The psychology dominating the minds of most institutional investors over the past few years has been that things were slowly getting back to normal. This has weighed on institutional demand for gold in a big way, and been a meaningful factor in the bear market (manipulation aside). The problem now is that this assumption is quickly being called into question, and if this psychological shift gathers pace, the shift back into gold could be very meaningful.
Another day, another Goldman prediction fiasco, and no, we are not talking about the stop out of the firm's Top Trade for 2016, namely the long USDJPY, short EURUSD (although that should happen any minute) - we are talking about that perpetual permabull, Jan Hatzius, just admitting the economy is in far worse shape than expected (if only by him), and as a result he just "revised" his Fed rate hike call, no longer expecting a March hike, instead now forecasting that the first rate hike will be in June and "and see a total of three rate increases this year."
Or, it could be something.
Because a currency represents a relative relationship, Fed hikes could have helped pull other central banks away from the dangers and consequences of negative rates, while still helping their hidden desire for a weakened currency. Opposing central bank policy actions would cause too powerful of an impact on exchange rates. Unfortunately, it appears the path into negative territory is winning the directional battle. A classic prisoner’s dilemma has arisen for the Fed.
“The retail investor waded in again. The sheep lined up and, unfortunately, are heading for the slaughter one more time. I think it is very hard to see how this Baby Boom generation, with 10,000 of them retiring a day, can afford one more devastating crash in their stock holdings. That is, unfortunately, what we are heading for. That’s why I say it’s dangerous. When the bubble breaks, it will spill and flow throughout the Main Street economy.”
“You're not allowed to walk in your own city anymore! Go home, boy! Who the hell elected you?"...
Early last month, we asked a simple question: "Will Martin Shkreli, like the E*Trade-ing Joe Campbell whose short position in KBIO blew up when Shkreli acquired more than half of the float back in November, start a GoFundMe page in the event his collapsing holdings leave him a few million short on the bail bond?” We may soon know the answer.
Yet another attempt at rising interest rates has spectacularly fizzled out.
The US Dollar Index is crashing the most since QE1 was unleashed in Q1 2009. Following The Fed's Dudley-isms this morning desperately jawboning some dovishness back into markets, the USD has plunged but the ubiquitous risk-on rally in stocks is very evidently missing as USDJPY soars back above BoJ NIRP levels. Today's plunge is bigger than Dec 2015's ECB fail drop...
At a press briefing, China revealed its growth target for the year and for the first time since 1995, it’s a range rather than a set number. The economy will grow between 6.5% and 7% in 2016, Xu said in a tacit admission that things are indeed slowing down for the engine of global growth and trade. More notable than the growth target were comments from National Development and Reform Commission Chairman Xu Shaoshi on the country’s acute overcapacity problem, defaults, and social unrest.
In a testament to how the ground is shifting beneath the Bentonville behemoth’s feet when it comes to e-commerce, we bring you the following brief commentary and graphic from Wells Fargo, who shows that when it comes to retail sales growth in the US, WalMart is, well, damn near dead.
When people hold cash out of aversion to negative interest rates, they risk losses due to theft and the like. The cost of avoiding this risk could be a key determinant of negative interest rates' lower bound, but it is hard to directly quantify. As a proxy for the cost of holding physical currency, we estimated the cost of storing gold based on gold futures prices. This cost has averaged an annualized 2.4% over the past 20 years, though it has varied widely over this timeframe.
Oil markets have been largely assuming that OPEC producers could go on producing at these levels for years, but what if that’s not the case?
Trading Desks Stunned By 'Brutal' Selling: "The Crowded Trades Have Come Unglued On Obvious Unwinds"Submitted by Tyler Durden on 02/03/2016 - 12:46
"Yest was one of the largest global net sell days over the past year and the largest sell day of 2016 so far, a 2.5 standard deviation (SD) event. L/S funds were the main sellers as they BOTH sold longs AND added shorts."