Pivotal Events: Stocks & Precious Metals

By Bob Hoye

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Wages and Salaries Jump By 3.1%, Highest Level Since 2008

By Anthony B. Sanders

Dow Jumps >300 Pts After Announcement

One of the most closely watched economic indicators by the Federal Reserve is the Employment Cost Index generated by the US Bureau of Labor Statistics.

Private industry wages and salarie rose 3.1% YoY in September, the highest since 2008.

wagesyea!

And not surprisingly, the biggest increase in benefits (also 3.1% YoY) is for … State and Local Government workers. Apparently, they don’t believe that there is a public pension fund crisis … or don’t care.

Continue reading Wages and Salaries Jump By 3.1%, Highest Level Since 2008

Bond Bull Bull

By Jeffrey Snider

On February 12, 1999, the Bank of Japan announced that it was going full zero. Japan’s central bank would from that day forward push the overnight uncollateralized lending (interbank) rate to the zero lower bound. Further, it pledged to keep it there until Japan’s economy recovered.

The economic slump in the nineties had been by 1999 almost a decade in length. As the Japanese economy ground to a halt, unmovable and completely resistant to being restarted by any of the orthodox techniques tried up to that point, there came to be an institutional bid for government paper. It was the perfect illustration of Milton Friedman’s interest rate fallacy – low interest rates signal tight money in the real economy. The bid was pure liquidity risk, having nothing to do with the “fundamentals” of bonds.

ZIRP was intended to try and change that condition. The mere rumors about it all the way back in 1998 had kicked off a BOND ROUT!!! From September 1998 through February 1999, it seemed as if the so-called bond bull market had finally been broken. Central bankers would ride to the economy’s rescue with non-standard “accommodation.”

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AAPL Still Following Its Quarterly Pattern

By Tom McClellan

AAPL share price quarterly

We are in a time when “normal” relationships are not working, and when any slight hint of misperformance is getting punished.  So it is fascinating to see that AAPL’s normal quarterly price behavior pattern is still “working”, something I discussed here back in August.

AAPL’s share price has a pretty regular pattern which plays itself out over each calendar quarter.  Apple Corp. releases its quarterly earnings report usually on the 1st day of the month, one month after the end of the calendar quarter, and so the next one is due out Nov. 1.

Continue reading AAPL Still Following Its Quarterly Pattern

The Daily Shot Brief – October 30th, 2018

By The Daily Shot

Greetings,

The United States: This chart shows the government’s contribution to the GDP growth (federal, state and local).

Source: Brookings, Cantor Fitzgerald Market Strategy Team

Global Developments: Here is TD’s global macro risks index.

Source: TD Securities

China: The Q4 GDP growth is shaping up to be disappointing (as tariffs hit).

Continue reading The Daily Shot Brief – October 30th, 2018

Trouble Brewing in Private Equity?

By Callum Thomas

In the low yield, low interest rate, low expected return, and low liquidity premium world, cash has flooded into alternative investments such as hedge funds, infrastructure, property, and of course private equity.  Asset allocators see these increasingly mainstream “alternative assets” as saviors of sorts, providing lofty return expectations with apparently low volatility.

And it has been a long time since these sometimes little understood asset classes have faced a real test.

But that could be changing.

An obscure index – in truth, a subset of private equity (and some may even call it a misnomer) – the S&P Listed Private Equity Index has undergone a major breakdown.  Gliding through its 200 day moving average and slicing through well defined support levels, there is open air before the next logical support level comes into play.

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What Can Kill a Useless Currency

By Keith Weiner

There is a popular notion, at least among American libertarians and gold bugs. The idea is that people will one day “get woke”, and suddenly realize that the dollar is bad / unbacked / fiat / unsound / Ponzi / other countries don’t like it / <insert favorite bugaboo here>. When they do, they will repudiate it. That is, sell all their dollars to buy consumer goods (i.e. hyperinflation), gold, and/or whatever other currency.

Redemptions Balanced With Deposits

No national currency is gold-backed today. In a gold backed currency, each currency unit begins life with someone who chooses to deposit his gold coin in exchange for the paper currency. And it ends life with someone redeeming the paper to get back the gold coin. A good analogy is bone in the human body. One process is constantly removing bone material. And another process is growing more. What seems to be a static bone, with fixed length and mass, is constantly being torn down and rebuilt. The seemingly stable bone is actually in equilibrium between two opposing forces.

So it is with the gold standard. Some people are redeeming paper to get the gold coin. Others are depositing gold coins to get paper. The seemingly stable gold standard is actually in equilibrium between two opposing processes.

Continue reading What Can Kill a Useless Currency