Saturday, December 20, 2014
Friday, December 19, 2014
Well, look at that:
After a couple big candles during the marketwide powervom earlier this week, gold ex-USD has scraped its way back above the 4.76-or-so support line and above its short-term EMA.
GDX is behaving again, above its short EMA, and threatening to power through the confluence of the Bollinger mean and the SMA(50). Above $19.27 or so looks pretty damn bullish if gold follows.
Gold in USD is not above its own SMA or anything yet, though it is above ex-USD.
At least B2gold has seen very impressive buying volume these past couple days.
I dunno, was it too early to write off the miners and PMs?
By the way, where's Jeff Currie working nowadays? Did he not get fired for that $1050 gold end-2014 call?
Hit #6 in the US, 22 weeks in the Top 40, sold 5.5m copies worldwide.
Why anyone would expect a Grammy for coprolites like U2 who can't even give away their album, when this type of stuff is tearing up the charts, I can't understand.
Thursday, December 18, 2014
Here's some more reading:
Calculated Risk - comments on Yellen's press conference. One bit important to the last few days of market action:
Yellen was not very concerned about the financial crisis in Russia spilling over into the U.S. She said "spillovers to the United States, both through trade and financial channels, would be small."Had to be said because it did.
Calculated Risk - LA port traffic in November. The data says exactly what you'd expect it to say.
Bespoke - oil volatility and correlation with equities. Important because it is.
Easy Money - the US gold standard was really a dollar standard. In that case, the US gold standard was really a price control on gold, right?
Bloomberg - Pooty-poot's advised by idiots, cronies and Nazis. And they were all fighting the last war when they told Pooty he'd face no opposition to his invasion of the Ukraine. And also, quote:
About 40 percent of Russia’s reserves are held in two sovereign wealth funds that are controlled by the Finance Ministry. The government is looking for ways to tap these funds to help cash-strapped enterprises while maintaining as much international currency as possible. Russian companies have about $50 billion in non-ruble bonds and loans due by the end of 2015, according to data compiled by Bloomberg.Yeah, I don't think any of that money is actually there anymore. You'll find it in numbered Swiss bank accounts and London real estate.
One option is to convert some of the $80 billion Wellbeing Fund, which was designed to safeguard the pension system, into rubles to provide emergency loans to select companies.
The Finance Ministry has already said it will use the other sovereign fund, the $89 billion Reserve Fund to cover at least half a projected 1 trillion-ruble budget shortfall next year.
1. I wonder whether anyone would want to spend their late-December workdays putting new shorts on the ruble, MICEX and oil. So whatever the balance is right now, I can't see why it should get worse barring new developments.
2. Without intentional selling down, the US markets would drift up over the next 2 weeks, no?
3. But at the same time, I'd not be surprised if everyone kept their downside puts over the holidays, and so $VIX might not drift down much at all.
So the oil move might be done, HYG might normalize around $88-$90 as excitement abates, US markets might drift up but I might not get as much of a win shorting $VIX as I would buying a straight equity ETF.
Here's Brent Cook's outlook for 2015:
He thinks things will be better in 2016 and 2017, despite not believing any of that China & India hype.
By the way, 70% of all the copper that's ever been mined is still "out there" too. If you're worried about people's gold holdings working their way back into the market, then maybe you should follow the scrap numbers.
And... um... the news out of India.
IKN - Do you seriously want Russia to have internal problems? Seriously? Quote:
So the Russian Rouble Rallies and the Dow futures pop and all is right with the world. Which begs the question for those of you who've been gloating at the Russia market collapse...Uh-oh. He's talking to me.
Do you seriously want Russia to have internal problems? Seriously?Really? "It stands to reason" is a bald assertion, not an argument.
...because if you do you know fuck all about history. It stands to reason that the world need a stable (or relatively so) Russia for its own greater and wider general stability.
Do I know anything about history? I do know that the last time Russia was economically crippled by low oil prices and mired in a war that had no plausible endgame, communism collapsed and hundreds of millions of people in eastern Europe were freed from slavery.
About the only bad thing that came out of this, that I can think of right now, was the Yugoslav civil wars. Those were bad, sure, but I'd assert they have to be measured against the reunification of Germany and the freedom of the Czechs and Poles and the Baltic states.
Oh and also against the end of Ceaucescu, Hoxha, the Stasi and so on.
OK, I've been told it also made things worse in Central Asia as Kazakhs, Uzbeks etc. "threw off the yoke of Russian/Ukrainian colonialism" and promptly drove their countries into the shithole. I guess that's also bad, though the Kazakhs, Uzbeks etc. didn't seem to mind.
This time, instead of communists, Russia is run by a mafia and the KGB old guard. And yes, I'd like to see their kleptocratic empire of murderers and Nazi clowns collapse. Maybe there's enough left of the intellectual elite and parties like Yabloko to guide Russia out of this and make it a better country.
I can understand, though, the desire to appease and coddle Russia, thus making life unbearable for the people in Lithuania and Estonia and Poland and so on who are all going to have to go to sleep every night wondering if they're next in line for reabsorption into "Greater Russia".
I'll just leave you with this picture:
OK, that's it. I'm starting to come up with interesting essay topics in economics every day now, so I've got to go to university and get my degree.
I had an interesting brainwave just now.
There's one chapter in Freakonomics where they study the salary structure available in street crack dealing, and find that it closely mirrors the salary structure in minimum-wage low-skilled fields like working in fast food. Not exactly, but fairly closely. The street dealer is paid crap, the "local manager" makes more but still crap, and only the "C-levels" at the top make the real money.
It seems obvious when you think about it - if crack dealing paid more, then people would quit fast food jobs to go deal crack, and thus wages in the fast food industry would have to go up so they could successfully compete for labour.
So what do you think would happen if the USA would increase its minimum wage to $10/hr?
Something interesting would happen, at least according to Economics 101:
1. Labour (in the aggregate, and over time, smartass) would leave crack dealing to work at safer, legal jobs. The crack dealing "industry" would need to "raise wages" if it wanted to still sell enough to meet demand.
2. But that would mean more money in the crack "industry" would go to labour, and thus the per-unit price of goods would increase, which would (in the aggregate, and over time, smartass) reduce demand.
So increasing the minimum wage would reduce profitability and demand for drugs, and get more young kids out of drug-dealing and into safe, legal, tax paying jobs.
And that would increase government revenue, and also decrease policing expenses.
Sounds like a slam-dunk move, no?
Dammit now I want to become a policy economist.
This gap down in the $VIX:
But this gap-up:
is far too much, far too fast.
Then again, that gap-up might only be there because the drop had been entirely driven by shorting, and now the shorts are covering.
I really feel a lot of the last few weeks' moves were driven by shorting - short ruble, short MICEX, short junk, and (maybe by extension) shorting of things like the R2K. They were all supposed to be slam-dunk trades, so everyone should have waded in.
The first clue this was true came on Tuesday, when a report that ruble trading would be suspended drove a rumour that Russia was going to enact currency controls. Suddenly there was a bounce not only in the ruble, but in the MICEX and oil and HYG.
The possibility there was that these short plays had become ubiquitous fads, and the threat of nonconvertibility complicating everything drove people out. Like someone smart in a blog that I linked to said a few days ago, the market's tendency is to go where it thinks everyone else is going - and once you think people are leaving the boat, you want to clear off and not be left the greatest fool holding the bag.
Then on Wednesday there was more covering, so it seemed. It felt like some people didn't want to hold these short positions when the Fed statement came out. Seems the market always clears out and goes quiet before these things. HYG had bounced back and oil had bounced back, in advance of the Fed statement.
There was also a story on the wire about Russia taking strong further moves to deal with the currency crisis, which also could have driven people out of their ruble and MICEX shorts. The central bank actions might have succeeded, y'know, or at least the idiots at the hedge funds who know nothing about economics might have been scared that they would have succeeded.
And there was apparently some data about US oil stockpiles that maybe made people reconsider the possible remaining downside in oil. Hard to screw up the courage to short oil when you don't know if it can fall to $20 or just to $50 - and I'd think you won't short it if you've already made money in the drop from $90 to $55. You'll probably take your money and run, right? Let the fools chase the last 10-20%.
Then Janet Yellen came out for the presser and changed the tenor of the discussion by presenting her perfectly intelligent opinions about what oil and Russia actually meant.
Once you break the back of a one-way trade by forcing some people out, I don't think it can get moving again - at least not without new information that the market participants all will interpret as telling everyone else to get back in.
So I think most people in these trades began to fear that other people were beginning to fear that everyone would get scared that everyone else was about to bail out. Sorry about that sentence, but like the really smart guy on that blog said a few days ago, it's what market participants expect from their neighbours that matters.
So we'll have to see if yesterday's and today's pop in US equities can be sold into or not.
And the problem I have is, going by that HYG chart above, the high yield trade does indeed have room to get sold into: wasn't Whitey saying just yesterday that all these indebted junior oils are about to go bankrupt and default on their debts? Has that been fixed? Doesn't HYG have to move lower to improve its yield to take this new threat into account?
Anyway, as Steenbarger says, we'll need people willing to hit the ask at these prices for the market to move up.
We'll see what happens.
Wednesday, December 17, 2014
What If - what if all the rivers in the US were instantly frozen in the middle of summer?
It's amazing how much wrong there is in this article.
Here's some news for you, with some cartoon gloating at the end:
New Deal Demoncrat - real aggregate and average wages set records in November. But you guys go ahead and keep puking the S&P!
David Kotok - some observations. Quote:
So, let’s say the negative impact from low oil is $150 billion and the positive impact is $450 billion. Our simple model suggests that the net positive impact equals about $300 billion. That is more than double the entire 2% payroll tax cut of a few years ago. It is bigger than the tax-cut amount debated this year in dysfunctional Washington DC. And it is about three-fourths the size of the revised federal deficit estimate for the fiscal year ending in 2015. That estimate is trending toward $400 billion.Hey Dave, might wanna tell your buddies Ritholtz and the other white-ass crackers to quit puking the S&P 500, then.
If we are close to right, and if these estimates are within a 20% to 30% margin of error, 2015 will deliver accelerating growth in the US. We will enjoy continuing low interest rates as the Fed gradually normalizes policy. Low inflation lends additional confidence to the forecast, because energy price pressures are removed. The US stock market is likely to reflect these trends.
WaPo - sorry Pooty-poot, you're doomed. It starts with
A funny thing happened on the way to Vladimir Putin running strategic laps around the West. Russia's economy imploded.and ends with
Putin might be playing chess while we play checkers, but only if we lend him the money for the set.And there's nothing Pooty-poot can do about it. Sorry Pooty! You're the past. We're the future. Good luck building a new North Korea for yourself and your mafia cronies. Hope you don't starve 144 million people to death. We in the west will happily take your young and attractive women, so at least they have hope.
BBC - US moves to normalize relations with Cuba. Considering the Americans have been staunch allies of genocidal murderers like Charles Taylor and Augusto Pinochet, their stance against Cuba and the relatively harmless Castro family has never made any sense. Well... except for the bit about the US government having been under the control of the American mafia and the white exile Cuban slave-owners who lost everything in the revolution.
Qz, the Middle Persian word for a joke that destroys the flow of a comedy program - Buttcoin was the worst investment of 2014. Worse than Russia, worse than gold miners. Oh and by the way, as of today the score is:
ten shares of AAPL: $1094.10
three butt-coins: $978.24
one ounce of gold: $1189.30
And those of you who doubted that the holy and constant, annointed and timeless value of gold would be worth more than either by the end of the year? Shame on you. I voted gold. Three times. What did you vote for? Huh? Huh? Not gold, eh?
Mineweb - gold traders bet Russia's next move is to puke bullion. And for all you dumbass goldbugs who thought Russia buying gold was good for gold, I have half a cartoon panel:
I guess that's what happens when a one-way trade suddenly and violently becomes a two-way trade, eh?
Here's GLD vs UDN:
Well, the breakdown took it to 4.75 or so and the previous resistance line kinda, but since then it's spent two days hovering.
This looks positive.
And the weekly chart shows anything above 4.65 is still positive.
But I think when there's still a pervasive marketwide fad in selling commodities, it's not the safest time to buy.