Wednesday, August 31, 2016

Buy Gold because it could break out to the upsidde

Having been at this for 40 years, I always look for anomalies. It's very strange to me that, since June, as went gold so went the bond market.

It doesn't make any sense to me. If you go back over the course of the past many years, they move in contravention.

You don't want to risk much on this trade. I can see gold breaking up to the upside and I can see the bond market breaking down to the downside. You don't need to risk more than one or two percent. 

If it starts to work [and] this anomaly of moving in tandem starts to break apart...you could see the gold market move $40 or $50 higher, and you could see the Treasuries note move three or four [basis] points lower.


Monday, August 22, 2016

Fed is creating confusion instead of transparency

On the various opinions from Fed officials 

Enough is Enough. There is far, far, far too much Fed speak with far, far, far too many variant opinions being expressed. The officials in question might think that by airing their different opinions they are doing the market a service by making their policy decisions less and less opaque and more and more transparent. They are not, however! They are creating confusion rather than transparency.

No Rate Hike coming anytime soon

Because the November [Fed] meeting is so close to the election, there is effectively zero chance of a rate hike then. And just for the record, the November meeting is scheduled for November 1-2; the election is one week later on Tuesday, November 8th. All of this means that we shall all be required to delve a bit more deeply into the minutes of the last FOMC meeting ....

Thursday, August 18, 2016

Crude oil rising into the 50 percent retracement

Crude oil prices have risen again and we immediately draw everyone’s collective attention to the chart of nearby WTI crude oil, noting that crude on this rally of the past two weeks has made its way back into “The Box” marking the 50-62% retracement of the sharp bearish run that began in mid-June. Those bullish of crude would do well to pay heed to this “fact” and might wish to lighten up on their positions; those bearish might wish to take action. We, however, are recommending nothing at this point....


Thursday, August 11, 2016

Cotton could be worth a Buy

Cotton prices have plunged on the news that China will extend its sales of cotton from its reserves through the end of September. China has been selling cotton from its reserves for the past several months as demand from its cotton spinners for supplies to meet the demand for cloth have increased materially. 

This time, however, China has increased the amount of cotton it will released, previously stating that it was going to allow for 1.7 million tonnes of cotton to be sold from the reserve but now increasing that to 2.0 million tonnes. We have been waiting for this announcement to finally step up to buy cotton and with prices plunging today we’ll do exactly that. 

Those who cannot trade futures should avail themselves of the cotton ETF, BAL, listed on the NYSE. However, be certain to put in limit orders, not market orders. 


Not an investment recommendation. Positions may change at any time.

Tuesday, August 9, 2016

Rise in part time jobs and decrease in Full Time work across North America

The hourly age wage increase was decent, there's no question is we are seeing stronger employment numbers here in the States. We have to remember however, there are two things that need to be discussed. 

One is that a great good deal of  this increase was because of this birth death adjustment which added about payroll jobs to the number. And something that very few people are paying attention is that across North America if we include what happened in Canada, and in Canada the expectation was about 10,000 jobs to be added to the Canadian payrolls and in fact 10,000 jobs were taken away and worse the interior numbers in Canada showed that a large number of part time jobs were increased and the number of full time jobs were decreased, plus the fact that there was a huge number of people that called themselves "Self Employed" which I take it be an indication that a number of people were laid off and were too proud to call themselves laid off and so called themselves Self Employed. 

So across all of North America including Canada and US the employment number was demonstrably less stronger than it first appeared. Yes I think there will be an increase in the Fed Funds rate sometime this year but perhaps just once at most and probably in September long before the elections in November. The Fed does not like to increase rates in December. 




Monday, August 8, 2016

Stocks expensive but we have no choice TINA

SHARE PRICES HAVE ONCE AGAIN GONE SKYWARD, following the release of the US Employment Situation Report, which obviously surprised almost everyone, everywhere. Although this has rather obviously raised the odds of an increase in the O/n fed funds rate somewhat, it has also suggested very strongly that the US economy is doing quite well and that the US economy shall “drag” the rest of the world  along with it. Are stocks over-bought? With the CNN Fear & Greed Index at 86 in egregiously “Greedy” territory, that fact is un-deniable, so of course they are. 

Is the P/e multiple for the US market in parochial terms and for the global market in catholic terms high? Yes… obviously and rather shockingly so! But can this trend continue to move “from the lower left to the upper right” despite our antipathy toward it? The fact of the matter is, “Yes, it can and seemingly it is and shall.” Fighting this trend has been a mug’s game of the worst sort, making all of us who’ve seemed to be wisely short at the proper time look, in the end once again, to be manifestly foolish.

The trend remains upwards...... We’ve no choice. We have to dance with TINA… There Is No Alternative…until the music stops even though we do not like the music and we do not like the band.


via ZH

Monday, August 1, 2016

Correlation of Crude oil and Stocks is negative

The belief generally on the Street, 'As goes oil prices, so goes stock prices,' that's nonsense. I put out a chart last week over the course of the last 5 or 6 years that showed crude oil prices going down, stock prices going. The correlation is negative not positive. You had a period of about three or four months where they did in fact move in correlation with one and other. On balance over broad periods of time the correlation is negative.