Saturday, December 24, 2011

Residents - Eskimo DVD

The most challenging and difficult Residents album was "Eskimo" - maybe because it was meant to be a series of stories told entirely in music form?

Maybe that's why they seem to have released a video DVD, titled "Eskimo - the Movie". It's made up only of illustrations, but at least it explains the meaning of each song as you're listening.

Anyway... here's "A Spirit Steals a Child", from the Eskimo DVD. It's brilliant, watch it.

Xmas playlist

No actual videos were ever made of these tracks, as far as I know. So you're stuck with stills and music.

And two separate versions of Santa Dog, by Residents: first the "Fire" single, then "Santa Dog 78".

Aw heck, we'll also include "Santa Dog for Gamelan Orchestra", just so you can see how versatile Residents really were.

Friday, December 23, 2011

Grandich and the 200DMA

I know certain readers don't appreciate Grandich at all.

But he recently posted a little commentary on the recent catastrophic loss of the 200DMA by gold that I thought was worthy of linking to... only because I've been saying the same fucking thing.

If you don't want to follow the link, this chart copied from his blog says it all:

Basically, don't go freaking out over an arbitrary number. The 200DMA is an arbitrary number. This chart proves it. The 200DMA has never been critical support.

The 50 week SMA has been support, at least for the past 3 years (it was pierced in 2009 during the market crash); We're still above the 50-week SMA.

And that's why I'm not concerned about gold. Not just yet anyway. Plus, whatever else Grandich has been up to, pumping his buddy's companies and all, he still does make the odd very good market call. And he's not bearish on gold at all.

The problem with Euro commentary....

The problem with Euro commentary is that a lot of people are flapping their mouths, but they know utterly fuck all about Europe, or even economics.

This dumb bitch was posted on ZeroHedge.

She works for Roubini, she seems to have gotten a Economics degree or maybe even an MBA, she can't start a sentence without some inanity like "I mean...", and she makes pat pronouncements without the slightest fucking clue about reality

To wit: no, Greece isn't leaving the Eurozone. It can't happen. It would explode all other sovereign bonds (everyone would be betting on who's next), it would instantly bankrupt all Greek businesses (whose contracts are in Euros), it would cause a Eurowide run on the banks (as all citizens would GTFO, fearing the instant vaporization of their savings in a currency devaluation).

It's not going to fucking happen. Yes it should happen. But no it won't happen.

There are other problems with Euro commentary... one is that some sources are Euroskeptics to begin with. Case in point, The London Telegraph, whose commentary generally runs along the lines of "and did those feet, in ancient times...". Racist bullshit.

But on the other hand, you can read David Kotok over at Ritholtz's blog. He actually went over to Europe and talked to central bankers and stuff. And he knows what's actually going on.

And here's a quote from him:

"Another important take-away from this trip is the response of Europeans to what they see and read in the American media when the eurozone is discussed. Europeans universally feel they are not understood, that their problems are not correctly identified, and that there is much hyperbole coming from the American media. Having examined this issue from both sides of the Atlantic, I believe the Europeans are right. My own experience in gauging television and mass media in public debate over the issues is that Americans do not understand the payment mechanisms in Europe. They do not take the time to do the research. Instead they jump to conclusions and make dramatic assertions. In fact, they do not delve into the details, where the devil dwells – and where the answers may be revealed."

He's a very boring read. So he must be right. So go read him.

Friday videos, and a plug for Soma FM's Xmas music stream

I'm off work for a whole week! Yay!

Here's a Berlin band that I really like, Quarks. Hard to find any videos of them. They also started to suck after they were picked up by Sony. But their older music is very honest and lifelike, I just love them:

Which reminds me of Ulrich Schnauss, who's also German (from Kiel). Again, first 2 albums were sheer brilliance. This track seems to be from something released more reecently. The shoegazers love him, though he's not really shoegaze (too many keyboards).

Someone posted a comment on YouTube that Ulrich Schnauss used to be "in Boards of Canada before they hit it big", which seems kinda funny cos BoC is Scottish. Anyway, I've probably posted BoC's "Disengage" before, but here it is again (audio only with a still for the video) - brilliant frickin' session, better than any of their studio work by far.

And by the way, If you're looking for a streaming site for Christmas music, I highly recommend SomaFM's "Xmas in Frisko" feed. Lots of funny music interspersed with serious music and crappy pop music. Go check them out!

Euro speculation

Problem with the Euro mess is that it's so hard to keep everything straight. There is one heck of a lot of variables to keep watching.

I work in engineering, and so I often get a job dumped in my lap that is really really huge. As in, I can still get it done, but it is going to take about five thousand steps to get done - and I have to know which one thing to do first before I start on step two. So I'm used to gigantic problematic disorganized clusterfucks that take ages just to puzzle out.

So I was thinking last night about the Euro mess, and whether it's done or not. Let's see what I got:

OK. Number one most important point, ignore ZeroHedge. They want the world to disassemble into a post-apocalyptic Mad Max future. Only god knows why; because in the Mad Max movies, stock traders and libertarians were the ones getting raped to death by the mouth-breathing proletarian gangs in hockey gear and spiky hair. But point being, ignore ZeroHedge.

Now. What are all the problems? - Greek default, Spanish and Italian (and Portuguese as if anyone cared) bond yields, French bond yields, periphery CDSes, Euro bank balance sheets, Euro bank counterparty risk, Euro bank CDSes and bond yields, tapping of official liquidity, the money market... and on top of that, austerity-driven GDP contraction, ratings downgrades, political brinksmanship, ideological rejection of the simple money-printing solution, lack of a fiscal union, blah blah.

That's a lot of stuff to watch. You see all those things piled together, and you think "gee, this thing is definitely going to collapse like a house of cards". So you short the market waiting for your Lehman moment, where all liquidity disappears "in a derivative whirlpool", and over time you get annoyed cos it just never comes.

But what exactly is going to cause the Lehman moment?

We don't care that Greece defaults. The bankers have known this forever. It won't kill balance sheets. Ditto Spain and Portugal. Greece has been a basket case since the Ottoman occupation, while Spain and Portugal have had a dismal economic situation since the... I dunno, 18th century maybe? We don't care. So we should also not care that Spain, Portugal and Greece are going to suffer severe economic contractions if the problem gets "solved". We don't care because they suck to begin with. Ignore Spain, Portugal and Greece.

Italy. Yes, people really freaked out when Italian yields spiked. Scary. That really can destroy the Euro banking system, cos Italy is a major debt issuer. But is Italy the big concern? I personally really think that Monti will find it easy to stop issuing new debt; all he has to do is pass the tax reforms that his criminal predecessor refused to pass. Italy has a primary surplus, but like all major Euro economies I'm betting there's a lot there to be cut; they all have stupid farm subsidies, they can all institute means testing for benefits, blah blah. I'm ignorant about Italy's situation right now, but I feel pretty certain Monti can present positive surprises to the market. So don't ignore Italy, but quit freaking out cos it'll probably work itself out.

Liquidity concerns? Part of the problem has been banks deleveraging as part of the Basel requirements for next year. That's been a positive feedback, making things worse. Other than that? The Euro bosses have now begun sterilizing debt by allowing banks to trade it in for new 3-year "AAA with an asterisk" money at 1%. The banks then take that to re-leverage. I've read a lot of very boring pundits (e.g. Financial Post bloggers) who've asserted quite strongly that this counts as "back door QE", and who have been very happy at the initial take-up. Certainly Spain's short-term yield has caved in tremendously, we've seen that. And it seems that the Eurocrats have identified this as their central concern, and are all too happy to take whatever steps they have to. So liquidity seems to be slowly working itself out, and someone important is paying attention.

France and Germany downgrades? Pft. If US debt can take a downgrade, so can these two. Ignore the threat of Eurozone core downgrades.

A few banks go tits-up? Yes, possibly a big concern. But Dexia didn't cave the market, Jefferies sorted themselves out, and now the Eurocrats are taking steps (e.g. the liquidity programme) that will correct a lot of balance sheets. And yet there still is counterparty risk. But I think everyone knows this. That's probably the psychological reason for the liquidity collapse.

So I'm still trying to figure out what the problem is that we're supposed to be expecting will drive S&P 500 down to 666 again. China maybe? But that's not Europe.

Thursday, December 22, 2011

more on the tumbling $VIX

Here's an article on the tumbling $VIX in the Wall Street Journal (no paywall).

Go over there and read it. Yeah, right now. It's okay, I'll wait here til you're done.

OK? Done? No9w tell me, what did you get from that?

I see that $VIX is tumbling. The WSJ author says it's a sign of "lack of panic".

Laughably, he then panics. About, y'know, the lack of panic.

(But really he's panicking about the lack of fear premium in forward options.)

Then he goes and justifies his panic with reference to an article in fucking ZeroHedge for fuck's sake. Because, y'know, if you want to find interpretations of market indicators that are informed by dispassionate moderation, ZeroHedge is the place to go, isn't it? I mean fucking really.

Buried further in the article is a better explanation - that "demand for downside puts has slackened, in part because of the slower holiday season".

My interpretation - if people have so completely exhausted themselves panicking about things worthy of panic, so that now they're resorting to panicking about the subsequent lack of panic, to me that suggests somewhat strongly that the bottom is in.

market comment - what does $VIX mean, and when does a chart illustrate mass behaviour?

Holy crap batman, $VIX has really collapsed.

Gary Tanashian pointed this out a couple days ago as a "divergent property" of the market - fear index going down while other indicators still showed a liquidity problem. At the time, I suggested to him that $VIX, being a function of options trade, might only be going down because of the thin options trade in the leadup to holidays.

I don't know that for a fact; I was just suggesting that someone smarter than me look under the hood and tell us what the $VIX is actually made out of. After all, you don't know what the meaning of a complex indicator like $VIX is unless you can derive its value mathematically from the underlying data, right?

If you think $VIX is wrong, maybe you want to buy VXX ETF (or whatver, I dunno) and play a fear pop? I'll stay away from that thank you very much.

Now look at $HUI:

It's not popped above its EMA(8) yet so it's not bullish. I have to keep telling myself this! But look at that fantastic horizontal support at around 500, eh?

Considering the good miners are being sold at end-of-year to raise money, and the bad stocks are being brutally sold off (I think the tax-loss selling is about done btw), then maybe that explains this lackadaisical consolidation at support. After all, $HUI isn't responding positively to the rise in $SPX, nor is it responding to the end of the brutal selloff in PMs.

So maybe herd behaviour is underlying the narrow consolidation of $HUI.

I dunno, I expect good miners like BTO and GOZ are still going to be making a profit at $1600 gold. After all, they were making good profits back in mid-July which was the last time that gold was trading at $1600 for fuck's sake! So maybe the field is oversold.

And now for silver:

Same thing. Consolidation at support. Not that good a chart though.

I have no fear that gold will do better from here. Silver, though, gives me pause. But I've been starting to add back my positions.

Tuesday, December 20, 2011

Santa Claus rally?

I read a good post somewhere that the traditional time for Santa rallies is Dec 22 thru to the first week of January. And the market is always strong then.

Don't be fooled. Remember that the S&P 500 is not the $HUI. Gold and silver are not the $HUI. While everything else is consolidating, $HUI is breaking down. It closed yesterday below 500.

If you follow me, you know by now that I consider miners to be bullish when they cross above their EMA(8). Well....

RSI(8) is refusing to turn above 30, which could mean more downside to come. And the EMA(8) is 25 points above where we are now.

We could be in a little consolidating bottom right now, with a few minor lower lows, and ready to take off upwards. You see this same pattern at tops, just reversed now.

But I think it's very weak because everyone's scared of a liquidity collapse. Gold miners are the first to die. So people are selling them all. Sad really.

As for gold? No, Gartman is not calling a bear market. He doesn't see gold dropping below $1400. Don't believe the headlines. In fact, go chart gold in Euros. You'll see something interesting. As in, no drop. It's the USD strength that's hit gold.

And deflation? Doesn't matter. The price of gold advances at about 5.7 times the negative of the real interest rate. We will continue to have negative real interest rates until governments decide to strangle inflation with high interest rates - which will require us to have high inflation first.

Anyway... I'm out of gold stocks almost entirely. I still have AQM (strangely not dropping) and GOZ (not too worried, there's been good volume)... and, um, that's about it. Otherwise I'm in cash for the rest of the year cos I'm too damn busy and I don't want to buy in an illiquid season.

But I'd be happy to buy some paper gold or silver (maybe HBU and HZU) if things can drop just a bit more.