The ‘Gold as Inflation Hedge’ Canard
On the one hand you have the sons of Harvey & Erb, who called gold to $800/oz. and caused a stir in the gold “community”. Per Campbell Harvey in this video with Kitco’s Daniella (dig the flowing golden locks of hair)…
“Gold is just too volatile” to be an effective inflation hedge.
Well yes sir, you are right. Gold does not track inflation in any kind of a convenient time frame. Gold’s volatility is a reflection of the volatility of the assets orbiting around it in the constellation of risk.
This cool NASA illustration makes the point. Those planets – like equities, commodities and the various FrankenVestments concocted by Wall Street – are in motion. All is often fine, but when a meteor of risk discovery hits one of them well, it is suddenly marked down vs. gold. See?
Continue reading Gold is the Sun, and an Anchor
By Anthony B. Sanders
Yield Curve Flattens To Below 20 Basis Points
To be more precise, core personal consumption expenditures (PCE) prices YoY hit 2% for the first time since 2012.
Personal consumption expenditures YoY cleared 5.0% at 5.2%. But PCE has been declining steadily since its peak in 1975.
Continue reading Core Inflation Hits 2% (Highest Since 2012)
By Tom McClellan
August 30, 2018
In the election of 1992 there was an insurgent candidate, who did not win a majority of the popular vote, but who took the White House and set about reorganizing the government in a manner more to his liking. The first two years of his term in office were marked by numerous scandals, and by a stock market which saw a scary dip in the 2nd year which eventually resolved itself into a strong uptrend during the 3rd year of his presidential term. At that time, the Federal Reserve was commencing a program of rate hikes, which had market participants worried.
Does this sound familiar?
Continue reading Deja Voodoo, 1994 Edition
By Elliott Wave International
Lots and lots. Trading is not easy, period. But a few things can help.
Here’s a cool parlor trick: If you want to bring a loud, rowdy room to a screeching silence, ask if anyone can explain how cryptocurrencies work.
Cue crickets chirping.
Turns out, the “crypto” part of the name originally signified the encrypted nature of digital assets and their anonymous owners. But it’s proven foretelling, as cryptocurrencies have become synonymous with a cryptic impenetrability the likes of which no modern mainstream financial market — especially not one so fervently embraced — has known.
Even the experts are stumped by the exact logistics involved in cryptocurrencies, as these recent opinions suggest:
- “[Cryptocurrencies] are volatile by nature and thus don’t follow traditional rules and conventions.” (May 22 Coindiary.net)
- “The public’s fascination with cryptocurrencies is tied to a sort of mystery, like the mystery of the value of money itself, consisting in the new money’s connection to advanced science. (May 21 The Guardian)
That’s the bad news.
Continue reading What’s So “Cryptic” About Trading Cryptocurrencies?
By Otto Rock
Here’s the intro to last Sunday’s edition of The IKN Weekly, IKN483:
Friday may have been the day (but don’t count on it)
If there is one thing you can count upon in the wild and whacky world of gold stocks and all who sail with her, it’s that sentiment among its investors and speculators will turn on a sixpence. By way of example, we’ve just come out of an eight week period when gold was repeatedly hammered by the strong dollar, by Trade Wars!, by disdain for the whole precious metals complex and talk of dying demand. Most recently, gold spent two weeks under the U$1,200/oz line and spiked as low as $1,152/oz at one point and the whole process has been boring, painful or just plain horrible in turns.
And then, suddenly, Friday wakes up and gold pops over U$20/oz, going back above the U$1,200/oz and bringing a welcome relief rally to the sector. That’s why I decided to run this small poll on Twitter that day and here are the results of the 169 people who took a click of their time to answer:
Continue reading Friday May Have Been the Day (but don’t count on it), From IKN 483
By Tim Knight
Before I get started, I wanted to mention that I just received the full-color version of Silicon Valley Babble On, and it is just gorgeous. If you’re one of the well-to-do Slopers out there, you might want to spring for this luxury item, because it looks absolutely fantastic. It’s not cheap at 79.95, but here’s a link if you’re interested.
Now I’d like to share with you three charts of the S&P 500 cash index. I have deliberately left off the axis labels, so you’ll know neither the times nor the prices.
Continue reading Control Top
By Jeffrey Snider
The UST yield curve continues to flatten (as it does elsewhere). All sorts of mainstream articles have been published lately about it. Many of them often refer to academic pieces ostensibly trying assuage all fears about the yield curve’s threatening inversion. Fret not the distortion, they say.
And they are right. As I constantly remind people, it’s not inversion that anyone should worry about. All that matters is where the curve has been flattening, and not just recently. For years, it’s been shriveling and shrinking, a poignant likeness for the global economy.
Not so in the mainstream. The economy is booming. To reconcile how the yield curve could behave this way while strong growth is happening all sorts of intellectual byproducts are employed. Here’s another one published today:
Continue reading Downside Not Upside Global Risk
By Anthony B. Sanders
Las Vegas Fastest, Washington DC Slowest, First Time Homebuyers Face Grim Reality
Case-Shiller has released their June housing report.
The 20 metro home price index rose 6.31% YoY. The bad news? Hourly earnings for US private sector workers is only growing at 2.70% YoY.
As they say, all real estate is local. The fastest growing city in term of home prices is Las Vegas at 13% YoY with Seattle in close second at 12.8% YoY.
Continue reading Home Prices Continue To Rise Faster Than Wage Growth
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