Thursday, October 23, 2014

Thursday morning news: Caterpillar, China, Diwali, rare earths and S Club 7


Things were up at the open, but have drooped as USD went up and oil & high-yield went down. As usual. Dunno if things are going to continue like this, but I added $10K in an S&P index ETF. I can always flip it out to short-vix if we get another fear spike.

And by the way, for all you in the press:

#1, it's stupid to blame a stock selloff on a lone nut with a gun in Ottawa. That has no impact on the economy.

#2. it's callous and ignorant to blame a stock selloff on a lone nut with a gun in Ottawa.

Now here's some news:

BI - Caterpillar Q3 earnings beat. Don't trust Sam Ro's take on it, though, because he's admitted he couldn't pay attention to the presentation because of all the awesome pictures of dumptrucks and stuff.

Gavyn Davies - China's slowdown is secular, not cyclical. Sure, though I still think it'll be more of a Korea slowdown, not a collapse. In any case, yes you can't extrapolate 8-10% growth forever: China's not going to overtake the US in per-capita GDP. Ever. In any case, figure out how much physical plant China still has left to build before they can compare to Korea in 2001.

Bloomberg - China vehicle sales forecast cut. To show you how stupid the spin has been, here's a quote:
Dong Yang, secretary general of the state-backed China Association of Automobile Manufacturers, said total passenger and commercial vehicle sales for the full year would likely hit 23 million units, or an increase of about 4.6 percent. In July, the group lowered its projection for the increase in China vehicle sales to 8.3 percent, or 23.83 million units, down from the 10 percent increase it predicted in January.
So if the forecast is for 830,000 fewer units sold, and sales are still up 4.6% year-over-year, you don't spin the article as doom & gloom and a validation of a China hard landing thesis.

FT beyond brics - It's Diwali! Time to give gifts.

Council on Foreign Relations - rare earths and national security. A report on rare earths, if you're still interested in them now, five years after they were cool.

Popsugar - S Club 7 are reforming. I know this will be exciting to IKN! He's their biggest fan! And there ain't no party like an S Club party!


Wednesday, October 22, 2014

BRENT COOK SAYS JUNIOR MINING SUCKS: here's what you need to know


Here's Cookie Monster saying that junior mining really sucks:



REASONS TO PUKE THE S&P 500: here's what you need to know


Here's today's reasons to puke the S&P 500 into nonexistent bids:

Calculated Risk - thirty one states had unemployment rate decreases in September. OMG unemployment decrease! Sell sell sell!

Calculated Risk - September LA port traffic: imports highest since 2006. OMG imports increasing! Sell sell sell!

Calculated Risk - AAII billings suggests robust construction ahead. OMG architectural billings up! Sell sell sell!

Liz Ann Sonders - market's on a roller coaster. Quote:
Helping with this objective analysis is SentimenTrader, who looked at every intermediate-term S&P 500 low of the past 20 years (there were 26 of them). They recorded the level of their comprehensive set of indicators on those dates, and compared them to the market's current condition. As of day's end last Thursday, 51% of their 85 indicators matched or exceeded the extremes set at other lows (it dropped a bit through Friday).
OMG objective analysis! Sell sell sell!

BI - Joey the Weasel defects to Bloomberg. Good riddance, Joey, and I won't be reading you or Bloomberg. Blodget, please try and replace him with someone who isn't a click-whore. And see if you can get Udland and Ro to leave too. Keep Mamta.


Sandstorm Gold


SAND:


Remember when Sandstorm was such a great deal at twelve bucks?

Hey Nolan, have you figured out what's wrong yet?


Here's what I think the market's doing today


Here's what I think is going on:



The market is seeing oil go down today and has decided to sell, cos that worked so well the last time.




The market is seeing US dollar go up today and has decided to sell, cos that worked out so well the last time.



And maybe Pimco has gone back to dumping high yield.

So either we'll see more dumping tomorrow, or we won't.

I guess if we do, I can watch for a while and then go back to shorting $VIX. If it doesn't follow through after today, I'll just go buy more US index ETFs.

Might just see a higher low and that's it. I think people are beginning to cotton on that puking US equities is kinda dumb.


$VIX is popping again


Well, yesterday the October $VIX options got doohickeyed, and today the $VIX has started popping again:


I didn't want to sell over the lunch hour, because that's Mom & Pop Act Dumb hour, but with a mental stop at $24.50 on HVI I eventually felt I had to. Things were starting to look downwardly mobile, and the $VIX future curve is flattening again on the near end. Plus you can see a long upward line on that chart above, from end of August through to today, that it seems the market won't let $VIX break below.

And maybe there was a distortion in the $VIX due to the option expiry.

So, a quick $2000 win for me, and I'll wait for the chance to either reload a $VIX short or just buy more US equities on the cheap.

Maybe I'll wait for something stupid like UNP getting puked down 10% again before I buy back in? I dunno.


Some Sarah Palin humour


OK, this is hilarious:



Ford's chart annoys me


With the usual caveat that the following is for information purposes only, I am not a licensed securities dealer and this is not meant as a recommendation to buy or sell securities:

OK, so Union Pacific has popped all the way back up, so there's no point in buying it now.

Magna has only recovered a third of its drop, but it's only got about another 18% left on the table for it to get back to its August high.

But look at this:


Really?

Here's the weekly:


Are you serious?

So the market is saying it considers Ford's outlook to be as terrible as it was in May 2013. That looks silly to me.

Apparently part of this is based on Ford's decision to redesign its light trucks using aluminium. Apparently the market thinks that aluminium trucks are for wimps, and those butch sweaty men in home construction will prefer nice heavy steel trucks from GM.

Apparently engineers have no idea how to build things out of aluminium.

I dunno. I'm not buying, just cos Canadian banks like taking 3-5% or something off the top when you buy US stocks. But this chart just speaks silliness to me.


Mister I-like-being-the-market-and-dumping-high-yield-coupon-into-a-bidless-book is back


HYG:


If this red candle gets bigger, that'll feed through to $VIX and equities via the robots, and we'll get another dip in the market.

Probably a higher low because Ebola mysteriously disappeared and Europe mysteriously isn't collapsing anymore.*



* - UST10Y = 2.24% while Spain10Y = 2.16% as of this second

Eighth grade math: ratios


My god, I just looked it up and they don't teach ratios in Ontario until grade eight.

I remember I did long division in grade four: I remember because it's the first time I had trouble in math. Why do we need to go four years between long division and ratios? What are we teaching our children in the meantime? Has grade school devolved into nothing but drool bibs, construction paper and Marxist-Leninism?

We just don't beat our kids enough anymore. Bloody socialists.

Anyway:

IKN - the gold/copper ratio. Where he shows this chart:


"This could be a thing. If it is, gold doesn't go up any further unless copper comes to the ride, too" is incorrect, old fig. That is only one condition that meets your red-line-over-a-squiggly-line proposition.

The other condition is that both gold and copper go down from here, but gold goes down slightly faster than copper.

Since your proposition and inference have the apparent goal of justifying a bullish stance toward copper, I felt I needed to point out the alternate possibility.

And the alternate possibility is more likely if we're in a secular bear market for commodities.

But it's all just "technical analysis" anyway, so you may as well go buy yourself a Tarot deck and play with that.

Or dump your miners and go buy some Union Pacific.


Tuesday, October 21, 2014

Josh Brown has become the noise that I need to tune out.


Reformed Borker (Bork Bork Bork!) - Monday before the open, let's talk about how scared we are.

Fucking idiot. Remember, this was Monday:
Jon Krinsky’s technical note for MKM Partners this week is entitled “The Game Has Changed… V-Shaped Bottom Unlikely” and, while not bearish, he is very skeptical that last week’s low will be the low for the current correction. He notes that breadth was terrible despite Friday’s bounce and that we’ve now spent a week below the 200-day moving average – which hasn’t happened since the current rally began in 2012.
Breadth is better now, isn't it?

Bespoke - all those stocks you panty-piddlers sold off the hardest last week have bounced back the hardest, including Union Pacific and WHAT IN THE NAME OF LIGHTLY TANNED JESUS WERE YOU THINKING?!?

God, Josh, you were so scared of a giant correction, weren't you? What a godforsaken panty-piddling little sissy you are. Tell you what Josh, here's a picture for you:

Another pic from last week's 10% off sale


Hey, remember Union Pacific?


You could have bought it last week for 10% off. Great granny stock.

Tell me again how Wall Street Whitey is so damn smart that he will happily vomit shares in the dominant American rail carrier at a 10% discount, wiping out 4 months of gains.

Explain to me under what circumstance Union Pacific can suddenly be worth 10% less, aside from asteroid impact.

Please summarize what data you ever saw that indicated a collapse of 10% in rail traffic over the space of one week.


Alcohol is always involved

The big secret that you discover, as you get older, is that 99% of news stories could truthfully include the sentence "alcohol was involved".

"Russian separatists down Malaysian airliner with surface-to-air missile, killing hundreds: alcohol was involved."

"Leafs beat listless Red Wings: alcohol was involved."

"Republicans nominate Cruz as presidential candidate: alcohol was involved."

"IBM offers negative guidance for 2015, leadership decides to maintain focus on virtualization services: alcohol was involved."

It's easier for you in the long run if you just give in and join the involvement with alcohol. Everything makes more sense that way.