Gundlach Reveals His Favorite Trade For 2018

One day after Stanley Druckenmiller confessional to CNBC that as a result of central planning and markets that make no sense, the legendary hedge fund manager had a “terrible” year, and his “first down year in currencies ever” (he also said many not very nice things about bitcoin), it was Jeffrey Gundlach’s turn to confess some of his more controversial views. And so, the man who two years ago correctly predicted the Trump presidency, first discussed his best investment idea for the new year. To those who listened to his latest DoubleLine investor presentation last week, the answer will hardly be a surprise: namely commodities, because they’re “historically, exactly where you want it to be a buy.”
“I think investors should add commodities to their portfolios,” Gundlach says on CNBC’s Halftime Report.
Gundlach said commodities are just as cheap relative to stocks as they were at historical turning points, while the macroeconomic backdrop also supports the case for commodities; he was referring to the following chart which he highlighted last week.

This post was published at Zero Hedge on Dec 13, 2017.

Australian Banks – First The Housing Bubble Bursts, Now A Public Inquiry

We keep returning to the subject of Australia and the growing signs that its bubble economy is bursting. Earlier this month, we discussed how the world’s longest-running bull market – 55 years – in Australian house prices appears to have come to an end. We followed this up with ‘Why Australia’s Economy Is A House Of Cards’ in which Matt Barrie and Craig Tindale described how Australia’s three decades long economic expansion had mostly been the result of ‘dumb luck’.
As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble.
Last week, in “The Party’s Over For Australia’s $5.6 Trillion Housing Market Frenzy”, we highlighted some scary metrics for Australia’s housing bubble – notably how the value of Australian housing is more than four times gross domestic product – higher than other nations with housing bubbles, e.g. New Zealand, the UK and Canada. Two days ago, we noted the number of Australians optimistic about the year ahead had plunged to a record low.

This post was published at Zero Hedge on Nov 30, 2017.

US Futures, World Stocks, Bitcoin All Hit Record Highs

US equity futures continued their push higher into record territory overnight (ES +0.1%), and the VIX is 1.5% lower and back under 10, after yesterday’s blistering surge in US stocks which jumped 1%, the most since Sept. 11, following Powell’s deregulation promise, ahead of today’s 2nd estimate of U. S. Q3 GDP which is expected to be revised up. U. S. Senate Budget Committee sent the tax bull to the full chamber to vote, and on Wednesday Senators are expected to vote to begin debating the bill. It wasn’t just the S&P: MSCI’s all-country world index was at yet another record peak after all four major Wall Street indexes notched up new highs on Tuesday. Finally, completing the trifecta of records, and the biggest mover of the overnight session by far, was bitcoin which topped $10,000 in a buying frenzy which saw it go from $9,000 to $10,000 in one day, and which is on its way to rising above $11,000 just hours later.
In macro, the dollar steadies as interbank traders and hedge funds fade its rally this week; today’s major event will be testimony by outgoing Fed chair Janet Yellen after Powell said there is no sign of an overheating economy; the euro has rallied on strong German regional inflation while pound surges on Brexit bill deal news; yields on 10-year gilts climb amid broad bond weakness; stocks rise while commodities trade mixed.
In Asia, equity markets were mixed for a bulk of the session as the early euphoria from the rally in US somewhat petered out as China woes persisted (recovered in the latter stages of trade). ASX 200 (+0.5%) and Nikkei 225 (+0.5%) traded higher. Korea’s KOSPI was cautious following the missile launch from North Korea, while Shanghai Comp. (+0.1%) and Hang Seng (+-0.2%) initially remained dampened on continued deleveraging and regulatory concerns before paring losses into the latter stages of trade. Notably, China’s PPT emerged again with Chinese stock markets rallied in late trade, with the CSI 300 Index of mainly large-cap stocks paring a drop of as much as 1.3% to close 0.1% lower. The Shanghai Composite Index rose 0.1%, swinging up from a 0.8% loss, with property and materials companies among the biggest gainers on the mainland. The Shanghai Stock Exchange Property Index surged 3.8%, the most since August 2016. The Shenzhen Composite Index was little changed, after a 1.2% decline, while the ChiNext gauge retreated 0.4%, paring a 1.5% loss. In Hong Kong, the Hang Seng Index was little changed as of 3 p.m. local time, while the Hang Seng China Enterprises Index fell 0.3%Stocks in Europe gained, following equities from the U. S. to Asia higher as optimism over U. S. tax reform and euro-area economic growth overshadowed concerns about North Korea’s latest missile launch. The Stoxx 600 gained 0.8%, reaching a one-week high and testing its 50-DMA. Germany’s DAX, France’s CAC, Milan and Madrid were all up between 0.5 and 0.7% and MSCI’s all-country world index was at yet another record peak after all four major Wall Street indexes notched up new highs on Tuesday. ‘It seems to me markets are still trading on the theory that the glass is half full,’ said fund manager Hermes’ chief economist Neil Williams.

This post was published at Zero Hedge on Nov 29, 2017.

As Australia’s Housing Bubble Bursts, Optimism For The Year Ahead Crashes To Record Low

Zero Hedge readers might have noted our increasingly bearish tone on all things Australian – economic that is, since the cricket team just whipped the English in the first test match in Brisbane. The focal point of our concern is the housing market and, earlier this month, we discussed how the world’s longest-running bull market – 55 years – in Australian house prices appears to have come to an end. We followed this up with ‘Why Australia’s Economy Is A House Of Cards’ in which Matt Barrie and Craig Tindale described how Australia’s three decades long economic expansion had mostly been the result of ‘dumb luck’.
As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble.
Last week, in “The Party’s Over For Australia’s $5.6 Trillion Housing Market Frenzy”, we highlighted some scary metrics for Australia’s housing bubble cited by Bloomberg. In particular, we showed how the value of Australian housing is more than four times gross domestic product. This is higher than other western nations, like New Zealand, Canada and the UK, which are experiencing their own housing bubbles. The ratio of house values to GDP in the US seems positively tame in comparison.

This post was published at Zero Hedge on Nov 28, 2017.

Technical Scoop – Weekend Update Nov 19

Weekly Update
‘Bubble, bubbles everywhere, and not a drop to drink…yet’
– Willy Wonka, Willy Wonka & the Chocolate Factory, 1971

‘Money…. Money, Money makes the world go around’
– Liza Minnelli, Joel Grey, Cabaret, 1972

‘There is too much money in the world’
– Lawrence Luhring, New York art dealer, on sale at auction of Leonardo da Vinci’s ‘Salvator Mundi’
Yikes! $450.3 million for Leonardo da Vinci’s ‘Salvator Mundi’ sold on Wednesday night at Christie’s auction, shattering the high for any work of art sold at auction. It far surpassed Picasso’s ‘Women of Algiers’ which fetched $179.4 million at Christie’s in May 2015. It also far surpassed the $127.5 million that Russian billionaire oligarch Dmitry E. Rybolovlev paid for it in 2013. In 1958, the painting sold for 45 because it was believed this was not an authentic da Vinci but merely one done by one of his students. In 2005, an art dealer purchased it for $10,000. There have been numerous questions surrounding its authenticity and the fact that it had at times been restored. The painting dates from around 1500 and is believed to have been commissioned for King Louis XII of France. The current buyer is unknown.
Bubbles, bubbles everywhere. There are bubbles in the stock market, the bond market, the corporate bond market, auto loans, student loans, real estate, government debt, art and collectibles, and yes, Bitcoin! But it also begs the question – why isn’t there a bubble in commodities and especially gold?

This post was published at GoldSeek on 19 November 2017.

Despite Massive Liquidity Injection, Chinese Stocks, Commodities Head For Worst Week Of Year

The PBOC stepped up cash injections this week, suggesting authorities are trying to shore up financial markets as a selloff in bonds spreads to equities… but it is not working!
As Bloomberg reports, the central bank has already added a net 510 billion yuan ($77 billion) via open-market operations into the financial system this week, matching the third biggest weekly injection this year.

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

China Commodities, Stocks Are Tumbling

As we just detailed in great depth, China’s credit growth is slowing at just the wrong time – as exemplified by last night’s economic malaise and bond market weakness – and tonight we are starting to see it ripple through commodity and stock markets…
As we noted earlier, Chinese bonds are breaking key levels as China’s credit impulse begins to weigh…
***
And tonight we are seeing that deleveraging pressure filter through to equity markets…

This post was published at Zero Hedge on Nov 14, 2017.

Comex Gold Sees ‘Another Large Sell’ as Bullish Silver Betting Grows to 7-Week High

COMEX gold contracts recovered a $5 drop against a weakening US Dollar in London lunchtime trade Tuesday, rising back to last week’s finish at $1275 after what analysts called another “large sell” order on the futures market.
Commodities retreated and bond prices edged higher as world stock markets fell again.
Germany’s Dax dropped for the fourth session running after the 19-nation Eurozone released a raft of stronger economic data, led by 2.5% annual GDP growth across the region for the third quarter of the year.
“Speculative financial investors stopped withdrawing from gold and built up net long positions again in the week to 7 November,” says German financial group Commerzbank in a commodities note today, looking at the latest Comex gold derivatives data from US regulator the CFTC.

This post was published at FinancialSense on 11/14/2017.

Macro Plan Still on Track for Stocks, Commodities And Gold

As I’ve been noting again, again, again, again, and again the macro backdrop is marching toward changes. I’d originally thought those changes would come about within the Q4 window and while that may still be the case, it can easily extend into the first half of 2018 based on new information and data points that have come in.
One thing that has not changed is that stock sectors, commodities and the inflation-dependent risk ‘on’ trades and the gold sector, Treasury bonds and the risk ‘off’ trades are all keyed on the interest rate backdrop; and I am not talking about the Fed, with its measured Fed Funds increases. I am talking about long-term Treasury bond yields and yield relationships (i.e. the yield curve).
People seem to prefer linear subjects like chart patterns, momentum indicators, Elliott Waves, fundamental stock picks or the various aspects of ‘the economy’ or the political backdrop. They want distinct, easy answers and if they can’t ascertain them themselves, they seek them out from ‘experts’. But all of that crap (and more) exists within an ecosystem called the macro market. When you get the macro right you then bore down and get investment right. That’s the ‘top down’ approach and I adhere to it like a market nerd on steroids. And with the recent decline in long-term bond yields and the end of week bounce, the preferred plan is still playing out.
So let’s briefly update the bond market picture with respect to its implications for the stock market, commodities and gold.

This post was published at GoldSeek on 10 November 2017.

Global Stock Meltup Sends Nikkei To 25 Year High

The global risk levitation continues, sending Asian stocks just shy of records, to the highest since November 2007 and Japan’s Nikkei topped 22,750 – a level last seen in 1992 – while European shares and US equity futures were mixed, and the dollar rose across the board, gains accelerating through the European session with EURUSD sumping below 1.16 shortly German industrial output shrank more than forecast, eventually dropping to the lowest point since last month’s ECB meeting. Meanwhile soaring iron-ore prices couldn’t provide relief to the Aussie as the RBA held rates unchanged as expected; Oil traded unchanged at 2.5 year highs, while TSY 10-year yields rose while the German curve bear steepened, both driven by selling from global investors.
The Stoxx Europe 600 Index edged lower, erasing an early advance, despite earlier euphoria in stocks from Japan to Sydney, which reached fresh milestones. Disappointing reports from BMW AG and Associated British Foods Plc weighed on the European index as third-quarter earnings season continued. Earlier, the Stoxx Europe 600 Index rose as much as 0.3%, just shy of a 2-year high it reached last week. Maersk was among the worst performers after posting a quarterly loss, saying a cyberattack in the summer cost more than previously predicted. Spain’s IBEX 35 gains crossed back above its 200 day moving average. European bank stocks trimmed gains after European Central Bank President Mario Draghi said that the problem of non-performing loans isn’t solved yet, though supervision has improved the resilience of the banking sector in the euro region. Draghi was speaking at a conference in Frankfurt.
Over in Asia, equities rose to a decade high, with energy and commodities stocks leading gains as oil and metals prices rallied. The MSCI Asia Pacific Index gained 0.8 percent to 171.40, advancing for a second consecutive session. Oil-related shares advanced the most among sub-indexes as Inpex Corp. rose 3.7 percent and China Oilfield Services Ltd. added 4.6 percent. The MSCI EM Asia Index climbed to a fresh record. The Asia-wide gauge has risen 27 percent this year, outperforming a measure of global markets. The regional index is trading at the highest level since November 2007. Hong Kong’s equity benchmark was at its highest since December 2007 as Tencent Holdings Ltd. advanced for an eighth session. Australia’s S&P/ASX 200 index closed at its highest level since the financial crisis.

This post was published at Zero Hedge on Nov 7, 2017.

In Bizarre Warning JPMorgan Says “Beware The Shadow World” As “Speed Of Asset Rally Is Scary”

While the Fed may still be confused by the lack of inflation, if only in the “real economy”, if not in financial assets, increasingly more analysts have realized that what the Fed has done is tantamount to blowing an roaring inflationary bubble, if largely confined to the realm of asset prices. And while we used a Goldman chart to demonstrate this divergence a little over a month ago…
***
… now it’s JPMorgan’s turn to undergo the proverbial epiphany.
In a note from JPM’s Jan Loeys, titled “Financial overheating a problem yet?”, the strategist writes that “growth-sensitive assets, such as equities, credit, cyclicals, and commodities continue to gain and outperform, keeping us comfortably in the Growth Trade. Growth prospects have been rising and accelerating over the past two months from the only slow and dispersed upgrades of the previous 12 months. By now, we are in a full-fledged and globally synchronized move up in growth optimism.” Perhaps, but there is a catch as JPM unwillingly concedes:
The speed of these upgrades and asset price rallies is both exhilarating and scary. The faster we rally, the greater the joy, but the more one should be worried about the eventual reckoning. How far from now is that and what should we do about it?

This post was published at Zero Hedge on Nov 5, 2017.

German Investors Now World’s Largest Gold Buyers

– German gold demand surges from 17 ton-a-year to a 100 ton-plus per year
– 6.8 Bln spent on German gold investment products in 2016, more per person than India and China
– Germans turned to gold during financial crises and ongoing euro debasement
– Evidence of latent retail demand on increased economic concerns
– ‘Gold fulfils an important long-term, wealth preservation role in German investors’ portfolios’

Editor: Mark O’Byrne
***
India and China often grab the headlines as the world’s largest buyers of gold. In 2016 this was not the case.
When measured on a per capita basis it is Germany that takes the impressive crown of largest gold buyer in 2016, all thanks to their investment market. Last year the country set a new personal best, ploughing as much as 6.8bn ($8 bn) into gold coins, bars and exchange-traded commodities (ETCs).

This post was published at Gold Core on November 6, 2017.

Commodities vs. Technology in Trading

Guest post from Paul Somerfield:
In commodity trading, it’s important to take two kinds of technology into account. The first is technology that can affect the underlying price of the commodity and the second is disruptive digital technology that can change the way commodities are traded.
Technology can be a game changer for commodity prices Take oil. A decade ago we were all being told that we’d reached peak oil, and that declining stocks would mean an astronomically high oil price in the future.
Yet, at the time of writing, Brent crude is trading at $61.33 a barrel, way below its peak price. So what happened? Technology happened, that’s what. Advances in exploration and drilling technology meant that oil previously locked up in shale could be mined. An enormous amount of new inventory was able to exploited. So much for peak oil and a crude price nudging $200. Right now, the OPEC producers are trying to get the price so low that the US shale industry calls it a day because it’s not worth the expense of fracking and horizontal drilling to extract the oil.

This post was published at Deviant Investor on November 4, 2017.

Gold Speculators Refuse To Give Up; Another Drop Likely

Normally winter is a good time for gold, with men buying their significant others jewelry for Christmas and lots of New Years Day marriage proposals. Here’s an overview of the dynamic from Adam Hamilton of Zeal Intelligence:
Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year. While seasonality doesn’t drive price action, it quantifies annually-repeating behavior driven by sentiment, technicals, and fundamentals. We humans are creatures of habit and herd, which naturally colors our trading decisions. The calendar year’s passage affects the timing and intensity of buying and selling.
Gold stocks exhibit strong seasonality because their price action mirrors that of their dominant primary driver, gold. Gold’s seasonality generally isn’t driven by supply fluctuations like grown commodities experience, as its mined supply remains fairly steady all year long. Instead gold’s major seasonality is demand-driven, with global investment demand varying dramatically depending on the time within the calendar year.
This gold seasonality is fueled by well-known income-cycle and cultural drivers of outsized gold demand from around the world. And the biggest seasonal surge of all is just now getting underway heading into winter. As the Indian-wedding-season gold-jewelry buying that drives this metal’s big autumn rally winds down, the Western holiday season is ramping up. The holiday spirit puts everyone in the mood to spend money.

This post was published at DollarCollapse on NOVEMBER 4, 2017.

Gold Stocks’ Winter Rally 2

The gold miners’ stocks have largely ground sideways this year, consolidating their massive 2016 gains. That lackluster trading action, along with vexing underperformance relative to gold, has left gold stocks deeply out of favor. But these uninspiring technicals and resulting bearish sentiment should soon shift. The gold stocks are just now entering their strongest seasonal rally of the year, the super-bullish winter rally.
Gold-stock performance is highly seasonal, which certainly sounds odd. The gold miners produce and sell their metal at relatively-constant rates year-round, so the temporal journey through calendar months should be irrelevant. Based on these miners’ revenues, there’s little reason investors should favor them more at certain times of the year than others. Yet history proves that’s exactly what happens in this sector.
Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year. While seasonality doesn’t drive price action, it quantifies annually-repeating behavior driven by sentiment, technicals, and fundamentals. We humans are creatures of habit and herd, which naturally colors our trading decisions. The calendar year’s passage affects the timing and intensity of buying and selling.
Gold stocks exhibit strong seasonality because their price action mirrors that of their dominant primary driver, gold. Gold’s seasonality generally isn’t driven by supply fluctuations like grown commodities experience, as its mined supply remains fairly steady all year long. Instead gold’s major seasonality is demand-driven, with global investment demand varying dramatically depending on the time within the calendar year.

This post was published at ZEAL LLC on November 3, 2017.

Doubling Down on Deflationary Forces

Almost all other forecasters have been looking for a revival of inflation for years. And they still are.
Zeal for Gold
After the Fed bailed Wall Street out of the 2008 financial crisis, and exploded its balance sheet through quantitative ease, many investors, including astute hedge fund managers, foresaw hyper-inflation and charged into gold as the most likely beneficiary. They solemnly quoted Milton Friedman, who said that inflation is driven by central bank-created money, and leaping Fed assets foretold lots more of it. But inflation didn’t gallop, but receded – and with it, gold prices.
But that hasn’t dissuaded the inflation bulls. Wall Street Journal columnist James Mackintosh wrote in the recent September 8 edition: ‘The danger is that the low inflation consensus has grown far too strong, on too little evidence.’ A September 1 Journal headline sums up those folks’ problem: ‘Inflation Still Subdued, Posing a Conundrum.’ They point to the low U. S. unemployment rate, the weak dollar, and stronger growth worldwide, which, they maintain, should intensify demand for commodities and push their prices up. Yet the personal consumption deflator, the Fed’s favorite inflation measure, ex food and energy has been slowing since late last year.

This post was published at FinancialSense on 10/31/2017.

The Big Macro Play Ahead

At NFTRH, we are about major macro turning points above all else. Of course, it is often years between these turning points or points of significant change so we are also about the here and now, and managing the trends, Old Turkey style.*
Since we are all learning all the time, I have no problem admitting to you that while right and bullish on commodities and stocks in 2009, after becoming bullish on the precious metals in Q4 2008, I completely ignored Old Turkey due to my inner biases. The result has been that after taking excellent profits from the precious metals bull, personally, I have greatly under performed the stock market bull despite holding a bullish analytical view for the majority of the post-2012 period.
Undeterred and ever plucky, we move forward. Currently, I play the bullish stock market like millions of other casino patrons, but this is as a trader and portfolio balancer, with the goal always to be in line with the macro backdrop of currency moves (I’ve been very long the US dollar for a few months now) and Treasury/Government bond yields and yield relationships.
This week something happened that has gotten me geeked out like at no other time since Q4 2008, when it was time to put the real precious metals fundamental view (as opposed to commonly accepted gold bug versions) to the test and go all-in. This week, assuming it is confirmed by remaining active through the FOMC next week, we got a short-term signal in Treasury bond yields that starts the clock ticking on a big macro decision point, which may include an end to the stock mania and the beginning of a sustained bull phase in the gold sector, among other things.
But first, we need to understand that the macro moves at an incredibly slow pace and one challenge I have had is to manage what I see clearly out ahead with the extended periods of intact current trend that seem to take forever to change. We as humans (and quants, algos, black boxes, casino patrons and mom & pop) are increasingly encouraged to try to compute massive amounts of information in real time and distill a market view from that at any given time, all at the behest of an overly aggressive financial media that wants to harvest your over exposed, bloodshot eyeballs on a daily, no hourly basis.

This post was published at GoldSeek on 27 October 2017.

Gold Price Rallies as China Fears ‘Minsky Moment’

Gold price losses of 2.0% for the week so far were cut to 1.2% lunchtime Thursday in London, as world equities fell from new record highs and government bond yields rose against a backdrop of fresh geopolitical tensions from Spain to India and China.
After Wall Street set new all-time highs last night, gold priced against the rising US Dollar touched $1288 per ounce as Western stock markets marked the 30th anniversary of October 1987’s Black Monday – the sharpest ever 1-day fall in equities – by falling some 0.7% on average.
Commodities slipped and major government bond prices rose, nudging longer-term interest rates lower.
The weakest UK retail sales data in 4 years meantime saw the Pound retreat to a 1-week low on the foreign exchange market, helping the UK gold price in Pounds per ounce to halve this week’s earlier 1.5% loss to trade at 976.
“From being the most hated developed market currency earlier this year,” says a Hedge Fund Watch from French investment bank Societe Generale, “Sterling is now back in favour” with speculators.

This post was published at FinancialSense on 10/19/2017.

What a Gold-Backed Yuan and Cryptocurrencies May Mean for the Dollar

Amoungst all the crypto news this, and crypto news that, was a tiny item appearing in the Nikkei Asian Review on September 1st. Reporting from Denpasar, Indonesia, Damon Evans wrote, ‘China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry.’
Not bitcoin backed, not ethereum backed, g-o-l-d backed. How low tech of the Chinese. For the moment, oil is priced in dollars, whether it’s Brent or West Texas Intermediate.
Evans explained,
China’s move will allow exporters such as Russia and Iran to circumvent U. S. sanctions by trading in yuan. To further entice trade, China (the world’s largest oil importer) says the yuan will be fully convertible into gold on exchanges in Shanghai and Hong Kong.
This will be China’s first commodities futures contract open to foreign companies such as investment funds, trading houses and petroleum companies.

This post was published at Ludwig von Mises Institute on October 20, 2017.

Europe’s Weight In Gold and Silver

Gold, and silver, have always been valuable. Through upturns in fiat currency, downturns in commodities, and everything in between, the precious metals have always been a useful indicator and base level for the worth of things internationally.
Learn How to Exploit the Gold Frenzy! Far from being the hallmark of huge institutions, like the Federal Reserve, you can take advantage of the evergreen currency to secure your own ‘reserve’.
Why Use Gold?
There have been few occasions where government has been criticized for keeping hold of gold reserves. Quite apart from it, in fact, with the British government panned for selling back in 2002.
Buy Silver Quarters – In Stock, Ships Fast! There has never been a better time in fact, with measures over the world being taken up that can threaten your ‘liquid’ cash flow. Over in Europe, there has been legislation introduced as the EU attempt to prevent bank runs that threatens your ability to withdraw your own cash in the event of adverse economic conditions.

This post was published at GoldSilverWorlds on October 12, 2017.