Saturday, June 22, 2013

"Gold COT Data Show Bottoming Condition"

Tom McClellan, CMT, wrote an article on the 14th of June, where he noted the Commitment of Traders report showed "a bottoming condition" for gold.

Here. Go read the article.

Since then, you might have missed it, but gold lost another $88.

Now tell me how important the CoT data is.

The only thing that matters is price. Price and volume. The only two things that matter are price and volume.

Let me know when those two are acting bullish, m'kay?

Hey, Todd Rundgren is 65 today

So Todd Rundgren turned 65, and I managed to track down a high-quality video of an entire concert from 1981.

So here's Todd Rundgren's Utopia:

Some weekend reading

Some articles I happened across last night:

Reformed Borker (Bork Bork Bork!) - so was that capitulation? Two >90% down days in a row has usually been a great time to buy during the past few years. And I'd like to add that I was watching the $VIX curve all day both days, and it tried and failed to backwardate; that makes me feel positive. But this dude is still scared and would rather wait til S&P 1550-1575.

Krugman - a potentially tragic taper. Well, that's interesting: Krugman coming out against the taper. I think he might be letting his Keynesianism run amok here. After all, this Fed program is an extraordinary policy, meant to combat an extraordinary situation - not just an average recession, but a major aggregate demand crisis. Once the US monetary situation is no longer extraordinary, and has clearly evolved into the beginning of a typical recession recovery, why shouldn't the Fed cut back on the extraordinary measures and just use normal monetary policy from then on?

Calculated Risk - more thoughts on tapering. Bill McBride has already been screaming from the rooftops that the criteria for tapering have been made patently clear to even the most casual observer. I wonder how he'd respond to Krugman's worrying? I hope he does.

Pragmatic Capitalism - the inflation predictions weren't just wrong, they blew up portfolios. Oh my! Now Cullen Roche has joined the pile-up on the goldbugs! Quote: 
The thing that really drives me crazy about this is that so much of this has come from the ideologically driven groups who were really selling nothing more than fear and hatred of the Fed and the government. Look, I know the government hasn’t done everything right and I am certainly no Federal Reserve apologist, but that doesn’t ever justify bad analysis and specific portfolio recommendations that are simply irresponsible. And that’s all we’ve seen here. People selling an ideology based more on politics than knowledge….
I agree 100% and I still shake my head when I see otherwise reasonable people continuing to base their "analysis" on the dog-whistle talking-points of the economically illiterate American right-wing.

FT beyond brics - Turkey: on the scimitar's edge. Relevant to me cos Greece - I was wondering why NBG was continuing to puke, and it might be because of Turkey.

FT beyond brics - the EM selloff. A lot of money is leaving the EMs, and the question is which funds are going to have huge losses on their EM positions. Similar to Shaoul's point about the bond vomiting possibly worsening in July when the poor muppets open their monthly statements and see how badly Bill Gross and friends have chainsaw-assraped their life savings.

Michael Shaoul - China money market update. I'm sorry, but while I think Shaoul is way smart, I suspect he's not all that plugged-in to the reality in China, e.g. compared to Bill Bishop. He also seems to be suffering from Whitey Disease, assuming that the Chinese leadership who engineered this crisis are too stupid to see it through without causing destabilization. Sorry, but the leadership already have made it clear that destabilization is the ultimate sin against The People; I have to assume that they've got this entirely under control. In any case, it seems to me to be exactly what someone smart, foresighted, proactive and ruthless would do.

FT beyond brics - the China credit crunch. Quote: 
If Beijing simply wants to slow credit growth by a few percentage points, this month’s scare tactics may prove sufficient. But if it really wants to force banks to come clean about their business, including property lending, own up to bad debts and adopt more transparent practices, then the government might decide to drive a few smaller banks to the wall to hammer home the point.
Personally, as I think I've said before, this looks to me more like an attempt by the Chinese leadership to flush out Ponzi WMPs, insolvent manufacturers, and (maybe also) insolvent local governments. Those are the real enemy; if a particular bank is crippled by bad debts, why should Xi & Li give a shit? They can leave that bank to sort things out (or fail) on their own, fuck 'em. Quit assuming China has Whitey's problems.

Mineweb - what might Chaturmas mean for gold prices? Adrian Ash from Bullionvault surprises me by noting that India has something to do with gold prices. Anyway, we now enter a slack period for Indian demand; combine that with the present crisis in China, and the reasonable expectation of more outflows from GLD on price weakness, and you can expect gold's action to paint a very sad picture for the next few months. Sucks to be you guys.

WSJ Moneybeat - gold miners take a beating. Quote: 
Analysts said many gold producers would have to make tough decisions ahead after the latest rout.

“Prices are now well below the top end of marginal costs for higher-cost and some small gold producers,” said HSBC analyst James Steel.

Gold miners have already been cutting back wherever they can. Newcrest earlier this month said it would slash costs by 20%–which includes lowering “discretionary” spending on scoping studies, trimming its exploration budget, and focusing more on lower-cost mining activities. It is also closing its Brisbane office and cutting jobs.


But further cuts may now be needed. “At the very least expansion plans are likely to be shelved and although larger producers may be able to struggle on and meet production schedules at these prices, it is unclear if smaller ones can keep output up should prices fall further or remain low for a sustained period,” said HSBC’s Mr. Steel. 
Now, I don't like the idea of poor present net demand (as evidenced by the price) leading to shuttered production, because it means when gold demand does come back there'll be an overhang of production that can come back online: so even after the tide turns gold's price will stay pinned, at least for a while.

But you still have to ask yourself: long-term, will the future see net gold demand of much over 4000t/y ever again?

I think it's very reasonable to answer "yes": perhaps not from ETFs, at least until the investor class has been given a few years to forget the recent carnage. But the more that Indian & Chinese growth stalls, I figure the more it'll lend credence to Indian & Chinese trust in gold as an asset class; so when their net per-capita personal wealth generation picks up again, they'll buy gold again, and the net worldwide demand will come roaring back to higher than what net supply can meet.

And if that happens, and gold price gets strong, I bet the American hedgie momos will pile back in, and thus you get net money inflows to GLD again, and thus there's yet more demand to add to the equation.

And by then there won't be any new gold to mine, cos the exploration business (at least in the Western markets) will have died; and the operating miners will have chewed through several years of reserves at break-even prices.

So in the very long-term, barring any technological innovation that makes successful exploration trivially easy, I don't see why anyone would be concerned about gold. It goes up from here. Eventually.

For the next few years though things might begin to really really suck.

Vancouver Venture - update on the "how low will RIO go" contest. Whoopsie... I have no idea where I said RIO would go to $0.60, but I guess I'm now on record. Oh well... the next highest to me is some guy with $1.68 as his target, so I think I'm guaranteed to win that one.

Wow... a shiny half-ounce silver coin, and it's all mine! I think I'll grind it down to a fine powder and use it to treat infections.

Friday, June 21, 2013

Elliot Wave - making money on down days since god knows how long

I once made the mistake of signing up for that Elliot Wave mailing list, so now every once in a while I get their special offers to buy their idiot analysis.

Today, this was the quote they started their email with:

"Declining C waves are devastating in their destruction. There is virtually no place to hide except cash. Illusions evaporate, and fear takes over."

Ooh scary!

So I guess this is why the goldbug hard-money doomers will be watching today's market, chanting in unison "crash! crash! crash!", cos finally gold will be proven right and the S&P 500 will have been proven just an illusion.

Here's the rest of the stupid Elliot Wave email:

I help oversee Bob Prechter's account on Twitter. Early this afternoon he decided to tweet the quote above. He believes it is exactly the right reminder, on a day when stocks, bonds and precious metals have seen huge back-to-back down sessions.

Bob co-authored Elliott Wave Principle 35 years ago. Those were the days of "paper and ink" publishing. Now his words move on Twitter at nearly the speed of light across fiber optic cables and cell towers.

Technology changes but the patterns of investor psychology do not. At the degree of trend Bob is describing, this "declining C wave" is massive. You deserve to understand exactly what he's talking about.

And then a link to a page where you can buy their idiot service for $60/month.

I guess that they use down days to sign up as many doomers as they can?

Open letter to PS Dave

I felt very sorry last week that I had apparently convinced you to puke your Corvus position when it finally got back up to 75 cents....

But now that it's back to $0.60, on real volume unlike the fake manipulation-style run-up of last week, I don't feel so bad.

Noon checkup: do bonds still suck today?

Yup, still 3SD down.

Yup, still 2SD down.

Yup, still 3SD down.

Conclusion: Hedge fund cocaine addicts still vomiting bond ETFs.

And therefore they are also vomiting US equities. Cos... something something, I dunno. I guess you can't puke a lung without also puking the corresponding testicle.

Blog stats fun, possibly drunk at 11:30 AM

1700 page views yesterday! That's about double my long-term average.

What's funny is that even though a nonzero number of views came from IKN (who plugged me twice on Thursday), much of the extra traffic this time seemed to come from the greater intarwebz.

Am I now the go-to source for insightful intermarket analysis?

Or was it just goldbugs wondering what the fuck was happening to all those great gold stocks?

Again, as a refresher, here's the same warning I have made several times:

If average daily pageviews reliably stay over 1000, I will monetize my blog. Seriously, I hate ads more than you do, but I do still covet that $50/month I could get from from Google.

I use Adblock, Ghostery and Noscript, so I never see ads anyway. So what do I care.

If, after monetization covers my blog in hundreds of penis-enlargement ads and free offers from Elliot Wave, the pageviews still increase, and eventually go over 2000, this will be turned into a subscription-only pay blog. Of course the villainous clowns and reprobates who are polluting the comments section right now will get free lifetime subs; but future villainous clowns and reprobates will have to pay.

As Quagmire says, "ugly chicks need loving too! They just have to pay more."

After all, the only dependable way to make money in the market is getting people to pay you for your stupid opinion - whether you're some newsletter writer plugging stocks, or whether you're Kyle Bass charging a bunch of muppets 2% & 20% to significantly underperform SPY. The real money is in getting people to give you money (as IKN just noted today, this holds on the TSX:V as well).

And I wanna fucking be on TV. And they don't let you on TV if you don't make money off of other people.

Just imagine if I was on TV. 

I wonder how a TV appearance is construed by a restraining order. If the bitch watches BNN can she tell them to keep me off the air?

Morning news

Hey look, gold and silver have bounced back. Are y'all buying up all those cheap shares of BCM and BTO and RIO and LYD? Eh? Are ya?

The best post I saw last night was from Barry Ritholtz. He used the phrase "taper tantrum". That is what is needed to smarten up this market - a witty phrase that makes people realize how childish they've been, puking USTs just because one day before December the Fed might start reducing the size of its asset purchases, assuming that the US economy continues to improve.

Anyway, here's some news articles from last night, then I'm probably off to do things, though it's a bit hot and sticky outside.

Bespoke - market crash hits the mainstream. Yesterday's action hit the front page of the Drudge Report. Thus you know the move is now done. God I love Bespoke... I should subscribe again. Their cold unemotional data is a great antidote to all the bullshit out there.

Oh.. plus their stock picks aren't gold miners.

Vix for the People - market recap. Thinks we're nearing a tradeable bottom.

Calculated Risk - four charts on Fed tapering. The Fed has quite fucking clearly communicated its criteria for the taper, and the press and the hedge fund cocaine addicts are just being fucking assholes for accusing them of bad communication! In this post, Bill McBride puts the exact criteria for the taper into charts, so that even a coked-out psychotic hedge fund idiot can see exactly what the criteria are.

Blood and Treasure - we're all Dengists now. Hilarious blogger, swears well, worth reading if you want to pad out your RSS's entertainment section. He notes of the PBOC and the liquidity strangle:
For many years, critics of China who identify with this mythical phoenix like creature called ‘the markets’ have been telling China that it needs to do something about its debt problem. Eventually Beijing, says ‘Oh, OK’ and deliberately stages – not allows to happen, but deliberately stages – a Lehman event across its banking system. This was not a response to a crisis: the PBOC could have pumped more money into the system this time just as it had done before. It’s an act of will.

And ‘the markets’ promptly crap themselves, though I don’t know if this is actually serious or that ‘granny just saw a flasher’ response that you seem to get a lot of. Actually, what the folk on the trading desks have been exposed to is something that people in China have known for a long time: this is how China solves its problems, with brutal and ruthless fixes. Ok, we have a problem. We also have absolute power. HULK SMASH.
Dunno how true it is, but it's a wittier summation of one possible explanation than anything I can come up with.

Geez. I've really let myself go downhill.

Sinocism - last night's newsletter. I think Bill Bishop is still dunning for money (he seems to think he should get paid for blogging... you're an awesome source, Bill, and should get hired as a consultant analyst by a whole bunch of folks; but dude, this is blogging). As for the China doom, he says:
not good what has happened this week, but not as dire as some of the unhelpful, hyperbolic commentary from some Western pundits/blogs like Zero Hedge et al would lead you to believe. Even Bloomberg TV said this morning some of Thursday’s comments were “overblown”.
Always important to be reminded when we fall into hyperbole.

Friday videos - Rush's "Xanadu"

It's not actually very well known, but Neil Peart meant this song as an analogy about the perils of pursuing the gold standard.

Thursday, June 20, 2013

Another little grenade for you

So there's this communist bullshit called The Law of Supply and Demand.

And here's a chart of gold holdings. From a couple months ago, but the numbers are probably still in the ballpark:

Say around 2400 tons still in ETFs.

Per-quarter worldwide gold demand is around 1000 tons.

That 2400 tons in the ETF is, if liquidated, surplus to the rest of the gold production happening right now.

If you assume worldwide gold demand can remain constant, that means you assume:

- there is no more new gold production coming onstream, and no gold production taken offstream.
- EM central banks can continue buying even though their trade surpluses are disappearing
- Indians will continue buying despite their economy stalling
- Chinese will continue buying despite the new war against the moneyed classes there
- and everyone will want to buy gold even as it keeps falling lower.

OK, I won't complain if you assume all that.

You can bet more ETF gold will be liquidated, cos the price has gone down, and that is a signal for ETF-owners to sell.

So how many years of depressed prices does it take to chew through most of GLD? Or even half of GLD?

What does that surplus of "production" coming from the ETFs to do the gold price?

Seriously, does it take a fucking genius to understand this?

End of carnage news

I'm probably going shopping tomorrow or something, so don't expect much chatter from me for most of the day. Market's probably going to puke more, since apparently it's Dodecatuple Witching or something. If I get home before 4PM and see $VIX up in the 30s or 40s, maybe I'll buy a short VIX for the weekend. Cos I'm stupid that way.

BI - observations about the market selloff. A rare nugget of gold (fnarr fnarr) in the black slime of Business Insider. A guy actually looked at the trades happening today and figured out what is going on: it's all bond funds and ETF selling.

Again: the hedge funds who bought the May top are now puking their guts out. Because the Fed's $85B/month asset purchases are going to begin to decrease sometime in the next 6 months. Maybe. And therefore awesome housing data and US GDP growth get discounted in favour of... fuck, I dunno.

These are the guys people pay big money to, to manage their wealth. What's left of it.

Reuters - Anatole Kaletsky: are markets making another blunder? Reade the entire thing if you want to read a good stern talking-to, but this long quote sums it up nicely:
Given that the Fed forecasts published this week were substantially stronger than the expectations of most market economists, the conclusion that logically follows is that tapering will only happen if the U.S. economy does substantially better than investors currently expect. In other words, either the economy will surprise on the upside or the Fed stimulus will continue at full steam. The one contingency that Bernanke explicitly and repeatedly excluded was that U.S. employment growth would weaken and monetary stimulus would simultaneously be reduced. Yet this is precisely the outcome that many investors and analysts now seem to expect.

Is it really possible that markets have simply misinterpreted something as important as Bernanke's comments on May 22 and are continuing to do so, despite this week's clarification?

Such a suggestion may seem preposterous to believers in the omniscience of efficient markets, but financial markets have made plenty of spectacular mistakes in the past.

The blunders in the ten years to 2008 were mostly on the side of over-optimism: the bubbles in U.S. mortgage bonds, housing and before that internet stocks. Since 2009, however, financial mistakes have mostly been in the opposite direction: refusal to acknowledge the powerful bull market that started in April 2009, exaggerated expectations of a euro breakup, and most recently the unwarranted market panic over U.S. budget deficits and the "fiscal cliff." The instant reaction to Wednesday's comments by Bernanke looks like the latest example of such a bearish blunder.
Or, y'know, you can go over to that goldbug blog and listen to Mr. Hard Money admonish the modern finance system for using debt and leveraging. Cos he's smarter than them.

Calculated Risk - Philly Fed indicates expansion in June. Enough terrible manufacturing numbers have come out of the US that a few good ones might just catch everyone on the wrong foot.

Michael Shaoul - US existing home sales. Quote:
The evidence seems clear that the US housing market has strengthened considerably over the first half of the year and continues to run well ahead of expectations. 
But feel free to ignore hard data in favour of that goldbug blogger and his charts from ZeroHedge, who spent the past few months calling for a commodity resurgence and not a China collapse.

FT Alphaville - Chinese monetary policy with Maoist characteristics. Digging very deep into political statements in order to suss out clues to this China situation. Quote:
[...] it all suggests this is a very deliberate move to direct China’s credit into more effective investments — things that will actually make some kind of return, rather than requiring debt rollovers and the like.
Heh. In which case, maybe this is US 2006, and they're trying to avoid US 2008?

Reuters - Peru central bank trims GDP outlook. I'd have to defer to someone with a clue on the topic of whether the Peruvian economy is vulnerable in the face of continued weakness in silver and copper. Then again, maybe China avoids US 2008, and we never get that smoking ruin we're awaiting in the commodity complex?

Grandich has quit junior miners

Grandich has quit blogging junior miners, and I guess is going to work in financial planning or something?

Here's his post.

Don't you dare call this a bottom tick.

Quickly, some miner charts

Nothing needs to be said. Down 30% in a week.

Oh dear. Almost 20% in one day.

BTO seems to be holding up.

There's another one that's dead.

Another one that's down 30% in a week or so.

The moral of this story?

From now on, wait to call a bottom til it's behind you, and let someone else make the first 20% on the coming upmove.

Really honestly I'd be happy to buy BCM at $1.34. But I'll be happier at 50 cents.

Checking in with VIX

3:18 PM, the toddler snit continues, so let's check in with $VIX:

Obviously it's up. Though 20 isn't that bad, is it?

The curve is getting awfully close to inverting, which I guess means the Sturm und Drang is really starting to hit.

Oh well. Think of it as a chance to trade, eh? So, apparently XIV is what you buy when the $VIX has peaked and the curve inversion starts to turn back around, right?

IKN grossly overcomplicates things

IKN today posted hold or sell your junior: a guide.

Again he grossly overcomplicates things. Here's my take:

Loads of sound and fury signifying nothing (except for China DOOOOM)

More later. Here's some for now.

Reformed Borker (Bork Bork Bork!) - Hey you! I'll just reprint it in its entirety cos me and Josh are best buds.

Hey you! Guy who runs the largest bond fund on earth...what do you think of buying bonds here?

"We think it's a great time to be buying bonds!"

How about you? Guy who writes books and newsletters about gold and does investment banking for junior gold miners and sells gold to retail investors - is gold a good buying opportunity here?

"Sell everything you own and buy gold, more and more."

And you! Emerging markets fund manager - what do you think of emerging markets stocks right now?

"Back up the truck."

Thanks guys!

Ritholtz - Really? With Ben and Janet. Again with the sarcastic response to the 24 hours of crack withdrawal that we call this week's market.

CNN Money - Bernanke won't blow up bond market. How dare this person inject sense into the discussion! Sell! Sell!

Bespoke - yet the Philly mfrg surprised to the upside. OMG NO SELL SELL

Michael Shaoul - China hardens policy stance toward financial sector. Quote: " the odds of China slowing sharply later this year have appreciated considerably in recent weeks". Now read the entire article - though I'm suspecting that Shaoul is dooming a bit too much on China.

FT Alphaville - is the interbank strangulation a Chinese policy move? Well, if the banks didn't play ball with the party overseers before, then this is the way to respond to ensure things get done right: strangle the entire system, then when each bank goes into crisis determine if it's one that should be saved.

I was opining to Jojo this morning that China's leaders seems to be pretending they're in USA 2006 (which maybe they are), and trying to head off USA 2008 by taking a baseball bat to the knees of every bank that refuses to clean up its act. This is a good thing, since it means avoiding 5 years of QE, and possibly even avoiding a 50% stock market collapse. The former would just blow another bubble, while the latter is socially/politically unacceptable in China. Interesting idea?

FT Alphaville - is the interbank strangulation an end of a Chinese carry trade? Interesting point. But Kaminska tends to overcomplicate things.

Bloomberg - EMs crack as $3.9 trillion runs for the door. The increase in US bond yields would have a knock-on effect of strangling EM growth by tightening EM credit. Now, if you're a goldbug and you accept that EM growth drives the gold price, and you also feel US yields will go up, then how can you be bullish gold right now?

Michael Shaoul - EM currencies and USD bonds. Please please read this article: the currency and bond moves you're seeing now in the EMs is what ends the EM bull cycle. And this does not get fixed quickly.

Michael Shaoul - on Brazil. As he notes, Brazil is indeed providing the template for EM market collapse. They're already at the endgame, so who will follow?

NY Times - why India trails China. Also should have said something about the caste system and how it's essentially institutionalized slavery. But I guess Amartya Sen would never bring that up, eh?

Mineweb - mining equipment manufacturers hope to contribute to efficiency improvements. If the near future for mining involves cost containment in the face of a flat or declining gold price, can you still do the math to figure out who to invest in? And can you recognize which past era saw the same occur?

Wednesday, June 19, 2013

Ron Paul beats them all with his new price target for gold

CNBC - Ron Paul says gold could go to "infinity dollars".

Take that Albert Edwards, Marc Faber, and John Paulson! They're all spineless twerps with their conservative targets for the gold price. Senator Dr. Paul has set the price target to end all price targets.

Now, Senator Dr. Paul comes at his "infinity dollars" target differently than your three-year-old does; he notes that the value of dollars is going to zero, and therefore any gold price will of necessity be infinity dollars.

But what does this mean for all his shares of Barrick, Goldcorp, Agnico and so on? After all, those are priced in dollars! So if dollars go to zero, and his stocks are in dollars... then... the stocks... go... to zero, right?

Aha, puny socialist! You obviously never learned math in school! No wonder all you do for a living is confiscate the wealth of the job-creators! If you can just tear yourself away from your homosexual marriages and your abortions for just a minute, Senator Dr. Paul can clear this all up for you.

You see, Barrick, Goldcorp, Agnico and so on mine gold, and so therefore when the price of gold goes up to infinity dollars, and dollars go to zero, these stocks will go up to infinity dollars (gold) divided by zero (dollars), or infinity times infinity dollars! In fact, since more of their reserves become economic as gold goes up, when gold hits infinity dollars their reserves will be infinity ounces: so on a total reserves basis they'll be worth infinity times infinity times infinity dollars!

Now that's leverage to the price of gold, boy!

And we can be certain of this because gold miner stocks go up when the price of gold goes up. I mean, just look at the past 5 years.

Of course, Senator Dr. Paul has to ride out the present volatility in gold and gold stocks. But that's easy, since he has the courage of his convictions. Dollars are going to zero! Gold is going to infinity! How hard is the math?

To summarize the damage done

So let's see what the bipolar crackheads at Wall Street did today, shall we?

So after 2PM they vomited emerging market bonds. Cos nobody needs to own EM bonds when they can own USTs.

They also found it necessary to vomit junk bonds. Cos nobody needs to own junk bonds when they can own USTs.

And they vomited USTs. Cos. Fuck, I dunno.

They heavily vomited emerging market equities, cos something something.

They even vomited Japan, cos something something.

The leading sector, semiconductors, got vomited as well, because if it's one thing that will cave the sector in it's less unemployment and low inflation. Or. Something.

$VIX didn't really do anything today, though.












While we're waiting....

While we're waiting for Bernanke's beard to implode the S&P 500 by 80% in a worldwide pukefest of doooooom, here's some SMBC Theater:

When the Onion is making fun of doomers, you know that narrative is dead.

This story from the Onion is so funny that I have to quote it in its entirety, only because I'm sure a lot of the people that need to read it would never click through knowing that it mocks their distorted worldview:

Financial Sector Thinks It’s About Ready To Ruin World Again

NEW YORK—Claiming that enough time had surely passed since they last caused a global economic meltdown, top executives from the U.S. financial sector told reporters Monday that they are just about ready to completely destroy the world again.

Representatives from all major banking and investment institutions cited recent increases in consumer spending, rebounding home prices, and a stabilizing unemployment rate as confirmation that the time had once again come to inflict another round of catastrophic financial losses on individuals and businesses worldwide.

“It’s been about five or six years since we last crippled every major market on the planet, so it seems like the time is right for us to get back out there and start ruining the lives of billions of people again,” said Goldman Sachs CEO Lloyd Blankfein. “We gave it some time and let everyone get a little comfortable, and now we’re looking to get back on the old horse, shatter some consumer confidence, and flat-out kill any optimism for a stable global economy for years to come.”

“People are beginning to feel at ease spending money and investing in their futures again,” Blankfein continued. “That’s the perfect time to step in and do what we do best: rip the heart right out of the world’s economy.”

According to sources, the overwhelming majority of investment bankers are “ready to get the ball rolling” by approving a host of complex and poorly understood debt-backed securities that are doomed to quickly default, as well as issuing startlingly high-risk loans certain to drive thousands of companies into insolvency.

Top-level executives also told reporters that when it comes to depleting the life savings of millions of people and sending every major national economy into a tailspin, they feel “refreshed and raring to go.”

“The other day I actually overheard someone on the sidewalk utter the words ‘I’m saving up for retirement,’ and right away I thought to myself, ‘Well, time to get down to work,’” said Morgan Stanley chairman James P. Gorman, adding that the increasing number of individuals entertaining ideas of starting their own businesses or buying houses was the financial sector’s cue to set off another devastating global recession. “We’re definitely thinking on a huge scale again, because we all really enjoy toying with the livelihoods of millions of people overseas and forcing them to wonder why reckless, split-second decisions made thousands of miles away dictate their whole country’s socioeconomic future.”

“Plus, it’ll be nice to finally wipe out the Euro once and for all this time,” Gorman added.
While most private equity firms, investment banks, and hedge funds are reportedly still undecided on the precise route to take in order to torpedo the job market and crash all international stock exchanges, sources confirmed they are nearly in position to resume gambling away trillions of dollars belonging to the American populace.

“We’ve got a lot of options on the table; it’s just a matter of picking which one we want to use to paralyze every single sector of the world economy,” said Capital One executive vice president Peter Schnall. “We already burst the dot-com and housing bubbles, so this time we can maybe mix it up by popping the education bubble and shattering the lives of everyone with outstanding student loans. Or maybe we’ll artificially inflate prices of stocks in social media companies and then pull the rug out, bankrupting every investor tied to companies like Facebook and Twitter. Or do both.”

“On second thought, maybe we’ll wipe out the housing market again too, just for the hell of it,” Schnall quickly added. “Might as well, right?”

According to a recent survey of Wall Street officials, 82 percent said they were “excited to shake off the rust” and send the Dow and NASDAQ into another freefall. Additionally, 75 percent of respondents admitted they have been “champing at the bit” for months to wholly undermine the nation’s local banks and money market accounts, leaving Americans too terrified to leave their savings anywhere.

Moreover, the chief financial officers from Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo unanimously told reporters that it has been “way too long” since they last saw the utterly dejected faces of American families whose homes had just been foreclosed on due to circumstances totally beyond their control.

“Now that the public’s efforts to curtail questionable Wall Street trading practices have all but ceased, it’s time for us to bring the world to its knees again,” said AIG CEO Robert Benmosche.

“There are still plenty of opaque financial derivatives, high-frequency trading operations, and off-balance sheet transactions out there, all with virtually no federal regulation. Trust me, we can definitely work with that. And if anything, we can always just lobby for further concessions and deregulation in Washington—which, by the way, is so, so easy to do—and then we can cause as much damage as we want.”

Added Benmosche, “And while we’re at it, we’ll make sure we once again come away from this whole thing scot-free and far wealthier.” 

OK, here's your "China doom overdone" indicator

You know I've been in love a bit recently with the "China dooooom" story.

Well, unlike an idiot, I reserve the right to change my mind when new data comes in.


When the China dooooom searches outnumber the Daniela Cambone searches on my blog, that tells you the story is a bit overcooked.

Also, if anyone wants me I'll be in my room doing google image searches for brazilian girls full body painting.

Because you know I like to keep abreast of such data.

I enjoy a fully-rounded perspective.


Some morning news, not that it matters til after 3PM

JC Parets - put/call suggests a bounce is nigh. Add that to the overelevated $VIX (which is mathematically related to put/call, I guess, somehow) and maybe we get a big pop at 2PM?

Michael Shaoul - April Spain trade data is good. The Euro periphery strikes back?

FT beyond brics - China cash squeeze is intentional. The authorities are using tightening to kick the banks (and by extension the businesses that can't service their debts anymore) square in the nuts. Which suggests to me that if there comes a liquidity crisis with bank and SOE failures, China might do what we all wanted the US to do in 2008: let the fuckers fail. Hey, it would solve their overcapacity problem, it'd be the imposition of free-market discipline, and as long as you can sort out a few trillion in debts it's better in the end, no? Plus it might get the corrupt provincial kleptocrats back in line, no? I can dream.

Pre-FOMC snapshot

Let's take stock of all the momo charts before Bernanke's beard screws everything up at 2-3PM, ok?

Emerging market bonds have synced to what looks like a new equilibrium after a month of puking. They're supposed to go to $0 or something when QE "ends" - where "ends" is defined as the sudden withdrawal of all liquidity by a Federal Reserve who wants to destroy America because this serves the sinister purpose of Jews and Blacks.

Or something.

Junk has done even better than a sync, it's almost w-bottomed. It's now back to where it was in March. More sensible behaviour, I think. Supposed to go to $0 when QE ends, because something something.

USTs have also continued having bottomed out for 3 whole fucking weeks, despite what the news says. Again, US debt servicing is supposed to explode when the economy recovers, because Ayn Rand.

By the way, I find it hilarious that France's 10Y yield is lower than the American 10Y yield, yet some pundits (probably anti-socialist, plutocratic fascists) like asserting that France is about to collapse.

They must really love pre-Abe Japan then. The one with the 20 years of flatlined economy.

USD is still drifting lower, though more slowly now.

EM stocks seem the worst for wear, and of course the apocalypse is near.

Though strangely, I saw an article last night that suggested hedgies are thinking about piling into EMs. That would be funny; get them all in and then have China go kablooie, wiping all of them out.

Japan has quit puking, but I guess you could call it a mean reversion? So maybe it's not out of the woods yet. Whatever; so much of the anti-Abenomics blather seems to be the last gasp of the paleoconservative anti-Krugmanites.

And meanwhile the Semis are still breaking out. Great sector to be in right now, fantastic strength, I wonder if that's the new hedge fund fad? The place they're putting their money after losing it in Japan, then losing it by buying S&P at its all-time highs then selling it this past week during the massive 5% correction?

$VIX is threatening to go bullish. Then again, why should $VIX take the escalator down this time? Why not just stay elevated?

The suggestion has been made that $VIX's elevation is the result of a bunch of option-buying as protection from today's Fed release and beard revelation. If it breaks down fast, say even below 14.50, then maybe the S&P just flies right up? Cos I'd have to assume a lot of the algos buy partially based on a $VIX signal input.

Be certain to watch these charts from 2-3PM this afternoon, for what I'm sure will be a fun hour of Pythonesque absurdism.

Tuesday, June 18, 2013

Since I saved Lydian....

Lydian fought its way back up this afternoon, nice. All because of my shout-out.

So here's two more stocks that are going for far too cheap and you guys should buy them all cos gold is money and silver too and you don't believe all that shit about the impending China liquidity event and the end of the commodity cycle do you now:

Buy buy buy! Now now now!*

* - this is not investment advice or a solicitation to buy or sell securities. My Own Market Narrative is a comedy blog meant only to entertain, not to inform your investment decisions. The author of this blog is not a licensed securities dealer, has no concept whatever of how to manage money, and has possibly even served time for criminal offences and/or been made the subject of restraining orders. If you want someone to inform your investment decisions, phone some company like Sprott or Canaccord and ask them if they would like to anally rape your life savings to death.

Some newsbits

GDXJ is right where you don't want it to be the day before a Bernanke speech - threatening to break down.

Meanwhile, $VIX is elevated, and that might possibly be just because of tomorrow, so I might try to do a quick in-out on XIV during tomorrow's action. We'll see.

Reformed Borker (Bork Bork Bork!) - private clients buying while hedge funds sell. Note that hedge funds were buying the all-time highs in April and May, and are selling now. Note also that even if you ignore the copious arterial bleeding due to their 2%/20% fee structure, they still all underperform SPY. Now ask yourself: who's the dumb money?

FT Alphaville - when liquidity meets control in China. Quote:
We think the risk of a credit crunch has definitely increased over the past two weeks. While overall liquidity is still abundant, and the PBC still has a lot of tools to use if it deemed necessary, accidents could happen in the process of changing liquidity provision or cleaning up interbank activities. This is especially so when much of the credit expansion so far has been hidden off balance sheet and often under multiple layers of transactions, liquidity is unevenly distributed, and interbank transactions have made the system highly linked. Therefore, the central bank and other regulators must tread very carefully in the coming months in managing the process to try to minimize the risk of unexpected break in the liquidity chain or unwanted credit crunch.

WSJ - China wrestles with banks' pleas for cash.

Sober Look - China's economy: warning signs. Again with the China doom. That Forbes article is really getting around.

FT Alphaville - the end of the end of the end of the commodity supercycle in Asia. Wonder what weak commodity prices will do to the US economy, eh? Something bad? Or something good? And I wonder how badly misled you're going to be if you're following a commodity indicator for inflation hints, or if you misconstrue commodity price declines as signals of liquidity collapse?

Reformed Borker (Bork Bork Bork!) - how's that end-of-the-world trade doing, guys? Quote:
I've saved about three dozen atrociously allocated retirement portfolios in the last few years where gold holdings out-weighed productive assets (like stocks and bonds) by 2-to-1 or more. I've taken accounts away from every single hyper-inflationist and deflationist celebrity doomer you can name. I consider it my sacred duty to rescue investors from the revival tents and carnival midways whenever possible. But I can't save them all.
And a chart:

I know that someone in particular is itching to email me just to say "god Josh Brown is a fucking asshole".

Well, before you do, consider this:

GLD:SPY only shows a 50% loss since 2011. He could have charted GDXJ versus the SPY, which shows an 80% loss. Here, let me show you:

Turns out Josh is letting you off easy.

But don't worry. A 50% collapse in SPY with a 150% pop in GDXJ will easily get the goldbugs right back to where they were in August 2011.

And that's definitely going to happen now that there's a US recovery, and an imminent China & India collapse that kills half of all gold demand and unleashes a flood of scrap onto the market.

Or, um... sorry, the other thing. Not. That's it. Not going to happen.

A modest proposal: Blog Like You're Weisenthal

So apparently August 25th is Joe Weisenthal's birthday.

In appreciation of Joey's years of shameless click-whoring, I declare the week of August 18-25 to be Blog Like You're Weisenthal Week.

If you're a blogger, make sure every post you put up that week is a Weisenthal post.

All you have to do is make sure every headline is in all-caps and includes phrases like "DESTROYED" or "ANNIHILATED" to describe e.g. a 0.4% loss on the S&P 500.

Especially irrelevant data points should come with a photo of something like a nuclear explosion or a crashed train.

Broader news summaries (like what I do) all have to come with a completely fucking irrelevant picture of a hot chick.

Another great source of WeisenNews is any price target propounded by some analyst clown. Make sure you post a bullish one (e.g. DOW 50,000) right after an apocalyptic one (Humanity To Revert To Neolithic Hunter-Gathering, Says Marc Faber/Albert Edwards/Jim Kunstler/Eric Sprott/Alex Jones).

Also feel free to post meaningless bits of trivia about Hollywood personalities, to the extent you can do it without clawing your own fucking brains out and throwing them at the wall like so much monkey poo.

Make sure to pad out each article to at least 500 words!

Slideshows are even better for maximum clicks.

If we can get enough blogs to join in, maybe we can turn it into a movement or something.

Come on! It'll be fun!

I'll post a reminder for you all in August.

China DOOOOOOOOOOOOOOOOOM, your last and final warning

Michael Shaoul - China Money Market Tightening May/June 2013. I have been rolling the dice the past month or so and assuming that Michael Shaoul is a really frickin' smart guy who should be my number-one go-to source for market & economic predictions. We'll see soon if it pays off, I guess.

Should June's Social Funding and Loan data confirm our concerns then the clock would begin ticking on the effects of a severe credit crunch becoming apparent in Chinese economic activity, with the lag likely to be around 6 months based on the experience of other cycles.

Read his post. Subscribe to his blog via RSS and continue reading every post he puts up. And realize the importance of China to EMs, commodities, and gold. And what that means for developed markets.

And ask yourself if gold, the GDXJ, copper, Vancouver & Sydney real estate, EPU, and so on haven't been screaming this in your face all this time and you simply haven't been paying attention.

This is your last and final warning.

Is Lydian an even better deal now?

Look at this deadly deal!

Hm. Only $165M for a low-cost simple mineable gold deposit in Armenia that certainly definitely absolutely is going to get bought by a major at some point cos they certainly doubtlessly need to replace ounces!

That's a much better deal than it was at $1.50 when Rick Rule was selling buying, isn't it?

Thus my motto: til the stock retakes its EMA and starts going up, just step aside and stand out of the way.

The smart money was doing this 2 years ago, and only more recently did I smarten up enough to do what they do.

Will it or won't it?

Kinda pointless to look at these considering tomorrow's when the news gets made, but even still....

The S&P looks to be crawling out of its recent funk.

Yet the transports seem thoroughly unconvinced. Though they've seemed to lag recently, no?

And the $VIX is still elevated.

Well, semiconductors seem like they want to break out. AMAT and MU look to be breaking out.

So are semis the leading signal here?

Of course none of this will matter when Bernanke's beard nears the microphone tomorrow and causes a major market discontinuity. So I'm just going to sit back and watch for now.

Wow... AMAT has a 2.5% dividend. And it's a tech stock. That crazy or what?

Oh and PS the junior miners are puking KTHXBYE.

Monday, June 17, 2013

"CEO Technician" and the art of predicting

Poking around Tommy Humphreys' website, I came across this fellow called "CEO Technician".

On May 30, after gold's breakout above $1400, he seems to have predicted "the summer of 2013 will be best remembered for gold’s range-bound trading between $1400 and $1500". (It's below $1400 right now.)

On May 27, he predicted the breakout to $1460, saying "It’s looking more and more like it is time for gold bears to cover their short positions and live to fight another day. Last year at this time gold experienced a $100 rally from major support near $1530 – this week could be just as interesting if gold is able to breakout above $1400 during the next 24 hours." (It went to $1425 or so, then back down to where we are today.)

On April 26, he noted the most bullish gold CoT in recent history, stating "gold bulls should be looking for a continued steady march higher – today’s pullback after a $160 rally is part of the process". (The close that day was $1462. Went down ever since.)

On April 7, he suspected a "silent bottom for gold". The close was $1573. At this point you notice those fucking Rydex sentiment charts and remember how fucking persuasive they all were at keeping you in the fucking market while gold collapsed. I will punch the next person who makes a market call based on sentiment charts. Especially funny is his statement "there is clearly a great deal of evidence which suggests that gold prices may have tested support in the mid-1500s for the final time in what may eventually be remembered as the quietest bottom in the history of the gold market."

This is already getting embarrassing, but let's be the Ramsay Bolton to his Theon Greyjoy:

On March 12, he noted "the junior miner train is leaving the station." He has absolutely no regret today in writing "I hear a lot about 'investors' buying Dow stocks that are sitting at all-time highs, but not much about investors adding deeply depressed gold miners to their portfolios. With multiple ways for investors to win in the junior gold mining space from current levels [...] perhaps it’s time to move some money into this deeply depressed & undervalued space."

That seemed to have been a fad back then - mocking the Mila Kunises who were about to get destroyed while the gold miners took off baby to da moon Alice! Oh boy, I have several names written down of smart-ass fuckheads on the internet mocking the beautiful and intelligent Mila Kunis for buying stocks instead of junior fucking miners.

Since then, of course, GDXJ went down 32% while DIA is up 5%. I have no idea whether the goldbug crowd are still being fucking smarmy fucking smartasses. You'd think that would have taught the loudmouthed pricks a fucking lesson.

On Feb 25, he posited a V-bottom for gold. Quote: "The conditions are ripe for a V-shaped bottom given that sentiment and market positioning are both clearly 'off sides'. More importantly, we now have a catalyst for a sharp sentiment shift in the form of the Italian election results. With Fed Chairman Bernanke on tap for tomorrow morning, things may be just beginning to get interesting for gold...."

Guess what? The Italy ETF, EWI, is up 6% since then while gold continued down another 13%.

On Feb 20 he wrote "the gold capitulation is here!"

It wasn't.

I mean fuck dude. It's past 9PM, I'm ending this post here.

Basically, this is why TA fucking deserves to be hated - clownish stupid rah-rah predictions. And then the guy never fucking takes it back a week later, or a month later; still the same fucking bullshit but at a new lower price.

No "I was wrong at $1600; why was I wrong? Let's figure out what could have made me wrong." No "maybe it doesn't have anything to do with fiat money-printing". No "let's simply look at all the possibilities with an open mind, and then try to find real evidence (not fucking Rydex sentiment charts which are the cheapest shit imaginable and which have already led you astray several times) to help us determine which possibility is more likely".

Instead it's "let's ignore how fucked up every single one of our past calls has been and try to spew another 500 words for the blog".

Fuck, now it's almost 9:30. Suffice to say, Tommy, get rid of that TA moron.

Newsflash: Brent Cook has opinions on politics

I was poking around looking for some news re: Bear Creek Mining, and saw a link on Stockhouse to a Tommy Humphreys interview with Rick Rule where I'm sure Rick didn't say anything about wanting to puke BCM down to penny stock status no sir.

Anyway, I pop over there, and what do I see:

Brent Cook: Under the Veil of Homeland Security

He has political opinions.

Another one bites the dust....

Bear Creek Oh My Lord Mining:

What the fuck is this? Seriously. What the fuck?

Um... are people puking because a bunch of the guys named themselves Vice Presidents of Things?

Does this one end the way AQM ended, at 3 cents?

Hey, I keed, BCM is worth more than 3 cents a share. But even still, I've been watching for the past 2 years as all the other good properties went down to zero; I wouldn't put it past BCM to do the same thing for utterly no reason.

It does really suck when the market has so little conviction in the value of junior miners that these stocks can puke like they're doing. Rio Alto at $2.50, AQM at $0.03, SBB at $1; and now what, Bear Creek at $1.70 and falling?

Is this the sound of Sprott puking or something?

I know I'm all about China DOOOOOM and so on, but a few years after China collapses and the EMs stall I'm sure people will still probably be buying lots of silver and gold. And there won't be any to buy cos you guys will have puked these development properties into non-existence.

Crappy junior miner charts, again

Candente Copper on special, now over 90% off!

Coro Mining, now 95% off!

This one I don't get. I haven't followed the newsflow whatsoever for the past few years, but Revett is (was?) an actual mining company, they mine silver and copper at a profit (?), and they even managed to survive the 2008 commodity crisis - which nearly sunk them due to a stupid arrangement with their smelter, if memory serves.


Upon googling, I see they had a big cave-in at Troy, and have had to lay off a ton of staff. Well, I guess now's a good time for a perspirational pome:

The rain, it raineth on the just
and also on the unjust fella;
but mostly on the just, because
the unjust stole the just's umbrella.

Probably still a good stock to buy, once they sort out the whole mine collapse thing, as long as you believe silver and copper aren't going to continue collapsing. But what do I know eh.

EM charts that don't suck as much, some philosophizing thereupon, and a witty new acronym

I hate when things obey some sort of silly arbitrary chart rule.

Cases in point:

Indonesia ETF stopped dropping at the weekly SMA(50). Weird, eh? Does that mean we saw little more than an EM correction?

Same with Thailand ETF. Drops to the weekly SMA(50).

Turkey, pretty much the same, despite all the political blather going on there right now.

This is all kinda fishy. Am I wrong in expecting an EM dooooom? Was this just a small EM correction, and now we're going to see EMs race back up?

BTW, I'm just some uneducated guy over here, but I'm under the impression that these 3 countries are all pretty much manufacturing- & consumer-driven. I guess Turkey has some mining (I know they were the center of the universe for chromium ages ago, and there is some gold exploration there today), but I was under the impression their growth is more a consumer-based, demographically-driven thing.

Meanwhile Mexico, another industrial powerhouse in the wings, has broken through its weekly SMA(50). Then again, I assume Mexico has more mining than the other 3, in which case the larger downswing was to be expected, no?

I'd find it interesting if we were about to see a divergence in EMs, with the miners (e.g. Peru and Chile) getting slaughtered while the developed-industry EM countries continue to outperform - this time on the basis of DM demand for goods, instead of EM demand for raw materials.

Can that happen? I'd be interested in reading up on whether Thailand, Indonesia and Turkey have the same problems (debt, interest rates, or inflation) that the crapped out EMs (India, China, Brazil) have.

Could the TITs* be the model of successful EM growth?

* - Fuck off Jim O'Neill, this witty acronym is mine.

Lots of news

Lots of news to catch up on.

Calculated Risk - mid-year review of the 10 questions for 2013. He's pretty much called this year perfectly. As opposed to the laughable, risible economic predictions of most of the gold scene.

Bonddad - economic analysis: US.

BI - what if the secular bear is not over. If you want one more crash before the bear ends, maybe you can expect it to originate in a China banking crisis? I suggested this to someone several months ago, by the way. But at the same time, if your argument is "if this bear is over, it's been the shortest in 110 years", you've got to remember:

* - this bear was responded to with massive Fed intervention;
* - China also responded with massive intervention, which gave us that big commodity spike from 2009-10;
* - many previous bears occurred during a gold standard;
* - related to the above, governments were more stupid in previous ages - almost as stupid as Germany has been this time around.

Bloomberg - hey, didja know stocks go up when there is Fed tightening.

Dynamic Hedge - this yen carry concern is completely idiotic. Quote:

A couple months from now we will look back at this Yen carry concern as completely idiotic. Take a moment to remember external events the market previously lived and died by: sequester talks, Greek elections, Italian bond auctions. Not to oversimplify, but all of them satisfied the need to have something identifiable to point at and yell, “Risk! See, there it is.” The only constant is speculation and doubts about the Fed’s commitment to the QE strategy. I wish I could claim that the Yen carry trade can be ignored, but it can’t. Positions are on the books, and there will be winners and losers on a grand scale. Let it run its course — don’t let the ugliness of the unwind distract from the overall long-term trend in the process. Based on the recent past, a surge of volatility followed by a resumption of trend would not be too far off script.
See? Completely idiotic, like the OMG Greece crisis and the OMG Eurobreakup crisis. That people are still scared of dumb shit (and not China) shows you that this market has a way to go yet.

Michael Shaoul - Tokyo condo sales data. Another piece of data that he feels supports a bullish stance on Japan.

BI - Jim O'Neill on investing in EMs. A broad rumination on the topic from someone who's probably a fair bit smarter than you.

Reuters - monsoon rains cover India early.

Michael Shaoul - RBI holds rate. He notes "Indian economic and liquidity conditions have continued to deteriorate".

Michael Shaoul again - India May trade data OMG LOL BRB. I think when this fellow says something like "the increasing reliance of India's financial system on the generosity of foreign investors", that is meant as noting a very bad thing.

BI - Ambrose Evans-Pritchard says the China credit bubble is unlike anything in history. Sure, a drop of caution when reading this article because it was written by Mr. I Have a Brain Parasite.
NY Times - faltering job prospects for China graduates. - Dennis Gartman says gold is an aging athlete. Even given how much I've been teasing recently, I don't see how gold gets to $1000 without a China or India crash, or some other crisis that causes a spike in scrap during a buying strike. Thus my fixation with China and the EMs.

FT Alphaville - time to take basic income seriously? I'm sure the neocon kleptocrats will be screaming bloody murder at the idea of a guaranteed minimum income - after all, they've been trying to destroy anything resembling that for the past 30 years. But this article goes into more philosophical questions as well. My personal take? If capital is confiscating all the returns, you need to see the economy degrade to the level of Dickensian "Satanic mills", and then a long generational period of revolution. Every era needs a vicious cleansing, or else humanity gets soft.

Another leg down?


Another BOHICA*?

* - "bend over, here it comes again", a phrase taught to me by IKN.

Sunday, June 16, 2013

Holy fuck I'm a 4-year-old again

When I was a kid, daddy wanted me to become an engineer like my dumbass brother. So he bought me a Lego and a Meccano, and toy trucks.

This video certainly takes me back to my childhood.

P&H has a whole bunch of product videos available on YouTube, and while among other things it proves that capitalism indeed benefits from free distribution of content, it's also just loads of fun to watch these toys in action.

I guess if you still give a damn about shitty junior miners, you should troll YouTube for the thousands of mining equipment videos that will obviously be just waiting there for you. Beckoning like a shiny new toy truck.