We’ve Entered the Twilight Zone in Oil

Why this is Not the Time to Chase Oil Stocks. By Dan Dicker, Oil & Energy Insider: We’ve entered the twilight zone in oil, where rumors and financial moves in outer markets are affecting oil and the stocks we’ve accumulated, making trading these markets not only difficult, but dangerous. We’ve got to stay disciplined and focused in this tough market and stay away from some tempting, but ultimately destructive ‘opportunities’.
Oil has put together a strong four day rally, pushing Brent prices above $50 a barrel again. But we must realize where this strong response from oil has come from before we foolishly attempt to leverage that move into good opportunities in oil stocks.
First, another meeting from OPEC and non-OPEC members has been tentatively scheduled for September, to discuss another production cut. Both the Russian oil minister and Saudi sources have floated some positive outcomes might come from these discussions. Khalid Al-Falih has said the Saudis would ‘take any action to help the market rebalance’, and yet the Saudis have also pushed their production in August to the highest level ever – 10.9m barrels a day.

This post was published at Wolf Street on August 21, 2016.

Optimistic Channel Charts

Buy low! Sell high!! That market advice is infallible, if only we can guess what prices are low and high. My way to make those guesses for myself is to extrapolate previous market action into a projection of where prices may go in the future. That is a long winded way to say I draw lines on a chart. The lines that are most useful to me are channels that form with lines through market lows and highs. For example, here is a logarithmic scale chart of gold this year.

This post was published at GoldSeek on Sunday, 21 August 2016.

How Beverly Hills Billionaires Built A Water Empire In California With Taxpayer Money

Beverly Hills Billionaires Stewart and Lynda Resnick control an agricultural empire in the Central Valley of California which Forbes values at $4.2BN. According to an article recently published by Mother Jones, the Beverly Hills based couple bought their first acres of ag land in 1978 as an inflation hedge. Within 20 years the Resnicks had grown to be the largest producer/packager of almonds and pistachios in the world with 130,000 acres of land in the Central Valley and nearly $5BN in annual sales. You’re all probably familiar with some of their brands:

But 130,000 acres of permanent crops requires a lot of water…about 120 billion gallons a year, in fact. At that level of consumption, Mother Jones points out that the Resnicks consume more water than all the homes in Los Angeles combined.

This post was published at Zero Hedge on Aug 20, 2016.

The Federal Reserve Rate Policy Disaster Will Hit These Groups the Hardest

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
Federal Reserve rate policy has dominated headlines this week following the release of the July FOMC minutes on Wednesday, Aug. 17. They indicated Fed officials have mixed opinions on whether or not they should raise interest rates in 2016.
The Fed has kept interest rates low since the recession, but this loose monetary policy is damaging the economy.
In fact, according to Money Morning Capital Wave Strategist Shah Gilani, today’sFederal Reserve interest rate policy is a disaster waiting to happen.

This post was published at Wall Street Examiner by Diane Alter ‘ August 19, 2016.

The 3 Big Stories NOT Being Covered – Part III

My Two Cents
By Andy Sutton and Graham Mehl
The third and final (for now) portion of this series might be a tad anticlimactic. If so, we apologize. Most people know America is in debt beyond comprehension. A small subset of people understand that the numbers published by the government are missing a whole bunch of important items and use accounting methods that would land most business people in prison. An even smaller subset understands the idea of generational accounting.
What we are going to discuss this time around is not the long-term situation, but rather the medium to short-term situation because some really bad things are going to take place within the next 5-7 years absent major, MAJOR policy changes. At that point, the policy changes will have to be drastic since our government fiddled while Rome burned for the last 3 decades.
If you take nothing else away from this article, understand that our ‘leaders’ – of all political affiliations and stripes – KNEW this was going to be the result if they did nothing, yet that’s precisely what they did. The blame game this time around ought to be one for the ages, however a well-informed populace can short-circuit the traditional mudslinging by inserting the following statement: ‘You all knew. You knew and you did nothing. You are guilty of dereliction of duty. You failed your constituents and your country. ALL of you.’ The few statesmen of the group of 535 will be echoing what we just said above. Former Congressmen and Senators who tried to warn their colleagues and the American people will be echoing the above sentiment. The guilty ones will play the blame game. The media will enable it and create an ‘emergency’, which will give the government cover to do something that the establishment that owns most of our leaders has wanted for some time now – the nationalization of the retirement system, means testing, higher taxes, a continued decline in the standard of living, and further debt accumulation.

This post was published at GoldSeek on Sunday, 21 August 2016.

Irrational Exuberance Is Back… And Even The Fed Is Worried

Authored by John Authers, originally posted at The FT,
Markets are extravagantly confident that brokers are too bearish, and that their profit forecasts for US companies are too low. The multiple of 18 times next year’s projected earnings at which the S&P 500 currently trades, according to Bloomberg data, allows little other interpretation. It is at its highest since 2002, outstripping any level it reached during the credit bubble, or when the Federal Reserve was pumping up asset prices with QE bond purchases.
There are other signs that optimism on earnings is taking hold. For a while, the S&P has been dominated byhigh dividend-yielding stocks. This is a sensible strategy when you do not have faith in corporate profitability or growth. In the past few weeks, however, the S&P 500 Dividend Aristocrats index has started to lag behind the market. Classic income-producing sectors, such as utilities and real estate investment trusts, have also ceded leadership.

This post was published at Zero Hedge on Aug 20, 2016.

Doug Noland’s Credit Bubble Bulletin: The “Neutral Rate”

This is a syndicated repost courtesy of Credit Bubble Bulletin. To view original, click here. Reposted with permission.
‘The neutral (or natural) rate of interest is the rate at which real GDP is growing at its trend rate, and inflation is stable. It is attributed to Swedish economist Knut Wicksell, and forms an important part of the Austrian theory of the business cycle. The neutral rate provides an important benchmark for policymakers to compare with the market rate. When interest rates are neutral the economy is on a sustainable path, and it is deviations from neutrality that cause booms and busts.’ (Financial Times/lexicon)
‘Wicksell based his theory on a comparison of the marginal product of capital with the cost of borrowing money. If the money rate of interest was below the natural rate of return on capital, entrepreneurs would borrow at the money rate to purchase capital (equipment and buildings), thereby increasing demand for all types of resources and their prices; the converse would be true if the money rate was greater than the natural rate of return on capital. So long as the money rate of interest persisted below the natural rate of return on capital, upward price pressures would continue… Price stability would result only when the money rate of interest and the natural rate of return on capital – the marginal product of capital – were equal.’ ‘Wicksell’s Natural Rate’, Federal Reserve Bank of St. Louis Monetary Trends, March 2005

This post was published at Wall Street Examiner by Doug Noland ‘ August 20, 2016.

ANOTHER BILLIONAIRE GOES ALL IN ON THE ‘BARBAROUS RELIC’ GOLD WHILE MAINSTREAM MEDIA REMAINS SILENT

Billionaire Crispin Odey recently released a management letter to his hedge fund clients praising gold and explaining gold products constituted the next, great investment wave.
He is yet another in a wave of billionaires who have all, suddenly, been moving massive portions of their portfolio into gold… with one of the latest being George Soros, who moved a significant amount of his portfolio into gold just a few months ago.
It is quite likely that both of these individuals are familiar with TDV’s Shemitah and Jubilee Year analysis. That’s not to say they read TDV (of course they may – and should), but they understand the larger, secretive events associated with these occult timelines. That may be in fact one reason why Soros and other billionaires have been acting this year to realize gold positions. And why Odey, too, has now moved in that direction.
The two men move in the same, elitist circles. Soros provided Odey with his first large investment stake, reportedly of some $150 million, when Odey set up his initial hedge fund in the early ’90s. And Odey was briefly married to a daughter of Rupert Murdoch and is now married to Nichola Pease who is reportedly related to one of the founding families of Barclays Bank.

This post was published at Dollar Vigilante on AUGUST 20, 2016.

Precious Metals Markets: Zoom Out

When looking at the short term minute charts things look very volatile in the precious metals complex but the further you look back in time the less volatile the price action becomes. If one is a day trader then the minute charts are the ones to focus in on but if you’re an intermediate term trader perspective is everything.
Looking at the five year weekly combo chart below the precious metals complex has been building out a beautiful uptrend since the January 2016 low. There is nothing on any of these three charts that suggests a top is in place and it’s time to sell. The thin black dashed horizontal lines taken from the previous highs is our first line in the sand for support. Note the left side of the chart and how the thin black dashed horizontal lines held resistance when they were broken to the downside which is bear market action. What we have since January is bull market price action.

This post was published at GoldSeek on Sunday, 21 August 2016.

Why Gold Is Going Higher (In 6 Charts)

Submitted by Stephen McBride of Mauldin Economics via ValueWalk
6 Charts That Show the Number One Reason Gold Is Going Higher
Asset prices are at all-time highs around the world. Since 2008, assets under management have increased by a whopping 43%. The reason? Institutional investors have been taking advantage, gobbling up all they can get.

This post was published at Zero Hedge on Aug 20, 2016.

The Week in Review: August 20, 2016

Monday marked the 45th anniversary of Richard Nixon’s closing of the gold window. As Paul-Martin Foss noted, the result since has been dramatic inflation as central bankers loss the last remaining shackles imposed by the Bretton-Woods gold-exchange standard. It was this action that helped usher in the modern age of economic hedonism, as central bankers have become enablers to debt-addicted government. Of course, the same politicians who fundraise from “low info voters” using the boogeyman of income inequality are often the biggest cheerleaders for the inflation that helps drive it. As long as policy decisions are driven by politicians who desire a ‘third way,’ instead of understanding the unique insights of Ludwig von Mises and the Austrian school, we’ll continue to see disastrous policy.

This post was published at Ludwig von Mises Institute on August 20, 2016.

“Seven Signs Of A Deeply Dysfunctional Market” – Why Citi Is Also Warning Of “Surprising, Sudden, Intense” Tail Risk

In his latest letter, Elliott Management’s Paul Singer reached new levels of bearishness, warning that the “bond market is broken”, the loss of confidence from the failure of central bank actions “could be severe” and that “the ultimate breakdown (or series of breakdowns) from this environment is likely to be surprising, sudden, intense, and large.”
* * *
Overnight, one of the best credit analysts, Citi’s Matt King, followed up on Singer’s gloomy observations with a presentation showing seven signs why markets are deeply dysfunctional, highlighting the numerous “broken relationships” that have emerged as a result of central bank meddling, “from profits to political uncertainty, and spreads to standard deviations, traditional market relationships are being turned on their heads” and admits that “yes, it’s monetary policy we demonstrate is driving everything. And yet here too, there are worrying signs of what may become a breakdown.”
For the benefit of those who are still stuck trading in the “market” we present King’s entire must read presentation “Seven signs markets are deeply dysfunctional”, which we doubt will lead to smarter investing decisions, will at least provide some perspective on what we have dubbed since 2009, is a thoroughly broken market, something even the WSJ recently admitted.

This post was published at Zero Hedge on Aug 20, 2016.

Dow Theory Throws Up A Warning Flag

This is a syndicated repost courtesy of The Felder Report. To view original, click here. Reposted with permission.
A version of this post first appeared at The Felder Report PREMIUM.
While investors celebrate new highs in the major stock market indexes there is one fly in the ointment that nobody seems to be paying much attention to. In fact, many are hailing the breakout to new highs as the start of a new bull market but students of history and more importantly students of Dow Theory are not so sanguine.
Charles H. Dow, founder of the Wall Street Journal and Dow Jones & Company, was one such avid student of the markets and market history. In a number of editorials published in the Journal, he outlined many of the truisms he discovered through his many years of research. One of those has since been dubbed, ‘The Dow Theory.’ Wikipedia explains:

This post was published at Wall Street Examiner on August 19, 2016.

What’s Next for the Price of Gold After This Week’s Fed Minutes

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
The price of gold was closely watched this week as traders awaited the release of the July FOMC meeting minutes on Wednesday. The minutes were expected to provide clarity on possible moves in interest rates.
Instead, we got more fuzziness. Policymakers agreed additional economic data is still needed before deciding on an interest rate hike. Apparently, some officials are itching for an increase soon.
After the minutes came out, gold prices and the U. S. dollar headed in opposite directions. The gold price pushed higher, while the dollar was pulled lower.
Still, the price reactions for both assets remained rather muted, leaving us little clarity of where both are headed this year.

This post was published at Wall Street Examiner on August 19, 2016.

Trump Protesters Turn Violent In Minneapolis: Jump On Motorcade; Spit On Donors

Protestes at a Trump fundraiser at the Minneapolis Convention Center grew violent overnight as “some fundraiser attendees were pushed and jostled, spit on and verbally harassed as they left the convention center” according to the Star Tribune. Trump’s fundraiser got off to a late start as he made a last-minute stop in Louisiana to survey damages from the recent flooding.
The demonstration was organized by the Minnesota Immigrants Rights Action Committee. One protester was quoted as saying:
‘You’ve got somebody out there saying things that used to only be said in the shadows. I think what he’s saying represents something pretty dangerous for our country.’

This post was published at Zero Hedge on Aug 20, 2016.

Investor Complacency Is Smashing Records

Submitted by Dana Lyons of J. Lyons Fund Management
Near-term volatility expectations are currently on a stretch of unprecedentedly low levels.
About a month ago, we began to take note of investor complacency creeping into the stock market. At the time, the major averages had recently broken out to all-time highs amidst strong breadth readings and favorable seasonality. Thus, such complacency, or optimism, was arguably warranted. As such, our take was that the positive price action and participation was certainly enough to override the budding excessive bullishness. We have seen that, in such circumstances, sentiment extremes can persist for an extended period of time before any negative consequences unfold. Indeed, the markets have continued to creep higher ever since, along with investors’ optimism. At this point, however, sentiment is getting to the point where it is a legitimate red flag, in our view. In fact, by one measure, the market has never witnessed a stretch of such investor complacency.

This post was published at Zero Hedge on Aug 20, 2016.

Drama Kings: SF Fed’s William Hawkish On December Rate Increase (Prob Rises Above 50%)

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
I remember Alan Meltzer’s speech at the National Association of Realtors calling for Fed transparency and adhere to a monetary rule (like a Taylor Rule) to give everyone an idea of what is happening with regard to monetary policy.
Instead, we have Fed Board members (and former board member) slinging their opinions which adds to confusion … and volatility. Particularly strange since the Fed Funds Target rate has been increased just once since June 2006 (that is, one rate increase in TEN YEARS).

This post was published at Wall Street Examiner on August 19, 2016.

The Impossible Italian Job

The Italian Banking Crisis would complete Europe’s ‘Doom Loop.’ Italy’s repeated attempts to stave off a full-blown financial crisis and breathe life back into its moribund banking sector can be summed up in four words: too little, too late.
In April, it set up a bad bank vehicle called Atlante that was expected to bail out the country’s most troubled lenders as well as allay growing fears of a systemic crisis within the financial sector. With just 5 billion of funds to its name, it did neither.
Cue Plan B, which saw the EU in June grant permission for Italy to use ‘government guarantees’ to create a ‘precautionary liquidity support program for their banks’ worth 150 billion. On the surface it seemed like a lot more money, but in the end it amounted to little more than a PR stunt. The stampede out of Italian banks barely missed a beat [As Fears of ‘Bank Run’ Escalate, Italian Banks Get 150 Billion Bailout of Empty Promises].

This post was published at Wolf Street on August 20, 2016.

Hedging against inflationary money

US interest rates have been held fairly low for quite some time now. The Federal Reserve (Fed) last raised its rate by 0.25 to 0.50 percent on 16 December 2015, but that was but a temporary reprieve. Rates’ long-term backslide has since resumed.
The situation in the USA is emblematic of interest rates in many currency areas these days. Borrowing costs have hit rock bottom or close to it. Ten-year government bond yields in Germany and Japan, for example, recently plunged into negative territory.
Consequences
The global decline in interest rates has consequences. For one, it drives up asset prices. Take, for instance, the stock market. Future cash flows are being discounted at a lower rate, thereby pushing up firms’ present value and thus their stock prices.
What’s more, lower interest rates reduce firms’ borrowing costs. For leveraged firms, this means higher profits, and their stock prices should benefit strongly: Higher cash flows are discounted at lower interest rates.

This post was published at Mises Canada on AUGUST 18, 2016.