SP 500 and NDX Futures Daily Charts - Recovery, For Some

US equities bounced off key support today. What a surprise.

The reasons for this were the 'better than expected' jobs number from ADP, and expectations of money printing stimulus for Europe by the ECB.

The first chart below shows how 'well-behaved' the SP 500 has been throughout this rally, with one slip.

There is no reason to suspect that the Banks and Wall Street will put a halt to their money machine just yet.

The Fed minutes for the last meeting were released at 2 PM today, with some jawboning about raising rates some time later this year.

The big tickle is going to be the Non-Farm Payrolls Report on Friday, and next week we kick off the 4Q2014 earnings season. Oh joy.

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - Wooden Ships

“You cannot go on 'explaining away' for ever: you will find that you have explained explanation itself away. You cannot go on 'seeing through' things for ever. The whole point of seeing through something is to see something through it...

In a sort of ghastly simplicity we remove the organ and demand the function. We make men without chests [strong hearts for honor and truth] and expect of them virtue and enterprise.  We laugh at honour and are shocked to find traitors in our midst.”

C.S. Lewis, The Abolition of Man

There was some intraday commentary on the NAV Premiums of Precious Metals Funds here.

Gold and silver had a pop rally today out of the 1200 bound and up to the next big level of resistance, as can be seen on the chart below.

 

Silver is in a similar position, but gold seems to be leading the way this time.

If the metals break out, look for silver to get some serious legs.  But in this long bear market that is one big 'if.'

In checking some things today, I noticed that JNUG, the triple junior miners ETF, has almost doubled since Christmas Eve.  Live by beta, die by beta.

Friday is a Non-Farm Payrolls Report.  The last time the metals were smacked, they rolled them up higher, got some specs in with stops, and then just smacked them down, hard. 

 

When you are able to rig so many global markets with virtual impunity, many possibilities are open to you.  Pick a quiet hour and drop more tonnes of paper metals than a miner can produce in real bullion in a year.  Why not?  It is only money, and the Fed can print more of it.   And they would be as gods.

So, the only thing that really matters to the gold and silver bulls now is a follow through to break the bearish downtrend.   This will put some proper regards back in the Street, but we are not there yet. 

 

The political neo-cons and the economic neo-liberals are riding high, heedless, invincible, winning. 

 

What could go wrong?

Have a pleasant evening.

"The head rules the belly through the chest— the seat, as Alanus tells us, of Magnanimity, of emotions organized by trained habit into stable sentiments. The Chest-Magnanimity-Sentiment— these are the indispensable liaison officers between cerebral man and visceral man.

It may even be said that it is by this middle element that man is man: for by his intellect he is mere spirit and by his appetite mere animal. The operation of The Green Book (a book promoting relativism) and its kind is to produce what may be called Men without Chests. … A persevering devotion to truth, a nice sense of intellectual honour, cannot be long maintained without the aid of a sentiment... It is not excess of thought but defect of fertile and generous emotion that marks them out. Their heads are no bigger than the ordinary: it is the atrophy of the chest beneath that makes them seem so."

C. S. Lewis, The Abolition of Man

SP 500 and NDX Futures Daily Charts - Wash 'N Rinse, or Something Different

"Most of them became wealthy by being well connected and crooked.  And they are creating a society in which they can commit hugely damaging economic crimes with impunity, and in which only children of the wealthy have the opportunity to become successful. That’s what I have a problem with. And I think most people agree with me."

Charles Ferguson, Predator Nation

"A lot of white-collar criminals are psychopaths. But they flourish because the characteristics that define the disorder are actually valued. When they get caught, what happens? A slap on the wrist, a six-month ban from trading, and don't give us the $100 million back. I've always looked at white-collar crime as being as bad or worse than some of the physically violent crimes that are committed."

Robert Hare

Tsar Nicholas II: I know what will make them happy. They're children, and they need a Tsar! They need tradition. Not this! They're the victims of agitators. A Duma would make them bewildered and discontented. And don't tell me about London and Berlin. God save us from the mess they're in!

Count Witte: I see. So they talk, pray, march, plead, petition and what do they get? Cossacks, prison, flogging, police, spies, and now, after today, they will be shot. Is this God's will? Are these His methods? Make war on your own people? How long do you think they're going to stand there and let you shoot them? YOU ask ME who's responsible? YOU ask?

From Nikolas and Alexandra

There was intraday commentary about this opening year plunge in stocks here.

 

Let's see how the rest of January goes before drawing too many conclusions. 

 

There is not a lot of doubt in my mind that, given the current vectors, this will end badly.  But timing and forecasts are a very difficult process, best approached with a great deal of humility.

 

Have a pleasant evening.

 

 

 

What 2000, 2008 and 2015 May Have In Common

'As a dog returns to its vomit, so the fool repeats their folly.'

Proverbs 26:11

 

And they do it about every seven or eight years, it seems, in the modern economic discipline of bubblenometry.

 

What hath the Fed wrought, and the crony accomplices to Wall Street in the Administration and Congress?

Back to the brink, again.  Crouching dangers, hidden risks.

 

Margin Debt as a percent of GDP is flashing a warning sign as shown in the first chart from Cross-Currents.net.

And the second chart shows that a second indicator could be seen in the stock market performance for the first three days of trading in January, in a chart from Kimblechartingsolutions.com.

 

As the upper left corner of the second chart reminds us, these 'predictions' are forecasts, with a nod to life's school of probability. 

 

I will like to see what happens for the full month of January for a confirmation, before we start warming up the bear train for a trip downtown.   And let's not forget the bubble-making propensities of the keepers of the world's reserve currency, in the age of weaponized finance.   Triumphant exceptionalism does not wear a pauper's rags well, although it is perfectly acceptable dress for the trickle down underclass.

 

This will likely end badly, but timing is always problematic since these breakdowns most often involve a trigger event, or a black swan.  But the system is hardly robust, and so the risks are high.

 

But all in all, as George Takei would say, Oh my.

 

Related:   Margin Debt To GDP Highest in 85 Years

NAV Premiums of Certain Precious Metal Trusts and Funds - Another 30,000 Gold Ounces Redeemed

Sprott Physical Gold Trust saw about 30,000 ounces of gold bullion redeeming, with a commensurate elimination of unit shares in the exchange.  That makes it about 66,680 ounces, or 2 tonnes, redeemed at these prices since December 1, 2014.  

 

The withdrawal from Sprott Gold Trust is an indication of the mispricing of gold bullion and the tightness and leverage behind the scenes in the physical gold market.

The Sprott Physical Silver Trust's cash levels have fallen below one million. There is going to be a secondary offering to bulk up those cash levels some time this year.

While the spike in gold and silver prices today were enjoyable for those who are bullish on the metals, these sharps rises and drops are symptomatic of the highly leveraged paper pricing that is called the Comex.

And one's mind goes back to the last high, which was ruthlessly driven down by equally baseless, paper selling.

There is a Non-Farm Payrolls Report on Friday. Let's see what happens with this.

 

Gold Daily and Silver Weekly Charts - Flight to Safety

It could be hard to see the action in gold and silver today as anything but a 'flight to safety' as people with leveraged stock positions were unwinding them and seeking safety in Treasuries and precious metals.

There will be a Non-Farm Payrolls report on Friday.

Gold has moved to a key resistance point, and its moves for the rest of the week will carry some importance. I shaved my downside stock bets towards the close, and am holding gold but no silver at this time. I lightened up the gold position a little as well, losing from of the positions I had taken on the recent lows.

Gold needs to break this downtrend. It is obvious on the charts. Everything else is just longer term news, but short term noise.

China continues to execute an economic strategy in adding to its gold bullion, with 2014 being a 2000+ tonnes year for them. Where they are exactly going with this is not known for sure, but to just ignore it is most likely a serious error.

 

Nothing of note occurred in the Comex warehouse or delivery reports.

 

I have become more aware of a movement on the economic right to promote their particular brand of the economic philosophy known as Modern Monetary Theory (MMT). 

 

Apparently the game plan is to use take on that 'new era' idea that suggests that income taxes are no longer required.   Therefore we should see either an elimination of the income tax, or a big reduction in the direct taxing structure back to a small flat tax, and perhaps a consumption tax, pushed by some lobbyists and individuals in the GOP Congress.  

 

The US would just print what they needed, as determined in the budgeting process.

 

However, if the currency should ever get into valuation trouble, which theory suggests not, but reality suggests it will, then we would see a big push to cut discretionary spending to 'save the currency.'  And after all, who would not wish to rise to the occasion and 'save the Dollar?'

 

Remember the meme that 'Reagan proved that deficits don't matter?'  And how quickly that notion was discarded when the deficits could be attributed to spending that didn't line the one percent's pockets through deficit spending on pre-emptive wars?  And how hard they and their academic friends pushed the theory that 'efficient markets' needed little or no regulation? These jokers have no shame.

 

What makes anyone think that stimulus or financial innovation, even of the dodgiest new era type, would not be as abused as anything else in this age of yawning inequality in money and power?

 

More laws, financial innovations, and all the bells and whistles and magical thinking that our leadership can conjure up will not suffice to replace the important first step that faces us:  meaningful political and financial reform.  And unfortunately there is no will to do this yet, and the credibility trap remains a significant obstacle for both parties and many of the thought leaders in finance and economics.  

 

And so we must protect ourselves accordingly. 

Have a pleasant evening.