Thursday, March 26, 2015
The difference this time is that today HYG isn't under existential threat from the miniscule percentage of its holdings that are associated with the oil patch, since oil has been going up these past few days.
The last time the world's greatest ever railway* was trading this low, Ebola was threatening to kill all Americans by making them poop out their own liquefied and bloody intestines to teh deaths omg buy gold.
It got better.
* - by which I mean that if you just bought UNP in 2000, and then went away for 15 years and lived your life, you'd have made a 1200% gain plus dividends. In fact, the dividends alone are today yielding 25% on UNP's Y2K purchase price. You fucking tool. God, you're such a fucking tool. How can you be such a fucking tool?
Well, this is interesting:
I was worried because the SMA(50) for gold ex-US is about to drop off and it was still hugging the line.
But as it turns out, it seems to want to pop upwards now.
After a 50% retrace, that's pretty good.
So if you want to try the strategy of owning shitty miners in April, that's fine by me.
OK, so yesterday morning I sold my HSU, and then the market went lower.
But this morning I bought back half at 4-5% less. I figure the market should be at a higher price someday, and me earning an extra 4-5% over a SPY buy-and-hold strategy is good.
As well, NSC is -3SD and $TRAN is <-2SD, so this is a bit of a silly selloff.
And the economic surprise index is low and we already know there was bad data in February.
And we already had four selloffs to S&P=2000 in the last 3 months. So there's fresh money in at that point.
And this selling this week might just be end-quarter rebalancing. Plus some fear of the biotech selloff, which is silly, plus some repositioning now that Whitey's scared he might be on the wrong side of the US dollar trade.
I still have cash, so I can always double down to fill my S&P long if things go 3-4% lower. Also, because VIX futures are still strongly contangoed, I even have the option of waiting and then buying a short VIX ETF later in a selloff if $VIX goes significantly higher.
I see SPY just had a 9:50AM reversal. Good, go lower and I'll buy more.
I'm agnostic on gold.
But yeah sure I still own some Dalradian.
BBC - we fired Jeremy Clarkson because WHAT THE FUCK WERE WE THINKING. Clarkson loses his job because he punched Oisin Tymon in the face for giving him a sandwich and salad after a hard day of filming.
I would have punched Oisin Tymon in the face just for looking like Oisin Tymon, personally:
|Even better, he's supposedly "Irish" yet he whinges cos someone gave him a split lip.|
Notably, May and Hammond's contracts are up, and they've already made it apparent they're not coming back to Top Gear if Clarkson isn't there. Probably because they realize he's the funny one (well, May is alright too).
So, BBC, good luck next year with The Oisin Tymon Show. Let's hope it makes you £40 million a year, because that's what you've just given up by killing off Top Gear. And I'm sorry but replacing Clarkson, May and Hammond with Malcolm Hebden, Johnny Vegas and Russell Brand is not a winning strategy.
Though actually Hebden and Vegas would be funny together. But for fuck's sake not Russell Brand.
As for Clarkson, he gets a free lifetime pass for punching Piers Morgan. He can sacrifice children to Satan while clubbing baby seals with the skulls of koala bears in the Islamic State of Iraq and the Levant for all I care.
As for BBC Canada, I guess they can fill the space left by Top Gear by airing yet more fucking Holmes on Homes. Great BBC programming there, BBC Canada. Yet another reason your shitty channel will be going off-air next year when the CRTC's pick-and-pay is brought in, along with all the other shitty extended cable channels that just show the same fucking 5 hours of programming on loop all day and night, which nobody wants to watch, which only existed so that you could nick a larger share of my cable bill. Twats.
Wednesday, March 25, 2015
Here's some news from IKN's favourite evarrr blog:
Bespoke - big fat 0 for CPI. Shit or get off the pot, guys: either core is important or it's not.
Medium - shut up about bubbles in the bond market, you know-nothing white-ass honky crackers. Here is the central quote that each of you should burn onto your forearm with a soldering iron:
But does holding bonds entail accepting large long- and fat-tailed risks? Only if you must sell your bonds in the future. If you have the option to hold them to maturity, your risks are bounded and very small. What you are complaining about is not risk, but rather lousy expected return. And even if you cannot hold them to maturity, the fact that others can hold them to maturity provides a pool of demand that limits how far bond prices can crash.To sum: a bond guarantees your capital and pays you a coupon. It is not an equity.
Brad Delong - the assumptions behind the Fed's 2% inflation target are erroneous. Very good point - always check under the hood to see why anything is the way it is. Um, Brad... should you perhaps email your post to Janet Yellen? Y'know, in case she's a dumbass who doesn't know anything about inflation targets?
Bonddad - has the EU finally turned the corner? If so, dude, I'm sure the Germans will find a way to fuck it up for everyone else. Oh and quote:
Although recent news releases point to better growth in the year ahead, we still only have a few months of positive data, which isn’t enough on which to base a long-term projection. But, there has been sufficient positive news to state that a real turnaround may be in the works.Or, Hale, whatever small turnaround happened was due to the USD-EUR move, which is probably over by now. Remember, there's never been an EU stock worth owning over the past twenty years save Nokia for a while.
FT Alphaville - this is nuts, Chinese equities edition. If you're saying it's nuts, Keohane, then it's not a bubble. Quote:
The reality is that there’s simply quite a bit of money in China and a limited number of places for it to go. Particularly with the property market suffering. In fact, while the stock surge is a product of a very mechanic process, there is an argument that the Chinese government potentially sees (saw?) the stock market as a way to replace the wealth being lost in the property market.Or, it sees capital invested in business equity as being much more economically productive than capital invested in real estate. Did you think of that? Meanwhile, have you checked China's equity P/Es to see if they're really "nuts"?
IKN - Iwnattos is the most amazing person ever, PS buy Dalradian. Quote:
After following the dude's blog for many moons I can say that some of his stuff I agree with, some leaves me agnostic, other times I think he's spouting pure crap and gets me wondering what he'd been smoking just before hitting send. But he never fails to get me thinking, which is the number one thing I want from any regular reading material. His viewpoint of the market isn't just different from mine, it's different from just about anyone I've come across and that's the reason above all others that he's nothing short of must-read material in my working life. You can read all the bias-confirming cookie-cutter market prose and commentary that you want, I'll go with the original brainwork every time no matter if I agree with the specific daily content on show or not.Since when am I ever full of crap? You're full of crap, Mickey.
Polemic's Pains - yet another goddamn stream of consciousness. Haven't managed to make it through yet, but maybe it's vaguely useful to someone.
Transports looked like crap for two days, but finally this morning the QQQ decides to join in on the towel-throwing:
And $VIX is finally popping:
$VIX under 13 seemed dumb to me, but then again, things can always get dumberer.
Anyway, funny nuff, you can't make a cent shorting $VIX with ETFs right now because the front interval apparently has a 10% contango. A fine example of the market screwing the most people.
Speaking of the market being the biggest bitch it can at the most inopportune times, it'll be fun to watch this:
Fun to watch because all QQQ investors got washed out in the early-March correction and have just made it back to where they were. So QQQ should have good support, since it's the second time through that price interval.
Meanwhile, Wall Street Whitey's been thinking he's so damn clever by overweighting R2K these past couple weeks because blah blah US dollar; now that the US dollar chart is reversing, the "market will be the biggest bitch" law suggests that whitey's IWM position is gonna enjoy some intense bum-love for the next few days.
Tuesday, March 24, 2015
This is annoying:
High yield is still going up. So there's no fear.
But transports are really sucking, so by Dow theory the US is eminently sellable.
And $VIX is already awfully low.
But yet RSIs for QQQ, IWM and SPY are still all reasonable.
So I have no idea what's going to happen next, but my antennae are twitching.
Mining.com - my uranium call
Sounds like yet another call where you skated to where the puck was instead of where it's going to be.
Y'ain't no Gretzky, Rick. At best you're an Alexandre Daigle.
As for the rest of his chat:
With regards to a gradual lessening of faith in the dollar, I believe it would not be event-related but arithmetic-related. There are trillions in sovereign bonds worldwide that trade at negative real yields. For instance $1.7 trillion of European debt maturing in more than a year paying a negative yield.2 There are also many US bonds trading for a negative yield, after you adjust for inflation. You lose money, guaranteed, by investing in these bonds. This is important for gold investors.
First of all, your cost of holding gold is the lost yield from not owning bonds. When you could make 5.5% or 6% in bonds in a supposedly riskless fashion that was the cost of owning gold. But that cost is now gone. Your holding costs for owning gold are nil.
Yet - despite the negative real rates environment that Summers, Krugman and Piketty have identified as a secular condition - whitey still says, every day, that there's an "opportunity cost" to holding gold.
I think the rates/opportunity cost argument is bullshit, of course, because nobody in the real world holds physical gold instead of USTs. But it's still hewed to by the lamestream media because they were taught it by some old dude who last traded gold during Nixon, or maybe Carter. Here are some of Whitey's conceptual errors:
1. The futures market doesn't hold physical gold. They hold contracts that over time have to net back to 0.
2. The GLD ETF doesn't really have an opportunity cost: carrying cost of GLD is nonzero but tiny.
3. Central banks can't dump gold holdings for USTs because it breaks their risk rules.
4. Indian peasants won't dump gold for USTs because what the fuck about the word "peasant" don't you understand, cracker?
5. Indian temples won't dump their gold for USTs because USTs are not the physical incarnation of the goddess Lakshmi.
But sure, you can still talk about the "rates/gold" narrative because although it's wrong and stupid, people still believe it.
I have felt extremely frustrated by the lack of issuer capitulation.
By that, I mean that Sprott’s ability to invest money on behalf of investors in projects that are suitable has been constrained. The mining industry wails and moans about the lack of capital and their inability to go forward. Those same people in the mining industry aren’t willing to offer equity or debt at market-clearing prices.
The last time we saw capitulation was in the summer of 2000. That was concurrent with issuer capitulation. The very best issuers decided that they had to raise capital at almost any terms that they could. The attractiveness of the returns they could get from deploying capital at a market bottom overcame the near-term pain that they suffered to their egos for issuing at prices below previous issuance prices.
In the issuer market today, you see these really luminary financiers, like Robert Friedland, willing to issue full warrants in order to attract capital. Financiers and promoters with, let’s say, less established reputations than Mr. Friedland’s, aren’t willing to do that.
Here we get to Rule's "capitulation" argument.
In reality, he's not looking for "market capitulation", which has been happening for the past two years anyway: and in any case, look at the 2000-2003 Nasdaq chart for an example of complete capitulation over time instead of over price. There was no final puke in the QQQ, nor in most of its stocks - rather, there was a marginal lower low in the survivors, with an eventual collapse in volume (so if you wanted to load up on an appreciable quantity of Nasdaq stocks at the "bottom", you had to do it on the downmove because the upmove started with miniscule volume).
V-bottom capitulative pukefests don't happen in bubble pops: they happen in panic crises.
But it doesn't matter anyway cos what Rule really wanted to see was "issuer capitulation". And he didn't see it cos nobody's offered him full warrants, good for them.
But issuer capitulation should also have involved 500 stocks leaving the V for the NEX (which Canadians can still trade through discount brokerage accounts), and nobody's seen that happen either.
Boo hoo, Rick. No free lunch for you. You're going to have to work for your money, bitch.
In all seriousness, I can imagine him having held some capital back in the hope of a final capitulation. I'd want to.
But if he did hold some back, so did a lot of other people. Listening to Cookie, it seems there are more financiers left than there are viable gold projects.
So I'm suspecting that the odds of Rick being left on the dock as the boat leaves him behind might be significantly nonzero.
Which I guess he doesn't mind: if he feels certain he's missed the bottom he's still got a long time to pile in after the rest of the market has made the first 20%.
But him and everyone else, acting together, are a market that determines how the gold miners stocks will behave. Remember that.
Monday, March 23, 2015
OMG look at the shocking collapse in the price of gold this month oh wait
Looks like all the white-ass honky crackers who thought they were being so clever being short gold contracts approaching a Fed have been cockpunched quite well.
Nautilus - what will you eat after the apocalypse? Someone actually sat down and calculated the number of chainsaws in the world, their duty cycle, and how many would be needed to cut down all the world's forests to make wood pulp for growing mushrooms. Now that is engineering!