Tuesday, December 27, 2016

Be long but fearful of a sharp correction

We shall once again suggest that new purchases of stocks at these levels shall prove to be ill-advised in the not too distant future. 

Trend remains upward and fighting that trend…opposing that trend… or worse, being short into that trend is and has been debilitating. The proper course of action, obviously, is to be long of equities but fearful of the inevitable correction, which will be violent and sharp when it happens.

Finally, what does bother us is this: that the economy here in the US is strong and shall grow stronger in the New Year as the “animal spirits” of the populace generally are aroused after years of being caged. But… and this is the most difficult “but” of all… aren’t stronger economic circumstances good for equity values, one might reasonably ask? The answer is, “Not always” and the reason is that when the monetary authorities are erring toward tighter policies as evidenced currently by the sharp contraction in the adjusted monetary base AND as the economy strengthens capital moves from the capital markets… from equities… into new plant, equipment and labor.

It is quite common, historically, for economies to strengthen AND for equity values to fall during times such as that, just as it is quite common for equities to rise even as recessions deepen as the monetary authorities are then erring upon the side of monetary expansion while the demand for plant, equipment and labor is faltering. This is the “harsh” secret of economic expansions and economic contractions when compared to equity valuations that is all too often misunderstood and this is our great fear at the moment.

Nonetheless, for now, and until the current great good fun of this bull market has run its course, the trend is up; the music is playing; the women are beautiful; the men are well mannered and the punch bowl is still on the table.

via zh

Thursday, December 22, 2016

Dennis Gartman correctly predicts Fed rate hike

The Fed follows what the market does. Fed has never been a leader in rates whether to the upside or downside. Fed has always been a follower of the markets and the markets have taken the rates higher and will probably continue to do so.  

Tuesday, December 20, 2016

Trump's infrastructure spending will boost commodity stocks

The incoming president has made it abundantly clear he will focus attention on several areas, infrastructure being primary, defense being secondary and I think … I want to own the things that if I drop them on my foot will hurt: Steel, ball bearings, railroads that sort of thing. I think we will see continued movement into those very simple things,

The real movement now is that we will see a movement towards the Mahoney Valley which is where steel was born here in the United States.

Monday, December 12, 2016

Tough for Crude Oil to rally much further

I think $52 crude oil plus a $4 contango gives you $56 for a one year forward. It is going to be tough to push WTI over $52. I said that more than two months ago, I said it a month ago and I will said it today again. As long as there is a contango, as long as there is a carry charge for the 1 year forward crude oil, that's imminently profitable.

Monday, December 5, 2016

Normally OPEC agreements are cheated upon very quickly

If you can bet on one thing in this world, bet on a mother's love, and bet on the fact that OPEC cheats. But it will be a month or two before we know that is actually happening.

I've said for a long time that i don't expect oil to get above $52. There are so many people caught on the short side of WTI and that's what you are seeing right now. That will end sometime in the coming weeks.

A strong dollar is going to be detrimental to commodity prices. The strong dollar is going to continue to be overhead resistance on commodity prices. Clearly that adds to the price of crude oil and that is bearish in the long run.

Monday, November 21, 2016

Thursday, November 17, 2016

Gartman on India, Currencies, Gold, Euro

Hougan: What about emerging markets? They’re also taking it on the chin this morning. Can you own them?

Gartman: Well, the dollar’s getting strong and foreign currencies are getting weak. That’s beneficial to their stock markets. But I’ll leave fishing in the emerging markets to people wiser than I am.

If you must look into emerging markets, look at India. It has the best government right now. I have enormous respect for Prime Minister Modi.

Hougan: One sector that caught my attention today is financials, which is moving up big: Is that a long-term move, or a kneejerk reaction anticipating less regulation?

Gartman: Financials understands that interest rates are going higher, spreads will widen, and it will be a better environment for banks. Banks make no money when interest rates are at zero; they make a lot more money when interest rates are at 5%. So it will be a better environment for banks going forward.

Hougan: What about gold?

Gartman: I am now, have been and will continue to be bullish on gold in euro-denominated terms.

If you look at the adjusted monetary base, it has tumbled in the U.S. … as the Fed stopped experimenting with quantitative easing. The same cannot be said in Europe, where the monetary authorities have had no choice but to continue. Their economies are still mired in deflation and far underperforming the economies here in the United States.

So I think the euro will fall well below par to the U.S. dollar, and if I believe that—and the charts are telling me that too—why would you buy gold with a rising dollar when you could buy it in a devaluing euro? I think it’s the best of all trades.

Hougan: We’re roughly two months away from Inside ETFs 2017, where you’re giving the closing keynote speech. Between now and then, are you bullish in general? Where would you tell investors to place their bets?

Gartman: The trend in equity prices is still from the lower left to the upper right. Weakness is to be bought, especially in infrastructure-oriented equities. If you’re uncomfortable being outright long, there are myriad ways to hedge yourself. But you want to err upon the side of being bullish on stocks.

Beyond that, I think you want to err on the side of being bullish on the U.S. dollar and bearish on the euro. I think you want to err on the side of avoiding debt securities, because I think interest rates are going to rise. … If you’re a punter, you probably want to be short the bond market; if you’re an investor, you just want to steer clear. And I think you want to err on the side of being bullish on gold, but specifically in euro terms. That’s my story and I’m sticking to it.

via ETF.com

Wednesday, November 16, 2016

The losers in a Trump presidency

The losers are very conservative, fiscally conscious Republicans.

There is an old-line of thinking: “Only Nixon could go to China.” In other words, you had to be a hard right-wing conservative to open up Communist China; it was the only way people would accept it. The same phenomenon could happen here: Only a quasi-Republican could throw over the bounds of fiscal austerity and say, “let’s spend money.”

Watch what happens: Trump’s going to embrace Bernie Sanders. It will stun everyone, but that’s what’s going to happen. Sanders will get on board; Democrats will get on board; most moderate and liberal Republicans will have no choice but to get on board.

Honestly, he’s going to out-Keynes Keynes. And the loser, when that happens—to answer your question—is the bond market.

Tuesday, November 15, 2016

Bond will under-perform

If you own bonds, you’re going to have a hard time in the next year. The peak was made in the bond market weeks ago. Now you’re going the other way, and it could be years of a bear market in bonds.

Can the country survive with a 5% yield on the 10-year note? Of course it can. But it will be bad for the bond market. Of course, there are ETFs that will take care of that fact if you want, with the inverse products like the TBT.

Monday, November 14, 2016

Market appears to believe in Donald Trump and infrastructure

The market wants to believe that Mr. Trump’s talk about trade protection, tariffs, building walls and calling people names was simply what he had to do on the campaign trail. His conciliatory acceptance speech—and it really was a conciliatory speech—was perhaps the best speech he’s given in the past year and a half. He seemed to have turned the corner; it was a completely different attitude.

The market seems to believe he’s going to spend money on infrastructure—on roads, bridges, airports, port facilities and hospital. The speech indicated he was going to take a different stance than his demeanor indicated on the campaign trail. As soon as his speech was over, the market turned around.

You have to take Trump at his word. He used the word “infrastructure” over and over in his speech. That means steel, cement, asphalt and the drilling infrastructure that goes into creating natural gas. They are things that, if you drop them on your foot, they’re going to hurt.

Mr. Trump is a builder, and builders build. So as an investor, you go out and find the simple things. I don’t think this fella is particularly interested or adept at high-tech or big pharma; he’s going to use simple things to build buildings, roads and bridges. If you keep it that simple, you’re probably going to do OK. 

In general, I think Mr. Trump made it abundantly clear that he’s going to invest in infrastructure. 

Wednesday, November 9, 2016

I voted for Donald Trump but world was not prepared for a Trump victory

I think the world was not prepared for Mr. Trump to win this. So money is fleeing to safer havens — it's going to gold, it's going to the Japanese yen.

US Dollar
I think that we're going to see the dollar become a good deal stronger because of this. I do think that Mr. Trump tends to be somewhat of a trade protectionist. Who's going to be hurt by that? It's going to be the Europeans. It's going to be Germany, that depends so much upon trade exports.

I think the benefit goes to the gold market because of uncertainty. I think that's going to happen rather consistently.

The new president is going to be far more expansionary when it comes to energy. That's going to be helpful to the suppliers of the production of crude. It's going to be detrimental to the crude's price itself.

The coal industry itself has been resurrecting on its own, and it's going to do far better. Coal mines will be reopened. New coal production will come on stream. Natural gas ... we will be drilling, drilling, drilling for more.

Monday, November 7, 2016

Fed is going to push the US Dollar higher

Dennis Gartman explains why he is bullish on the US Dollar. And why he is optimistic of Gold in Euro and Yen terms.

Monday, October 31, 2016

Reasons Oil will stay between $40 - $52

As long as Rosneft continues to stay outside and produce as much as they want, as long as you have problems in Venezuela, as long as you have the Iranians continuing to increase production, and having the Chinese remove themselves where they had been buyers buying for their own SPR(Strategic Petroleum Reserve) and apparently having removed themselves. I think it's going to be difficult even if they get an agreement to put prices very much higher at all, if at all.

Maybe, we get spot WTI back to $52 again. I think that will be difficult. Maybe we get Brent, the official international marker crude, to $54 per barrel again but the problem is the contango continues to be extremely wide.

Wednesday, October 26, 2016

Medium term 10 year bond rates to stay below 1.95

Rates can go higher, but not dramatically so. It's going to be very difficult to get the 10-year much beyond 1.95, at least over the course of the next year or two.

Ten years from now, where will rates be? A lot higher than where they are right now. Where will they be a year from now? Not much higher than where they are now.

Monday, October 24, 2016

Trend is up despite some warning signs

SHARE PRICES ARE UNIVERSALLY HIGHER as all ten of the markets comprising our International Index have risen in tandem, and they’ve done so with some sense if vigor, for four of the ten have risen by more than 1% and as several others were very nearly 1% higher. It is rare when there is this sort of universality in equity prices around the world, and historically such occurrences have taken place either at the very beginning of material new moves or at the very end of sustained bull or bear markets.
Margin debt continues to give us a great reason for pause and concern about equities. There are any number of ways to look at margin debt numbers and we’ve included charts of margin debts several times over the course of the past several weeks noting that the peak in margin usage characteristically… at least since the turn of this century… has led the downturn in equity prices by a year and one half or so.

We have to admit that the trend is up; that the monetary authorities are continuing to supply reserves to the systems around the world and that that supply is making its way into equity prices rather than into plant, equipment and labor. We are seeing, in broad global terms, what we have previously referred to as the Zimbabwe-isation of the global capital markets and we’ve no choice but to accept that fact and to recognize that that trumps all other “fundamental” and/or technical concerns:

Thursday, October 20, 2016

If I was forced to buy or sell gold in US dollar terms.....

If you made me take a position in dollar gold—if you said, “Dennis, you have no choice, you must take a position, you must either buy it or you must either sell it”—I'd be a buyer, but only if a gun were held to my head and I were forced into taking action.

Wednesday, October 19, 2016

Why Corn prices may have bottomed

It's time to be a buyer of corn, so maybe it's time to look at the Teucrium Corn Fund(CORN).

If there's one thing in the world you can absolutely count on, it's that year in, year out—as long as the weather is average―we produce more grain every single year than we did the previous year.

Our farmers are the best in the world. Our agricultural universities continue to do a better job at genetically making plants better and more efficient. We apply better types of fertilizer each year than we did before, because the genetically modified crops use less water and use less fertilizer.

We're just better at growing crops. This year, we're going to grow a crop of corn totaling 15.1 to 15.3 billion bushels. It was only 10 years ago that a 12-billion-bushel corn crop was a record crop. Now we're growing 15 billion. Next year, unless the weather gets ugly, we'll grow 15.4 billion.

Corn prices have come down a long way. Everybody knows we're going to produce an all-time record crop and yet, corn doesn't make a new low. One of the oldest rules in the book is that a market that doesn't go down any longer on bearish news isn't going to go down anymore.

That's why I like corn.

Tuesday, October 18, 2016

Simple reason crude could go down | All OPEC members cheat

At the meeting in Algeria last week, some sort of agreement was reached, to at least at freeze or maybe even curtail production. OPEC's been producing about 33 to 33.25 million barrels of crude a day. They say they're going to freeze production at something closer to 32.5 million barrels of crude per day.

If history has taught us anything about OPEC, it's that OPEC cheats. Every one of its members cheat. They cheat when they need to. They cheat when they don't need to. They cheat when it's good for them; they cheat when it's bad for them. They'll cheat again.

What I find interesting is that everybody got excited because Russia said it was going to perhaps sign on with a production freeze. And yet [Tuesday] morning, Mr. Sechin, the president of Rosneft, Russia's largest crude oil producer, asked, "Why should I curtail production? I'm going to continue to increase production."

He is brutally aware that $50 oil plus the $4 contango for one-year forward futures gives you $54. Every fracker in the United States is wonderfully profitable at $50-55 per barrel.

If you can have $55 for the one-year forward in crude, every banker who's lent any money to crude producers here in the United States is going to mandate that they get some hedges in place. Crude oil wells that have been drilled but capped are going to be brought on to production. It's going to be very difficult to push nearby WTI above $50 by more than a buck or two.

The rally in crude oil probably is going to very swiftly run its course.

Monday, October 17, 2016

Commodity markets on balance do not look healthy | Gold Bullish in Euro and Yen terms

Click here to watch the video if it does not play.

I have liked gold solely in euro terms and in yen-denominated terms. The monetary authorities in Europe and in Japan have no choice but to continue to be extraordinarily expansionary. Their economies are weak and getting weaker. Our economy is at least holding up reasonably well. By December, the Fed will probably take the overnight rate up 25 basis points.

Europe can't even consider the notion of tightening in at this point. The political and economic circumstances mandate that the ECB remain as expansionary as it can be. Therefore, gold in terms of the euro can go a good deal higher. I'm very bearish of the euro itself. Once we get under 1.095, the next stop is 1.05, and then we go to par.

Let's say dollar gold holds steady at $1,250 or so, and the euro goes to 1.05. In that instance, gold predicated in euros—and an ETF like the AdvisorShares Gartman Gold/Euro ETF (GEUR)—goes up another 5% or 6% from these levels.

So I'm bullish gold, but only in terms of the euro primarily, and then in terms of the yen secondarily.

Sunday, October 16, 2016

Hillary Clinton victory would mean Washington gridlock and its a positive for stock markets

If you’d asked me a week ago what the election impact will be on the capital markets generally, I would have said it's clear that Mrs. Clinton is likely going to win the presidency. At the same time, the Senate and the House were probably going to remain in the hands of the Republicans. Then we would have the best of all governments—we would have utter and complete and total gridlock. Markets like gridlock, because government can't do anything to you; they can't hurt you.

Now, however, with the virtual collapse of Mr. Trump's campaign over the course of the past week, I fear the Senate may actually be taken over by the Democrats.

It's also somewhat possible—maybe only a 20% probability—that the Republicans may even lose the House. If that were to occur, if we were to get a Democratic president, a Democratic Senate and a Democratic House, that would be terribly bearish for stock prices.

Thursday, October 13, 2016

Long term commodity bull super cycle is not over

Given the numbers of people who have truly thrown up their arms and given up on commodities, and the number of commodity hedge funds that have been forced to close—that’s  the hallmark of a market that’s about to go in the other direction.

Wednesday, October 12, 2016

Feeling uneasy about the market

Regarding the market here in the US, the trends of the broad indices remain upward, if again we define the “trend” by the 200 day moving average of the index in question or of the individual stock. The Dow, for example, is nearly 3.1% above its upward sloping 200 day moving average and that obviously remains bullishly inclined. The S&P’s 200 day moving average continues to move “from the lower left to the upper right” .... and the broad Russel Index is a stunning 9.2% above its upward sloping 200 day moving average. Clearly the trends, in broad terms, remain upward.

But… and isn’t there always a “but” of some consequence?...we are nonetheless bothered by the fact that so many of these broad indices “seem” to be turning for the worse, not the better. We are bothered by  the fact that the S&P “seems” to be failing in recent day, refusing to make new highs while breaking short term, but nonetheless seemingly important, short term upward sloping trend lines as seen in the chart of the S&P this page. The same can be said of the Dow; of the NYSE and of the Russel. This we find worrisome; this is what keeps us up at night.

Finally, we found it more than merely passing strange that on the first of the month stocks did not advance. Historically, new inflows of money have taken the indices higher on the first trading day of each new month. This time that did no happen, and that has given us reason for concern. ...... we find ourselves uneasy about the equity market… very, very uneasy

Tuesday, October 11, 2016

Why Gold took a beating last week

SPOT GOLD: Gold fell relentlessly, ostensibly on the news that the ECB might well “taper” its purchases of sovereign debt securities. With the Chinese removed from the market because of the National Week/Golden Week celebrations, and with the Indians reticent for whatever reason to step into the fray, gold had sellers everywhere without buyers of consequence. Do we think gold is overdone on the downside; yes, we do indeed, but so much technical damage has been wrought that any bounces toward $1292-$1297 will prove to be formidable resistance on a first bounce. For now, we have wounds to lick and heal.

As for gold and the other precious metals they remain rather obviously weak and as we move away from Tuesday’s collapse it appears more and more that this was a forced liquidation on the part of a large… actually a massive… hedge fund out of London. The sheer panic that swept through the gold market then really hadn’t the look of a sell off predicated upon a rumoured push by the ECB to curtail its purchases of sovereign debt securities, nor had it the look of a rush on the part of hedgers in the gold mining industry to hedge forward production. Rather it had the look of forced margin-clerk liquidation. It looked like panic on the part of someone, somewhere who had lost control of the situation.

Reading through the always interesting… but usually openly anti-everything and especially anti-TGL… ZeroHedge comments, we came across the following regarding Mr. Crispin Odey and the troubles he and his funds have been having of late. ZeroHedge wrote

        In mid-August, when the market was enjoying its low-volatility grind higher, we observed that one of the biggest bears in the hedge fund industry, Crispin Odey, was having a bad year, with his hedge fund sinking some 30% through the end of July. Since then, conditions have only gotten more precarious for the billionaire hedge fund manager, and as the FT writes, for Odey, who is betting it all "on a violent unwind of a QE bubble", the endgame may have arrived.
         As Miles Johnson writes [for the Financial Times], "many financial commentators have warned that current monetary policy has inflated a bubble that will one day violently pop. Few of them have risked money betting on the precise manner in which a chaotic unwinding of quantitative easing will play out through financial markets. This makes the portfolio of Crispin Odey, a London-based hedge fund manager, an interesting outlier. Mr. Odey is one of only a handful of investors who has backed up his dire prognosis for the global economy with a series of large, leveraged trades designed to pay off in the event of a crash."

To be sure, as we noted two months ago, Odey's bets are predicated on a collapse of Japanese bond prices, a surge in the price of gold and immolation of equities. Or as the FT puts, it, "If it works he may make hundreds of millions of dollars for his clients. If wrong his fund may not survive."

We are not rumor mongers here and we do not like to report on other people’s problems for we’ve plenty of our own errors and sins to account for; but the fact that much of this was reported in The Financial Times allows us to speculate that Tuesday’s sell-off did look like liquidation rather than fundamentally warranted selling. This view is further supported by the fact that the open interest in the COMEX futures has fallen by more than 4% this week, suggestive strongly of forced liquidation and a throwing up of the hands… and of the stuff in one’s stomach.

via ZH

Monday, October 10, 2016

Oil term structure bullish for oil prices

WTI CRUDE OIL: The Trend Line’s Been Broken and The Term Structure’s Bullish: 

Supply has never been a problem; there is plenty of… indeed an increasing supply of… crude; the problem is with demand. But the contangos are narrowing and the trend line’s been broken and any correction over the next week or two back to this trend line is to be bought.

Thursday, October 6, 2016

For the last 17 months we have been in a global BEAR Market

I think you’re going to be better off sitting in cash, being very quiet, being patient, and if you have to own something, hedge it up.

Tuesday, October 4, 2016

Deutsche Bank MAY be let off with a punitive fine

We should have understood that the pressures being put upon the Deutsche Bank by the American government in its demand for a fine of $14 billion would be ameliorated in some manner. Perhaps we should have understood that the demand for that fine was solely and completely one of political expedience as the Obama Administration wanted to appear to be rather obviously anti-Wall Street and rather more obviously set upon teaching capitalism a lesson, but would also be amenable to some lessening of the fines in question so that a substantive sum of money could be secured from a foreign, global bank prior to the November election. 

Yes, perhaps we should have known that the whole US government attack upon The Deutsche Bank was political in nature and that it would be resolved not from an economic perspective but from a political one instead. But amidst the chaos of Friday morning and amidst the collapsing stock markets evident at the time, and amidst the shocking weakness of the EUR on all fronts… relative to the dollar; relative to the Swiss franc; relative to gold et al…perhaps we should have decided then that the streets were running with figurative blood and that the time had come to turn bullish of shares… perhaps. But we are not that wise; nor are we that courageous that we shall step out into heavy traffic and dodge the dangerous cars and trucks of ill fortune that seemed so intent at the time to kill us at a moment’s notice.

If the US government is intent now to let the Deutsche Bank off with a relatively small fine… and $5 billion or so seems like a rather archly punitive fine of the first order, but that’s another question for another time… then perhaps the “Zimbabwe-isation” of the global capital markets remains firmly intact. This process of global monetisation on the part of the major central banks is still firmly intact and is not going to go away anytime soon and it is this process that does trump all else. 

If the great Marty Zweig taught us all decades ago never to fight the Fed, then we are to learn today never to fight the collective force of the central banks in aggregate either, but should instead see this as a wind at the stock market’s collective back.

Monday, October 3, 2016

Deutsche Bank will be bailed out if needed

We are not privy to the goings-on in Germany at Deutsche bank and we are certain that there are myriad problems all of a sudden seemingly coming to a head that are causing the bank to be talked about in “Lehman”-like terms. The question is whether Merkel & Company shall come to the Bank’s aid and save it from failure, and although Ms. Merkel has said countless numbers of times that she has no intention of doing so, in the end she will. She shall have no choice. Germany… and by extension the whole of Europe, and buy even further extension… the industrialized world cannot abide the collapse of the Deutsche Bank. It will be bailed out. Other banks in Germany can and would be allowed to fail, but the Deutsche Bank cannot and will not be.

In the world of capital markets, perception is all-too-often reality; if the market “perceives” you as impaired, you are impaired and if the market “perceives” you as insolvent, you are effectively insolvent… at least for the moment. This is the harsh reality of the market and as our old friend from 25 years, Mr. Barry Bausano, the Chairman of the Deutsche Bank’s hedge fund business said yesterday, even though the bank’s prime brokerage operation is very nicely profitable the bank still has “a perception issue.” Barry and others at the helm of the Bank’s various capital markets divisions have said that there have been no noticeable outflows of funds from the Bank, and given that that is so the Bank will likely weather the storm. Certainly we expect that that is true and at the moment we’ve no doubt but that that is indeed and in fact true. However, once again, in the capital markets, perception is all too often reality.

Risk does indeed happen fast, as our old friend, Doug Kass, reminds everyone.

Friday, September 30, 2016

Peak high end NYC real estate ?

High-cost New York real estate has got to be the best short in the world. It’s already crumbling at the top. They can’t sell the penthouses and the Russians are no longer coming to the United States.

Thursday, September 29, 2016

Crude oil top is near $50

We have seen the end of the bull market in crude. It’s going to be very difficult for WTI crude oil to maintain much above $50 per barrel for any protracted period of time.  

Wednesday, September 28, 2016

Clinton won the first debate over Trump according to the markets

The market is now more convinced than ever that Ms. Clinton will win the election following last evening’s debate between she and Mr. Trump. As we have explained here previously, the stock market here in the States is able to convince itself that her left-of-center rhetoric of recent days and weeks is nothing more than campaign rhetoric; that when she becomes the President she will turn away from these recently embraced leftist philosophies and will return to her roots better anchored on Wall Street… or at least that is the hope......

The capital markets can deal with almost any sort of news as long as it has hard, fixed news with which to deal. Mr. Trump was and is the “wild card” of the two candidates, with equity investors uncertain what his protectionist policies would bring to the domestic and the world economy, but fearful that a fully-fledged protectionist Administration under Mr. Trump would devolve into a severe global recession, if not a possible global depression. The talk of late has been properly of Smooth-Hawley, the 30’s and global economic weakness should Mr. Trump prevail in November, and certainly too that has been our fear. The non-victory “victory” by Ms. Clinton last evening has put aside those fears, at least for the moment, and has given way to stronger equity prices as we write. This may be ephemeral, but for now it seems as if the equity market has breathed a sigh of relief, hoping that freer rather than less trade is the future.

Let us be quite clear here; we are not supporters of Ms. Clinton and we shall not be voting for her; but that said, the markets feel less burdened by her economics than they would be burdened by Mr. Trump’s protectionism… the far lesser of two evils in our opinion.

We have not done much in the way of changing our retirement portfolio here at TGL. We remain long of aluminium… which gapped higher three trading sessions ago after a period of sustained weakness… while we are materially hedged with derivatives and with gold.....

via zh

Monday, September 19, 2016

Donald Trump presidency is good for Gold and bad for Stocks, Bonds

Donald Trump pictured with Robert Kiyosaki

I'm not a Clinton supporter and not really much of a Trump supporter. 

A Trump presidency would be enormously bearish for stocks. He's clearly not the known quantity and she clearly is the known quantity. She is far better known on Wall Street and the markets are always dismayed by confusion. Confusion breeds contempt and confusion would be part of his administration to begin with. So I think that would be terribly detrimental to stock prices were he to get closer to 42, 45, 46 percent and draw closer to where she is right now. 

I tend to be at this point somewhat bearish on Bonds. It has been a 32-year bull market and it looks like the peak was made, the low in yields several months ago. I think that a Trump presidency would probably allow rates to go higher and I think that would be terribly detrimental to bond prices on balance.

I think Gold would be supported by Mr Trump. Gold likes confusion, gold likes political dissent, gold would probably do rather well in a Trump administration. 

Tuesday, September 13, 2016

Risk happens fast according to Doug Kass

RISK HAPPENS FAST” ...as our old friend, Doug Kass, likes to tell us, for all ten of the markets comprising our International Index have fallen since Friday, with 5 of the 10 having  fallen by more than 2% and with one… the market in Brazil… having fallen by nearly 4%. 

Trend lines that had been sloping upward in instance after instance and which had held for months have been broken through to the downside, proving themselves to be readily vulnerable. “Reversals,” one after another, have evolved, and not merely daily reversals, but in many instances weekly and now even monthly reversals to the downside have either already evolved or are on the verge of doing so.
Risk does indeed happen fast, with the blame today going to be cast upon the Federal Reserve Bank for the thought that it may actually vote to tighten monetary policy at its meeting next week. We have never been of the mindset that the Fed was prepared to tighten policy and to raise the o/n Fed Funds rate next week, but many were and more had become so following Mr. Rosengren’s comments on Friday that he was beginning to err toward tighter policies… this from one of the more “dovish” of the voting, regional Federal  Reserve Presidents. That was all that was needed to change the market’s collective psychology at a moment’s notice, and although we are quite certain that the global market’s bearish rush shall quell any further consideration on the part of various FOMC voting  participants about tighter policies, it shall not likely make any difference; the die’s been cast and risk has indeed happened fast.

via zerohedge

Monday, September 12, 2016

There will be no Russia - Saudi Arabia crude oil freeze agreement

Saudi Arabia - Russia production freeze ?
They have been at religious difference for decades. That is not going to go away anytime soon. They have never really liked one another. The Russians have until recently been Atheists and that doesnt bode well with the Saudi's. The Saudi's see the long term price of Crude at effectively zero. There will be no freeze of any consequence. The contangos continue to widen, which tells you that there is an abundance of supply in the market. As long as the contangos continue to widen, as crude oil bids for storage, prices are going to head lower. Finally once you had WTI two weeks ago close at $50 with a $4 contango, every fracker, except for the total incompetents are making very profitable enterprise at these prices. 

So, the amount of crude oil that's going to come out of the Bakken, out of the Permian, out of Eagle Ford, is just going to be very large. The Saudis, the Iranians and the Russians have nothing they can say to us to tell us to stop our own production and we won't.

The reality is we're going to be stuck for several years between $35 on the low end, and $55 on the high. On balance we are likely to see $35 before we see $55.

Thursday, September 8, 2016

Market knows Donald Trump has no chance to be next president

Clinton could be the next President

The market is wise enough to know that Mr. Trump has no chance of becoming the next president and thus cannot and will not affect monetary and/or economic policy here in the U.S. or abroad.

Wednesday, September 7, 2016

Decline in hours worked another reason for Fed not to hike in September 20-21 meeting

On the Bureau of Labor Statistics report indicating a decline in hours worked per week : 34.3 hours per week in August, 2016, compared to 34.4 hours per week in August, 2006. 

"This is the number that caught us off, and this is the number that we think shall make it all but impossible for the FOMC to vote to raise the (overnight) fed funds rate at the (September) meeting.

Tuesday, September 6, 2016

Gold bullish in both Dollar and Euro terms

Where could Gold go ?

In dollar terms, perhaps quietly higher, with the operative word here being ‘quietly'.

In EUR terms, however, I am quite bullish for the European monetary authorities have no choice but to err expansionarily while the monetary authorities here in the States are soon going to err constrictively… leading to higher gold/EUR prices but merely steady gold/dollar prices

Thursday, September 1, 2016

Yen has gotten surprisingly strong

Surprisingly the Yen has become stronger and stronger to the extreme detriment to the Japanese Exports, Japanese economy and Japanese industry. And continues to get stronger. 

If you look at the Dollar versus the Euro there is plenty of resistance for the Euro between 1.11 to 1.14. I cant imagine the Euro can  rally beyond the 1.14 from present levels. The political circumstances in Europe are bad and the economic fundamentals are worse. 

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. 

Wednesday, July 20, 2016

Janet Yellen will not raise or lower rates for remaining of the year

There's little to be drawn from the Fed minutes. I think the FOMC used the referendum (on the U.K. leaving the EU) as a reason to do nothing. They would prefer doing nothing and they will probably do nothing for a long period of time. 'Lower for longer' is probably the way to consider what the Fed is going to do for quite some long period going forward.

There is a lack of resolve on the part of the economy here in the U.S. We're moving forward at a very tepid rate and I think we're stuck here at these low levels of Fed funds for a long period of time, certainly until the end of this year and perhaps into the middle of next year.

Tuesday, July 19, 2016

Cotton is breaking out to the upside

Take a look at what's happening to cotton. It's a market that nobody has been paying attention to and has been totally left off of everybody's radar. 

Something is developing technically in the cotton market. Cotton is trading within a very small range between 68 cents and a low of 60 cents. Suddenly, cotton is breaking out to the upside. The term structures are starting to move and the contangos are beginning to narrow. Markets that don't go down on bearish news aren't going down anymore.

Any time you have a chance to buy any weakness in the next two or three days, take a look at it. Be a buyer on any one- or two-cent declines.

Monday, July 18, 2016

This will end badly warns Gartman

Are stocks over-done on the upside? Yes, of course and that is stunningly clear from the fact that the CNN Fear & Greed Index finished at 88, a level exceeded only once in the course of the past three years when it touched 93 back in the spring of ’14. However, even then the market continued to run to the upside and it is worth remembering that fact. The market was egregiously over-bought then and it became even more egregiously over-bought in the weeks and months ahead. 

As Keynes said, “The market can remain irrational far longer than we can remain solvent.” The present “irrationality” may persist and likely shall. It may be ill advised… and very so… to initiate long positions here, but it is still wise to remain long of what one owns in order to participate in the “game” as long as the music is still playing. There will come a time when the music stops; when the reality of the situation created by the world’s leading central banks hits and hits hard and when the game turns ugly and bloody, but that time is not yet upon us. So we are to dance while the band plays; the champagne’s cold; the ladies are beautiful and the men are handsome, for soon enough it will all change… the only question is “When?”:

As Lord Keynes reminded us, the market can remain illogical far longer than we can remain solvent, but when we couple Herb Stein’s dictum with that of Keynes we know intuitively that something is going to  give; that these closed end fund premiums are doing to collapse and that this will end badly. It’s a given; it will happen!

Wednesday, July 13, 2016

Owning Gold in a basket of currencies could make sense

Gold has been on the rise for the past six months, leading to some recent speculation by traders and economists that it may be due for a pullback.

We are not "gold bugs" here at The Gartman Letter. We do not believe that Western culture is doomed to fail. We are not of the mindset that the world is coming to some inglorious end; indeed, we are not even certain that a recession is on the near-term horizon.

Further still, we don't think the dollar is in any danger of ceasing to be the world's reserve currency. We are convinced that with the confusion caused by the British vote to leave the European Union that the U.S. dollar shall be even more firmly entrenched as the world's reserve currency.

"Gold is the currency for the ages, having been around for centuries and having always been a metal that civilizations are enamored with." 

And, we are actually convinced that this is a better world in which we live presently than at any time in man's history; the number of wars is reduced to the fewest in history; the battles are the least bloody; men and women are living longer; diseases are being conquered. It is indeed the best of times.

That would usually mean that we are not bullish on gold, but, in fact, we are – and have been for quite a long time.

The problem is that we "see" gold as nothing more than a currency as well as some sort of "store of value." We see gold as the same as the dollar, euro, pound, etc. — but with "value" incumbent in it. Gold is the currency for the ages, having been around for centuries and having always been a metal that civilizations are enamored with. As such, and as foreign-currency traders, we tend to view one currency in terms of others; that is, just as the euro is "priced" in terms of the dollar or yen… gold can be and should be "priced" according to how many dollars are needed to buy one ounce of gold, or euros, yen, pounds, etc.

In terms of the euro, for example, gold has been in a bull market with higher interim highs and higher interim lows for two and a half years, even though, in dollar terms, it has been rising for only a bit more than six months. Since early 2014, gold has risen 40 percent if you measure it in euros but only 14 percent in dollar terms and 8.4 percent in yen terms. When you average that out, gold has risen about 21 percent relative to the world's three most important currencies since early 2014.

Why is this important? It is indicative of the fact that the world's central bankers are all, in unison, increasing the supply of reserves — the supply of money — to their banking systems, ostensibly to strengthen then economies, through the transmission of higher equity prices and through an eventual hoped-for inflation. And not only are theFederal Reserve, European Central Bank and the Bank of Japan acting in this fashion, but so, too, the People's Bank of China, the Reserve Bank of Russia, the central bank of Brazil and most central banks around the world. This is a process that shall not change anytime soon, for all of the world's major central banks are trying to create inflations and/or are at least fighting mightily to defeat deflationary forces that are extant and unwanted.

We are bullish, then, of gold relative to most other currencies. We see gold as the most stable of currencies, likely to continue to rise in value relative to the euro, yen, U.S. dollar and, indeed, relative to the ruble, pound, Brazilian real, Indian rupee, et al.

If one believes that the monetary authorities around the world will continue to inject reserves into their systems at a heady pace, then ownership of gold in several currency terms makes all the more sense. Indeed, in light of the fact that the Bank of Japan and the ECB are almost certain to embark upon new experiments in quantitative easing, while the U.S. Federal Reserve Bank shall be a good deal more reticent about doing so, owning gold in euro and yen terms is far more fundamentally warranted that owning gold in dollar terms. 

Monday, July 11, 2016

Money is now going into stocks for yield and Bonds for capital gains

Share prices have soared since Friday morning with all ten of the markets comprising our International Index having risen and with 7 of the 10 rising by more than 1%, as represented by the “green” coloring in the price index below, and as 2 of those 7 have risen by more than 2% and with 1 of those ten… the market in Japan… having risen by more than 4%. It is a spectacle of bullish enthusiasm and the markets are “dancing” to TINA’s tune… There Is No Alternative. Money has no place to go these days other than to the equity markets and the global markets are breaking out to the upside. It is really quite stunning.

As one or two off the wittier and wiser “Wags” commenting upon how the markets are moving have said, we are witnessing a stunning shift in the fundamental view of how capital is to be allocated: that is, money is moving into equities for the yield and is moving into the bond markets for the capital gains. 

This is breaking centuries of capital market allocation theory and it is putting that theory upon its head, because for centuries “serious” money went into the bond market for yield and went into the equity markets for capital gains. Now it is wholly and completely otherwise.

Perhaps this is a permanent change in investment theory, but perhaps not. Perhaps capital will, for the coming decades, move into equities in search of dividends and yield, and perhaps the central banks have so disturbed, distended and destroyed the bond market that money seeking capital gains will indeed flow there. 

After all, what money, in its right mind, would seek to move into Spanish debt yielding dramatically lesser interest rates than US government debt? None, in a truly rational world, with the term “rational” being defined as the action of portfolio managers over the course of the past several hundred years, but in a world over-turned by the monetary authorities at the world’s leading central banks perhaps all of the rules of the past are also over-turned.

As we have argued, just as in the case of physics where the “laws” as understood are either over-turned or severely bent as temperatures approach “absolute zero,” the “laws” of money management are turned on their heads as interest rates approached zero and are certainly turned on their heads as rates have gone into negative territory.

Monday, June 27, 2016

This is a serious situation and lots of confusion within Europe

I think the big thing is since the UK had a referendum, the propensity for the other countries to have a referendum grows. You're going to have countries such as Bulgaria who are marginally involved in the EU and just barely made it in. They are people in that country who are going to say, "you know what... what are the benefits ?" So there's all sorts of confusion, you have a federal elections coming up in Spain where its a very extreme right wing vs left wing. There's a lot of confusion embarked in Europe at this point and this only makes it worse.

The panic is over but now reality sets in as the world has to begin to try to understand just how truly serious and how tectonic plate-shifting was the British referendum last week. What we have come to accept as the status quo in Europe has been torn wholly asunder. That which was, isn’t, but that which shall be is wholly unknown. We are treading new ground.

Friday, June 24, 2016

BREXIT hammers the market pre-open

Gold in British Pound terms up almost 15 percent overnight

British Pound down 8 percent pre-market open

Related Articles

Dennis Gartman warning prior to BREXIT vote

Its a Bear Market

Monday, June 20, 2016

Brexit would propel Gold higher and push the Sterling and Euro lower

You want to be long the currency that should be the strongest and that would be Gold. You want to be short the currency or fund your Gold, that is weakest and that is the Sterling and second the Euro.


Thursday, June 16, 2016

Bear market making us reduce long positions

Because this is a bear market in global terms, we need to position ourselves accordingly; that is we shall increase our short derivatives positions today in our own retirement funds while we reduce our long positions, sufficient to get ourselves into a small net short position by mid-day. 

The world is a much more frightening place than it was only a few days ago; the prospects of a Clinton or a Trump presidency; the confusion underlying central bank policy making; the geopolitical circumstances of the moment all work together to cause is dismay rather than joy….. to cause confusion rather than confidence. We shall act accordingly.

Wednesday, June 15, 2016

Draghi should helicopter money

Draghi's comments I thought were very, very serious.  He's made it abundantly clear that there is not much more that they can do.

If you look at the Euro after his comments came out, the Euro gave up 70 pips almost immediately. I think they can do helicopter money and I think they should do that.

Monday, June 13, 2016

Bill Ackman's eventual demise will be a Greek tragedy

The purpose for this exercise is to learn the lesson that Mr. Ackman is learning the very hardest of ways: that the market is wiser and larger and fiercer than are we. We are but small, imperiled cogs in a huge machine that can and will grind us into oblivion. The best that we can do is make certain that we have our trading positions in line with the market’s main trend; that we align ourselves with forces larger than are we and that we never, ever deviate from that intention.

Mr. Ackman is heading toward investment oblivion. He is trapped in a trade that he cannot… and will not… get out of. His institutional clients will make the decision to get out for him as they demand that their remaining capital be returned and that as he raises that capital he is forced to sell his remaining shares in Valeant.

This is an enormous tragedy of huge proportions being played out here before our eyes. Mr. Ackman’s investors did not deserve this fate, but they are being forced to live it nonetheless. How truly sad. He averaged down…again… and again…and again… and again. His eventual demise is a lesson to us all. Would that we learn from it: This is Greek tragedy of the saddest kind. No one deserves this fate"

Friday, June 10, 2016

Bill Ackman losing position at Valeant could come back to haunt him

Concerning what has happened of late to Pershing Square and Mr. Ackman, we had a discussion with a friend in the hedge fund industry yesterday… a “rival” of Mr. Ackman’s… whose “take” on this question was most interesting. 

Our friend is convinced that Mr. Ackman’s effect upon the hedge fund industry may in the end by more dismaying than the effect that Mr. Madoff had upon it, for Madoff was a  matter of criminality that should have been discovered but was hidden for a long while from view, while Ackman’s actions have been long standing, inexorable and perhaps repeatable by others, creating fear amongst institutional investors who will, in the future, be unwilling and/or unable to put money at risk in these same manners. Money will not, in the future, allow itself to be gated, and in response the entire hedge fund industry will be diminished.

Here we have one of the true giants of the hedge fund industry; a gentleman once worth billions who ran billions more; a leader in the performance race for many years and now rather obviously a gentleman, who like Icarus of Greek mythology fame, flew too close to the sun and is now falling into oblivion"

When one averages down into a long position… or averages “up” into a short position… only one thing can be happening to the equity in one’s account: it must, by definition, be falling. If you buy a company’s stock at $25/share and it goes to $20/share, you are worth less than you were before. It cannot be otherwise. It is simple arithmetic. On the other hand, if you buy a company’s shares at $25/share and they go to $30/share your equity can only be larger. Why, we ask, would you wish for the former?"

We watched as US Airways’ stock fell from $125/share all the way to zero, with some of the great minds in the business having owned it… and having bought it… all the way down into oblivion. We watched as sugar prices in the early 70’s fell from $1.25/lb. to $0.03/lb., with buyers all the way down, and over the past three decades we’ve watched as the coupon on the long bond here in the US has gone from 14.25% to where it is today in single digits

Once again, averaging down into long positions while averaging up into short positions and continuing to do so even as the trend is clearly against one... is what we have referred to as the sole “carcinogen” in the investment/trading business. The demise of Nick Leeson; the collapse of Sumitomo Metals; the problem caused by Mr. Kerviel at SocGen… all came about by adding to losing positions and by disregarding risk. It is our duty to avoid such nonsense. Hopefully we shall continue to do so.

Wednesday, June 8, 2016

Oil prices to stay below $50

I wouldn't be surprised if we stabilized between the low $40's and the very low $50's for a long period of time.

The Iranians are surprising everybody by how swiftly they had been able to ramp up production. They're almost back to the levels of pre-sanctions, and they're going to get past those levels very soon.

The Saudis have made it abundantly clear that they intend to increase production because they see their own crude oil as a wasting asset that will basically be worthless in 25 years. They're going to be selling it as quickly as they can to get what money they can right now.

In the U.S., anything above $45-50 for spot WTI with a decent contango on the one-year and two-year forward curve gives you a very profitable level for almost any kind of fracker in any reasonable territory in the Bakken or in the Permian to produce.

You've also got 25-35 tankers filled with crude sitting just outside Singapore that’ll come to the market at any time. Is the oversupply over? No, it's going to get much worse. On balance, it's going to be very hard to push crude oil much above $50.

Tuesday, June 7, 2016

Market refusing to go down is a bullish sign

All the fundamentals would seem to indicate the market should go lower, but it doesn't want to go lower. Too many people are short. Too many people have no place else to go with their money. The trend seems to be from the lower left to the upper right. The next big move is probably still upward.

Monday, June 6, 2016

Venezuela selling Gold and will put pressure on gold prices for another couple months

People bought gold because they were concerned about equity prices. Gold was rallying very hard in January and February as the stock market was stumbling. When the stock market firmed up, the propensity to add to any long positions in gold was greatly reduced.

There's also been some rather aggressive sellers―primarily the Venezuelans―who've had no choice but to sell gold. They can't raise foreign capital or hard currency, and Venezuela needs hard currency.

Venezuela has made so many stupid decisions in the course of the past several years under Mr. Maduro. The country is the great producer of sludgy, heavy crude oil. To sell that crude oil, it has always had to mix it with better blends from abroad.

But it can't seem to buy any more because it doesn't have the money to do it. Thus, it’s been a seller of gold from its reserves, which makes Venezuela the dominant seller right now. They may have another month or two selling, at most. Once that's out of the way, gold prices probably will go higher.

Most of the monetary authorities, with the exception of the United States, are going to be easing monetary policies. The Japanese have no choice but to do so. The government deferred the sales tax increase that was supposed to go into effect next April for at least 2.5 more years. That will give the monetary authority at the Bank of Japan the ability to expand reserves even more aggressively. The Europeans have to do the same thing.

I like gold, but gold in euro terms and gold in yen terms is a far better trade than is gold in dollars.

via etf.com

Wednesday, June 1, 2016

Monsanto stock is worth minimum $130

I agree with Monsanto. I think they're worth at least $130 a share and my guess is that they will get that sort of number before too long

Why is Monsanto worth that much? It's an amazing company, it has led the world in GMO (genetically modified organisms) seeds. Genetically modification of seeds has given us such as increase in corn production, a huge increase in soybean production, strange products like cotton that comes out white. And I think Monsanto is worth that price. Eventually I think they'll get their price of $130.


Tuesday, May 31, 2016

Markets to rally higher by end of this week

When all the markets reversed to the upside, after having opened lower and then gotten higher on the day, I said to myself, 'this is turning better, something's taking place. Perhaps it was the agreement that was reached between the EU (European Union) fiscal authorities and Greece… that seemed to me to be the turning point and once you got higher on the day, it's as if the shorts, I being included, had to rush to get long and I actually ended the day long here, which is unusual for me to turn my position that quickly.

Anybody who is short and there are a lot of smart people out there that are heavily short and they will have to run to cover. It can get real ugly.

Monday, May 30, 2016

Dollar rally could put downward pressure of Gold in US dollar terms

As we know, a strong dollar begets weaker commodity prices all things being otherwise equal. With the strength of the dollar, that I think shall continue, it’s going to put downward pressure, on balance, on gold.

Wednesday, May 25, 2016

Dollar strength to continue and create downward pressure on Gold

There has been an aggressive seller of spot gold at 1,270 to 1,285. Whoever that person or institution is will likely continue to be there until after a rate increase.

If you have to trade gold, stay on the sidelines in terms of U.S. dollars.

Monday, May 23, 2016

Gold Market top ? High levels of Net Short Gold positions in COT reports

I love the notion of being long of Gold in Non-US terms particularly in Yen and Euro terms. 

There is, however, one major factor in the market that gives us very real reason to be concerned: the net commercial short position in gold futures is amongst the highest levels seen since the turn of the century and characteristically these have developed at important gold market tops.

The top in 2008 was made when the commercials were almost as short as they are now; the top in ’09 was made the same way as was the real top in 2011 when gold peaked at $1,900. Attention must be paid.

via bulliandesk

Tuesday, May 17, 2016

Multiple reasons behind the Gold rally and why Gold can go higher

Demand for gold is very strong and what you are seeing is people are moving out of all currencies on balance, out of the Euro, Ruble, Yen, Renminbi. So I've been bullish primarily in Euro and Yen terms, and now I'm turning bullish even on US Dollar terms. 

If you see commodity prices continue to rally, you will see Gold prices rally. You have to argue for stronger Gold prices, gold has been strong for the past few months and likely to continue.

Wednesday, May 11, 2016

Long Gold in US Dollar terms

Given the recent sharp weakness in the Japanese Yen and the recent modest weakness in the EUR, taking both to levels we thought likely to find support, we moved to reduce our long positions in EUR/gold and Yen/gold modestly, replacing those positions with US dollar denominated gold instead, ending the day evenly split between the three “types” of gold but keeping our over-all gold position intact.

Monday, May 9, 2016

Gold has a tendency to get to big round numbers and back down

I think Gold is still a bull market. I think the monetary authorities around the world, with the exception of the United States, are continuing to err on the side of easier monetary policies, even the Japanese have no choice after they made a mistake last week . Normally one wants to think that a bull market in equities gives way to weaker gold prices, but that's not necessarily true. If the monetary authorities are in fact easing... that could still make the case for a stronger stock prices and for stronger gold

We are quite convinced at this point is that the bear market that had so plagued gold priced in US dollars since November of 2011 has rather obviously ended, even as the bull market in gold priced in yen has been extant for nearly three years and as gold prices in euros has been extant for a year or more.

Gold prices facing strong headwinds at $1300

We have no idea who it is or ‘what’ it is that has been selling spot gold at $1,300, but the seller there is obviously formidable. That seller shall have to be vanquished before the next bull run. One gets the sense, however, that the bullish forces are camping out just below that level to gather themselves for an assault upon the $1,300 fortifications. Let the battle lines be drawn.

Monday, May 2, 2016

BOJ no action is a mistake

The BoJ has made a very, very big mistake. The stock market has plunged. Corporate Japan, hoping for greater monetary wind behind its sails, has been thrown an anchor instead and needing a materially weaker yen has gotten a materially stronger yen instead. We are stunned.

Wednesday, April 27, 2016

Time to stop being bearish on crude oil

We invoke Lord John Maynard Keynes this morning who said long ago when he had changed his mind on an investment he had previous touted that “When the facts change, I change; What then do you do, Sir?” The facts are changing in the world of crude oil; demand is still rather strong and supplies seem to be rising but only modestly. Further, the term structures are shifting. 

We had been, on balance and really quite openly, bearish of crude for the past several years, erring always to sell crude’s rallies rather than to buy crude’s weakness. That has been wrong for the past two months and it is time to acknowledge that “wrongness.” If the facts are indeed changing… and certainly they seem to be… then we too must change. Lord Keynes did; we must also.

via zerohedge