GeoCapital Economics
Global Economics
Valuable Sources for supporting professionals in their decision taking for managing the complexity and uncertainties of the globalizing world economy to gain and sustain leadership and competitive advantage:
Recommended Readings for Knowledge, Strategy and Mind Set, and Real-World Cognition
- Global Economic Intersection
- Influential Economics - Ranking
- Global Economic Indicators
- Sober Look
- World Economics
- TradingEconomics
- Mauldin Economics
- Calendar - Economic Indicators
- IFC > Economies' Ranking Data & Trends
- Earth's Transformations
- GeoCurrents
- AskDefine Geostrategy
- Geography - Shaping History, Politics, Economics
- Economic Diplomacy
- The Market Oracle
- MarketWatch
- Macro Monitor
- CBS News
- FOX News
- Bloomberg View
- Global Market Update
- Capital Economics News (Bloomberg)
- Globalization
- Encyclopedia of Economics
- The Economist Economics
- The Economist Markets & Data
- The Economist Economics A-Z
- Human Development Index
- EC Economic and Financial Affairs
- Economic Policy and Commentary
- Yale Global Online
- World Development Reports
- World Review
- Economic Diplomacy
- Knowledge Management
- Finding the Flow
- Profile Books
- Global Luxury Report
- Reuter's Breaking Views
- Sober Look
- World Economics
- TradingEconomics
- Calendar - Economic Indicators
- The Market Oracle
- Spirit & Art of Governing
- Spirit Codes (in German)
WSJ Real Time Economics Categories
- Fed
- Credit Crisis
- Global
- Employment
- Business Cycles
- Consumption
- Trade
- Inflation
- Housing
- ECB
- Budgets
- Vital Signs
- Manufacturing
- GDP
- Central Banking
- Stimulus
- Currency
- Taxes
- Energy
- Economists React
Global Macroeconomics
- Chart of World Economic Outlook (IMF)
- World Economic Outlook (WEO)
- World Economic and Financial Surveys
- Economic Indicators
- Economics > Countries & Regions
- Countries Stats & Data
- Country Profiles
- Economics > Country News
- World Economics
- Economics > Countries & Regions
- Economics > Country News
- Economics > Countries - Credit Rating
- Macro Monitor
- Economic Indicators
- Global Economy
- Markets
- MarketQuotes
- MarketWatch
- BBC News
- FinancialNews
- BloombergTV
- TWSJ Global News
- TWSJ Market Data
- BBC Market Data
- ThomsonReuters
- ThomsonReuters Science
- World Economics
- Economic Indicators
- Economics > Countries & Regions
- Countries Stats & Data
- Country Profiles
- Economics > Country News
- Economic Indicators
- USD Index Chart
- Bond Yield Charts
- Economic Calendar
- Macroeconomic Analysis
- World Interest Rates Table
- Financial.Com [Widget]
- Charts & Data For Mining
- Geopoliotics & Oil
- World Gold Council
- Gold Facts - A World Gold Council initiative
- Gold Mining Process - video
- Gold - Chart
- Gold Money Index – Chart and Prices
- Precious Metal Prices - Charts
- Gold Silver Prices - Charts
- Geopoliotics & Oil
- World Gold Council
- Gold Facts - A World Gold Council initiative
- Gold Mining Process - video
- Bond Yield Charts
- Foreign Trade online
- The Forex Market
- USD Index Chart
- Foreign Exchange Strategic Charts
- Bloomberg Market Data
- The Wall Street Journal Markets Data Center
- Oilprice
Seeking Alpha Analysis - Macroeconomics
- Discuss what the Fed could do that would be beneficial to commodity markets.
- Highlight how the ebola outbreak in West Africa is now forcing companies to delay exploration plans.
- Look at some of the upgrades and downgrades by analysts.
- We're never going to stop importing oil because supply diversity is prudent.
- Both oil and natural gas production in this country are the highest in about 35 years.
- There is an enormous demand for rig crews, frack crews and all the associated equipment and materials.
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- Look at yesterday's market action and whether the buying indicated a bottom.
- Discuss SCHW's decision to drop Pimco after the exit of Bill Gross.
- Highlight why GPRO was lower yesterday.
- The European Central Bank remains committed to further stimulus.
- Its accommodating policy should lead to increased lending and improved inflation readings in time.
- Until policy begins showing tangible results, it would be wise to avoid buying the currency or its ETF.
- A strong USD may be helping to weaken crude values, and in the process, this weakens the Canadian Dollar.
- There is going to be a period of explosive growth in the trade of liquid natural gas. Canada is not prepared to participate despite massive natural gas reserves.
- Is it possible the crude supply glut combined with tepid global demand will take the crude market 10/20 dollars per barrel lower?
- Mario Draghi disappointed markets in a downbeat speech that promised little to prevent deflation or increase growth.
- Markets fell hard around the world, with safe-haven buying of bonds, dollars which pushed commodities lower.
- My investment exposure has been shrinking since summer and getting more and more defensive, shorting gold at times. This is time to get defensive.
- Brazil dryness returns for coffee and no hope for rains for at least 2 weeks.
- Gold prices break major support.
- Stronger dollar pressures crude, along with a glut of global supplies.
- A strong dollar in the third quarter has been matched by EM currency weakness.
- EM economies with "cheap" currencies are already benefiting from better export growth.
- The strong dollar is spreading U.S. growth around the world.
- The attempt to correct the dollar lower fizzled out.
- Disappointing European service PMI provided new excuses to sell the euro and sterling.
- The US employment report may disappoint.
- There are several factors likely to push the dollar higher going forward. The greenback is no longer merely a cyclical safe haven, but a compelling story on its own.
- Chief among these drivers is the growing divergence in economic outlook, and monetary policy, between the US, Europe and Japan.
- A combination of slower global economic growth, and further appreciation of the dollar, should maintain significant headwinds for dollar denominated industrial commodities, and oil prices in particular.
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- Are commodities good forecasting tools for the stock market?
- Does weakness in commodities mean the economy is in trouble?
- Key S&P levels we are watching.
- Offshore drillers are in a bear market.
- Some offshore drillers are managing the downturn better than others.
- Drilling backlog can be used to forecast supply/demand and revenue scenario's.
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- Macroeconomic data suggests rates could justifiably be 100 basis points higher.
- However, a number of forces at play suggest U.S. Treasury rates will fall further.
- Despite current market volatility, expect one more rally for U.S. stocks and bonds.
- The U.S. oil production is slowly rising and is expected to gain over 12% by 2015.
- OPEC may cut its oil quota.
- The weaker than previously estimated demand for oil in Europe and China is slashing the gap between Brent and WTI.
- Brazil has made plenty of news over the past year. However, the most important development in Brazil this year has garnered almost no international attention: extreme drought.
- Historically, the main weather problem for Brazil's coffee farmers has always been frost. Few have had to deal with the consequences of prolonged heat and dryness.
- As consumers in the most populous countries of the world get wealthier and their palate expands, per capita consumption of coffee will rise - having an enormous impact on global demand.
- Natural gas supply and demand appear well-balanced, lending support to the Henry Hub stability thesis at ~$4/MMBtu.
- New takeaway capacity schedule in the Northeast Region defines the trajectory of natural gas supply, and is the key driver to monitor.
- Chesapeake sees no relief to the Marcellus North constrained situation in 2015, with gradual relief in 2016-2017.
- Finance and Economic officials continue to lower forecasts for economic growth, yet they see growth continuing for several more years.
- These forecasts imply that the American economy will at least achieve the second longest expansion in its history...even though one with extraordinarily slow growth.
- Just how long can this expansion continue? What will policy makers be able to do? How might this expansion stop? It might be a lot different than we have experienced.
- Investors prefer owning the equity now rather than owning gold.
- Investors should seek companies that are funded to generate significant catalysts going forward.
- Companies that are fully funded to production are less susceptible to changes in their equity prices in the near term.
- The Shiller P/E currently sits at 26. The last three times the level was above 25 were during the Great Depression, the tech bubble and the financial crisis.
- Solid GDP growth, low inflation and decreasing unemployment are uncharacteristic of those three periods suggesting that things might not be so bad this time around.
- The S&P 500 has gone almost three years now without a 10% correction - the longest such period in 100+ years of stock market history.
- We look for rates to move higher, given economic acceleration, the end of QE and seasonal step-up in Treasury financing.
- History has shown that the U.S. stock market continues to rise when 10-year Treasury yields begin to move higher, particularly in a low-inflation environment.
- Stocks are actually more likely to decline in an environment of falling interest rates, which often signals economic down-cycles.
- Ethanol has fallen out of grace in recent years. Should investors be excited about new developments in this once promising alternative fuel?
- Although ethanol has not replaced petroleum as the primary fuel source in the world, it has a widespread reach nonetheless.
- Unfortunately, the transition to gasoline blends containing higher levels of ethanol has sputtered in recent years.
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- Pessimism is at a three-month high, but is only above average for the 8th time in 12 months.
- Bullish sentiment is at its lowest level since early August.
- Small-cap stock performance is having a mixed effect on investor attitudes.
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- Sterling continues to closely track interest rate expectations.
- The heavier sterling tone coincides with ideas that maybe the BOE can push out the first hike until after the May election.
- We are skeptical about the partisan politicization of UK monetary policy.
- Indian markets are likely to outperform other emerging markets over the next 3-5 years.
- The growth and development push by the new government is likely to take GDP growth higher.
- India's GDP growth is likely to surpass China's GDP over the next 3-4 years, making India the hottest investment destination.
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- US Federal debt has surged to $17.6 trillion and the debt is likely to increase further.
- There is a diminishing impact of debt on GDP growth and more debt is unlikely to solve the growth issue.
- Unfunded liabilities ensure that Federal debt will continue to rise even if the economy is on a sustainable growth path.
- Increase in interest rates can create another problem from a rising debt servicing cost perspective.
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- Euro corrects higher in aftermath of Draghi's anti-climactic press conference.
- Little fresh information has really been gained.
- Worries about ECB will be expressed, but exaggerated as sub-investment grade instruments will be small part of purchases.
- Weekly corn sales were 638,000 MT, a 24% decrease from last week.
- Weekly net soybean sales were 869,100 MT, a 66% decrease from last week.
- Weekly net wheat sales were 741,100 MT, an 87% increase from last week.
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- A primer on the arguments pro and contra tightening monetary policy.
- Those who are in favor fear asset bubbles, rising wages and want to protect income from savers.
- Those who are against argue that rising rates risks the recovery, inflation is low, rates would be low in the absence of Fed expansionary policies and there is still considerable.
- As I predicted when it happened, the 2,000 level on the S&P 500 has proven to be a very stubborn resistance level for the market to breach decisively.
- The recent downturn in the market has accelerated recently due to some of the concerns I highlighted for investors in another column.
- These worries could remain for a while and the market started the fourth quarter with a thud. What I see ahead and how I am playing the market given these concerns.
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- The sharp market correction yesterday is likely to be the beginning of a sustained correction.
- Treasury bond yields and dollar index supports my view on market correction.
- The ECB meet today is unlikely to have a positive impact on markets and can accelerate correction on the contrary.
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- Discuss yesterday's market action in the oil market.
- Look at the news from Tesla yesterday and what rumors are currently in the market regarding potential new products to be released October 9th.
- Highlight the latest moves by Saudi Arabia to cut oil production and oil prices.
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- Argentina was declared in contempt of court after circumventing U.S. judge rulings on repaying creditors holding defaulted bonds.
- The country continues to show willingness to pay, but the conflict keeps on escalating.
- The solution might not come until early 2015.
- Despite the consequences, Argentine assets remain attractive.
- The market has begun to turn.
- Small cap stocks usually get hit first.
- The large cap stocks get hit afterwards.
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- Discuss the latest on the ebola case in Dallas, Texas.
- Look at the pullback in airline stocks caused by investors worried about ebola scaring passengers away.
- Highlight another company developing an ebola vaccine.
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- Do you remember Geithner and Paulson insisting that AIG pay banks 100 cents on the dollar on insurance claims?
- And do you remember that was done after AIG executives said they thought they could get banks to settle for 60 cents on the dollar?
- The Starr lawsuit against the US government for excessive penalties against AIG should provide some interesting new information on exactly what happened and why.
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- Disappointing US economic data and pullback in US yields have spurred a bit of a correction.
- Dollar-bloc and yen are benefiting the most.
- Shifting UK rate expectations may be taking a toll on sterling.
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- The Australian dollar is rebounding sharply from a poor reaction to Australia's August retail sales report.
- The forex trading action suggests a bottoming process is finally underway for the currency.
- Once again, how the Australian dollar trades against the Japanese yen may provide the key signal of a turning point in trading.
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- The progress in the labor market could play a role in bringing down GLD.
- The stagnation of the U.S inflation is also keeping GLD from making a comeback.
- The ongoing rise of the US dollar could keep pull down GLD.
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- Consumer confidence was just reported down sharply in September, thanks to all the scary news about ISIS, Ebola, Russia etc.
- However, consumer spending was just reported up in August 0.5% and GDP revised to 4.6% for Q2, so Wall Street need not worry about the economy on Main Street.
- That said, capital flow issues continue to haunt stocks in my view.
- There is a heated debate about confiscation.
- Let's look at history as a guide.
- Will it also affect your safety deposit boxes?
- In August, the US economy added just 142,000 jobs, the lowest boost to nonfarm payrolls since January.
- Analysts on Estimize are forecasting that the September jobs report due Friday will reflect a return to the 200,000+ jobs per month economy.
- If the Estimize community is correct, this would be the best month-over-month improvement since January.
- We are still in the second and longest stage of the gold bull market.
- Deflation everywhere, however, debt levels are rising everywhere.
- Central Banks around the world have given investors the illusion that all is well.
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- A recent trend in economic reports is concerning.
- The S&P 500 is testing an area where buyers have stepped up in the past.
- Market levels we are watching.
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- China had at least three major structural problems, an urban housing bubble, over-leveraged shadow banking and rampant corruption nationwide that could destroy a generation of record economic growth.
- Two recommendations that should benefit mightily from China are Deere and Ecolab.
- Amazon has been good to my subscribers and I still love its long-term perspective, but it looks more like a victim than potential beneficiary of a growing world.
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- Developed and emerging market stocks had a poor finish to Q3, and Q4 has begun off with more of the same.
- EM equities act like high beta versions of DM equities.
- Technically, there are further downside risks.
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- Asset allocation shifts are very subtle overall.
- Fixed-income allocations rose to an eight-month high.
- Stock and stock fund allocations declined to a four-month low.
- From 12/21/12 to 9/21/14 my Sustainable Energy Portfolio is up 192%.
- My Fossil Fuel reference portfolio is up 13.5%.
- The Dow Jones Industrial Average is up 32.0.
- The S&P 500 is up 40.6%.
- The Sustainable Energy Portfolio crushed the indices while the Fossil Fuels underperformed.
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- Discuss the situation in Brazil and why those big commodity companies are facing downward pressure exceeding that of peers here in North America.
- Highlight two energy names which look attractive around these levels.
- Look at commodity markets and explain why some of these markets may be close to bottoming out.
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- September marks the beginning of harvest and has been a slow start for the Corn Belt, due to the slow progress of corn maturity.
- Grain prices continued to decline through the month of September due in large part to the estimated record domestic production for corn and soybeans and global production for wheat.
- The Creighton University farmland price index contracted for the third consecutive month moving from 41.4 to 33.7, its lowest level since February.
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- The ABS and covered bond purchase program is the main focus of the ECB meeting.
- Some will be disappointed with the lack of a sovereign bond buying program.
- Part of the problem is that what ails the euro area might not be able to be addressed by monetary policy.
- Throughout history, gold stocks have carried exceptional risk that has departed from popular notions of safe haven status.
- Declines of -10% in the Dow Industrials usually translate into greater declines in gold stocks.
- If timing is the key to the purchase of precious metal stocks, some established indicators have failed since 2007.
- Investors viewing the stock market as overvalued and poised for a decline should reconsider investing in precious metal stocks.
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- China's dynamics have been disturbing markets.
- China's industrial output slowing to 6.9% troubles the markets when analysts expected an 8.7% rate. This metric combines with 30 months of deflationary Producer Price Index numbers.
- The nature of China's economic growth relies on local governments and therefore China's corporate debt.
- Local governments were expected to supply the lion's share of a $4T stimulus package in 2008.
- Now, local government debt combines with corporate debt and is unsustainable when growth slows.
- The U.S. Dollar is rising and should continue to increase across the board.
- For investors, the correlation regime with U.S. Treasuries matters a lot.
- Between 2011 and 2013, a stronger dollar would come along with lower U.S. Treasury yields.
- The sign of the correlation has changed since: a stronger dollar will bring along higher U.S. Treasury yields.
- I don't expect any change in the correlation regime before the Fed starts hiking next year.
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- We have two different markets for gold: One is an honest market for physical metal; the other is a less honest paper market.
- We must distinguish between those gold ETFs that are honest and those that might not be so honest.
- I can't imagine we won't see a major breakdown in the global financial system within a year from now.
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- Discuss general market issues facing investors right now.
- Look at the news that the ebola virus has reached US shores.
- Highlight biotech and drug companies which could benefit if their vaccines are used.
- There are occasions when the market detaches from its true value. This can occur due to various external forces such as overexcited investors, or fads that promise to change the world’s landscape (the internet, Facebook).
- We believe that the stock market is presently overreaching its real value.
- This month we will review indicators that assess sentiment and margin within the marketplace.
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- The key driver of the dollar is not a change in Fed expectations.
- German manufacturing PMI slips below the 50 boom/bust level.
- Dollar-yen pokes through 110.
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- West African cocoa production makes up about 70% of total global supply.
- Ivory Coast and Ghana which account for 60% are still unaffected by the outbreak directly, but border closure is affecting worker flow to cocoa farms.
- If the area's production is completely disrupted, there is opportunity in the cocoa commodity as well as great risk to many companies that use it as ingredient.
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- Silver Wheaton has outperformed other silver investments in recent years.
- The company’s type of business allows it to expand its core business at a fast pace.
- Silver producers such as First Majestic Silver offer other relative advantages over Silver Wheaton.
- 1% decline missed Wall Street forecast of a .8% rise.
- Pending sales dropped despite lowest mortgage rates in a year.
- Latest Conference Board survey suggests that plans to buy a home lowest since Feb 2012.
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- The United States saw its first diagnosed case of the Ebola virus in Dallas on Tuesday.
- Despite minimal risks of spreading, it remains worthwhile to closely examine the effects from an ebola outbreak starting to spread in the U.S.
- Markets have shown resilience during past pandemics, but the nature of this virus is different than those that have come before.
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- The S&P 500 Index was higher once again for the third quarter.
- Yet every other major asset class outside of U.S. large cap stocks was down for the period.
- Stock performance even within the S&P 500 Index was spotty at best.
- The time may soon be here where investors are once again rewarded for carrying out a thoughtful and deliberate portfolio construction process.
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- USD/JPY has broken out of major resistance of 105.
- Outside of technicals, weak macro environment in Japan also a downward catalyst for Yen.
- Monetization is only solution to resolve Japan's debt crisis.
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- Once key interest rates rise again around the globe, Japan will find it hard to keep its domestic interest rates levels near zero. Domestic investors need higher yields.
- Japan's debt/GDP levels are not sustainable, especially once interest rates rise. Japan would have to use huge portions of its tax revenue to just cover the debt interest payments.
- Current account deficits and Japan's demographics (aging population) as well as moves by major central banks (rising interest rates by the FED) could trigger these debt events between 2015-2020.
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- Zero percent interest rates is the new normal.
- Even if the Fed talks higher rates, they know that they can't without crashing the so called recovery.
- When rates do rise, it won't be by choice, and the results won't be pretty.
- A chessNwine article prompted this thought on the relative weakness of junk bonds and small caps.
- This weakness along with breakdowns among the "frothies" may be a harbinger of major market trouble.
- There is another explanation, however. Junk and small caps are both radically overpriced in a way that can't be disguised, and investors may simply be acting rationally.
- If so, the large cap market, which is modestly expensive, may continue on its own path, whatever that turns out to be.
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- Soybean stocks were reported at their lowest level in modern history at 92 million bushels.
- USDA reported 1.24 billion bushels of old crop corn on hand for September 1, 2014, a 50% increase from last year.
- Wheat stocks were reported at 1.91 billion bushels, a 2% increase from last year. Stocks stored on-farm totaled 722 million bushels, a 30% increase from last year.
- Volatility in foreign exchange market as investors flee euro and yen for liquid U.S. dollar.
- Euro and yen hitting multi-year lows. Inflation picking up outside US.
- US dollar seen as temporary safe haven. Could the US dollar be the next currency to decline?
- Precious metals and junior miners trading at historic discounts should be considered as an alternative to fiat currency.
- Deflations set the stage for hyper-inflations.
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- Recent reports of housing's demise have been greatly exaggerated.
- Pending Home Sales, while hyped by reports to be showing real estate decline, is actually trending higher and at its second highest point this year.
- Real estate relative stocks have mostly suffered through September and are worthy of inspection and prospection here. Physical real estate investors can rest easy as well.
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- Monetary Policy has supported asset prices for years.
- Monetary Policy has officially changed.
- Does that mean we should control our risk again?
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- A common theme was present in Tuesday’s economic data.
- The market’s indecisive state calls for tighter risk controls.
- Bull and bear levels of note.
- US equity market valuations are among the highest on record, when measured by metrics that correlate strongly with long-term returns.
- Despite the "can't fight the Fed" mantra, monetary largesse is not prophylactic against bear market declines.
- The combination of extreme valuations, coupled with deteriorating market internals make it advisable to reduce U.S. equity exposure.
- Chicago Fed President's Monday speech on monetary policy.
- Measuring the effects of ultra-low policy rates.
- Market implications for an extended continuation of current policy.
- The volatile month of October.
- The contrarian methodology.
- Why a contrarian would choose gold and stocks.
- Believing the Bernanke Dollar is a good contrarian bet involves tremendous cognitive dissonance.
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- Discuss the current state of the uranium market.
- Look at natural gas prices and how the chart is setting up for a possible breakout above the $4.20/MMbtu level.
- Highlight India's plans to expand their nuclear power generation capacity.
- While a potential merger between CF Industries and Yara could be a win-win situation for both companies, I have some concerns about CF Industries and the U.S. nitrogen fertilizer industry.
- The nitrogen fertilizer industry in the U.S. has benefited from the shale gas boom.
- The industry though now faces threat from rising exports from China.
- The industry also faces rising competition and the nitrogen market could turn fundamentally imbalanced by 2017.
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- The US monthly trade balance has been remarkably steady over the past couple of years.
- US runs a surplus with countries it has a free-trade agreement with.
- Yet the US does not primarily service foreign demand by exporting, but by building and selling locally.
- The price of money adjusts much quicker than the price of goods.
- Brent Crude down sharply over last few months while Henry Hub natural gas remains buoyant.
- However, most natural gas producers are down along with the oil names.
- This creates an opportunity to pick up high-quality natural gas producers.
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- It was an interesting third quarter as the market struggled despite better than expected earnings results for the second quarter.
- Small and midcap stocks suffered losses in the quarter and new worries were adding to investors' growing list of concerns.
- So as we enter the last day of the third quarter, what lies ahead for equities in the fourth quarter? My four predictions for the next quarter are outlined below.
- Since 2008 we have learned two important things about the relationship of money supply and inflation.
- An elevated money supply is now and always will be an inflation risk.
- In a market with stocks at or near record prices certain commodity companies may provide opportunity for the fearless investor.
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- Discuss EBAY's announcement today that they will spin-off the PayPal unit.
- Highlight the profit taking occurring in FNMA and FMCC shares after very large moves higher over the past two years.
- Revisit two winners and discuss what name we would focus solely on moving forward.
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- Soft euro area core CPI sends euro reeling.
- Yen data mixed, but key industrial output and household spending were poor.
- Scandi bloc goes bid.
- Soybean, corn and wheat prices made new lows again this week.
- At current price levels, small farmers need to consider substitute crops for next year.
- There is a very profitable cash crop in the US.
- A long-term inter-commodity spread to consider.
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- A new report by the International Center for Monetary and Banking Studies has a new warning about the world's debt situation: world debt is still rising in relation to GDP.
- Economic growth is slowing in some areas while others are in process of raising interest rates; both threaten to make the debt situation worse.
- All solutions seem to be problematic in one way or another. Investors need to consider the consequences of each of the policy choices available.
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- Key petroleum spreads tell us a great deal about market fundamentals, and increasingly, the participation and flow of new capital into energy markets.
- The deterioration in distillate values matches a deterioration in distillate balances on both a US and global macro basis.
- It is however way too early to write off distillate completely.
- While oil markets wait on winter, capital flows will likely have a greater impact on oil price structure, market mood and important oil spread relationships.
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- The current tightness in lending.
- Prices versus income.
- Outlook for the future.
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- Corn conditions were estimated by the USDA at 74% in “Good” or “Excellent” condition, unchanged for the past four weeks.
- Soybean conditions were reported at 72% of the crop in “Good” or “Excellent” condition, a 1% increase from last week.
- Spring wheat harvest was reported at 94% complete, an 8% increase from the previous week, but 2% behind the five-year average.
- Shiller’s CAPE ratio can be used for long-term equity market expected returns.
- CAPE is currently higher versus the historical average, but this should not be used to predict a market top.
- Comparing CAPE to a simple trend-following strategy for market timing: value versus momentum.
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- This is an important week for the market's intermediate-term trend.
- As economic data improves, concerns about an interest rate event remain.
- Two important calendar items may set this week's tone.
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- The perfect storm of factors are at play this week to bring volatility to trading and possibly even cause a stock market correction.
- Fiscal year-end for many institutional money managers, the critical Employment Situation Report, and the serious threat of ISIS driven terrorism has already stirred market volatility and threatens to all week.
- Suggesting investors avoid the SPDR S&P 500 (NYSE: SPY) or surf the volatile waves with a straddle strategy on the SPY or via stakes in volatility ETFs.
- Gold and silver see heavy shorting.
- Gold and silver demand surges.
- Gold and silver premiums rebound.
- There is prior research in the area of measuring how a commodities pricing might impact the pricing of equity markets - specifically oil and the S&P 500.
- A regression model is constructed to measure the relationship between oil over the last ten years (2004-2014) and is presented here.
- It would appear that roughly 30% of the change in oil can in part explain the change in the S&P 500.
- Based on this model, the current pricing of the market (or the S&P 500) appears higher then the level that the current price of oil might suggest is normal.
- In Japan, there is general optimism for a steady economic recovery, with a prevailing sense of confidence in reasonable valuations and a low bar for incremental improvement.
- Companies that can take advantage of global business opportunities look far more attractive than those simply waiting for a rising national tide to lift their boats.
- A re-allocation towards riskier assets from the national pension funds and insurers would create very large inflows to Japanese equity markets.
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- Look at the recent price movements in the energy market, focusing on oil.
- Discuss ECA's purchase of ATHL to increase their oil and liquids production and get exposure in the Permian Basin.
- Highlight other names in the E&P space which could be attractive takeover targets for companies wanting more oil production in their portfolio.
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- Pending October reports are expected to confirm the existing trends in the forex markets. Any possibility of an October surprise?
- The euro futures trade at the CME now accounts for almost 30% of the total currency futures trade. The bear euro market is hardly an undiscovered trade.
- Did Bernd Lucke and emergence of his Alternative fur Duetschland Party weigh on the euro this past week?
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- While there has been a broad slowing in the last 15 months, the U.S. housing market has stabilized and started to recover.
- Homebuilders are catering to upscale buyers where financing is less of a constraint, and also building larger and more expensive homes.
- Housing has started to add to economic activity after stalling for the last few quarters, but the gain in traction will prove slow and sensitive to large shifts in interest rates.
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- Wall Street analysts have predicted a $1050 target for gold in 2014.
- Gold dropped 44% in the bear market from 1975-1976.
- A similar drop of 44% would take gold down to near Goldman Sachs' low target.
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- Natural gas rallied last week by 3.8%.
- UNG has underperformed natural gas by nearly 1% during September.
- The low storage is likely to keep pushing up natural gas prices.
- Weak demand and strong supply from Australian producers keep lid on met coal prices.
- Decline in 4Q14 met coal benchmark price will result in additional production cuts to address concerns of oversupplied market.
- Cost reduction efforts, selling of non-core assets and reduction in capital expenditure will only positively affect U.S. coal producers in short term.
- The profit of any oil company depends on the costs it needs to produce 1 barrel of oil, technically spoken 1 barrel of oil equivalent (boe).
- The Iraqi part of Kurdistan is commonly considered to be one of the regions with least production costs.
- In this article I calculate production costs for two companies, that concentrate on this region: Genel and DNO.
- Production costs are indeed extremely low, but risks come from the political situation.
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- Quantitative easing is supposed to end in October but Fed purchases of securities rose to almost $40 billion in September.
- There were some large "operational" factors that impacted the Fed's balance sheet in the month that had to be "offset".
- Bottom line: the Fed's "tapering" will end in October, on schedule.
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- Highlight the latest on the protests in China.
- Discuss the bond market and the fallout from Bill Gross leaving Pimco.
- Look at how YHOO and SFTBY might potentially spend their BABA windfalls.
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- The August job numbers were not an anomaly - the economy continues to be worse, despite what the financial media states.
- Zero percent interest rates and trillions of dollars of stimulus hasn't been and will not be the solution.
- The more Japan and Europe follow suit, the worse off their economies will be.
- The Hang Seng was hit 2% overnight on continued civil unrest; although the Nikkei was up, Europe is lower in mid-day trading.
- U.S. equity futures are set to start the day in the red.
- Many investors consider this the time to go long volatility or enter into traditional hedges like commodities and deep value blue chips.
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- Copper prices have been pressured by weak economic data in China.
- Concerns of oversupply have also arisen as refiners ramp up production.
- As copper prices continue to fall, expect copper miners to follow lower.
- This article follows an article I wrote last week entitled 'Long-Term Outlook - Bleak'.
- The article has caused some discussion and I want to clarify some points.
- The discussion has highlighted several issues that I feel are important.
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- US large cap shares with high volatility spread have outperformed the market by 1.48% a month on average since 1997; this has not been the case of late.
- Financials now make up the largest proportion of share in the best ranked decile group.
- This surge in volatility spread among financials comes as the sector is on track to underperform the market for the first time in three years.
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- RBNZ confirms intervention, PM wants to see $0.6500.
- HK shares slide on protests and fear of larger crack down.
- European stocks and bonds under pressure.
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- This week, the price of gold was basically unchanged from the previous week.
- Other precious metals -- silver and platinum -- moved lower on the week.
- Bulls and bears continue to debate the future path of the yellow metal.
- Short term, gold's path of least resistance is likely lower.
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- Regulation prevented banks from actively participating in the commodity markets before 1999.
- Banks made big profits in commodities since the repeal of Glass-Steagall.
- The financial crisis of 2008 and new regulation forced the banks out of the game once again.
- Commodity markets are in the hands of a new breed of Commodity Kings.
- The final quarter of 2014 is here.
- Can the market rally into 2015?
- How will the holiday season shuffle out?
- Who are the big names to watch in Q4?
- Stocks showed significant weakness last week for the first time in a while, but it was all quite predictable and not overly concerning, although more downside is likely.
- Market breadth is important for a sustained bull run, so the challenge for investors will be to put together broader bullish conviction, including the small caps.
- Overall, this week’s fundamentals-based Outlook rankings look a bit biased to the bullish side of neutral.
- Our sector rotation model still suggests a bullish stance, holding Healthcare, Technology, and Financial. Also discussed are alternative ETFs and individual stock ideas.
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- Commodity prices and the dollar suggest emerging markets will suffer, especially relative to developed markets.
- The downturns in oil, nickel, silver, and gold are all particularly ominous.
- China may be the next domino in the emerging market crisis to fall.
- The ExxonMobil-Rosneft partnership struck black gold in the Kara Sea.
- The Arctic play is part of a long game to advance Russia's resource prowess.
- Russia needs the help of western multinational firms for now.
- Long-term trend still intact.
- Improving economic data will lead the S&P 500 higher.
- Pullbacks provide investors with lower-risk entries.
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- Barrick Gold’s revenue for the third quarter is expected to fall by 13%, year over year.
- The current low gold prices are likely to drive down its profit margins.
- If Barrick Gold doesn’t meet its production goals and maintain its production costs low, this could adversely impact its stock.
- Latest Commitment of Traders report shows that short positioning by Managed Money traders has increased to the highest level of 2014.
- The last time these short positions were at these levels was December of 2013, which was around the gold bottom.
- Contrarian investors should be interested in building long positions at these high short levels regardless of their long-term view of gold.
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- The 2013 Home Mortgage Disclosure Act Data show a divergence in the number of home loans going to the low and moderate income buyers versus higher income demographics.
- The current distribution is more consistent with pre-recession demographics.
- A post-recession low in overall housing affordability may be at least partially responsible for the shift. Regardless, the shift is something to watch.
- The market breached into cautious territory last week for the first time since early/mid August on our combined Daily/Weekly mechanical perspective.
- There is good reason to be a bit worried here about further downside in the broad stock market, but similar pullbacks have been contained in 2014.
- The NASDAQ Volatility Index is around a key level, and the 50 day moving average on the S&P 500 Index is also important here.
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- Gold will likely bottom within the next 6 months.
- There are a multitude of investment opportunities for gold.
- The GLD ETF should be last on your list of long term investment opportunities.
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- Progressive economic thought has two flawed anchors: fiscal policy and wealth redistribution.
- Fiscal policy fails because government purchases are inherently unproductive.
- Redistribution of wealth fails because progressives think wealth is not "created" or "destroyed," just owned.
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- The ECB's ABS purchase plan is the key event of the week and there are many moving parts.
- We highlight the risk of disappointment with the US employment report.
- The US, UK and Japanese data are unlikely to alter views of central bank policy.
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- Investors are exiting the junk bond market in mass numbers.
- Selling intensity has reached capitulatory levels and suggests a near-term bottom may be in.
- Deterioration in the space casts a dark shadow on the stock market given their leading tendency.
- While the junk bond market leads at market tops, lack of economic weakness is encouraging.
- Xi Jinping and Li Keqiang have consistently pushed a reform agenda.
- Rhetoric has been followed up with action, with major reforms in the SOE and financial sector underway.
- Monetary stimulus is off the table unless the economy slows substantially or the reform camp suffers a political setback.
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- The silver price has fallen to new lows, and has dragged down the share price of silver miners.
- Sell side analysts have cut targets and buy/sell recommendations accordingly.
- The latest analyst data is presented and analyzed in this article.
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- Part 1: Secular Stagnation & Quantitative Easing.
- Part 2: Free float vs Full Market Cap and the $1 Trillion Tax on Savings.
- Part 3: The effect of all the above in a ZIRP environment.
- Part 4 & 5 : Potential Supply Side Melt Down? Potential Reserve Side Melt Up?
- Part 6: Is ZIRP here to stay?
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- CurrencyShares Japanese Yen ETF appears to provide a unifying theme among a cocktail of market signals that have defined post-crisis trading.
- The latest decline in CurrencyShares Japanese Yen ETF in response to U.S. dollar strength appears the most sustainable of other market moves given the previous periods of consolidation.
- The ETF is an even stronger point of interest now that it has finally completed a post-crisis roundtrip.
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- Part 1: Secular Stagnation & Quantitative Easing.
- Part 2: Free float vs Full Market Cap and the $1 Trillion Tax on Savings.
- Part 3: The effect of all the above in a ZIRP environment.
- Part 4: Potential Supply Side Melt Down?
- Part 5: Potential Reserve Side Melt Up?
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- Australia’s Bureau of Resources and Energy Economics (BREE) is forecasting a stronger Australian dollar than prior forecasts.
- Prior resilience in the currency seems to have influenced the firmer forecast.
- These forecasts imply the Australian dollar may not have much more downside from current levels in coming months.
- I'm comparing the current refill of working gas in storage so far from past years by imputed weeks.
- The result shows that refilling working natural gas in storage is on pace to meet EIA's adjusted expectations.
- NG bears would swing the market if refill number around 100 Bcf before withdrawal season begins.
- Long positions could be built up upon the market's dips waiting for the coming withdrawal season.
- Swing trading might be a better choice when NG price fluctuates within a narrow range.
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- There is much "hope" in the metals market.
- Most need to get "real" about how the metals market moves.
- Upcoming week's expectations.
- Investor and consumer confidence are very high in the U.S. and very low in the rest of the world.
- Meanwhile, the U.S. stock market is very high, while global markets elsewhere are breaking below important long-term support levels.
- Is confidence a leading or lagging indicator?
- The Dow 30 components, alone, have collectively disclosed at least $50B in (mostly unrecognized) “deferred” US taxes on foreign earnings.
- US-headquartered multinational companies have accumulated hundreds of billions of dollars (>$630B from the Dow 30) of “undistributed foreign earnings” not subject to US taxes unless and unless repatriated.
- Undistributed foreign earnings disclosures and deferred tax liability (future repatriation taxes) estimation methodologies can vary significantly by company.
- A tax code that incentivizes indefinite foreign re-investment, relative to capital repatriation, is indefensibly bad public policy with an uncertain future - future effective tax rate assumptions should reflect this uncertainty.
- Market divergences were the highlight last week -- as expected and in contrast to news.
- The week ahead features a deluge of data -- a test of current market "messages".
- The outlook for traders has turned more pessimistic.
- Investors can enjoy a different time frame, with little risk from recession.
- Some beaten down sectors offer special opportunities.
- Gold and silver prices continue to tumble as the dollar strengthens, prompting concern over mine closures.
- Lower prices have resulted in increased demand for physical metal, both in the U.S. and Asia.
- This week's labor report could have a big impact on U.S. monetary policy and the dollar, possibly halting the metals' slide.
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- Thanks to the Fed's gross distortions of psychology, today's stock markets are overextended, overvalued, and epically complacent.
- That means a major selloff is long overdue to rebalance sentiment, and the imminent end of the Fed's QE3 bond-monetization campaign is the likely catalyst.
- Best case it will be a major correction approaching 20% like at the ends of QE1 and QE2, worst case a new cyclical bear cutting stock markets in half.
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- Fundamental, technical and psychological factors are aligned in dollar's favor.
- Dollar-bloc were the weakest currencies last week, though still net long in the futures.
- Speculators now net long US 10-year Treasuries.
- Many are saying the economy is accelerating.
- The mainstream leading indicators are not showing much acceleration.
- This is not to say the economy is doing badly - just that there is little indication yet of a growth spurt.
- The US Dollar Index has broken above July 2013 highs as the US economy strengthens.
- The Trade Weighted Index also reflects this trend.
- But the Trade Balance remains in deficit.
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- Business television was critical of gold as a safe haven this past week, despite its actual near perfect action counter to stocks on Thursday.
- But I viewed the catalysts for both the stock decline and gold rally as soft, and I point to the near perfect negative correlation of the GLD security to the UUP.
- Given the path of the Fed, and absent significant terrorism or threatening enough Russian aggression, dollar strengthening has no offset to stabilize gold now, so I would not hold it.
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- The U.S. stock market roared back to life on Friday.
- This does not mean, however, that stocks have shaken off their recent challenges.
- Most major stock asset classes remain under heavy short-term downside pressure.
- Highly correlated high yield bonds are threatening to break down.
- Attorney General Holder said that Wall Street criminals will be prosecuted.
- Investors have lost confidence in the system.
- The new attorney general needs to show that no one is "Too Big To Jail."
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- Higher interest rates are unlikely to improve banks' net interest margins.
- Tighter leverage and liquidity restrictions severely dilute a bank's earnings power.
- Bank stocks are likely to lag the broader market for many years.
- The Bank of Japan believes that the labour market is tight enough to bring about a sustained increase in real wages. It is not in our view.
- Since the depths of Japan’s economic crisis in the late 1990s there has been a marked switch away from full-time into part-time work.
- The switch has been driven by employers, who have lacked confidence in Japan’s economic recovery. And it has occurred, by and large, against the wishes of Japan’s workforce.
- There are more people now working part-time in Japan who would rather work full-time than there are unemployed people.
- We are unlikely to see a meaningful pick-up in wage growth in Japan until employers have the confidence to take on more full-time workers, reducing the pool of hidden unemployed.
- ECB behind EURUSD 8.67% decline.
- US economy is recovering nicely and market continue to expect rate hikes in mid 2015.
- Still time to profit from the EURUSD weakness.
- New York Stock Exchange margin debt inched up to about $463.02 billion in August from about $460.23 billion in July, the exchange reported.
- NYSE margin debt at its latest level is therefore just -$2.70 billion, or -0.58 percent, below its greatest peak of around $465.72 billion in February.
- The risk of speculation in August appeared higher not only than it did in July but also than it did in 83.45 percent of all months evaluated by my methodology.
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- Gold has been hit hard over the last few months due to a strong US Dollar but investors have plenty of bullish catalysts.
- Indian gold demand is reportedly up significantly as premiums and smuggling rises due to upcoming festivals and a strong monsoon.
- Possibly the biggest catalyst for gold is the upcoming Swiss referendum which could change the way the Swiss bank manages it reserves.
- Commentators have been castigating Dave Kranzler for his supposedly "perma-bear" views on housing.
- However, they have not been specific about housing returns since his articles began.
- An analysis of the data vindicates Kranzler's position on housing.
- China's economic health affects global markets, driving commodity demand.
- PMI remains above 50.0, but one-month moving average failed to cross above the three-month.
- The real test is Global PMI.
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- Are there logical ways to monitor the market's tolerance for risk?
- Friday's data may increase market fears related to the Fed.
- Did support hold earlier this week?
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- The data is not consistent with reports from the private sector.
- The data is not consistent with mortgage purchase applications.
- KB Homes reported another decline Q3 (which included August) deliveries.
- Homebuilder stocks declined despite "bullish" new home sales report.
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- Focus on the gold market and the continued march towards $1,200/ounce.
- Look at a trading opportunity in ROSE now that shares have fallen back into our buying range.
- Highlight another downgrade for an iron ore miner.
- Acorda Therapeutics purchase of Civitas Therapeutics means investors can now participate for the first time in a unique and significant Parkinson's Therapy poised to move into phase III trials.
- The Civitas CVT-301, an L-Dopa inhaler and Cynapsus' APL130277, a tongue strip delivering apomorphine will compete with each other in the future as 2 rescue therapies for Parkinson's "off periods."
- It is believed that the size of this future market is large, perhaps as much as $500 million, but further research will be required to develop both size and composition.
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- The world is experiencing a great deal of disturbance, and this is getting translated into the financial markets.
- We are seeing volatility increase across all markets, and this is likely to be the case in the next couple of years.
- Policy makers are contributing to this volatility, and will continue to do so in the near future.
- Discusses indications of economic weakness.
- Gives examples of these indications.
- Briefly discusses past pre-crisis periods and the next financial crisis.
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- The current Brazilian president, Dilma Rousseff, is hated by the markets for her economic policies.
- The presidential elections will take place on October 5th, with second round on October 26th.
- If Rousseff loses, a strong market rally is probable and Petrobras and CEMIG should be amongst the biggest gainers.
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- Discuss recent market action and what we see ahead.
- Look at the volatility that has crept back into the market, especially in the last week of trading.
- Highlight the strong quarterly results from NKE.
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- After signing a $400 billion gas deal earlier this year, Russia and China are already talking about another one. This time the gas will come from fields currently supplying the EU.
- The LNG potential market will likely shift from Asia to Europe as a result of less Russian gas to the EU and more to Asia.
- LNG producers will find it difficult to get the current price they fetch in Asia for their product from the economically fragile Europeans, leading to severe losses.
- It is simply not clear that "U.S. GDP growth and inflation are both in a long-term downtrend."
- Debt and technological change need not be negative factors in the economy.
- Jeremy Robson fails to build support for his thesis that the long-term outlook for the US economy is bleak.
- If India continues to import 70 tonnes of gold bullion each month, then the total imports just to India will be 31% of all world gold mine production.
- In the first five months of 2014, U.S. mine production was 85,400 kilograms (kg), down four percent from the 89,200 kg of gold.
- In the first five months of 2014, U.S. mine production was 85,400 kilograms (kg), down four percent from the 89,200 kg of gold bullion produced in the first five months.
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- Dollar pullbacks continue to be shallow and brief.
- Markets moving in official sanctioned direction and no push back from the US.
- US Q2 GDP to be revised up, and Q3 looks to above 3%, but Q4 may slow.
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- Myths about monetary policy.
- The importance of the business cycle.
- The shrinking middle-class and the pressure on real income growth.
- The market has nothing further to prove. Prognosticators have hit their 2,000 target for the S&P 500.
- Most large cap money managers are trailing the S&P 500 index. They're hoping for a fall.
- This pullback has the greatest chance of being a 10% correction or more.
- Washington policy may not bankrupt the country, but it will bankrupt growth if policy doesn't change.
- Americans increasingly feel little sense of opportunity.
- Kicking the can down the road will not end in a robustly growing economy.
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- To beat the market, you must find inefficiencies - Seek Alpha!
- This requires more than noting a trend.
- Commodity prices often reflect false signals - as in 2011.
- Current prices reflect dollar strength, not economic weakness.
- Energy and materials stocks provide a good way of playing this theme.
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- U.S. stocks as measured by the S&P 500 Index dropped by –1.62%, which represented its fifth worst decline in 2014.
- When putting this latest decline into perspective, it appears at first glance that the bulls still have good reason to remain optimistic.
- But when exploring deeper under the surface, troublesome signs are accumulating that suggest a far more significant change in the long-term market trend may soon be on its way.
- Current ECB plans to handle recession are somewhat simplistic.
- To encourage investment, the ECB needs to consider buying sovereign debt.
- Even with immediate direct investment, investors should wait longer before investing in Euro-debt.
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- Market media offered many reasons for the market decline intraday Thursday, but I found them to be misleading.
- Two factors likely played key roles in the market decline; fiscal year end pressures on money managers to preserve their year's performance effort and a terrorism warning from Iraq's PM.
- While the market should remain volatile at least through the end of the month, if not for the next several months, the day's decline could be reversed near-term.
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- Despite the risk of lower oil prices, I believe that the CAD will continue its appreciation against the JPY.
- I project that consumer prices will continue to rise in Japan, due to further central bank stimulus in pursuit of a 2% inflation target.
- Given the macroeconomic environment, the current dip to the 98.30 level may simply be a temporary reversal.
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- Expectations for the Federal Reserve to raise short term rates next summer have pushed Treasury yields higher.
- Similarly, U.S. consumer prices remain muted.
- These two developments have weighed on inflation expectations, pushing inflation-protected securities lower.
- P/E ratios and interest rates have an inverse correlation. This tells us everything we need to know about the fallout from the Fed's upcoming policies.
- December 17th, Janet Yellen's next press conference, seems like an ideal opportunity to lay out the expectations for interest rates in 2015.
- You will likely have a buying opportunity after the December fed meeting—just be sure to focus on those stocks that return increasing amounts of cash.
- The Federal Reserve is doing everything it can to provide a smooth exit from its monetary stimulus.
- However, there are reasons to believe such a smooth exit will be impossible.
- Look for large moves in asset classes which were favored by the money printing soon after it ends.
- In this analysis we plot changes in the gold price over the 3-month period following the day of the announcement against the change in the 10-year real yield.
- All things being equal, the greater the impact of the policy on real yields the greater would be the expected change in the gold price.
- Although the chart doesn't include causal relationship between change in gold price and the change in real rates it does appear that there is a relationship between the two.
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- The price of bitcoin continues to plummet sharply.
- This is coming at the same time as a USD rally.
- We believe that the fall will continue as nerves from investors effect confidence behind Bitcoin.
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- The value of the euro just broke $1.27, a decline from $1.39 earlier this year.
- The eurozone economies seem to be moving toward recession, and price deflation seems to be a real threat.
- Mario Draghi, president of the European Central Bank, has sworn that he will do everything possible to prevent another recession and price deflation.
- This fiscal year has already seen a number of IPO launches not seen in over a decade. What does this enthusiasm mean for investors?
- Below, I retrace the already well-known phenomenon of spikes of IPO launches preceding market downturns, and look more closely at revenues per IPO as a lagging indicator.
- Based upon this, the number of IPOs launched this year serves as a warning sign the bull market may be either very mature or about to turn.
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- Steady bullish sentiment remains above long-term average.
- Bearish sentiment rose but stays below long-term average.
- Neutral sentiment falls below its long-term average for the first time in 3 weeks.
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- If you haven’t read ‘Deep Risk’ by William Bernstein you should!
- One of the concepts Mr. Bernstein discusses is that risk has two dimensions - magnitude and duration.
- How we prepare for and react to both dimensions during a market downturn will greatly impact our results.
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- The recent market decline is accelerating through midday trading Thursday. This is something I have been cautioning investors against throughout September.
- There are myriad warning signs that are foreshadowing further declines that should be watch items for equity investors as I believe they will drive market direction over the coming months.
- What I am watching in the market right now and how I am positioning my own portfolio during this recent uptick in volatility is detailed below.
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- Discuss the energy sector as a whole.
- Look at the latest ruling against BP tied to the Gulf of Mexico spill.
- Highlight how lower oil prices could affect Saudi Arabia moving forward.
- Coal stocks will probably continue to sell off until the end of the year.
- The latest coal headlines have not been good, which will further pressure shares.
- Coal looks to be a good contrarian play for next year.
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- The oil market in the U.S. continues to loosen up, which could bring down Oil.
- USO has slightly outperformed oil prices.
- The backwardation in oil futures could play in favor of USO.
- Strength in popular averages masking underlying weakness.
- Focus on trends, not Fed forecasts.
- Economic fundamentals turn bullish.
- Excessive valuations more of risk if rally stalls.
- Recent highs not greeted with increased optimism.
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- Weekly U.S. net corn sales for the week ending September 18th in the 2014/2015 marketing year were 836,400 MT, a 27% increase from last week.
- Weekly net soybean sales were 2,565,600 MT, a 75% increase from last week.
- Weekly net wheat sales were 396,300 MT, a 26% increase from last week.
- U.S. coal producers continue to face structural changes affecting demand and supply of thermal coal in the U.S.
- Metallurgical coal is still highly dependent on steel market that benefited greatly from the one and only China boom.
- Both thermal and metallurgical coal producers in the U.S. are too leveraged to find significant value at today's prices.
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- The blitz most of the central banks in advanced nations have unleashed on the world is actually the least effective, and the most risky, way to stimulate economies.
- Its main transmission channel is to stuff money into banks in order to entice households to borrow more at exactly the time when they're least likely to respond.
- There has to be a better way.
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- Steady appreciation, artificial interest rates and non-existent volatility have created extreme complacency that will ultimately end in tears.
- Over the past 50 years, the US stock market has declined more than 30% over a 12 month period on six different occasions.
- Given the current level of government intervention in the economy a 30% free-fall could be an excessive forecast, but stock market is well overdue for a correction.
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- Year over year price gains are now definitively falling.
- The more reliable Case-Shiller data will likely show the same pattern.
- The housing market slowdown is undeniable at this point.
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- Discuss the economic news in Asia and Europe impacting markets.
- Update readers on the latest AAPL software flop.
- Look at the latest computer virus making the rounds and its impact on certain companies.
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- According to the Australian Securities & Investment Commission, 146 companies in the mining sector went into administration (bankruptcy) during the fiscal year ending June 30, 2014.
- We expect a fresh wave of failures within the next six to eight weeks as more resource companies become insolvent.
- In the final shakeout, we are anticipating a number of mismanaged companies will deservedly go under and some very good projects will be picked very inexpensively.
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- Warren Buffett claims that gold isn't a good investment since it's an asset that will never produce anything.
- Buffett's own Berkshire Hathaway hasn't outperformed gold during the last 15 years and neither has his other major holdings.
- Buffett's argument against gold is weak, and has many inaccuracies and flaws.
- Gold isn't just an object that is dug out of the ground, melted down, and put in another hole in the ground, it has an entire industry built around it.
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- Fed Chair Janet Yellen's message has been that she would keep interest rates zero bound for a "considerable time."
- Dr. Yellen's next challenge is to define what the FOMC means by another crucial phrase "highly accommodative."
- A "highly accommodative" monetary policy could cause the U.S. economy to overheat.
- Industrial commodities will continue to suffer if China's manufacturing levels continue to decline.
- The advantage that Gold has over other commodities is that it is also seen as currency.
- Temporary manipulation measures adopted by big banks will one day be overcome.
- The United States is growing faster than New Zealand - historically, this indicates a fall in NZD/USD 67% of the time.
- The RBNZ is seeking a weaker currency - Don't fight it, sell the kiwi.
- The Federal Reserve is cultivating inflation - Don't fight it, buy the dollar.
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- Hayek is famous, but he is generally misunderstood. His enormous body of interdisciplinary work is highly regarded by experts in diverse fields, but is mostly unknown to the general public.
- In an article recently published by Seeking Alpha, George Soros has articulated some common misconceptions regarding Hayek.
- I correct some of these misconceptions, and suggest that Mr. Soros and the public at large could benefit greatly by a wider and deeper acquaintance with Hayek's work.
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- Grain markets are at four-year lows.
- My first boss told me that potato futures went to zero.
- Could corn be the potato of 2014?
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- Dollar advance led by the push lower by dollar-bloc.
- Euro falls on momentum more than new developments.
- Yen bears shrug off recent words of caution.
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- Much has been made of the relative weakness of U.S. small-cap stocks so far in 2014.
- But what is perhaps even more notable is that increasing signs of rot are presenting themselves from within the S&P 500 index itself.
- The fact that these trailing results are coming from the economically sensitive industrials sector is particularly troublesome for the sustainability of the stock market rally going forward.
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- Thirteen states have seen minimum wages rise.
- Lowest 10% have seen income increases.
- How has employment in those states been impacted?
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- The market is waiting and trying to guess when interest rates are going to rise and how fast they will rise.
- The best scenario would be for the economy to pick up sufficient steam to cause loan demand to put pressure on short-term interest rates.
- Right now, given the new predictions of the Fed: economic growth may not be strong enough to put pressure on short-term interest rates for a relatively long period of time.
- The Federal Reserve begins the implementation of a policy change to end QE3 next month.
- Investors believe that since this move was telegraphed well-ahead of time that market behavior will be calm and collected.
- When too many investors hold the same opinion, consensus thinking is often proven wrong.
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- There are logical ways to monitor the market's concerns about a possible shift in Fed policy.
- The up and down nature of the markets is likely to continue.
- Key S&P 500 levels we will be watching.
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- The euro has been tracking the CRB index better than the so-called commodity currencies.
- The link is not causal.
- If the relationship is not spurious, global growth and ECB response may be the driver.
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- Coffee prices have rebounded sharply this year amid a drought in Brazil, the world’s largest producer and exporter of Arabica coffee.
- Recently, coffee prices have seen a pullback; however, the rally in coffee prices will resume due to a range of issues on the supply side.
- Going long on coffee could still generate significant returns.
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- We are currently seeing three factors which lead us to conclude that any stock market correction could be quick and deep.
- Stock ownership by U.S. Households is at levels not seen since the dot.com bubble era of 2000.
- The use of leverage, through margin, continues to register extremely high readings.
- Investors have taken on a short-term trading mentality when it comes to equities, and may be quick to exit the market at the first sign of trouble.
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- What is a financial bubble?
- The stock market bubble.
- The dollar bubble and the dollar- bubble- busters.
- Crash, pains, do I need to lose my gains?
- Markets stretched in the very short run. Stay neutral till possible dip or till lull ends.
- Medium term go long US stocks and dollar versus Euro on the back of strong technical, a decoupling macro backdrop and very supportive policy.
- In the long term global recovery and decoupling favour overweighting stocks over bonds.
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- Soft Chinese met coal demand and strong supply from Australian producers means met coal quarterly benchmark price for 4Q14 to remain weak.
- U.S. coal companies’ efforts to preserve cash through reduction in operational and capital expenditure likely to help in short term.
- Aggressive and consistent production cuts needed to address problem of oversupplied met coal market.
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- Real estate data today included mixed messages from a mortgage origination measure and new home sales.
- The housing relative stock sector is mostly higher today as a result of the good data point, but major mortgage lenders are mixed with some shares drifting lower.
- Today's data is symbolic of what real estate investors will face in the future, a rising rate environment matched against a potentially healthier economy and housing demand.
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- New home sales surge to a post-recession high, far exceeding earlier expectations for a continued pick-up in sales growth.
- Performance was led by the West and South and confirms the recent sharp recovery in builder confidence.
- Despite the good sales news, iShares US Home Construction continues to under-perform the headline data.
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- All-in sustaining costs have been coming down for silver miners.
- Due to a low silver price, it is recommended to mitigate risks by choosing low AISC.
- Leverage can be found in silver miners with high AISC.
- Value tends to outperform growth during periods of strong M&A activity.
- The dollar value of M&A activity in 2014 has already surpassed levels seen in every year since 2008.
- The quantity of M&A transactions remains below the highs after the Great Recession, suggesting M&A activity is far from overheating.
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- August was another positive month for global equities, as liquidity encouraged risk-taking.
- The disappointing August U.S. payroll gain is likely to be an outlier; I believe the U.S. market still has upside potential.
- Emerging markets have sustained a rally for four months, but deteriorating fundamentals still warrant an underweight in this asset class, in my opinion.
- Although some commodity markets can be relatively compartmentalized, the wheat trade is a world affair.
- Wheat can be a highly volatile market that can offer plenty of opportunities for different styles of trading.
- The most traditional ways for traders and investors to gain exposure to wheat have been through the futures market or commodity stocks.
- Since then, a number of grain ETFs, managed futures programs, and automated trading strategies have been added.
- Direct investment in farmland is another option, sometimes considered less volatile than the other investments described above, but with its own share of risks.
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- Update readers on the latest reports concerning the EU sanctions on Russia.
- Look at the railroads and how they are moving energy and agricultural commodities with record production for both clogging lines in the Bakken and Midwest.
- Discuss China's equity markets trading at one-year highs and why we think the 2,400-2,500 area is tested sooner rather than later.
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- The strength of the U.S. dollar has led people to doubt the need to hold either gold or gold-related equities in their portfolios.
- The bottom line is North American natural gas production continues to hit record highs.
- Junior miners that have very high-quality projects have been able to access the capital markets and issue equity.
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- Discuss Starbucks' deal to purchase the remaining interest in Starbucks Japan that it does not already own.
- Look at the earnings from BBBY and the poorly timed analyst downgrade the day of the company's earnings.
- Highlight a potential sale of a business by WAG.
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- The S&P 500 equal weight index has shown relative weakness to the S&P 500 recently.
- This weakness can be attributed to small cap stocks falling faster than larger cap stocks, a phenomenon not seen in the cap weighted S&P 500 alone.
- If the fear of higher Treasury rates continues to weigh on small caps, U.S. equities as a whole could be in jeopardy of declines.
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- The World Steel Associate data for August released this week indicated another step down in the critical Chinese steel market.
- China produces 60% of integrated steel, and over half of that is for the construction market. Until real estate builds recover, iron ore prices will remain pressured.
- Supply growth is forecast at over 40% by 2017, while demand is only expected to increase by 10%-15%. Pricing dynamics in the near and long term are negative.
- Stocks with significant iron ore exposure like Vale, Cliffs and Fortescue have additional downside risk if iron ore prices decline further. It is not time to value shop here.
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- Gold Reserve investors were finally compensated for the Brisas Project, which was confiscated by the Venezuelan government.
- I had mentioned this as a possibility but remained skeptical that this would come.
- The stock's price performance on the news was lackluster: if you were waiting for this catalyst it has come and it is time to "sell the news."
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- Last few months of data out of the EU and the US show that inflation trends are on a decelerating path.
- Low growth combined with low inflation makes for much lower nominal economic growth, which leads to a trend of increasing debt loads, at lower interest.
- Once the factors that led to the current stock rally, such as low inflation and stock buybacks, dissipate, it will be very hard to start another one.
- Silver fell through its mid-term support, gold is still holding it.
- Short positions by commercial hedgers have been heavily covered in all precious metals, except one.
- The article lists the discounts on precious metals in 6 Canadian funds.
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- That's what the media reports, but not what the fund's divestment statement says.
- A big ecological-sociological purpose is designed to smokescreen the real intent.
- There are stronger economic motivations at hand than do-good ones.
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- What's the current Draghi plan of attack?
- How has (or hasn't) the EU played along?
- The U.S.: Only half of the equation is satisfied.
- Fed talks as we fall asleep, and inflation still missing in action.
- Dollar must be loved despite resentment.
- Bubble definition elusive while waiting for widespread enthusiasm.
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- The World Gold Council, which gets its numbers from Thomson Reuters GFMS, reports that total gold demand in Q2/14 fell by 15% versus the same period in 2013.
- The fact that central banks are buying gold tells me that gold—the currency between states and central banks—is still regarded as an important part of the reserve mix.
- We're still in a stagnant global economy. The fear associated with 2008–2009 has receded but when it comes to unemployment, median household income, etc., the new normal is more ugly.
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- Equities continue to be unable to break above 2,000 on the S&P 500 in a decisive manner. Both the S&P and DJIA had their worst day in a month Monday.
- Some cracks are starting to develop in the market as we head into October, a month that has historically seen some major sell-offs in equities over the decades.
- Investors should have some "watch items" on their list over the next month. Why I believe a cautious portfolio stance is warranted at the present time is profiled below.
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- Discuss WTI Crude Oil prices and what to watch for moving forward.
- Highlight the latest big M&A talk in the fertilizer industry.
- Look at Russia's OAO Mechel and their expected bankruptcy.
- The total supply of money and credit has not grown much since 2008, leading to low inflation.
- Credit growth is finally recovering to pre-2008 levels, the first solid sign that inflation may be coming.
- The U.S. dollar is strong, but mainly because foreign currencies are weak.
- Gold as a trade looks bearish, but the fundamental case for holding gold as insurance remains.
- Gold's price action expressed in terms of stock value.
- Quantitative Easing's (QE) effect on gold price.
- Is gold fighting deflationary forces?
- There appears to be a paradox as the S&P 500 sets record highs while the average of the stocks within the index is down 7% year to date.
- An analysis of S&P 500 stocks by capitalization weight indicates the larger caps are leading the bull market forward while lower-weighted stocks decline.
- Investor sentiment has been moving away from small- and middle-weight cap stocks to mega caps in 2014.
- While a market-breadth divergence bears watching, a number of economic indicators are positive for investors and the economy going forward.
- Stephen A. Schwarzman was dubbed the "king" of private equity by Fortune magazine.
- Similarly, Jack Ma is now considered the "king" of e-commerce.
- Both companies' IPOs could wind up coinciding with a clear top for equity markets.
- Conventional energy stocks (oil, gas and coal) are all suffering declining demand and lower pricing.
- Solar PV and wind power installations provide substantial new capacity.
- Renewable energy stocks (solar PV and wind) are performing strongly in 2014.
- While energy investment often focuses on fossil fuels, perhaps it is time to take a broader view of energy investment, as there are major opportunities opening up with renewables.
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- Natural gas remained in the same price range in recent weeks.
- What is the impact of oil on natural gas prices?
- The current injection pace might not bring the storage to normal levels by November.
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- We believe the markets will see a correction heading into 2015 and extend those losses into the new year.
- The Russell 2000 chart today shows an ugly double top combined with a death cross.
- We believe this to be the drying up of the bullish well.
- The US economy will pay for years of cheap money and a low exchange rate. This has created an unsustainable asset bubble.
- Economic activity will drop as European and Chinese economies stumble.
- Low volatility and technical indicators point to a market nearing the top.
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- Discuss the latest in tech regarding products and M&A.
- Look at yesterday's reports that Icahn had exited his HLF position.
- Update investors on the SYY merger with US Foods and the FTC's possible antitrust case against the company.
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- Harvest progress for corn and soybeans has been slowed by wet weather across the U.S. throughout September.
- Condition reports remain at 20-year highs despite maturity levels for both corn and soybeans being behind their five-year average.
- Spring wheat harvest was reported at 86% complete, a 12% increase from the previous week, but 6% behind the five-year average.
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- Investor sentiment is currently optimistic, but we view a resurgence in volatility for both stocks and bonds as highly likely.
- Over the last few decades, investors’ fixed income allocations have helped smooth the bumps when stocks have fallen. Unfortunately, the oft-discussed headwinds facing bonds represent a stark reality for investors.
- The emergence of liquid alternative funds has broadened the menu of solutions that can potentially help diversify traditional stock-and-bond portfolios.
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- The price of silver fell to $17 by the end of last week.
- Silver’s fall coincided with the rally of the USD.
- The latest FOMC meeting may have contributed to the weakness of the silver market.
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- China is in trouble. Growth rates are not meeting estimates and as a result, the government has to pump more money into the economy; but stimulus alone will not work.
- US dollar is strengthening which indicates global liquidity is tightening. Asset prices will find it difficult to grow in the face of US dollar strength.
- Large Cap Market Leaders such as Caterpillar and McDonald's are struggling badly with their numbers indicating the world economy is actually contracting not growing.
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- The price of natural gas is volatile.
- Last year's cold winter depleted inventories.
- This summer inventories were rebuilt, but remain below last year's level and the five-year average.
- A cold winter this year will cause natural gas prices to explode.
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