Saturday, November 19, 2016

Weekend news

Gotta study for a stats test this weekend, but I really can't be arsed. So here's some news instead:

Calculated Risk - October housing starts assplode! That should let the US economy coast for another year. At which point:

WaPo - Trump's "big infrastructure plan" is actually a massive giveaway. Well, there goes any hope for actual growth:
It’s a tax-cut plan for utility-industry and construction-sector investors, and a massive corporate welfare plan for contractors. The Trump plan doesn’t directly fund new roads, bridges, water systems or airports, as did Hillary Clinton’s 2016 infrastructure proposal. Instead, Trump’s plan provides tax breaks to private-sector investors who back profitable construction projects. These projects (such as electrical grid modernization or energy pipeline expansion) might already be planned or even underway. There’s no requirement that the tax breaks be used for incremental or otherwise expanded construction efforts; they could all go just to fatten the pockets of investors in previously planned projects.
Well, American economists should be fully in favour of it then, since they've been advocating tax breaks and subsidies to the kleptocracy for thirty years now.

The Krugginator - Trump's big infrastructure plan isn't. Pointed question:
Third, how much of the investment thus financed would actually be investment that wouldn’t have taken place anyway? That is, how much “additionality” is there? Suppose that there’s a planned tunnel, which is clearly going to be built; but now it’s renamed the Trump Tunnel, the building and financing are carried out by private firms, and the future tolls and/or rent paid by the government go to those private interests. In that case we haven’t promoted investment at all, we’ve just in effect privatized a public asset — and given the buyers 82 percent of the purchase price in the form of a tax credit.

Again, all of these questions could be avoided by doing things the straightforward way: if you think we should build more infrastructure, then build more infrastructure, and never mind the complicated private equity/tax credits stuff. You could try to come up with some justification for the complexity of the scheme, but one simple answer would be that it’s not about investment, it’s about ripping off taxpayers. Is that implausible, given who we’re talking about?
I'd also add that private toll roads don't provide the economic benefit that public roads do, since all toll road companies know how to capture all of the consumer surplus (i.e. the externality) that a toll road generated. Economists, however, have no fucking clue about this.

FRBNY - the panic of 1907 and the birth of the Fed. There's something in this story explaining yet another reason why having a gold-backed currency is so fucking moronic:
The tight monetary conditions were compounded by the usual autumn surge in demand for currency and credit by farmers harvesting and shipping their crops east. Absent a central bank to accommodate this seasonal surge in demand, interest rates would spike instead. This “perverse” elasticity of the money supply (Miron 1986) had sometimes triggered banking panics and was central in the “great debate” (Wicker) over the need for a central bank.
Yup, money demand is seasonal. And when money demand is high, interest rates naturally spike. Great idea, guys! Let's spike interest rates every year!

Friday, November 18, 2016

Friday videos: Mogwai

Here's the guys who generously gave Godspeed You! Black Emperor a career as a second-rate Mogwai ripoff band:

At approximately 8:25 you learn the definition of "oof".

Thursday, November 17, 2016

And gold goes plonk.

So it doesn't matter that gold still has support in $CAD and $XEU, it's nevertheless plonking now.

So I guess it's true after all that gold had no support at $22, just like I said.

Thankfully, this morning I saw that I had some of the same positions as Gary Wordsalad, and suddenly felt that imminent sense of foreboding that means I was with the stupid money. So I sold my miners and silver in favour of more SPY and QQQ.


And now 'Murrica begins to find out the trick that was played on them:

Mother Jones - NSA chief says Russia hacked the election. Oh, but you don't believe this article because they're lefties, right?

Inquisitr - exit polls show massive discrepancy between exit polls and election results. Like, over 5% in a few swing states. Almost as if the voting results were changed.

IBTimes - FBI probing Russian hacks. You think they stopped at hacking phones?

Fox News Twitter - Director of National Intelligence certain Russia hacked the election. Even Fox News is following this story FFS.

London Economic - Trump was right, the election was rigged. Greg Palast is all over this. - petition the DoJ to obtain an injunction against the Electoral College. Yeah, you could sign a petition. Or you could do what the founding fathers wrote the 2nd Amendment for, and start defending your country from foreign invasion and enslavement.

Wednesday, November 16, 2016

FRB Atlanta says wage growth accelerating

FRB Atlanta - wage growth accelerating. Quote:

The Atlanta Fed's Wage Growth Tracker is a three-month average of median growth in the hourly earnings of a sample of wage and salary workers taken from the Current Population Survey. Last month in a macroblog post, I noted that the Wage Growth Tracker reading for September, at 3.6 percent, was close to where it had been hovering since April. However, I also noted that the non-averaged median wage growth for September was at a cyclical high of 4.2 percent, and so it would be interesting to see what the October data revealed. Well, the October data are in, and they do confirm a sizeable uptick in wage growth over the last couple of months. The median wage growth for October was 4.0 percent, which brings the Wage Growth Tracker up to 3.9 percent — a percentage point higher than a year ago, and now the highest level since November 2008.

In addition, nominal wage rigidity, as measured by the fraction of workers reporting no change in their hourly rate of pay from 12 months earlier, declined to 13 percent—the lowest since April 2008.

I've got an idea! Let's give Trump all the credit!

Tuesday, November 15, 2016

Since I haven't posted news in a while....

Now that The Great Discontinuity is past, we can start reading news again.

To wit:

Calculated Risk - hotel occupancy data still positive. So quit being a pussy, your favourite politician just got elected president.

Tim Duy - December still a go. So quit being a pussy, all you right-wing trolls have been demanding higher rates for years and now you'll get your chance.

Macro Man - thoughts and stuff. Trying to identify what the next market moving event will be... how about a Renzi referendum loss and Marine le Pen elected president of France? I guess those would be good for gold.

Reuters - Theresa May is a bit of a dumb bitch. Apparently she not only has no Brexit plan, her every idea originates from a desire to stay alive til teatime.

Fiscal Times - there is no skills gap. The problem is that companies are offering too low a salary to hire anyone but the drug addicted ex-meth whore down the street. I guess small-town 'Merica could respond by unionizing and demanding fair wages... but that's sociamalism, isn't it? Better to ban abortion and kick out the Mooslims, that'll make the bosses pay us more!

BBC - the charm of small-town America. Where the mayor enjoys calling Michelle Obama an "ape in heels". Because that's what makes America great again.

An important caveat about the gold chart right now

This is so important that I'm going to try to post images again:

Ah, success. Google loves me again.

Make no mistake, gold in USD is in fucking trouble here. A break in the gold price below $1210 negates the entire reason for owning gold miners that the market has had since early spring. This right here is a "hold or die" line. Your miners go to $0 if this dies.


Gold in Canadian dollars looks very constructive. The mid-October pivot, and the break through $1620-$1640 in May & June, act as strong support.


Gold in (hundreds of) Euros actually looks fine too. In fact, if I was a greasy European I'd be loading up the truck at this point, with gold at -2SD at a higher low, a positive divergence on MACD, and the SMA(50) resistance just 2-3% away.

It's up to you to figure out which of these narratives you believe will win out in the end.

Far as I'm concerned, I'm still stuck at the point where I'm trying to fade the hammerblow torque of the Trump win so I can see the underlying trend without all the graph discontinuities.

market comment

So OK fine, I've put a small double long on silver (HZU), and a small double long on gold miners (HGU).

The silliness across the broad market (XLF, UUP, JJC, QQQ) looks about done, no -3SD condition can stay that way for long, SLV and GDX are already around 15% below their SMA(50)s which is usually as far as you can push them before they fight back (as long as they still have any fight in them), and the volume candles in SLV for the past 2 days suggest the selling was heavy enough to clear sentiment at least for a couple days.

Copper didn't affect miners on its way up so I'm not sure it'll affect miners on its way back down.

Close stops on both positions because, like I said, I'm in school a lot of the time.

It might have been dumb to place these trades based on the moves at the open, but then again the moves at the open might convince bigger money that the time to sell is past.

Any longer-term hopefulness, though, depends on GDX and SLV gaining, and then exceeding, their SMA(50)s. Any less than that and you're just living in fantasy-land.

Oh, and about banking

  • XLF has printed 6 white candles in a row.
  • It's up almost 15% in that time.
  • It's been 3SD up for 4 days.
  • It's now 3SD up on the weekly chart.
  • And on triple or quadruple normal volume too.
  • But the large US financials are worthless shit companies. I mean, you laugh at Deutsche, but do you really think Citi and BoA are any less incompetently managed? You really think repealing Dodd-Frank will improve their long-run performance?

I have no short banking play unless I buy US ETFs, which as a rule I don't do because of the currency exposure.

But I look at the above and think "Well, at some point the big Trump inrush to financials ends, and maybe the outrush from big tech doesn't, and we get a downward move in S&P 500 as the market starts equilibrating all these changes in pressure".

And in any case, the big upmove in financials certainly makes it look like the global kleptocratic elite is happy to have Donald Trump in power, eh?

Morning market comment

So it looks like $19-$20 was the support level for GDX after all.

I mean, sure it bounced on Monday afternoon, and that was enough to shake me out of my low-commitment double shorts (why not book the profit and go back to neutral with all this market craziness going on?). But it can still drift slowly from here, back down to $19-$20.

I actually might have felt it was time to book my profits Monday morning, and earn an extra few thou, if I wasn't writing a "math for economists" test. That's the problem with being in school: there's a lot of trades I can't make, because I don't have the opportunity to follow them as close as I need to.

Which is actually good. Being in school has forced me to trade much less: to only go for the slower, less speculative moves, to sit and wait on positions, and to spend a lot more time getting a handle on the underlying facts.

It would make for a boring investment newsletter, though, wouldn't it?:

This week I sat on my S&P index ETF while binge-watching Mr. Robot. Oh and I bought a Unabomber t-shirt online. Maybe if the GDX looks like it's bottomed I can put on a double long, but that's probably a few weeks away. Now let me rant about the global neoliberal elite kleptocracy for 20 pages....

I'd have to give that away for free.