Pivotal Events – Precious Metals

By Bob Hoye

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Not Buying the New Stimulus

By Jeffrey Snider

What just happened in Europe? The short answer is T-LTRO. The ECB is getting back to being “accommodative” again. This isn’t what was supposed to be happening at this point in time. Quite the contrary, Europe’s central bank had been expecting to end all its programs and begin normalizing interest rates.

The reaction to this new round was immediately negative:

The euro and euro zone government bond yields fell sharply on Thursday after the European Central Bank changed its rate guidance while banking stocks tumbled as a fresh round of cheap loans was less generous than previous packages.

Continue reading Not Buying the New Stimulus

3-day Pullbacks from 50-day High to 10-day Lows

By Rob Hanna

The decline in SPX meant it was the 3rd day in a row in which it closed lower. 3-day pullbacks will often suggest an upside edge. I also found it notable that 1) the pullback originated from a 50-day high, and 2) it left SPX at a 10-day low. So I examined other times we saw such drops, and found some interesting results.

2019-03-07

Historically we see that 3-day drops from 50-day highs to 10-day lows have often by followed by a bounce in the next few days. Traders may want to keep this in mind as they determine their trading bias.

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Or better yet, subscribe to NFTRH Premium for an in-depth weekly market report, interim updates and NFTRH+ chart and trade ideas to get much more bang for your buck. Also keep up to date with actionable public content at NFTRH.com. Follow NFTRH & Biiwii via Twitter @BiiwiiNFTRH, StockTwits.

Bold Gold Rolled

By Tim Knight

In spite of the President’s declaration on Saturday that the dollar was “too strong”, King Dollar is holding its own and, in turn, gold continues to get battered. It has tumbled hard pretty much every day since February 20th. I wanted to mention, however, that it could be finding a reasonable area of strength soon.

Miners, too, should be watched closely for support a little north of $21.

Continue reading Bold Gold Rolled

Deja Vu? Bankers Get Creative to Offload CLO Risk in U.S. and Europe

By Anthony B. Sanders

Bankers dumping business loans and corporate debt in the forms of Collateralized Loan Obligations off on investors in the US and Europe? As New York Yankee legend Yogi Berra once said, “It’s déjà vu all over again.”

(Bloomberg Quint) — Arrangers of collateralized loan obligations are innovating their way through a tough market as they try to shift a stockpile of warehoused assets from their balance sheets.

The year’s first batch of new CLO issues to price in the U.S. includes two transactions with short maturities and one static deal, where the underlying pool of loans remains the same throughout its lifetime. These non-typical features are offered to draw in investors some of who have grown more cautious after leveraged-loan prices dropped and CLO funding costs rose at the end of last year.

Continue reading Deja Vu? Bankers Get Creative to Offload CLO Risk in U.S. and Europe

Trump: The First MMT President

By Kevin Muir

I have become fascinated by MMT (Modern Monetary Theory). Sure, you can crap all over it, but I am not so sure there isn’t much to learn by opening your mind to the idea that some of the ways we think about economic theory might be wrong.

Too many pundits look at provocative headlines emanating out of the likes of Alexandria Ocasio-Cortez and simply chalk up MMT as socialism-disguised-as-economic-theory that needs to be quickly squashed before we end up like Venezuela.

Continue reading Trump: The First MMT President

Is Capital Creation Beating Capital Consumption?

By Keith Weiner

We have written numerous articles about capital consumption. Our monetary system has a falling interest rate, which causes both capital churn and conversion of one party’s wealth into another’s income. It also has too-low interest, which encourages borrowing to consume (which, as everyone knows, adds to Gross Domestic Product—GDP).

What Is Capital

At the same time, of course entrepreneurs are creating new capital. Keith wrote an article for Forbes, showing the incredible drop in wages from 1965 to 2011. There was not a revolution, because prices of goods such as milk dropped at nearly the same rate. The real price of milk dropped as much as it did, because of increased efficiency in production. The word for that which enables an increase in efficiency is capital.

Or, to put it another way, capital provides leverage for productive human effort. We don’t work any harder today, than they did in the ancient world (probably less hard). But we are much richer—we produce a lot more. The difference is capital. They had not accumulated much capital. So they were limited to brute labor, to a degree which we would find shocking today.

Continue reading Is Capital Creation Beating Capital Consumption?

The Wrong Focus

By Charlie Bilello

“Don’t dwell on what went wrong. Instead, focus on what to do next. Spend your energies on moving forward toward finding the answer.” – Denis Waitley

What matters more – your indicators, or your opportunity set?

I think this is an incredibly important question to think through.  Visit any website, turn on any financial news channel, and invariably you’ll find someone who references some indicator to support his or her bullish or bearish view.  Many indicators will be shown against some chart, or in the context of  a strategy, to show just how powerful that indicator has been in the past, and what it means in the context of some current market action.

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What if ‘Excess’ Reserves Aren’t Really Excess?

By Michael Ashton

One intriguing recent suggestion I have heard recently is that the “Excess” reserves that currently populate the balance sheet of the Federal Reserve aren’t really excess after all. Historically, the quantity of reserves was managed so that banks had enough to support lending to the degree which the Fed wanted: when economic activity was too slow, the Fed would add reserves and banks would use these reserves to make loans; when economic activity was too fast, the Fed would pull back on the growth of reserves and so rein in the growth of bank lending. Thus, at least in theory the Open Markets Desk at the New York Fed could manage economic activity by regulating the supply of reserves in the system. Any given bank, if it discovered it had more reserves than it needed, could lend those reserves in the interbank market to a bank that was short. But there was no significant quantity of “excess” reserves, because holding excess reserves cost money (they didn’t pay interest) – if the system as a whole had “too many” reserves, banks tended to lend more and use them up. So, when the Fed wanted to stuff lots of reserves into the system in the aftermath of the financial crisis, and especially wanted the banks to hold the excess rather than lending it, they had to pay banks to do so and so they began to pay interest on reserves. Voila! Excess reserves appeared.

Continue reading What if ‘Excess’ Reserves Aren’t Really Excess?