One Nightmare to Go

By Tim Knight

Two days left this month, and two days until the summit. Tickety-tock.

As I mentioned earlier today, my speculation on Monday that more “bear pain” was ahead turned out to be agonizingly accurate. The speculative chart I offered back then was:

And we blew through that entire yellow zone and then some. Indeed, let’s take a hard look at the updated chart, since I’ve got a few points to make about it.

Continue reading One Nightmare to Go

Mexico: The New Mining Law and the Changing Scenario Around Mining (from IKN496)

By Otto Rock

You can rant or giggle at this blog’s contents as much as you like, it’s not where the real work goes on round these parts. This from The IKN Weekly IKN496, out on Sunday evening. I’ve been asked by a couple of subscribers to put it on the open blog and yeah, why not. Here you go.

Mexico: The new mining law and the changing scenario around mining

The main political risk news story out of the region last week is the very same we previewed last Sunday, a closer look into what we can expect from the new AMLO government for the Mexico mining sector. At the time last Sunday I expected to preview some of the potential negatives in the pipeline, but events overtook me and last week we saw a range of Mexico exposed mining stocks take steep dives on the political newsflow. Examples:

  • Fresnillo (FRES.L) down 15%
  • Torex Gold (TXG) down 15%
  • Southern Copper (SCCO) down 15%
  • MAG Silver (MVG) (MAG.to) down 8%

However, not all Mexico exposed miners were whacked hard, or even at all, compared to the benchmarks. More examples:

Continue reading Mexico: The New Mining Law and the Changing Scenario Around Mining (from IKN496)

Bubble Burst? Smart Money Flow Index Continues To Decline To 1995 Levels

By Anthony B. Sanders

The Smart Money Flow Index, measuring the movement of the Dow in two time periods: the first 30 minutes and the last hour, has just declined AGAIN.

smartdow

The Smart Money Flow Index, like the DJIA, has been around for decades. But it has just fallen to the lowet level since 1995.

Continue reading Bubble Burst? Smart Money Flow Index Continues To Decline To 1995 Levels

When SPX Closes Higher on Bad Breadth

By Rob Hanna

While the SPX closes higher on Tuesday, NYSE breadth was weak – both from an % Up Issues and % Up Volume standpoint. This triggered the study below from the Quantifinder. I also discussed it in last night’s subscriber letter.

2018-11-28-1

Here we see numbers suggesting a substantial bearish edge over the next 1-4 days. Below is the full list of instances and their 4-day returns.

Continue reading When SPX Closes Higher on Bad Breadth

They Warned Us

By Jeffrey Snider

We can add this to the list of all the things going wrong in October. If it felt like a wave of renewed deflation built up and swept over markets and the global economy, it’s because that’s just what had happened. I don’t think it random coincidence the WTI curve went contango and oil prices globally crashed when they did. Golden Weeks in China are always interesting, especially on the reopen.

There are two facts as they pertain to China in 2018. The first is the nation’s clear monetary trouble. The second is why it has (re)emerged.

The statistics for the first part were pretty grim last month, accounting for much of why October was such a major global mess. The People’s Bank of China has been forced into cutting back on monetary growth in base measures all year. This all changed in January, the same time the global economy began to come crashing back down from its low-level reflation in 2017.

Continue reading They Warned Us

Here’s Hoping the BCSC Goes After TSX Companies as Well, Not Just the CSE

By Otto Rock

Because there’s plenty of grist for that particular mill, too.

I’ve been sent the link and/or the PDF of the BCSC announcement about the so-called “BridgeMark Group” around two dozen times since it came out yesterday. And a good thing too, thanks to all who cared enough to think of this humble corner of cyberspace, it’s greatly appreciated. There’s been plenty of real reporting on the development done by real reporters, you hardly needed a pissant blogger throwing in his dos centavitos yesterday, but there are a couple of interesting angles to the allegations brought by the BCSC Executive Director.

1) All the companies are CSE-listed. Now that’s fine, if all the named issuers have been doing naughty things they should be called out but there’s no way on God’s green earth you can tell me these nefarious peddlers of scams are confined to that exchange. Sleight of hand as outlined in the report has been going on forever on the TSX and especially the TSXV, therefore we wait to see whether BCSC has actually grown a real pair. Is it after the bad guys, or is it just trying to shut down the TSX competition which has grown from insignificant to a thorn in the side of the main exchange these last couple of years?

Continue reading Here’s Hoping the BCSC Goes After TSX Companies as Well, Not Just the CSE

Fed Shifts to a Less-Predictable (?) Approach to Policy Making

By Anthony B. Sanders

Nick Timiraos from the Wall Street Journal has an interesting article entitled  “Fed Shifts to a Less-Predictable Approach to Policy Making.”

Federal Reserve officials are moving into a more unpredictable phase of policy-making after two years of removing economic stimulus in regular, quarterly intervals.

They will be deciding whether and when to raise interest rates more on the basis of the latest signs of economic vigor—such as in inflation, unemployment and growth—and less on forecasts of how the economy is expected to perform in the months and years to come, they’ve indicated in interviews and public comments.

Less predictable???? One possible rule is the Taylor Rule. But The Fed kept their target rate at 25 basis points from late December 2007 to December 2015, far below the TR rate.

trrudesbuch

Here is the Fed Funds Target rate.

Continue reading Fed Shifts to a Less-Predictable (?) Approach to Policy Making

Revisiting the Gold-Backed Yuan Fantasy

By Steve Saville

This is an excerpt from a commentary posted at TSI about three weeks ago]

In an article titled “China’s monetary policy must change” Alasdair Macleod discusses a path that China’s government could take to make the Yuan gold-backed and thus bring about greater economic stability in China. Keith Weiner pointed out some flaws in the Macleod article, including the fact that the sort of Gold Standard that involves pegging a national currency to gold is just another government price-fixing scheme and therefore doomed to fail. We will single out an error in the article that Keith didn’t address and then briefly explain why a gold-backed Yuan is a pipe dream.

This excerpt from the article contains the error we want to focus on:

China’s manufacturing economy will be particularly hard hit by the rise in interest rates that normally triggers a credit crisis. Higher interest rates turn previous capital investments in the production of goods into malinvestments, because the profit calculations based on lower interest rates and lower input prices become invalid.

Continue reading Revisiting the Gold-Backed Yuan Fantasy

A History of First Cuts

By Kevin Muir

The market is definitely torn about whether last week the Federal Reserve signaled a pause in their rate-tightening campaign. You know where I stand (they did), so there is little to be gained by my shouting into the wind trying to convince anyone.

Yet one of my more astute readers sent a note to be careful what I wish for. Now, he knows we are a long way from the Fed actually cutting rates. In fact, I suspect we both think the Federal Reserve will raise rates this December. But let’s imagine that I am correct and the next meeting brings about a one-and-done rate rise. What if the Fed’s next move after December is a rate cut? I know that seems preposterous right now, yet there are many signs the American economy is slowing faster than the Federal Reserve forecasts.

Continue reading A History of First Cuts

A Golden Renaissance, Report

By Keith Weiner

A major theme of Keith’s work—and raison d’etre of Monetary Metals—is fighting to prevent collapse. Civilization is under assault on all fronts.

The Battles for Civilization

There is the freedom of speech battle, with the forces of darkness advancing all over. For example, in Pakistan, there are killings of journalists. Saudi Arabia apparently had journalist Khashoggi killed. New Zealand now can force travellers to provide the password to their phones so the government can go through all your data, presumably including your gmail, Onedrive, Evernote, and WhatsApp. China is now developing a “social credit” system, to centrally plan the economy and control citizen behavior. Canada has made it a crime to call someone by the wrong gender pronoun. Even in the US, whose First Amendment has (mostly) stood as a bulwark against censorship now has a president who threatens antitrust action against Amazon, because its CEO Jeff Bezos owns the Washington Post, which prints things he does not like. On college campuses, professors are harassed if they say one thing that the professional sensitives are sensitive to. If a controversial speaker is invited, he risks an angry mob coming to disrupt his talk (or worse).

Continue reading A Golden Renaissance, Report