• Tag Archives ETF
  • Gold Market Morning: July-27-2017: rising despite heavy U.S. gold ETF sales!

    Gold Today – New York closed the day before yesterday at $1,248.40. London opened at $1,262.00 today.
    Overall the dollar was weaker against global currencies, early today. Before London’s opening:
    – The $: was weaker at $1.1728 after the day before yesterday’s $1.1654: 1.
    – The Dollar index was weaker at 93.50 after the day before yesterday’s 93.97.
    – The Yen was unchanged at 111.25 after the day before yesterday’s 111.25:$1.
    – The Yuan was stronger at 6.7377 after the day before yesterday’s 6.7506: $1.
    – The Pound Sterling was stronger at $1.3138 after the day before yesterday’s $1.3031: 1.
    Yuan Gold Fix
    The reaction to the Fed’s inaction not just on rates but on the timing of the contraction of the Fed’s Balance Sheet, interrupted the gold price relationship between global markets. New York closed at the same level as Shanghai yesterday, but London opened at just $2.50 below Shanghai’s trading level this morning. The price differentials between the global markets were nearly eliminated on the back of the Fed’s inaction. We look today to see just how global markets interact and to see if they are really narrowing their differences.
    If you had been following our commentary in the Gold Forecaster newsletter on China and the shift of pricing power to the east, you would not have been tempted to sell your holdings of gold or silver!

    This post was published at GoldSeek on 27 July 2017.

  • Demand for Physical Gold Up, Supply Down in First Half of 2017

    It’s easy to get caught up in what the Fed will do next, or the latest political brouhaha in Washington D. C. And of course, this stuff matters. But when it comes to gold, you should never lose sight of fundamentals.
    Nothing is more fundamental than supply and demand. Based on the GFMS Gold Survey 2017 H1 Update Outlook, the fundamentals for gold are trending in a positive direction. Demand is pushing upward, while supply is falling.
    Demand for physical gold rose to 1,895 tons in the first half of 2017, a 17% increase over the same period last year.
    Comparing the first and second quarter of this year also reveals an upward trend. Demand climbed in Q2 2017 to 957 tons. That was up from 938 tons in Q1, a 2% increase.
    Meanwhile, total supply dropped 5% in the first half of the year. Mine output was stagnant, falling by 0.2%. Production dropped precipitously in China and Australia, the world’s number one and number two producers. The amount of scrap gold also fell, helping to drive the decline in supply.
    In many ways, the demand increase signals a return to normalcy after a tumultuous 2016.
    After the rollercoaster ride of events for the gold market in 2016, from a jewelers’ strike to Brexit to Trump to demonetization, 2017 has avoided similar dramatic events in the first half, at least from a gold perspective with far right candidates seeing little success in a range of European countries. Indeed the first half of this year has arguably been more of a reversion to normality across much of the gold market, with neither the highs (of ETF demand) or lows (of truly pitiful Asian demand) that were recorded in the first half of 2016 being repeated.’

    This post was published at Schiffgold on JULY 27, 2017.

  • Are We There Yet? Here Is Howard Marks’ “Bubble Checklist”

    As first reported yesterday, in his latest nearly-30 page memo, a distinctly less optimistic Howard Marks – hardly known for his extreme positions – “sounded the alarm” on markets by laying out a plethora of reasons why investors should be turning far more cautious on the risk, and summarizing his current view on the investing environment with the following 4 bullet points:
    The uncertainties are unusual in terms of number, scale and insolubility in areas including secular economic growth; the impact of central banks; interest rates and inflation; political dysfunction; geopolitical trouble spots; and the long-term impact of technology. In the vast majority of asset classes, prospective returns are just about the lowest they’ve ever been. Asset prices are high across the board. Almost nothing can be bought below its intrinsic value, and there are few bargains. In general the best we can do is look for things that are less over-priced than others. Pro-risk behavior is commonplace, as the majority of investors embrace increased risk as the route to the returns they want or need. Among the items on Marks’ of the items, the one we focused on yesterday, had to do with Marks recurring warnings on ETFs and passive investing. To be sure, he also covered pretty much everything else from equities, to the record low VIX, to FAANG stocks, to record tight credit spreads, to EM debt, to PE and even Bitcoin.

    This post was published at Zero Hedge on Jul 27, 2017.

  • Gold Market Morning: July-25-2017: Gold consolidating above $1,250

    Gold Today – New York closed yesterday at $1,257.20. London opened at $1,253.00 today.
    Overall the dollar was weaker against global currencies, early today. Before London’s opening:
    – The $: was slightly weaker at $1.1654 after yesterday’s $1.1650: 1.
    – The Dollar index was slightly stronger at 93.97 after yesterday’s 93.94.
    – The Yen was weaker at 111.25 after yesterday’s 110.76:$1.
    – The Yuan was almost unchanged at 6.7506 after yesterday’s 6.7503: $1.
    – The Pound Sterling was slightly weaker at $1.3031 after yesterday’s $1.3041: 1.
    Yuan Gold Fix
    New York closed $0.50 higher than Shanghai on yesterday with London opening $7 lower than Shanghai. This keeps open arbitrage opportunities with Shanghai. Once again Shanghai is pointing the way higher for New York and London.
    Sales from the SPDR gold ETF become available for shipping to Shanghai implying that should U. S. investors want to return to physical gold they will have to pay up for it.
    Silver Today – Silver closed at $16.40 yesterday after $16.48 at New York’s close Friday.

    This post was published at GoldSeek on 25 July 2017.

  • SWOT Analysis: Silver In the Spotlight

    The best performing precious metal for the week was silver, up 3.34 percent as investors loaded up on ETFs that purchase the physical metal, perhaps speculating that silver would outperform gold if the latter rallied. Gold traders and analysts remained bullish this week, for the fifth week, as the European Central Bank keeps its stimulus going, reports Bloomberg. In addition, as the dollar slumps amid an investigation into President Trump, gold heads for the first back-to-back weekly advance since early June, another Bloomberg article reads. Gold bulls are keeping their faith in the metal, reports Bloomberg, as the equity rally pares the yellow metal’s gains. Gold bulls have pointed to slow inflation and Fed concerns that asset prices look ‘somewhat rich.’ Similarly, a Bank of America Merrill Lynch survey shows fund managers are growing hesitant to buy U. S. equities. Jason Mayer of Sprott Asset Management says that the non-stop bull market has led to a lot of complacency where managers aren’t hedging. ‘Once that tide turns, that could prove to be bullish for gold and precious metals,’ Mayer said. After President Trump’s economic revitalization agenda once again faltered, the U. S. dollar fell to an 11-month low this week, reports Bloomberg. Opposition to Trump’s health-care reform bill, along with European shares dropping amid earnings disappointments, sent gold to its highest level this month.

    This post was published at SilverSeek on July 24, 2017.

  • Why VIX ‘Acceleration Events’ And Extreme Short Interest Signal “Clear Path To Uglier Scenarios”

    VIX ETFs and ETNs
    We take a deeper dive into the strange world of VIX ETFs and ETNs. We take a quick look at the incredible short interest in both the long VIX products and the short VIX products. This massive short interest in both long and short products seems unique to the VIX world (it reflects a re-balancing trading strategy that works in the VIX space because of the high volatility of the VIX products) (VIX ETFs seem to run 5 to 10 times the realized volatility of the S&P 500).
    Then we dig into the prospectus for each of the 4 funds I focus on (VXX, UVXY, XIV and SVXY).
    What is important is the Acceleration Event in XIV. The language from the prospectus seems clear that if the VIX Short Term Futures Total Return index moves 80% in a day, then XIV has to unwind. While an 80% move in a single day is very unlikely, I believe that the lower VIX goes, the easier it is for it to occur (VIX at 8 only needs to jump to 14.4 in a day for this to occur), because these VIX products make a ‘mistake’ in my view of converting changes in VIX to percentage changes to provide returns (the VIX futures do not do that for example).
    The problem with an XIV acceleration event is two-fold – all of the hedges (short futures positions it has) will need be covered, just as the market is struggling. The second order problem is that many investors who have been waiting for a spike in VIX to sell volatility won’t have an outlet. If you planned to buy XIV on a VIX spike and it isn’t there, what do you buy? It is far less clear what sort of trigger mechanism SVXY has (that is something we are looking into).

    This post was published at Zero Hedge on Jul 23, 2017.

  • When Is A P/E Not A P/E: How To Turn Nasdaq’s 90x Into 22x In 3 Easy Steps

    Having previously exposed the greatest trick the market has pulled on Biotech investors in the past – What Is The PE Of The iShares Biotech ETF? It Depends On Whether You Read The Fine Print – it appears investors need another lesson in reality versus perception.
    As Horizon Kinetics puts it so eloquently – It’s One Thing to Not Know, It’s Another to Be Told What Isn’t So “So, in reality one knows that an unprofitable company makes an investment more expensive, while in the world of indexation, such as in the QQQ, unprofitable companies are lower.”
    Unpacking a Mainstream Index, the NASDAQ 100
    First, the Label
    The essential value of an index is that it is a passive form of investing, the opposite of active management. The active manager’s results are dependent upon security selection; in contrast, indexation’s foundational intent is that the results will derive from broad exposure to a vast array of securities; that no individual security will dramatically impact the result – the entire idea is to avoid company?specific risk.

    This post was published at Zero Hedge on Jul 23, 2017.

  • Market “Paralysis” Confirmed – Squeezed Shorts And Anxious Longs Are Fleeing Stocks

    For the last two years, short interest in the US stock market’s largest ETF has collapsed as bears have been squeezed back to their lowest level of negativity since Q2 2007 (the prior peak in the S&P). But, there’s a bigger issue – despite record highs and ‘no brainer’ dip-buying, anxious longs have dumped S&P ETF holdings for four straight months – the longest streak since 2009 – seemingly confirming Canaccord‘s recent finding that “it’s not complacency, it’s paralysis.”
    Bearish investors say they are scaling back on these bets not because their view of the market has fundamentally changed, but because it is difficult to stick to a money-losing strategy when it seems stocks can only go up.
    ‘There seems to be an overall view that people are invincible, that things will always go up, that there are no risks and no matter what goes on, no matter what foolishness is in play, people don’t care,’ said Marc Cohodes, whose hedge fund focused on shorting stocks closed in 2008.

    This post was published at Zero Hedge on Jul 22, 2017.

  • No More “Cash On The Sidelines”: Private Client Cash Levels Drop To Record Low

    One can finally put all references to “cash on the sidelines” in the trash can, not only for purely logistical reasons (when someone buys a stock, the seller ends up with the cash), but also from a purely cash allocation basis. According to the latest BofA flow show report, Michael Hartnett writes that as of the latest week, private client cash – i.e., high net worth individuals, or those who still allocate capital to single-stocks and ETFs on a discretionary basis (unlike the broader US public which has long ago given up on the stock market), is now at a record low, taking out the cash levels observed in the period just prior to the last market peak in 2007: “GWIM cash allocation % AUM falls to all-time low of 10.4%.”

    This post was published at Zero Hedge on Jul 21, 2017.

  • Trader Tells ‘New’ Volatility-Sellers: “Come On In, The Water’s Warm”

    By now most of us are fed up with hearing apocalyptic warnings of the coming VIX disaster when all the nave short sellers will be squeezed in an epic 2008 style equity crash. Either you buy this argument, or you don’t. No sense wasting too much more time on it. I am of the opinion that for all the uninformed XIV buyers (the short VIX ETF), there are stacks of VXX longs desperately trying to catch the next great VIX rise. But, who knows? I might be wrong, and I definitely am not privy to the extent of institutional equity index volatility selling, so maybe there truly is a massive weak short position whose comeuppance will soon be laid bare for everyone to see.
    But yesterday I had dinner with a buddy who passed along some interesting information that caught me by surprise. He is a unique individual. A former derivatives broker who didn’t trade with pension funds and other typical institutional clients, but instead specialized in high net worth individuals and non-traditional corporations. His clients could definitely be described as sophisticated, but with an entrepreneurial, non-traditional flare.

    This post was published at Zero Hedge on Jul 21, 2017.

  • The “Wipeout Scenario”: 250% Losses If VIX Spikes To 20

    How Bad a Damage If Volatility Rises: The Bear Trap of Short Vol ETFs
    As if there was any need for any more threats to financial stability in a world overburdened with debt facing rising interest rates on bubble valuations in both bonds and equities, within an environment dominated by economic policy shifts and political gridlock, there is a potential bear trap right in today’s most fashionable investment products, which risks deflating fast: Short Vol Exchange-Traded Notes and, more broadly, volatility-driven investment vehicles. In this note we will discuss briefly the former. A full analysis and access to our data room is available upon request.
    Years of Central Banks’ hyper-activism, financial repression and regular bail-out of financial assets led to a collapse in volatility, and the ensuing investment mania in volatility-driven strategies: risk parity funds in primis, vol-levers of all types, but also exchange-traded notes directly linked to volatility. Among these, Short Vol ETFs have grown relentlessly, oftentimes including leveraged plays, oftentimes sold to retail, fully or partially un-aware of how quick wipe-out-type risks can materialize on such products, and how close we got to such wipe-out risks. For the purposes of our scenario analysis, we will define a wipe-out risk as one of losing more than 75% of the original investment.
    We find that the total size for vol-linked ETFs, after leverage and Beta-adjusted is almost $40bn.

    This post was published at Zero Hedge on Jul 20, 2017.

  • Investors Are Pouring Money Into Silver ETFs

    Silver, known for being a market of extremes, is living up to its reputation this year.
    Prices rallied 17 percent in the first four months of the year, only to reverse and wipe out those gains. Despite the selloff, investors are pouring money into exchange-traded funds, and assets have reached a record 21,211 metric tons, valuing the holdings at $11 billion. At the same time, the picture is bearish in the futures market, where hedge funds now hold the first net-short position in two years.
    Different kinds of investors are driving the opposing trends, according to George Coles, an analyst at research firm Metals Focus Ltd. Large, active hedge funds shorted Comex futures because of the risk of higher U.S. interest rates, driving silver prices lower, he said. ETF buyers tend to be smaller traders that use silver for long-term diversification of their portfolios. They’ll be rewarded for their bullishness as slower U.S. economic growth spurs demand for haven assets, Coles said.
    “This may be a case of the smaller investors versus the big guys,’ Coles said in a phone interview from London. ‘In this case, the smaller guys may be right.’
    He’s predicting that silver prices have probably bottomed and will rebound from current levels. Prices will reach $20.25 an ounce in the next 12 months, an increase of 25 percent from the current value of $16.164.

    This post was published at bloomberg

  • Bloomberg Silver Price Survey – Median 12 Month Forecast Of $20

    – Bloomberg silver price survey – Large majority bullish on silver
    – Silver median ’12 month-forecast’ of $20
    – Precious metal analysts see silver ’24 percent rally from current levels’
    – Investors are pouring money into silver ETFs
    – Speculative funds bearish even as ETF assets rise to record
    – Spec funds being bearish is bullish as frequently signals bottom
    – Important to focus not just on silver price but on silver value
    – ‘Important to note that all portfolios under all conditions actually perform better with exposure to gold and silver’ – David Morgan (see video)
    From Bloomberg:
    In a Bloomberg survey of 13 traders and analysts, the majority were bullish. 11 people said silver prices would rise and two predicted declines.
    Among the seven respondents that provided estimates, the median 12-month forecast was $20 – indicating a 24 percent rally from current levels.

    This post was published at Gold Core on July 18, 2017.

  • 30-Year EM Veteran Fears “The Most Illiquid Market Conditions I’ve Ever Seen”

    Low market volatility spurred a ‘torrent’ of capital flows into emerging-market debt, reflecting investor complacency and ‘excessive risk taking,’ Bank of America Merrill Lynch strategists led by David Hauner in London wrote in a report last week. He warned that the second half of the year should bring challenges for lower-rated issuers as higher interest rates in the U. S. reduce some of the appeal of junk credits with relatively steep interest rates.
    ‘The market is at a point where we haven’t hit a real bump in the road to wake everyone up.’
    And they are not alone. Since entering the world of emerging markets nearly three decades ago, Robert Koenigsberger, who oversees $6 billion as chief investment officer at Greenwich, Connecticut-based Gramercy Funds Management, has seen more than his share of changes. One of the most consequential, BloombergQuint.com reports, is the migration of allocators from hedge funds to exchange-traded and mutual funds in recent years.
    That’s effectively made ETFs one-day liquidity vehicles, versus the 90-day instruments leveraged funds typically offer, which, as Koenigsberger explains simply means:

    This post was published at Zero Hedge on Jul 17, 2017.

  • ‘Investors’ Haven’t Bought Tech Stocks Like This Since Bernanke Hinted At QE2 In 2010

    Investors piled $2.7 billion into QQQ (the benchmark ETF tracking the Nasdaq 100 Index) in the five days through July 14 as shares in the fund posted their biggest advance this year.
    As Bloomberg notes, the biggest weekly inflow since September 2010 came as the tech-heavy index – with megacaps Apple, Amazon, Facebook, and Alphabet among its largest members – rebounded to within 1 percent of its record high.

    This post was published at Zero Hedge on Jul 17, 2017.

  • There Has Been Just One Buyer Of Stocks Since The Financial Crisis

    When discussing Blackrock’s latest quarterly earnings (in which the company missed on both the top and bottom line, reporting Adj. EPS of $5.24, below the $5.40 exp), CEO Larry Fink made an interesting observation: ‘While significant cash remains on the sidelines, investors have begun to put more of their assets to work. The strength and breadth of BlackRock’s platform generated a record $94 billion of long-term net inflows in the quarter, positive across all client and product types, and investment styles. The organic growth that BlackRock is experiencing is a direct result of the investments we’ve made over time to build our platform.”
    While the intention behind the statement was obvious: to pitch Blackrock’s juggernaut ETF product platform which continues to steamroll over the active management community, leading to billions in fund flow from active to passive management every week, if not day, he made an interesting point: cash remains on the sidelines even with the S&P at record highs.
    In fact, according to a chart from Credit Suisse, Fink may be more correct than he even knows. As CS’ strategist Andrew Garthwaite writes, “one of the major features of the US equity market since the low in 2009 is that the US corporate sector has bought 18% of market cap, while institutions have sold 7% of market cap.”
    What this means is that since the financial crisis, there has been only one buyer of stock: the companies themselves, who have engaged in the greatest debt-funded buyback spree in history.

    This post was published at Zero Hedge on Jul 17, 2017.

  • Net Neutrality: The Liars Need To Be Locked Up

    The last couple of days have been so-called days of action on so-called “Net neutrality” and now a veritable trove of large “consumer” corporations have joined the fray — Amazon, Facebook and (of course) Netflix among them.
    It’s time to cut the crap on all of this — every one of these firms simply wants to shove their costs down your throat, whether you use their services or not.
    That’s what this is really about, you see.
    It’s obvious with Netflix, of course, but less-so with the others. Facebook, for example, has to deliver advertising — including high-bandwidth video advertising — to make money. To do that someone has to pay for the transport of the data from their servers to your computer or phone.
    Who pays?

    This post was published at Market-Ticker on 2017-07-13.

  • Dead Malls of America: The Retail Apocalypse Deepens

    We’re kicking off the trading week with another brutal day for the retail sector.
    There’s nothing worse than a group of stocks trending lower during a roaring bull market.
    These poisonous retail stocks emit a radioactive glow. Even a novice investor can’t miss these losing positions draining the gains from his brokerage account.
    Traditional retailers and the ‘mall stocks’ are having a downright terrible year. The S&P Retail Index ETF (NYSE:XRT) is down more than 11% so far this year after pushing to new lows on Monday. For comparison, the S&P 500 is up more than 8%.
    Investors flipped the switch in 2017. No one wants anything to do with the traditional retailers. The divergence couldn’t be more clear…

    This post was published at Wall Street Examiner on July 11, 2017.

  • Investors Are Dumping Emerging Market Debt At A Record Pace

    Having warned that Emerging Market debt risks had hit 10-year lows (despite soaring uncertainty) and EM equity risk had hit record lows (amid record inflows), it seems the lagged impact of the collapse in the China credit impulse is finally being recognized as the largest EM Debt ETF (from JPMorgan) just suffered its largest outflows in history…
    As a reminder, in the run-up to this dumping of EM assets, expected uncertainty in Emerging Market Equities has never been lower… (in fact EEM implied vol is now less than half its lifetime average of 29.7%)
    What was even more stunning than investors’ tolerance for these risky issuers is how little compensation they’re demanding in return. Emerging Market bonds were pricing in the least ‘risk’ since Dec 2007…
    The disconnect is a result of historically low interest rates worldwide — notes in Japan, Germany and France have negative yields — as well as what skeptics see as investors’ complacency as they pour into index-based funds without scrutinizing their holdings.

    This post was published at Zero Hedge on Jul 12, 2017.

  • So what’s happening to gold – and silver? — Lawrie Williams

    What a difference a week or two makes in gold sentiment – and in silver which has fared even worse with the gold:silver ratio running close to 80 again at one point – a level which usually is at the top end of the comparison and would seem to signify a great buying opportunity for silver bulls – but is it? Gold sank to $1204 before making a small recovery, and silver to $15.07 before making a slightly larger one (in percentage terms at least.) Prices do seem to be clawing their way back upwards at the time of writing, but is this just a blip in a continuing downtrend? As I write, gold is at $1214 and silver at $15.60.
    No doubt the dastardly bullion banks with their huge short positions in both precious metals are being seen as the principal culprits. Certainly trading volumes have been far higher than one would expect, particularly at the tail end of last week, but as usual these are paper gold (and silver) transactions driving the markets, but this time aided by sales of physical metal out of the big ETFs. Gold and silver bulls feel that the end-game is nigh and the big bullion banks (of which JP Morgan comes in for particular stick) will switch tack and drive prices back up again making mega profits on metal they have bought on the cheap. But is this just wishful thinking – no-one really knows. Second guessing the big banks is a mug’s game. JP Morgan, for example, always seems to come out on top in its trades – far more so than normal balanced financial markets would suggest. No wonder there is ever-continuing talk of blatant market manipulation by the big guys.

    This post was published at Sharps Pixley