Archive - Jun 2013

History may not repeat but it certainly rhymes and when it comes to the animal spirits of human fear and greed, nowhere is that more evident than the 'surveys' of confidence that US citizens have undertaken for thelast 30 years. As the following two charts show, while many are exuberant at the rise in confidence of late, it is a pattern we have seen play out twice before - and both previous times - it did not end well...

More than 97,000 rail carloads of crude oil were delivered in the United States during the first quarter of the year.That's 20 percent more than the fourth quarter of 2012 and 166 percent more than during the same period last year. Rail shipments of grain, metallic ores and minerals declined, however. Oil companies are moving more of their oil by rail because pipeline capacity can't keep up with North American production gains. Last week, a pipeline planned from Texas to California was shelved because of the lack of shipper interest, though for rail, there's been relative surge in crude oil traffic. It remains to be seen if that can be sustained, however. The debate over pipelines versus rail hinges on access, price and reliability.

It's one thing for broke Argentina to nationalize assets of just as broke Spain. However when tiny west-African country Gabon decides to "seize" assets from three international oil companies including China's petrochemical giant Sinopec, things not only get interesting, but puts a brand new pawn on the global geopolitical chessboard. But why is Gabon seeking to antagonize some of the primary participants in its crude extraction supply chain? Simple: leverage, or its own perception thereof. As the FT reports, this surprising move comes as Gabon prepares to "launch a licensing round for the deep waters off its coast. Experts say reserves in the Gabon Basin could rival deep offshore discoveries in Brazil."

Do you feel lucky?

Those tens of thousands of outstanding delivery requests against JPM are finally starting to make their way through the pipeline: following the withdrawal of 28,380 ounces of gold after nearly one month of radiosilence out of the vault located below 1 CMP, today the CME reported that another 21k troy ounces of eligible gold were withdrawn from the bank (coupled with the reallocation of another 8.8K registered into eligible), taking the total to a fresh record low of 767,752 ounces.

As more and more "baby boomers" head into retirement the need for high quality, independent, registered investment advisors will continue to grow.  The need for firms that do organic research, analysis and make investment decisions free from "conflict," and in the client's best interest, will continue to be in high demand in the years to come as more "boomers" leave the workforce.  While the "Wall Street" game is not likely to change anytime soon; the trust of Wall Street is fading and fading fast.  The rise of algorithmic, program and high frequency trading, scandals, insider trading and "crony capitalism" with Washington is causing "retail investors" to turn away to seek other alternatives.

Treasuries appear to be shrugging off the Taper talk in favor of safe-haven status as they rally 6-7bps - the best yield compression since mid-February. US equity markets did not close off the lows (as the Nikkei is within 45 points of the dreaded bear market 20% correction level). Credit markets anxiety yesterday bled through today and they led stocks lower (with no Hindenburg Omen today). The VIX term structure bear-flattened dramatically as the 'picking-up-nickels-in-front-of-the-steamroller' trade finally got its fingers caught - the front-end of the curve smashed higher and is now at its flattest to the midcurve in 2013. The USD weakened as JPY was bid (and AUD sold hard) amid heavy carry unwinds. Volume was heavy today but the selling was very broad-based across the sectors (homebuilders remain worst on the week). The Dow ended with its biggest points drop in almost two months - no buy-the-dip-mentality victory today eh Maria?

Presented with no comment...

The UK Prime Minister, David Cameron has convened a meeting with ministers from overseas territories (Bermuda, Jersey, Guernsey, the Isle of Man, Gibraltar, the Cayman Islands, Montserrat, the Turks and Caicos Islands, Anguilla and the British Virgin Islands) in London it has been announced.

Amid the cozy world of X-Factor, American Idol, and Dance Moms, we can often be lulled into the belief that all is well in the world. But once the cocoon of mind-numbing media is shrugged off, the realities of the world are all too 'Matrix-like' exposed. Simon Black's travels have exposed these three things...

How Another Housing Bubble Was Blown … And Why

As every down-tick in the paper price of Gold is viewed as another death knell for the 'global safety' trade; a drop in stock prices is somehow seen as an 'opportunity' to the world's media and status quo maintainers. However, as Reuters reports, Richard Peterson - acting director of the US Mint - explains, demand for US gold and silver bullion remains at "unprecedented" high levels almost two months after the historical sell-off. So that is what the pent-up-demand, 'money on the sidelines' has been waiting for? Notably, Peterson also added that, due to demand, the Mint may resume making platinum bullion coins (after stopping in 2008).

A month ago we posted two sets of charts - WTFs and Divergences. It appears equity markets are beginning to catch down to this underlying reality as the Fed (afraid of its own shadow impact now) tries to gently talk the bulls off the leveraged ledge.

Moar 'm' words from the modest boring of backward-looking release - The Beige Book. Unable to say the word slow, it seems 'modest', 'mild', and 'moderate' are the adjective of choice. But there is a bright spot... FED: BEIGE BOOK BASED ON INFORMATION GOTTEN ON OR BEFORE MAY 24; FED SAYS GROWTH WAS `MODEST TO MODERATE' ACROSS MOST OF U.S.; FED: HOUSING INCREASED AT `MODERATE TO STRONG PACE' ACROSS U.S. and we know what is happening there now. So we assume this is the 'growth' that brings 'teper' chatter - hhmm.