Market Turning Points

Current position of the market
SPX: Long-term trend – In 1932 and 1974, the 40-yr cycle was responsible for protracted market weakness. The current phase is due this year but where is the weakness? Has man (Federal Reserve) finally achieved dominance over universal rhythms or has it simply delayed the inevitable?
Intermediate trend – The correction is over and what is most likely the final phase of the uptrend (before a more serious correction) is underway.
Analysis of the short-term trend is done on a daily basis with the help of hourly charts. It is an important adjunct to the analysis of daily and weekly charts which discusses the course of longer market trends.
APPROACHING AN IMPORTANT HIGH?
Market Overview
According to the Trader’s Almanac, September is the weakest month of the year. What better time for the stock market to have a long overdue correction of intermediate scope. I indicated under ‘Long-term trend’ above, that the heretofore predictable 40-year cycle rhythm had sorely disappointed the bears, this time. Will the month of September do likewise? Perhaps not! There are some sound reasons why bearish expectations will be at least partially redeemed in the near future. Let’s examine some of them:
The weekly MACD approaches the beginning of the month in a state of double negative divergence. This reflects price deceleration on an intermediate scale. Of course, this is not a final verdict! The MACD is still in an uptrend and, if it continues to move up, could nullify the divergence. However, the daily MACD also exhibits negative divergence and, judging by its histogram which has started to decline over the past four days, it may also be losing its upside momentum.

This post was published at Gold-Eagle on September 2, 2014.

US Futures Levitate To New All Time High As USDJPY Surges Above 105; Gold Slammed

Just when we thought centrally-planned markets could no longer surprise us, here comes last night’s superspike in the USDJPY which has moved nearly 100 pips higher in the past few trading days and moments ago crossed 105.000. The reason for the surprise is that while there was no economic news that would justify such a move: certainly not an improving Japanese economy, nor, for that matter, a new and improved collapse, what the move was attributed to was news that Yasuhisa Shiozaki, who has been advocating for the GPIF to reduce allocation to domestic bonds, may be appointed the Health Minister when Abe announces his new cabinet tomorrow: a reshuffle driven by the fact that the failure of Abenomics is starting to anger Japan’s voters. In other words, the GPIF continues to be the “forward guidance” gift that keeps on giving, even if the vast majority of its capital reallocation into equities has already long since taken place. As a result of the USDJPY surge, driven by a rumor of a minister appointment, the Nikkei is up 1.2%, which in turned has pushed both Europe and Asia to overnight highs and US equity futures to fresh record highs, with the S&P500 cash now just 40 points away, or about 4-8 trading sessions away from Goldman’s revised 2014 year end closing target.
Oh, for whatever reason but probably just because “banks are providing liquidity”, both gold and silver were summarily pounded to multi-month lows seconds ago.
In other Asian markets, the Hang Seng, Shanghai Composite, and the KOSPI are 0%, 1.4% and -0.8%, respectively. European stocks advance amid speculation that slower growth will prompt policy makers to accelerate stimulus. German and Italian shares outperform. The yen came close to a five-year low against the dollar, while the pound falls after a survey showed support for Scottish independence increasing. Treasuries drop ahead of reports this week that economists predict will show U. S. manufacturing and employment expanded in August. Oil and gold fall.

This post was published at Zero Hedge on 09/02/2014.

The Underbelly of Corporate America: Insider Selling, Stock Buy-Backs, Dodgy Profits

The hollowing out of corporate strengths to enable short-term profiteering by the handful at the top leads to systemic fragility.
Anonymous comments on message boards must be taken with a grain of salt, but this comment succinctly captures the underbelly of Corporate America: massive insider selling, borrowing billions to buy back their own stocks to push valuations to the moon so shares granted as compensation can be sold for a fortune, and dodgy accounting strategies that boost headline profits and hide the gutting of investments in long-term growth. Here’s the comment: “I’m occupying a vantage point that allows me to see what is going on inside the top Fortune 50 companies. I have never seen such rot before. Of the 50, at least 30 have debt at 120% of cash. Most have cut capex, R&D and maintenance by 80%. Most have been borrowing money to do stock buy-backs, while simultaneously selling off business units and doing layoffs.
Of the 50, at least 20 have 100% insider selling. For some, you would have to go back decades to find a point where all of the acting board of directors are selling. In essence, they are paying the mortgage with their credit cards. Without bookkeeping games, there are no solid earnings. There will be no earnings growth. ‘Executive compensation based on stock performance’ is killing corporate America.

This post was published at Charles Hugh Smith on MONDAY, SEPTEMBER 01, 2014.

WILL THIS BE THE LAST LABOR DAY WORKERS CAN AFFORD TO ESCAPE THE US?

Ah, “Labor Day.” A government created day on which those people who work (read: producers) are supposedly celebrated by the people who don’t (government and welfare recipients). Pat yourselves on the back, entrepreneurs – the parasites love you. As I’ve written here in The Dollar Vigilante (TDV) Blog, approximately 65 million US citizens work. The rest receive welfare in various forms.

So, as you see, for about 252 million Americans, life is pretty good. The government taxes those who create vast sums of wealth, half of which is then stolen (“for the greater good”) and re-allocated to people who can’t work or won’t. A small percentage of this is allocated towards some useful things, sure, but most is squandered by the growing bureau-rat class.
So, it’s safe to say that about 252 million individuals are not interested in leaving the US. Expatriation!? They probably don’t even know what that means. They’d be absolutely insane to want to do so…. They have it pretty good. They’re born, they immediately get separated from their family and educated (read: brainwashed) in government year-round camps, torn from precious REM sleep and fed lackluster school lunches only to fail by world standards. And then, after lots of brainwashing (some of which costs hundreds of thousands of dollars), there is a job awaiting them in an exploding public sector – a militarized public sector at that.

This post was published at Dollar Vigilante on September 1st, 2014.

France Needs a “Thatcher Moment” But First a Depression

It is amusing reading day in and day out the Keynesian cure for what ails Europe, especially France.
Consider France. Public spending amounts to 57% of French GDP, yet Keynesians want still more. The sad irony is that 100% would not be enough. In fact, it would make matters worse.
France suffers from too much government spending and too much government interference everywhere one looks.
The Problem
On Sunday, in Eurozone Currency Dispute Intensifies: France Wants More ECB Action to Correct Overvalued Euro, Germany Doesn’t I summed up the problem.
Inflation Won’t Cure France
Contrary to popular belief, inflation will not spur consumer spending. Nor will inflation create any jobs or cause wage inflation.
Nonetheless, France demands the ECB wizards fix something that cannot be fixed by monetary policy.

This post was published at Global Economic Analysis on Tuesday, September 02, 2014.

Austrians, Fractional Reserves, and the Money Multiplier

John Tamny recently wrote a piece at Forbestitled, ‘The Closing of the Austrian School’s Economic Mind’ in which he critiqued certain claims made in Frank Hollenbeck’s Mises Dailyarticle, ‘Confusing Capitalism with Fractional Reserve Banking.’
Tamny goes far beyond taking Hollenbeck to task, asserting that many modern Austrian economists have certain views of monetary policy that are at odds with much of the rest of the contribution of the Austrian School. Tamny’s biggest point of disagreement with Austrians is over the low regard with which many Austrians hold the practice of fractional reserve banking. In so doing, he makes several arguments which cannot stand up to critical scrutiny.
The crux of the Austrian position is that the practice of fractional reserve banking gives ownership claims to the same funds to more than one person. The person depositing the funds clearly has a property claim to those funds. Yet when a loan is made from those funds, the borrower now has a claim to the same funds. Two or more people owning the same funds is what makes bank runs possible. The existence of deposit insurance since the 1930s has minimized the number of these runs, in which multiple owners sought to claim their funds at the same time. The deposit insurance that prevents bank runs really amounts to a pre-emptive bailout of the banks. As this is a special privilege, rather than a natural development of the market, it follows that restrictions on fractional reserve banking would be a libertarian validation of the market rather than the statist interference that Tamny claims it to be.

This post was published at Ludwig von Mises Institute on Tuesday, September 02, 2014.

A Warning to Those Grown Bored with Gold

I’m starting to warm once again to gold. Like many of you, I never gave up on it, I had just grown too bored to care. With the bear market in bullion about to enter its fourth year, who could be blamed for losing interest? Gold has looked so punk for so long that every time it rallies sharply, I get that nagging feeling, as you probably do, that we’re about to get sandbagged for the umpteenth time. So why the change of heart? All credit to Richard ‘Doc’ Postma, a friend and regular guest panelist with me on interviews with the (Al ) Korelin Economic Report. Doc, a physician by training, is also an astute investor and market timer. A patient sort as well, he is that rare bird who can watch and wait for months or even years while exceptional opportunities slowly take shape. I hasten to add that on more than one occasion, he has been a crucial step ahead of me in calling some important price swings in gold. Naturally, that got my attention.

He now thinks gold and silver are about to take off – as soon as late September or early October. The very idea of it caused me to look with fresh eyes at my charts for corroborating signs. The inescapable conclusion is that Doc is onto something. The evidence is there for anyone who cares to look. For one, bullion continues to hit marginal new lows, but without breaking down. Rallies have been fleeting, followed by slumps that continue to wear down even gold’s most loyal followers. Most telling of all, mining shares have shown increasing reluctance to give ground on days when demand for physical is weak.

This post was published at Rick Ackerman BY RICK ACKERMAN ON SEPTEMBER 2, 2014.

USDJPY (And Nikkei) Surge Higher as Japanese Car Sales Collapse To 3-Year Lows

And for tonight’s menu of disastrous Japanese economic data, we have (drum roll please)… Auto sales. Overall auto sales fell 9.1% YoY to 333,471 – the lowest in 3 years. Minicars dropped a stunning 15.1% YoY according to the Japanese auto dealers association. The response – rather obvious by now – to this terrible news… a 35 pip vertial ramp in USDJPY which can mean only one thing – the Nikkei 225 rallied 150 points… On a side note, following disappointing PMIs, China fixed the Yuan at 4-month lows.

This post was published at Zero Hedge on 09/01/2014.

The morning after: What happens when a government destroys its currency

Dallas, Texas
Imagine this scene:
‘Everyone in the country was in shock. People’s net worth had devalued more than 53% overnight.’
‘The value in savings accounts dropped in half and neither merchants nor consumers knew how to react because they had never been through something like it before…’
This is how an American business executive described living through Mexico’s devaluation of the peso exactly 38 years ago on September 1, 1976.
Looking back, it was so obvious.
Mexico had a mounting debt, destructive policies, and a woefully unsustainable fixed exchange rate with the US dollar. All the writing was on the wall.
But most people ignored the warning signs and kept their money in pesos.
Mexican President Luis Echevarria even went out on the radio to reassure people that the currency was safe.
Finally, under intense fiscal pressure, the government reached its breaking point. And on August 31, 1976, they made the decision to devalue the peso.
People woke up the next morning on September 1st to a 50% decline. Subscribe to Sovereign Man

This post was published at Sovereign Man on September 1, 2014.

BIG, FAT TOLD-YA-SO: CENTRAL BANKS TRADING & MANIPULATING ALL MARKETS

The S&P, the Dow, US Treasury Bonds, CURRENCIES (WHAT THE $%^&!), Petroleum, Metals, Agricultural Products, everything. The Chicago Mercantile Exchange and CFTC have openly confirmed that CENTRAL BANKS are in the markets by posting the REDUCED FEE STRUCTURE for CENTRAL BANKS that trade the futures and options markets. That link goes to the CFTC. The Commodity. Futures. Trading. Commission. As in the Federal Government of the Iniquitous Gutter Kleptarchy, your tax dollars at work, ‘Merica. The CME has a special incentive program for Central Banks to trade. Isn’t that nice of Terry Duffy and the boys to give the Central Banks a break on fees? Aw.
Here is the write up at ZeroHedge, sourced from, yet again, Nanex.
There is no acid-trip rabbit hole deep enough to match the depths of insanity that have now been plumbed.
Are we fuzzy on what a ‘Central Bank’ is? Well, let’s go the definition just so everyone is crystal, crystal clear on this:
Central Bank: an institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the amount of money in the nation, and usually also prints the national currency, which usually serves as the nation’s legal tender.
Um, yeah.
Sooooo do you think that it is a tiny bit problematic for entities that PRINT MONEY to trade equity, currency and commodity markets?

This post was published at Barnhardt on August 30, 2014.

The Bad News Out Of Europe Is Intensifying

All of the economic signals confirm that growth in the eurozone economy is going nowhere.
The Eurozone manufacturing purchasing managers index plunged to a 13-month low of 50.7 in August., down from 53.8 in July. This was worse than the 50.8 expected by economists.
Any reading above 50 signals growth, and the eurozone’s PMI is rapidly tumbling to that no-growth level.
“Although some growth is better than no growth at all, the braking effect of rising economic and geopolitical uncertainties on manufacturers is becoming more visible,” Markit’s Rob Dobson said. “This is also the case on the demand front, with growth of new orders and new export business both slowing in August.”

We already know that GDP growth in the Eurozone fell to 0.0% in Q2. However, the July and August data have suggests a failure to rebound in Q3.
“In one line: Alarming signs from the eurozone manufacturing sector,” said Pantheon Macroeconomics’ Claus Vistesen. “The downbeat economic news is intensifying.”

This post was published at GotGoldReport on September 01, 2014.

Deja Vu – Someone Tell The Gold-Manipulating-Machines The Market’s Shut

Just 3 months ago, as Americans celebrated Memorial Day, the spot price of gold jerked $20 higher (then plunged) as gold futures closed. Today, as Americans celebrate Labor Day, the liquidity-less market for spot gold just dropped $6, ripped back and settled lower in the space of a few minutes (with bids and offers fully crossed for a few minutes) as someone clearly forgot to tell the machines that the market is closed…
Makes perfect sense…

This post was published at Zero Hedge on 09/01/2014.

Europe Fantastic Bond Bubble: How The Central Banks Have Unleashed Monumental Speculation

Capitalism gets into deep trouble when the price of financial assets becomes completely disconnected from economic reality and common sense. What ensues is rampant speculation in which financial gamblers careen from one hot money play to the next, leaving the financial system distorted and unstable – a proverbial train wreck waiting to happen.
That’s where we are now. And nowhere is this more evident than in the absurd run-up in the price of European sovereign debt since the Euro-crisis peaked in mid-2012. In that regard, perhaps Portugal is the poster-boy. It’s fiscal, financial and economic indicators are still deep in the soup, yet its government bond prices have soared in a triumphal arc skyward.
Unfortunately, the recent crash landing of its largest conglomerate and financial group (Espirito Santo Group) is a stark remainder that its cartel-ridden, import-addicted, debt-besotted economy is not even close to being fixed. Notwithstanding the false claims of Brussels and Lisbon that it has successfully ‘graduated’ from its EC bailout, the truth is that the risk of default embedded in its sovereign debt has not been reduced by an iota.

This post was published at David Stockmans Contra Corner on September 1, 2014.

Removing Any Doubt

You may have missed it. In fact, you probably did. While you were out enjoying your holiday, we saw more proof of how Cartel algos are set to manage and control price, regardless of the day or time.
Just after 1:00 p.m. EDT on Monday, a very curious drop in the spot price of gold occurred. “Curious” in that all global futures markets were closed, with the U. S. electronic trading closed until later today, opening at 6:00 p.m. New York time .
But the futures markets being closed didn’t stop a trade from effecting the spot price of gold which, at 1:02 p.m., fell by nearly $5 in an instant. This “trade” was noticed by ZeroHedge and it immediately caught my attention. The damage, however, was minimal and the spot price almost immediately recovered. As I type, spot is down about $1 and up over $3 from the low.

This post was published at TF Metals Report on September 1, 2014.

The ‘New’ Cold War and the Power of Gold

The Cold War describes a state of political and military tension, after World War II, between powers in the Western Bloc (United States, Western Europe and Japan) and powers in the Eastern Bloc (Soviet Union and the Warsaw Pact countries). Historians have not fully agreed on the dates, but 1947 – 1991 is common. It was “cold” because there was no large-scale fighting directly between the two sides, although there were major regional wars in Korea, Vietnam and Afghanistan that the two sides supported. However, the danger of an actual nuclear war was always present. The Cuban Missile Crisis of 1962 was a direct and dangerous confrontation between the United States and the Soviet Union during the Cold War and was the moment when the two superpowers came closest to nuclear conflict. The Berlin Wall, that best symbolizes the Cold War, was erected in 1961 and destroyed in 1990. It was referred to, in the East, as the “Anti-Fascist Protection Rampart” and, in the West, as the “Wall of Shame”. I spent almost half of the Cold War in the East and the other half in the West, so I had the chance to observe it from both sides.
On December 3, 1989, Mikhail Gorbachev and George H. W. Bush declared the Cold War over at the Malta Summit. A new era of openness and collaboration between the two blocs started and was confirmed by the G7 leaders’ invitation to Russia in 1998 to join the annual summits, becoming the G8. Subsequently, Russia was excluded from the forum by the other members in 2014 as a result of its involvement in the Crimea crisis in Ukraine, ending this 16 year- period of dtente and disarmament.

This post was published at Gold Broker on Sep 1, 2014.

A New Calendar of Holidays

A new calendar of peace holidays has just been published. And none too soon, if you’ve noticed the epidemic of military holidays around us.
I can understand that Catholics have a saint for every day of the year. And I’m not shocked that various ancient religions have holidays for a high proportion of the year’s days. But what to make of the United States, which now has a militaryholiday for at least 66 separate days, including Memorial Day, Veterans Day, and lesser known days like the just passed Marine Corps Reserve Birthday?
In the coming weeks we have V-J Day, 9/11 Remembrance Day / Patriot Day, the U. S. Air Force Birthday, National POW / MIA Recognition Day, and Gold Star Mother’s Day. There are, in addition, six week-long military holidays and three month-long ones. May, for example, is National Military Appreciation Month.

This post was published at Washingtons Blog on September 1, 2014.

Goldman’s Special Purpose Tentacle Revealed In Europe’s Latest Bank Failure

The day that Banco Espirito Santo finally crashed and was liquidated nationalized under the weight of its countless criminal “inside the family” fund transfers, money losing loans, and off balance sheet activities, we pointed out to something amusing: the Goldman trail. Because not only was it revealed that in mid-July, two weeks before the Portuguese bank conglomerate failed, Goldman had invested several hundred million into the broken business, but that all through 2014, Goldman had done its best to drag the muppets down with it.
Recall from January 14, 2014 where Goldman said:
Buy BES: Winner at home, recovering abroad
In our view, BES is (1) optimally positioned to gain from Portugal’s banking market evolution and (2) likely to benefit from improving margins in Angola. With the stock trading at a 29% discount to peers’ 2015E P/TBV and with 28% upside to our 12m target price of 1.55, we upgrade BES to Buy.
* * *
Positioning: Looking beyond the crisis – BES best placed
Resilience to asset quality deterioration determined banks’ ability to withstand the effects of the economic and financial crisis. Those effects, however, have their cause in macroeconomic imbalances that led Portugal to ask for financial assistance from the EU/IMF. Addressing those causes will determine the future shape of the Portuguese banking market and the relative positioning of the banks. In this context, we develop a theoretical (and severe) scenario to assess relative positioning in a deleveraging economy: under this scenario, we estimate that Portuguese banks would need to delever by a further 35 bn domestic loans (or 15%) by 2020 to partially reverse the imbalances that contributed to the crisis. This is a top-end assumption and depends heavily on the country’s future macroeconomic performance. In this negative scenario, we show that BES would be best positioned to gain from a ‘race to the bottom’. Our estimate is harsh, but we still believe that it is a good proxy for the underlying trends in the lending market. In this context, even under more benign scenarios, BES is best placed.

This post was published at Zero Hedge on 09/01/2014.

1/9/2014: Irish Manufacturing PMI: August 2014

Irish Manufacturing PMIs released by Markit and Investec today show very robust and accelerating growth in the sector in August. These are seasonally adjusted series, and given this is a generally slower month for activity, acceleration is more reflective of y/y trends than m/m. Nonetheless, the PMI hit 57.3 in August, up on already blistering 55.4 in July, marking the highest PMI reading since December 1999.
Per release: “…output and new orders each rose at sharper rates. This encouraged firms to up their rates of growth in input buying and employment. Meanwhile, input prices fell for the first time in over a year and firms lowered their output charges.”

This post was published at True Economics on September 1, 2014.

Kirk Sorensen: An Update On The Thorium Story

The following video was published by ChrisMartensondotcom on Sep 1, 2014
Two years ago, we interviewed Kirk Sorensen about the potential for thorium to offer humanity a safe, cheap and abundant source of energy.
He is an active advocate for developing liquid fluoride thorium reactor (LFTR) technology, the details of which were covered in our earlier podcast: A Detailed Exploration of Thorium’s Potential As An Energy Source. That interview concluded with Kirk’s observation that the West could have a fully-operational LFTR reactor up and running at commercial scale within a decade, but it won’t, because it is simply choosing not to prioritize exploring its potential.
But that doesn’t mean other countries are ignoring thorium’s promise.
Kirk returns this week to relay what has happened in the thorium space since our last conversation. The East, most notably China, is now fully-mobilized around getting its first reactor operational by as soon as 2020. If indeed thorium reactors are as successful as hoped, the US will find itself playing catch up against countries who suddenly hold a tremendous technology advantage.