Monday, May 22, 2017

Money moving into Europe from the Dollar and Trump presidency speculation



Watch the video above

Wednesday, May 17, 2017

Snapchat not worth investing in


Is there anything in the investment world less investable than SNAP?

This is a company losing millions of dollars/month, whose product is the ability to create funny pictures of friends that can be sent via the net and messages that disappear soon after having been transmitted.

This is utter nonsense. This is not a business; this is a time sapping hobby; a diversion; a silly little waste of aggregated time that could be spent “profitably” but which is spent stupidly instead.

Although we know that teenagers… and adults who think of themselves as teenagers… love this silly little “app,” but it is simply an app… and a silly one at that.

Is anyone with a rational investment horizon and a sense of history of investments surprised by the fact that since having gone public at $24/share SNAP’s shares have gone at best sideways and last evening fell nearly 30% on disappointing sales and “eye-ball” counts.

Again, as Herb Stein said, that which cannot continue won’t. SNAP, snapped and the investment world is a bit better place for its having done so. We trust we are clear.

Monday, May 8, 2017

Be careful out there

We want very badly to believe that the great bull market that has been extant for as long as it has been… now having finished eight powerful years to the upside here in the US… continues in unabated fashion for the simple truth of the matter is that everyone, everywhere lives better in bull markets. The food tastes better; the music is clearer with sweeter melodies; the women are lovelier and the men are actually handsome. Cinderella lives in bull markets. In bear markets, suddenly the make-up runs; the dresses turn shabby; the bands play off-key and without rhythm and the men and women turn one upon the other. Life turns harshly for the worse.

Thus we want truly to believe that the bull market continues but we are beginning to have real doubts. Certainly a correction of some very real magnitude is upon us.

We know only this: that when things go awry it is best to cut positions as swiftly as one might. As Jesse Livermore was told by a more senior mentor about a position that he, Livermore… had had in place that was causing him to lose sleep, cut back to a “sleeping” position. We have done that, and even now we find it difficult to doze off for the pain of losing 3% in one week is very real and all too evident.

All of that said, we are at a position in the equity, bond and commodity markets where the margin clerks are in control and where rationality takes a seat on the sidelines for a while. The rumors of one or two or several “funds” being forced to liquidate almost certainly will prove not to be rumors but shall prove to be fact either today or over the weekend. More such rumors will develop; some too shall prove to be the truth. The game is changing and so as Sgt. Esterhaus used to say to his men before he sent them out into the mean streets of Chicago on that great television show of years past, “Be careful out there.” So do be careful out there!


via zerohedge

Monday, May 1, 2017

Investing in other currency terms VS the US Dollar


People need to understand, if you buy Soy Beans, you buy Beans, you've sold Dollars. You made the bet that the Dollar is going to weaken and you would rather own beans versus the Dollar. If you buy Crude Oil, you have effectively made a bet against the US Dollar. If you bought Gold you really made a bet against the US Dollar. I rather own Gold in currencies that I think are going to fall in value. There will be a time when I will have no interest in Gold in Euro's and Yen terms. For now I think the Yen and Euro will continue to weaken.

Wednesday, April 26, 2017

I can be wrong sometimes says Dennis Gartman

I trade only for my own account so I think that's important. What I write in my newsletter, is what I am doing. I am up 5 percent up for the year. Do I get things wrong ? Yes absolutely. 

The important thing to do is, not to stay wrong. And I try not to stay wrong for very long periods of time. The only thing that will take you out of this business is getting something wrong and adding to it, doing more of which is wrong. I have a very simple idiom, lets do more of what has been working and less of what has not. If you do that in life you will succeed, if you do that in investing, you will succeed.

Tuesday, April 25, 2017

100% income tax proposed in France by Melenchon


Mr. Melenchon has gone out of his way to prove his far-left-of-centre bona fides by announcing that he wishes to increase the marginal tax rate on the wealthy in France violently, and has proposed a rate of 100% on incomes above €400,000, or approximately $425,000 at the current EUR/US$ exchange rate.

What is disconcerting is that no one in France is laughing at the stupidity of this proposal and many are actually applauding.

Monday, April 24, 2017

I want to buy Steel and Infrastructure stocks

Businesses in the US are actually doing well. If you get out of New York, if you go to Virginia Beach, if you go to Sacramento, if you go to Cleveland, they are Help Wanted signs everywhere. business are actually doing better at the base. And I think that's whats going on with the Stock Market more than anything else. 

Is it surprising to me ? Yes
Do I think share prices overvalued ? Yes. 
Are Price to Earnings multiples extended to the upside ? Yes.

What to buy ?
I am an old guy, I like simple things in infrastructure and economic growth. Get me steel, I want to own ball bearing manufacturers, cements, I want to own simple things.

Why ?
We are still building houses, we are still building roads, bridges. We are still going to make things. We still need steel, ball bearings, cements. We shall for the next 500 years.

Wednesday, April 19, 2017

Going against the trend will cost you your money

It's still a long term bull market. You should still err on the side of being bullish. Cash at one point should be a wonderful thing to have, but not yet. And there are times when I have gone to cash. Every time I had done it, I wish I had not.

We may all find stock prices overpriced and by Price to Earnings multiple they are infact. But nonetheless if you fight the trend it will cost you money. I find it difficult to buy stuff, but you have no choice.

via cnbc

Tuesday, April 11, 2017

Chinese are not manipulating their currency as Trump alleges


The President is absolutely wrong. The Chinese are not manipulating their currency downward. If they've done anything, and I've argued this for months and months, the Chinese have been supporting their currency instead.

If they are manipulating to weaken their currency, they're doing it 180 degrees in the wrong direction and somehow I don't believe that the Chinese are illogical and that silly when it comes to foreign exchange. They are not currency manipulators as the President would have us believe.

What I find interesting is everybody is concerned about the fact that China hold so much of our paper. Let me think, what a great trade, we buy goods from them, we give them paper. That's a great trade in my opinion and I think we are on the stronger side of the question. 


via cnbc

Wednesday, April 5, 2017

Dennis Gartman trading tip - Nothing wrong to be wrong but.....

The most important thing in the world of trading and investing is to not become married to a position. Defending a bad trade is the only thing that shall take you out of this business. There is nothing at all wrong with being wrong, but there is everything wrong with staying wrong.

Monday, April 3, 2017

CNN Fear & Green Index fell to 29 recently

STOCK PRICES… EVERYWHERE… ARE HIGHER AND SHARPLY SO as all ten of the markets in our International Index have risen. This is a rare event and historically such unanimity amongst our “universe” of markets has marked important panic tops if this has happened after extended bull runs, or has marked important panic lows at the end of extended bear runs. Certainly this is not the latter. We obviously have considered the markets overextended to the upside and have been reticent about buying into them aggressively. As we said the other evening when on CNBC’s “Fast Money,” and as we’ve said countless times here in TGL, this is a bull market and in a bull market one can have only one of three possible positions: Very, aggressively long of equities on balance; pleasantly long of equities on balance or, finally, neutral of equities, and there is no question but that we’ve tended to err upon the latter two positions and “Err” is the proper word here for we have indeed erred.

Those who’ve thrown caution to the investment wind and have remained aggressively long have reaped their rewards and we applaud them for either their tenacity, or their brilliance or their obeisance to the trend. We have been “too cute by half” in fearing a correction that never seems to avail itself.

Given the recent weakness in the CNN Fear & Greed Index we were coming very close to buying equities aggressively, if only had this Index fallen to 20 or below, having been to 85 only a few months ago. It fell to 29 .....… close to 20 but not quite there. It has turned up from there. If that was this indicator’s low it shall be the fifth time in a row that it has made a progressively higher low since late ’14. Previously, going back to late ’14, the lows were very near to 0; then 5 in the autumn of ‘15; then 15 in the first few days of ’16; then 15 in the late autumn of last year and now 29.

We have no choice but to follow the “lead” from the CNN Fear & Greed Index and to be bullish of equities. To make it simple we shall return to our original thesis regarding the Trump Adminisration and defer to the “Mahoning Valley” rather than to Silicon Valley; that is, we’ll buy steel, and coal, and ships, and railroads and ball bearings and cement and weaponry et al, for if the Trump Administration does stand for anything it stands of infrastructure and defense. These things we can count and these things we can count upon. These things are simple being the things that if dropped on your foot shall hurt.

Monday, March 27, 2017

This reminds me too much of what happened in 1972 to 1974

This is the start of at least a 5 percent correction, and perhaps something far worse than that over time. I take this very seriously. This is not just a one off circumstance in the equities market. This has something that has happened across all over the universe of capital markets. I think there's something to the downside that could become quite serious and one should be very careful. If we stop at 5 percent.... Let us hope it's merely a 5-7 percent correction and nothing more than that.

We've been saying that we expect a 5 to 10 percent correction. We've been saying that for weeks now. At the end of bull markets, earnings always look great. Earnings don't look bad until you've gone somewhere into an economic downturn. Earnings lag by at least a quarter, and usually by a half, so you're going to get the best earnings right at the peak of economic activity.


Wednesday, March 22, 2017

Bear markets are ugly and depressing

STOCK PRICES ARE DOWN MARKEDLY AND UNIVERSALLY as every market of the ten markets comprising our International Index has fallen with five of the ten having fallen by more than 1% and with two markets…. Japan’s and Brazil’s… have fallen by more than 2%. Allow us to be quite blunt here and acknowledge that something “broke” in the markets across the board yesterday, and we said in an interview earlier today with CNBC Europe, it is not just that stocks broke to the downside, but that precious metals “broke” to the upside along with bonds, and that the base metals broke to the downside following equities. The psychology of the market has taken a very real and very severe beating and we fear, of a sudden, that something more than a mere long-awaited correction has fallen upon our shoulders.

We would like very much to believe that all we are about to see is the normal… the standard… the again, much-awaited 5-7% correction in equity prices that shall be that proverbial “pause that refreshes.” We would like to believe that imperatively for as we have said before, “Bears don’t eat.” That is, bear markets are ugly; bear markets are depressing; bear markets weigh heavily upon the nation’s and the individual’s psyche and so we want to believe that this shall be something less than the beginning of a bear market and shall indeed by nothing more than the first day or two of a correction. This we truly want to believe, but we fear otherwise.

Time of course only shall tell what is happening or is about to happen. Trend lines cast back months rather than weeks can still hold. The market may reach such severely over-sold levels and may reach them so quickly as to render the market given to a rally. We may see the CNN Fear & Greed Index rush downward toward 15 and turn higher. We may see the clouds part and the sun come out again… but again we fear otherwise.

In our own retirement account yesterday we took very  real action to protect ourselves on the downside, for we stepped in early in the session and bought Japanese equities via the Wisdom Tree ETF, DXJ, but within an hour, with the market moving quickly against us, we cast it overboard, taking a small loss in the process. Then as prices continued to deteriorate we actually ventured to the short side of the market, buying bearish derivatives and by 1:00 in the afternoon, doubling those positions and carrying them “home” through the close of trading. This is the first time in a very, very long while we have actually gone short of equities, but it is our intention to become even shorter of them, hoping to sell a bounce that might develop intra-day.

Finally, always remember this, that as our old friend Doug Kass reminds us, ‘Risk happens fast.” Perhaps the FBI’s investigation shall stop at Mr. Manafort and maybe even Gen. Flynn and perhaps it shall not go any further. But for the umpteenth time here this morning, we fear otherwise. Discretion being the far better part of trading/investing valor, it is time to take some money off the table. 



via zh

Bullish Japanese stocks but hedged against the Yen

We are bullish of Japanese shares and have an initial position in place long of the Japanese stocks via ETFs here in the US, but we wish only to be long of those ETFs that hedge away our exposure to a weaker Japanese Yen.

Our preferred position then is in DXJ:Wisdom Tree’s currency hedged Japanese ETF. Further, it is our intention to add to this position but not until such time as the “spot” Nikkei closes “materially” above 16,600. 

Tuesday, March 21, 2017

Gold miners vs Physical

No one shall be surprised to read that we have not changed our thesis on gold at this point for we remain bullish of gold in EUR and Yen denominated terms as we have for the past several years, noting once again that gold in EUR terms leads the way higher and is up 9.6% year-to-date while gold in US dollar terms is up 9.2%. 

Gold in Yen denominated terms is lagging behind the other two prices thus far this year as capital seems intent upon moving out of Europe and to other venues, with Japan being a prime venue thus far, perhaps simply because of the geographical separation of Japan from the political problems attendant to Europe presently and thus keeping the Yen “bid” vs. the EUR. However, we shall suggest that that Gold/Yen’s three year out-performance vs. gold in US dollar terms… unchanged vs. -7.5%… does “trump” the year-to-date figures.

As gold has risen in all currency terms in the course of the past several days there is some very real concern that gold mining shares have seriously under-performed. We share that concern for historically the mining shares are leaders to the upside and to the down, thus when we are bullish of gold but see the mining shares lag behind we become openly concerned that something is amiss. 

Nonetheless, the political confusion that does seem to reign at the moment in Europe generally as elections loom in the Netherlands and France does tend to keep us viewing gold positively.

Monday, March 20, 2017

You should buy Gold in dollars, Euros or Yen terms


For the first time in a while, I think you should own commodities in general. You should own gold in dollar terms; you should own gold in euro terms; you should own gold in yen-denominated terms. Gold has started to be a bull market.


Friday, March 17, 2017

Stocks vs Real economy

Mr. Trump's agenda is bullish for the economy, but not necessarily bullish for stocks. That sounds illogical, but it's not illogical at all.

Why do stocks go up before economies come out of a recession? Because at the bottoms—when the monetary authorities become expansionary—that money finds its way into the capital markets, because it isn't needed in plants, equipment and labor.

You get that period of time that stocks take off on the upside and the economy continues to dwindle, and everybody wonders how stocks can continue to go up. That's what happens at bottoms.

On the other hand, at the tops of economic expansions, when there’s demand for plants and equipment and labor, money has to come from somewhere―especially if the monetary authorities are starting to err on the side of being restrictive rather than expansionary, as the Fed currently is. At that point, money comes out of the capital markets and goes into plants and equipment and labor.

Trump's proposals and his agenda are very bullish for the economy. By definition, therefore, it's somewhat bearish for equity prices after this sort of extended rally.

Wednesday, March 15, 2017

Valeant stock lessons learnt from Bill Ackman


We have focused attention for the past year and one half upon the demise of and the unwise handling of the stock in Valeant Pharmaceuticals by the hedge fund community. We never understood the business plan adopted by this company and we never understood the stock’s sky-rocket move higher from ’12-mid’15 when it rose from $40/share to just “north” of $260. It made no sense to us then and when the stock fell from $240/share to $200/share in the early autumn of ’15 we argued then that the “There-is-never-just-one-cockroach” Theory was almost certainly to be in effect and that VRX’ shares were headed toward eventual failure.

When it gapped from $150/share to $120/share we argued again that lower price would prevail and that Mr. Ackman… and others following his lead into the company’s shares… was making a possible careerending decision when he averaged down on the trade. As our old friend, Paul Tudor Jones, has always said, “Losers average losers.” Further, when Mr. Ackman argued for a seat… or seats… on the company’s Board of Directors, thus making it almost impossible to sell his shares without doing even more damage to the company’s stock for sales then had to be made quite public, we argued that this was a truly ill-advised decision on his part and that it would serve only to tell the market that his block of shares remained as over-head supply that eventually shall have to be sold, likely in a forced manner.

Yesterday, Mr. Ackman announced that he had indeed sold his remaining shares in VRX and has asked to have himself and an associate released from their Board seats. This was a very public capitulation on his part and quite honestly we feel very sad for him to have fallen this hard and this publically for no one deserves that sort of ignominy. Nonetheless, it was his selling, we are certain, that drove the stock down in the course of the past two weeks from $17/share to under $12. Now he is gone and the market knows that his shares have been distributed into the stronger… or at least broader… hands of other investors. There is no longer a huge block of shares dangling like the sword of Damocles over the market’s head.

Ackman was not alone in this trade. Other skillful and formerly wise hedge fund managers followed him into Valeant and followed him all the way down. But we are rather convinced that those “hedgies” are out now that Mr. Ackman is out so perhaps a “punt” from the long side is reasonable. The coast is now clearer. Lessons have been learned… we hope.

Gartman warns in 2016 that Bill Ackman averaging down in Valeant could end badly



Tuesday, March 14, 2017

30 year bond rally is over

That 30-plus-year bull market, which began in August 1982, is over. It's hard to believe, but I was there at the beginning. I was there at the end of the previous bear market, and I was there at the beginning of this long, protracted bull market in bonds (or the long, protracted decline in interest rates). It's hard for me to make people remember, but in 1982, the 30-year bond had a coupon of 14.75%, and you couldn't give them away at the time. It was astonishing how bad the psychology was.

But since 1982, we've been in a 30-plus-year bull market; that bull market has ended. The trend is for higher interest rates, not lower. But you must also remember the bond market tends to move in multidecade, long-term trends. If we're in for 20, 30 or 40 years of higher rates, for the first 15 or 20 years, we'll see rates go up very slowly, and very marginally.

It's at the end of this next bear market―the last quarter―that rates will go up the fastest and prices of bonds will fall the most dramatically. So while interest rates are going higher, there's no reason to be panicky about that right now.

Monday, March 13, 2017

Markets could disappoint investors


I would counsel people not to be a buyer of equities up here. If you’re an owner of equities, I would counsel strongly to bring stops up behind your positions, buy puts to protect those positions, sell futures to protect those positions, or write covered calls to protect those positions. I would tell you not to be a buyer of new equities. And anything that you had in the past, do something to protect those profits.

Trump Effect

Will there be tax cuts as consequential as Mr. Trump has indicated? There'll be tax cuts, but will they be as consequential? Probably not. Will there be infrastructure spending? Not a question. But will there be as much infrastructure spending as the markets seem to anticipate? Probably not.

Those things make it difficult to remain bullish of stocks at these levels. The market can go higher, but it is at levels I find to be nosebleed territory. People should be very careful up here. New purchases are to be avoided; old purchases should be hedged up in some fashion using derivatives or options; and bring stop orders up close behind the market.

Tuesday, February 21, 2017

State of market euphoria


As we have said many times in the past, the “game” of investing is so very like the children's game of “Musical Chairs.” The music is still playing loudly and well; all are dancing and circling the chairs and it seems, for the moment, that the music shall last forever. 

However, when the music does inevitably stop… and it will… all will suddenly dive for the chairs in the middle of the circle and there shall always be one or two participants who find themselves chair-less. Things then grow ugly. Large profits become smaller and small profits become losses.

Wednesday, February 15, 2017

Two rate hikes in 2017

Bullish on Cotton, Grains and Energy

Why? Because those markets have stopped going down. When markets stop going down on bad news, they are ready to turn around.

Two "hawks" have replaced two "doves" on the FOMC voting panel 

I think, at most we'll get two interest rate increases in 2017. 

Monday, February 13, 2017

The melt up will continue for now

STOCKS AROUND THE WORLD CONTINUE TO ADVANCE with nine of the ten markets comprising our International Index having risen since we marked them on Friday. The trend remains upward and although nearly ever method we know of for measuring market sentiment is preposterously over-extended to the upside, and although nearly every method we know of to measure relative value is equally over-extended to the upside, the great game of investment musical chairs continues. The “music” of monetary expansionism continues in Japan and Europe, so clearly that helps even as the policies incumbent in quantitative easing here in the US are farther and farther behind us.

The CNN Fear & Greed Index is this morning at 69 and is swiftly approaching “greed” territory once again and purchases of equities at these levels is historically very ill-advised for within weeks… or at the most a few months… those purchases will be proven to have been undertaken at extended, and very high prices. But as happened in the dot com Bubble of near the turn of this century, prices were egregiously, preposterously, stupendously, stupidly over-extended to the upside and then continued to become even more egregiously, preposterously, stupendously and stupidly over-extended for months and months and months. As our old friend, and mentor, Dr. A. Gary Shilling taught us, “The market can remain illogical far longer than you or I can remain solvent.”

Illogic reigns; the “Melt Up” has begun in earnest and it will stop when it stops and not a moment before.

To get the numbers out of the way, for the year-to-date stocks around the world as measured by our International Index are +3.8% while stocks here in the US, as measured by the S&P are +3.4%. The global leader… at least as far as our Index is concerned… continues to be Brazil, which led to the upside last year and which for the year-to-date is up a stunning 11.0%.

Also, once again, amidst the euphoria of the moment, it is worth remembering that stocks in global terms are still well below their highs made in May of ’15 when our International Index traded to 11,185. It does seem that that “peak” wants to be tested at the very least.

In our retirement fund here at TGL… and we’ve a few millions in the fund so it is not an inconsiderable sum and certainly it is meaningful to us… we are long of the shares of the largest steel producing company here in the US; we are long of gold in EUR and Yen denominated terms (having exited our position in gold/US$ late last week, a position established in the shares of the largest gold mining company in North America rather than in GLD or one of the other bullion ETFs.) and we are long of soybeans via the ETF, SOYB. 

As of Friday’s close we are up 5.2% for the year-to-date and we are grateful for reasonably well defined trends; for taking small losses and for simply “Doing more of that which is working and less of that which is not.”


Wednesday, February 1, 2017

Magazine headlines indicating market may have peaked

We were concerned about the stock market when we opened the latest edition of Barron’s and saw the front page cover announcing DOW 30,000! In the past, it has always been magazine and/or newspaper headlines that marked the highs and lows of the equity markets. Hence, when we opened our mail yesterday morning [Ed. Note: We sometimes don’t receive Barron’s in our post-office box until Monday morning; the rest of the world receives it on Saturday. This was one of those days!] and saw the front cover we thought: Has it happened again? Has a nation-wide publication once again marked the highs?  Have we learned nothing at all from history?


The jubilation over Dow 20,000 was disturbing enough, but to have had Dow 30,000 touted on the front page of Barron’s revisited historical precedents that spoke very loudly to us. We would very much like to believe that the bull market shall continue and we would very much like to think that Dow 30,000 shall eventually be upon us, and we very, very much would like to believe that any further weakness in  stocks is to be bought, but at the moment we have very serious doubts to that effect…. Very, very serious doubts.

Tops of consequence are made in this fashion, with front page articles touting new highs. Attention then must be paid...


via zerohedge

Friday, January 27, 2017

Gold will be stronger after India's currency supply issues are resolved


The situation in India continues to be problematic. The liquidity that the Modi government had promised following its currency “conversion” scheme has not yet appeared. Eventually the new currency denominations promised by the government will be fully available, but until then India’s citizens are living in a relatively “cashless” environment when “cash” has always been the preferred method of doing day-to-day business.

As a result gold buying on the part of India, the most important gold buying nation in the world, has remained subdued at best.

In that light, gold has held on quite well and we are left to wonder how strong it shall be when India returns in full regalia?

Wednesday, January 25, 2017

Bitcoin panic selloff was inevitable


Bitcoin may be the currency of the future but quite honestly we find it quite nearly incomprehensible at this point.

Monday, January 23, 2017

Gold to rise in Euro and Yen terms

No one anywhere should be surprised by this weakness for after nearly a month of quietly stronger prices, some correction is to be expected.

Many are blaming gold’s weakness upon the comments from Ms. Yellen ... and we shall not discount her comments… or theirs either… but gold was already showing some signs of ‘tiredness’ before Dr. Yellen took the stage.

Bullish Dollar and Gold

Why would we wish to use a currency… the dollar…which we think shall rise in value to buy gold when we can use currencies that we believe shall weaken to do the same thing.

Thursday, January 5, 2017

Its still a bull market in early 2017

STOCK PRICES AROUND THE WORLD ARE STRONGER AGAIN as our international Index has risen another 58 “points” or a bit more than 0.5% and although we are suspicious of this continued strength and although we are certain that a correction of some consequence shall happen “of a sudden” and only when it is obviously very least expected, one cannot take an overtly bearish stance for that would be folly. 

Again we shall simply suggest that this remains a bull market and that in a bull market that one is suspicious of one shall do best by being neutral of equities on balance, and so we are.

We are acting as a good “hedged” fund would act, being long of the things we like while being hedged against broad market risk at the same time.

Appearing on CNBC’s “Fast Money” last evening we again said that we wish to own the “things that if dropped on your foot shall hurt.” That is, we wish to own the simple things incumbent in economic growth: steel; ball bearings manufacturers; railroads that move “stuff” and the like. This is an old story; but it is nonetheless a very good one. If auto sale are as strong as they are domestically…as noted above… and if they are stronger still in China and Asia, then steel demand shall remain strong. Further, if the Chinese government wishes to crack down upon manufacturers there because of air pollution concerns, steel manufacturing in China may slow, with global demand still remaining rather high and thus forcing steel buyers to the US or perhaps to India. Sometimes, simple makes sense and in this instance, fully hedged “simple” might make the most sense of all.