Breakouts

Wednesday felt like an inflection point in gold and the INDU with both breaking important trendlines. As there is alot of ground to cover tonight lets get right to the charts starting with the daily look at the INDU. Today the INDU finally closed below the bottom rail of the now seven point bearish falling flag and the double bottom trendline at 16,920. This was a big deal IMHO. We may see a little backing and filling in this general area but today’s move clearly setup a pattern of lower highs and lower lows. Note the six point bearish falling wedge that formed back in July of last year. As it formed below the previous high it needed an even number of reversal points to complete the pattern to the downside. Because our current seven point bearish falling flag formed at the top it needed to have an odd number of reversal points to make a reversal pattern. One last point on the chart below which shows two red arrows one point up and the other pointing down. As you can see the rally out of the low made in October was vertical only taking three days. The red arrow pointing down shows how it’s possible we may see the INDU reverse symmetry back down over the same area as shown by the red arrow pointing up.

This post was published at GoldSeek on 7 January 2016.

“Nowhere To Hide” As Baltic ‘Fried’ Index Careens To Fresh Record Low

Another day, another fresh all-time record low in The Baltic Dry Index as Deutsche Bank’s “perfect storm” appears ever closer on the horizon. Plunging 4.7% overnight to 445 points, this is 20% lower than the previous record low in 1986 and as one strategist warns, “It’s a brutal start of the year, there’s just nowhere to hide on the market.”
“This looks like a ripple effect from what happened back in August,” adds Alexandre Baradez, chief market analyst at IG France, hopefully looking forward, “it might continue for a few weeks, but given China’s central bank fire power, it shouldn’t last for more than that.”
But Deutsche’s “perfect storm” looms…

This post was published at Zero Hedge on 01/07/2016.

Rail Volumes Drop to Recessionary Levels

Transportation is a measure of how well the real economy is clicking. Alas….
‘Weaknesses in energy and manufacturing as well as world economic softening had a negative impact on both carload and intermodal traffic in 2015.’ Those were the encouraging words of John T. Gray, Senior VP of Policy and Economics at the Association of American Railroads (AAR).
And rail traffic has gotten clobbered.
The deterioration in the second half of 2015 dragged the whole year down from 2014: carloads fell 6.1%, according to the AAR, while intermodal containers and trailers edged up 1.6%, for a total decline of 2.5%. But the deterioration late in the year was a doozie.
In December, total volume dropped 8.9% year over year, with both components down: even intermodal containers and trailers, which had been holding up for much of the year, edged down 0.7%; and carloads (bulk commodities, autos, and the like) plunged 15.6%.
Only four of the 20 carload categories showed gains, and they’re relatively small categories: miscellaneous carloads, up 46.6%; motor vehicles and parts, up 5.2% (that relentlessly booming auto sector); chemicals, up 0.7%; and waste and scrap, up 3.3%.

This post was published at Wolf Street on January 7, 2016.

As The Saudi Economy Implodes, A Fascinating Solution Emerges: The Aramco IPO

Earlier today we reported that when it comes to Saudi Arabia, things are going from bad to abysmal, with the market is clearly aware of it. Saudi riyal forwards hit their highest level in almost two decades as oil plummeted: twelve-month forward contracts for the riyal climbed 260 points, and set for the steepest close since December 1996 on growing speculation the world’s biggest oil exporter may allow its currency to slide against the dollar for the first time since 1986 (incidentally, Bank of America’s “Number One Black Swan Event For The Global Oil Market In 2016“).
Alongside this, Saudi default risk has also been rising, and as of this morning Saudi CDS traded wider than Portugal:

This post was published at Zero Hedge on 01/07/2016.

Zatlin: Markets Are Not Going to Like What’s Coming in 2016

In Thursday’s podcast interview we spoke with the savvy head of Moneyball Economics, Andrew Zatlin, where he outlined three cycles converging in 2016 that he believes will be bearish for the market.
Given his outlook, he felt investors should be raising cash and selling into any future rallies.
The three cycles he outlined all combining this year are the following:
The end of the Chinese supercycle, which began to impact global markets starting around 2014 and which is now coming to a head A peak of the US business cycle and possible mild recession No more easing by the Fed (a tightening of the liquidity cycle) and its related influence on corporate buybacks, which have largely held up the market On the first cycle, Zatlin told listeners that the slowdown in China started to exert greater pressure on global markets starting around 2014 as the slide in oil and commodity prices picked up speed. It was around this time that the massive public spending for infrastructure by the Chinese government started to flatline, causing a ripple effect across the globe, particularly in commodity-exporting countries. This, he said, was one of the main stories of 2015 and is now coming to a head this year.

This post was published at FinancialSense on 01/07/2016.

China Adds More Gold; Buying Spree Expected to Continue Through 2016

China added another 19 tons of gold to its reserves in December, continuing a buying spree analysts expect will continue through 2016.
Since announcing its reserves for the first time in six years last summer, the People’s Bank of China (PBOC) has steadily added to its horde. The PBOC added 14 tons in October, 15 tons in September, 16 tons in August, and 19 tons in July. It accelerated the pace in November, purchasing 21 tons, and continued to buy gold at a steady clip last month.
China has added more than 100 tons of gold to its stash since its July announcement.

This post was published at Schiffgold on JANUARY 7, 2016.

These Are The 10 Companies Most Hated By Wall Street

Two months ago, we revealed the list of stocks most hated by the buy-side: that increasingly clueless cabal of Hotel California groupies which, unable to do fundamental analysis (thanks to the Fed) is forced into the same trades and then, when a paradigm shift strikes (as happened ever so frequently over the past year) is crushed under their own and their peers’ weight leading to the worst hedge fund performance year since 2008. We said to go long these names in advance of hedge fund liquidations and collateral and margin calls. Incidentally, the trade generated substantial alpha in the past 6 weeks. The full list can be found here.
Today we were not at all surprised to find that the buyside’s revulsion toward some of the worst (if better performing) stocks has spread and hit the sellside. Acording to Bloomberg, “analysts” are already ratcheting down their expectations for U. S. stocks, while various economic models are also moving downwards.
As a reminder, we have been covering the gradual conversion of banks such as JPM, Citi, UBS and today, BofA, who have all said to no longer “buy the dip”, but to “sell the rip” instead, and while selling stocks, “buy gold.”
More details:

This post was published at Zero Hedge on 01/07/2016.

Zimbabwe Adopts Yuan as Legal Tender

Zimbabwe’s adoption of the yuan as legal tender demonstrates its close ties with China, and Beijing’s efforts to globalize its currency.
Long a pariah state under the rule of aging despot Robert Mugabe, Zimbabwe has witnessed an economic uptick in recent years. This reversal of fortunes has been brought about, in part by (until recently) rising commodity prices, as well as a diversification of foreign investment options. Indeed, by 2013 commentators noted that ‘on current trends Zimbabwe’s economy is about five years away from a full gravity-defying recovery.’
Back From the Brink
Zimbabwe’s ruin has been orchestrated for decades by Mugabe’s policies; a state of affairs that was only hastened by international sanctions condemning the country’s regime. Faced with widespread famine, economic collapse, and the expulsion of most wealthy, white land owners, Zimbabwe long teetered on the precipice.
Read: Richard Duncan Says US Dollar Will Not Be Replaced By Yuan, SDRs, or Gold Anytime Soon
Perhaps the most potent symbol of the country’s dysfunction was its historic levels of hyperinflation, which peaked at 79.6 sextillion per cent. Zimbabwe abandoned its own currency in 2009, instead making the South African rand and U. S dollar legal tender in the country. Since then it has also added the British pound. These moves have curtailed inflation, the perennial bugbear of Zimbabwe’s economy.

This post was published at FinancialSense on 01/06/2016.

UBS: Avoid stocks buy Gold

2015 was a volatile year for the stock markets, and 2016 opened with a near obliteration of Chinese stocks on the first day back.
For this reason, equity salesmen Michael Riesner and Marc Mller at UBS told clients in a 39-page equity sales trading commentary document sent via email, entitled ‘Technical Analysis: Technical Outlook 2016′ on Wednesday morning that they should plough into gold:
Gold has been trading in a cyclical bear market since 2011.
In 2016, we expect gold and gold mines moving into an eight-year cycle bottom as the basis for the next multi-year bull market.

This post was published at TruthinGold on January 7, 2016.

China, Oil, & Markets: It’s All One Story

If there’s one thing to take away from this year’s developments in markets and economies so far, it’s that they are all linked, they’re all part of the same thing. If you can’t see that, you’re not going to understand what’s happening.
Looking at falling oil prices as a separate thread is not much use, and neither is doing the same with Chinese stocks, or the yuan, or the millions of Americans who are one paycheck away from poverty, for that matter. It’s all one story.
And the take-away from that, in turn, is that focusing too much on ‘narrow’ conditions in your particular part of the globe has only limited value. We’re very much all in this together. In the UK today, it matters very little what George Osborne says or does, or Mark Carney, because they don’t shape the future of the economy.
The same goes for all finance ministers and central bank governors across the planet, Yellen, Draghi, Koruda, the lot: the influence they exert on their own economies, which was always limited from the start, is running into the boundaries imposed by global developments.
Even if central bankers could ever have ‘lifted’ anything at all (a big question mark), their power to do so is rapidly diminishing. The constraints global developments place on their powers will now be exposed -even more. And of course they’ll try to deny and ignore that, as naked emperors are wont to do.
And with the exposure of the limits to their abilities to make markets and economies do what they want, come the limitations of the mainstream financial press to make their long-promoted recovery narratives appear valid. Before we know it, we might have functioning markets back.

This post was published at Zero Hedge on 01/07/2016.

The first lesson from history: Human beings always rise

About a week and a half ago when I landed in Australia, I walked past the currency exchange booths in the arrivals hall and took a quick look at their rates.
Their quoted price to change US dollars into Australian dollars was 77 cents that day.
I quickly glanced at my phone and found that the actual market rate was just 72 cents.
So these guys were charging an unbelievable 7% markup! And that was on a major currency.
For people who happen to come from more exotic countries, the price is even higher.
If you hail from Costa Rica, for example, these airport guys won’t exchange Costa Rican colons into Australian dollars.
So you first have to exchange colons for US dollars in Costa Rica (and pay some overpriced exchange rate), and then once again change US dollars for Aussie dollars at a 7% markup once you land in Australia.
This is such an incredible scam, one of many that exists in the global financial system.
One of my favorite financial scams is in sending wire transfers.

This post was published at Sovereign Man on January 7, 2016.

The Greatest Money Manager Alive Attributes The Majority His Success To Just This One Thing

Last April I wrote a post about the specific trading style that has made guys like Stan Druckenmiller, Jim Rogers and George Soros so successful. That post focused on a single quote from Druck which I found particularly compelling because it goes against what most investment pundits would tell you is the right way to invest.
But Druck made an even more poignant and timely point in that speech a year ago. He singled out specifically what he believes to be the most important factor behind the returns in risk assets, namely the stock market:
‘Earnings don’t move the overall market; it’s the Federal Reserve Board… focus on the central banks and focus on the movement of liquidity… most people in the market are looking for earnings and conventional measures. It’s liquidity that moves markets.’
Interestingly, his further point in this regard was not the popular, ‘don’t fight the Fed.’ In fact, it was just the opposite:

This post was published at Wall Street Examiner on January 7, 2016.

Gold Daily and Silver Weekly Charts – China Tonight and Non-Farm Payrolls Tomorrow

“We hardly need to be reminded that we are living in an age of confusion – a lot of us have traded in our beliefs for bitterness and cynicism or for a heavy package of despair, or even a quivering portion of hysteria. Opinions can be picked up cheap in the market place while such commodities as courage and fortitude and faith are in alarmingly short supply…
To be persuasive we must be believable; to be believable we must be credible; to be credible we must be truthful. It is as simple as that.”
Edward R. Murrow
What surprises me, at sixty-four years of age, is not that people so willingly sell themselves for lies. I have seen that happening throughout my life, although I may not have recognized it at the time for what it was.
No, what never ceases to surprise me is they sell the only thing that they really own, and the only thing that they can continue to hold and take with them, for so little. What does it profit a man indeed.
Just because a cheat and a liar is good at it, almost with a professional pride, and is better than most of their peers, is no reason to admire them. Because in the bigger scheme of things they are just wallowing in the mud with the rest of them.
China will attempt to keep its equity markets open as selling threatens to feed on itself, tripping circuit breakers that close the exchanges and fuel a feeling of panic in the retail investors.
So tonight we will see another push and pull struggle between retail selling and official buying in an attempt to allow some holders to liquidate while keeping a feedback loop and panic from forming.

This post was published at Jesses Crossroads Cafe on Jan 7, 2015.

JAN 7/SILVER A HUGE STANDOUT/GOLD BREAKS THE 1100 DOLLAR BARRIER/LAST NIGHT CHINA HALTS TRADING FOR THE DAY AFTER 7% LOSS/TODAY CHINA NOW OUTLAWS HALTING OF STOCKS/BLOODBATH ON ALL BOURSES TODAY,…

Gold: $1107.70 up $15.80 (comex closing time)
Silver $15.34 up 38 cents
In the access market 5:15 pm
Gold $1094.00
Silver: $14.02
At the gold comex today, we had a poor delivery day, registering 0 notices for nil ounces. Silver saw 0 notices for nil oz.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 200.82 tonnes for a loss of 103 tonnes over that period.
In silver, the open interest rose by 725 contracts even though silver was only up only 1 cent with respect to yesterday’s trading and again without a doubt we had more short covering. We have an extremely low price of silver and a very high OI. The total silver OI now rests at 168,245 contracts. In ounces, the OI is still represented by .841 billion oz or 120% of annual global silver production (ex Russia ex China).
In silver we had 0 notices served upon for nil oz.
In gold, the total comex gold OI rose by a whopping 8318 contracts to 422,006 contracts as gold was up $13.50 in yesterday’s trading.
We had a huge 4.16 tonnes of gold deposit into gold inventory at the GLD, / thus the inventory rests tonight at 645.13 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. Our 670 tonnes of rock bottom inventory in GLD gold has been broken. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold, after they deplete the GLD will be the FRBNY and the comex. In silver, we had huge changes in inventory at the SLV/we had massive withdrawals of 4.28 million oz /Inventory rests at 317.797 million oz.
First, here is an outline of what will be discussed tonight:

This post was published at Harvey Organ Blog on January 7, 2016.

Bill Gross on China, Secular Stagnation, and the Highly Leveraged “Negative Carry” Environment

In a Bloomberg TV Interview, Bill Gross of Janus Capital spoke with Bloomberg’s Tom Keene about the state of the global economy.
The interview and transcript below are well worth the time. Gross’ thoughts on negative carry are particularly interesting. I offer my comments beneath the transcript.
Partial Transcript
TOM KEENE: Bill, good morning to you, thrilled to speak to you tomorrow on the jobs report. Let’s talk about the more urgent matters of this market. First of all, Bill, China is the topic. Is this about China and their stock market? Or is there more going on on this January afternoon?
BILL GROSS: Yes, it is about China specifically, Tom. But there’s a lot more going on and we’ve talked about it in past months.
The global economy is still highly levered and central banks are artificially elevating prices and keeping interest rates low.
It’s a highly levered world and when something gets out of whack like the Chinese currency or in terms of the oil price, then you see these movements everywhere.

This post was published at Global Economic Analysis on January 07, 2016.

Dow Dumps 1200 Points From Holiday Highs, Nasdaq In Correction As Steeper Yuan Collapse Lies Ahead

Remember ‘The Santa Claus Rally’ that Bob Pisani said “we should expect” – well The Dow is now down over 1200 points from the highs just before the end of the year and extending those losses as Reuters reports, PBOC advisors are said to call for steeper yuan depreciation, pressuring the government todepreciate by 10-15%.

This post was published at Zero Hedge on 01/07/2016.

Gold and Silver Market Morning: Jan-7-2016

Gold Today -The New York gold price closed Monday at $1,093.50 up from $1,078.50. In Asia it moved up to $1,099.35 but in London it held back slightly where the LBMA price was set at $1,096.00 up from $1,083.85 with the dollar index lower at 98.72 down from 99.42 yesterday. The euro was at $1.0863 up from $1.0741 against the dollar. The gold price in the euro was set at 1,010.23 up from 1,009.03 as the euro recovered. Ahead of New York’s opening, the gold price was trading at $1,102.45 and in the euro at 1,014.07.
Silver Today -The silver price in New York closed at $14.02 up 3 cents. Ahead of New York’s opening the silver price stood at $14.06.
Gold (very short-term) The gold price will be stronger in New York today.
Silver (very short-term) The silver price will be stronger in New York today.
Price Drivers
The gold price has confirmed its breakout solidly and has broken through the next overhead resistance at $1,100. The dollar was turned back for the 100 level on the dollar index and is now trading lower against the euro as we forecast. The gold price is moving independently of any currency moves on the part of the dollar and the euro and is rising in all the world’s currencies.

This post was published at GoldSeek on 7 January 2016.