30 year yield is back front and center in the analysis, with a target of 3.6% to 3.7%. But yields are not near an indication of what the media will hype as a new bear market in Treasury bonds and an age of rising interest rates. Not saying it can’t happen, it sure can. But I am saying that it is not nearly indicated, just as it was not indicated during the last rate hysteria or the one before that or the one before that…”

Well, interest rates were just a component of this comprehensive report.  But they are a key.

NFTRH 346 out now.

nftrh346

A Recessionary ‘Feel’…

By Alhambra Investment Partners

Recessionary ‘Feel’ Remains in Trade

I understand the idea behind trying to get exports to fit into the orthodox conventions about the dollar and global trade, even if I don’t agree with that at all, as it at least makes some plausible sense. If the dollar is up against trade partners, in simple math terms you might expect to see fewer US exports heading overseas – the currency translation makes our goods “more expensive.” But where that has at least a logical basis, there is none on the import side. If US goods are more expensive, then foreign goods are much cheaper, relatively, and thus with robust jobs and all that there should be a massive infusion of imports right now.

The opposite is, of course, the case, where imports continue to collapse in 2015. The resolution of the West Coast port strike, which is so often referenced in all this, amounted to a March increase of just 2.1% year-over-year. That followed February’s alarming 4.4% decline. But rather than all these cheapened imports and freely flowing ports opening up the spigot for burgeoning domestic demand, imports fell almost 6% in April! That was the worst month since March 2013 and the initial inflection off the 2012 global slowdown. If there is a robust US economy hiding in here, it is the most camouflaged in history.

ABOOK June 2015 ExIm Imports YY Continue reading A Recessionary ‘Feel’…