• Gold Money
    05/26/2016 - 14:27
    Here’s a question that might have you pondering: Is gold a commodity? More importantly, are we doing a disservice to the gold industry by calling gold a commodity? These may sound like silly...

Risk On Or Risk Off?

Tyler Durden's picture

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Tue, 07/06/2010 - 17:05 | 455402 43 Steelie
43 Steelie's picture

Always look forward to your analysis Nic, thanks as usual.

Tue, 07/06/2010 - 17:10 | 455412 Panafrican Funk...
Panafrican Funktron Robot's picture

The problem I have with tracking the BDI is that it bears little to no relation with equity behavior, particularly over the last couple of years.  I get that it's a great indicator of the "real economy", but it seems like equities have almost completely decoupled from the "real economy".  I think monetary policy is the only thing worth tracking at this point if you're trying to describe equity behavior. 

Wed, 07/07/2010 - 04:21 | 456185 Sudden Debt
Sudden Debt's picture

Could that be because of the Evil Speculators :)

Tue, 07/06/2010 - 17:13 | 455421 Mitchman
Mitchman's picture

This is excellent analysis as always.  Thank you. 

S&P at 380?  That is a very scary thought.

Tue, 07/06/2010 - 17:12 | 455423 Popo
Popo's picture

Risk Off. 

The bulls gave it everything they had after the long weekend.  The media was shrieking for a rally, and what we got was a complete fizzle with a last gasp at the close.  Hardly a showing of strength.

If that's supposed to be a sign that the slide has ended, it was one pathetic signal.


Tue, 07/06/2010 - 17:26 | 455462 Yikes
Yikes's picture

Agreed.  Up almost 2% at the beginning of the day (for reasons I don't understand) and couldn't hang on to it.  There are bound to be technical bounces just to keep the algo's happy but IMHO, steady decline.



Tue, 07/06/2010 - 19:36 | 455713 Chip
Chip's picture

TZA was deeply red at 9:45 and closed green--all you need to know. 

Course IBD will be there telling us the usual "day one of an attempted rally, watch for the followthrough day/rally attempt on day 3" etc etc

Tue, 07/06/2010 - 19:57 | 455741 Deep
Deep's picture

All you guys playing these leveraged ETF, watch out, its seems a lot buy the posts, you guys are not really short the market.

Short real way



Tue, 07/06/2010 - 17:15 | 455428 NOTW777
NOTW777's picture

words of wisdom; sounds even better when listening to angry bull doug kass in the background.

Tue, 07/06/2010 - 17:15 | 455429 luster
luster's picture

380?  I guess I will not be seeing Nic as a CNBS guest.

Tue, 07/06/2010 - 17:16 | 455431 NOTW777
NOTW777's picture

is kass losing it?

Tue, 07/06/2010 - 17:16 | 455432 walküre
walküre's picture

Great analysis. I like the S&P 380 call but why stop there?

Tue, 07/06/2010 - 17:26 | 455468 VK
VK's picture

Exactly! S&P 100 is more like it!

Tue, 07/06/2010 - 17:16 | 455433 Jeff Lebowski
Jeff Lebowski's picture

I had to re-read it twice to comprehend that it really did say "three hundred and eighty".

Yikes.  Any timeline associated with either number, Nic?

First I want to reiterate I remain bearish big picture and that my long term target in S&P is 380 with intermediary target at 865.

Tue, 07/06/2010 - 17:22 | 455451 walküre
walküre's picture

What they're really suggesting is that Double Dip is now priced into the market.

So, what's next? The Great Recession is priced in. The Depression or Double Dip is priced in.

When will we learn that a collapse of all monetary systems has been priced in and the market goes up?

This is too funny.

Tue, 07/06/2010 - 20:09 | 455766 RichardENixon
RichardENixon's picture

The 2011 increases in capital gains and dividend tax rates are not priced in yet. That will happen by December at the latest.

Tue, 07/06/2010 - 17:18 | 455436 Cleanclog
Cleanclog's picture

Doug Kass . . . excited to be strongly opined that GDP is above 1%, like that's a reason to be bullish. Pathetic.

Tue, 07/06/2010 - 17:19 | 455438 carbonmutant
carbonmutant's picture

"The consumer is the "krill" at the bottom of the food chain"

Without the "krill" the whales die...

Tue, 07/06/2010 - 17:35 | 455494 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

True, but when you and several billion of your closest krill friends die for another whale, it is cold comfort.

Maybe krill have bumper stickers that say "Shoot the whales"

Wed, 07/07/2010 - 02:41 | 456161 carbonmutant
carbonmutant's picture

 Well in our economy the whales don't actually eat the krill, they do depend on them for revenue and for profits.

The bailouts were a way of feeding the whales until the krill started to produce again.

Unfortunately the administration's feeding program seems to be causing an outbreak of government obesity while starving the krill.

Tue, 07/06/2010 - 17:20 | 455441 Turd Ferguson
Turd Ferguson's picture

Risk on = Sell gold

Risk off = Sell gold

$ rally = Sell gold

$ selloff = Sell gold

The desperate manipulation of the gold market tells you, if you're willing to listen, that something major is coming. QE2.

Tue, 07/06/2010 - 17:22 | 455449 Mitchman
Mitchman's picture

I agree with you TF.  But don't you think that will precipitate a crash in the Treasury market?  At least  ablowing out of spreads on the weekly rollover?

Tue, 07/06/2010 - 17:29 | 455473 Turd Ferguson
Turd Ferguson's picture

Mitch: I'm not sure there is much of a treasury "market" anymore. 

Step 1: Allow JPM, GS et al to borrow unlimited $ at discount window for 50bps

Step 2: JPM, GS et al take said $ and purchase unlimited treasuries at auction

Step 3: Cover it all up with vague notation "Direct Bidders"

Can't see where a new, massive stimulus plan or an extension of MBS participation by Fed would effect this dynamic.

Tue, 07/06/2010 - 17:57 | 455546 Implicit simplicit
Implicit simplicit's picture

It will have to be something opaque with the direct bidders. The public resistence to GS and JPM would be considerable.

 The "national security" team will prop up a station on some Godforsaken Island and buy billions in treasuries.

Tue, 07/06/2010 - 18:13 | 455582 Chemba
Chemba's picture

don't be such an ignorant turd.  GS does not "borrow from the discount window to warehouse treasuries" on its balance sheet.  Citi perhaps, but not GS.

Tue, 07/06/2010 - 18:04 | 455561 Cheeky Bastard
Cheeky Bastard's picture

The desperate manipulation of the gold market tells you, if you're willing to listen, that something major is coming. QE2.


Actually very much NO. If indeed market was pricing in QEII [which it surely will, but not yet] you would see Gold rising; not falling. The market is pricing in a deflation and that is reflecting on both gold, commodities and equities. The manipulation was done in May [for reference and confirmation see the following; day-on-day evolution of all-tenor GOFOs, m-o-m increase in average daily volume cleared and dollar value of the volume cleared that month]. This was unwinding and selling for liquidity. Gold had almost no resistance on its way up to 1260 [except on OP-EX days; but that is usually reverted in the matter of minutes]. When they yield on the 10Y goes above 3.20% the market will begin pricing in the possibility of QEII [but that is unlikely to happen at least not before September]. When you see 10Y above 3.20%; start buying.

Tue, 07/06/2010 - 19:09 | 455674 Muir
Muir's picture

"Actually very much NO. If indeed market was pricing in QEII [which it surely will, but not yet] you would see Gold rising; not falling. The market is pricing in a deflation and that is reflecting on both gold, commodities and equities. "

There can be no argument with this statement.



("When you see 10Y above 3.20%; start buying." I'll keep that in mind.)


Tue, 07/06/2010 - 21:44 | 455910 Al Huxley
Al Huxley's picture

I'd just reiterate at this point that, the return on new debt having gone negative, QE2 is the worst imaginable thing possible for the markets and the economy.  I'm sure there will be the reflexive bounce, but if you see QE2, that would be the sign to start moving towards a 100% short position.  There is no saving this situation now, short of a massive debt default.

Wed, 07/07/2010 - 00:42 | 456087 Turd Ferguson
Turd Ferguson's picture

Wrong, Cheeky. You clearly don't see the powers of Bullion Bank manipulation.

Look at the charts of 6/21 and 6/28 to see the clear evidence.

Wed, 07/07/2010 - 04:33 | 456189 Cheeky Bastard
Cheeky Bastard's picture

Wrong, Cheeky. You clearly don't see the powers of Bullion Bank manipulation.


Dude; there is a 1000 word post I written about precisely that about 1.5 mth ago. I understand it; believe me I do; but this was not manipulation; this was profit taking.

Wed, 07/07/2010 - 01:13 | 456121 Bonesetter Brown
Bonesetter Brown's picture

Cheeky, any opinion on why there has been no draw on the Fed's FX swap lines?

The re-opening of those swap lines were a form of qualitative if not quantitative easing.

Wed, 07/07/2010 - 04:37 | 456191 Cheeky Bastard
Cheeky Bastard's picture

I have no idea. With every new report coming about FX swap lines i remain puzzled as to why the swap value is either 0 or some negligible amount. 

Tue, 07/06/2010 - 17:26 | 455466 buzzsaw99
buzzsaw99's picture

My number is 376. Eerie.

Tue, 07/06/2010 - 19:29 | 455705 jdrose1985
jdrose1985's picture

Prechter is calling for <1000 Dow, beat that!


I'll reiterate my Dow 3k number here.

Tue, 07/06/2010 - 17:27 | 455469 SayTabserb
SayTabserb's picture

So by a parity of reasoning, if that is apt here, does this mean that the S&P is going to lose 63% of its present value, and should that translate to a 63% loss on the Dow, taking it from its present 9,700 to about 3,600?  Is that a correct correlation of these two markets?

Tue, 07/06/2010 - 18:05 | 455565 New_Meat
New_Meat's picture

ooch--you said the sainted number 63% <insert eeirie sounds here>.  It is an e thing.

Yamada has said SPX 600 followed by 400.  No time frame, noted.

But check out the volume on SPY vs. DOW on basis of individual stocks.  That will be first-order correlation, but, yes, everyone comes out to the Paddy-Wagon, even the piano player.

- Ned

(I was only 20 or so when I figured out that "Irish Pennant" was an ethnic slur, invented by Irishmen I learned.  But I was in my 40's before figuring out Paddy-Wagon.  Go figure.)

Tue, 07/06/2010 - 20:03 | 455756 Boop
Boop's picture

Perhaps not from the Irish - Irish pennant:

   1. (British) (nautical) A loose or untidy end of a line or other part of the rigging of a sailing ship

   2.(US) A loose thread of a Naval or Marine uniform; also the loose end of any knot not tied properly

Tue, 07/06/2010 - 20:35 | 455812 New_Meat
New_Meat's picture

I learned -2.

and the doggies would taunt their recruits with the lanyard equivalent : "Boom, Sir". Don't know how far back that went, probably to Jackson at VMI or in Mexico or earlier.

Tradition matters.

- Ned

Tue, 07/06/2010 - 22:28 | 455963 Diogenes
Diogenes's picture

How about Irish confetti? (old bricks) LOL

Tue, 07/06/2010 - 17:35 | 455470 Rogerwilco
Rogerwilco's picture

Here in the USA they need to goose things enough to keep up appearances through the November elections. Then the lame-duck Congress will deal with all the malcontents and naysayers with much needed legislation. Next it's Obama's turn, and he'll have to gin up some kind of shooting war to get his numbers out of the basement in the run-up to the 2012 elections. The risk of a pre-election rally is too great to ignore -- I'm staying out of the bipolar markets.

Tue, 07/06/2010 - 17:38 | 455502 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

My concern is that the lame-duck congress might end up voting for the most monstrous legislation, knowing full well that they are out of their current gigs and hope to be behind a desk at some finance firm after a few "favors" are passed.

Tue, 07/06/2010 - 17:38 | 455501 tmosley
tmosley's picture

Risk off and on simultaneously.

I call it Schrodinger's Market.

Whatever you do, don't open the box.

Tue, 07/06/2010 - 17:39 | 455509 SayTabserb
SayTabserb's picture

We'll be collapsing the wave function, all right.

Tue, 07/06/2010 - 18:07 | 455569 New_Meat
New_Meat's picture

Collapse more than wave functions--lol - Ned

Tue, 07/06/2010 - 17:39 | 455510 Pedro
Pedro's picture

Is it just me or does every major index chart I see have a head and shoulder pattern?

Tue, 07/06/2010 - 17:46 | 455523 Turd Ferguson
Turd Ferguson's picture

I keep seeing this...an oldie but a goodie


Tue, 07/06/2010 - 18:27 | 455608 Pedro
Pedro's picture

Hilarious.  The Ole "Black Swan"

Tue, 07/06/2010 - 19:30 | 455707 Implicit simplicit
Implicit simplicit's picture

Or the ole bugeyed duck; a very rare event, much like the black swan:)

Tue, 07/06/2010 - 18:21 | 455594 HarryWanger
HarryWanger's picture

I've been pretty bearish lately but I gotta say, last July, oh, right about this time, everyone and their brother was screaming SPX head & shoulders. And I mean everyone. Traps so many shorts it was scary. I'm not buying into this one yet either. Sure, it could continue down but it also could be a repeat of last July.

Not a big fan of the head & shoulders formation. I actually think most of those formations exist to suck people into the trade and crush them. We'll see but I'm playing quick trades this week until some earnings start to flow.

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