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Commodities Tumble As Stocks Scramble
Turning on the screens this morning to red pixels was an odd feeling for anyone who has traded stocks this year and while the low was put in soon after the US open the slow and steady weak volume limp higher in equities (led by financials and too-hot-to-handle Apple but breadth was nothing special for a change) got ES (the e-mini S&P futures contract) back up to close at 1400 on the nose (-4pts on the day). Investment grade credit was generally an outperformer relative to stocks today (though AAA corporates were net sold perhaps on rotation back into Treasuries) though the roll in credit derivative markets hinders comparisons a little, however, high yield credit dwindled a little (on light flows) into the close. Commodities were the hardest hit of the day - dramatically underperforming the implied weakness of a modestly stronger USD. Silver, which recovered well off its lows of the day, was equal worst performer with Copper as China's slowdown story dominated. Interestingly Oil also fell as increased supply news hit pushing WTI under $106. Gold outperformed (though was lower on the day) and stands down only 0.6% on the week now (less than half the losses of the other metals/oil). Treasuries (as we already noted) broke their record losing streak with a modest 1-2bps compression in yields close to close (after being closed for the Japan session last night). A relatively large jump up in EURUSD near the US day session open was the biggest news in FX markets but that leaked away all day as the USD limped high off that low (helped by AUD and JPY weakness). The AUD weakness and EUR and JPY strength at the time suggests a sizable carry unwind and it coincided with the drop in US equities and drop in WTI. VIX managed to rise once again, expected given equity's drop, but as equities rallied this afternoon, VIX kept pushing higher (and we note longer-dated months saw vol compression) suggesting steepeners being unwound - or maybe still hangovers from the TVIX debacle.
IG continues to outperform (though some of this is likely roll-related compression) even as we saw net selling in the AAA bucket of corporates today. HY was not as exuberant as the up-in-quality trade remains firmly in place but stocks managed to rally almost the entire day off a nasty gap down open - the likes of which we have hardly seen this year...
FX markets generally continued to trend USD higher but were interrupter early in the US day session by a rip in EUR and dip in AUD...
Commodities got double-whammied by China growth concerns and a leaking higher USD this afternoon. Clearly they are generally clustering again with Gold the slight outperformer but the coincidence of Oil, Copper, and Silver all down around 1.1% on the week is surprising (given USD's 0.2% loss on the week).
Correlations started to break down this afternoon as stocks rallied and broad risk-assets (proxied by our CONTEXT) did not partake. Most notably Treasuries leaked lower in yield while JPY crosses managed very small gains to support stocks.
Treasuries remained in a narrow range but rallied into the US day session close to manage a gain on the day (as the front-end underperformed notably). A glance at the chart below tells you that it didn't exactly feel like a trend reversal but at least we broke that losing streak as the narrow range suggests there is a fight to break that late-October swing high in yields.
Charts: Bloomberg and Capital Context
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Commodities On Sale As Stocks Falter
"Stocks pull back in relative strength to prepare for tomorrow's ramp, while everything else obeys the laws of supply and demand."
Wait a second. How is Crude at $106 and Brent at $124 a tumble again?
Silver, as always, sucks balls.
what's the paper lining?
1. Eric Sprott gets second rate billing.
2. Tmosley Who?
3. KWN ties Coast to Coast for most bizarre conspiracy topics: strange occurrences, life after death and silver manipulation games
If/when any of that actually happens it'll be time to buy again.
funny, this
http://www.zerohedge.com/news/catching-silver-crusher-algorithm-act
looks like proof.
Let's see how it sucks in a few years. You'll be sorry.
It just seems like stall speed from here. No QE (yet) margin compression will hit earnings. No "Greece will be the next Lehman X 10" to overcome. Just coast along until the mountain of bad earnings, debt ceiling, expiring tax cuts, automatic spending cuts etc. etc. etc. brings on a big dump and more QE
The stock rally is due to central banker buying up stocks, known cases such as Central Bank of Israel printing and buying US public companies stocks. On top of that, QE 1, twist, 2, LTRO etc..... So all technicals are out the windows. there might be more runnup but down turns are increasing unlikely as more printing will never permit markets to readjust.
Gold and silver are on sale again.
Walk everything down and then more QE pre-election ??
Nope. The mere rumour that "More QE is on the way! Just around the corner! Next month, or tomorrow!" will be enough to keep the equity fires burning.
When the buyer of last resort also owns both a printing press and a computer, the fear of dips is not necessary.
I would only add that in essence these fuckers and the government can essentially front-run themselves. At least so long as the dollar is the "reserve" currency.
With all of the various pundits talking about how "undervalued" gold/silver mining stocks are, it reminds me of the overused/trite expression "the South will rise again".
Motorhead
ETF's have taken the place of mining stocks.................save for the FEW real winners.
Title should have been "Commodities Tumble as Stocks Crumble" - sounds better.
No problem for me. I'll use the opportunity to add to my PM holdings.
Commodities crumble as stocks stumble, said Rumplestiltskin playing pigskin.
All this after The Bernanke bashes the Gold Standard today... The real reason The Fed hates the Gold Standard is that it limits the amount of FRAUD they can perpetrate... If they are free to print unlimited amounts of money, they earn MORE money in INTEREST and thus greater profits go to the private shareholders of the PRIVATELY OWNED Fed....Want proof? The two most profitable years for the Fed were 2010 and 2011....Why? Because they PRINTED!!!
Here's what he had to say in an exchange with a student.
The United States abolished the gold standard in 1933, and fully moved away from a fixed exchange rate in 1971. Bernanke defended that decision Tuesday, saying a gold standard creates an "awful big waste of resources."
"To have a gold standard, you have to go to South Africa or someplace and dig up tons of gold and move it to New York and put it in the basement of the Federal Reserve Bank of New York and that's a lot of effort and work," he said.
A student pressed him on the issue, asking him to play Devil's advocate: "Given everything that we know about monetary policy now and about the modern economy, why is there still an argument for returning to the gold standard and is it even possible?"
Bernanke didn't bite. He said that there is not enough gold for a global gold standard and that "the world has changed."
"I understand the impulse, but I think if you look at actual history, you'll see that the gold standard didn't work that well and it worked particularly poorly after World War I," he added. "There's a good bit of evidence that the gold standard was one of the main reasons that the Depression was so deep and long."
http://economy.money.cnn.com/2012/03/20/professor-bernanke-rails-on-gold-standard-6/?iid=HP_LN
> Bernanke defended that decision Tuesday, saying a gold standard creates an "awful big waste of resources."
That is a great explanation why every normal human being prefers to save in paper that Benny and Hyper (rather than Super) Mario print as they please.
I'd better get rid of my PMs before I waste my resources. Scholar my ass.
Uhm, no. Not true. VIX is dying out there in price terms.
VIX volume is pretty good though. Same as last year. It will be epic, when this shit show of a market unwinds later this year.
You're confusing products. You surely mean the VXX, which is indeed "dying", however by now the sense is quite clear that its a shitty product as a "close synthetic" of the VIX.
The spot VIX (started the day nice and green, stumbled into the close though) isn't tradeable... its the futures and options you're interested in, especially the near term months (Apr, May) which have been seeing lots of decent size call buying (outright and spreads) in the past days and will get the most activity from tomorrow onward as March VIX settles right at the open.
....with the Fed effectively printing and buying stocks (paper into real assets alchemy), hard to see the market ever tumbling much beyond 3-4%. Only when people realise that what they perceive as an instrument of value (ie FRN's) is created out of nothing and has no tangible backing will the Fed be at risk. This process is years away I think. At which stage they will own 70% of all the worlds assets. The Jekyll Island monster will then have concluded what is was established to do.
That's what THEY are hoping for, thing is, before all of that happens THEY will get shot, execution style :(|)
Its a shame all the pumpers sold at 1900 and 49 bucks leaving the retail guy holdings a bag of rocks.
I hope you learned your lesson.
Gold makes you mental and the pumpers will fleece you.
If, and I mean if, we get that 4000 rally all the pumpers told you what will you do?
Buy the top or sell the top.
This correction should teach you a lesson.
Wall street made your insurance a trade nothing more. When the schills say to da moon, Sell it to them.
Do you consider housing a commodity? I do, some people don't. Interest rates are nil and most people have little or no real equity in their homes. Forget the guy who's upside down, in general, people are low on Cash. The subprime loan RE bubble isn't going to happen again, so I don't see the small retail buyer getting back into stocks. It's more likely the average joe is being squeezed by rising prices on energy, taxes and general inflation. As far as PM pumpers, I think they wish they had that kind of power, Global demand is the force behind PM sales. China alone would back stop it at $1500. Nothing fundamental has been corrected, all the reasons people invested in pm's are still in play.
Gold is insurance. Sometimes you pay a higher premium but the insurance outlasts, as gold, vs many forms of paper. Those holding paper may see it vaporize a-la MF Global but those holding gold rocks won't lose a thing.
There's no reason to own no gold. Even with the premium you pay for this insurance being volatile to the upside sometimes, it's still worth more later than it is now.
http://flic.kr/p/bpJpXX
Martin Armstrong's 1100 may be closer than 4000
prepare
That would be awesome....
I'd surely buy alot more.
I like gold and silver commodities......mostly
i'd love to see the risk off continue.
http://www.cnhedge.com/
http://www.jinrongbaike.com/