Chart Update

     

 

 

Commercial and Non-Commercial Market Participants

The commitments of traders in gold futures are beginning to look a bit concerning these days – we will explain further below why this is so. Some readers may well be wondering why an explanation is even needed. Isn’t it obvious? Superficially, it sure looks that way.

 

kilogold-pamp-3

 

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Pros and Cons

The recent rally in commodity prices has surprised many market participants and has greatly supported the stock market’s rebound. It has also made bulls out of a number of former stock market bears, as one of its side effects was to cause an improvement in market internals. But does the rally actually make sense?

 

bethlehem steelThe original Bethlehem Steel Works in Bethlehem, Pennsylvania.

Photo via leggendaurbana.it

 

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Damned If You Do…

After waking up on Thursday, we quickly glanced at the overnight market action in Asia and noticed that the Nikkei had tanked rather noticeably. Our first thought upon seeing this was “must be the yen” – and so it was:

 

1-Yen, June, dailyJune yen futures, daily – taking off again – click to enlarge.

 

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The Inflation Illusion

We hear more and more talk about the possibility of imposing negative interest rates in the US. In a recent article former Fed chairman Ben Bernanke asks what tools the Fed has left to support the economy and inter alia discusses the use of negative rates.

We first have to define what we mean by negative interest rates. For nominal rates it’s simple. When the interest rate charged goes negative we have negative nominal rates. To get the real rate of interest we have to subtract inflation from the nominal rate, so to speak remove the illusion of inflation.

 

1-real FF rateThe “real” federal funds rate (effective FF rate minus CPI-U y/y rate of change)

 

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The Cracks in the Economy’s Foundation Become Bigger

Last week the Bureau of Economic Analysis has updated its gross output data for US industries until the end of Q4 2015. Unfortunately these data are only available with a considerable lag, but they used to be published only once every few years in the past, so the current situation represents a significant improvement.

 

decay-3Decay…

Photo credit: bargewanderlust

 

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Buy Low, Sell High?

It is an old truism and everybody has surely heard it more than once. If you want to make money in the stock market, you’re supposed to buy low and sell high. Simple, right?

 

mad_professor-600x399Successful stock market investing in two simple steps

Photo via slideshare.net

 

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Big Moves in Markets No-One is Paying Attention to

A lot of attention has been on equities and precious metals in the past week but the biggest movers right now are the softs [e.g. commodities like grains, oils, sugar, etc.).

 

wheat_field-1000x523We actually are in Kansas now, Dorothy!

Photo via agriculture.ks.gov

 

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Dismal Earnings, Extreme Valuations

The current earnings season hasn’t been very good so far. Companies continue to “beat expectations” of course, but this is just a silly game. The stock market’s valuation is already between the highest and third highest in history depending on how it is measured.

 

NYSE

Photo credit: Kjetil Ree

 

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Business under Pressure

A recent post by Mish points to the fact that many of the business-related data that have been released in recent months continue to point to growing weakness in many parts of the business sector. We show a few charts illustrating the situation below:

 

1-Total Business SalesA long term chart of total business sales. The recent decline seems congruent with a recession, but many other indicators are not yet confirming a recession – click to enlarge.

 

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No Correction Yet

Late last week the HUI Index broke out to new highs for the move, and so did the XAU (albeit barely, so it did not really confirm the HUI’s breakout as of Friday). Given that gold itself has not yet broken out to a new high for the move, it would normally be expected to do so, as Jordan Roy-Byrne argues here.

 

bogota-culture-museo-del-oro-1a.jpgPhoto via Museo del Oro / Bogota

 

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The Yen Breaks Out

A few days ago we discussed the yen’s trend change and what appeared at the time to be an imminent breakout. This breakout has now actually occurred, and looks quite convincing to us.

 

yen unchained

 

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The War on Cash is on!

If you are used to making visits to your bank to make your credit card payments, you may find this no longer an option in the future. Some banks are no longer accepting (or limiting their acceptance) of cash deposits. The war on cash forges on. Paper money, which is indeed more or less worthless, is slowly being taken out of circulation and being replaced by digital currency.

 

Burning_Money

Photo credit: Stephen Krow

 

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THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

 
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