It took me one morning to move out of US markets and to 60-70% long miners. I still own Italy and some Developed Ex-US as of this moment, but only cos this seems like an overblown drop.
Here's a bit of morning news. More later.
Bespoke - European markets are getting ANNIHILATED. I guess if you're still positive the Eurozone recovery, then this is a buy opp? Then again, maybe we need to see a lot more American momo fools rotate out of Europe, since it was such a popular play last year.
IKN -blah blah gold silver ratio. Where he takes a dig at the anal ysts who were predicting fine times ahead for silver:
And as usual, the selective amnesia of technical analysts has kicked in. If you want a bit of boredom in your day, ask any of the specialists who told you silver would fly once gold broke U$1,360/oz what went wrong. They'll answer with a whole bunch of terms, but "i was wrong" won't figure in their answer.The empiricist in me agrees: if one prediction after another is wrong, why should I listen to predictions?
FT Alphaville - when will I "Cu" again, ha ha, get it? Oh I say, Joseph Cotterill, you are such a witty chap! Deutsche Bank thinks the copper drop isn't a big deal:
While some metals merchants could be subject to mark to market margin calls due to RMB depreciation, they might opt to do more transit trades to meet cash requirements rather than selling copper outright, although this may only last for a short period of time.
We believe that the recent sell-off is a combination of speculators trying to anticipate the unwinding of financing deals and a lack of buying in China due to sluggish real demand…
With the SHFE/LME arb moving deeper into negative territory (Figure 7) and higher costs associated with RMB, such trades could become less attractive. However, as long as the returns on the unsecured loan in CNY are sufficiently high, such trades could remain profitable.
Copper is hedged in financing deals and is 100% cash backed. (It is rare to get financing deals with copper prices un-hedged these days.) As a result, falling copper prices do not trigger financing deal unwind…
IKN - gold's not in a bubble, you other analysts. Maybe with western stocks so low, now that it all got shipped to China, there's so little physical left in the West to underlie the paper trades that gold can move a lot faster now? I dunno. Anyway, here's a chart for perspective: