Algos Saved the Day, but what if Algos Turn Bearish?

Stock market volume is a sadly drooping southward curve, interrupted by spikes. Volumes and turnover rates are now back to levels of the late 1990s. If high-frequency trades and ETF-arbitrage are taken out of the equation, turnover might well be back to where it was in the 1980s. So algorithmic trading – for example, an instant burst of computer-generated buy orders based on a headline that hit a fraction of a millisecond earlier – can have a big impact on the market overall.
Art Cashin, in his ‘Market Commentary’ for UBS on yesterday’s market action – titled, ‘Bulls Turn Tide, Maybe Helped By Artificial Intelligence’ – put his finger on the power of those algo trades.
U. S. stocks followed the lead of European markets and moved lower after a mixed opening. A key negative influence was further weakness in crude, which had Chevron and Exxon subtracting over 20 points from the Dow by mid-morning. Also hurting was a continued ratcheting up of interest rates around the globe.

This post was published at Wolf Street on September 11, 2014.

Paul Volcker: Ultimate Villain

Few historical figures of our recent era have been (falsely) lionized in a more egregious manner than the infamous Paul Volcker. According to the economic mythology written by our Revisionists (i.e. our ‘history’); Volcker almost single-handedly ‘rescued’ the U. S. economy – and thus the entire Western bloc – with the ultra-extreme monetary policies for which he is credited as the architect at the end of the 1970′s.
During 1979 and 1980 the FOMC [Federal Open Market Committee], under Volcker’s leadership, sought to reign in [sic] double-digit inflation by setting strict money supply growth targets… The result of the switch in policy was a substantial rise in interest rates, with the prime rate peaking at 21.5 percent in December 1980.
The reality was that Paul Volcker was a monetary berserker. The task assigned to him by his Masters (the Old World Order) was not to ‘save’ our economies – but to destroy them. In a recent commentary; Darryl Schoon identifies what Paul Volcker really represented:
In August 1971, at the urging of Paul Volcker, then Under-Secretary of the Treasury, President Nixon ended the convertibility of the dollar to gold; and for the first time in history gold was no longer money…
Paul Volcker took full responsibility for triggering capitalism’s end game. In a 2013 interview, Volcker explained his role in that consequential act with more than a modicum of pride: ‘I certainly was a major proponent of suspending gold convertibility, in fact the principal planner.’ [emphasis mine] As all sophisticated readers understand; it was the assassination of the gold standard (by Nixon/Volcker) which instigated the runaway inflation of the 1970′s – as all of our currencies were no longer ‘backed’ (i.e. anchored) by any hard asset. Thus even if one actually believed the mythological account of Volcker’s exploits as written by the Revisionists; the best that could be said of this bankers’ stooge was that he was trying to fix a problem which he created.

This post was published at BullionBullsCanada on 10 September 2014.

Watching The Flows

So here we are. It’s September 10 and things sure don’t look any better than they did at the end of May. For that matter, things don’t look much better than they did at the end of December, either. What’s left? Is there any remaining hope for a rally into year end? Can the metals at least eek out a positive return for 2014?
As you know, I’ve been out the past two days. It was great to look away for a while but, unfortunately, I made the mistake of not completely looking away. What did I see whenever I checked? Just more of the same. With the overnight selloff back on 9/1, The Cartel Monkeys managed to break the 200-day moving average in gold and all we’ve seen since is Spec selling of longs and adding of shorts. Of course, The Cartel Banks have been using all of this Spec selling to cover their own naked shorts. As you know, that’s by design. The Banks now thoroughly dominate these paper markets and it appears that they will continue to do so for at least the foreseeable future.
Think back to how this has all played out in 2014. Twice, Spec interest has flown into the long side of gold (and silver) and twice The Cartel Banks have acted dramatically to first cap price and then smash it back down.
First, after beginning the year at $1200, gold rallied smartly through January and February. It finally broke through and above it’s primary long-term trendline on March 14 when it closed at $1382. It opened higher still on Sunday the 16th and traded as high as $1392 before the Cartel offensive began. Price was routed over the next two weeks as it fell by over $110. The Spec shorting/selling and Cartel covering/buying then continued all the way to a bottom in late may at $1240.

This post was published at TF Metals Report on September 10, 2014.

Foreclosure Activity Picking Up – Just In Time For Market Collapse

‘[Foreclosure activity] is reason to wake up and realize the housing recovery we’ve seen over the past two years is not as strong as it might have seemed.’ Daren Blomquist, RealtyTrac
Beginning in the Fourth quarter of fiscal 2013, we have experienced a leveling in demand that continued through the second quarter of fiscal 2014 and has more recently become a weakening in demand. – Major homebuilder CEO
The housing market is collapsing. The big investors have stepped away and, now, flippers done: All-Cash Sales Fall to Six-Year Low. The demand-side of the market is in collapse.

This post was published at Investment Research Dynamics on September 11, 2014.

How The UK Would Look Like Without Scotland

One quick look at the map of the UK shows the biggest impact a loss of Scotland would have on the Divided Kingdom (f/k/a UK) of England, Wales and Northern Ireland, should the “Yes” vote in the Scottish referendum garner a majority in one week:
In case it’s not obvious, the answer is territory. For better or worse Scotland is blessed with one of the lowest population densities in the developed world, with its 5.3 million citizens living spread across almost 79,000 square kilometers. This represents some 32% of the U. K.’s current land. As the WSJ compares, with about 165,000 square kilometers of land, the new U. K. would come close to the size of Tunisia – while currently it is bigger than Romania or Belarus.
But how else would a Scottish departure impact the UK? Here are the answers courtesy of the WSJ:

This post was published at Zero Hedge on 09/11/2014.

20% of this entire industry just lost their jobs. Time to buy?

September 10, 2014 Santiago, Chile
Jim Rogers is easily one of the smartest and most successful investors I know.
And one of his seemingly endless pearls of wisdom about investing is that sometimes the best thing to do is absolutely nothing.
Sit on the sidelines, and wait until the opportunity is so obvious the money is just lying there in the corner waiting to be picked up.
You don’t become really successful (in investing or otherwise in life) by doing what everyone else is doing. Following the herd is a sure-fire way to mediocrity.
It’s important to keep this in mind as the stock markets keep on hitting new all-time highs almost on cue, week in, week out.
It’s perverse what investing in public markets has largely become – gambling whether stock prices will go up or down based on what a cabal of unelected central bankers is going to do, say, or merely whisper.

This post was published at Sovereign Man on September 10, 2014.

Ira Epstein’s Gold Report

For a number of months I’ve been telling you that the next catalyst for gold was the combination of a rising US Dollar and rising US interest rates. It’s a fate de complete concerning the rising Dollar against most world currencies. As for US interest rates, very quietly if you’re not watching the markets as I do, they’re slowing beginning to rise. Today there was talk about a report published by the San Francisco Federal Reserve saying that rates will rise sooner than expected due to improved US economic data. A clue if that’s correct will come when the Federal Reserve meets at the next FOMC meeting and changes the wording concerning interest rates staying low for a long period of time.
As you already know the Ukrainian situation and threats of increased sanctions by the US and Europe has done nothing to support gold prices. If anything, gold has plunged to new break lows from this year’s high and looks like last year’s low near $1180 might be challenged.
The next event that might impact gold is the vote in Scotland for independence from the United Kingdom. The vote’s outcome is too close to call according to the latest Scottish polls. All of England’s bigwigs began touring Scotland yesterday trying to convince the Scots to stay within the UK, with the exception of Queen Elizabeth. If the outcome of the vote is yes, to breakaway, that will act as a catalyst for Catalonia to call for a vote for independence from Spain.
What this might do is cause gold to rally as a yes vote not only would not be good for England but it would have ramification in Spain, a Eurozone member. The Eurocurrency is probably headed into the mid 120′s as it is. A yes vote for Scottish independence might be the trigger for the low 120′s in the Euro, which would propel the Dollar even higher.

This post was published at GoldSeek on 11 September 2014.

Strong 30 Year Auction Ends This Week’s Treasury Issuance

If yesterday’s tailing 10 Year auction left people concerned that today’s final for the week 30 Year bond issuance would be weak, then the results put that promptly to rest, after the $13 billion reopening of Cusip RH3 priced at 3.24%, pricing 2.3 bps through the 3.263% When Issued. Furthermore, the Bid to Cover if 2.67 was above the August 2.60, well above the TTM average of 2.40, and the second highest of 2014, second only to June’s 2.69. The internals were very solid as well, with Directs taking down 21.8%, above the 16.8% average, Indirects holding 45.5%, in line with last month and above the TTM average of 43.4%, and Dealers left with 32.8% of the paper which they can quickly flip back to the Fed for the next 6 or so weeks until QE ends (before it has to resume once again of course).

This post was published at Zero Hedge on 09/11/2014.

Dollar-Yen Pumps Then Dumps As Kuroda Punks Algos

Sometimes we wonder what world Japanese leaders live in. This morning’s mind-blowing lies and propaganda from BoJ chief Kuroda show one thing and one thing only – Japan has reached Europe’s Juncker moment – “it’s serious enough that one has to lie.” But it’s the market’s reaction to his every word that is whipsawing JPY around and running algos wild as first he said more QE is to come then rejected it saying there is no need for more QE now..

This post was published at Zero Hedge on 09/11/2014.

Full European Commission Statement On Next Round Of Russian Sanctions

From Europe’s Chief Haiku Officer, Herman van Rompuy (now that he is president only in legacy terms, replaced by the guy who will lie – and allegedly drink – every time it gets serious):
Statement by the President of the European Council Herman Van Rompuy on further EU restrictive measures against Russia The set of measures adopted on Monday will enter into force on Friday 12 September 2014.
At the same time, it is my understanding that the Permanent Representatives Committee (COREPER) before the end of the month will carry out a comprehensive review of the implementation of the peace plan on the basis of an assessment carried out by the European External Action Service (EEAS).

This post was published at Zero Hedge on 09/11/2014.

Initial Jobless Claims Surge Most Since June

For the 2nd week in a row, initial claims missed expectations and on the heels of last week’s dismal payrolls data (which was “unbelievable” according to the smartest people in the room) it surged to 315k – the highest since June. Perhaps most critically, on both an adjusted and unadjusted basis, initial claims are highher year-over-year (SA 315k vs 307k, NSA 234k vs 229k respectively). Is this noise? It has been 7 weeks now from the mid-July lows… and the 4-week-average many look at, has risen for 4 of the last 5 weeks.
Trend change?

This post was published at Zero Hedge on 09/11/2014.

Strong US Dollar Weakens Gold Prices This September

Last week I wrote about the historic correlation between the month of September and the strength of gold. Now it appears that this September might be shaping up as one not to remember but forget.
Based on data reaching back to 1969, gold rises 2.1 percent on average in September. Ten days into this year’s month, however, the precious metal has lost 2.6 percent, slipping from $1,288 to $1,254.

As I pointed out last week, a dip such as this might be common in other months, but it’s somewhat rare in September. In the last 20 years, there have been only five Septembers in which gold prices ended lower than they started at: 1996, 2000, 2006, 2011 and 2013. Although we remain optimistic, 2014 might see another such down September.

This post was published at Gold-Eagle on September 10, 2014.

Ruble Plunges To Record Low As US Stocks Give Up Scotland “No” Poll Gains; Bond Yields Sliding

Well that didn’t last long. The late-day exuberance inspired by a small sample size poll of Scottish independence voters has been entirely removed as America went back to war, the West prepares (boomeranging) new sanctions for Russia, and US macro data showed weakness (and for once bad news appears to be bad news). AUDJPY is in charge of stocks so far (as USDJPY fades back from 107). The Ruble has tumbled 4 days in a row and is now at record lows against the USD. Treasury yields are sliding this morning, as is the USD and gold is bouncing back modestly from early weakness…
Stocks lose yesterday’s gains…

This post was published at Zero Hedge on 09/11/2014.

China Holds ‘Gold Congress’ – Positioning Itself As Global Gold Hub, ‘In China, Gold Is Money’

China Gold Congress in Beijing

The China Gold Congress is currently in full flight in Beijing. The three day Congress is China’s biggest gold industry event of the year, drawing in participants from across the Chinese and international gold sectors including central banks, mining companies, bullion banks and refiners.
The event, co-sponsored by the World Gold Council (WGC) and the China Gold Association, showcases China’s gold industry and acts as a focus point for what is now the world’s largest gold market in terms of demand and product innovation.
Discussions and forums during the event cover everything from reserve asset management for the official or central banking sector, through to investment products and mining supply. One of the key themes this year is the internationalisation of the gold market.
China’s gold market accounts for one third of global demand, and according to the WGC, is expected to grow another 20% cumulatively from now until the end of 2017.
In what is still a very centrally planned economy despite many market related reforms, nearly all reported gold activities in China flow through the Shanghai Gold Exchange (SGE) in one form or another.
Both the China Gold Association and the Shanghai Gold Exchange were established with government backing and their growth and success reflect a very deliberate pro-gold strategy on the part of the Chinese Government.
Even though the China Gold Association is a non-for-profit member association, it still primarily acts as a conduit and coordination group between the government and the gold producers.
The Shanghai Gold Exchange is the government’s second central hub in China’s gold market.
SGE approved refiners take in production from China’s fragmented gold mining industry and in imports from Hong Kong and other countries.
The gold then flows through the Exchange after which SGE deliveries flow out to the banking sector, the official government sector, and additionally to the jewellery and technology industries.
The development of the Shanghai Futures Exchange also provides an additional venue for hedging and gold price discovery.
In China gold is money and is accepted as such by the general population.
There really does not seem to be a debate about this in Chinese government circles, and another part of the government’s strategy has been to advocate the increased innovative usage of gold by the Chinese banking sector.

This post was published at Gold Core on 11 September 2014.

Will Europe’s woes hurt the U.S. economy?

The U. S. economy has so far shown remarkable resilience in the face of several roadblocks year. It has shrugged off the threat of wars in Ukraine and the Middle East, has ignored the tapering of QE, and has been generally unfazed by every other obstacle in its path, whether real or imagined. Now, however, another threat looms in the horizon and poses a much bigger threat than previous challenges.
Europe’s economic slowdown has weighed on the global economic outlook all year. More recently it looks like several countries in the euro zone may even be headed into deflation. Investors worry that deflation in Europe could spill over onto U. S. shores and ruin what has been an impressive recovery up until now.
One reason for Europe’s lagging performance is the size and scope of its welfare state. Economist Ed Yardeni observes that in Europe, ‘There are too many government regulations and regulators, and not enough startups and entrepreneurs. Labor markets remain too rigid.’ He also points out that Europe’s bankers aren’t lending, while capital markets remain ‘relatively limited’ sources of capital. The region is also highly dependent on Russian gas, and, unlike the U. S. has made no effort at developing domestic sources of energy.
While credit is plentiful in the U. S., it remains much tighter in the euro zone. According to Yardeni, over the past 12 months through May, short-term business credit rose to a record-high $2.0 trillion in mid-August in the U. S. In the euro zone by contrast, bank credit is down 2.2% over the past 12 months through June.

This post was published at GoldSeek on 10 September 2014.

Keiser Report: De-Dollarization (E652)

The following video was published by RT on Sep 11, 2014
In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss ‘de-dollarization’ and ‘dumb’ bills which would reverse the ‘Truth in Lending’ Act. In the second half, Max interviews Jerome Booth, author of ‘Emerging Markets in an Upside Down World,’ about sanctions, emerging market investments and the Argentine default.

Dimitri Speck: Platinum’s price is suppressed like gold’s and silver’s

Analysis by market analyst and GATA consultant Dimitri Speck shows that the platinum market is manipulated just as the gold and silver markets are, largely through futures contract sales keyed to the morning and afternoon platinum price fixings.
Speck writes: "There have long been hints that systematic manipulation of gold and silver prices via the futures markets is taking place — also during the fixing. Due to the many similarities, it seems likely that the futures market also plays a decisive role with respect to manipulation of the platinum fixing.
"The one-sided direction of the fixing manipulations over many years is conspicuous. Conventional manipulations can be excluded as a possible reason. These could, for instance, have the goal of creating profits for option writers or other holders of securities tied to a benchmark. However, in such manipulations, one would expect that prices would be manipulated to the upside just as often as to the downside. This is, however, not the case with platinum, and neither is it the case with gold and silver.
"Thus, the manipulation of the platinum fixing, similar to that in gold and silver, amounts to systematic price suppression."

This post was published at The Hedge Fund Journal

Bank of Japan Buys Government Debt at Negative Yield

Tuesday marked another milestone in the topsy-turvy world of monetary easing in Japan: The Bank of Japan bought short-term Japanese government debt at a negative yield for the first time, according to market participants.
The BoJ scooped up some of the three-month No. 477 Treasury bill, which has traded at a negative yield for the past two trading days amid strong demand, the market participants said.
Normally, people who buy debt expect to get their money back plus some interest. Negative yield means the buyer gets back less than he or she puts in.
Why would the Bank of Japan buy under such conditions?  Traders said the bank wanted to show the market that it would meet its asset purchase goals–literally at whatever the cost.

This post was published at Wall Street Journal

Futures Slide On Renewed Catalan Indepdence Jitters, Disappointing Chinese Inflation

Following yesterday’s confusing exuberance, which saw the sluggish market rise in the last hours of trading as the latest Scottish poll showed a reverse of the “Yes” momentum (and fading Gartman’s latest reco of course), overnight European jitters have re-emerged once more following a speech by Catalonia’s Artur Mas, who has long pushed for independence of the region, and who said that while there are different ways Catalonia can vote, the important issue is that Catalans vote somehow. Mas says Spanish govt will likely try to block Catalan vote “the reasons why the central government is blocking the vote are political not legal”, which in turn has once again brought attention to Europe’s artificial, unstable and temporary political and monetary union, which threatens a reversion of the nightmare days from 2012 when Mario Draghi was promising he would do everything in his power to send the EUR higher (as opposed to now).
Additionally, the latest inflation data overnight from China, with the CPI missing expectations of 2.2% to just 2.0%, while producer prices contracted once more, this time by 1.2%, down from -0.9% and below the 1.1% consensus, which was a record 30th consecutive month of PPI declines in China, signaling overcapacity in China’s factories and weaker commodities prices.. The main driver, as we have been noting recently, was the clobbering in the commodity sector but also lower food prices. And while deflation for a country which creates a little under a trillion in new loans per quarter is an absolute disaster, BofA was quick to point out the silver lining: “Benign inflation in August and probably September should allow adequate room for further policy easing including targeted monetary easing.” Great: so more of the same monetary stimulus which has failed to fix the world for the pastr 6 years will be unleashed and this time everything will be fixed.
And while US equity futures are broadly lower for now, this time something is different because even as the USDJPY soars to new multi-year highs touching 107.14 moments ago, this time it has failed to pull TSY yields higher with it, and as a result treasuries gain for first time in six sessions with the 10Y yield trading at 2.514%, rising through both 50-DMA (2.467%) and 100-DMA (2.527%) this week amid speculation Fed may be closer to signaling rate increase.

This post was published at Zero Hedge on 09/11/2014.