A la estela de los QE
Viernes, 24 de Julio del 2015 - 15:52:00
Ya saben que somos positivos para el comportamiento de los mercados, especialmente bolsa, en los próximos 6-12 meses.
¿Y qué compramos? naturalmente, preferimos mercados bajo la sombra de bancos centrales que siguen comprando activos. Es el caso en las economías desarrolladas de la zona EUR y Japón.
¿Y el resto? Más que ponernos cortos, preferimos infraponderar en un contexto de liquidez, progresiva mejora de las perspectivas macro y baja volatilidad implícita. No confundir esto con un periodo de calma.
Cíclicos, especialmente beta mayor que la unidad.
Aprovecharnos de la inercia compradora, sin reparar en el precio. Pero aceptando, como hacen muchos responsables de bancos centrales que los precios actuales son altos. Pero no excesivamente altos.
Las matizaciones siempre son importantes. Y los gráficos sirven para matizar, ¿no están de acuerdo?
Dos puntos de PER a nivel mundial por encima de la media histórica no parece mucho, especialmente si pensamos en los 10-15 puntos de diferencia en momentos pasados que fueron identificados como una burbuja.
Dicho esto, también es cierto que seguimos apoyando la inercia compradora en la liquidez y no tanto en la mejora de los ratios.
Piensen por ejemplo en la fuerte revisión a la baja de las perspectivas de resultados para el año, desde niveles del 11 % a finales del año pasado a la aceptación ahora de un crecimiento de los beneficios a nivel mundial no superior al 4.0 %. Pero, naturalmente, se espera una mejora el próximo año con crecimientos previstos del 13 %. Veremos.
Tipos bajos, dividendos, en general, altos.
¿Cuánto tiempo pueden estar bajas las rentabilidades de la deuda? Pregunten a los bancos centrales.
Por último, madurez del ciclo económico….¿y del ciclo inversor? 6-12 meses no parece mucho tiempo, ¿verdad?
José Luis Martínez Campuzano
Estratega de Citi en España
Viernes 24/07/15 PMI manufacturero, ventas de casas nuevas
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 5:06 pm
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 5:22 pm
Amazon Just Became Bigger Than Walmart: Here's Why
Submitted by Tyler D.
07/23/2015 - 16:39
The moment everyone has been waiting for has finally arrived, by which of course, we mean the moment when the market cap of AMZN would finally surpass Wal-Mart.
What's The Real Reason The Fed Is Raising Rates? (Hint: It's Not Employment)
Submitted by Tyler D.
07/23/2015 - 17:15
Sometime this fall, the Federal Reserve will begin a new tightening cycle. Publicly, Federal Reserve officials appear to be confident that the American labor market may be overheating or that inflation may be on the way in. Is this the case? In looking at Employment, Industrial Production, Consumer Prices, Capacity Utilization, Retail Sales, and the West Texas Intermediate price of oil, there's no evidence that the Fed should raise rates. What is the Fed worried about? Probably, and almost exclusively, it's financial asset price appreciation.
Submitted by Tyler D.
07/23/2015 - 16:39
The moment everyone has been waiting for has finally arrived, by which of course, we mean the moment when the market cap of AMZN would finally surpass Wal-Mart.
What's The Real Reason The Fed Is Raising Rates? (Hint: It's Not Employment)
Submitted by Tyler D.
07/23/2015 - 17:15
Sometime this fall, the Federal Reserve will begin a new tightening cycle. Publicly, Federal Reserve officials appear to be confident that the American labor market may be overheating or that inflation may be on the way in. Is this the case? In looking at Employment, Industrial Production, Consumer Prices, Capacity Utilization, Retail Sales, and the West Texas Intermediate price of oil, there's no evidence that the Fed should raise rates. What is the Fed worried about? Probably, and almost exclusively, it's financial asset price appreciation.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 5:24 pm
The Hard Truth: For Retail Investors, The NYSE Is Always Out Of Service
Submitted by Tyler D.
07/23/2015 - 18:15
The real reason why retail investors weren't impacted by the NYSE's halt is a hard truth... to retail investors, the NYSE is always dark
Where Do Retail Investor Orders Go? The simple answer: to the highest contracted bidder. Stock "wholesalers" or internalizers like Citadel or Knight pay retail brokers lots of cash to execute retail trades, essentially creating a "third market". Why? Because in a high frequency trading world, where stock prices have never been more fuzzy to the end user, but crystal clear to those that spend enormous sums on colocation and PhD employees, it's never been easier to print money (not unlike Bernie Madoff's scheme in the 90's). But that is the subject of a much, much longer story. Someone should write a book.
15 Years After Land-Grabs, Mugabe Invites White Farmers Back To Zimbabwe
Submitted by Tyler D.
07/23/2015 - 18:45
File this one away in the "when populism backfires" folder. A little over a month after announcing that the Zimbabwean dollar - which, you’re reminded, was phased out in 2009 after inflation rose modestly to 500 billion percent - would be demonetized and exchanged at a generous rate of $5 for every 175 quadrillion, Zimbabwe will for the first time rethink the sweeping land grabs which began in 2000 and subsequently crippled the country’s economy.
Submitted by Tyler D.
07/23/2015 - 18:15
The real reason why retail investors weren't impacted by the NYSE's halt is a hard truth... to retail investors, the NYSE is always dark
Where Do Retail Investor Orders Go? The simple answer: to the highest contracted bidder. Stock "wholesalers" or internalizers like Citadel or Knight pay retail brokers lots of cash to execute retail trades, essentially creating a "third market". Why? Because in a high frequency trading world, where stock prices have never been more fuzzy to the end user, but crystal clear to those that spend enormous sums on colocation and PhD employees, it's never been easier to print money (not unlike Bernie Madoff's scheme in the 90's). But that is the subject of a much, much longer story. Someone should write a book.
15 Years After Land-Grabs, Mugabe Invites White Farmers Back To Zimbabwe
Submitted by Tyler D.
07/23/2015 - 18:45
File this one away in the "when populism backfires" folder. A little over a month after announcing that the Zimbabwean dollar - which, you’re reminded, was phased out in 2009 after inflation rose modestly to 500 billion percent - would be demonetized and exchanged at a generous rate of $5 for every 175 quadrillion, Zimbabwe will for the first time rethink the sweeping land grabs which began in 2000 and subsequently crippled the country’s economy.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 5:30 pm
How Monsanto, Exxon Mobil, & Microsoft Lobbyists Are Bundling Funds For Hillary
Submitted by Tyler D.
07/23/2015 - 21:15
The pantsuit revolutionary is at it again. Once again demonstrating her populist chops by employing the services of lobbyists to bundle millions in campaign funds. It’s no wonder opinion polls on her have been plunging as of late.
Submitted by Tyler D.
07/23/2015 - 21:15
The pantsuit revolutionary is at it again. Once again demonstrating her populist chops by employing the services of lobbyists to bundle millions in campaign funds. It’s no wonder opinion polls on her have been plunging as of late.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 5:35 pm
Central Banks And Our Dysfunctional Gold Markets
Submitted by Marcia Christoff-K.
Many investors still view gold as a safe-haven investment, but there remains much confusion regarding the extent to which the gold market is vulnerable to manipulation through short-term rigged market trades, and long-arm central bank interventions. First, much of the gold that is being sold as shares, in certificates, or for physical hoarding in dubious "vaults" just isn't there. Second, paper gold can be printed into infinity just like regular currency. Third, new electronic gold pricing — replacing, as of this past February, the traditional five-bank phone-call of the London Gold Fix in place since 1919 — has not necessarily proved a more trustworthy model. Fourth, there looms the specter of the central bank, particularly in the form of volume trading discounts that commodity exchanges offer them.
The Complex World of Gold Investments
The question of rigging has been brought to media attention in the past few months when ten banks came under investigation by the US Commodity Futures Trading Commission (CFTC) and the US Department of Justice in price-manipulation probes. Also around that time, the Swiss regulator FINMA settled a currency manipulation case in which UBS was accused of trading ahead of silver-fix orders. Then, the UK Financial Conduct Authority, which regulates derivatives, ordered Barclays to pay close to $45 million in fines against a trader who artificially suppressed the price of gold in 2012 to avoid payouts to clients. Such manipulations are not limited to the precious-metals market: in November of last year, major banks had to pay several billion dollars in fines related to the rigging of foreign-exchange benchmarks, including LIBOR and other interest-rate benchmarks.
These cases followed on the heels of a set of lawsuits in May 2014 filed in New York City in which twenty-five plaintiffs consisting of hedge funds, private citizens, and public investors (such as pension funds) sued HSBC, Barclays, Deutsche Bank, Bank Scotia, and Société Génerale (the five traditional banks of the former London Gold Fix) on charges of rigging the precious-metals and foreign-exchange markets. "A lot of conspiracy theories have turned out to be conspiracy fact," said Kevin Maher, a former gold trader in New York who filed one of the lawsuits that May, told The New York Times.
Central Banks at the Center of Gold Markets
The lawsuits were given more prominence with the introduction of the London Bullion Market Association (LBMA) on February 20, 2015. The new price-fixing body was established with seven banks: Goldman Sachs, J.P. Morgan, UBS, HSBC, Barclays, Bank Scotia and Société Génerale. (On June 16, the Bank of China announced, after months of speculation, that it would join.)
While some economists have deemed the new electronic fix a good move in contrast to behind-closed-door, phoned-in price-fixing, others beg to differ. Last year, the commodities exchange CME Group came under scrutiny for allowing volume trading discounts to central banks, raising the question of how "open" electronic pricing really is. Then, too, the LBMA is itself not a commodities exchange but an Over-The-Counter (OTC) market, and does not publish — does not have to publish — comprehensive data as to the amount of metal that is traded in the London market.
According to Ms. Ruth Crowell, the chairman of LBMA, writing in a report to that group: "Post-trade reporting is the material barrier preventing greater transparency on the bullion market." In the same report, Crowell states: "It is worth noting that the role of the central banks in the bullion market may preclude 'total' transparency, at least at the public level." To its credit, the secretive London Gold Fix (1919–2015) featured on its website tracking data of the daily net volume of bars traded and the history of gold trades, unlike current available information from the LBMA as one may see here (please scroll down for charts).
The Problem with Paper Gold
There is further the problem of what is being sold as "paper" gold. At first glance, that option seems a good one. Gold exchange-traded funds (ETFs), registered with The New York Stock Exchange, have done very well over the past decade and many cite this as proof that paper gold, rather than bars in hand, is just as sure an investment. The dollar price of gold rose more than 15.4 percent a year between 1999 and December 2012 and during that time, gold ETFs generated an annual return of 14 percent (while equities registered a loss).
As paper claims on trusts that hold gold in bank vaults, ETFs are for many, preferable to physical gold. Gold coins, for instance, can be easily faked, will lose value when scratched, and dealers take high premiums on their sale. The assaying of gold bars, meanwhile, with transport and delivery costs, is easy for banking institutions to handle, but less so for individuals. Many see them as trustworthy: ETF Securities, for example, one of the largest operators of commodity ETFs with $21 billion in assets, stores their gold in Zurich, rather than in London or Toronto. These last two cities, according to one official from that company, "could not be trusted not to go along with a confiscation order like that by Roosevelt in 1933."
Furthermore, shares in these entities represent only an indirect claim on a pile of gold. "Unless you are a big brokerage firm," writes economist William Baldwin, "you cannot take shares to a teller and get metal in exchange." ETF custodians usually consist of the likes of J.P. Morgan and UBS who are players on the wholesale market, says Baldwin, thus implying a possible conflict of interest.
Government and Gold After 1944: A Love-Hate Relationship
Still more complicated is the love-hate relationship between governments and gold. As independent gold analyst Christopher Powell put it in an address to a symposium on that metal in Sydney, October 2013: "It is because gold is a competitive national currency that, if allowed to function in a free market, will determine the value of other currencies, the level of interest rates and the value of government bonds." He continued: "Hence, central banks fight gold to defend their currencies and their bonds."
It is a relationship that has had a turbulent history since the foundation of the Bretton Woods system in 1944 and up through August 1971, when President Nixon declared the convertibility of the dollar to gold suspended. During those intervening decades, gold lived a kind of strange dual existence as a half state-controlled, half free market-driven money-commodity, a situation that Nobel Prize economist Milton Friedman called a "real versus pseudo gold standard."
The origin of this cumbersome duality was the post-war two-tiered system of gold pricing. On the one hand, there was a new monetary system that fixed gold at $35 an ounce. On the other, there was still a free market for gold. The $35 official price was ridiculously low compared to its free market variant, resulting in a situation in which IMF rules against dealing in gold at "free" prices were circumvented by banks that surreptitiously purchased gold from the London market.
The artificial gold price held steady until the end of the sixties, when the metal's price started to "deny compliance" with the dollar. Still, monetary doctrine sought to keep the price fixed and, at the same time, to influence pricing on the free market. These attempts were failures. Finally, in March 1968, the US lost more than half its reserves, falling from 25,000 to 8,100 tons. The price of other precious metals was allowed to move freely.
Gold Retreats Into the Shadows
Meawhile, private hoarding of gold was underway. According to The Financial Times of May 21, 1966, gold production was rising, but it was not going to official gold stocks. This situation, in turn, fundamentally affected the gold clauses of the IMF concerning repayments in currency only in equal value to the gold value of such at the time of borrowing. This led to a rise in "paper gold planning" as a substitution for further increases in IMF quotas. (Please see "The Paper Gold Planners — Alchemists or Conjurers?" in The Financial Analysts Journal, Nov–Dec 1966.)
By the late 1960s, Vietnam, poverty, the rise in crime and inflation were piling high atop one another. The Fed got to work doing what it does best: "Since April [1969]," wrote lawyer and economist C. Austin Barker in a January 1969 article, "The US Money Crisis," "the Fed has continually created new money at an unusually rapid rate." Economists implored the IMF to allow for a free market for gold but also to set the official price to at least $70 an ounce. What was the upshot of this silly system? That by 1969 Americans were paying for both higher taxes and inflation. The rest, as they might say, is the history of the present.
Today, there is no “official” price for gold, nor any “gold-exchange standard” competing with a semi-underground free gold market. There is, however, a material legacy of “real versus pseudo” gold that remains a terrible menace. Buyer beware of the pivotal difference between the two.
Submitted by Marcia Christoff-K.
Many investors still view gold as a safe-haven investment, but there remains much confusion regarding the extent to which the gold market is vulnerable to manipulation through short-term rigged market trades, and long-arm central bank interventions. First, much of the gold that is being sold as shares, in certificates, or for physical hoarding in dubious "vaults" just isn't there. Second, paper gold can be printed into infinity just like regular currency. Third, new electronic gold pricing — replacing, as of this past February, the traditional five-bank phone-call of the London Gold Fix in place since 1919 — has not necessarily proved a more trustworthy model. Fourth, there looms the specter of the central bank, particularly in the form of volume trading discounts that commodity exchanges offer them.
The Complex World of Gold Investments
The question of rigging has been brought to media attention in the past few months when ten banks came under investigation by the US Commodity Futures Trading Commission (CFTC) and the US Department of Justice in price-manipulation probes. Also around that time, the Swiss regulator FINMA settled a currency manipulation case in which UBS was accused of trading ahead of silver-fix orders. Then, the UK Financial Conduct Authority, which regulates derivatives, ordered Barclays to pay close to $45 million in fines against a trader who artificially suppressed the price of gold in 2012 to avoid payouts to clients. Such manipulations are not limited to the precious-metals market: in November of last year, major banks had to pay several billion dollars in fines related to the rigging of foreign-exchange benchmarks, including LIBOR and other interest-rate benchmarks.
These cases followed on the heels of a set of lawsuits in May 2014 filed in New York City in which twenty-five plaintiffs consisting of hedge funds, private citizens, and public investors (such as pension funds) sued HSBC, Barclays, Deutsche Bank, Bank Scotia, and Société Génerale (the five traditional banks of the former London Gold Fix) on charges of rigging the precious-metals and foreign-exchange markets. "A lot of conspiracy theories have turned out to be conspiracy fact," said Kevin Maher, a former gold trader in New York who filed one of the lawsuits that May, told The New York Times.
Central Banks at the Center of Gold Markets
The lawsuits were given more prominence with the introduction of the London Bullion Market Association (LBMA) on February 20, 2015. The new price-fixing body was established with seven banks: Goldman Sachs, J.P. Morgan, UBS, HSBC, Barclays, Bank Scotia and Société Génerale. (On June 16, the Bank of China announced, after months of speculation, that it would join.)
While some economists have deemed the new electronic fix a good move in contrast to behind-closed-door, phoned-in price-fixing, others beg to differ. Last year, the commodities exchange CME Group came under scrutiny for allowing volume trading discounts to central banks, raising the question of how "open" electronic pricing really is. Then, too, the LBMA is itself not a commodities exchange but an Over-The-Counter (OTC) market, and does not publish — does not have to publish — comprehensive data as to the amount of metal that is traded in the London market.
According to Ms. Ruth Crowell, the chairman of LBMA, writing in a report to that group: "Post-trade reporting is the material barrier preventing greater transparency on the bullion market." In the same report, Crowell states: "It is worth noting that the role of the central banks in the bullion market may preclude 'total' transparency, at least at the public level." To its credit, the secretive London Gold Fix (1919–2015) featured on its website tracking data of the daily net volume of bars traded and the history of gold trades, unlike current available information from the LBMA as one may see here (please scroll down for charts).
The Problem with Paper Gold
There is further the problem of what is being sold as "paper" gold. At first glance, that option seems a good one. Gold exchange-traded funds (ETFs), registered with The New York Stock Exchange, have done very well over the past decade and many cite this as proof that paper gold, rather than bars in hand, is just as sure an investment. The dollar price of gold rose more than 15.4 percent a year between 1999 and December 2012 and during that time, gold ETFs generated an annual return of 14 percent (while equities registered a loss).
As paper claims on trusts that hold gold in bank vaults, ETFs are for many, preferable to physical gold. Gold coins, for instance, can be easily faked, will lose value when scratched, and dealers take high premiums on their sale. The assaying of gold bars, meanwhile, with transport and delivery costs, is easy for banking institutions to handle, but less so for individuals. Many see them as trustworthy: ETF Securities, for example, one of the largest operators of commodity ETFs with $21 billion in assets, stores their gold in Zurich, rather than in London or Toronto. These last two cities, according to one official from that company, "could not be trusted not to go along with a confiscation order like that by Roosevelt in 1933."
Furthermore, shares in these entities represent only an indirect claim on a pile of gold. "Unless you are a big brokerage firm," writes economist William Baldwin, "you cannot take shares to a teller and get metal in exchange." ETF custodians usually consist of the likes of J.P. Morgan and UBS who are players on the wholesale market, says Baldwin, thus implying a possible conflict of interest.
Government and Gold After 1944: A Love-Hate Relationship
Still more complicated is the love-hate relationship between governments and gold. As independent gold analyst Christopher Powell put it in an address to a symposium on that metal in Sydney, October 2013: "It is because gold is a competitive national currency that, if allowed to function in a free market, will determine the value of other currencies, the level of interest rates and the value of government bonds." He continued: "Hence, central banks fight gold to defend their currencies and their bonds."
It is a relationship that has had a turbulent history since the foundation of the Bretton Woods system in 1944 and up through August 1971, when President Nixon declared the convertibility of the dollar to gold suspended. During those intervening decades, gold lived a kind of strange dual existence as a half state-controlled, half free market-driven money-commodity, a situation that Nobel Prize economist Milton Friedman called a "real versus pseudo gold standard."
The origin of this cumbersome duality was the post-war two-tiered system of gold pricing. On the one hand, there was a new monetary system that fixed gold at $35 an ounce. On the other, there was still a free market for gold. The $35 official price was ridiculously low compared to its free market variant, resulting in a situation in which IMF rules against dealing in gold at "free" prices were circumvented by banks that surreptitiously purchased gold from the London market.
The artificial gold price held steady until the end of the sixties, when the metal's price started to "deny compliance" with the dollar. Still, monetary doctrine sought to keep the price fixed and, at the same time, to influence pricing on the free market. These attempts were failures. Finally, in March 1968, the US lost more than half its reserves, falling from 25,000 to 8,100 tons. The price of other precious metals was allowed to move freely.
Gold Retreats Into the Shadows
Meawhile, private hoarding of gold was underway. According to The Financial Times of May 21, 1966, gold production was rising, but it was not going to official gold stocks. This situation, in turn, fundamentally affected the gold clauses of the IMF concerning repayments in currency only in equal value to the gold value of such at the time of borrowing. This led to a rise in "paper gold planning" as a substitution for further increases in IMF quotas. (Please see "The Paper Gold Planners — Alchemists or Conjurers?" in The Financial Analysts Journal, Nov–Dec 1966.)
By the late 1960s, Vietnam, poverty, the rise in crime and inflation were piling high atop one another. The Fed got to work doing what it does best: "Since April [1969]," wrote lawyer and economist C. Austin Barker in a January 1969 article, "The US Money Crisis," "the Fed has continually created new money at an unusually rapid rate." Economists implored the IMF to allow for a free market for gold but also to set the official price to at least $70 an ounce. What was the upshot of this silly system? That by 1969 Americans were paying for both higher taxes and inflation. The rest, as they might say, is the history of the present.
Today, there is no “official” price for gold, nor any “gold-exchange standard” competing with a semi-underground free gold market. There is, however, a material legacy of “real versus pseudo” gold that remains a terrible menace. Buyer beware of the pivotal difference between the two.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 5:42 pm
Gold "Flash-Crashes" Again Amid Continued Commodity Liquidation As China Manufacturing Slumps To 15-Month Lows
Submitted by Tyler D.07/23/2015 - 22:00
As Bridgewater talks back its now widely discussed bearish position on fallout from China's equity market collapse, Chinese stocks rose at the open (before fading after ugly manufacturing data). However, liquidations continue across the commodity complex in copper, gold, and silver. Though not on the scale to Sunday night's collapse, the China open brought another 'flash-crash' in precious metals. All signs point to CCFD unwinds, and forced liquidations as under the surface something smells rotten in China, which has just been confirmed by the lowest Manufacturing PMI print in 15 months.
There Goes The Housing "Recovery" Again: New Home Sales Plunge Most Since 2014
Submitted by Tyler D.
07/24/2015 - 10:08
Despite exuberant existing home sales, new home sales crosses back below the 500k Maginot Line to 482k SAAR - the lowest since Nov 2014. Previous data was revised notably lower as June data missed expectations by the most in a year. The West region saw new home sales collapse 17%. Perhaps the slide in single-family home starts means something after all?
Submitted by Tyler D.07/23/2015 - 22:00
As Bridgewater talks back its now widely discussed bearish position on fallout from China's equity market collapse, Chinese stocks rose at the open (before fading after ugly manufacturing data). However, liquidations continue across the commodity complex in copper, gold, and silver. Though not on the scale to Sunday night's collapse, the China open brought another 'flash-crash' in precious metals. All signs point to CCFD unwinds, and forced liquidations as under the surface something smells rotten in China, which has just been confirmed by the lowest Manufacturing PMI print in 15 months.
There Goes The Housing "Recovery" Again: New Home Sales Plunge Most Since 2014
Submitted by Tyler D.
07/24/2015 - 10:08
Despite exuberant existing home sales, new home sales crosses back below the 500k Maginot Line to 482k SAAR - the lowest since Nov 2014. Previous data was revised notably lower as June data missed expectations by the most in a year. The West region saw new home sales collapse 17%. Perhaps the slide in single-family home starts means something after all?
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 5:45 pm
The End Of The Supercycle? Commodity "Capitulation" Arrives
Submitted by Tyler D.
07/24/2015 - 11:49
In a note by BofA's Michael Hartnett, the bank looks at the latest EPFR fund flows and concludes that the wave of commodity "capitulation" revulsion selling has finally arrived.
Submitted by Tyler D.
07/24/2015 - 11:49
In a note by BofA's Michael Hartnett, the bank looks at the latest EPFR fund flows and concludes that the wave of commodity "capitulation" revulsion selling has finally arrived.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 5:48 pm
The FBI And DOJ Get Involved: Hillary Clinton Sent Confidential Emails From Her Personal Email Account
Submitted by Tyler D.
07/24/2015 - 13:12
It's not that Donald Trump needed much help in his juggernaut campaign across the GOP presidential primary with his lead at last check in the double digitts, but moments ago the flamboyant billionaire got an unexpected present from the WSJ which may have just crippled the chances of his biggest democrat competitor as well, Hillary Clinton. WSJ reports that according to an internal government review Hillary Clinton, as former Secretary of State, "sent at least four emails from her personal account containing classified information during her time heading the State Department."And now, at long last, it appears that both the FBI and the DOJ are finally getting involved.
Can We All Stop Being Surprised By Company Earnings "Surprises"?
Submitted by Tyler D.
07/24/2015 - 13:25
According to the FT, S&P 500 earnings are on track to decline by about 2.6% year-over-year which is actually about 2% better than what analysts were expecting at the end of June. So this is turning out to be a better earnings season than must expected? Not really. This is just a continuation of the game where consensus expectations are moved lower and lower until companies can, you guessed it, “surprise” to the upside. And its not just for this quarter that growth expectations are taken lower, this happens for growth expectations multiple years out.
Submitted by Tyler D.
07/24/2015 - 13:12
It's not that Donald Trump needed much help in his juggernaut campaign across the GOP presidential primary with his lead at last check in the double digitts, but moments ago the flamboyant billionaire got an unexpected present from the WSJ which may have just crippled the chances of his biggest democrat competitor as well, Hillary Clinton. WSJ reports that according to an internal government review Hillary Clinton, as former Secretary of State, "sent at least four emails from her personal account containing classified information during her time heading the State Department."And now, at long last, it appears that both the FBI and the DOJ are finally getting involved.
Can We All Stop Being Surprised By Company Earnings "Surprises"?
Submitted by Tyler D.
07/24/2015 - 13:25
According to the FT, S&P 500 earnings are on track to decline by about 2.6% year-over-year which is actually about 2% better than what analysts were expecting at the end of June. So this is turning out to be a better earnings season than must expected? Not really. This is just a continuation of the game where consensus expectations are moved lower and lower until companies can, you guessed it, “surprise” to the upside. And its not just for this quarter that growth expectations are taken lower, this happens for growth expectations multiple years out.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 5:50 pm
Hillary Speaks In New York About Her Economic Policy - Live Webcast
Submitted by Tyler D.
07/24/2015 - 13:54
It is unclear if Clinton will received $250,000 for today's speech in New York which is expected to outline Blackrock's the presidential candidate's new tax agenda (profiled previously), but it is assured that any questions relating to the just broken news that Clinton lied about not sending any confidential emails will be duly muted.
Copper, China And World Trade Are All Screaming That The Next Economic Crisis Is Here
Submitted by Tyler D.
07/24/2015 - 14:10
If you are looking for a “canary in a coal mine” type of warning for the entire global economy, you have a whole bunch to pick from right now.
Submitted by Tyler D.
07/24/2015 - 13:54
It is unclear if Clinton will received $250,000 for today's speech in New York which is expected to outline Blackrock's the presidential candidate's new tax agenda (profiled previously), but it is assured that any questions relating to the just broken news that Clinton lied about not sending any confidential emails will be duly muted.
Copper, China And World Trade Are All Screaming That The Next Economic Crisis Is Here
Submitted by Tyler D.
07/24/2015 - 14:10
If you are looking for a “canary in a coal mine” type of warning for the entire global economy, you have a whole bunch to pick from right now.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 5:53 pm
Dow Dumps 600 Points From Monday's Jubilant Highs
Submitted by Tyler D.
07/24/2015 - 14:29
From 18,075 highs, The Dow Industrials - hit by a smorgasbord of missed earnings and weak guidance - has collapsed 600 points from its highs a week ago... This is the worst week for the Dow since January...
Did The Canary In The Credit Coalmine Just Croak: Capital One Credit Loss Provisions Soar By 60%
Submitted by Tyler D.
07/24/2015 - 14:40
The biggest shocker in COF's earnings release was something found between COF's top and bottom line: a surge in provisions for credit losses: at $1.1 billion this was a jump of 21% from Q1 and up a whopping 60% from the year prior. It was also the biggest credit loss provision the credit card company has taken since Q2 2012.
Submitted by Tyler D.
07/24/2015 - 14:29
From 18,075 highs, The Dow Industrials - hit by a smorgasbord of missed earnings and weak guidance - has collapsed 600 points from its highs a week ago... This is the worst week for the Dow since January...
Did The Canary In The Credit Coalmine Just Croak: Capital One Credit Loss Provisions Soar By 60%
Submitted by Tyler D.
07/24/2015 - 14:40
The biggest shocker in COF's earnings release was something found between COF's top and bottom line: a surge in provisions for credit losses: at $1.1 billion this was a jump of 21% from Q1 and up a whopping 60% from the year prior. It was also the biggest credit loss provision the credit card company has taken since Q2 2012.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 5:57 pm
Submitted by Jordan Eliseo via ABC Bullion,
Precious metal investors suffered yet another rude shock early this week, with the price of gold plunging below USD $1100oz, with a nearly USD $50oz sell off occurring in a matter of minutes in early Asian trading on Monday the 20th July.
In total, some 5 tonnes of gold was dumped on the Shanghai market in this two minute window, an extraordinary amount when one considers DAILY trading volume is typically in the vicinity of 25 tonnes.
At the same time, according to ANZ Bank, there was also 7,600 August 2015 gold contracts traded on the COMEX, equivalent to another 23 tonnes of metal.
The market has since bounced around, trading back above USD $1100oz at one point, though this morning we see that the metal has eased again, currently sitting at USD $1,091oz, whilst silver has fallen below USD $15oz, with the gold/silver ratio now sitting at 73.82
Australian dollar investors have not been spared this time around, with the AUD price falling back below AUD $1500 per oz. Year to date, this has reduced gains (yes, investors are still UP for the year in local terms, albeit mildly) to just 2%, though the recent sell off has also led to marked increase in trading volumes for bargain hunting physical buyers.
China Gold Announcement
Whilst the majority of the sell off in gold reflects extreme pessimism and aggressive short positioning in the markets (more on this below), perhaps some of the weakness in gold prices this week can be tied back to the Chinese announcement on Friday the 17th regarding their updated physical gold holdings.
To recap, on the 17th Juy 2015 the Chinese government announced that national gold holdings had increased to 1658 tonnes, up some 57% in the past 6 years. Based of these figures, the Chinese state has been buying roughly 100 tonnes of physical gold per year for the past 6 years.
This number disappointed many analysts and gold bulls who thought the number would be somewhere between 3,000 and 5,000 tonnes.
Despite the much lower than expected announcement, the updated figures still put China in fifth spot when it comes to the largest national gold reserves, behind the United States, Germany, Italy and France. Despite this, physical gold holdings still officially represent less than 2% of China’s massive foreign exchange reserves.
So what to make of it?
A few months ago, we wrote a piece for Livewire that specifically discussed Chinese national gold holdings. Titled “There are known knowns, known unknowns, and unknown unknowns”, we stated that whatever the number ended up being, “we think the number will offer plenty for both the bulls and bears to argue about, and we’re almost certain it won’t move markets as some expect”.
Whilst the sell off in the gold market this week might lead some to argue we were wrong regarding the impact of the announcement, we are happy to stand by our comments, for a few reasons.
Firstly, it is worth mentioning that China does not just hold physical gold through the People’s Bank of China (PBOC). They can also hold gold through the State Administration of Foreign Exchange (SAFE), and the China Investment Corporation (CIC).
When it comes to SAFE, one of their major functions is; “to undertake operations and management of foreign exchange reserves, gold reserves, and other foreign exchange assets of the state.”
The CIC on the other hand is a Chinese sovereign wealth fund. Founded in 2007 with roughly USD $200 billion of investment capital, it had grown to well over USD $550 billion by August of 2013. As at the end of December 2014, some 26% of this money was sitting in what the CIC describe as long-term investments, which include resources and commodities specifically.
As a result, we’re relatively certain that Chinese national gold holdings across all the entities it controls are higher than the official number, though it remains a known unknown as to what the true figure is.
It is also worth mentioning that if Chinese national gold holdings really only are in the vicinity of 1,600 tonnes, and that the Chinese state has been doing far less buying than many anticipated, then by default it means the Chinese citizenry have been doing more buying than might have originally been anticipated.
At the end of the day, we know that thousands of tonnes have been shipped into China in the past few years, and we also know that China is now the largest miner of gold.
We’re quite certain that the gold imported and mined hasn’t been thrown away, so if the state wasn’t buying it, someone or a group of someone’s, clearly has been.
Finally, it pays to remember the game that China is playing. At present, getting the yuan included as part of the SDR is a major priority, therefore announcing respectable but not threatening levels of national gold reserves, and not doing anything to potentially cause gold prices to rise makes plenty of sense from a Chinese perspective.
But don’t forget for a minute the long-term plan, which Song Xin of the China Gold Association has alluded to previously, that being the accumulation of at least 8,500 tonnes of gold over time to at least match/exceed the United States sovereign gold reserve.
Bottom line: China will be a net buyer, and a net importer of physical gold for years to come. In and of itself that won’t necessarily cause a sharp rally in gold prices anytime soon, but gold acquisition from the Chinese state and her citizens, as well as emerging market central banks the world over will continue to provide support for the physical gold market.
Those that have sold gold in the past few days (and there have been plenty in the ETF and futures markets) as a result of the “disappointing” number out of China may have just caused the capitulation event that typically marks the bottom of any bear market.
The Death of Gold
And so we come to the “Death of Gold”, a headline we saw earlier in the week accompanying a story about a particular ASX Stock that had soared 400%, alongside a sales pitch for investors imploring them to part with their hard earned cash for more stock tips. This headline capped off a week of unanimously bearish stories on the future prospects for gold, just some of which we’ve included below as images.
A
B
C
D
E
Even in the depths of the GFC induced bear market in equities, the headlines, commentary and analysis that surrounded the stock market was not as pessimistic as the commentary that surrounds gold today.
The lack of inflation and a much anticipated interest rate hike by the Federal Reserve are the key reasons cited for the bearishness towards the precious metal market. Whilst this is understandable, it is also overly simplistic, with investors and analysts clearly forgetting the strong return of gold for the majority of the past 15 years, though inflation predominantly trended lower over this entire period, which has been interspersed with hugely deflationary events like the NASDAQ crash, the GFC, the European debt crisis and even lately, the flare ups in Greece and the Chinese stock market.
Investors have also clearly overlooked the fact that three of the fastest period of gold price appreciation in history, 1971 to 1974, 1976 to 1980 and 2001 to 2007 occurred during periods of Fed tightening, indicating that higher rates alone are clearly not enough to sink the gold market. That fact often shocks people who buy into the simple narrative regarding gold and interest rates, which is why the following slide typically raises a few eyebrows when presented at investment conferences and the like.
Rates
But be that as it may, the market is a voting machine, in the short term at least, and right now the votes are clearly going against the gold market, with ETF outflows picking up pace, and speculative positioning at record levels, with well over 100,000 money manager contracts short gold , as you can see on the chart below.
MM
We are not in Kansas anymore.
Gross short positions in total, across all market participants, were also at a record 180,000 contracts, with net positioning at the lowest level since November 2014. Speculators using the futures market to express a position in gold have never been this bearish!
On the ETF front, last Friday saw 11 tonnes of gold divestment out of the SPDR Gold Trust, the largest single day outflow since 2014. For an understanding of highly correlated gold price moves are to the flows in and out of ETFs, consider this excellent chart from ANZ, which plots the two side by side over the past year.
ANZ
As you can see, investors in gold ETFs tend to follow the momentum of the gold market, and the price action itself, and are no doubt heavily influenced by some of the commentary they’re seeing regarding gold right now, with Societe Generale’s Robin Bhar recently stating; “If anyone can show me the bullish case for gold, I’d like to see it. I doubt this is the final nail in gold’s coffin. I think we can add a few more.”
The precious metal miners were also buried in the latest sell off, with GDX falling by over 12% at its lowest point this week. This was a true capitulation panic out of gold, with some 169 million shares in GDX changing hands this Monday, a volume that dwarfs turnover in previous periods of turmoil in the gold market.
As to how decimated the precious metal mining complex now is, consider the following excerpt from a July 21st update from Pater Tenebrarum from Acting Man, who commented that; “the HUI Index produced an RSI of slightly above 11 on its daily chart, after declining for a record 10th day in a row. This RSI reading is the lowest in the history of the index (the previous record low was produced in 1998 at about 16). Moreover, gold stocks have now broken every historical bear market record in the sector. Not only is this by now the biggest decline on record, the sector (as measured by the BGMI) is also trading at a record low relative to the gold price – undercutting the previous record low established in 1942 in the mini-crash following the Pearl Harbor attack.”
That is some sell off.
As for when the selling ends, no one can be 100% certain, and perhaps analysts like Bhar who I mentioned above will be correct, with severe price declines to come in a short period of time, and a bottoming out process closer to USD $800-900oz.
But a headline like “The Death of Gold” can’t help remind us of arguably the most famous Business Week headline of all time, released two months before I was born, back in August of 1979.
Titled “THE DEATH OF EQUITIES: How inflation is destroying the stock market” – it is the most frequently cited example of why investors should do the exact opposite of what the headlines in the financial media are telling them to do, for the very simple reason that this headline almost marked to the day the beginning of one of if not the greatest stock bull markets of all time.
Many investors have heard of this article and magazine cover, though we are certain not as many have read the article, nor picked up the fact that the same magazine specifically mentioned oil and gold, discussing the merits of indexing bonds to the two commodities. We have included the article as a link here, for those of you who wish to take a step back in time. We've also included a screen shot of the infamous cover.
DOEQ
The article is a truly extraordinary read, commenting on the disappointing performance of the Dow Jones over the preceding decade; nothing that “since 1968, according to a study by Salomon of Salomon Bros., stocks have appreciated by a disappointing compound annual rate of 3.1%, while the consumer price index has surged by 6.5%. By contrast, gold grew by an incredible 19.4%,”
The high inflation of the period, and gold’s outperformance throughout it was no doubt the reason why the concept of indexing bonds to gold would have held such appeal. By doing so, investors in fixed income products theoretically would have had their coupon and eventual principal repayments protected from the reduction in real purchasing such inflation causes. Of course the end of the 1970s would have been an unfortunate time to implement such a strategy, as gold was soon to peak, but that is what an era of high inflation leads too.
Today, some 35 years after this infamous article was released, the situation is completely reversed, with optimism towards financial markets at all time highs, and gold so universally loathed as an investment choice that the Wall Street Journal is calling it a ‘pet-rock’, whilst others call for the death of an asset that has survived for six millennia, protecting wealth along the way.
I’m fairly confident the headlines will be as wrong today as they were back in August of 1979, and have topped up my precious metal holdings accordingly. I might be a little early on that trade, but dollar cost averaging into the market will work over time, whilst the universal distaste towards the precious metal market that we see today can’t help but whet a contrarian’s appetite.
Precious metal investors suffered yet another rude shock early this week, with the price of gold plunging below USD $1100oz, with a nearly USD $50oz sell off occurring in a matter of minutes in early Asian trading on Monday the 20th July.
In total, some 5 tonnes of gold was dumped on the Shanghai market in this two minute window, an extraordinary amount when one considers DAILY trading volume is typically in the vicinity of 25 tonnes.
At the same time, according to ANZ Bank, there was also 7,600 August 2015 gold contracts traded on the COMEX, equivalent to another 23 tonnes of metal.
The market has since bounced around, trading back above USD $1100oz at one point, though this morning we see that the metal has eased again, currently sitting at USD $1,091oz, whilst silver has fallen below USD $15oz, with the gold/silver ratio now sitting at 73.82
Australian dollar investors have not been spared this time around, with the AUD price falling back below AUD $1500 per oz. Year to date, this has reduced gains (yes, investors are still UP for the year in local terms, albeit mildly) to just 2%, though the recent sell off has also led to marked increase in trading volumes for bargain hunting physical buyers.
China Gold Announcement
Whilst the majority of the sell off in gold reflects extreme pessimism and aggressive short positioning in the markets (more on this below), perhaps some of the weakness in gold prices this week can be tied back to the Chinese announcement on Friday the 17th regarding their updated physical gold holdings.
To recap, on the 17th Juy 2015 the Chinese government announced that national gold holdings had increased to 1658 tonnes, up some 57% in the past 6 years. Based of these figures, the Chinese state has been buying roughly 100 tonnes of physical gold per year for the past 6 years.
This number disappointed many analysts and gold bulls who thought the number would be somewhere between 3,000 and 5,000 tonnes.
Despite the much lower than expected announcement, the updated figures still put China in fifth spot when it comes to the largest national gold reserves, behind the United States, Germany, Italy and France. Despite this, physical gold holdings still officially represent less than 2% of China’s massive foreign exchange reserves.
So what to make of it?
A few months ago, we wrote a piece for Livewire that specifically discussed Chinese national gold holdings. Titled “There are known knowns, known unknowns, and unknown unknowns”, we stated that whatever the number ended up being, “we think the number will offer plenty for both the bulls and bears to argue about, and we’re almost certain it won’t move markets as some expect”.
Whilst the sell off in the gold market this week might lead some to argue we were wrong regarding the impact of the announcement, we are happy to stand by our comments, for a few reasons.
Firstly, it is worth mentioning that China does not just hold physical gold through the People’s Bank of China (PBOC). They can also hold gold through the State Administration of Foreign Exchange (SAFE), and the China Investment Corporation (CIC).
When it comes to SAFE, one of their major functions is; “to undertake operations and management of foreign exchange reserves, gold reserves, and other foreign exchange assets of the state.”
The CIC on the other hand is a Chinese sovereign wealth fund. Founded in 2007 with roughly USD $200 billion of investment capital, it had grown to well over USD $550 billion by August of 2013. As at the end of December 2014, some 26% of this money was sitting in what the CIC describe as long-term investments, which include resources and commodities specifically.
As a result, we’re relatively certain that Chinese national gold holdings across all the entities it controls are higher than the official number, though it remains a known unknown as to what the true figure is.
It is also worth mentioning that if Chinese national gold holdings really only are in the vicinity of 1,600 tonnes, and that the Chinese state has been doing far less buying than many anticipated, then by default it means the Chinese citizenry have been doing more buying than might have originally been anticipated.
At the end of the day, we know that thousands of tonnes have been shipped into China in the past few years, and we also know that China is now the largest miner of gold.
We’re quite certain that the gold imported and mined hasn’t been thrown away, so if the state wasn’t buying it, someone or a group of someone’s, clearly has been.
Finally, it pays to remember the game that China is playing. At present, getting the yuan included as part of the SDR is a major priority, therefore announcing respectable but not threatening levels of national gold reserves, and not doing anything to potentially cause gold prices to rise makes plenty of sense from a Chinese perspective.
But don’t forget for a minute the long-term plan, which Song Xin of the China Gold Association has alluded to previously, that being the accumulation of at least 8,500 tonnes of gold over time to at least match/exceed the United States sovereign gold reserve.
Bottom line: China will be a net buyer, and a net importer of physical gold for years to come. In and of itself that won’t necessarily cause a sharp rally in gold prices anytime soon, but gold acquisition from the Chinese state and her citizens, as well as emerging market central banks the world over will continue to provide support for the physical gold market.
Those that have sold gold in the past few days (and there have been plenty in the ETF and futures markets) as a result of the “disappointing” number out of China may have just caused the capitulation event that typically marks the bottom of any bear market.
The Death of Gold
And so we come to the “Death of Gold”, a headline we saw earlier in the week accompanying a story about a particular ASX Stock that had soared 400%, alongside a sales pitch for investors imploring them to part with their hard earned cash for more stock tips. This headline capped off a week of unanimously bearish stories on the future prospects for gold, just some of which we’ve included below as images.
A
B
C
D
E
Even in the depths of the GFC induced bear market in equities, the headlines, commentary and analysis that surrounded the stock market was not as pessimistic as the commentary that surrounds gold today.
The lack of inflation and a much anticipated interest rate hike by the Federal Reserve are the key reasons cited for the bearishness towards the precious metal market. Whilst this is understandable, it is also overly simplistic, with investors and analysts clearly forgetting the strong return of gold for the majority of the past 15 years, though inflation predominantly trended lower over this entire period, which has been interspersed with hugely deflationary events like the NASDAQ crash, the GFC, the European debt crisis and even lately, the flare ups in Greece and the Chinese stock market.
Investors have also clearly overlooked the fact that three of the fastest period of gold price appreciation in history, 1971 to 1974, 1976 to 1980 and 2001 to 2007 occurred during periods of Fed tightening, indicating that higher rates alone are clearly not enough to sink the gold market. That fact often shocks people who buy into the simple narrative regarding gold and interest rates, which is why the following slide typically raises a few eyebrows when presented at investment conferences and the like.
Rates
But be that as it may, the market is a voting machine, in the short term at least, and right now the votes are clearly going against the gold market, with ETF outflows picking up pace, and speculative positioning at record levels, with well over 100,000 money manager contracts short gold , as you can see on the chart below.
MM
We are not in Kansas anymore.
Gross short positions in total, across all market participants, were also at a record 180,000 contracts, with net positioning at the lowest level since November 2014. Speculators using the futures market to express a position in gold have never been this bearish!
On the ETF front, last Friday saw 11 tonnes of gold divestment out of the SPDR Gold Trust, the largest single day outflow since 2014. For an understanding of highly correlated gold price moves are to the flows in and out of ETFs, consider this excellent chart from ANZ, which plots the two side by side over the past year.
ANZ
As you can see, investors in gold ETFs tend to follow the momentum of the gold market, and the price action itself, and are no doubt heavily influenced by some of the commentary they’re seeing regarding gold right now, with Societe Generale’s Robin Bhar recently stating; “If anyone can show me the bullish case for gold, I’d like to see it. I doubt this is the final nail in gold’s coffin. I think we can add a few more.”
The precious metal miners were also buried in the latest sell off, with GDX falling by over 12% at its lowest point this week. This was a true capitulation panic out of gold, with some 169 million shares in GDX changing hands this Monday, a volume that dwarfs turnover in previous periods of turmoil in the gold market.
As to how decimated the precious metal mining complex now is, consider the following excerpt from a July 21st update from Pater Tenebrarum from Acting Man, who commented that; “the HUI Index produced an RSI of slightly above 11 on its daily chart, after declining for a record 10th day in a row. This RSI reading is the lowest in the history of the index (the previous record low was produced in 1998 at about 16). Moreover, gold stocks have now broken every historical bear market record in the sector. Not only is this by now the biggest decline on record, the sector (as measured by the BGMI) is also trading at a record low relative to the gold price – undercutting the previous record low established in 1942 in the mini-crash following the Pearl Harbor attack.”
That is some sell off.
As for when the selling ends, no one can be 100% certain, and perhaps analysts like Bhar who I mentioned above will be correct, with severe price declines to come in a short period of time, and a bottoming out process closer to USD $800-900oz.
But a headline like “The Death of Gold” can’t help remind us of arguably the most famous Business Week headline of all time, released two months before I was born, back in August of 1979.
Titled “THE DEATH OF EQUITIES: How inflation is destroying the stock market” – it is the most frequently cited example of why investors should do the exact opposite of what the headlines in the financial media are telling them to do, for the very simple reason that this headline almost marked to the day the beginning of one of if not the greatest stock bull markets of all time.
Many investors have heard of this article and magazine cover, though we are certain not as many have read the article, nor picked up the fact that the same magazine specifically mentioned oil and gold, discussing the merits of indexing bonds to the two commodities. We have included the article as a link here, for those of you who wish to take a step back in time. We've also included a screen shot of the infamous cover.
DOEQ
The article is a truly extraordinary read, commenting on the disappointing performance of the Dow Jones over the preceding decade; nothing that “since 1968, according to a study by Salomon of Salomon Bros., stocks have appreciated by a disappointing compound annual rate of 3.1%, while the consumer price index has surged by 6.5%. By contrast, gold grew by an incredible 19.4%,”
The high inflation of the period, and gold’s outperformance throughout it was no doubt the reason why the concept of indexing bonds to gold would have held such appeal. By doing so, investors in fixed income products theoretically would have had their coupon and eventual principal repayments protected from the reduction in real purchasing such inflation causes. Of course the end of the 1970s would have been an unfortunate time to implement such a strategy, as gold was soon to peak, but that is what an era of high inflation leads too.
Today, some 35 years after this infamous article was released, the situation is completely reversed, with optimism towards financial markets at all time highs, and gold so universally loathed as an investment choice that the Wall Street Journal is calling it a ‘pet-rock’, whilst others call for the death of an asset that has survived for six millennia, protecting wealth along the way.
I’m fairly confident the headlines will be as wrong today as they were back in August of 1979, and have topped up my precious metal holdings accordingly. I might be a little early on that trade, but dollar cost averaging into the market will work over time, whilst the universal distaste towards the precious metal market that we see today can’t help but whet a contrarian’s appetite.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 6:00 pm
Dear CFTC: Here Is Today's Illegal "Spoofing" In Gold Futures
Submitted by Tyler D.
07/24/2015 - 15:23
As Nanex once again shows, having captured the exact "spoofing" moment, the action was all on the ask side, with a "spoofer" first representing a large sell order, and sending gold lower after 2:41pm, which remains on the order book, but which promptly vanishes once the actual price of gold crossed into the spoofer's "ask" following a subsequent ramp at 4:51pm.
Syriza "Rebels" Planned To Ransack Greek Mint, Seize Cash Reserves, Arrest Central Bank Governor
Submitted by Tyler D.
07/24/2015 - 16:45
Syriza hardliner Panayotis Lafazanis and "a diverse group of far left activists from supporters of the late Venezuelan president Hugo Chávez to old-fashioned communists," planned to take over the Greek mint, commandeer the country’s reserves, and arrest Yannis Stournaras, the governor of the Bank of Greece, FT says, describing a secret plot hatched at an Athens hotel last Wednesday.
Submitted by Tyler D.
07/24/2015 - 15:23
As Nanex once again shows, having captured the exact "spoofing" moment, the action was all on the ask side, with a "spoofer" first representing a large sell order, and sending gold lower after 2:41pm, which remains on the order book, but which promptly vanishes once the actual price of gold crossed into the spoofer's "ask" following a subsequent ramp at 4:51pm.
Syriza "Rebels" Planned To Ransack Greek Mint, Seize Cash Reserves, Arrest Central Bank Governor
Submitted by Tyler D.
07/24/2015 - 16:45
Syriza hardliner Panayotis Lafazanis and "a diverse group of far left activists from supporters of the late Venezuelan president Hugo Chávez to old-fashioned communists," planned to take over the Greek mint, commandeer the country’s reserves, and arrest Yannis Stournaras, the governor of the Bank of Greece, FT says, describing a secret plot hatched at an Athens hotel last Wednesday.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 6:04 pm
Jim Grant On Gold's Liquidation Sale: A "Vexing But Wonderful Opportunity"
Tyler Durden's picture
Submitted by Tyler D.
07/24/2015 17:00 -0400
Don’t tell Jim Grant, the publisher of Grant’s Interest Rate Observer, that gold is a hedge.
The author and publisher said the metal is much more dynamic; providing a trifecta of price, value and sentiment, and investors should have exposure to it.
“[G]old is an investment in monetary and financial disorder – not a hedge. You look around the world and you see exchange rates are properly disorderly, when you look around the world of lending and borrowing -- we are in a regime of price control by another name, so-called zero percent rates and quantitative easing by the world central banks – we are in one of the most radical periods of monetary experimentation in the annals of money,” Grant told Kitco News Thursday.
Grant added that it could be that it all works out, albeit a very “low probability.”
“You want to have exposure to the reciprocal asset of the paper assets that are the most popular - so gold, to me, is now the conjunction of price, value and sentiment, and I am very bullish indeed.”
Gold prices are on track for its longest run of losses since 1996. After reaching five-year lows this week, the metal was relatively quieter on Thursday with prices slightly rebounding on some bargain hunting in the spot market. Kitco’s spot gold was last up $0.60 at $1094.60 an ounce.
Grant summed up the gold selloff as “Mr. Market having a sale,” and added that the downward spiral is “terrifically vexing but a wonderful opportunity.”
He explained that no one knows the bottom for the metal and that should not be the sole focus.
“The important thing to recall is why those of us who own it, bought it. What is it about gold that ought to make it appealing – when it seems to be absolutely the thing you don’t want to have.” He added that gold thrives in the face of monetary turmoil, disorder and uncertainty, noting, “I think we have all three of these things.”
On the topic of U.S. Federal Reserve rate hikes, Grant said the central bank is in a hurry to raise rates.
“The Fed feels it must act just for institutional pride; but, money supply growth is dwindling, the turnover rate of money likewise, the only thing that is dynamic in the world of money and credit is the issuance of more and more dubiously sourced debt, and more and more lenient terms,” Grant said. “What debt does is two things: it pushes forward consumption and pushes back evidence of business failure,” he added.
Grant said he likes owning physical gold particularly South African Kruggerands. He added he is also the owner of “too many gold mining shares” for which he has, “a great deal of worry for the present but a great deal of conviction for the future.” Mining stocks have suffered even more since lower gold prices means less revenue per ounce of the metal for producers. The Market Vectors Gold Miners exchange-traded fund (GDX), which consists of stocks of gold-mining companies, was down $1.70, or 11%, to $13.72 on Thursday.
Tyler Durden's picture
Submitted by Tyler D.
07/24/2015 17:00 -0400
Don’t tell Jim Grant, the publisher of Grant’s Interest Rate Observer, that gold is a hedge.
The author and publisher said the metal is much more dynamic; providing a trifecta of price, value and sentiment, and investors should have exposure to it.
“[G]old is an investment in monetary and financial disorder – not a hedge. You look around the world and you see exchange rates are properly disorderly, when you look around the world of lending and borrowing -- we are in a regime of price control by another name, so-called zero percent rates and quantitative easing by the world central banks – we are in one of the most radical periods of monetary experimentation in the annals of money,” Grant told Kitco News Thursday.
Grant added that it could be that it all works out, albeit a very “low probability.”
“You want to have exposure to the reciprocal asset of the paper assets that are the most popular - so gold, to me, is now the conjunction of price, value and sentiment, and I am very bullish indeed.”
Gold prices are on track for its longest run of losses since 1996. After reaching five-year lows this week, the metal was relatively quieter on Thursday with prices slightly rebounding on some bargain hunting in the spot market. Kitco’s spot gold was last up $0.60 at $1094.60 an ounce.
Grant summed up the gold selloff as “Mr. Market having a sale,” and added that the downward spiral is “terrifically vexing but a wonderful opportunity.”
He explained that no one knows the bottom for the metal and that should not be the sole focus.
“The important thing to recall is why those of us who own it, bought it. What is it about gold that ought to make it appealing – when it seems to be absolutely the thing you don’t want to have.” He added that gold thrives in the face of monetary turmoil, disorder and uncertainty, noting, “I think we have all three of these things.”
On the topic of U.S. Federal Reserve rate hikes, Grant said the central bank is in a hurry to raise rates.
“The Fed feels it must act just for institutional pride; but, money supply growth is dwindling, the turnover rate of money likewise, the only thing that is dynamic in the world of money and credit is the issuance of more and more dubiously sourced debt, and more and more lenient terms,” Grant said. “What debt does is two things: it pushes forward consumption and pushes back evidence of business failure,” he added.
Grant said he likes owning physical gold particularly South African Kruggerands. He added he is also the owner of “too many gold mining shares” for which he has, “a great deal of worry for the present but a great deal of conviction for the future.” Mining stocks have suffered even more since lower gold prices means less revenue per ounce of the metal for producers. The Market Vectors Gold Miners exchange-traded fund (GDX), which consists of stocks of gold-mining companies, was down $1.70, or 11%, to $13.72 on Thursday.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 6:05 pm
What's Really Killing Capitalism
Tyler Durden's picture
Submitted by Tyler D.
07/24/2015 18:00 -0400
Submitted by Bill Bonner
Stifling Growth
Zombies and cronies stifle the process of growth and wealth creation.
To add wealth, you have to add knowledge. That is, you have to learn to do things better.
The trouble with zombies is that they don’t want to learn. Learning is hard. And costly. Zombies just want to take the fruits of someone else’s learning.
Likewise, cronies try to freeze the process of accumulating knowledge.
New knowledge – accumulated by others – is threatening. It is what causes disruption. And what economist Joseph Schumpeter called “creative destruction.”
Cronies fear this new knowledge and try to block it from ever happening – with subsidies, licensing requirements, and other regulatory impediments.
George Gilder, in his latest book, Knowledge and Power: The Information Theory of Capitalism and How It Is Revolutionizing Our World, is that an economy is fundamentally a learning system, not a way for distributing wealth, believes that this obstructionism is a bigger threat to prosperity than debt.
When Capitalism Fails
Information, says Gilder, is always surprising. It tells us things we didn’t know.
In an economy, the person who is the source of most important new information is the entrepreneur. He is the fellow who takes risks, builds a new business, and then – surprise, surprise – it works!
The cronies want to stop him, before he undermines the value of their old assets and old business models with new information.
The zombies want to drag him down, leeching on him so greedily that he runs out of energy.
But without the entrepreneur, capitalism fails.
Capitalism also fails when the information the entrepreneur relies upon is distorted.
When the feds fiddle with interest rates, for example, they turn the most important signal in capitalism into misleading noise. Gilder:
[I]nterest rates are noise, rather than signal. Interest rates near zero cause finance to hypertrophy, as privileged borrowers reinvest government funds in government securities. Only a small portion of these funds goes to useful “infrastructure,” while the rest is burned off in consumption beyond our means.
Gilder believes the signals must move through channels – secured, but not corrupted – by government!
Yes, government exists. It is going to provide “channels” – laws, property protection, speed limits, and so forth – whether we like it or not. And it will be better for us all if it just keeps the channels open and free from twists and tolls.
But that is very different from providing “guidance.” Politicians don’t have the information or experience to provide guidance. They are zombies. They don’t want to learn the nitty-gritty details of real wealth building. They should just make sure basic laws – against murder, theft, and fraud – are enforced.
And otherwise butt out.
Tyler Durden's picture
Submitted by Tyler D.
07/24/2015 18:00 -0400
Submitted by Bill Bonner
Stifling Growth
Zombies and cronies stifle the process of growth and wealth creation.
To add wealth, you have to add knowledge. That is, you have to learn to do things better.
The trouble with zombies is that they don’t want to learn. Learning is hard. And costly. Zombies just want to take the fruits of someone else’s learning.
Likewise, cronies try to freeze the process of accumulating knowledge.
New knowledge – accumulated by others – is threatening. It is what causes disruption. And what economist Joseph Schumpeter called “creative destruction.”
Cronies fear this new knowledge and try to block it from ever happening – with subsidies, licensing requirements, and other regulatory impediments.
George Gilder, in his latest book, Knowledge and Power: The Information Theory of Capitalism and How It Is Revolutionizing Our World, is that an economy is fundamentally a learning system, not a way for distributing wealth, believes that this obstructionism is a bigger threat to prosperity than debt.
When Capitalism Fails
Information, says Gilder, is always surprising. It tells us things we didn’t know.
In an economy, the person who is the source of most important new information is the entrepreneur. He is the fellow who takes risks, builds a new business, and then – surprise, surprise – it works!
The cronies want to stop him, before he undermines the value of their old assets and old business models with new information.
The zombies want to drag him down, leeching on him so greedily that he runs out of energy.
But without the entrepreneur, capitalism fails.
Capitalism also fails when the information the entrepreneur relies upon is distorted.
When the feds fiddle with interest rates, for example, they turn the most important signal in capitalism into misleading noise. Gilder:
[I]nterest rates are noise, rather than signal. Interest rates near zero cause finance to hypertrophy, as privileged borrowers reinvest government funds in government securities. Only a small portion of these funds goes to useful “infrastructure,” while the rest is burned off in consumption beyond our means.
Gilder believes the signals must move through channels – secured, but not corrupted – by government!
Yes, government exists. It is going to provide “channels” – laws, property protection, speed limits, and so forth – whether we like it or not. And it will be better for us all if it just keeps the channels open and free from twists and tolls.
But that is very different from providing “guidance.” Politicians don’t have the information or experience to provide guidance. They are zombies. They don’t want to learn the nitty-gritty details of real wealth building. They should just make sure basic laws – against murder, theft, and fraud – are enforced.
And otherwise butt out.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
Re: Viernes 24/07/15 PMI manufacturero, ventas de casas nuev
por Fenix » Vie Jul 24, 2015 6:07 pm
Howard Marks Interviewed: "There’s No Free Market Today"
Tyler Durden's picture
Submitted by Tyler D.
07/24/2015 18:30 -0400
Earlier this year, Oaktree Capital Management's Howard Marks asked what is perhaps the most important question for capital markets: "What would happen if a large number of holders decided to sell a high yield bond ETF all at once?"
The answer, of course, is that fund managers would be left with a massive, non-diversifiable, unidirectional flow which would force them to either tap emergency liquidity lines with banks to meet redemptions or else risk selling the underlying bonds into an increasingly thin secondary market for corporate credit; the former option is a delay-and-pray scheme while the latter has the potential to trigger a sum-of-all-fears scenario wherein illiquidity quickly begets a fire sale.
"The ETF can’t be more liquid than the underlying, and we know the underlying can become highly illiquid," Marks warned.
Recently, the "lonely contrarian" spoke to Goldman on topics ranging from manipulated markets to investor psychology. Here are some notable excerpts.
* * *
From Goldman's "Fortnightly Thoughts"
How can we understand investor psychology and use it to make investment decisions?
It's the swings of psychology that get people into the biggest trouble, especially since investors’ emotions invariably swing in the wrong direction at the wrong time. When things are going well people become greedy and enthusiastic, and when times are troubled, people become fearful and reticent. That’s just the wrong thing to do. It’s important to control fear and greed.
Why do behaviour patterns and mistakes recur despite the plethora of information available now? Are we doomed to repeat our mistakes?
The bottom line is that even though knowing financial history is important, requiring people to study it won’t make a big difference, because they'll ignore its lessons. There's a very strong tendency for people to believe in things which, if true, would make them rich. Demosthenes said, "For that a man wishes, he generally believes to be true" Just like in the movies, where they show a person in a dilemma to have an angel on one side and a devil on the other, in the case of investing, investors have prudence and memory on one shoulder and greed on the other. Most of the time greed wins.
Is it volatility that’s made people scared of equity markets, particularly since 2000?
Volatility goes in both directions but it’s declines that people dislike, not volatility. In 2000, people pursued growth but forgot to ask themselves ‘at what price?’ And in recent years they've been pursuing safety and income while ignoring the same question. Today the price being paid for the safety and income of bonds is among the highest in history.
How do you think about the current very low interest rate regime?
Yes. The point is that today you can't make a decent return safely. Six or seven years back, you could buy three to five-year Treasurys and get a return of 6% or so. So you could have both safety and income. But today, investors have to make a difficult choice: safety or income. If investors want complete safety, they can't get much income, and if they aim for high income, they can't completely avoid risk. It’s much more challenging today with rates being suppressed by governments. This is one of the negative consequences of centrally administered economic decisions. People talk about the wisdom of the free market – of the invisible hand – but there’s no free market in money today. Interest rates are not natural. They are where they are because the governments have set them at that level. Free markets optimise the allocation of resources in the long run, and administered markets distort the allocation of resources. This is not a good thing... although it was absolutely necessary four years ago in order to avoid a complete crash and restart the capital markets.
Looking at the current scenario, is your level of caution and concern as high as it was during 2006-07?
The worst things that occurred in 2006-07 are not happening as much today. But currently I’m just cautious, like I was in 2004-05. And some people might easily argue that I turned cautious too early.
If it’s human nature that causes the bubbles and crashes, do you think asset management should be done with more machines and fewer people?
No, I disagree strenuously. People who doubt the existence of inefficient markets and the ability to profit from them may disagree with me. But if you think you're operating in an inefficient market like I try to do, a lot can be accomplished by getting great people, developing an effective investment approach, hunting for misvaluations, keeping psychology under control, and understanding where you are in the cycle. I am not saying that everyone should try this. In fact, an algorithm or an index fund may work best for a lot of people. But at Oaktree, we don't make heavy use of machines. We are fundamentalists and ours is a "non-quant shop." As long as there are people on the other side making mistakes – failing to fully understand assets, acting emotionally, selling too low and buying too high – we’ll continue to find opportunities to produce superior risk-adjusted returns. This is something I'm very sure of.
Tyler Durden's picture
Submitted by Tyler D.
07/24/2015 18:30 -0400
Earlier this year, Oaktree Capital Management's Howard Marks asked what is perhaps the most important question for capital markets: "What would happen if a large number of holders decided to sell a high yield bond ETF all at once?"
The answer, of course, is that fund managers would be left with a massive, non-diversifiable, unidirectional flow which would force them to either tap emergency liquidity lines with banks to meet redemptions or else risk selling the underlying bonds into an increasingly thin secondary market for corporate credit; the former option is a delay-and-pray scheme while the latter has the potential to trigger a sum-of-all-fears scenario wherein illiquidity quickly begets a fire sale.
"The ETF can’t be more liquid than the underlying, and we know the underlying can become highly illiquid," Marks warned.
Recently, the "lonely contrarian" spoke to Goldman on topics ranging from manipulated markets to investor psychology. Here are some notable excerpts.
* * *
From Goldman's "Fortnightly Thoughts"
How can we understand investor psychology and use it to make investment decisions?
It's the swings of psychology that get people into the biggest trouble, especially since investors’ emotions invariably swing in the wrong direction at the wrong time. When things are going well people become greedy and enthusiastic, and when times are troubled, people become fearful and reticent. That’s just the wrong thing to do. It’s important to control fear and greed.
Why do behaviour patterns and mistakes recur despite the plethora of information available now? Are we doomed to repeat our mistakes?
The bottom line is that even though knowing financial history is important, requiring people to study it won’t make a big difference, because they'll ignore its lessons. There's a very strong tendency for people to believe in things which, if true, would make them rich. Demosthenes said, "For that a man wishes, he generally believes to be true" Just like in the movies, where they show a person in a dilemma to have an angel on one side and a devil on the other, in the case of investing, investors have prudence and memory on one shoulder and greed on the other. Most of the time greed wins.
Is it volatility that’s made people scared of equity markets, particularly since 2000?
Volatility goes in both directions but it’s declines that people dislike, not volatility. In 2000, people pursued growth but forgot to ask themselves ‘at what price?’ And in recent years they've been pursuing safety and income while ignoring the same question. Today the price being paid for the safety and income of bonds is among the highest in history.
How do you think about the current very low interest rate regime?
Yes. The point is that today you can't make a decent return safely. Six or seven years back, you could buy three to five-year Treasurys and get a return of 6% or so. So you could have both safety and income. But today, investors have to make a difficult choice: safety or income. If investors want complete safety, they can't get much income, and if they aim for high income, they can't completely avoid risk. It’s much more challenging today with rates being suppressed by governments. This is one of the negative consequences of centrally administered economic decisions. People talk about the wisdom of the free market – of the invisible hand – but there’s no free market in money today. Interest rates are not natural. They are where they are because the governments have set them at that level. Free markets optimise the allocation of resources in the long run, and administered markets distort the allocation of resources. This is not a good thing... although it was absolutely necessary four years ago in order to avoid a complete crash and restart the capital markets.
Looking at the current scenario, is your level of caution and concern as high as it was during 2006-07?
The worst things that occurred in 2006-07 are not happening as much today. But currently I’m just cautious, like I was in 2004-05. And some people might easily argue that I turned cautious too early.
If it’s human nature that causes the bubbles and crashes, do you think asset management should be done with more machines and fewer people?
No, I disagree strenuously. People who doubt the existence of inefficient markets and the ability to profit from them may disagree with me. But if you think you're operating in an inefficient market like I try to do, a lot can be accomplished by getting great people, developing an effective investment approach, hunting for misvaluations, keeping psychology under control, and understanding where you are in the cycle. I am not saying that everyone should try this. In fact, an algorithm or an index fund may work best for a lot of people. But at Oaktree, we don't make heavy use of machines. We are fundamentalists and ours is a "non-quant shop." As long as there are people on the other side making mistakes – failing to fully understand assets, acting emotionally, selling too low and buying too high – we’ll continue to find opportunities to produce superior risk-adjusted returns. This is something I'm very sure of.
- Fenix
- Mensajes: 16334
- Registrado: Vie Abr 23, 2010 2:36 am
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