Saturday, June 15, 2013
Hey, lookie dat failed head & shoulders targeting $29.
Failed on volume too, like it's supposed to.
Emerging markets generally are down strongly, again on significantly higher volume.
Hey, out of curiosity... those hard money goldbug fiat Weimar Zimbabwe guys and Elliot Wave worshippers, they don't mention emerging markets ever, do they? Y'know, the world economy? That thing?
Even a festering odious backwater such as this, lightly populated with base motherless scum of the foulest order, still gets interesting topical searches from time to time.
Seems some people are interested in reading some opinions about Lumina Copper, eh?
I wonder why.
Ouch! $4.60 and falling, eh? I can imagine a certain LatAm focused blogger out there being all smug about how he stayed away from LCC. Though he did put his money into AQM instead.
Anyway, my opinion on Lumina Copper? Wow, that's cheap: $200M for a copper deposit. Wonder if anybody needs one anymore. Wonder if some news has been making the rounds this past week that has caused the well-connected cunts of Bay Street to decide it prudent to puke shares into the market til blood comes out their noses.
Wonder how you can not call the China & commodities play dead when every single miner stock is collapsing into a black hole, sucking your money away with it.
Or maybe it's all just something something Argentina.
"Nobody wants to be the last one left," said Marcos Aguinis, an author of several bestselling political books and novels. "It's tragic, the predictability, but this is clearly falling apart once again."No shit, eh? Emerging market falling apart.
Due to my geometrically increasing fame and fortune, this blog has now picked up a large number of sponsors.
So I'll take this opportunity to run some of their ads:
Source is Fark so flame them not me.
And in case you're one of those poor goldbugs who feel cast adrift, with all of your beliefs proven false, confusedly trying to make sense of this brave new world, here's some fucking education for you, courtesy of Wikipedia.
Wikipedia: Fiscal Multiplier
Wikipedia: Liquidity Trap
Wikipedia: Lost Decade (Japan)
Wikipedia: Quantitative Easing
Wikipedia: Zero Interest Rate Policy
There's really no reason to be an uneducated fool in this fancy-pants new internet age.
5 newsbits left to get out of the queue.
BI - Ed Yardeni on stock market PE relative to growth. According to him, S&P is not even remotely richly valued. And y'know growth will improve from here.
Bespoke - higher high on crude oil. That's strange, and goes against the idea of China dooooom. Pure paranoid speculation on my part suggests it might still fit together if the market is simply pricing American withdrawal from the middle east. Which China's new heavy involvement in Iraq suggests. But it might also mean China's not dooooomed.
Reuters - Deutsche Bank horribly undercapitalized. Remember how I was saying most of European crisis management was meant to keep DB from collapsing?
Mining.com - Cameco starts mining at Cigar Lake. Canada does your anium better than any other country. We're the fucking gods of your anium. Suck our dicks, Kazakhstan! Oh... and U3O8 spot dropped below $40 for the first time since 2006.
Mining.com - HSBC says gold ETF outflows have died off, gold will go back over $1600. And I'm sure this has nothing to do with their involvement with managing GLD. Nope. Nothing at all.
Friday, June 14, 2013
Found a link to this guy Vince Marciano, who also reviewed the 2013 PDAC.
Have no clue what this guy is like at all; he may be a shyster, he may be one of the lizard people. But maybe you'll enjoy reading his review of the PDAC speakers as much as you enjoyed mine.
Time - grading Abenomics. Yeah, the structural reforms have to come too. Quit acting like a cokehead and have some patience. But thanks for reminding everyone that one poliy announcement alone doesn't successfully underpin a 100% bull move.
Dragonfly Capital - the Chinese market is about to get a hurting. Because of some funny chart pattern called the "bullshit carp harmonica" or some such thing. Question for you is, what you gonna do with gold if that happens? Plan now!
Reuters - Monsoon seen covering India early. Again good for gold long term - as long as India doesn't collapse.
BI - blah blah Bob Janjuah blah blah apocalypse blah blah culling of the firstborn blah blah dooooom. Mamta, you're supposed to be better than that click-whore Weaselthal. Quit giving free press to clownish lunatics like Janjuah. Start interviewing Michael Shaoul for fuck's sake.
Injured finger, typing difficult, thus just headlines.
Reformed Borker (Bork Bork Bork!) - the Hilsen-rescue. Except today the markets have been heading back down. Quit sweating the noise Josh.
Vix for the People - yesterday recap. $VIX term structure was positive and $NYMO got better, but who knows?
Calculated Risk - Fed likely to push back. Hilsenrath stuff.
Atlantic - what's up with inflation?
Economist - the stealth boom.
Qz - Still got your money in EMs?
Reuters - India is the weakest link in EM rout. Poor central bank reserves and big trade deficit.
Mineweb - Indian gold imports fall. Dunno whether smuggling gets counted in these trade numbers though.
Rajesh Mehta, chairman, Rajesh Exports, said shipments in June are set to decline further, since most of the orders were placed before the curbs on imports were initiated.Be worried, goldbugs.
"There is practically no demand from consumers. No one is shopping for gold. There is a lull in the market,'' he said.
Haresh Soni, chairman of the All India Gem and Jewellery Trade Federation said shipments are bound to be way less than the average $36 million imports witnessed in the last fortnight of May.
Reuters - Monsoon progress. Good.
Mining.com - Chinese trade iron ore higher. But yet Shanghai rebar is collapsing.
Mineweb - era of mega-goldmines is over. But... where will we get the gold from, then? How many La Arenas do you need to make one Oyu Tolgoi? Will gold just become a base metal byproduct like silver?
Thursday, June 13, 2013
Here's China all-cap:
Seems like an attempted bounce despite shitty China data.
Here's emerging markets:
Reversal on volume, and this is a hedgie plaything ETF so maybe that reversal means something?
And here are two commodities the EMs love to use, whose supply is guaranteed because they're plentiful and the mines are ridiculously simple to build out:
Coal looks like shit.
Steel looks a bit better.
I dunno... if Bernanke taking away the coke bowl is bad for EMs, what about Shinzo laying out a nice shiny new coke bowl?
I know I've been saying the EMs have hit the wall and can't grow any more this generation. But maybe people might think something different... for a few weeks, maybe?
Here's Brent and Mickey saying the same old thing:
1. Mickey is ashamed that he called the bottom in January cos we're 20% lower now.
2. Brent expects to see some real carnage still to come.
3. Blah blah management blah blah share structure.
By the way, it seems one hell of a lot of junior miner newsletters started sometime around the crash of 2008.
That's a bad thing.
Because then every dickhead with a newsletter got to spend a couple years tooting his own horn about his +100% annual returns. They got to believing their own hype.
Then the market turned and everyone got burned.
And here's an open challenge to all the goldbugs out there - newsletter writers and everyone else.
Explain to me what will make gold and silver go up again.
Reformed Borker (Bork Bork Bork!) - The tape is exhausted. Posted a few hours ago, then the market ripped your face off with a big rally.
Bespoke - bullish sentiment rises.
Bespoke - input prices drop again. Hey, know another time that import prices kept falling? 1997 to 1999. Good times.
FT Alphaville - doubling down on the Nikkei. That's Nomura. I wish they could explain why stock valuations should more than double in one year. They're just feeding the fucking crackheads with this fucking nonsense. Yes it should go up, but 18,000 by Xmas?
Barnejek - Just how bad is the EM selloff? Quote:
All in all, I don’t want to make this post too technical but this is the first EM bond “crisis” since I have been in the industry when local bonds in emerging markets have so far been outperforming IRS and ASW have been tightening. And while I think I understand the reasons behind that this is not a sustainable situation, in my opinion. In fact, I strongly believe that something has to give – either the real money guys are in a denial or the hedge funds have jumped on the tapering bandwagon too early. Either way, the EM curves are pricing something that is almost impossible to come true, in my view.I.e., consider the bullshit sniffed out?
FT beyond brics - Indonesia: time to panic? But see also
Michael Shaoul - Indonesia raises its reference rate to 6%. Dunno why... aren't devalued EM currencies a good thing? Is this all because of those capital outflows? Anyway, Shaoul notes "the degree to which hot money flowed into this complex in recent years, and the potential for disruption should these flows reverse".
Newmont - we're cutting staff! No shit, eh? Maybe you can start by cutting every idiot who either doesn't dig ore out of the ground, or who has no fucking clue how to read a FS and construct a mine.
Remember all the sturm 'n' drang you've heard from the media in the past few days about bonds?
Yeah, well, about that:
EMB's popped up the past few days.
Junk has gone basically nowhere for 2 weeks now.
USTs are still where they closed last Friday.
So what's going on?
In reality, people (read: hedge fund cokeheads) are selling EMs.
And they're selling China.
That's what's really happening.
Option Pit - $VIX about to go backward. This might just bee this guy feeling bearish and then applying his expectation to the $VIX. But if it goes backward you can expect a longer downmove for the S&P.
VIX for the People - Market recap for June 12. The $NYMO has already printed its severe downward spike. And the sources of market volatility (yen, Nikkei, HYG) seem to all have finished making their moves. And all the TAs have had their little downmove targets hit. So is this a bottom in the US market right here?
BI - Yen rise slamming speculators. Too many people on the wrong side of the boat, is all.
Marketwatch - Jim O'Neill says "get ready for 4% bond yields". Yeah except that's a good thing if it means the US economy is growing.
The Atlantic - here's why investors are sprinting away from bonds. Geez, this is becoming a popular meme, no?
Should interest rates rise? If the economy is improving, yes. But it will be a long slow grind higher. Not a sharp jump.Exactly. Same as with the Nikkei - you shouldn't see it go up 100% in a few months.
WSJ Moneybeat - US retail investors stick with Japan. Not just retail either:
Michael Shaoul, chairman of Marketfield Asset Management, said that his firm is holding onto its iShares position and would consider buying more shares if structural changes in Japan show signs of taking hold.Smart guys are holding on to Japan too.
“We can afford to be patient,” he said, noting that the ETF remains up about 12% this year. His fund ranks among the iShares ETF’s top holders as of the end of last quarter, according to regulatory filings.
Reuters - Emerging markets at risk says World Bank. Kaushik Basu has an interesting and calm take on things, which I agree with:
At the same time, global markets were battered this week as traders tried to read the tea leaves of when the U.S. central bank will decide to start winding down its own stimulus measures.I.e. you've got to let the coke fiends flee the scene before things settle down. Nevertheless,
For emerging markets, this market volatility should not be too disruptive over the medium term, although it could cause some capital flow fluctuations in the next three to six months, Basu said.
"(The volatility) is an adjustment trauma, in anticipation of what is going to come, and as soon as the policy change is properly in place I do expect this trauma to go away," Basu said.
What is more worrying is what happens later, as long-term interest rates begin to rise when the Fed and other central banks tighten monetary policies.Didn't mention China there. Strange.
Higher interest rates would raise the cost of capital in emerging markets, leading to lower capital investment, which causes lower growth in the long run, the bank said.
"Longer term, potential output could be lower by between 7 and 12 percent unless measures are undertaken to reduce domestic factors that contribute to the high cost of capital," according to the report.
The risk is especially high for countries such as Egypt, Jamaica and Pakistan, that have run up high debt in a time of low interest rates. If interest rates surge suddenly, these countries would face sharply higher debt servicing costs that they may not be able to manage, the World Bank said.
WSJ China Realtime - China's audit office shines light on local government debt. Read it and weep, bitches.
Reuters - Fitch warns on risks from shadow banks in China. You didn't read that article above, so I'll reprint half of this one and make you read it:
Banks are likely to be on the hook for bailing out non-banks in trouble, because the only efficient way to deal with shadow bank exposures is to transfer the risks to the formal banking sector, Chu said.
The country was already seeing defaults in trust and wealth management products that could be an early sign of trouble.
"Stress will appear in the weakest parts of the financial sector, which tend to be non-bank financial institutions on the fringe of the system - and gradually work its way inward," she predicted.
While there are some factors mitigating the situation, such as China's closed capital account, deep central bank reserves, the fact that funding is largely domestic and the main borrowers and banks are state-owned, there was still a potential for contagion, Chu said.
The foreign owners of stakes in Chinese banks already saw big writedowns on those stakes in the 2008 financial crisis and this could happen again, she pointed out.
There is also about $1 trillion in credit exposure by foreign banks to Chinese banks and corporations but this was also manageable.
"The bigger issue is what is it going to mean for growth and confidence, which could play out in a very negative way because China has been so important to the global growth story," she said.
Mineweb - gold smuggling in India. This is why you shouldn't care about the fucking 8% surtax: Bollywood movies feature major villains who are gold smugglers. It's part of the culture.
Mining.com - Your anium hits 7-year low. Insert snarky comment about how anal ysts have been saying "your anium goes up from here" for... oh... 7 years now?
Mineweb - Vietnam gold premium to drop. Now here is why EM people buy gold:
“In the long run, for the majority of Vietnamese, particularly those who have lived through the war years and the ensuing economic regression, gold is still considered as the favorite tool for saving and investment.”I.e., gold is an asset class that protects you against existential risk. And here's a quote that I'll reprint for you just cos it sounds funny:
“In periods of economic stress, expectations for dong weakening caused people to buy dollars and gold,” Matt Hildebrandt, a Singapore-based economist at JPMorgan Chase & Co., said in a phone interview on June 10. “The central bank is trying to reduce the use of gold to create more stability for the dong.”God, I hate dong weakening!
Wednesday, June 12, 2013
All this panic in the markets and yet AMAT is still strong. I was thinking about selling my tiny AMAT position to raise cash, then brought up this chart and realized "that is not the kind of chart that you sell, dummy".
JPM and GS are stumbling, but Prudential is still in a strong upward chart. I don't own any, but this is also a nice chart.
The breakdown of these two stocks is one criterion I'd apply to determining whether I should be scared of the US and world situation. Til then this is just an ordered sell-off.
UPDATE: and then today AMAT broke down. So I guess we really are going to get a correction for a bit.
A few more newsbits from this morning:
Calculated Risk - negative equity decreases, still 9.7M properties with negative equity. So there's no bubble, and there's still a way to go before housing has recovered.
FT beyond brics - Philippine exports and QE. Good point: don't worry so much about the US QE taper, because Japan is bringing their own QE onstream and that might take up some of the slack. Not that there's anything wrong with a US QE taper because it means their economy has returned to organic growth and that's a good thing. In fact, a recovering Japan (and possibly after that a recovering Europe?) takes up a lot of the world economic slack.
FT Alphaville - copper still in the pits. BNP recommends short copper. They think the premium over marginal production cost is still too high given the supply surplus.
FT beyond brics - India's falling rupee and falling growth. This is the endgame for an EM bull cycle - India's left with no easy solutions. Hard to grow when you're a corrupt nation with dirt roads and a caste system.
Here's a video explaining the recent action in the yen, Nikkei, and EM bonds:
So while we wait for that "Who wants chowder?" moment, let's review recent action:
EM bonds seem to have quit puking today. For the time being.
Japan iShares (which is NOT the Nikkei, but per its volume it's obviously a hedge fund wankfest) has been consolidating quite well.
High yield is obviously being leaned into heavily but it's not yet broken that Feb pivot.
VIX term structure is still in contango, meaning this is an orderly selloff and not a liquidity event or a massacre of the firstborn.
The caveat with EMB, EWJ and HYG is that if they all break down and collapse some more, that might flip the Wall Street world into more fear-driven panic selling.
But I'm operating under the assumption it was the crackheads who bought this garbage, and the crackheads only got the idea a month or two ago; so once the crackheads are out, these areas will settle down.
By the way: if you bought Zambian municipal 10Y debt yielding 5%, why would you puke it into non-existent bids? Your principal is guaranteed (to the extent that any bond principal is guaranteed, sure: but you're the fucking clown who figured it was a safe place to put your dough, right?), and you get a 5% yield. I mean, I could see puking it at a 5% loss to NPV, but why puke into no bids for a 20%-30% loss? It's fucking income! You bought income. You now have income.
Sure, face value might go down, but NPV to maturity doesn't change until a default event. So why sell EM bonds?
Especially into no bids?
See, this is why you need mandatory drug testing and psych tests for hedge fund employees.
Calculated Risk - no real estate agent boom. 2007 saw a boom in real estate agents, so that was a bubble; no boom in agents this time around, therefore no bubble. As an aside, I'm fucking tired of posting this type of info from Calculated Risk every day, but as long as people are feeding you disinformation I guess my duty is to counteract it by sending you to the people who know what they're talking about. If you want to help, just put Calculated Risk on your RSS.
BI - BAML client flows - hedge funds puking S&P 500. This is good. Why? Over 80% of hedge funds underperform the SPY; this means (pretty much by definition) that they're the dumb money. Point two: if this is all the pullback the SPY can experience with hedge funds puking, the SPY is pretty strong. Point three: where else are the hedgies going to invest? They'll be back.
Reuters - developing world oil demand surpasses wealthy nations. As John Kaiser would like to point out: why, then, should the US be spending trillions on projecting military power? All they're doing is providing an oil price subsidy to the rest of the world. If the US clues in about this - and the lack of pushback from the Rethuglicunts over the defense sequester suggests even the most clueless are now getting a clue - then they'll be able to save a fortune in government spending simply by pulling back from the oil fields. Imagine a US that didn't spend a fortune on military force projection. Imagine how much smaller their federal budget deficit would be. You may say I'm a dreamer, but I'm not the only one....
Reuters - Peru posts record $452M trade deficit in April. Again, I'd expect Peru should not be doing that if we're in a secular EM/commodity boom.
Reuters - Asia's ticking time bonds: time to run? Money shot is here:
But the market for trading those bonds is slowly drying up, leaving it susceptible to a sharper selloff if holders of these so-called G3 bonds decide it is time to head for the exit.Be very, very afraid. The ducks seem to be lining up. We might get that rollercoaster ride this year after all.
"The issue is that if any of them choose to sell their holdings, the market may not have the capacity to absorb these flows. If we reach a stage like that then liquidity could dry up very quickly and that can have a spiralling effect," said Dhimant Shah, a fund manager at Mackenzie Investments in Singapore.
Asia's low market liquidity could create a more explosive selloff in which a lack of trading creates a price vacuum, leading to sharper price declines as investors scramble to sell assets for cash, a scenario similar to the dark days of the Lehman crisis.
"I don't recall in recent memory bonds falling so quickly without a tail-risk event as they did in the last month," said Richard Cohen, head of credit trading in the Asia Pacific for Credit Suisse. Tail-risk refers to a sudden event that has a major impact on financial markets.
Tuesday, June 11, 2013
You point out it's been slaughtered recently.
I just posted a link to a story btw (or at least I think I did) that points out the EM bond secondary market is brutally thin, so these guys are selling into no bids. No wonder EM bonds are diving.
But what I'd like to know is what the story was that made people buy EM bonds in the first week of April.
And what was the story that made people buy it non-stop from June to October 2012?
Cos whatever it was, I think we can agree now that it was a bullshit story.
Reformed Borker (Bork Bork Bork!) - 361 Capital weekly research briefing. Blaine Rollins is about the most useful part of Borker's blog, I think. Worthwhile tidbits this week:
- High temp hiring might be the result of a Fascist pig workaround of Obamacare. Well, I guess if you have no good reason to retain your workforce the minute the economy turns up....
- S&P 500 10-day A/D is most oversold in a year.
- Again, a reminder that the bond beatings will only get worse now that the bond investors are getting their May performance info in the mail.
- He mentions the "great bond market rout of 1994" - which preceded a 100% advance in the S&P over 26 months, just so you know.
Some of the world’s biggest quant hedge funds have suffered steep losses in the past two weeks following the sell-off in global bond markets. So-called “CTAs”, which use computer models to automatically spot and ride market trends, were caught out as investors anticipated an end to the Federal Reserve’s measures to stimulate the U.S. economy, triggering a global rout in fixed income investments. Bond yields have risen sharply from some of their lowest levels in decades in the past fortnight, leaving funds with large holdings badly hit. Many quant funds have been major buyers of bonds over the past few years as their algorithms have followed yields lower. “Since mid-May it has been a perfect storm of some of the biggest trends in markets reversing all at once,” said a senior manager at one large quant fund. “It has been particularly brutal.”There is no such thing as a stupid computer... only stupid people.
Bespoke - more on the spike in mortgage rates. Ouch, the 30-yr really went up, eh? Wow, from 3.4% to 4%? Hey Joe Sixpack: does a 30-year 4% mortgage rate make you not want to buy a house all of a sudden? Til I can find further info on this topic I'll assume it's just another artefact of hedgie panic.
Calculated Risk - SoCal May home sales highest in 7 years. Obviously the spike in 30-year rates of 0.6% (!!!) hasn't killed the home buyers' market. And I like how people will see the headline and go "hm... since 2006? OMG that wuz teh beginn of teh endz! SELL SELL SELL"
JC Parets - is this the end of EM underperformance? Again with the charts over-riding fundamentals. And I don't know why this mad risk-off scramble of the hedgie cokeheads should resolve into EM bullishness... that doesn't seem plausible. Though, to be fair, why should the death of China kill EMs if the US economy is improving? Heh... I forgot, EMs have now hit their TFP limits and are now embroiled in various credit, budget, political and fast-funds crises. That's why.
FT beyond brics - LatAm currencies getting walloped. Quote:
“You have a huge stock of liquidity compared with secondary market trading volume,” says Morden. “Even a little slow leakage becomes very extorting and causes a huge movement in pricing.”So... yet again some coke-headed manic fucknuts have taken a position larger than the market. Tell me again how intelligent Wall Street is, compared to the average CNBC-watching suburban momo.
PS Dave - Vancouver Venture bullion contest! A shiny new half-ounce First Majestic silver coin (probably paid $50 retail, now worth something like $9 melt if you act fast) goes to the person who can predict when Rio Alto mining stops puking. I already see a flaw in this cunning plan, Baldrick:
The winner will be announced when Rio finally capitulates and reverses the trend with a double bottom or a hammer candlestick.God, that's it? A hammer, or a double bottom? How about getting back above its Bollinger mean, or above its SMA(50)? I mean, you want to pick the "stops puking" point and not just the "temporarily suspends puking to catch its breath", no?
Then again, if you're only doing this to get the funds who are vomiting Rio to tell you when they're stopping their selling - that is clever.
BI - Tuesday afternoon market update. Basically, the yen shorts are getting pulverized into a warm foamy goo again, so obviously everyone else should sell everything and go live in an abandoned missile silo in Idaho with 100 tons of MREs.
Pragmatic Capitalism - the 3 worst financial predictions of the last 5 years. Hyperinflation is #2. But yet some people still want to associate themselves with that prediction.
Bonddad - is the monthly NFP bullshit? He clarifies what the NFP really is, for the people in the press and financial industry who obviously have no clue because they consider it so darn important.
Michael Shaoul - Spanish house transactions for April. An improvement on a hideously low number. Shaoul's bullish Spain.
FT Alphaville - here's the thing about Abenomics. Credit Suisse about Japan and the difficulty of demographic determinism. I wonder when those bozos will realize that the same problem also exists in China right now?
Mineweb - lack of cash with the miners. Ernst & Young out with yet another uproariously enjoyable report about the state of the mining industry.
BI - Email us with your own accounts of how much Ed Snowden sucks! Blodget really screws the pooch on this one: his extensive journalistic experience allows him to track down a real Secret Service agent, who (because the Secret Service is tasked with protecting the President and not anything to do with electronic espionage) can confirm what we all know, that Ed Snowden "is a douche", a "traitor", and a "coward".
After all, it's not as if the government (heck, and even the Republicans) has thousands of paid workers spending all day posting things on the internet for political purposes, right?
And Blodget most definitely saw this "Secret Service agent"'s credentials, and is a competent enough journalist to know how to verify them, right?
And it's not at all weird that this "Secret Service agent" says nothing of value in his letter other than "Snowden sucks" and "go USA!", and yet he can get it posted on BI, right?
Anyway, Henry Blodget encourages other "secret agents" to email him with their own tales of Edward Snowden, at email@example.com.
Seriously, he did that. And it doesn't seem to have been a joke either.
Now, I know for a fact that I myself have several dozen readers who are members of the NSA, CIA, FBI, MI6, Mossad, FSB, GRU, and even FAP.
Maybe you guys would be interested in emailing Henry Blodget to tell him your own, quite verifiable, certainly true and not made up, not meant to be hilarious or funny, tales of how the government isn't really spying on everyone, just the terrorists? And PS Snowden is a queer?
Because after all, he knows how to verify sources, and he's not at all a sucker who's going to be used by the government, or the Republicans, or even just any clown with the ability to hit "send" in an email program, for the inevitable character assassination that the US is going to do on Snowden.
I already sent mine off, confirming to him that I'm from the NSA, and I use my secret powers to determine when Blodget's not at home so I can bang his wife.
Oh, and by the way...
This is Edward Snowden's girlfriend. Read it and weep, Blodget.
Our favourite whoopsie of 2012, Lupaka Gold, spiked yesterday:
Which must be a welcome change for those who have been holding this thing since 90 cents.
The spike saw an IIROC trading halt, and resumption a little later.
A dude on Stockhouse pointed out that it's because a German newsletter just issued a pump. And maybe that screwed up a bit of the German market-making.
Another dude on Stockhouse posted a Google Translate of the pump in question. I won't repost it since obviously you can get naughty naughty spanky bum-bums for freely posting a subscription service's writeups, but if you follow the dude on Stockhouse link and hit "newer" you can see it for yourself.
The things I found notable in this report were:
* the writer says it was "confirmed to him" ("off record" I guess, since I'd think it would be material information) that several companies are interested in Invicta. This is a large land package, sure, but it's also (from what I remember) one confirmed set of small deposits, its grade distribution didn't impress me (go up the cutoff grades chart and see your gold disappear), its topography doesn't impress me (looking at the site photo made my fear of heights act up), and apparently you'll never see a leach pad built. Which makes you wonder how a buyer "could go into production in 2-3 years!" Or why anyone would buy it for more than LPK already paid for it.
* guy says Invicta is awesome cos there's a possibility of a lot more gold there. Plausible, but I'd think it would take years to do the geo simply to identify more targets. Wanna hold an exploreco thru years of initial geo?
* Lupaka recently added two guys to the board. What a way to add value!
* they're "all in agreement" that Crucero could have up to 20Moz of gold!!!!1!! Because the writer must have seen that famous IP map with the big purple spots on it, with "eleven promising anomalies" written in crayon, and that's how easy it is to find gold. Thus the discovery drilling they've budgeted for the rest of the Crucero anomalies this year... oh, wait....
* he assigns actual value to Antakori because OMG something something takeover. I wonder why he didn't visit Antakori during this nice Peruvian vacation?
* actually, just looking at this again now, it seems to me there's a hint in this writeup that LPK might be considering yet another AAG-style overpriced all-share buyout. Which worked out so well the last time.
Overall, the German author in question seems a very excitable fellow who hopefully had the foresight to pack an extra pair of panties for the LPK site visit.
UPDATE: Kipper the Keenmeister has his own take at mining.com. But he's not as funny a read as I am.
UPDATE 2: Kissy-buddy down in Peru asks his own question on the topic. He's also not as funny a read as I am.
It's a bloodbath, a bloodbath I tell you!
Well, actually... in the past five days there has been NO bloodbath in high-yield. In fact, we're seeing some nice big white candles being printed, which tells me the intelligent people are letting the cokeheads puke and then butting in front of each other to scoop up the deadly deals produced. Meanwhile HYG is back to where it was at the beginning of March.
And look at the bloodbath in USTs!
Well, a 1% loss over 2 weeks isn't that bad... especially considering it also counts as a 1% loss since February.
By the way, what was that story that made USTs go up from Feburary to April? Was it that everyone was worried that the US economy was sputtering and in danger of falling into recession, because nobody bothers to read Calculated Risk and Bonddad to check up on US economic indicators like employment and housing?
Cos if that US recession narrative is dead, then all IEF has done is fall back down into its longer-term gently-downward channel.
But cokeheads get excited and suffer from memory loss.
Ritholtz - "Markets collapse on Turkey unrest". Like he says, it's as good an explanation as anything else. Quote:
Hence, with the focus on risk assets and speculation, the market moves seem to have an outsized mindshare of what’s covered in the media versus their relative size and import — versus what really matters — these days.
Reformed Borker (Bork Bork Bork!) - are you ready for Dow 150,000? Well, yes, at the end of the next secular bull move, absolutely. Though I think it won't be a 15-year move.
Ritholtz - on Meredith and Monica. The second part of the article doesn't interest me at all, but the first is the best wake-up call you'll read this week:
It was, I guess, a rude awakening for me when I realized, many years ago, that most of the talking heads I saw on TV had no idea what the hell they were talking about. The sooner one learns that lesson, the better. So, take it from me (and BR, who says the same thing): Figure out who’s on their game and who isn’t; who’s got an agenda and who doesn’t. Stick with those who are consistently good and occasionally great, jettison the money-losers and ideologues. Finance is not the place for one-hit-wonders. (How do you wind up with a small fortune on Wall St? Start with a large one. Or follow the money losers because they deliver a message you want to hear, not one that will make you money.)
Now, to be clear, there’s a difference between being wrong and being ignorant (though some folks are often both). And there’s yet another, more insidious category: those who deny they’ve ever been wrong, gloss over their mistakes, don’t learn from them, or perhaps pretend they never happened. Being wrong is one thing, staying wrong is another; there’s nothing wrong with the former, everything wrong with the latter.
Buttonwood - rough trades. Basically they're pointing out that all the volatility is down to hedge funds running in and out of popular trades. Good paragraph here:
We are in a world where there is very little yield on offer, and thus a limited amount of "carry" to exploit (the gap between high and low-yielding currencies or bonds). The natural trade for a hedge fund is to go long the high-yielder and short the low-yielder; this creates a source of income that generates positive returns (in the short term at least) and justifies the fees. But we are also in a world where central banks have "nationalised" many markets, and investors must spend time in the Kremlinology of deciphering the comments of Messrs Bernanke, Draghi and Kuroda. A change of emphasis here, the wrong sentence there - and managers rush to switch positions.
WSJ Japan Realtime - Mauldin literally bets his mortgage against the yen. And when that doomer joins the parade you know it's a yen bottom.
India Reuters - Indian shares see biggest outflow in 3 years. "Sell EM" has become quite the popular trend, eh.
Dragonfly Capital - EMs ready to show some strength. I am unconvinced, given all the bad fundies I've been seeing, and that this fellow is betting based on a channel he sees in a SPY:EEM chart. Perhaps this fellow should read the below articles from far more intelligent sources:
FT Alphaville - swimming naked in China. If you haven't heard of China Everbright Bank, please read this article.
Michael Shaoul - China DOOOOOM and OMG China DOOOOOOOM. Killer quotes from each article are:
China's economic growth is now wholly dependent on its internal real estate and infrastructure spending, which in turn are driven by excessive local credit growthand
The danger now is that credit starts to shrink more rapidly, with the back-up in global yields threatening corporate bond issuance on top of regulatory efforts to slow bank loan and shadow banking activity. Should this take place China's internal liquidity may start to deteriorate quite rapidly.Those are scary sentences to me. It suggests that the China collapse is coming which 2 years ago I said would herald the end of the commodity/EM cycle.
BI - Mohamed el-Arian on "market sucking sounds".
As commentators focus on this early morning’s price action, including some notable gapping dynamics, investors are well advised to keep an eye on underlying market liquidity. The “sucking sounds” of prior days are getting louder as four factors come together. And while not a "Lehman Moment," investors should be careful as such nasty market technicals can feed onto themselves.
Dislocated liquidity conditions -- as in wider and more volatile bid-offer spreads, considerably less intermediation appetite among dealers, etc. -- are cascading down from the most levered market segments. The direct and immediate causes are:
* Greater market volatility forcing more formulaic and VAR-based accounts to reduce positions in an accelerated fashion
* Crossover investors trying to get back to their “home asset classes,” and finding it hard to do so in an orderly fashion
* An outflow of funds from mutual funds and other accounts; and, of course,
* Reduced willingness among dealers to make markets and, in the process, resisting to hold much inventory
In essence, the liquidity underpinnings of markets can no longer support the overall positioning of investors overly comforted by the prolonged and repeated interventions of hyper active central banks using experimental policies.
Determining whether this is just a temporary blip or what economists call a “multiple equilibrium” (i.e., rather than mean revert, an unpleasant outcome increases the probability of a subsequent worse outcome) is essentially a call on two main issues: the health of the underlying fundamentals relative to market pricing, and the availability of balance sheets to step in with stabilizing liquidity.
Given current indicators, this periodic phase of dislocation in market liquidity -- and they do occur occasionally -- is likely to continue in the immediate period ahead.
In the process, look for some attractive pockets of value to emerge.
Volatility is up. I don't know why, so I'll blame Keynesianism.
Happily, the panic reaction to a 1% drop in SPY futures gives me the opportunity to scare you all even more by mentioning unquantifiables like "multiple equilibrium", "market liquidity", "'Lehman moment'", "dislocated liquidity conditions", "cascading", "accelerated", "underpinnings... can no longer support", and "unpleasant outcome".
PS Mo, the plural is "equilibria". Learn to speak English, you dirty foreigner.
Monday, June 10, 2013
I wonder how Lumina Copper's doing?
"To shreds, you say! Well, how is his wife taking it?"
"To shreds, you say!"
I think some smart-alecky fellow who's significantly less rich than Ross Beaty once gave a very low price target where he'd be interested in again buying LCC. Was it $6? Or maybe $5?
$5.50-$6 is obviously critical support on the weekly.
So why's LCC dropping yet further? Has Argentina become an even worse place to mine?
Or is it "the end of the commodity supercycle", and you'll soon be able to buy LCC at $2.50? Or $1?
Anyway, I couldn't find a video of Professor Farnsworth doing "To shreds you say!", so instead here's Zoidberg's slinky:
And here's my reaction to the idea of investing in the junior miners right now:
Look at Nevada Copper:
I made money on it last year, again thanx Otto (who didn't buy cos he's a wuss).
I haven't followed any of the newsflow recently, so I have no idea what's up here. And if I remember correctly, it is nearly majority-owned by some Russian with a Bailiwick of Jersey bank account, which I don't like to see (cos I don't do business with Russians you know).
But I guess if you think copper's bottomed, and if you think copper action will be positive like it was 2 of the past 3 summers, then this might be something to look into for a quick money-maker?
Maybe this "commodity supercycle" narrative is overdone for the time being (like "Nikkei to da moon Alice" and "Yen to 120" and NBG and GREK and "short HYG" and "short Treasurys" have all been overdone), and the time is ripe for a bit of positivity about China that brings back the suckers for one last boost of the base metals?
I doubt it, but you never know.
Rio Alto is oversold on the daily.
Rio Alto's also grossly oversold on the weekly. BTW, I remember buying & day-flipping during a fun short attack at around $1.60-$1.80 - maybe that was November 2010? I thought it was such a deadly deal back then, and it didn't have a mine.
Oh, and gold in Nov 2010 was around $1350 or so. So today, for the extra 70 cents, you get an operating mine. Whose operating grade is over 50% better than what was originally expected (I think the RC drilling happened in 2011).
I had thought maybe the selling of RIO was because the Andean markets are diving, what with the "end of the commodity supercycle" and Rio also being an important BVL listing... but it really doesn't line up that well over the past 2-3 weeks.
PS Dave posted in the comments last week that it looks to him like a fund is unwinding its position in Rio. Well, if so, it's kinda fucking sad that they took such a large position that they became the market, no? And what fucking signal are they using for their stop loss: the weekly EMA(1000)?
Looking at this insto ownership list on NASDAQ, It looks like everyone bought RIOM because... because... because gold or US listing or something? Now there's up to 76 million shares that have to be unwound. How many of these guys are selling because they've read in the FT about the end of the commodity supercycle? Eesh.
I have no hankering to ever own a gold miner again generally, but I would buy RIO again - given the right macro. It's too cheap now for today's world problems. But I'd buy it after all the selling is done. Not now.
BCM also went through a bout of severe fund puking last year, if you remember. Yes, I made a great pile of money on the flip (thanks Otto, it was one of my 3 best trades of 2012), but it would have been even smarter to wait til after it stopped diving.
Sunday, June 9, 2013
New Deal Democrat - weekly indicators: moving forward in first gear. The US is still slow. No surprise there, but a downtick from moribund could certainly spook the market this summer.
Barry Ritholtz - the smartest man in Europe. Now even Barry's intrigued by the idea of investing in the Euro periphery. I guess we have to keep an eye on EWI, GREK and EWP for the inevitable 100% surge that'll come when all the hedge funds decide to pile in.
India Reuters - China trade data underscores growth worries. You've been paying attention to what I've been saying these past few months, no?
India Reuters - China major commodity imports rise in May. Still, this doesn't exactly convince me, and it certainly hasn't convinced the market. But it is still a counterfactual.
Wikipedia - Coursera. A hot chick asked me why I don't go back to university and do a Ph.D.; I explained that I don't need that piece of paper. She said "but you're so smart, you can learn so much" and I said "why should I?" Fact is, universities have been paper-printing mills for decades now; they're no longer contributing at all to the benefit of society. And thanks to the internet we are now seeing the death of the traditional educational institution in favour of massively online learning. I think this is transformational, and will be one of the great stories of the 21st century.