By Charlie Bilello
They say it’s the longest bull market ever.
Certainly makes for a good headline, but what does “bull market” mean? And is determining its length of any value for investors? Let’s take a look…
Defining the “Bull”
There is no standard definition for “bull market.” If you ask 10 different market participants you could easily get 10 different answers.
Continue reading Is This Really the Longest Bull Market Ever?
“This is a very serious situation-will be addressed!”
Donald Trump has been Googling himself, which isn’t surprising because he’s a textbook narcissist who, over the weekend, actually took to Instagram and posted a picture of himself next to a statement ostensibly meant to commemorate deceased Senator John McCain.
For weeks, Trump has attempted to piggyback on recent social media bans of Right-wing conspiracy theorists like Alex Jones to reinforce his media bias message. That’s a backdoor way of trying to convince his base that all of the bad legal news and tariff headlines they read aren’t real.
Of course the reason social media and search giants have to be careful with folks like Alex Jones is that those folks push demonstrable lies with no basis whatsoever in reality. Jones was allowed to get away with that for years, but his ongoing dispute with the families of Sandy Hook victims and an absurd allusion to shooting Robert Mueller were a bridge too far for Apple, Facebook and YouTube (among others) who moved in to save viewers and listeners from themselves earlier this month.
Continue reading Trump Says Google Is ‘Illegally Rigged’ After Googling Himself
By Jeffrey Snider
I have to hand it to my colleague Joe Calhoun. In recent months, he’s been able to almost perfectly predict the Trump Administration’s response tactics to all this trade war stuff. Back in July, it was mere comments on the dollar. Not long thereafter, aid to farmers caught up in the China dispute. When that happened, Joe predicted it wouldn’t be long before NAFTA.
According to my record keeping, Mr. Calhoun is now three for three. You might only give him half credit for this latest one since technically the current NAFTA news only includes Mexico and doesn’t yet touch Canada. Yet. With the midterms approaching, you can see where all this is going.
That was pretty much Joe’s point all along. Politics is somewhat predictable in this way. And it reveals something else perhaps more relevant to what’s going on. Is this all really trade war stuff?
The political math adds up in that direction. The Trump administration has been messing with China which would only create collateral domestic damage. Betting on a booming economy, in the data anyway, the President need only clean up the rough spots. He’s doing it and one right after another.
Unlike earlier in the year, however, markets aren’t impressed; at least, those markets that actually count (stocks have no bearing on the real economy). The eurodollar futures curve, for one big example, wasn’t at all impressed and barely budged on today’s NAFTA news. In the all-important EDM 2020-EDM 2021 inversion, it had lessened intraday by all of 1 bps.
Continue reading COT Blue: May 29 Not Trade War
By Otto Rock
Here’s one that made me giggle, sent by a friend who was sent it by A Concerned Citizen. Back in late January, Miranda Gold (MAD.v) ran a $1.5m placement in order to raise funds for paying management to do nothing business and exploration and stuff. All normal so far, but then on February 1st they announced this:
Continue reading Miranda Gold (MAD.v): And a Mad Time Was Had by All…Directors
By Anthony B. Sanders
…As 10Y-2Y Treasury Curve Flattens To 18.75 BPS (REAL Fed Funds Target Rate Remains NEGATIVE)
We have been watching out for the US Treasury yield curve to invert (e.g, 2-year Treasury yields greater than 10-year Treasury yields).
And the US Treasury 10Y-2Y slope has flattened to 18.75 BPS.
Continue reading US OIS Forward Swap Inverts For First Time Since June 2007…
By Keith Weiner
Last week, we said that the consensus is that gold must go down (as measured in terms of the unstable dollar) and then will rocket higher. We suggested that if everyone expects an outcome in the market, the outcome is likely not to turn out that way. We also said that this time, there is likely less leverage employed to buy gold and that gold is less leveraged as well. And this, combined with a contrarian perspective on the consensus view, means that this time gold won’t go down before going up.
Dan Oliver of Myrmikan Capital emailed Keith to say that people in the third world use gold as collateral on their loans. When they can’t repay, the gold collateral is sold by the creditors. This time around, there is likely to be a larger crisis in the so-called emerging markets and their currencies, and hence this selling of gold will be a bigger factor. With greater selling pressure on gold, we’re back to the bearish case.
Million Ton Rock, Meet Million Ton Force
The bottom line is that we have several forces pushing gold up, and several pushing it down. On the up side (not upside, sorry we couldn’t resist) these include creditors rightly fearing dreadful losses when debtors default, speculators wrongly thinking that an increase in the quantity of dollars causes gold to go up, and even the possible path to remonetizing gold if we are successful in help Nevada to issue a gold bond. On the downside, we have speculators who front-run the consensus that gold must go down first in a crisis, and we have forced selling by leveraged gold holders in the first and third worlds.
Continue reading Another Gold Bearish Factor, Report
U.S. politics and trade are likely to dominate the headlines this week, which means market participants will yet again be forced to cope with the psychological overhang from Donald Trump’s ongoing legal trials and tribulations (and “trials” can now be taken quite literally) and the threat of another escalation on the tariff front.
Last week was easily the worst week of Trump’s presidency. In addition to Michael Cohen pleading guilty and implicating the President in open court, Paul Manafort was convicted on eight counts and Trump Organization CFO Allen Weisselberg was granted immunity by federal prosecutors, a development that bodes particularly ill given how much he likely knows. It also seems likely that Trump will move against Jeff Sessions sooner rather than later.
On trade, there’s progress on the NAFTA front as Robert Lighthizer appears to be closing in on a deal with Mexico, but low-level talks between the U.S. and a Chinese delegation went nowhere last week, setting the stage for Trump to move ahead with duties on an additional $200 billion in Chinese imports. Here’s BNP with a bit of color:
Continue reading Psychological Overhang: Full Week Ahead Preview
By Callum Thomas
Global trade growth has been something we’ve picked really well both going into the global trade recession in 2015/16 and the subsequent recovery and acceleration in 2016/17. It has helped raise conviction on risk management calls around commodities and emerging markets, and getting more aggressive on the growth vs defensive asset allocation (respectively). So it’s worth highlighting this chart of weekly global trade indicators, which after a notably deceleration in the combined signal, there has been a significant improvement in the past few weeks.
With the global manufacturing PMIs softening recently, it’s interesting to see some data which presents a contrastingly bullish picture. Indeed, the seeming chorus of bearishness spurred by the deceleration in global trade may simply be wrong footed as global trade growth stabilizes. In any case, we see no signs of imminent collapse in our key indicators at this point.
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By James Howard Kunstler
With Russian “meddling” stalled in the dead letter office, The New York Times has apparently re-branded itself Floozie Central in its quixotic campaign to unseat the Golden Golem of Greatness by all means necessary. The Stormy Daniels affair, and its slime-trail of payoffs, is the slender thread that the Resistance hopes to hang Donald Trump on.
The great legal minds of cable TV have been very busy trying to suss out which part of the $130,000 non-disclosure payoff might apply as a campaign financing violation. If Rudy Giuliani still had his wits about him, of course, he would claim that the money was just Ms. Daniel’s going rate for an overnight frolic amongst her legendary twin peaks, that is, a sex worker’s simple transaction fee. Where does it say in the constitution that a president may not consort with tramps and hussies?
Continue reading Meanwhile, Out in Left Field
By Steve Saville
[This post is a modified excerpt from a TSI commentary published last month]
Although I’m not in total agreement with it, I can highly recommend Erik Norland’s article titled “Gold: At the Crossroads of Fiscal and Monetary Policies.” The article is informative and, unlike the bulk of gold-related commentary, actually deals with fundamental developments that could be important influences on gold’s price trend.
The article was published in early-May and states that the U.S. is in a mid-to-late stage recovery. While that statement was probably correct at the time, evidence has since emerged that the economy has entered the “Late-Expansion” stage.
Note that the “Late-Expansion” stage could extend well into 2019 or perhaps even into 2020 and that the best leading indicators of recession should issue timely warnings when this stage is about to end. By the way, the extension of the Late-Expansion stage is why the industrial metals markets probably will commence new intermediate-term rallies later this year.
My only substantial disagreement with the above-linked article is associated with the relationship between gold and fiscal policy. Parts of the article are based on the premise that expansionary fiscal policy and its ‘ballooning’ effect on federal debt are bullish for gold. This premise is false; expansionary fiscal policy is not, in and of itself, either bullish or bearish for gold.
The effects that fiscal policy and the associated change in government debt have on the gold price will be determined by their effects on economic confidence. Of particular relevance, there’s no good reason to assume that an increase in government debt will bring about a decline in economic confidence, which is what it would have to do to be bullish for gold. In fact, if an increase in government indebtedness is largely the result of reduced taxes then it could lead to increased economic confidence for a considerable time and thus put DOWNWARD pressure on the gold price.
That there should not be a consistent positive correlation between the gold price and the extent of US government indebtedness is borne out by the empirical evidence. In particular, the following chart shows that there was a NEGATIVE correlation between the US$ gold price and the US government-debt/GDP ratio between 1970 and 1995, with debt/GDP drifting lower during the long-term gold bull market of the 1970s and then trending upward during the first 15 years of gold’s long-term bear market.
Continue reading Gold at the Crossroads
We began tracking this negative divergence in NFTRH last year as the leadership of two premier Semi Equipment companies began to decelerate vs. the broad sector.
Over time the ugly patterns became even uglier with breakdowns to new lows. This chart shows that ugliness but more importantly it tries to illustrate AMAT & LRCX as leading indicators for the broad markets. In 2013 it was a big part of the macro signaling that told us to prepare for a coming economic upturn. In late 2015 it told us that the market top of that time probably was no such thing.
Continue reading Semi Sector: A Warning or a Buy?