Let’s take an in-day snapshot of gold vs. several key competitors (for your investment dollars/euros/yen, etc.) and check the progress in turning the macro from risk ‘on’ to risk ‘off’, cyclical to counter-cyclical.
Gold/Commodities motors along above the SMA 200. The move has been hysterical, and thus looks impulsive. That could mean something as we look back in hindsight one day.
I noticed on a different site someone mentioned the fund SHE, the “gender diversity fund“, and I thought they were just doing a politically correct joke. Sort of a riff on all the virtue signaling going on these days. Nope. This is real. There is seriously a fund based only on having more women than usual in senior management positions. And as you can see below, comparing SHE to the male-dominated SPY, those women sure do make a gigantic difference in investment returns. I’m sure it makes the lack of liquidity and wider bid/ask spreads totally worth it.
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Yesterday saw another significant M&A transaction being announced in the mining sector, with Pan American Silver acquiring Tahoe Resources. This deal comes less than two months after the merger announcement between Barrick and Randgold, which was well received by the market.
Drain the Swamp!
I’d like to see a lot more of these deals announced because hopefully they will help clean up the mining sector and provide investors with some long overdue returns. While the broader market has seen a tremendous bull market over the past decade, the mining sector has been stuck in a quagmire. Not because of metal prices and not because of demand factors, but because the sector has done an extremely poor job of creating value. In large part, this is because some companies or management teams have been exceptionally good at destroying value. Public companies are supposed to make investors money and the mining sector has been atrocious in this regard.
5Y CDS Rises To Near 200 As Earnings Continue To Sag
Too much debt? Declining earnings per share? All of the above??
(Bloomberg) — General Electric Co. may still have a relatively solid investment-grade rating, but investors aren’t taking their chances. They’re snapping up derivatives that protect against losses on the company’s debt.
The cost to insure against a default by GE for five years climbed to as high as 211 basis points in early trading, credit-default swaps prices from CMA show. That’s almost double what it cost just two weeks ago, and it’s the kind of level that hasn’t been seen for the company since the waning days of the global financial crisis.
That’s still well below the peak crisis levels for GE’s finance unit back then (GE Capital CDS surged to more than 1,000 basis points in March 2009). But the pace of the increase has been rapid, particularly when compared with the broader investment-grade market. Yields on some of GE’s bonds have also reached levels that are in line with junk-rated bonds, Bloomberg Barclays index data show.
This is not surprising given the performance of GE’s equity and 5% perpetual bonds.
Crude oil prices reached a new multi-year high on October 3, and then started a dramatic drop. It has just now fallen for 12 straight trading days to reach the lowest close since December 2017. There are various theories about why this has happened, attributing it to comments from President Trump, OPEC chicanery, Iranian oil exports, falling demand, fracking overproduction, and all manner of other explanations. But few of those explanations address the “when” question, concerning why this is happening now.
[biiwii comment: per my comment to this post at Slope of Hope…]
I once asked Bruno if I could publish his posts @ biiwii.com and he responded in such a humble way. As if it were an honor for HIM that I would consider publishing him. It was actually the other way around. He was an idealist and as honest as the day is long. But the humility; that is a thing I respected most. Thank you Tim for this post. I am very sad to hear this.
I have sad news to share with everyone. Our beloved brother-in-arms, Bruno de Landevoisin, has passed to the eternal realm. For those of you who don’t know to whom I’m referring, Bruno was a very long-time member of the Slope community, writing more posts here than anyone except myself, and doing so with a fastidious attention to detail. He went by many names – – Idiot Wind, BDI (which meant “Bob Dylan Idiot”, since he was a huge fan) – -but we all knew him as the loveable Frenchman, descended from royalty, who was a tireless and lovingly combative member of this community.
I have seen a fair amount of hubbub about the Russell “Death Cross” that is happening today and the potential bearish implications for the market. A “Death Cross” is a catchy (though perhaps not terribly accurate) term for when the 50-day moving average of a security cross below its 200-day moving average. It is being promoted as a warning of a potential bear market. Of course all bear markets will see this happen at some point, because a bear market is an extended decline. But the real question when considering the implications of the Death Cross are whether it serves any value in predicting a bear market. To answer this I did an examination of past Russell Death Crosses, and what they meant for the S&P 500.
Both of my data sources show Russell data back to late 1987. And since I need 200 days to calculate a 200-day moving average, the earliest the study could look back to was 1988.