$NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages.
- Bank of America advises owning gold
- Markets in "Twilight Zone" transition period
- Fed policy normalisation poses risks
- Own gold and cash to protect against "cleansing drop in asset prices"
- Data show markets disconnected from reality
- Fragile system vulnerable to shock
- Gold is hedge against systemic risks
Gold is a regarded as a hedge against market turbulence by Bank of America who, in a note to clients, advised holding gold and paper currency at this time.
Bloomberg report that Bank of America Merrill Lynch describe the markets as being in a "Twilight Zone" - the zone between the end of QE and the Fed beginning to raise rates to try to bring normality back into the markets.
The note highlights two problems with raising rates which are prolonging this sojourn in the Twilight Zone. The first is that the real economy in the U.S. is not currently strong enough to withstand a rise in interest rates.
The second is that raising rates could cause a shock to the markets and the economy as the practically free money juicing the markets comes at a more realistic cost and some government, corporate and household debts become unserviceable.
For these reasons, Bank of America believe that the Fed is far from taking action to return the markets to normality and "the investment backdrop w ...
NEW YORK (Reuters) - Five of the world's largest banks, including JPMorgan Chase & Co and Citigroup Inc, were fined roughly $5.7 billion, and four of them pleaded guilty to U.S. criminal charges over manipulation of foreign exchange rates, authorities said on Wednesday.
According to the latest CAT retail sales data, Caterpillar has now reported an unprecedented 29 months of declining global retail sales, with the month of April seeing a 16% Y/Y collapse in China (after a 25% plunge in 2014 and a 20% plunge the year before), while Latin America just suffered an epic 44% Y/Y crash, the biggest going back to 2009, after a 28% drop the year before.
Or as far as the industrial and heavy equipment bellwether is concerned, the emerging markets (or BRICS) are in an unprecedented economic collapse.
To put Caterpillar's ongoing second great depression in context, during the Great Financial Crisis, CAT suffered "only" 19 months of consecutive retail sales declines. As of April 2015, this number is now 29, and there is no hope in sight of seeing an annual rebounce any time soon.
Following last night's 5.2 million barrel inventory draw reported by API, crude prices surged once again (bouncing off levels before the first inventory draw at the end of April). Consensus appears confused since Bloomberg median estimates were for a 1.75mm draw while survey respondents expected a 3.82 million barrel draw this morning. DOE data showed a disappointly lower than API, 2.67 million barrel draw - which initially sent crude prices tumbling... machines bid them back, and now they are plunging again. Production dropped 1.2% overall - its biggest weekly drop since July 2014.
3rd weekly inventory draw in a row...
And production plunged by the most in 10 months...
Which sent crude falling - then soaring - then dumping...
Retracing gains post API - as it appears the market was disappointed that the DOE draw was not as big as API had predicted
Li Hejun began the day as either China's second-richest man according to Forbes, or richest, according to the Hurun Report (China's version of the Forbes rich list) and Le Figaro, with a fortune worth more than $30 billion. By 11am, his net worth was amazingly cut by half, and he was almost $14 billion "poorer" as shares in Li's flagship Hanergy Thin Film plunged by 47% in Hong Kong before trading was suspended - due to Li's absence at the company's annual meeting.
While four months of supercharged stock gains were eviscerated in minutes, it was not a surprise to everyone, as one analysts called Hanergy "a disaster waiting to happen," noting that the company is working with "unproven" technology and has disclosed few details about the work that underpins its valuation.
Two prominent families are digging into their pockets to finance the initial stages of a $4 billion project in North Miami. Lenders these days are remaining picky when it comes to backing land acquisition and improvement, the riskiest part of development.
We have all read the latest crop of media articles challenging gold's investment relevance. The typical approach to bearish gold analysis is to attribute hypothetical fears to gold investors, and then point out these concerns have failed to materialize. Sprott believes the investment thesis for gold is a bit more complex than simplistic motivations commonly cited in financial press. We would suggest gold's relatively methodical advance since the turn of the millennium has had less to do with investor fears of hyperinflation or U.S. dollar collapse than it has with persistent desire to allocate a small portion of global wealth away from traditional financial assets and the fiat currencies in which they are priced.
At Sprott, we are amazed that gold's role as a productive portfolio-diversifying asset is still questioned by so many. During the past decade-and-a-half, gold has posted the most consistently positive performance of any global asset, yet is still scorned by consensus. What part of gold's track record is so difficult to understand? Figure 1, below, outlines performance of spot gold in nine global currencies during the past 15 years. Despite widely divergent monetary and financial conditions, the performance of gold since 2000 has significantly exceeded any asset class with which we are familiar. How could such an admirably performing asset continue to elicit such broad indifference?
Now that the S&P 500 Index has more than tripled from March 2009 lows, the investment world is once again replete with portfolio gains from U.S. equities. We recognize few asset classes can challenge the pedigree of the S&P 500 Index, and even fewer investors would consider gold on par with the S&P 500 as an important
FIGURE 1: ANNUAL PERFORMANCE OF SPOT GOLD IN NINE GLOBAL CURRENCIES (2001-2015) [BLOOMBERG]
A little over one year ago, Europe did not like the fact that it was stuck in a perpetual recession so it did something about it: it arbitrarily raised the GDP number by hundreds of billions in estimated "growth" when it added the "contribution" from prostitutes and drug dealers, and hey presto: GDP jumped in every European country (alas, Greece has since descended once more into recession).
In the US, where the populist outcry to such an arbitrary "sinful" strategy to boost GDP would not work, especially not so recently after the US itself revised its own historical GDP higher by about $500 billion when it retroactively added the benefits of intangibles, trademarks, and changed the way pensions were capitalized, economists have been stumped how to rejigger numbers which refuse to comply with central-planning's "best "intentions of boosting not only the S&P to record highs, but also the economy which somehow crashes every time there is snow in the winter.
Which brings us to the most recent idiotic proposal, one which had been hinted at several months ago by the Chicago Fed, and which has gotten significant prominence in recent days after the San Fran Fed came out of the closet, and said it's not its fault it has been perpetually wrong with its permabullish forecasts (unlike the Atlanta Fed of course, whose impartial, unbiased, numbers-driven model has been spot on): it is the seasonal adjustments. Or rather, lack of a second seasonal adjustment. Because, you see, the "big thing" in economics right now is that seasonally-adjusted economic data is simply not seasonally-adjusted enough!
One wonders if the Fed looked at the Q3 GDP print of +5% with the same alarm, and said the number was too high so clearly it is time to apply a "summer seasonal adjustment" reduction to outlier numbers... to the upside ...
Bond yields are leaking higher, The USDollar is flat (but noisy), but with no macro data to spark a momo run, US equities have tumbled out of the gate... especially Dow Transports. Dow & S&P are back to unchanged on the week...
BTFD? Well we are sure the FOMC Minutes wil lbe spun dovishly.
Trannies are in trouble again - Down 6% YTD... worst start to a year since 2009 (Dow Up 2.8%)
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