31 January 2017

Stocks and Precious Metals Charts - FOMC Rate Decision Tomorrow

Gold and silver moved sharply higher today as the US dollar gave up more of its recent gains.

There was overnight commentary on the large number of Comex deliveries for the February gold contract. The gold does not go anywhere for the most part, but it does get shoved around the plate for leverage.

In other words, at the moment the precious metals are running as a paper cross trade with currencies, with actual bullion playing a minor role at best. While this is not uncommon, it is not exactly in synch with the actual physical supply and demand flows in the Asian markets. When speculation disconnects from the physical markets for long enough, we eventually get a jarring reversion.

Stocks gave it up a little, with Washington and Wall Street getting edgy over Trump and his initial executive actions, as needlessly distorted as some of them might be by the friends of Wall Street in the corporate media. The status quo has ruled the roost in this country pretty well for the past 20+ years. Now that they are not handing down pre-ordained policy outcomes, they are not sure what to do. It is like a guy who has been trading on insider information for years suddenly having to figure out exactly what the markets are saying.

The next four years are sure to be interesting.

The FOMC will be announcing their latest rate decision tomorrow. Let's see if the metals can hold close to their most recent upper trendline impact as you can see on the charts.

Most likely is an announcement that the Fed will be slowly winding down some of their reinvestment program as rates continue rising. I am not so sure they will actually do anything except for jawboning.

There seems to be a lot of that going on in Washington these days.

Have a pleasant evening.

30 January 2017

February Comex Gold Comes In With a Bang

Deliveries on February Comex Gold contracts came in with a bang.

Silver, not so much.

The customers were disgorging positions, with a huge one coughing it up at JPM.

Let's see if the metals can finally put together a breakout over this stubborn overhead resistance.

As large as this 'delivery' might be for Comex, it is still relatively peanuts compared to the physical markets of Asia.   That is where the action is.

Stock and Precious Metals Charts - The Dark Night of the Soul

“Be kind, for everyone you meet is carrying a heavy burden.”

Ian MacLaren

“There is not a moment in which God does not present Himself under the cover of some pain to be endured, of some consolation to be enjoyed, or of some duty to be performed. All that takes place within us, around us, or through us, contains and conceals His divine action. All simple souls must admire and respect one another, saying: 'Let us each proceed along our path to the same goal, united in purpose and by means of God's order which, in its great variety, is in us all.'”

Jean-Pierre de Caussade

The Trump trade blinked a bit today, as stocks gave up some of their phenomenal gains on doubts about the presidential ban on visitations from seven countries which had been identified by the prior administrations as high risk locations for terrorists.

While this act was sweeping and lacked finesse, operationally clumsy to say the least, the reaction to it was just about as dramatic, including tears. Well, that's politics in the 21st century. And I am sure we will see much more of this sort of thing over the next few years.

We are going to learn more about ourselves than we may have expected. There is nothing new in this; it is the particular experience of about every other generation and their own 'rendezvous with destiny.' How can we be content when the choices are between the 'lesser of two evils.' They are both evil, and many including me are not happy about it— but it is what it is.

Gold and silver were struggling to make some gains, and ended the sessions largely unchanged. Stocks managed to claws back some of their earlier losses. What a surprise.  The warehouses are pretty much in a lockdown on the Comex.  I find it to be rather uninformative compared to the real markets in Asia which unfortunately are a bit more opaque.

Remember that Wall Street has some seriously large stock IPOs lined up on the runways, and will attempt to hold it together until it can get them off the field and airborne.

Then we will see how the winds may blow.

Longer term patrons of Le Cafe may remember Steve Meyers, who provided commodity commentary on youtube videos that we linked to from here from time to time. As it turns out, Steve has written a book just out called, The Greatest Trade: How Losing It All Became Life's Biggest Blessing.

As so many others, I knew Steve only through his current work, and from the emails we exchanged from time to time on various subjects. I had no idea that Steve had had a rather dramatic introduction into trading futures and commodities some years before. This book starts at the point at which the young trader took 'the big hit,' to the point of losing the family farm, and seriously contemplating suicide in his despair.

What I find engaging about this is that one would have never suspected he had gone through this sort of thing if you spoke with him years afterwards. He was about as calm and level headed a person as one might find.

And the other thing that is remarkable is that most traders will brag about their wins, but rarely if ever admit to their losses. Indeed, unless you are trading on advantaged information, most professional traders will take the 'big hit' now and then, especially when they have had an exceptional run of good fortune.  I am certainly no exception to this, being all too human.

But in this case Steve not only admits it, but takes us into his personal dark night of the soul, and how this turned out to be a redefining moment for him, an experience that changed his life for the better.

I wish him well, and I hope he can help others who have 'screwed up' in various ways, suffered setbacks, and have trouble coping with it, and gathering themselves together to move forward.

We are all imperfect and at times broken people, to some extent and in our own ways, even though there are some who cannot admit it, even to themselves.  And we can find commonality not only in our suffering and setbacks, but more importantly in our response to them.  This is our lot.

Whether it may be divorce, drugs, betrayals, heartbreaks, serious illness, deaths in the family, bad deals, or whatever, what matters is what we do with them.  These are the 'talents' that we are given, along with all the skills, friends, hard work and good fortune, and it is our job to make something with them.

If you have never lost you are probably not really playing the game, yet.  Come what may, what matters most is what you do with it, all of what life brings that shapes who you are.  You can try to deny it, to retreat into drugs, alcohol, narcissism, abusive relationships and the like, overloading your sense to dull the pain—  but you can never really escape it.

I have a small painting hanging in my study, that was given to me by a good friend, teacher, and mentor, long passed away many years ago.   He used to say to us, in all of life's confusions, keep your minds and your hearts focused on the one thing in life that never changes, the immanent presence of God in the Incarnation, the 'little white spot.'

So we may as well use it, all of it, all our experiences, to make the best of life for ourselves and especially for other people and His creatures, even if it is only in our simplicity as we are, in our loving acceptance of a higher power that loves us despite our own weakness and imperfections.

If you would have a worthy purpose in life, feed His little ones, the least of these, through whatever small ways and acts of kindness that you can.

Have a pleasant evening.

29 January 2017

Drug Prices in the US vs. Canada - The Big Pharma Political Connection of Corporatist Democrats

This is a slide used by Bernie Sanders when he proposed making drug imports from Canada to the US legal.

The proposal was voted down in the Senate 52-46, with a few key Democrats helping overturn Bernie's proposed legislation.

Among those voting against it was the recipient of big pharma campaign contributions Democratic rising star Cory Booker.

Booker used the Big Pharma talking point that 'the bill did not include provisions requiring the protections of the FDA.'

Oh really?  We think that the Canadian government's regulation of medicine is weaker than in the US?   Please, Cory, tell us exactly where they fall down on the job.

And oh by the way, most it not all of those drugs are the same drugs being sold in the US by the same manufacturers, so the point could be moot.  Just allow the imports of drugs the FDA has already approved.

But a real solution, which appears to be far too much for our pampered plutocrats, would be to repeal the US law that prohibits Medicare from negotiating drug prices as is done by the government health services in Canada. But I would not expect the US political establishment to seriously consider overturning that sweet monopoly deal with the drug companies.

Not as long as Big Pharma can keep holding that SG&A level around 45 percent, compared to 25 percent or less of most other industries.  There is a lot of money being spent there to motivate doctors and lawmakers in the drug industry.

And then there is the 'balance billing' racket where hospitals toss in enormous zingers to your medical bills by using doctors and test labs that are not in your network, for which you get little to no insurance coverage, or insanely high deductibles.  And you have no knowledge of their choice in advance.

New York state has passed a ban on this.  But most other states have not.

The current US healthcare system is like a protection racket.  It is dominated by monopolist behemoths, in the providers and the insurers, and sustained by huge amounts of public relations and their paid functionaries in the media and the Congress.

It is the most expensive healthcare system in the developed nations.  And that is largely due to corruption and a twisting of the laws due to the influence of Big Money in lawmaking and regulation.

28 January 2017

Thomas Frank and Jimmy Dore - Trump Is the Legacy of the Corporate Democrats

"We hold this truth to be self-evident— that government in a modern civilization has certain inescapable obligations to its citizens, among which are:

(1) Protection of the family and the home.

We have begun and shall continue the successful drive to rid our land of kidnappers and bandits. We shall continue to use the powers of government to end the activities of the malefactors of great wealth who defraud and exploit the people.

(2) Establishment of a democracy of opportunity for all the people.

We have increased the worker's pay and shortened his hours; we have undertaken to put an end to the sweated labor of his wife and children; we have written into the law of the land his right to collective bargaining and self-organization free from the interference of employers; we have provided Federal machinery for the peaceful settlement of labor disputes.

We will continue to protect the worker and we will guard his rights, both as wage-earner and consumer, in the production and consumption of all commodities.

(3) Aid to those overtaken by disaster. These obligations, neglected through 12 years of the old leadership, have once more been recognized by American Government. Under the new leadership they will never be neglected."

Democratic Party Platform, 1936

There is no 'invisible hand' that is a natural tendency in markets, unless we assume some utopian model of all people acting perfectly rational, and being as naturally good as angels.

In reality, however, the only invisible hand that exists in unregulated markets is that which is picking the public's pockets and confiscating their wealth through fraud, monopoly, and the abuse of power.

History shows this to be undeniable. The dynamic tension between the unprincipled and the public interest is written into the fabric of our experience.

The gospel of continual progress suggests that everything that we have now is different and much better than everything that has gone before. This does not apply equally well to human behavior, human nature if you will, as it does to material science.

The current establishment, an amalgamation of the moneyed interests and the professional class, does not want you to hear things that might make you think independently of the prevailing story.  They want you to be frightened, distracted, confused, and compliant.

Above all, they and their most ardent supporters and doctrinaire apologists need to hear these things.  Because otherwise they cannot change.  And if they do not change, they will not avoid the consequences that will ultimately engulf them.

The problem is that they are caught in a credibility trap.  They have become the defenders and enablers of what their party was dedicated to counteract and uproot—  the systematic abuse of the vulnerable by the powerful and well-positioned, under any rationale, whether it is race, or class, or money, or nationality.

And at the same time they personally do not wish to change, or even admit to any problems they may have caused, despite what they say and the excuses and rationales they may construct, under high sounding names and appeals to identities and sacred missions.

They are impediments to meaningful reform because this system of class and privilege, as rotten and unjust as it may be, serves their interests, and keeps them and their friends very, very secure and comfortable.

Theirs is a Faustian bargain, and it will bring ruin to them now and in the time to come.

(Caution on language)

27 January 2017

Stocks and Precious Metals Charts - Into the Weekend

"Seek the Lord, all you humble of the land,
who have observed his law;
Seek justice, seek humility;
And perhaps you will be sheltered
on the day of the Lord’s justice.

This was the triumphal city, high and mighty,
Saying to herself, ‘I am the one, and none dare stand beside me.’
How desolate now has she become, a place fit only for wild beasts.
Those who pass by her scoff, and shake their heads at her ruin."

Zephaniah 2:3,15

We have to be somewhere soon, so here are the charts at 3:30 PM.

The GDP number came in light for 4Q 2016.

Stocks were chopping with the broader indices showing weakness, and big tech still one of the mainstays.

They are lining up some IPOs on the if/come, so I don't think stocks will dump off these highs just yet. But if something 'happens,' then all bets are off.

The metals are holding their own, but need to move up and above this overhead resistance which is proving to be about as stubborn as expected.

Have a pleasant weekend.

26 January 2017

Stocks and Precious Metal Charts - Something Wicked This Way Comes

"Wall Street told US manufacturers to move their production to China in order to increase profits from lower labor and regulatory costs, or Wall Street would finance takeovers of the companies, and the new owners would raise the firms’ profitability by moving production offshore. Large retailers, such as Walmart, ordered suppliers 'to meet the Chinese price.'

When the jobs were in the US, most of the gains in productivity went to labor. Therefore, real median family incomes rose through time, and the consumer purchasing power this income growth provided drove the US economy to success for ever more people. When the jobs were moved to Asia, the growth in real median US family incomes stopped and declined."

Paul Craig Roberts

"A credibility trap is when the managerial functions of a society have been sufficiently compromised by corruption so that the leadership cannot reform, or even honestly address, the problems of that system without implicating a broad swath of the powerful, including themselves.

The moneyed interests and their aspirants tolerate the corruption because they have profited from it, and would like to continue to do so. Discipline is maintained by various forms of soft financial rewards and social coercion."


I don't necessarily agree with Paul C. Roberts on many things, but I know the above to be true. I saw it happening up close and personal.  It was fairly obvious really to the objective and informed observers of history.   Ideologues of all persuasions, not so much—  they are always lost in some new era, with those things outside the boundaries of their reality proscribed by utterly inadequate models, selective facts, and self-defining truths.

The sophists in the professional class will say 'prove it,' and offer their tortured models and selective histories to show that this was merely the natural path of progress and technology, ie unavoidable.  But they will feel your pain, from a distance.

I am afraid that things are apparently way past that point of arguing futilely about it with a mind to finding an organic remedy, if you have not noticed.  Some have spoken about this for years, warning of your folly in vain.  And now, ladies and gentlemen, a banquet of consequences is being served by the Mad Hatter, once again.

The futures were gyrating after the bell as some big name companies like Paypal, Microsoft, Intel and Alphabet turn in their financial results.

The wiseguys want to unload a mass of big IPOs in the next two weeks, so they will attempt to support the markets as long as nothing happens to make that too difficult.

I suspect that the Republican dominated Congress will do their best to ruin the economy.  I wonder how much Trump may fall into line, or pursue his own instincts and legacy.

The Democrats are virtually sidelined, as they only slowly begin to digest the consequences of the failure of their neo-liberal economics, world power ambitions, and the 'better of two evils' political strategies.  As for their Republicans, they are obsequiously vile in the service of the moneyed interests.

Greed prevails as fear recedes.  The 'establishment' is firmly mired in denial of their failing policies.

Something wicked this way comes.

Have a pleasant evening.

25 January 2017

Stocks and Precious Metals Charts - Fire Burn and Cauldron Bubble

Cartoon with permission by artofmarkbryan.com
As suspected, the Dow Industrials hit their high note today, sticking a close over the 20,000 handle.

It has taken quite a few years for the Dow to double from its first foray over 10,000 in March of 1999. Remember that? I remember vividly the Dow crossing 1,000 for the first time in late 1972. And then we had the grinding bear market of the early 1970's, with no return to 1,000 until the arrival of Reagan.

I suspect we will soon be seeing the lipstick being applied, and a flurry of new IPOs hitting the market while the market is hot, full of speculative money. That will be a sign of a topping process. But until something happens to shake things up, greed springs eternal.

The Donald released his orders for The Wall today. His cabinet appointments are disturbing because they seem to place his feet in the oligarchy of the Republican establishment, moreso than fresh minds and new ideas for growth.

I had to laugh today, when some infomercial pundit suggested that Trump will bring us changes that will allow companies to permit capital formation, which will be good for employment and productivity.  Are you kidding me?

These jokers have been piling the rather healthy profits which they received after the bailouts of 2008 into stock buybacks and dividends, and were using legal gimmicks to park huge amounts of cash in tax havens offshore.

Ok, so perhaps they will be encouraged to spend that money here in different ways, but I doubt very, very much that they will be for the good for the general economy. Their model is greed, and the worst sort: short term and near sighted.   More gaming of the system is in the forecast.

This interplay between the Republican establishment and The Donald will certainly be interesting. They have their long knives out for Social Security and Medicare, and the Heritage Foundation is back in the saddle.  I wonder what Mr. Trump will do when the rubber meets the road between his goals of legacy, and the pitiless hearts of the monied interests.

Kyle Bass caught my attention with his interview on Bloomberg TV today.  He is very bearish on China, and believes that they will have to recapitalize their financial system, which will result in a profound devaluation of the yuan.  By contrast, Russia has already taken most of the pain of their economic problems and it had been reflected already in the rouble.

I wonder when America will take the consequences of many years of bad policy and political decisions that have resulted in historic imbalances and inequality.  Right now we are inclined to export it, as holding the 'reserve currency' status certainly does facilitate that sort of thing.

Gold and silver retreated a bit today, as it was another risk on fiesta. I liked the close on gold, holding above 1200, although that level is more psychological. Gold and silver have come quite a way in the past month, and a pullback is justified. Let's see where it goes and when, so we can assess its character.

Have a pleasant evening.

24 January 2017

Stocks and Precious Metals Charts - Risk On to Dow 20,000

Today was one of those risk on days, when the porcine class sees things going their way, or they will make it so.

A primary driver may be the desire to get the Dow Industrials, which are now pretty much only industrial in name only, up and over the headline 20,000 number, the better to eat you with, my dears. Yes, it's a bubble. That's what the Fed and the financial system do these days, go from one bubble to another, bringing in the sheaves of hypocrisy and fraud.

Tech stocks were also breaking to new highs. The VIX slumped back down to the lower bound of its recent trading range. And gold and silver were off. Risk on, remember?

As for now, these equity markets are pretty clearly signaling a trading range, and not a post-election decline. I think that comes later.

The Trumpster is doing some good things and some dodgy things. The TPP was a neoliberal abomination, and canning that deal and putting NAFTA back on the table is a smart move, no matter what the the establishment's professional auxiliary may say.

I have some bad feelings about the Keystone and Dakota pipelines, and we will have to see where that goes, and to whom it flows. The Donald is hard to predict, because I do not think his mind is always fully engaged to his mouth, or a category of first order principles, other than profits. Opportunists and wheeler-dealers tend to have that difficulty.

But I don't have much sympathy for those who knock him for jawboning companies, and trying different tactics to generate jobs, decent full time jobs, for the working class, in a tangible leader-like manner. In this he is more like a Franklin Roosevelt. Yikes, did I say that? Yes, and Obama seemed much more like a Herbert Hoover, but with a much cooler panache, and significantly less operational experience.  Hillary?   It is not polite or fitting to compare a lady to Il Duce.  But as a pair of Clintons goes, it does come to mind.

Well, enough said, and it's probably better to move along and get something useful done.

Have a pleasant evening.

23 January 2017

Stocks and Precious Metals - Forget it Jake, It's Chinatown

President Trump continues to rattle markets with change, or at least the proposals for them.

Stocks were off a bit, as well as the dollar, as the Executive Orders started flowing, to dump the TPP among other things.

No internationalist love and support there. I suspect this will cause increasing displeasure in his own party, and the establishment of the Northeast power corridor and Silicon Valley in general.

Otherwise, most of the markets seem to be locked into a fairly tight one percent trading range, with a back and forth motion chopping the off-footed daytraders.

Let's see which way this breaks. And not only the markets.

It's been a long time coming.   Going to be a long time gone.

Have a pleasant evening.