Friday, May 24, 2013

Some thoughts for the weekend and a rant at another assclown "analyst"

Some Friday evening news for y'all.

Monday is something like Veterans Day in the US, so if you want to do boredom-trades in shitty stocks it'll have to be the Venture for you. See if maybe you can get rid of that crappy Corvus position that's been haunting you.

BI - Kotok says low inflation is fantastic for stocks. Which reminds me, I haven't been getting any Kotok on my Ritholtz RSS recently. Has he gone somewhere else?

Joe Fahmy - Extreme fear. He sees in with both people who are out of the market (scared of the coming rapture where Jesus punishes us for going off the gold standard) and people who are in the market. I wonder if you can see that in the market's dynamics?

Ritholtz - % of stocks over 200DMA. I guess it's a warning sign that we're near a top? But as he notes, the market always ends up higher later.

WSJ Japan Realtime - it's Japanese retail who puked.

Ritholtz - Nikkei downtrend 1982-present. Seems they hit that upper trendline. But as he says,
The key here is if and when the Nikkei breaks through that trendline, it is likely the beginning of a longer term multi-year breakout. This is why we put on Japan exposure for clients much earlier this year.
Or I guess you could just keep buying junior golds and hope that God stops hating you soon.

Permashave Dave - dark trading pools and HFT explained. Link to a BNN expose on the topic. And it's "Permashave" cos someday he's gotta take a haircut on Corvus that he ain't never gonna get back.

BI - Citi's Tom Fitzpatrick is a clueless fucktard on rabies. Here I shall rant. I shall begin by reprinting the chart that Fitzpatrick grabbed from King World News of all fucking places:

My reproducing this chart on my blog does not mean I'm a clueless assclown.

Recognize that chart? Hm?

Yeah, you do.

It's the one that most goldbugs suspiciously fell silent about after gold dropped way the fuck down below the 2010 debt ceiling limit you fucking clown. It's the chart that famously shows two completely fucking unconnected things that are going up - except now only one is going up.

Now some idiot boy-child has drawn a dashed line with an arrow on the end, which the more mentally retarded of analysts tend to do to try to persuade you that some shitpig is guaranteed to go back up.

It must go back up, right? After all, the arrow on the dotted line points up!

Can Citi's Tom Fitzpatrick explain how gold and the US debt ceiling limit are connected? As the US debt increases, for example, is the Fed required to buy gold to back the debt?

I could produce another chart relating the price of gold to the number of children born each year with the name Trayvon, the number of retired hockey players who used to be on the Toronto Maple Leafs, or the number of stupid bank analysts whose heads I'd like to beat some fucking sense into, and it'd look about the same. It doesn't mean they have anything in common.

Citi's Tom Fitzpatrick, you fucking clueless retarded crack-smoking syphilitic drooling idiot boychild assclown, gold's price is determined by emerging markets wealth growth and availability of mine supply. Not by that stupid fucking chart that only King World News will still print because the rest of the entire fucking world considers it a hilarious fucking joke.

Bribing with kitten videos


Kitty gets stuck in a hamster ball! And there's a tail in it! Oh noes!




Oh noes! And another kitty is being attacked by a terrible robot mouse! Iz teh Rise of teh Machinez! Where iz teh Sarah Connor!?!



OK, there's your kitten videos.

Why I think the S&P correction might be over


Ford retested its EMA. Does it need to do more downside work?



Goldman Sachs is retesting its horizontal support level.

These are two that I'll watch today for weakness.

But I seem to remember this thing about Japan and the US being two separate countries.

More downmoves for the miners ahead?


$HUI has another bear flag:


Because gold has another bear flag:


Because lease rates are ticking up again:


Hey, this TA stuff is easy!


Paul Krugman and FT Alphaville on the Japan selloff


Two opinions on the Japan selloff:

Paul Krugman - three possibilities for the selloff. He offers three different possible reasons for the Nikkei selloff, and chooses #3. I prefer option #4 - people were selling off because people were selling off because OMG VaR risk and the market was already up a frillion percent so let's move on to our next pump & dump.

FT Alphaville - Kuroda hasn't got the hang of the Jedi thing yet. Or this as an alternate: Kuroda wants everyone to think inflation is going up, but he doesn't want the bond effect of inflation going up, and so he wants to make the market believe two opposite things simultaneously, and he's not doing a good job of it right now.

I'm beginning to suspect there won't be a rollover and selloff in the US. The data is against it, the fundamentals are against it, and everyone's paying too much attention to the bears and willing to listen to their ignorant uninformed opinions - when in fact they haven't been proven right in years. Meanwhile grown-up stocks like JPM and F performed mightily well yesterday considering the selling pressure.

Basically, people saw the US market sell off after Bernanke, so they began to worry about shit they needn't worry about. Then they saw Japan sell off 7% for its own separate reason that has nothing to do with the US, so now they're all scared of the same thing happening in New York. After all, blah blah red candle blah blah shooting star, right?

Too fucking convenient.

I'm going to hold off and watch things a bit, but I think this one-day freak-out was probably enough to clean out sentiment to the level that it needed to be cleaned out considering the good forward outlook for the US economy.

The Cure from 1980 again


This internet thing is providing a permanent archive of all things that don't suck, isn't it?

Here's the Cure live in Apeldoorn for fuck's sake in 1980 no I'm serious with the song M.



Thursday, May 23, 2013

On the subject of "album of the 90s"


Someone asked about what I think is the album of the 90s.

I'll say Nevermind, because the album fucking sucked shit and the band were fucking garbage and they wrecked the whole fucking decade.

I probably have quite different tastes in music than other people you run into. Here's my list of the ten albums of the 90s; each one is truly a stunning sit-down listen from beginning to end. Not one weak song on most, all of them explore a whole new world you didn't know existed til that album came out.

Note: only some of these albums had actual videos, because most of these bands were dirt poor.

My picks after the break....

What I find interesting right now



JNK was looking bad yesterday. It seemed risk-offy.

What would an intraday reversal mean? It'd be funny to see the cokeheads get their faces ripped off today.



For all the sound & fury, gold is still below its EMA(16).




I was watching CNBC last night/this morning (couldn't sleep, clown would eat me) and one relatively intelligent-seeming guy suggested that generally bonds would reprice lower over the next bit. That probably fits in with Michael Shaoul's argument that there's no upside and far too much downside to bonds right now.

I guess the market would have to digest a re-pricing of debt, no?

Some more news


Bespoke - Wall Street's S&P forecasts. Only 5 had a year-end target above 1660. Then again, these strategists have no clue, they just pull numbers out their asses. Isn't that right, my regular reader from Stifel Nicolaus?

Reformed Borker (Bork Bork Bork!) - Chills-n-wrath (ha ha ha! get it? It's like Hilsenrath but with the H changed to a CH, and that makes it funny!). Josh turns bearish all of a sudden. Boy, I sure hope we don't see a faceripper rally offa this one single day - he's gonna look awful dumb.

Bloomberg - Italy's exports to spur recovery in 2014, Italian says. Thus, take with a grain of salt. Nevertheless, the Mediterranean is probably a great place to put some money right now, or after a correction.

WSJ Japan Realtime - return of the big, bad Japan export machine. Japan exports to the US. The US recovers, then Japan may recover.

FT Alphaville - The Nikkei has been abducted by retail?!? Are you shitting me? Retail? You're blaming the stock market rise on retail?

WSJ Japan Realtime - market takes Japanese banks for a jump off a cliff. Too many people been reading Zerohedge's doomery about VaR, I guess.

Risk Reversal - all about Japan. Interesting suggestion - was the entire world's optimism pinned on Japanese stimulus? S&P and Nikkei moved in lockstep.

BI - China's flash PMI sucked. Another reason (maybe) that people are freaking out here.

FT Alphaville - about China's ability to absorb more capital. Michael Pettis has an interesting idea called "extractive elites"; I guess that's what you'd call the people who stole a big chunk of China's big stimulus money a few years ago, no? So maybe the needed investment is one in ethical reform.

Bloomberg - commodity holdings tumble in May. So is that where the hedgies will flock to next?

Mining.com - geologists discover new gold-copper deposit in Sinkiang. Considering how prospective central Asia is, and how underexplored it is, doesn't it worry you long-term that China and Russia might just blow the gold supply wide open in the next decade? Especially with their state-controlled exploration system, which doesn't rely on share prices?

OMG iz teh doooomz!!!



More to come later - have to jettison some stuff this morning.

FT - dumb money returns to Japan. Way to presciently call the top, Mackintosh!

WSJ Japan Realtime - Japan's rollercoaster Thursday. Not a misprint, Japan down 7%. Because fear or something.

JC Parets - Nikkei crashola. He called it overheated and now gets to say "toldyaso".

BI - Japan has its own reasons for crashing. Seems they forgot the biggest reason - the hedge funds are now going to pile out cos they're scared at the change on the ground.

Bespoke - Japan, US gain ground on the rest of world in 2013. Probably because of hedge funds chasing the market.

All-Star Charts - about Wdnesday's candle. I'm sure everyone's looking at it and making that comparison to 2000 and 2008's -1% reversals from new highs. Especially the hedge funds.

Reformed Borker (Bork Bork Bork!) - chasing like a pro. This is especially hilarious now....

Major hedge funds are reportedly buying, or have bought, massive amounts of Standard & Poor's 500 index calls in the over-the-counter options market. The calls would increase in value if the index, now at about 1,664, rises to 1,725 by year's end. The funds reportedly missed the stock market's rally and are playing a vicious game of catch-up.

Though it is difficult, if not impossible, to penetrate the veil of secrecy that surrounds the OTC markets, evidence in the listed options market suggests investors are clamoring to buy bullish calls.
That's a big tipping boat right there, eh?

Add up all of the above, and you have a pile of stupid hedge funds who are probably going to spend a week puking.

I'm most interested right now in what happens to JPM and GS's charts. They were strong yesterday going into the close, and rising spreads are supposed to be free money for them....
Telegraph - hedging returns to the gold scene. Petropavlovsk is hedging a large chunk of future gold production... I wonder who the counterparties are?

Wednesday, May 22, 2013

In case you're looking for something to panic about....


So a lot of the stocks that had broken out (JPM, F, so on) were acting a little funny this aft. Once Bernanke stopped talking, a lot of people apparently decided to sell a few things and take some profits.

I dunno if maybe the hedge funds use a Bernanke testimony as a "shift change" where they take profits, then decide on something else to pump? Anyway, there was a big red candle printed, major selling volume on SPY, JNK broke EMA support, IEF had a really big red candle, SLV saw big volume, and $VIX went up (only a bit).

So that's major volume and selling across all assets - just what we've seen a few dozen other times while the S&P 500 went up a thousand points.

I suspect what the cokeheads are doing tonight is looking for something to freak out over. It's a pretty boring world out there with Europe a silent smoking ruin and little in the way of bad US data, but I'm sure the hedgies will find some reason to sell things down a bit. After all, we had down volume and some of the breakouts had previously hit the simplistic TA targets people would be trading on.

Maybe we'll see some retesting before the inevitable return to upward movement.

But here's a nice little narrative for the hedgies to freak out about:

FT Alphaville - the risk of a Japanese VaR shock.
FT Alphaville - "Yes I would, Kent."
Zerohedge - Toyota pulls bond deal due to soaring yields.
Zerohedge - JGB futures halted for biggest 2-day plunge since Lehman.
Zerohedge - Japanese bond market halted at open as bond selling purge goes global.

It should be no surprise to the market. I think these people should have heard about Abenomics by now. And apparently there's going to be net buying pressure on JGBs once the government starts buying them all up.

But still, I'm sure all the coked-up psychos will be reading FT and Zerohedge tonight, and so tomorrow (or even the rest of the week) maybe we can get a nice little back & fill down to some sort of support.

I'll be amazed if this little liquidity readjustment provides any sort of bid at all to the junior gold scene, but nevertheless I remain confident that any 100-point downmove in the S&P will be met with great gloating from the clowns who've seen their ports go down 80% in the past 2 years.

Every 5-6 weeks the S&P seems to puke a bit. Yippity shit.

Bernanke live testimony


I wonder how many goldbug blowhards actually bother to watch Bernanke's live testimony, or even can understand the slightest bit of it?

Short silver?



SLV hasn't poked about the EMA(16) in a dog's age.

And any move you see from Bernanke testimony gets bled off in 2 days.

So this might be a fantastic time to short silver.

Either that, or silver's headfaked us with a cancelled-out low and is finally going to move into an uptrend. Which is more likely?



The miners are also in that sweet spot where they've disappointed us before.

I'll wait for a clear uptrend to form before getting back into this clusterfuck. After all, if the goldbugs are right, once the uptrend is apparent we should see these stocks fly up for another 5 years, eh?

That Bernanke!


I guess they turned on his mic at 10:00AM, and the gentle caress of his voice goosed the market instantaneously?

Nothing that Bernanke says should be a surprise to anyone. That is actually in his job description.

So anyone who's buying instantly on any word out of his mouth is a fucking moron.

A.k.a. a hedge fund manager.

Tuesday, May 21, 2013

I'm back! with more news


Reformed Borker (Bork Bork Bork!) - Goldman's reasons for the market going higher. Even Gary Tanashian is taking this seriously.

New Yorker - is there a stock market bubble? OK boys, if that meme has gotten as far as the New Yorker, I think we can call it a non-issue.

WSJ Boneymeat - Fed will fuel dollar rally with more confidence. Note that (as Shaoul said) a lot of EM currencies are puking right now. Also note that Bernanke's beard will be near a microphone Wednesday, with many people worried about an end to QE this year: so fingers on the PM buy and sell triggers everyone!

BI - how the market will react to Bernanke speech on Wednesday. Dunno, but they'll react somehow. I've upped my cash a bit by dumping failed breakouts - probably a bit of a worry-wart but whatever.

Bonddad - but gasoline prices roar back. So we can assume a crapping of trend for the US economy over this summer, if this continues.

Mineweb - the touchy situation for gold demand in India. When they're calling for anything from a boost to 1000 tons to a collapse to 500 tons, that is not a time I want to invest in gold.

IMF - paper on the middle income trap (pdf). Read this if you have any interest at all in the merging markets. Like, for example, interest in whether or not gold ever goes up again.

Mineweb - Brent Cook on reading drill data. But who the fuck cares when nobody's drilling, right?

Newsbits


More later, but here's some stuff to inspire thought among the open-minded and anger among the closed-minded:

Ritholtz - what is your market context? Good article that goes into the fact that this market is not the 1999 market, or the 1982 market, or the 1987 market - many characteristics are vastly different this time, and if you don't take those into account your calls are going to be wrong. He even addresses the "PEs never got low enough" argument that I was having with Jojo:
Problem is, P/E ratios never quite got low enough and dividend yields never got high enough. However, the credible counter argument is simply low rates removed the expected competition. Without risk-free US Treasuries yielding 14%, the major competitor to equities never materialized. Hence, stocks were prevented from finding their natural floor.
In a crash, the PE bottom is going to be the point where difference in stock and bond yields make stocks a no-brainer buy. Bond yields were so low in the last crash that you can't expect stocks to have bottomed this cycle at a 6 PE.


FT Alphaville - Goldman Sachs calls for S&P 2100. Hey, guys? Next time you rip off my ideas, please add a link to my blog, okay?

WSJ Japan Realtime - yup, Japan's money is definitely moving overseas. Foreign debt and real estate are the targets.

JC Parets - is the crude breakout for real? He's rather noncommittal - seems to feel that recent history demonstrates USO is prone to lots of false breakouts. Maybe it's just not going anywhere at all? There's certainly no fundamental reason for it to go up.

Calculated Risk - lumber prices decline sharply. And before the US haters can pop in and say "therefore real estate is a lie!", he notes that lumber will remain vulnerable to the downside as long-idled capacity is brought back online. Also, though, China has pulled back sharply from buying lumber - that again adds to the EM bear thesis.

Mineweb - massive drop in gold exploration. Gets into cash costs and marginal price of production too.

Monday, May 20, 2013

More about not being impressed


Each of these charts has a lot of damage to repair and the weekly view makes it quite fucking apparent.






Nice day for a one day rebound, but....

Ooh ahh gold silver and the miners, eh?

Here's GLD:


Nothing particularly convincing about the volume, and the price has only moved from -3SD to -1.5SD.

Wake me when it pops above the EMA(16) and stays above it from now on.



Nothing particularly convincing about the volume, and all it's done is move from -3SD to -1SD.

If SLV doesn't manage to take the EMA(16) at $22.64, stay above the EMA, and start an upward trend, after a large one-day move like this, then it's a total sack of bullshit. And it's been a total sack of bullshit for a while so I'm not guessing it's ready to change now.




And GDXJ is still a total joke.

I am certainly encouraged, yes, to see a one-day reversal from a stupid Sunday night Globex puke into nonexistent bids. And it would sure be nice if all the shorts got viciously burned.

But there are still people out there who want to puke this stuff, so until the puking is swamped out by buying I'm happy to sit this out.

Margins too high, eh?


So stock margins are too high, and therefore this bull move is only temporary before the US market stalls out, eh?

BI - Two wall street anal cysts independently published devastating defenses of record high profit margins


And next in the series of milestones, the R2K


RUT 1000, bitches!


But no, you should most definitely stay in the junior miners, because that little white candle being printed today that only barely got silver and gold and GDXJ and GDX back above -2SD really means the bottom is in, yuppers.


CAT chart

Caterpillar:


So it hit a cluster of resistance at $90.

Then it dropped down and successfully retested its Bollinger mean, EMA(16) and SMA(50), its lower trendline, its pivot at $86, and its RSI=50 and MACD lines.

Now it's going back up.

Not much of a risk/return here, unless you buy a higher high at $90 if it prints, but even still this sort of looks like the kind of stock pick that's a slam dunk.

Problem I have it that it's EM exposed.

Boy if only junior miners were easy like this.

Oh wait, they were. Back in 2010.

NBG - how's this for a chart?


National Bank of Even Moreso Now Holy Shit Look at That Chart:


Really, honestly, I'm not lying, I did sell out my remainder at $2.10 or so on Thursday.

And I wouldn't be crying too much today cos I'd bought in at $0.91.

The question is, buy back now? Wait for a drop to $1.22, the Bollinger mean? Wait for a retest of the SMA(50)? Or a retest of the late-April pivot at $1.19?

Or just assume it was an irrational hedge fund pump, and stay away cos the outbound stampede has broken this stock?

Marc Faber is a twat


BI - Marc Faber says "The US Can 'Artificially Depress' Prices And Confiscate Your Gold".

Oh good, Marc.

In that case, why were you telling all your little muppets to buy gold all these years?

What a fucking twat.

Some morning news


Ha! I feel better about having sold NBG, now that the price popped back down below my sell price. I guess it's a good thing to fear volatility, as long as you fear it at the right moment?

So should I buy back at $1.70? Or $1.38? Ideas, people?

And by the way - as a refresher, the reason I give you all that India and China news below is because the India & China situation is critical to the future of commodities, including gold.


Because then if someone you like reading shows complete willful ignorance on the topic of EM economies, you can stop reading them and save yourself time (and possibly a fuckton of money).

Anyway, here's some news:



FT Alphaville - the risk of a Japanese VaR shock. It would be sad if a Japanese market collapse, and subsequent international liquidity event, were caused by something as stupid as risk-model-induced selling. To me, that indicates a systemic mistake. What kind? I know nothing about VaR modelling and probably couldn't do the math, but if a risk model can create an existential threat just like that on a stupidly small change in bond yields, your risk model is beyond wrong.


BI - A CAT:C relative chart, and what it suggests. Interesting! It also suggests something changed in the end of 2011, just like Bespoke's little S&P PE chart and the peak $HUI chart.

Now, did your favourite intermarket analysis news source catch this sea-change that occurred in late 2011? That starting in fall 2011, S&P PEs turned around and began trending up, while stocks exposed to global real estate turned around and began underperforming stocks exposed to US real estate? And what that means for secular shifts in the global economy? If he didn't, why not?


Reuters - China's president takes charge of sweeping reform plans. This is the wildcard for gold over the next few years.


South China Morning Post - Dongguan is essentially bankrupt, warning sign for Chinese economy. Cities and businesses now have to walk a thin line.


FT - China's national problems start with local government. I guess if the central government passed a land tax or property tax pronto, that might be the best of possible first reforms. If the FT has identified revenue inequity as a significant concern, the government must already be on the case, no?


PIIE - an estimate of Chinese corporate borrowing. The problem is too much debt, to the point it no longer stimulates growth. If Xi reforms interest rates, will that be a kind of economic shock doctrine that kills off highly indebted businesses and cities?


India Reuters - consumer stocks shine in EM gloom. Importantly, "JPMorgan Asset Management attributes the emerging earnings slump to cyclical rather than structural factors, meaning it should start to ease as global economic growth recovers." I.e., once Europe turns the corner, Japan moves into growth, and the Rethuglicunts quit sabotaging the US economy. And they would say that, since they're reading my blog every day. Seriously.


India Reuters - weakened Congress Party wondering if early elections will help. A bit of a positive wildcard - we'll have find some data and see if the BJP has the power to knock out these clowns.


India Reuters - S&P reaffirms negative rating for India. Because despite all the promises, the government is so paralyzed that it can't even pass the bills that ultimately won't accomplish anything due to official-sector ineptitude.


BI - El-Arian on gold. Funny stuff. Read this extended quote, and afterwards I'll give you the hidden truth if you don't yourself notice it:
El-Erian's argument is that essentially gold had a brand and it had a story, and that story was that it would inevitably go up, as central banks stimulated more.

While lower inflationary expectations and surging equities played a role, the real catalyst for the dramatic price drop was a rumour that Cyprus could be forced to sell its holdings by its European partners. This involved a tiny amount of gold (valued at less than $1bn at the time), but it made investors suddenly pay attention to the possibility of significant supply hitting the markets from other European economies (particularly Italy with holdings of some $130bn).

This simple change was enough to bring the gold price down 15 per cent in less than a week. Since then, the metal has struggled to re-establish a firm footing, (it is currently trading at about $1,345 a troy ounce).

El-Erian then goes onto liken this to Apple. One moment it's on top of the world, and infallible. And then suddenly the story changes, and people value the company in a completely different way.  
OK, got that?

Paragraph 1: Gold was a momentum play. I.e. the only reason "people" were buying it was cos it was going up.

Paragraph 2: Now the momos are selling gold cos they see a possible downside. These momos, by the way, don't understand that Italy won't sell its gold, it has no reason to sell gold, and its gold was sold off years ago by JP Morgan and is presently part of 110 million Indian dowries.

Paragraph 3: The momos all stampeded for the door.

Paragraph 4 (the key): Apple? Ha! Know why Apple flew up from $300 to $700? Because every momo hedge funder bought Apple, is why! Know why Apple then puked back down to $400? Because every momo hedge funder sold Apple! Has Apple's fundamental "story" changed at all in all that time? No!

And who are the "people" el-Arian is talking about? Is he referring to Indian and Chinese consumers, or those people buying Kruggerands who created so much demand that South Africa has now become a gold importer?

No. He's made it quite obvious, subtextually, that the "people" he's referring to are the hedge funds.

So El-Arian is basically explaining to you, in code of course, that gold went down because the ignorant hedge funds who momoed it up are now momoing it back down.

Which you already knew cos you read that comment by Peter Tchir that I pointed out to you a few weeks ago that you should have read by now.


Mining.com - Marcus Grubb from WGC gave a good interview that calms your fears about gold... and then the Jew-controlled media took it down. Seriously. It was a great interview, and Grubb is still very confident about the long-term prospects for gold (basically agreeing with me that it depends on continued Chinese and Indian wealth growth, the present drop is just a silly ETF puke), and then Bloomberg took it down.


Sunday, May 19, 2013

Why the hell does Josh Brown give a permawrong clown like Felix Zulauf the time of day?


OK, so Felix Zulauf has put out a gloomgasm this week that has gotten play from the Reformed Borker (Bork Bork Bork!) and Joey the Weasel.

Don't follow any of those links though.

Instead please read these other dire predictions from Felix Zulauf:

Reformed Borker (Bork Bork Bork!) - Felix Zulauf Growls, 21 Jan 2013. Yet the market went up.

Reformed Borker (Bork Bork Bork!) - "We are witnessing the biggest market manipulation of all time", 9 Jun 2012. Yet the market's up since then.

Credit Writedowns - "The Euro will break apart", 14 May 2011. And it didn't.

I leave it up to you to find more instances of this twat being a fucking broken record of dooooom.

The guy's another fucking Hussman.

Ignore list for Zulauf.


Check out silver


Kaboom!


Apparently related to yen margin stops or something. Yeah right.

Oh fuck I'm linked to from Zerohedge


Some dude with a blog wrote a big rant about gold that I could care less about.

Then he got it reposted to Zerohedge.

This is no problem or concern of mine, except his post linked to my Credit Suisse criticism, and now I'm getting a fuckton of inbound traffic from fucking Zerohedge. I've tried breaking the link and it doesn't work.

So just as a clarification for anyone new here,

  1. Zerohedge are a bunch of crypto-Nazi queers.
  2. In the dystopian Zerohedger fantasy future, they'll all be sucking queerboy cocks for silver rounds.
  3. Basing your investment strategy on "niggers are bad with money so nigger presidents must be even worse" is fucking queerboy talk.
  4. Basing your investment strategy on "Jews are plotting to enslave gentiles so Jew central bankers are enslaving us even more" is fucking queerboy talk too.
  5. Again, they're dumbass fucking queers.
  6. Ayn Rand was a mentally-unstable bitch who spent her life whining about how commies stole her daddy's money, then she went on fucking welfare. She contributed absolutely nothing of value to the world, nor could she, because she had no skills or education whatsoever (or sanity) and so was destined to be nothing but a leech on productive society. Bitch couldn't even contribute by getting married and tending house cos she was so fucking mentally ill.
  7. Libertarians are fucking pedophiles too. Ever wonder why so many of them move to third-world countries with poor policing and a low age of consent?
  8. Gold miners suck™.
  9. Ron Paul is also a queer.
  10. And all your other neocon hereoes? Fudgepacking queers the lot of them.

I'm not worried about any blowback from this post because (as this guy Pater Tenebrarum demonstrated) nobody at Zerohedge ever reads the content of blog posts.

Cos if they'd actually read and understood my Credit Suisse articles they wouldn't have liked them.

Inspired by Jojo 2 - if you want a secular bear terminating crash, this is maybe about the only way


Jojo suggests there should be a final crash to terminate the secular bear phase of the US market.

I guess it can still happen; but do you want to bet that the bottom of this 25% correction is below S&P 1600? Cos it could just as well be a crash from 2200 to 1600, in which case you're going to feel awful stupid about not participating in the market rise over the interim. Especially if it turns out the crash never comes.

If you're actually invested in anything right now then you're betting with real money, you'd better get it right.

So what does the end of a secular S&P bear have to look like? Commodities and EMs go down, and maybe get killed. Which seems to be what's in the process of going on right now.

But if the hopes and dreams that underpin your investment strategy depend on a rebound in commodities and EM gold demand, then you'd better damn well see a recovery in EMs and commodities right now.

So what story had you better damn well believe in?

I guess you can remain hopeful that a re-energized Japan, the end of Republican extortionist stupidity in the US, and a finally-recovering Eurozone could combine together to get the overall world economy flying again, which will re-energize emerging market demand to the extent that the EMs only ever simply ride on the DMs' coat-tails. Then maybe you'd get your old-fashioned demand-driven inflation, and the Fed's old-fashioned "tap on the brakes" response of raising interest rates, causing an old-fashioned rate-hike-induced recession - thus a nice old-fashioned 20-30% correction.

There's the crash you're hoping for. And that little tap-on-the-brakes US correction might be enough to topple EM credit markets, which wouldn't hurt the US but would signify the end of the commodity market. Seems the world economy has done just that in the past.

But to get there, the world economy has to improve so much that I'd think you'd see an S&P PE of 20 or more before the end, with maybe even highly increased earnings influencing the denominator.

But the EMs are hitting a productivity wall and a credit wall right now. That's usually the end of an EM secular bull, which by Jim Rogers would mean we're moving into a DM secular bull.

Maybe this is a most likely scenario. I don't think the present situation today can result in an uncontrollable EM crisis - not in China for sure - but a re-energizing of world economy driving inflation which is responded to by the Fed tapping the brakes? That might tip the EMs into an uncontrolled crisis, which then would herald the end of EMs for a generation.

And in the meantime, the S&P would fly up as prospects for world demand improve. Will the bottom of that 20-30% correction be lower or higher than S&P 1600? I say higher.


Now here's something that Josh Brown really feels he needs to beat into our heads.

If today we are a year or two from the beginning of a 15-year secular bull market in the US, and if the most we can expect from a secular-bear-third-crash is a 20-30% correction, and it's not a certainty that we will even see that correction, then WHY THE FUCK do you want to be out of the market right now?

How long are you going to wait it out in cash (or even worse, dabbling in gold and silver during a nasty downtrend) before you realize how much you've lost waiting for an apocalypse that never comes?

And as far as playing a rebound in commodities?

Please for the love of god seek out primary sources to determine what's happening in supply & demand right now - in iron, zinc, lead, copper, and now even in silver and gold.

Do not listen to newsletter writers. Do not even listen to Brent Cook. Go find primary data with real worldwide production figures and consumption estimates per country. USGS, WGC, you should know these places and be able to find this data on your own.

Or, even better, this:

China had a 10% yoy growth rate a couple years ago; this drove a commodity speculation boom, sure, but it also ended up driving a massive build-out in supply. Iron is now in gross oversupply, copper is in oversupply, zinc and lead seem to not want to budge over 90 cents, and I have come across a few non-goldbug articles that have suggested that even silver and gold are moving into oversupply.

Yes, even if China can only achieve 6% growth yoy from now on, that's still positive for overall commodity consumption numbers; but since the commodity complex had no fucking problem building out supply to meet China's 10% yoy growth needs, why do you now think miners will find it harder to build out supply to meet 6% growth?

And that 6% growth is going to be consumer-focused, not infrastructure-focused - or at least that's China's government's assertion, though that might end up being pie-in-the-sky.

Basically, the commodity trend right now is down, and the S&P trend is up.

You have to be able to say what could possibly change either of those things.

Because even if money managers are highly short commodities, that means nothing if we're on the cusp of a trend change.

And the idea that every secular bear needs a third crash?

Your dataset is pitifully small, and our second crash was responded to with the kind of monetary policy that was never dreamt of even thirty years ago.

This time might truly be different.

Inspired by Jojo #1 - bonds and the repricing of risk


So I got around to reading Jojo's macro newsletter this weekend (hadn't been reading him for a few weeks). I disagreed with him enough that I was compelled to send off a strongly worded letter.

But it was a positive, in that it got me to thinking about a couple things I hadn't thought about before. This post and the next one will go into those things.

The first thing I want to talk about is bond yields.

As Jojo (and everyone else in the world) notes, bond yields are way the hell low on a historical basis. And we've been seeing crazy stories recently, like some dumb town in Zambia being able to sell bonds at something silly like 5%.

It's to the point that some commentators talk about the danger of "reaching for yield". As if the market is reaching for a cookie jar perched precariously over a pit of vipers.

And, insofar as the US equity market is in aggregate (and individually for dividend stocks) a yield-bearing security, the reach for yield can be said to also be artificially driving up the prices for stocks.

Now, apparently basic free market theory or something says that yield should be a function of risk. If you have more risk, you demand higher yield.

So risk must be mispriced right now, no? And mispricing of risk is at the heart of some crises - the most obvious recent example being the subprime crisis a few years back, where bullshit ratings convinced investors that securities made out of garbage had low risk.

Well, bonds must be mispriced right now, no? And that might mean we're about to hit a massive bond crash, which will be so severe that our future will look like this:


Or this:


Or, most likely, this:




But here's the thing. Sure, I can get behind the idea that yields have been re-priced. But mis-priced?

Look.

Risk pricing didn't get fixed after the subprime crisis; it got papered over. When the MBS prices dove to reprice them into their proper risk bracket, the kleptocratic fascist elite who lost money on the deal confiscated taxpayer wealth to bail them out. What should have happened was bankruptcies, massive shareholder losses and bondholder haircuts, but it didn't happen because the people who would have suffered were the people who own government.

This didn't just happen in the US. Irish taxpayers were forced to bail out their banks too. Spanish were forced to bail out their banks. Greeks were forced to bail out their banks. In Cyprus it went so far as the depositors (Russian mob or not) having to bail out their banks.

Now, if the kleptocratic fascist plutocracy has such complete control over governments that they can demand that taxpayers be enslaved forever so that the plutocrats can receive free money to make their bad debts whole, then why shouldn't risk get repriced down?

And just think about this. If world governments are always going to bail out the bondholders by stealing from the taxpayers, then risk is zero. And if risk is zero, yield has to tend toward zero as well. Isn't that just obvious?

There might be a mispricing of risk in some specific markets; a Zambian mayor who tries to make his taxpayers eat a bank's losses on city debt will probably see an angry mob rape his children to death before eating his brain and intestines. But the UST over here is still (maybe improperly?) used as a benchmark for Zambian debt over there, and corporate debt somewhere else.

The point of all this is whether or not we're going to see the end of the 30-year secular bull market in bonds.

The answer I came up with is, it depends on whether or not we have a worldwide revolution against the kleptocratic elite that has been given a zero-risk environment for their investments.

Sadly, the end of zero-risk would mean yields flying up to their natural free-market level; which would mean a big hammer-down in stocks, bonds, and pretty much everything else that is priced highly under this new bailout regime.

And if you think people are going to go along with that, when they see the possible results, then you don't remember the reaction against the "tanks in the streets" warnings of 2008.

In case you thought writing a blog was a stupid waste of time


My God.

In looking for a Star Wars quote to put into an email to someone, I came across this:

STAR WARS Technical Commentaries - Injuries of Darth Vader.

It's a detailed analysis of all the injuries of Darth Vader, with evidence presented, stills, everything.

And you thought Trekkies were overinvolved in a fictional universe?