American investors might be extremely disappointed with the recent performance of the gold price as the yellow metal is once again trading below $1200/oz. This causes a lot of people to frown, but the reality is that the gold price is actually showing signs of a break-out.
"If you drop anybody into any momentous period in history, it’s really tough to perceive it at the time. It’s only when you look back on these things with the benefit of hindsight that you really see how historic they really are. But for many people right now who can forget the narrative and can forget what they're being told by various interested parties, if you can stand back far enough and take a practical look at what’s happening, I think it’s much easier to see certainly how far from normality things are today. "
Few asked throughout the Ukraine civil war is just whose side is China leaning toward, after all the precarious balance of power between NATO and Russia had resulted in a stalemate in which neither side has an obvious advantage (even as the Ukraine economy died, and its currency hyperinflated, waiting for a clear winner), and the explicit or implicit support of China to either camp would make all the difference in the world, and perhaps the world's most formidable axis. Today we finally got the answer. China's ambassador to Belgium, was quoted as blaming competition between Russia and the West for the Ukraine crisis, urging Western powers to "abandon the zero-sum mentality" with Russia. Reuters assessment of Xing speech: "an unusually frank and open display of support for Moscow's position in the crisis." At least it is not a warning to the US to back off or else. Yet.
"In retrospect, Obama’s intervention in Libya was an abject failure, judged even by its own standards. Libya has not only failed to evolve into a democracy; it has devolved into a failed state... As bad as Libya’s human rights situation was under Qaddafi, it has gotten worse since NATO ousted him."
With the "Great Greek Tragedy" now behind the markets, for the time being, all eyes have turned towards the Nasdaq's triumphant march back to 5000. (The graphics department at CNBC have been working overtime on banners and bugs for when it happens....watch for them.) For now, it is all about the hopes of a cyclical upturn in the Eurozone economy supported by the ECB's QE program starting next month. Market participants have been bidding up stocks globally in anticipation that the ECB's program will pick up where the Fed left off, and the flood of liquidity will find its way back into asset prices
With production and inventories at record levels despite the total collapse in rig counts, all eyes remain on Bake rHughes data for any signal the algos can use to mount a run. The total rig count fell for the 12th week, down 43 to 1267. This 3.3% decline is the slowest drop in 6 weeks and oil prices are sliding on this news. The key level to watch for WTI is $48.24 which moves it into the red for the 8th month in a row. WTI Contango and Brent-WTI spreads continue to surge.
Two words can describe yesterday's first impromptu anti-government protest "organized" by the far-left Antarsya party now that the Greek honeymoon with the new Syriza government is over: disorganized and violent, especially since calling it a "protest" is a stretch - if anything was just young, unemployed, angry people tossing Molotov cocktails. Which is why today's first truly official protest organized by the Greek communist party in front of the Greek parliament on the well-known Syntagma square, will get far more attention, especially since it was Syriza's own anti-bailout protests that filled the same venue as recently as a few weeks ago.
Regular readers are well aware of an unresolved problem/issue which has permeated these commentaries for (especially) the past three years: the lack of any rational or objective means for pricing assets, most notably precious metals themselves. There are two enormous obstacles facing any analyst, in attempting to resolve this issue.
Despite a modest 1.7% rise (after dropping 1.5% in December), Pending Home Sales missed expectations of a 2.0% rise - the 5th monthly miss in a row. It appears NAR's chief economist Lawrence Yun has flip-flopped: On existing home sales, NAR blames drop on lack of supply (as prices drop); on pending home sales, NAR says buyers overcame lack of supply.
If there isone thing that is virtually certain about today's trading (aside from the post Rig Count surge in oil because if there is one thing algos are, it is predictable) is that despite S&P futures being a touch red right now, everything will be forgotten in a few minutes and yet another uSDJPY momentum ignition ramp will proceed, which will push the S&P forward multiple to 18.0x on two things i) it's Friday, and an implicit rule of thumb of central planning is the market can't close in confidenece-sapping red territory ahead of spending heavy weekends and ii) the Nasdaq will finally recapture 5000 following a final push from Apple's bondholders whose recent use of stock buyback proceeds will be converted into recorder highs for the stock, and thus the Nasdaq's crossing into 5,000 territory because in the New Normal, the more expensive something is, the more people, or rather algos, want to buy it.
Warren Buffett once famously chided that all the gold in the world would form a cube of 67 feet (20 meters) on each side. In doing so, he was attempting to argue that there was no point in owning gold since all the gold in the world would be an unproductive, useless hunk of metal. What’s ironic (and completely lost on the venerable Mr. Buffett) is that you could make the same argument about the paper-based financial system.
While economic indicators make "very poor bedfellows" for managing portfolios, they do provide some indication as to the relative risk of owning assets that are ultimately tied to economic cycles. Despite commentary to the contrary as of late, economic cycles have not been repealed, and the current economy is likely running on borrowed time. It is important to notice, that despite the "hype" of the mainstream media about the economic recovery, activity never rose past previous peaks in this cycle.
Stocks are pricing in ECONOMIC PERFECTION and the reality is that the global economy is imploding.
What do people have to be 'uncomfortable' about?!! Stock markets around the world are at record highs... real wages just jumped by the most MoM since 2008... So why oh why did Bloomberg's Consumer Comfort Index plunge to its lowest of the year, falling by the most since May 2014? Perhaps, just perhaps, the market is a red herring... distracting the plebeians from the reality of the economy?
After last week's holiday-shortened exuberance over initial jobless claims, this week's slam back to reality is quite a shock to the "everything is awesome" crowd. Initial jobless claims jumped 31,000 to 313,000 - the biggest percentage rise since December 2013. Continuing claims dropped modestly but remain up around 3.5% over the last quarter - near the worst since 2009.