Saturday, June 8, 2013

Hard money clowns versus reality


Here. Read these and do what the hard money clowns don't want you to do: think.

Washington Post - history lesson: why the Bush tax cuts were enacted.

The Economist - the national debt: imagine if it disappeared.

Think Progress - the forgotten Conservative campaign to save the national debt.

Daily Kos - Greenspan in 2001: we're paying off the debt too fast!

And then remember where DHS, two wars, and the Bush tax cuts came from.

And then unsubscribe from any clown who refuses to read the fucking history.

Weekend news


Let's see what myths and legends the primitive neolithic tribesman have recently invented to make sense of a chaotic and senseless world, shall we?


Ritholtz - blah blah NFP. Again, it's only one data point in a series, and the Fed treats it as no more than that; but Wall Street types are all coke addicts who live in a manic state of hyperexcitability.


New Deal Democrat - NFP data isn't good enough. He thinks there are hints in the data that growth in the US is stalling. Quote:
This month's report can be filed under the catergory of "positive, but not nearly good enough," which basically describes the entire last 3 years. Most of the positive indicators outside of the headline number actually just take back last month's declines. The only - slight - silver lining in the ongoing losses in manufacturing jobs is that we don't rely on those any more for a functioning economy.

Michael Shaoul - on the NFP. His takeaway is this:
our view is that global bonds are coming under liquidation pressure towards the quarter's end because of the PRIOR poor YTD returns rather than any obvious immediate shift in FOMC policy. It would have taken a weak BLS report to have reversed this selling pressure and our expectation therefore is that yields continue to edge higher going forwards.

Ritholtz - temp help services reach record high. He notes NFP is a lagging indicator (so no surprise if it sucks), while temp help is a leading indicator. Quote:
Very often, when companies engage in temp services for hiring, it can be a prelude to further permanent hiring. Some firms need immediate bodies faster than they can find ‘em themselves; others are worried about future demand and are being (excessively) cautious. In each case, we often see the temp hiring lead more permanent hiring.

Calculated Risk - AAR rail traffic improved in May. Intermodal was especially good, and that's a positive hint about demand. Here's a chart, which should make you see how good the data is relative to previous years:



WSJ Moneybeat - Soros buys back into Japan. Awful clever if he just sidestepped a 20% correction, no? Quote:
While the recent sharp fall in shares came as a surprise, the current level of the stock market is “very attractive” to the Soros firm since it expects Japanese economic figures and earnings to pick up.
Now is where we point out he's not a money-losing clown like Paulson or Sprott.


FT Alphaville - the rush from risk. Seems EM funds are seeing outflows.


Bloomberg - the spectre of another bond crash haunts Asia. Expectations of a replay of "the great bond market massacre of 1994". I doubt it actually happens - the "taper" is just that, and means the markets have no fundamental reason to instantaneously hammerblow - but I betcha it is on a lot of people's minds, and thus maybe we get a self-fulfilling outflow. That then corrects back to reality just like the Nikkei and yen did.


Reuters - Mali seeks to double gold output to 100t/y. And there you go: gold production increases because it's easy money for governments. That's what you don't want to see if you want the gold price to keep going up.


Mineweb - Australian gold fund shut as investors exit. And if a guy named Galt (no really) can't keep a gold fund running, that's pretty darn scary!


Jojo - Major summer rebound in the gold stocks. No question mark in that headline either. He seems very very certain - despite the EM slowdown, threat of EM collapse, build-out of physical supply, sell-offs of ETF-held gold, low worldwide inflation, and so on. Quite a brave call. Quote:
The buying opportunity that we’ve spoken of for months is now here. When precious metals equities rebound, they rebound violently.
Then he draws a shart with an arrow on it, pointing up. I've seen a lot of those in my time.

Friday, June 7, 2013

Oh okay, some goldbug charts



Whoops! Gold dropped back below that magical EMA I used to harp on about. So how low does it go now? Fuck, I hope it doesn't puke even worse. What would the reason be?

Oh hey, by the way, apparently Paulsen is no longer going to be providing updates on his gold fund. Heh heh. Cos Paulsen's a pussy.



BTO's a perfectly good miner that so far has simply bounced back off the +2SD line to the Bollinger mean. This chart's not really that bad at all, considering.




But RIO, another perfectly respectable miner you might want to own one day when they stop puking, has found yet another trap door and decided to plumb the depths of despair. Fuck, I remember buying RIO at $1.80 and thinking it was a deadly deal - and they didn't even have an operating mine back then. Wonder if I can buy it back at $1.80 after the gold apocalypse that'll happen with the China collapse?




GDXJ is generally still looking strong-ish considering gold's flag has broken down. Though we saw it get this close to its SMA(50) before, whereafter it dove about 40%.

Not touching this bullshit with a ten foot pole right now. Too much downside risk.

Friday morning news


I haven't looked at what the chattering classes have been saying this morning; I try to avoid reading BI first thing cos I don't want my worldview clouded with idiotic clickwhore headlines that use words like "SLAMMED" or "DESTROYED!!1!".

But apparently the US printed good jobs number today. Or at least the market's first 45 minutes of action has been a positive reaction to that. In any case, now we can look forward to the next portent of doooooom.

So anyway, here's the news I picked up last night before the jobs number came out and everyone was still on tenterhooks because they're a bunch of fucking cokeheads who can't just fucking calm down and buy SPY:

Schaeffer's - Why this $VIX pop looks different. Again, $VIX remained in contango and had been drifting up slowly. Probably in an expected correlation with the drop in junk and the Nikkei. Because robots saw junk & Nikkei puking and bought downside protection in response. Because those were the old correlations and nobody fucking bothers to update them to new realities on the ground.

$VIX for the people - he's not convinced. I don't see why you need a "washout". Maybe just a few weeks or months of sideways grind? But I don't see why anyone should expect a US market collapse, unless of course they're clownish hard money advocates with blogs reading free goldbug newsletters on the internet for all their background.

WaPo Wonkblog - with the age of uncertainty over, a boom may begin. Yeah, except the next uncertainty will be over which EMs manage to survive the coming outflows. But still, the US data is incontrovertible - unless of course you're some hard money advocate with fantasies of a return to the Gilded Age.

New York Times - EZ has been down so long it looks like up. Even crap data is held up as a positive if it's slightly less crap than the previous month's data. And thus "Germany, the economic envy of Europe, is expected to grow a mere 0.3 percent this year — a blistering pace only by the new standards of underachievement." But, then again, the German mind (remember, I'm one) loves to celebrate mediocrity and miserable toil.

WSJ Moneybeat - Some Abe advisor on blah blah. Here's my takeaway from the article:  
One of Japanese Prime Minister Shinzo Abe’s economic advisers said that investors had become “overconfident” in the quick impact of Abenomics, and that “probably markets are adjusting to that excessive euphoria.” 
The talking heads on CNBC this morning (don't worry, it's not a habit, it's just something to watch while having my morning smoke) brought up Greenspan ages ago (in the 70s maybe, I dunno) saying he was worried that markets would sense changes in policy and fly up instantaneously. Well, didn't that happen in Japan? After all, why should the Nikkei have doubled immediately, and the Yen have dropped 10% immediately? Because momo hedge funds pushed too far too fast. Because they're cokeheads. Nikk should definitely go back over 16000 if Abe's plan works, and Yen maybe could go down below 100 again, but not over the space of two fucking weeks!!

Basically, in my new adventures outside of the coddled hellhole of junior mining, I'm learning just how momo-driven some short-term moves really are. Thankfully I'm starting to not get surprised.

FT beyond brics - EM fund flows, a painful correction. Some think the rout in EMs could get worse. I guess this is yet another situation where risk was mispriced, and now each EM's equity and debt market is snapping back towards its proper risk pricing. Because, y'know, the hedge fund cokeheads who bought EMs didn't think the situation would change once US rates began to normalize. Because, y'know, they don't think, they just buy.

Mining.com - the last time Shanghai rebar traded this low. Again, China's not buying that much metal, eh? So there'll probably be a negative spillover to other base metals, and to EM equities as well, once iron ore prices correct back to the downside.

Stansberry Research - I guess I can cross Jim Rogers off my follow list. #1, Rogers is letting Porter Stansberry associate their name with his. #2, Rogers is saying he would like to invest in Russia. I still respect his theory of economic cycles, but he must now be suffering from some sort of fucking brain parasite.

Mr. Rogers sir, please get that brain damage of yours looked at before you get any more insane. And while you're recovering, maybe you'd like to read through the past several fucking years of John Helmer's Dances with Bears blog for some education in the finer bits of Russian ingrained criminality.

Or you could, more simply, follow this old and tested heuristic:

DON'T DO BUSINESS WITH RUSSIANS

Friday Videos - die Antwoord


This ain't Josh Brown's pussy-rap.





Thursday, June 6, 2013

One more newsbit



India Reuters - Monsoon set for above-average first week. I've been reliably told that Doug Kass appeared on CNBC today pumping gold, which should get him another mention on Zerohedge later tonight during the goldbug wankfest hour.

I hope his bullish status on gold is because of the good Indian monsoon and not because of those drool-covered, clownishly surreal "ten points" that he recently scrawled on the walls of the internet with his own poo, because I already completely discredited them earlier this week.


More news


More news to help you stockpile the guns and bullion:

Ritholtz - S&P index vs profits at all companies. It's not hard to understand, Barry. Look at yields in 2000, 2007 and today; valuations were childishly overstretched in 2000, and it's taken 13 years for the profit output of US companies to catch up to the total market valuation. That's why today's a better time to buy than 2000. Especially since the low we saw a couple years ago was as bad as the lows in 79 and 84.

BI - state income tax takings rise. Thus the US is recovering.

Calculated Risk - Fed's Q1 flow of funds. The US has reached a record high household net worth. How many new highs do you have to ignore?

WSJ Moneybeat - lighten up on QE fears. You freaked out about the other shit a couple years ago and that was dumb. Don't freak out over this shit either.

BI - Draghi bond sell-off gets worse. Dunno what exactly they wanted him to do that he didn't. But yes, Italy and Spain 10Y debt yields are up strongly, though both still well under 5%. Looks more like all the hedge fund crackheads are selling off debt and giving up their "reach for yield".

Price Action Lab - no party yet for bond bears. Again, that long-term UST chart for some perspective.

Michael Shaoul - EM carry currency update. Quote:
The losses becoming visible in a large number of mutual funds and ETF's are starting to approach -5% YTD, a level which may be considered unacceptable for what is supposed to be a safe and stable portion of investor allocations. The risk of redemption pressure feeding into these markets should not be underestimated.
FT beyond brics - EMs are dead. Guy from Nomura notes the parallels to 1994, including the threat to continued EM growth once US rates normalize. By the way, that was a great year to get into the US market. Very good article, please read in entirety!

FT Alphaville - Oh shit Japan again. Y'know, I find this a bit fishy: who the hell vomits Japan futures? If this was all "Japan retail", why wouldn't they just sell stocks when their market is open? Same for Japan instos. It really looks to me like it's American robots puking Japanese futures.

BI - is China facing a Minsky moment. I wonder if they'll hold off their own collapse til we're done with the Japan collapse?

Reformed Borker (Bork Bork Bork!) - takes Ambrose Evans-Pritchard seriously. Josh dude, a little advice here: Pritchard is a fucking moron. Either quit reading him or get yourself hooked up with King World News and Alex Jones.

Mining.com - Colorado Resources falls to earth. They give credit to my Homey From Dahomey, but cut out the part where he gives credit to me. To which I can only respond

Knock knock
Who's there
FUCK YOU

PS buy Santa Barbara Resources, V.SBL. They're the next CXO.

Vix and the S&P




It's been a long slow upward climb for $VIX the past 3 weeks. Long and slow is not normal. It's a climb that coincides exactly with the bottom falling out of junk bonds. And it seems to me one is causing the other. As in, a bunch of robots are buying volatility because Parampreet in Bangalore programmed them to.



But the $VIX is still in contango, which some smart guy said means there's no real fear problem right now. Aparently, if the curve starts to get wiggly, then there's fear of what's coming up and you can expect a proper drop in the $SPX.



Seems the $VIX hasn't much upside left from here - unless, of course, we get one of those OMGWEALLGONNADIE moments at the level of the fabled unicorn of Eurozone collapse.

Which, btw, the US market recovered from.

Morning news


Bespoke - S&P sector range charts. Everything's worked off its overbought status now.

BI - Morgan Stanley on why markets have been rallying while commods have been tanking. EM growth at risk, capacity build-up, and so on.

Bespoke - 10 day A/D line now in extreme oversold territory. It's at -1500 which apparently is very oversold.

BI - German manufacturing orders stink. Just in time for your election campaign, Angela!

Mineweb - silver slump doesn't move Indian buyers.

Bonddad - economic analysis of India. Not great.




Wednesday, June 5, 2013

Charles Schwab on the Hindenburg Gloamin'


Here. I can link to Schwab's dismantling of the recent "Hindenburg Omen" without even linking to BI or Rosenberg!

Schwab's Liz Ann Sonders - Omissions of the Omen.

But as BIG pointed out, a closer look at the "stocks" that made new lows on the NYSE shows that they aren't actually stocks! A third of the securities that made new lows on May 31 had the word "income" in them and a third had the word "municipal" in them as well. Nearly all of the new NYSE "stocks" making new lows were a mixture of closed-end fixed income securities, preferred stocks, or some other form of fixed income product listed on the NYSE.

BIG looked at the new 52-week highs and lows on the S&P 500® Index (which includes only stocks), and here we saw 6.2% of its stocks made new 52-week highs, while zero made new 52-week lows.

I think I said this was probably what was going on, a couple days ago, didn't I?

The evening news


FT - quant funds hit by US bonds sell-off. Again, there you go: it's some fucking robot badly programmed in Bangalore that's causing the bullshit in the US markets. That, and the idiot fund managers who run them.

JC Parets - Europe vs. China bottoming. Of course, this could also mean that China starts plummeting faster than Europe.

FT Alphaville - IMF = Ignorance Most Foolish, fnarr fnarr fnarr. I like the part where they say action on Greece was delayed "because of resistance from some euro-area countries whose banks held too much Greek government debt". Like, which country was the one that was delaying all the Eurozone reforms? Hm? Some German-speaking one, perhaps?


Mining.com - Chinese steelmakers can't be more bearish. The right thing for China to do is bring market forces to bear on inefficient mills, thus shutting them down, eliminating the supply glut, and improving productivity. But you can't do that when the most inefficient mills are owned by the most well-connected party officials.

Some morning news


Japan down another 4% overnight, so let's assume junk bonds will also puke and volatility will move up and the US market will get sold down. Cos that's what the algos seem programmed to do in this environment.

Now here's the news:


Bespoke - breadth hanging in there. Utes and telecom have both pooped a lung, but the drop-off of two defensive dividend-oriented sectors is what you should expect if everyone's gone negative on treasuries now. So this paints the pullback as just a repositioning based on a change in the sitrep on the ground.

VIX for the People - on the $VIX contango. I noticed that VIX has been going up slowly during this market retrace, and this fellow points out that $VIX is still in contango - which it shouldn't be if fear is an issue and a major dump is around the corner. He's short $VIX and seems to be the type of guy who would have a rational reason for being so. So, again, no worries necessary about this pullback.

By the way, another fellow I've read yesterday (can't find his blog now dammit, he was good) said that the downside protection has been getting bid up by the algos - can't remember what the reason was for them doing so, but it was knee-jerk. Remember, this market is populated partially by a bunch of stupid robots programmed badly by a code sweatshop in Bangalore; thus stupid things will happen to important indicators, and the old-fashioned bozos who only follow those indicators will sell in fear as e.g. they see $VIX rising. They don't look under the hood to figure out why $VIX is rising, and since their only exposure to fear premia is having once paid an underling to enter the Black-Scholes formula into their pocket calculator, they won't know to even look under the hood.

That's my opinion anyway.

Michael Shaoul - Spain unemployment data. This guy just can't stop with the hopeful "the bottom has passed for the Mediterranean" narrative. He's probably right, but man it's going to suck when he becomes famous and everyone listens to what he says! Mr. Shaoul, please begin swearing like a bricklayer on your blog. We want to keep you all for ourselves.

FT Alphaville - China's debt servicing cost. Jordan Roy-Byrne will confirm to you that over a year ago I was already calling for a China collapse as the third and final crash of the S&P 500 secular bear. It makes sense now that everyone would get out of the commodity space til the crash happened. Wei Yao at SocGen might end up being the next super-famous analyst if she gets this right.

Caixin - debt on local government platforms forces regulator into delicate balancing act. When there is no good option, you've got trouble coming.

Bloomberg - China crisis is good for the global economy. Yes, in that the reforms required to rescue China are major and will require dislocation and a crash. Bill Bishop at Sinocism (who's dunning for money again so go give him some cos that's where I'm getting the majority of my China news and it's important for you to read it) seems to suggest the new belligerent nationalism coming out of China is part of a strategy to force the kleptocrats into line - which would be needed to push through the sorts of (ultimately anti-kleptocrat) reforms needed.

Again, if you're not keeping well-informed on the China news, it seems to me that it would be wise for you to stay the fuck out of base & precious metals.

FT beyond brics - the Mexican peso is mighty no more. Again with the EM markets seeing difficulty. And Mexico is a manufacturing power, not some stupid concrete & steel eater like China. The article notes Mexico won't poop a lung since fiscally they're in great shape, but still in Mexico is feeling no love then it looks bad for EM growth, no?

Price Waterhouse Coopers - 2013 mining deals outlook. Nice fat pdf available to download, if you still bother with mining.

Tuesday, June 4, 2013

Short comment


Seems like when there's "too much" volatility being seen in JNK, the S&P pukes.

Like someone throwing a hissy fit.


Two pretty tangential newsbits


Just some leftovers from late last night.

World Complex - GSR at lowest area of stability. #1, since silver's price position is weak because of its byproduct status, maybe both have much further to fall? #2, this blogger is a mad genius - the best kind of genius. #3, IKN liked it and I've got nothing better to do than repost his stuff.

Yahoo Finance - survey of mining executives finds emo music, black hair dye, and wrist-slashing gaining in popularity. 39% of executives have put their companies into "pure survival mode", which means cutbacks in exploration to free up more money for hookers and VSOP before the inevitable delisting and applying for jobs at the local 7-11.

Monday, June 3, 2013

Doug Kass' ten points, one by one destroyed and their remains scattered to the howling winds of despair



Kass says he's buying gold. Good for him.

But let me throw him down and smite his ruin upon the mountainside here.

Expectations for the price of gold are now low and diminished. Gold experienced a speculative blow-off top 18 months ago as the European debt crisis peaked, the threat of a U.S. default ceiling rose and coincident with the debt rating of U.S. being lowered.

Expectations are low because emerging markets are tanking, and they provide over 50% of demand for gold.

And no Dougie, the blow-off top was because, as Peter Tchir noted, a bunch of hedge-fund cokehead clowns got bought into gold without any good reason. What do you think is going to make the hedge funds come back into gold?

Maybe the expectations are right, Dougie. I mean, expectations are for S&P 500 earnings to grow over the next year - are they wrong?

A most unpopular asset class provides a contrarian's appeal. Weak price action since September 2011 has created an improved reward vs. risk. Here is the price of gold since 1833. And below is a chart that follows the price of gold since 1970.

The price of gold since 1833? Are you fucking serious, you fucking assclown? Don't you know that gold was under a price control for most of that time? I mean, in what way whatsoever does that chart show to the same thing at the end that it does at the beginning?

I should stop reading right now. But no, let's take a polite look at what else Dougie's scribbled in crayon:


So the price control was lifted in the mid-70s, and as you'd expect the price shot up. Then that new high price stimulated new production; production doubled, til 2000 when companies like Barrick were warning of "peak gold".Gold went down as production went up.

Then by 2000 we saw an EM bull take hold, and India's and China's gold demand went up as a function of wealth creation in those countries. And at the same time some fucking lunatic went and invented the gold-backed ETF, which meant Wall Street clowns could buy gold without the trouble of sorting out storage. And thus gold went even upper.

Now the EMs are hitting a brick wall. EMs buy 50% of gold production. Tell me how this is bullish for gold.

Last month's gold selloff looks like a selling price and volume climax. That first day of the mid-April collapse was a near 5 standard deviation move lower (or every 4,700 years) on huge notional volume of $20 billion. On the following Monday, gold took an even greater beating. Over the two-day period, there was a 8 standard deviation event, which occurs statistically about every billion years.

Statistically, you're an ass. Markets have fat tails, and if you'd bothered to study any of the math that you need to know in order to work in finance, you'd know what that fat tail means for your "every billion years" comment.

So who's going to buy that gold back up? Your first 3 comments have only pointed out that gold's gone down.

Negative sentiment extreme. The sharp price drop in gold has brought on a growing short position.
With it lies the seeds for a potential short squeeze or perhaps some latent demand from short sellers.

So... you're buying gold on a mean reversion trade?

Those shorts broke to a bull market high in mid-February; gold was still at $1600. Since then, those shorts have been proven right, no? And so they pile on even more.

You've still said nothing except that gold has been going down.

The growing consensus view of an acceleration in the rate of global economic growth may be too optimistic. As such, not only might the recent rise in real interest rates be nearly over (as it holds the seeds for detracting from growth) but it raises the prospects for more QE, lasting much longer than many market participants expect.

"May be too optimistic"? So you're taking this position as a roll of the dice? And you manage other people's money?

The U.S. dollar's recent strength might peter out. A higher U.S. dollar is typically seen as a gold negative. But the recent strength, reflecting a growing consensus of Fed tapering, might be short circuited if global growth moderates.

So... you're buying gold as a hedge against USD weakness? Hasn't the recent price volatility in gold pretty much swamped the fuck out of gold's currency-hedge status? I mean, did that April puke in gold happen during a 15% appreciation in USD? Or are you now pulling pro-gold arguments from the hallowed pages of tfmetalsreport.com?

More currency debasing lies ahead. The currencies of all the major countries, including ours, are under severe pressure because of massive government deficits. The more money that is pumped into these economies (the printing of money, basically), the less valuable the currencies become and more valuable gold is.

Oh jesus fuck now you're bringing up the Ron Paul Doug Casey Fiat Weimar Zimbabwe "money-printing" hard money argument for gold? Are you fucking serious?

And didja notice that the CBO's estimate for US deficit has been lowered strongly recently?

Inflation is gold's friend. The world's debt load cannot be paid back in constant dollars. Reflating (and inflation) seem inevitable (though inflation may lie out into the distant future) and is the natural outgrowth of monetary policy.

Oh god. Now your head is even more up Ron Paul's flatulent ass. How's about you give his prostate a tickle while you're up there if you love him so much, eh?

Please refer to your own gold price chart above. Where was the inflation from 2005 to 2011, when gold quadrupled in price? Was inflation running at 25% per year? Cos you need 25%/yr compounded to get from $400 to $1900.

Tail risks remain. I don't subscribe to the notion that all economic tail risks have been eliminated nor that the shoulders of growth will be borne by monetary policy. Rather I view an upcoming "aha moment," in which it becomes recognized that easing is losing its impact as the Fed is pushing on a string. Again, QE might be with us for a lot longer than many anticipate.

So... you're buying gold in order to hedge your portfolio against a possible existential risk to the worldwide financial markets? If so that's okay, but you should have bought physical and taken possession. GLD is exposed to the same existential risks as all other equities.

If you're buying to hedge not against existential risk but simply against a minor liquidity event (which is probably what you mean by "fat tail" since you have no fucking clue what that means, see above on the discussion of fat tails and you not knowing math), then you might want to look at what gold did during 2008. It went down. It tends to do that when liquidity is threatened and people are forced to dump whatever they can sell. It's not just hedgie clowns who puke in liquidity events either - go check out scrap sales for 2008.

Demand for physical gold is rising. It is interesting to note that when the price of gold had its two-day crash in mid-April, the price for physical delivery (gold coins, etc.) held better (the premium increased) than future prices. (View about 33 minutes, 50 seconds into this presentation by Grant Williams.)

Jesus fuck. Now you don't even understand fucking premiums? The premiums were there because the sellers didn't want to sell at the price the hedge funds had puked it down to.

Sure demand has been up this year, if all you count is physical. But if you look at the WGC 1Q2013 presentation (which you did read as part of your due diligence, right? I mean you're a serious investor and do due diligence, right? Your total lack of statistics beyond a couple King World News charts is just to keep things simple for your readers, right?) you'll see that 1Q2013 demand was grossly negative when you factor in physical sales from the ETFs.

So does this mean Doug Kass is simply buying GLD because he thinks hedge funds will start buying back all the GLD that they've spent the last year puking?

Have these hedgie cokeheads been buying back all that Apple they puked?


In sum, I just can't take Doug Kass seriously. His arguments above can be summed up as

1. Gold has been going down, therefore it will go up.
2. I feel like rolling the dice and can't be arsed to fly to Macau.
3. Ron Paul is right, I mean, just look at his portfolio performance.
4. I don't bother reading myownmarketnarrative.blogspot.com to keep up to date with the dismal reality of the gold market.


He's the original macro tourist and you'll have better luck following Cramer's buy calls on Mad Money.

UPDATE: Sorry, silly me! I forgot! I could have just summed this entire article up as "Doug Kass says absolutely nothing about outlook for emerging markets and thinks they have nothing to do with gold." He's just another dumbass white boy who thinks that gold is a white people's metal and the US somehow magically determines the price of gold.


(UPDATE) Three evening stories


Well well well. After all the hot air of bullshit from the doomers, F and JPM came back by the end of the day. That was a reversal day, bitches, a big fucking smiley face - and it indicates that the US market is still going up.

You can tell I can't be assed anymore newswise today because now all I'm doing is forwarding you bullshit from Business Insider.

Yahoo blogs - When some dick from Raymond James is making fun of you, it's probably because you're a real moron. Jeff Saut from Raymond James points out the Hindenberg Omen failed the last dozen times it came up as well. It's bullshit, and if your dumbass newsletter or analyst mentioned it positively in his weekend missive you can cancel your subscription to that clown now.

IKN - takes Doug Kass seriously therefore must be drunk today. Sorry but Kass is a fucking clown. He's part of the Zerohedge brigade for god's sake. Don't take that clown seriously. Let him buy his gold; we'll see how India and China demand hold up. Fact is, I doubt the crackheads from the hedge fund world will ever buy back all that gold they've spent the past 6 months puking, unless it's already gone up based on fundamental demand.

BI - USD and Nikkei selling off. No surprise there - as I said, it's just the hedgies piling back out after all piling in. The hedge-fund crackheads drove Apple up to $700, and they drove gold to $1900; then they all piled out of each, and each went back down to a rational price. No surprise they've gone and pulled the same stunt now with the Nikkei and USD.

Don't get me wrong; if Abenomics eventually works, I'd think Nikkei should eventually, over the next several years, go up another 100% for starters. It just had no fucking reason to go up 100% in the past couple months. The same as Apple had no reason to be at $700 for another couple years yet, and gold had no fundamental reason to be at $1900 recently either.

So where are the crackheads supposed to be today? Well, considering they've failed miserably to even make as much profit as SPY in the past year, maybe they should just give up trying to be clever - they've proven they ain't - and just put their money into SPY. After all, maybe that market is large enough to take in all of their AUM without becoming grossly distorted? And hey, SPY's got a good PE and a decent dividend, no?

The volatility in world markets comes from asset managers thinking they're a fuckload more clever than they actually are. Eventually the crackheads will clue in, and at that point the S&P 500 will be at 2000.

Three more newsbits



BI - holy cripes the Nikkei. As Joey the Weasel notes, long Nikkei was the most popular trade on Wall Street. Well, if so, that would explain why it's crapping back down, right? It's just like gold and Apple, except faster now. Suggests that the hedge funds' favourite momo has a shorter and shorter lifespan as we move through time. So why don't you hedgie clowns just put your money in SPY and quit screwing up the world?

FT Alphaville - Mohamed el-Erian on "the assault on carry". Gee, Mo, sounds like you need to buy some gold to hedge risk, eh? Whaddya think, Mo? Gold looking good all of a sudden? Mo?

Mo?

Ritholtz - some badly-needed perspective on the UST10Y. Here:


Now quit y'all freaking the hell out. The 2000-2008 channel intersects t=now at about 2.8%, and the 2008-2010 channel at around 2.58%. So any doomer clown who reads anything into a couple short-term swings in UST yields is suffering from bornyesterdayism*.



* bornyesterdayism - the psychiatric disorder whose main symptom is utterly no recollection of past events, as if you were born yesterday. Also means you're a clueless git.

Some charts


These charts show large moves contrary to their expected direction, don't they?


Was the US 10Y treasury supposed to do that?



Was JNK supposed to do that?



Was the USD supposed to get flushed down that thing?



Thus, no wonder $VIX is up.

And thus, no wonder the hedgies are scrambling to buy something else.

more news for lunch time


OMGWEALLGONNADIE!!!!!!

Reformed Borker (Bork Bork Bork!) - corrections don't send out invitations. I guess he calls this a "healthy correction".

Michael Shaoul - ISM manufacturing for May. He notes May manufacturing ISMs are historically weak, and one contributing factor may be weakness in Chinese demand. Therefore, he yawns languorously, that's not what's causing today's market freakout.

BI - USD and Japan selling off. Note that the "consensus trades" are the ones getting kneecapped right now. I've noticed the same thing in my own stocks - momo vehicles like F and JPM (and ones I don't own yet like NVDA and SNDK) are getting killed, which leads me to believe this dip is just a bunch of hedgies puking their way out of margin calls. After all, why should Ford drop and Magna not?

Bespoke - Ford truck sales highest since 2007. Again, so why should Ford drop today? Cos hedgie momos are puking.

BI - Tesla dropping. Again, another hedgie momo play which is taking a hit as the hedgie momoes pile into... what, gold? Is today "Follow the latest wank from Kyle Bass" day?

der Spargel - an interview with auntie Angela. You'll notice, if you read between the lines, that she's no fan of democracy or the sovereignty of the voter. And that German arms sales are all about her kowtowing to German business interests. That's the way that Germany does political corruption.







Monday morning news


Here's the first bit of news:


And here's why:

Bespoke - back to bearish. Their weekly poll indicates bearishness not seen since... well... the last short-term bottoms.

Now here's some other news:

Bonddad - US market analysis. Consumers are looking a bit weak, sure. But I think the fear is coming from people being scared of what government debt is doing worldwide. S&P 1600 seems a sensible endpoint for the retracement.

JC Parets - will cyclicals finally break out vs staples? I need a good idea of what a "cyclical" is before I can play this: does Ford count? Josh Brown likes Dupont, but I think materials & chemicals will be negatively impacted by EM slowdown and would rather buy US domestic cyclicals.

BI - Euro PMIs look hopeful. The question you have to ask is, can Germany screw things up any more? The answer is, wait for that court case next week.

FT alphaville - Japonica offers for a big chunk of Greek debt. Smart move, would have been smarter a year ago though. I'd suggest this is yet another positive sentiment indicator for Europe.

Reuters - Draghi says Europe on course for gradual recovery. So how undervalued is Europe right now? Well, should Santander yield 7%?

WSJ Japan Realtime - Yen has fallen too far, study says. Doesn't surprise me: the hedge funds have yet again amplified a sensible move way too far in one direction. We saw this with Apple, then with gold; now it's Japan and soon it will be the EMs. Hint to hedge funds: if you've been underperforming the S&P, why not just put your frickin' money in SPY and walk away? That's the one market large enough for all the hedge AUM in the world.

BI - India's economic slowdown. Not news cos you heard it here first. But it's news that it's news.

Mining.com - India tightens import rules further. Not news, boring. But this sentence is worth its weight in fiat:
According to some estimates, Indian households are hoarding close to 20,000 tonnes of gold worth some $1 trillion, representing 50% of the country's GDP.
Now do you understand why I say India is the key to the gold price?

BI - end of the EM bull? See, that is news - that people are thinking the EM bull is over. And, of course, you heard it here first cos all Joey the Weasel does is rip off stories from My Own Market Narrative.

IKN - Peru's currency reserves dropping. Another indication that the EMs are in a downward spiral.
India Reuters - monsoon rains have arrived in Kerala. In case you still cared about the gold market.

Mining.com - Gaddafi's billions. Now, #1 - why did Gaddafi own gold? Maybe it is actually a wise thing to do when you have a fortune and need to keep it portable and untraceable. So this story vouches for gold's value as an asset class. But #2 - why was Gaddafi never listed in the Forbes list of billionaires? I've always wanted to know. Why haven't all the other dictators and mass-murderers been included in the list of billionaires? Is it because it would have made other rich people feel bad?