Ethereum experienced its first flash crash. The currency was trading at $315 and instantly fell to $13. http://www.businessinsider.com/ethereum-price-flash-crash-2017-6
The rebalance of the GDXJ was complete on June 16th. That stock along with the junior minors affiliated with it were shorted heavily once it was known the rebalancing was taking place. This week it experienced a nice recovery. http://oilnewsfeed.com/2017/06/19/small-cap-mining-stocks-big-time-opportunity-gdxj/
The tech giants are now heading to Nevada. There will be no taxes levied on block chain start ups. https://thebitcoinnews.com/nevada-takes-a-chance-on-pro-blockchain-legislation/
Jim Rogers came out stating the biggest downturn in history will start this year. http://www.businessinsider.com/jim-rogers-worst-crash-lifetime-coming-2017-6
Existing home sales set a new record high. It now costs $252,800 to purchase lived in home in the United States. http://www.economiccalendar.com/2017/06/21/may-us-existing-home-sales-rose-1-1-prices-hit-fresh-record-high/
Altria Group (MO) finished the week down 1%. In the stocks to watch, CALA closed the week up 6%.
The average stock is trading 73% higher than its historical average. Only two other times in history have valuations been this high. In 1929 before The Great Depression and in 1999 before the dot.com bubble burst.
Harry Markopolos, the investigator that brought down Bernie Madoff, exposed the lack of pension funds Boston Transit Authority. It will have a large impact on the municipal bond markets if the same is true with other pension systems around the country. Houston is selling streets to pay for pensions; there is a one million dollar per month short fall per month for Illinois pensions. Speaking of Chicago, vendors for road maintenance need to complete current work by the end of June, because as of June 30th there is no money to pay for these projects. http://telzilla.com/zero-hedge/madoff-whistleblower-harry-markopolos-has-uncovered-a-new-fraud/
Alabama just implemented a work for food welfare program. About 85% of current enrollees will no longer collect a check from the state of Alabama. http://www.kettlemorainepreciousmetals.com/2017/06/11/alabama-cut-welfare-by-85-all-states-should-follow/
As expected the Fed increased the fed funds by a quarter point. I think this is the last hike for 2017. http://www.marketwatch.com/story/fed-raises-rates-and-sets-plan-to-shrink-balance-sheet-this-year-2017-06-14
Ford is offering 15,000 buyouts. With large inventories and slowing sales this shouldn’t be a surprise. http://www.marketwatch.com/story/ford-offers-buyouts-to-15000-workers-worldwide-2017-06-08
Louisiana Pacific Corporation (LPX) closed the week up 2%. With this positive close the trade of the week has closed in positive territory 8 out of the past 10 weeks. The stocks to watch I posted included GOGL and WFM. GOGL was up almost 7% by Wednesday but closed the week in negative territory. Whole Foods Market (WFM) the headline story on Friday. They were bought by Amazon which caused the stock to close up 19%.
As of today there are over 750 and crypto currencies. The coin base website is adding 40,000 customers daily which is slowing the process down for all users. This would explain the continuing spike in Bitcoin and Ethereum. Bitcoin just crossed $3,000 while ethereum elevated to $350. Remember this currency was only trading for $10 in February. https://etfdailynews.com/2017/06/11/ethereum-tops-300-for-the-first-time-amid-cryptocurrency-craze/
Veritaseum is a new crypto currency that is going to start trading in the next couple of weeks. You can purchase this crypto currency right now. This coin can be used when new exchanges are being created. http://veritas.veritaseum.com/
After years of pleading from the gold and silver community the CFTC has finally charged one trader with insider trading. James McDonald is being investigated for spoofing the market. http://silverseek.com/commentary/surprise-cftc-announcement-16665
According to Marc Faber 5 companies in the S&P 500 have added 260 billion dollars in market cap. The other 495 companies shed the same amount. https://www.gloomboomdoom.com/
The IMF recently stated if the Fed fund rates were moved up by two percent, about twenty percent of the companies would go bankrupt. http://www.zerohedge.com/news/2017-04-19/stark-warning-imf-finds-over-20-us-corporations-risk-default-should-rates-rise
Hartford, Connecticut is the newest city facing the burden of paying for obligations that can’t be kept. http://www.courant.com/health/hc-uconn-health-budget-problems-20170609-story.html
The trade of the week Iridium Comm Inc (IRDM) closed the week up just under 4%. VRX also gained 8% by midweek but closed even on Friday.
On June 14 the Fed is scheduled to meet and will decide if the fed funds rate will be raised. Right now there is a 85% chance rates will be move up. https://www.bloomberg.com/news/videos/2017-05-24/85-chance-of-fed-june-rate-hike-according-to-poll-video
The Bank of Japan and the European Central Bank both have larger balance sheets than the Federal Reserve. Today the Feds balance sheet stands at 4.5 trillion. Remember it was only 800 billion pre- economic crises. https://www.thefringenews.com/boj-ecb-balance-sheets-exceed-the-fed039s-for-first-time-ever-what-happens-next/
In the not too distant future, over 400,000 stores could be able to use bitcoin for all transactions http://www.altcointoday.com/japans-bitpoint-add-bitcoin-payments-100000-stores/
Paul Singer, the CEO of Elliot Management Corp, sent an email to his clients and indicating all hell could break lose if Trumps policies fail. In 24 hours the company raised 5 billion dollars. Elliot Management manages 32.6 billion today. https://good-stockinvest.com/2017/05/31/paul-singer-warns-all-hell-will-break-unfastened/
Jobs numbers were released and at present time the unemployment rate sits at 4.3%. This month 608,000 people were not counted that were last month.
The Dow Jones closed in record territory finishing the week at 21,206. https://www.usatoday.com/story/money/markets/2016/12/05/stocks-wall-street-dow-sp500-nasdaq-oil-italy/94987178/
The State Debt of Illinois was lowered to one step above junk status. http://www.morningstar.com/news/dow-jones/economic-news/TDJNDN_2017060110821/sp-downgrade-brings-illinois-debt-one-step-closer-to-junk.html
Procter & Gamble (PG), the trade of the week, closed the week up just under 2%. Three out of the other four stock sets ups finished in the green. LABD the only loser was up over 9% on Tuesday before selling off and finishing the week in negative territory.
The block chain price explosion is finally beginning to consolidate. Bitcoin and ethereum high reached their all-time highs before they started to correct at the end of the week. It should be noted the CME has set up a crypto currency index. http://www.chicagotribune.com/bluesky/originals/ct-cme-group-bitcoin-prices-bsi-20160502-story.html
Ethereum recently held a conference and the biggest corperations were in attendance. The companies included the Microsoft, JP Morgan, Procter and Gamble, BP, General Electric, the CME and DTCC.
Hong Kong set up a new precious metals physical exchange. http://www.scrapregister.com/news/42472/hong-kong-exchange-plans-to-launch-physically-settled-chinese-yuan-and-us-dollar-gold-futures
Noble Group, the third largest commodity trader is close to going under. https://seekingalpha.com/article/4073465-noble-worth-less
A four times leverage etf that tracks the S&P 500 has been put on hold by the SEC. http://www.nasdaq.com/article/why-the-sec-shouldnt-reject-4x-leveraged-etfs-cm794885
Healthcare Realty Trust Inc. (HR) broke above $34.00 on Tuesday and remained in positive territory until it sold off on Friday. It closed the week down 1% at $33.09.
Mike Maloney recently released a video called “ The Everything Bubble” Through various charts, Mike breaks down the bond, stock market, and housing market bubble. https://www.youtube.com/watch?v=w0Oz2R0u4VM&t=413s
Nassim Taleb gave a rare interview where he disclosed the market is in a worse condition than in 2007. https://www.youtube.com/watch?v=ASD1LJQzj5o
The largest junior mining etf, the GDXJ, is rebalancing and driving down the price of junior mining stocks. http://www.pinnacledigest.com/tsx-venture-investing/gdxj-etf-rebalance-coming/
Bitcoin continues its parabolic move. The block chain currency is now pricing over $2,000. http://www.zerohedge.com/news/2017-05-20/bitcoin-soars-above-2000-first-time-ever
The dollar fell to its lowest price since November of 2016 using UUP. The US dollar index it closed at 97.12. On Friday, crude oil clawed its way back over $50 a barrel. Uranium closed the week at $21.50 per pound. This is the lowest price since the beginning of January.
On Wednesday, when the dow jones fell over 400 points, VXX spiked to just above $16 and failed to break through its 50 day moving average. In mid-April it failed at the 50 day as well.
Ventas Inc. (VTR) closed up a little over 2% on the week. Ironically it made its biggest move on Wednesday when the market was tanking. The trade of the week has done extremely well with stocks trading over $30. So far 15 out of 17 have closed in positive territory with the 2 losers only falling 1%
One of the largest computer hacks in history is taking place in 100 countries around the world. The hackers are demanding a ransom or else your files will be deleted. https://theintercept.com/2017/05/12/the-nsas-lost-digital-weapon-is-helping-hijack-computers-around-the-world/
Facebook, Amazon, Netflix, and Google are the FANG stocks. Right now they have a price to earnings ratio of 90:1. The NASDQ has moved up 40% on the back of 5stocks.
Larry Fink of Blackrock recently indicated he is weary of the week auto sales. https://www.bloomberg.com/news/articles/2017-04-19/blackrock-s-fink-sees-warning-signs-for-u-s-economy-brewing
Texas has a bill that would make gold and silver legal tender. http://thedailycoin.org/2017/05/04/texas-bill-establish-gold-silver-legal-tender-dealing-massive-blow-federal-reserve/
The probability of a FED rate hike in June is up to 74%. https://www.investing.com/news/economy-news/jobs-report-ups-odds-for-june-fed-rate-hike,-insufficient-for-2-in-2017-480600
Bitcoin continues its climb. It traded above $1900 this week. The Chinese government put capital controls on it, which made the price move up even faster. http://www.bitcoinisle.com/2017/05/11/bitcoin-price-hits-1900-for-the-first-time-ever/
The volatility index is again in record low territory. This is an 24 year low in this market. http://www.marketwatch.com/story/as-vix-hits-multidecade-low-investors-retreat-from-volatility-products-2017-05-09
The trade of the week, MDR, closed the week down 2%. It was up as much as 6% on Wednesday but closed the week in negative territory. BITA closed the week up 12%, while GOLD closed up 6%.
Canada placed a 270% duty on imported milk. The US milk producers were able to export milk to Canada through aloop hole. Since new milk products were produced post NAFTA those items were exempt. In response lumber tariffs were put in place.https://www.benzinga.com/news/17/04/9341647/fuel-on-the-fire-trump-hikes-canadian-timber-tariffs-in-retaliation-for-milk-duty
The UN wants to adopt bitcoin and etherium as currency soon. Etherium has jumped to over $90. Six months ago this blockchain was priced at. http://www.coindesk.com/the-united-nations-wants-to-accept-ethereum-and-bitcoin-and-soon/
Puerto Rico Defaulted on its bonds. The biggest bankruptcy in history. 73 billion dollars in bonds are being defaulted on. This bankruptcy is 4 times larger than the bankruptcy that took place in Detroit. https://www.washingtonpost.com/business/economy/puerto-rico-with-73-billion-in-debt-forced-toward-bankruptcy/2017/05/03/92e39d76-3020-11e7-9534-00e4656c22aa_story.html?utm_term=.17fcd6d8c418
The gold to silver ratio increased to 75:1 this week. According to Ted Butler the commercial shorts are decreasing from their April peak.
Ron Johnson Replace Americans Act passed with little coverage with health care getting most of the headlines. This would allow 500,000 immigrant workers and their families to come into the states to fill white and blue collar jobs. http://www.breitbart.com/big-government/2017/05/04/gop-propose-american-workers-replacement-bill-amnesty-immigration/
MX last week’s trade of the week, finished up over 18%. MNTA closed up 10%. This is the 4th consecutive trade that closed higher.
Fannie Mae is now making it easier for students with loans to buy a home. This new idea will allow students to roll their student loan debt into their mortgage. Increasing the debt load for these young adults is not the answer. http://www.cbsnews.com/news/fannie-mae-student-loans-mortgage/
The president’s tax cuts were brought to the public eye on Wednesday. The new policy would create a tax code with 3 brackets of 10%, 25%, and 35%. A proposed cut to the corporate tax code was put forward. If passed by the congress, corporate taxes would be slashed from 35% to 15%. http://nypost.com/2017/04/26/team-trump-unveils-sweeping-tax-reform-plan/
Silver closed the week down at $17.20 per ounce. That was completely expected with the record short position the commercials held on the commitment of traders report. Gold fared better and closed the week $1268.02. The sliver to gold ratio is approaching 74/1. Crude Oil failed to break above $50 and closed the week at $49.19 per barrel. The dollar closed the week down at $98.93.
Home Depot (HD), the trade of the week, finished the week up 4%. WIX was listed on the stocks to watch list, and it finished the week up 17%.
Another tax day has come and gone. In 1913, the first year income taxes were collected the tax rates were from 1-7%. Vastly different from today where some pay nothing while the wealthiest pay 39.6%. The tax code was 400 pages in 1913. Today it comprises of 74,608 pages. $3.36 trillion were collected by the government this year.
Corporate tax cuts are expected to happen this week. Individual tax cuts will be pushed into the future, if they happen at all. A significant cut in the corporate rate would push down their p/e ratios and make appealing for new investors to get in the market. http://prensariotiretail.com/2017/04/23/trump-says-massive-tax-cut-plan-coming-as-soon-as-wednesday.html
The French election is under way this weekend with Le Pen and Macron advancing. This election will determine if France will take a more nationalist stance or align itself with the EU. The final vote will take place on May 7th. If Le pen wins, she makes it very clear she wants to leave the Euro. You can expect a heavy media bias towards Macron. https://www.nytimes.com/2017/04/23/world/europe/emmanuel-macron-marine-le-pen-france-election.html?_r=0
Portola Pharma Cmn (PTLA) the trade of the week closed at $38.20. Up a half of one percent.
The CFTC added two new members, James MacDonald and Andrew Busch. Hearing this news, a long time silver investor, Ted Butler, wrote them an informative letter talking about the continued suppression of silver. For years Ted has shown the market it rigged using the CFTCs own data. Here is the open letter he wrote. http://www.zerohedge.com/article/
Oil closed the week at $52.91. On Wednesday it pushed to a high of $53.70 on news Saudi Arabia wants to cut oil for another 6 moths. My assumption is they are trying to keep oil steady until the IPO of Saudi Aramco in 2018. http://blogs.barrons.com/emergingmarketsdaily/2017/04/14/more-opec-production-cuts-saudi-arabia-others-want-60-oil/
Northern Dynasty (NAK) had north of a 30% up day on Wednesday. This came on news the state of Alaska approved a land permit. With a more lenient EPA this is speculative company to keep on your radar. https://finance.yahoo.com/news/northern-dynasty-state-alaska-approves-221400161.html
At the eleventh hour I decided to subscribe to Frank Curzio’s recently launched newsletter. His lifetime membership was too good to pass on. Frank has been around the newsletter business for many years. On his podcast the guests are extremely well informed business owners and investors.
Volatility finally started to rise this week. With Fed meetings and acts of aggression taking place in Syria and North Korea, was the catalyst that pushed VXX up 11%.
Extended Stay American Inc (STAY) last week’s trade of the week finished up 4% UEC was up as high as 6% on Tuesday and quickly sold off.
This week the commercials are holding record short positions in the silver market. Mike Maloney released a video that breaks this down. Despite their position the spot price broke out. JP Morgan has a short position 6 times larger than the Hundt brothers did. They continue to short the paper and buy the physical. https://www.youtube.com/watch?v=5_xkXtKXlZ4
In the oil market, the oil refiners, which have a good understanding of the market, have a large short position. EIA releasing data and OPEC nations refusing to cut production will push prices lower.
Frank Curzio has now rolled out his new financial newsletter. Until April 12, 2017 you can subscribe for $70. After that you will have to pay at least $200 per year in the future. Become a lifetime member for $270. This deal only will last for one week. http://www.frankcurzio.com/
Russia and China will now settle trade deals in gold. This will cause the demand for the dollar to drop. http://www.reuters.com/article/us-china-russia-idUSKBN0H40X020140909
The University of Utah is now issuing scholarships to gamers. All that time playing time playing
Ray Dalio recently spoke at an investment conference. He indicated because the debt is so high, the system only has months left. http://www.businessinsider.com/ray-dalio-populism-economic-risk-1930s-2017-4
The trade of the week, Boston Scientific (BSX), finished the week down just under 1%. It did a lot of sideways consolidation. Its price is remaining above the 50 day moving average so it could still move next week.
Consumer confidence is now hitting a 15 year high. http://www.marketwatch.com/story/consumer-confidence-hits-15-year-high-2017-02-24 This confidence is being backed by stock purchases. John Bogle the former CEO of Vanguard said there has been a billion dollars a day being directed into Vanguard etfs.
A record $540 billion dollars in property taxes were collected in 2016. I am curious to see how those numbers adjust with a market correction. Home owners will want lower property taxes while government entities will want their funding. It will be an ugly day when it arrives. Many states are severely underfunded. Only 13% of the pensions in Illinois are funded sufficiently. https://mishtalk.com/2017/03/14/illinois-general-assembly-retirement-system-only-13-percent-funded/
In previous market thoughts I have highlighted the glut in the automobiles. What is stunning is the deep subprime auto loans are increasing rapidly. In 2010 5% of loans were considered in the deep subprime category, meaning credit scores were between 300 and 600. Today 32.5% of auto loans are considered deep subprime. Wells Fargo is the largest underwriter of these loans. https://www.bloomberg.com/news/articles/2017-03-28/-deep-subprime-becomes-norm-in-car-loan-market-analysts-say
With markets at or near record levels you would think retirement accounts would follow suit. At the bottom of the markets in 2009 14 trillion in retirement assets existed. With a 200% move in the do 25 trillion now exist in those retirement accounts.
A trader who has been given the nickname 50 cent has been coming into the market for the past several weeks and buying vix call options that are priced at $0.50. So this trader has put 55 million dollars into this trade. http://markets.businessinsider.com/news/stocks/mystery-trader-loses-55-million-betting-on-volatility-2017-3-1001887023-1001887023
Three out of the four trade setups from last week finished positive. TSLA gained 6%, MOH increased 2%, while SLW, the trade of the week, closed up 1%. OCLR was up over 4% on Wednesday but sold off on Thursday and Friday to close the week down 3%.
Cheap oil continues to trend lower. It touched the $47 handle but closed the week at $48.14 per barrel. Inventories are continuing to build. Lower prices in oil will also affect the junk bond market since many of those bonds are tied to oil. Venezuela has now discovered the cause of the bread shortage in their country. It’s not due to a failed socialist government. It’s those greedy bakers. Bakers are now being detained because bread is being sold underweight most likely because their supplies have been diminishing. The price czar of Venezuela believes only 90% of goods and services need to be controlled. The elections have wrapped up in the Netherlands. Wilders the “Donald Trump” of that election didn’t not win. The vote for more nationalistic form of government failed. 52 of the top 100 cities in America are now considered rental dominated. I recently went to Zillow and if defaulted me to San Francisco real estate. The headline read, “fixer upper” with a price of $980,000. I am surprised only 52 cities are considered rental dominated. The dollar closed under 100 for the first time in a while closing at 99.76 on the usdx. The trade of the week UVV, finished the week down 1%.
As expected a quarter point was added to the fed funds rate. That brings it up to 0.75%. Last week the ECB held their rates flat. The automobile inventory continues to build. GM is now sitting on 108 days of inventory. The average is between 60-70 days. The same trend is occurring in the oil trade. Increasing inventories pushed crude oil down and it finished the week at $48.72 per barrel. Since the spot price is trending lower, MLPs that transfer oil and gas are also taking a hit. Ethereum, a block chain currency, has made large gains in the past couple of weeks. On March 9th the spot price was $16.51 and by the close on March 17th it hit a high of $45.26. http://ethereumprice.org/ Idaho is the next state looking to remove the capital gains from gold and silver. Steps have already been taken to remove the tax in Arizona, Utah, and Texas. In Venezuela one ounce of silver will purchase $250 worth of groceries. The hyperinflation continues to plague their people. The Trump/Russian hearing will be held on Monday of this week. The distraction of the day I would call it. The travel ban was dropped for those traveling from Iraq. 3 of the 4 trade set ups closed in positive territory. CLVS gained 14%, while JCOM, the trade of the week gained 1%
All eyes will be on the FED on Wednesday. There is now a 100% chance they will raise rates. The strong jobs numbers was reassurance this is going to happen. With a debt ceiling debate set to take place on Wednesday, I can’t imagine volatility remaining as low as it has. Besides two quick moves to the upside, VXX has gone straight down since February of 2016. The past couple of rate hikes have been good for gold. Towards the end of the day on Friday gold stocks rose sharply. Are the institutions taking their positions pre FED speech, time will tell. Bitcoin was taken down to $1085 after the Winklevoss Brothers were denied by the SEC to create a bitcoin etf. http://www.reuters.com/article/us-bitcoin-etf-idUSKBN16H2NU According to Bill Gross, “The Bond King” if the 10 year Treasury note goes over 2.6% there will be a bond market implosion. At the close on Friday it was at 2.56%. 2,500 troops are headed to Qu wait, while US B52 bombers were stationed in South Korea. Purdue University offering an income share agreement. (ISA) This would allow the university to take a certain % of a graduate’s income after they join the workforce. Target is a stock to keep on your radar if you are a long term investor. The CFO just bought a half a million shares at $58. Goldman Sachs has a selling price of $53. TGT is currently pricing at $55.36 with a 4.35% dividend. YRD finished the week up 5.5% while the CNQ, the trade of the week finished up 3%.
Recently a new book called “Fed Up” was released by Danielle DiMartino Booth. She was a former analyst at the Federal Reserve Bank of Dallas. In a recent interview she talks about her feelings about this institution and people who run it. Click on the Thursday, March 2 podcast to hear why she wrote the book and her thoughts on the Federal Reserve. http://patriotarchives.blogspot.com/ Record high debt is everywhere. Mortgage/Rents, auto loan payments, student loan debts, health care has never been so expensive, and credit cards debts are all hitting new time highs. Snap Chat had its IPO this week. The starting stock price was set at $17 per share. The Friday close had SNAP pricing at $27.09. Looking at the sectors industrials are leading the way, while the energy sector is lagging. EWQ is beginning to break out. It closed the week at $25.62. Marine Le Pen could be pushing that market higher as the polls continue to show her gaining ground. In the precious metals realm, platinum moved under $1,000 per ounce. Gold and silver got slashed early in the week. Commercial banks are holding close to a record short position. Typically this is bad for the spot price. Apis Cor, a 3D company in Russia, built a home in one day for $10,000. http://www.onenewspage.com/video/20170303/6978767/Printed-House-Built-in-Day.htm If a large number of home owners were displaced, this technology could provide them shelter quickly. UIS, the trade of the week broke into positive territory but ended the week down. BLUE gained 15% in the first few trading days but only closed the week up 4%.
For years the Federal Reserve board has publicly stated on numerous occasions that its job is to make sure of price stability and full employment. This past week, the head of the Minneapolis Fed, Neil Kashkari, finally disclosed what all of those watching the markets already knew. He stated “We are all about asset prices” This is why rates are low and will continue to stay low. If rates would spike asset prices would fall. In the middle of February, VXX, the way to trade volatility, moved a bit to the upside on large volume. It will be something to keep an eye on with the debt ceiling debate on the horizon, foreign elections outcomes in France and the Netherlands, and announcements regarding the tax code. The NASDQ is now more overbought that when the tech boom was peaking. It may bring in the bears, just another reason to watch volatility. On February 16 there were some regulations that were done away with in the coal market. A recent study shows a college graduate is now on average $37,000 in debt. Nearly half of students are not repaying their loans. 11% are in default while 39% filed for an extension. Janet Yellen came out and made it known three rate hikes are in store for 2017. Keep in mind last year four rate hikes were on the table and only one was exercised in December. Berkshire-Hathaway recently sold off its position in Wal-Mart. George Soros just took a position in Pandora. Alan Greenspan, the former head of the fed, recently came out and declared Ron Paul correct about the gold standard. https://mises.org/blog/alan-greenspan-admits-ron-paul-was-right-about-gold Speaking of gold, on March 31st, 1.6 billion Muslims will be allowed to purchase gold. Sharia law currently makes it illegal for them to own. https://schiffgold.com/key-gold-news/gold-prices-expected-move-sharia-law-revisions/ (TU) last week’s trade of the week broke into positive territory on Wednesday and Thursday, but ended the week down 1%. 3 out of 4 of the other stock set ups mentioned closed the week positive. (ADS, ACXM, ADSK, and DLTR)
The world has lost its mind. Recently a cheeto shaped liked the slain gorilla Harambe sold for over $99,900. http://www.msn.com/en-us/money/companies/harambe-shaped-cheeto-sells-for-almost-dollar100000/ar-AAmHBSz Approaching quickly is the next debt ceiling in March. Now that a republican is holding the office of president, the right will push to raise it, while the democrats, who previous pushed to increase the last debt ceiling, will stand in staunch opposition. A complete 180 degree change in position by both parties since the last time this topic was debated. Business as usual in Washington. It will be raised. Either they raise it and the markets continue to soar or the ceiling is caped, interest rates go wild, assets prices drop, and everyone loses. The market needs to clear itself and that will eventually have to happen, but not yet. Recently, Northern Dynasty (NAK) to a big hit to its stock price. They recently came under investigation. In the Frank Curzio’s latest podcast he lays out what is happening with one of North Americas largest gold and copper mines located in Alaska. Episode 490 http://www.frankcurzio.com/ The spot price of uranium is still climbing, currently sitting at $26.50 per pound. TAN, the etf for solar, looks like it is in the process of bottoming. Keep and eye on First Solar (FSLR) this week. I took a personal position in First Mining Finance (FFMGF) at $0.67. As of the close on Friday it was $0.786. Down from its peak of $0.85. (FRAN) last weeks trade of the week finished down 4%.
Gasoline demand is beginning to dry up as the inventories continue to build reserves. There are 13.8 million more barrels than one year ago. Spot crude closed the week at $53 per barrel. With rig counts climbing and shale oil adding to the glut I am not sure if oil can break much further to the upside. Trade deficits being reported every month has become business as usual. From 1894-1970 the US ran a trade surplus every year. The last time a trade surplus was reported was in 1975. Expanding on last week’s market thoughts regarding millennials and their expensive taste for coffee. The Extraction Lab in Brooklyn opened recently and now holds the title of the most expensive cup of coffee in the world. Customers can expect to pay $18 for one cup. https://theculturetrip.com/north-america/usa/new-york/articles/americas-new-most-expensive-cup-of-coffee-is-in-brooklyn-and-we-tried-it/ If some of those customers are traders they may want to switch their trading account to http://www.robinhood.com/ Robin Hood is a brokerage company that now offers $0 trade fees. That can add a lot to the bottom line if you are a day trader. Silver closed the week $17.93 per ounce. That’s only one penny away from its 200 day moving average. This week will be telling. Last week, it broke across that leveled but failed to remain above it. Spot gold is pricing $33 dollars below its 200 EMA. Speaking of the precious metals, the gold, silver and bronze metals in the 2020 Olympics held in Japan will be made completely from recycled metal instead of being melted directly from a mine. (HAWK), last week’s trade of the week finished up 2%.
Last week the Fed left rates unchanged. This was one of the more uneventful fed meetings. No interviews were given; just an overview of the meeting was released. In Davos, Joe Stiglitz made the case to do away with cash. This trend continues to build on itself. The academics continue to push the cashless narrative. A recent study showed a majority of generation x and millennials spend more on coffee than they save for retirement. It brings the question, who is going to buy the stocks liquidated by the baby boomers turning 70 and a half in 2017. Most retirement vehicles mandate a portion of their holdings need to be sold. Steve Mnuchin is the new Treasury Secretary. He is the former CIO at Goldman Sachs. His father was on the board of Goldman. He worked with George Soros at FSM Capital. During the housing crises his bank foreclosed on many families with a fair amount of equity in their home. The dollar closed under 100 on the dollar index for the first time in sometime. Platinum and uranium are continuing to breakout since the end of December. In the past few months I took a trial subscription to stock fetcher. This stock filter does an excellent job at finding daily potential set ups. www.stockfetcher.com Steelcase Inc. (SCS) last weeks trade of the week failed to gain traction and closed the week down 2%.
Crude Oil closed the week up at $53.24 per barrel. With the rise in the price of oil, solar has become the world’s cheapest energy. That being said, investors should know First Solar Energy (FSLR) has slowing been moving up since the beginning of December 2016. Platinum and uranium look to have bottomed and broken out. Tiffany’s piled on the list of retail stores with bad earnings, while JC Penny indicated 300 stores could be closing. The presidential transition is finally complete. The first 100 days will be telling on what kind of president Mr. Trump will be. Trump a long time democrat has put a lot of tough rhetoric during the campaign. Now let’s see if any of it will stick and how it plays into the stock market. He is going to need the easy money to keep coming to sustain this current rally. This will either be accomplished through a qe program or in the form of a rate cut. Starting in 2017 the first wave of baby boomers will begin turning 70 and a half, at which point they will be forced to start withdrawing from their retirement accounts. I am not sure where the money is going to come from to replace the outflow of capital for years to come. The trade of the week HTLD, closed down 3%. It is still holding the $19.80. Keep an eye on it this week.
Oil prices settled in at $52.37 per barrel. Up slightly since the end of last week. The looming threat to the OPEC production deal is Iraq. They are the second biggest member of OPEC, and could have a hard time cutting the 210,000 barrels per month quota. http://www.businessinsider.com/iraq-could-kill-the-opec-deal-2017-1 On the domestic side, oil rig counts have increased thirty weeks in a row at the same time shale oil is increasing. In the retail space, Limited followed in the footsteps of Macys and JC Penny and shut all of its brick and mortar stores. Their products will only be able to be purchased online. The State Bank of India is working on a form of banking that is all digital. Transactions will be processed through apps, internet banking, and mobile banking. http://economictimes.indiatimes.com/industry/banking/finance/banking/sbi-to-launch-its-own-version-of-digital-only-bank-soon/articleshow/56367231.cms Last week the Federal Reserve presidents came out and gave the differing opinions on rate hikes for 2017. One Fed head stated three rate hikes will occur. According to Mr. Lockhart, two rate hikes will happen in 2017. Just to cover all their bases James Bullard sees one rate hike this year. Then you have market analysts like Steve Sjuggerud who see rates being cut. When earnings time comes around for the financial institutions, they should be big. In 2016 the Fed paid out over 12 billion dollars on excess reserves that just sat on bank balance sheets. Analysts from the Fed recently released a study that showed millennials on average are earning 20% less that their parents did at their age, despite being more educated. Oshkosh Truck Corp (OSK), last week’s trade of the week, finished up just under 3%. All five setups closed in positive territory.
This is the week the Dow 20,000 hats will be worn. Last week 19,999.63 was the high. Bitcoin is priced at $910. That’s down over $200 dollars from its $1130 peak on the 4th of January. If you have any interest in owning bitcoins, www.coinbase.com is one place to go and learn about and buy block chain currencies. The gold community that shunned bitcoin in its infancy is slowly starting to back the idea. In 2016 it was the strongest currency around the world. China and India were responsible for its sub $400 move to its current price. As good as things look for bitcoin and the dow you can’t say the same thing for JC Penny and other retailers. JC Penny sold its headquarters and is now renting it back. Macy’s plans to close 100 stores in the coming year. Out goes the brick and mortar retailers and income the Amazon blimp warehouses. In the future, Amazon would like to place blimps over large cities and have products be delivered via unmanned drones. http://www.eweek.com/cloud/amazon-blimp-based-warehouse-idea-appears-technically-feasible.html The company just launched a brick and mortar store in Seattle where checkouts will become a thing of the past. http://www.seattletimes.com/business/amazon/amazoncom-unveils-self-driving-brick-and-mortar-convenience-store/ Amazon is also opening a book store in Manhattan. The dollar remains the strongest paper currency around the world. Holding at the 102 handle. As 2017 strength could continue if Marine Le Pen wins the French election. She has already announced France will leave the Euro and create their own currency. http://www.bbc.com/news/world-europe-38511058 3 of the 5 setups last week closed in positive territory. Realty Income Corp (O) last week’s trade of the week closed up over %4. IMGN was the big winner rallying 24%.
The Dow Jones industrial average closed the year at 19,762, while the S&P 500 finished at 2,238. Everyone I talk to about these markets feel they are overpriced. If the man on the street thinks the markets need to correct it will probably do the opposite and continue to run. If I had to pick the best information regarding trend analysis and stock picks, Steve Sjuggerud had great track record in 2016. Shorting treasury bills by purchasing TBT at $33 was his most recent call in October. By mid-December it was pricing close to $43 per share. Steve recently released a new video where he discloses his 6 opportunities in 2017. http://blueprint2017.com/ Check out the rest of his work at http://www.dailywealth.com/ The continued upward trajectory of these markets lies in the hands of fed confidence, and Trump’s follow through on cutting taxes and deregulation. At present time nothing has changed from Obama to Trump. Sentiment and confidence is all that is behind the recent rally. Sectors leading the way in 2016 consisted of Energy, Financials, and Industrials. Lagging Industries included consumer staples, Real Estate, and Health Care. We have now entered January. Let’s see if OPEC and the Russians follow through on their promise to cut production. A break from the plan would move prices down, while keeping the current plan to cut would continue to move oil prices higher. Gold held support at $1127. The price has decreased on declining volume which is healthy. In June of 2017 the Morgan Stanley Capital International (MSCI) index will be adding Chinese stocks. This should give the Chinses markets a boost when these purchases begin.
The Federal Reserve announced a quarter point rate hike on Wednesday. This is the only increase in 2016. At the end of last year, the talk was four rate hikes would be implemented in 2016. They delivered one. Banks stocks were the big winners Goldman Sachs stock increased 35% since the beginning of November. JP Morgan got a 25% increase to their stock price. The only sector to outperform the financials were the energy stocks. Lagging this month are stocks related to health care. The US dollar popped over $103 on the us dollar index and closed the week at $102.82. This is a 14 year high. Deutche Bank agreed to pay 38 million dollars to settle their silver fixing lawsuit. http://www.zerohedge.com/news/2016-10-17/deutsche-bank-pays-38-million-settle-silver-manipulation-lawsuit Along with the settlement Deutche Bank turned over incriminating evidence on other banks involved. HSBC and Barclays have their fingerprints all over this. Mike Maloney made an excellent video explaining how the banks colluded to control the price. https://www.youtube.com/watch?v=F1rKu7wvIXc In the gold cot report, spreads between the commercials and non-commercials continue to decrease, while open interest continues to fall. Once the commercials give up their large short position, the metals usually base and start to move up. In 2018 the ECB stated the 500 euro will no longer circulate. In other news related story to going cashless, Amazon is going to open its first brick and mortar store in Seattle. You can download an app on your phone, do your shopping, and leave without the inconvenience of standing in a checkout line. IBM announced they will be hiring 25,000 employees over the next 4 years in the United States. It’s encouraging to see good paying tech jobs being created instead of the retail or bartenders jobs. Altria (MO) the trade of the week, finished up 1%.
Wednesday at 1pm CST the Fed will most likely be announcing a quarter point rate hike. Anything other than that outcome would stir up the market. Dow 20,000 here we come. That being said, check out the divergence between the S&P 500 and the volatility index. The difference has never been greater. Financials will rally while bond selling will continue. The dollar moved up to close the week at $101.60 on the dollar index. In return the precious metals downtrend continued, as did the spot price of uranium closing the week at $18/lb. AG the trade of the week was up almost 4% on Wednesday. It could not hold above its 200 day moving average and then sold off the rest of the week, to close down 10%. The other 5 stock set ups closed up between 2% and 8%. Oil prices should continue to get bid up next week with the new OPEC oil deal coming into play next month. Atwood Oceanics closed the week at $13.49 on large volume and should continue up if this deal holds. Airline stocks continued to climb with investors following the footsteps of Berkshire Hathaway purchasing Delta, American, and United Airlines. Stillwater Mining Company (SWC), one of the largest platinum miners was bout out by Sibanye Gold (SBGL) for 2.2 billion dollars. http://finance.yahoo.com/news/sibanye-gold-buys-stillwater-mining-032644218.html Since the election Passport Potash (POT) has rallied over 20%. It consolidated sideways for nearly a year and is beginning to breakout while paying a 2% dividend. According to a recent Boston Fed study, only 35% of credit card holders pay their balances off in full each month. That lines up pretty close with the statistic that 70% of the us population has less than $1000 to their name. http://lacrossetribune.com/business/investment/personal-finance/in-which-state-do-people-have-the-most-credit-card/collection_00631fa4-4f80-57dd-8db0-bf92f0b7013c.html
Oil was the big story this week, closing at $51.68 per barrel. Once again, OPEC is claiming production cuts of 1.2 million barrels per day will happen starting in January. Russia also agreed to cut 300,000 barrels per day to reduce world inventories. Let’s see if their talk is followed by action. A Trump presidency may encourage the OPEC nations and the Russians to cooperate. On Friday the silver stocks rallied. They will begin to play catch up with the other industrial metals (aluminum, copper, and steel) that took off at the beginning of November. The technicals look the strongest on AG and PAAS. A weakening dollar will help drive silver prices up. Duetsche Bank was fined sixty million dollars for rigging precious metals prices. Anywhere you find corruption in the financial market you usually find Duetsche not too far behind. Very quietly the house passed H.R.6393, a Russian propaganda bill. https://www.congress.gov/bill/114th-congress/house-bill/6393 There has been a lot of speculation that Russian propaganda was the reason Trump was elected. Claims are being thrown around alt-right media outlets are influenced by them. The real propaganda is coming from the insignificant big media outlets. The unemployment rate fell to 4.6% from 4.9%, as the economy added 178,000 jobs. Over 446,000 jobs left the employment rolls by either by finding work or exhausting unemployment benefits. The labor participation rate lingers at 62.7%, near a 30 year low. http://www.zerohedge.com/news/2016-12-02/payrolls-rise-178k-unemployment-rate-tumbles-46-average-hourly-earnings-slide The probability of a rate hike coming next week look pretty good. Financial stocks moved up, while bond selling continued. HPP, the trade of the week, finished up 1%.
This week the Dow closed at an all-time high. At the close on Friday, it was priced at 19,152. I opened up yahoo finance this weekend and saw a hat with wording on the front “Dow 19,000” I feel like that is the hat that is going to be shown in some documentary after the next downturn has concluded. With the legalization of marijuana in four states on election night other stocks benefited and began to rise. Papa John’s Pizza (PZZA) is up 10% in the past 3 weeks. The same holds true with Dominos Pizza now trading at a new all-time high. In November of 2012, when Colorado legalized it, PZZA moved up 15% to end the year and continued to climb the following fifteen months. Copper stocks and the spot price of copper continued to climb on hopes of infrastructure spending in the United States and an uptick in China Last week I indicated AT&T was priced well. It made a 4 percent move to the upside and has closed the trading day positive eight days in a row. Other quality companies have been beaten up as of late. Realty Income Crop. (O) has been pushed to $53 a couple weeks ago after hitting $72 at the beginning of August. At the moment it offers a dividend of over 4% and pays it monthly. IPCI, the trade of the week finished up 1%. The other 4 stocks to watch all closed the week positive.
In the three days following the election 22 billion dollars came into the equities market, while 9 billion dollars left the bond market. This is the widest margin between equities and bonds in the history of the market. For the moment the overall equities market is headed up. This shows there was a lot of money on the sidelines until the election was finished. The Chinese did a massive devaluation of their currency. It is now trading at a 7 year low to the US Dollar. Last week the dollar hit 101.20 on the USDX. This is a 14 year high. UUP, the dollar etf, closed the week at $26.19 per share with a strong technical set up. Within a week or two it’s going to test its March of 2015 high of $26.50. Bank stocks began to soar in the first week of November. The market could be building in a December rate hike. Janet Yellen stated “A rate hike will happen relatively soon, it dangerous to wait” Market expectations for a FED rate hike topped 90% that the FED will hike rates in December. https://tradingmarketrisks.com/2016/11/14/expectations-for-a-december-fed-rate-hike-top-90/ OPEC recorded a record high output in October which sent crude oil prices as low as $43 per barrel. With one month of fiscal 2017 on the books government debt recorded 44 billion in debt. Berkshire Hathaway took positions is four airline stocks. If you want to by the airline market as a whole JETS is the etf for you. AT&T plunged from $43 to $36 dollars per share and looks to have bottomed for the short term. This might be a good entry. AT&T is also paying a healthy 5.28% dividend. Keep in mind the P/E ratio is only 16/1, while the rest of the market is averaging a P/E ratio of 27/1. Last week’s trade of the week, FNSR, finished up just under 6%.
With the election of Donald Trump on Tuesday, the market went on a wild ride. Early on Wednesday the futures were down more than 900 points. Despite that, the Dow closed positive the next three days in record territory on Friday at 18,847. It closed with 17% more volume than average. Biotech companies are the big winners after being under scrutiny with a Clinton win. Sectors that benefited were industrials and financials. Big selloffs occurred in the consumer staples and utility sectors. The dollar closed at $99.00 on the USDX. It will face strong resistance at $100.00. A break above that will result in a continued downtrend in gold and oil. Ten year treasuries moved from 1.82% to 2.11% which drove up lending on mortgage rates. Copper mining and water stocks rallied on Trump’s plans for investments in American’s infrastructure. He wants to cancel billions in payments to the UN climate change program and use that money to fix America’s water systems and infrastructure. The attached link shows his contract with the American voter. http://assets.donaldjtrump.com/_landings/contract/O-TRU-102316-Contractv02.pdf India is the newest country to continue the war on cash. Last week the Indian president came out and banned the $500 and $1000 Indian Rupee. The reason given was to fight corruption and tax evasion. ATM limits in India have been set to the equivalent of $30 US dollars per day. The exact opposite problem is occurring in Venezuela. The government put out bids to three printing companies to print $500, $1,000, $5,000, $10,000, and $20,000 bills to combat hyperinflation. At the moment people are weighing cash when purchasing goods. In California, Senate Bill 1234 is now making it mandatory for businesses with more than four employees to set up a retirement account. Conveniently that money will be safe guarded by the quickly going under CALPERS. http://www.latimes.com/business/la-fi-state-retirement-plan-20160829-snap-story.html Two of Chris Christie’s former aides were sentenced in “Bridge gate” They will be sentenced on February 21st facing the maximum of 86 years in prison. Wells Fargo scams millions of people and two upper management employees get paid over $260 million. A couple of political underlings close a bridge and face life in prison.
Tim Cook, the CEO of Apple, is the latest influential person to come forward in the war on cash. “Apple Pay could be the catalyst that ultimately gets the world to switch from cash to digital payments.” This was a recent quote from Cook in an interview with a Japanese news service. http://fortune.com/2016/10/17/apple-tim-cook-cash/ First the Federal Reserve and the Bank of England indicated it is ok to overshoot their inferred inflation targets. Now the Bank of Japan has echoed the same thoughts. Let’s see if these platitudes are valid through monetary policy going forward. Stocks have recorded their longest losing streak in the past eight years. Last week the Dow jones gave back 284 points or about 1.5%. The cause for concern would be the selling that is coming in at the end of the trading day. The last 30 minutes of trading is dominated by large institutions and they were doing a lot of selling last week. Keep in mind this two week correction has only amounted to a 3% selloff. The Federal Reserve minutes were released with no changes to the fed funds rate. They were not going to mess with the markets so close to the election. Crude oil prices got crushed this week closing at $44.13 per barrel. The market thoughts I posted on 10/2/2016 are now being vindicated. I think that OPEC cutting oil production is the same probability of the Federal Reserve raising interest rates. All talk no action. OPEC is not cutting production, the Russians are not cutting production, and the inventory increased 14.5 million barrels from the previous week. Q3 GDP had its strongest quarter in some time thanks to a one time soybean export order. Corporate bond etfs LQD and VCLT have corrected to the downside on large volume in the past two weeks. The big story is volatility. The volatility index rose from $13 on October 24th to $22.50 at the close on Friday. That is a 73% move in the past two weeks. In the gold space the COT reports show the commercials are begging to add to their short position the past couple of weeks. http://snalaska.com/cot/current/charts/GC.png More times than not you can expect metals prices to fall when commercials add to their short positions. FCX closed the week up 1%, not a huge return, but that makes 8 out of 9 weeks the trade of the week has closed in positive territory.
Once the election is over, health care should be the hot topic heading into 2017. On average premiums will rise 25%. In six states the increase will exceed 50%. The most extreme increases will be in New Mexico where some premiums will rise 93%. http://bustthebailouts.com/premium-increase-tracker-map/ The Chinese housing bubble continues to build. It now takes 18-20 years of disposable income to purchase the average Chinese property. In comparison, the average US home only costs 5 years of disposable income. 10,000 soldiers from California received notices they would need to repay their enlistment bonus from deployments that occured more than 10 years ago. The payouts range from $5,000 to $15,000. These soldiers were having their wages garnished to reimburse the pentagon. When this story became public knowledge, US Defenses Secretary Ash Carter ordered the Pentagon to stop seeking repayment. https://www.yahoo.com/news/us-defense-chief-dont-seek-repayment-enlistment-bonuses-142316557--politics.html Crude Oil closed the week at $48.66 per barrel. A sharp pullback caused by the OPEC nations not cutting production. Russia was going to reduce supply and then did an about face. They made a deal to start shipping more oil to the Chinese. Soybeans had its biggest weekly gain since July closing at $10.26 a bushel. Uranium continued its downtrend finishing the week at $20 per pound. Spot copper prices rose over 4% in the past two weeks finishing at $2.18 per pound. The trade of the week, AKS, was up as high as 10% Tuesday, but finished the week up 1%. This makes the trade of the week profitable 7 out of the past 8 weeks.
Wells Fargo will be losing its accreditation with the Better Business Bureau and is being investigated by the California Department of Justice. Maybe the California Public Employees Retirement System can get some of that cash. CALPERS reported a return of six tenths of one percent in the past year. To keep the system solvent returns of 7.5% are needed. That will be tough as a general slowdown in the US economy continues. The average car is sitting on the lot over 95 days before being purchased. Retail mortgages fell 7.1% in Q3 and are down 6% for the year. Amazon September deliveries are down, rail volume is down, and Boeing is closing a plant in Georgia that produces cargo planes because of a lack of demand. In a recent USA today article, 2/3 of Americans are limiting monthly spending. The four reasons given were as follows; saving money, no income, worried about the economy, or they have too much debt. Three million silver eagles were sold in the first two weeks of October. That matches total sales for the year in 1996. https://smaulgld.com/wp-content/uploads/2015/11/american-silver-eagles-sold-1985-2015.png Crude oil closed the week at $50.85 a barrel. With the market slowdown, overhead resistance around fifty dollars, and excess supply I don’t see it moving higher unless the confrontation with Russia escalates. Copper closed the week at $2.09/lb. This is only eleven cents away from its recent low of $1.98/lb. in January of 2016. Last week CSC closed the week up over 2%. That makes 6 out of 7 weeks the trade of the week has closed positive.
John Stumpf, the CEO of Wells Fargo, will be stepping down and recieve a $143 million benefit package. While the media has been playing the Donald Trump tapes from 11 years ago around the clock, here are some news items they missed. Putin has ordered overseas Russian officials to bring family members home. Russia would like to reestablish their presence in Cuba, and the US tested two dummy nukes in the Nevada dessert. The State Department funneled over 9 million dollars through the Peace Corps into a non-profit run by John Kerry’s daughter Vanessa. She brought home over $140,000 per year working 30 hours a week. Recently Steve Eisman, a character from “The Big Short” who made billions shorting the housing market came back to the same stage where he made that call in 2007. When asked what the next big short would be, he replied “The only big short out there is when the world loses confidence in QE” http://www.zerohedge.com/news/2016-09-19/big-shorts-steve-eisman-reveals-what-next-big-short This week the dollar closed strong at 98.14 on the US dollar index. Overhead resistance will be tested at 100. If that is broken the commodity smash will continue. Gold and silver entered into a short term downtrend as both metals had sharp price declines on large volume. If the dollar plateaus and corrects to the downside, the precious metals will do the exact opposite, and move back up. Oil continues to test its overhead resistance at $50 a barrel. TSU, last weeks trade of the week finished up 2%. The trade of the week has finished positive four out of the last five weeks.
Duetsche Bank’s fine levied by the Department of Justice came out to 5.4 billion dollars. That was 60% less than the 14 billion that initially came out. Duetsche Bank has between 50-70 trillion dollars of derivatives on their books. Not a good idea to prick that bubble. On Friday the British pound had a flash crash. Another “fat finger” market event. These are becoming more prevalent as time goes on. The New York pension fund lost 70 million dollars from the Wells Fargo fallout. France issued a 50 year bond. I wonder who is going to lock in a bond of that duration with little to no yield. Russia wrapped up war drills involving 40 million civilians. That is a bit unnerving since the US put a no fly zone over Russia’s neighbor Syria. In the US, 7.9 million people now hold multiple jobs, that’s a new record. Larry Summers stated the US Government should purchase stocks. To steal a phrase from Gerald Celente, “Those who run the economy will come up with schemes undreamed to keep the system going” http://www.bloomberg.com/news/articles/2016-09-30/summers-floats-idea-of-sustained-government-stock-purchases The natural gas etf, UNG looks like it is breaking out, while the spot price of uranium fell to a new low of $23.75 per pound.
As of the close on Friday, fiscal year 2016 is complete for the US Government. A 2017 budget is nowhere in sight. Not even a stop gap spending package has been passed. Oil rallied over $48 dollars per barrel after OPEC met and agreed to cut production. I think the OPEC cutting oil production is the same probability of the Federal Reserve raising interest rates. All talk no action. When the markets figure that out oil will rollover. With all the current events taking place and knowing we are in October volatility will enter the markets. VXX will be on the move this month. AMD, last week’s trade of the week, closed up over 5% at $6.91. Will the Saudis dump their US Treasuries after the JASTA was voted on last week by the senate and congress? The Bank of Japan has agreed to buy as many Japanese Government Bonds (JGBs) as necessary to keep long dated bonds low. They were constrained by a certain amount each month. Now the buying is unlimited. Duetsche Bank is going to be fined by the DOJ between 5-6 billion dollars. Since the amount was lower than originally expected, their stock bounced 14% on Friday. The Chinese Yaun has officially become an has entered the IMF basket of currencies with SDR access. One SDR will equal $1.40 us dollar.
The Dow Jones finished slightly higher for the week closing at 18,261. Gold added over $30oz. With the Federal Reserve leaving rates unchanged volatility plays that moved higher prior to the meeting were quickly smashed back down. With the first debate coming on Monday night I am curious in if political hyperbole will move select industries in the days that follow. Solar stocks like First Solar moved up nicely on Thursday and Friday. However, continued strength would be needed before hoping on the solar band wagon. I have been watching Brazil Resources (BRIZF) since its IPO in June of 2015. Last week the company came forward and inferred their deposits held 18 million ounces of gold instead of the 10 million indicated earlier. This might be a good place to place for speculative cash. This stock was a quarter in January and on Friday it closed at $2.40 per share. If you are a longer buy and hold dividend stocker holder AT&T (T) has consolidated a bit and started to move up last week. It pays a healthy 4.6% dividend.
Just as expected the Fed stayed away from raising rates. In return, most of the sectors in the market rallied. The Dow Jones finished up 163 points. Crude oil crept back to $45.59 per barrel, and gold closed above $1330oz. Volatility was the big loser today. The Wells Fargo CEO was blasted by the senate banking committee on Tuesday. My latest article talks about that massive fraud. The article can be found here www.moneyandtrading.com/articles As of late, I have railed against Ken Rogoff and his recent book release. A podcast I listened to today had an interesting take on the timing and content of the book. The host thinks the release of “The Curse of Cash” is Rogoff throwing his hat into the ring to be the next head of the Federal Reserve. He compared it to papers Ben Bernanke put out in the early 2000s, indicating he would drop money from helicopters to fight of a recession. Just something to think about.
This is a big week for the markets. On September 21st, the Fed and the Bank of Japan will be coming forward with their current plans. As I have said before, I think the Fed will remain dormant until after the election. On the other hand the BOJ is completely rouge. Japanese Government Bonds, (JGBs) don’t even get bid on unless the BOJ shows up to buy them. Right now the BOJ owns over 50% of the Japanese bond market. http://davidstockmanscontracorner.com/madness-over-tokyo-boj-owns-over-half-of-japanese-etfs/ 10 year bond yields leveled off to 1.7% after a huge spike from 1.5% the week before. As I indicated last week, crude oil prices dropped from $46.41 and closed $43.75 per barrel.
On Friday the markets had their biggest selloff since June. It seems they are building in a rate hike. At Jackson Hole Janet Yellen indicated the July data looked good and rate hikes were a possibility. The same thoughts were echoed by Japan’s central bank president. Last week, Mario Draghi, mentioned the governing council did not discuss extending its bond buying program past March 2017. Chances are the requirements won’t be met for that program to end and QE will continue in European markets. http://www.ft.com/fastft/2016/09/08/draghi-did-not-discuss-extending-qe-euro-pops-higher/ The Spider S&P 500 ETF (SPY) moved down on well over double its normal volume, with close to 200 million shares traded. The moves to the upside have been on week volume and the selloffs have induced large volume, just something to make note of. This correction finally moved the volatility stocks. They include VXX, TVIX, and VIXX. Utilities as a sector got hit the worst falling over four percent. The ten and thirty year treasury bonds spiked which in turn caused housing stocks to get correct sharply. The August data that came out was not good. This would indicate the FED would not raise rates if they are data dependent, as they claim to be. If this correction were to continue for a period of time the fed funds rate would be cut to zero and QE4 would be on the table.
Oil continues to be range bound between $40-$50 per barrel. Strong overhead resistance can be found at $50. In my opinion, oil prices still need to correct to the downside. There is still an excess of supply that needs to work its way through the system. The commercial shorts agree with my position on the commitment of traders report. On August 31st, The Energy Information Administration released a report showing the oil inventory increased by 2.27 million barrels. The expectation was an increase of 1.3 million barrels. http://www.investing.com/analysis/crude-oil-update---the-energy-report-200151202 If you are a speculator in the precious metals sector, it might be time to start taking your position. Silver Wheaton, (SLW) found support at $25, and finished the week strong. The recent pull back below its 50 day moving average was needed. In the most recent silver COT report, it shows the large commercials are covering some of their short position. When this occurs it usually paves the way for higher prices. Last week, all the trade of the week set up ideas finished positive.
For the last six weeks, the S&P 500 continues its sideways consolidation, on less than normal average. An interview I listened to a few days back, made a statement that took me by surprise. Only 29 of the 500 S&P companies use general accepted accounting principles. (GAAP) The attached link will show you how the data is changed with a little creative accounting. http://www.investopedia.com/articles/investing/022516/mind-gaap-buyer-beware-profit-adjustment.asp In Germany, negative interest rates are starting to take a toll on savers. Safe operators are manufacturing at their limits to keep up with demand. You can either put your money in the bank and have it take some of your capital, or you can buy a safe and not incur those fees. http://www.wsj.com/articles/german-savers-lose-faith-in-banks-stash-cash-at-home-1472485225 Rumors are Angela Merkel is going to lose her upcoming election by a landslide because of the German economy and the mass migration that is taking place under her watch. Make sure to check out the articles tab that was recently added to the home page. http://www.moneyandtrading.com/articles/ There you will find the first published article. It will also be posted at www.sgtreport.com at 8:00pm CST.
Those who went long on TLT (I Shares 20+ year bonds) in June profited handsomely. Now it looks like that trend is starting to reverse. TLT sold off on Friday on three times its normal volume. It is still holding its 50 day moving average. If this downtrend continues TBT, the ultra-short 20+ year treasuries, maybe the way to play it. Its price and volume has increased for the past three trading days. GDP revisions for Q2 came out last week. It was revised down to 1.1%, from 1.2%. Expectations were 2.6%. This is another reason Mike Maloney declared an official recession two weeks ago. I believe the metals short term correction will continue this week. The next signs of strength maybe a great entry for most mining equities. On the stock screener, finviz, only 2 gold stocks have a relative strength index above 50. No silver stocks have an rsi over 50.
A tremendous opportunity has presented itself in the precious metals equities. This industry has done nothing but go vertical since the beginning of February. GDX started its rally at $12.90 and put in a short term top of $32 per share. As of the close today it is trading at $27.31. Most of the gold and silver stocks mirror one another the way there are set up on the chart. I am really curious how the market is going to react to Janet Yellen’s Jackson Hole Speech tomorrow. I have a good feeling spot prices of gold and silver are going to be volatile. The gold/silver ratio has climbed back to over 71:1. This is up significantly from the beginning of August when it was 66:1. Real estate came out with good numbers in regards to new housing starts. That combined with real estate becoming its own sector next month, and low interest rates make residential reits as an industry to keep an eye on. As I stated in previous market thoughts, you should focus on residential and healthcare reits.
This week the Dow and S&P 500 finished relatively flat. On the daily charts, it is obvious the institutions that trade in the last half hour of the day are heavy sellers. That is something to watch going forward. The Federal Reserve released minutes from their July meeting and the vote was 9-1 to leave rates as is. I highly doubt a rate hike will occur until next year. With the election at the beginning of November, the Fed will try not to make any waves to skew the election either way. New stimulus would move the markets up and put Hillary in the White House. Massive tightening by the Fed would tank the markets and Donald Trump would be elected. FEYE is the trade of the week. Cyber security is going to be an important sector today and in the future. These attacks could affect the grid, the stock exchange, or any electronic files stored. Check out http://hp.ipviking.com/ to watch cyber-attacks happening all around the world. Other tickers to play cyber security include PANW and CYBR.
This week the other precious metal, rhodium, started to show signs of life. At the end of July its price touched $575/oz for a couple days. As of the close on Friday it was over $600/oz. Rhodium is used to manufacture cadillac converters. It’s an alloy for combining platinum and palladium. Russia and South Africa are the world’s top producers of the metal. At the moment our relationship with Russia is not the best and South African minors frequently go on strike. That is something to think about, especially when you know rhodium is rarer than gold. It peaked out at almost $10,000/oz in June of 2008. Rhodium can be purchased in 1oz and 5oz bars. To find an equity to invest in head to http://www.miningfeeds.com/rhodium-mining-report-all-countries Stocks listed on this site include: LNMIF, ZMPLF, and ELRFF.
The August 2016 jobs report numbers have been released. According to the Bureau of Labor Statistics (BLS) 255,000 new jobs were created. I would speculate this number has been manufactured to the upside a bit. Unemployment remained unchanged at 4.9%. Even Dennis Gartman, a guy I don't agree with most of the time pointed out 85,000 of these jobs were created through the birth/death model. This was tool created in 2000 where the BLS can take a guess with little back up of how many jobs were lost and created. Earlier in the month Q2 GDP numbers were released, coming in at 1.2% well below the 2.6% expected growth. Despite the lack luster GDP report, the Dow & S&P 500 continue upward.
A few days ago Mike Maloney released a new video discussing the topic of bond yields. Treasuries issued by the government range from a 3 month bill to a 30 year bond. Normally, the longer time duration of bond should reward the bond purchaser with a higher rate of return. When short term bonds are higher, that indicates investors are nervous. More times than not, a market corrections occurs when this takes place. These investors can be referred to as bond vigilantes. Today the yield curve is flat. Investors should be aware this is taking place. For a visual walk through click on the attached link. https://www.youtube.com/watch?v=45YTbktmed0
Today the Federal Reserve will wrap up their meetings and release their notes. My assumption is because of BREXIT, rates will remain at current levels. According to Peter Schiff, in an interview earlier today, rates will be cut before they are raised again. For those who are not familiar with Peter, he is a perpetual bear. Federal Reserve vice chairman Stanley Fisher said 4 rate hikes would occur in 2016. Those remarks were made in early January 2016, and you can find his statements in the attached link. http://www.reuters.com/article/us-usa-fed-fischer-idUSKBN0UK1OT20160106 I would put myself in Peter Schiff’s camp. Every 1% raise to the fed funds rate is an increase of 190 billion to the federal deficit. If rates were ever put back to their historical average of 5%, that would add almost a trillion dollars to the deficit. In 2015, 2.8 trillion dollars were collected in taxes. That means 40% of the budget would be dedicated to making interest payments. Rates will remain unchanged for the foreseeable future.
Starting on September 1st, real estate will become its own sector in the market and make up 3.5% of the S&P 500. According to JP Morgan, 100 billion dollars worth of real estate investments trusts,(REITS) will be purchased to keep that sector from being underweighted in their portfolios. XLRE is going to be the newest addition to the sector spider etf platform. On the flip side financials could take a hit losing one of its top performing assets. REITS are required to pay out 90% of their taxable income to shareholders through dividends. In a market where good dividends are not easy to come by, a good health care reit can get you a dividend of 5-7%, and a residential reit can provide 6-12%. For long term investors buying a healthcare reit might make sense. With a large baby boom generation needing medical care, HCN or HCP are a couple stocks to check out. If you are holding a lot of cash, and want a large dividend, a residential reit like NRZ or TWO are a couple tickers to look at. Make sure to add a stop loss when buying to limit any downside moves. For more information on reits click here click the attached link. https://www.reit.com/investing/reit-basics/what-reit
Today the equities overall were uneventful. Again low volume was seen in SPY (S&P 500 SPDR) This will make the third day in a row of less than 60 million shares traded. On average this ticker trades 100 million shares per day. Since the end of June the dollar has climbed above its 200 moving average. It crossed the 97 handle on the US Dollar Index, and remained there all day. At one point it climbed as high as 97.30. Gold and silver, as industries lost the most today, down 6% on average for the equities. Price pullbacks to the 50 day moving averages on most of these stocks would be healthy. Solar made a good overall move today. Sunpower Corporation (SPWR) finished the day up over 4%. Solar City (SCTY) finished the day up 2.63% at $26.95. On June 22nd, 26 million shares were traded, and since that day the price continues to climb. That is more than four times the normal volume for that stock. Remember volume always precedes price. Don't lose sight of the solar trade. Solar City was a 10 bagger in a little over a year in 2013. As a sector it will take a rocket ride again.
United States Steel Crop (X) is the trade of the week. X has moved steadily up since the middle of May. On May 17th, very quietly, the US Department of Commerce put a 540% tariff on cold rolled steel from China. This steel is used in appliances, cars, and electric motors. Before the tariff, China produced over 50% of the world’s steel. That is more than the US, European Union, Russia, and Japan combined. Other Steel companies like AKS and SID are trending in the same direction. It looks as if the rally will continue. At the end of May the Fed has allowed 30 banks to buy back their own stocks. Leading the way Citi Group will buy back 8.6 billion, Bank of America will do 5 billion, and Morgan Stanley will buy back 3.5 billion. So between those three banks that accounts for 17 billion dollars. It leaves me wondering how much will the other twenty seven banks purchase. This will move up the struggling financial sector. For example, Goldman Sachs was trading at $142 per share. On Friday it closed at $161.64.
We have new all time highs in the Dow and S&P 500. The Dow Jones closed at 18,506. Intra day it touched 18,534. The S&P 500 closed at 2,157. The large move in stocks in the past couple days are a direct result of the Bank of England keeping their 0.5 interest rate. This rate has been kept at that level since March of 2009. These new highs are coming on low volume moves. On average the SPY sees volume of 100 million shares traded per day. Yesterday volume was only 82 million. The S&P 500 has a p/e ratio of 25. The Schiller p/e ratio is valuing the S&P 500 at 27. As a reference, when valuing the S&P 500 p/e ratio, 0-10 is considered under valued, 10-15 is fair value, 15-20 is overvalued, and above 20 is bubble territory. To see a historical chart of this go to the investing tab and scroll to the bottom. (See the attached link for p/e ratio charts http://www.multpl.com/ )First Majestic remained strong, closing at $16.94 yesterday. This is up 10% in the last 2 trading days. The commercials continue to acquire the largest short position in history according to the commitment of traders report. Typically those shorts bring down the sport price of the metals. The new COT report can be found by clicking on the gold and silver tab.
I think precious metals bulls are happy to see a pullback of $25 in gold and $0.50 in silver. The metals and especially the equities were starting to make parabolic moves. If you have the chance, go to my interview page and listen to an interview by Keith Neumeyer. He is the CEO of Frist Majestic Silver. This stock has run from $2.50 in early February to almost $17 dollars yesterday. In the interview, Keith explained his company is mining silver out of the ground at a 9 to 1 ratio to gold. Silver is much rarer than most people realize. If you look at the current gold to silver ratio it is still 66:1. At the beginning of June it was as high as 76:1. Every 5 to 6 years this ratio moves under 40:1. Mr. Nuemeyer stated every $1 the spot price of silver moves up the company gains 20 million dollars of revenue. Between 18 and 19 million of that is profit. This shows the everyday investor what kind of leverage you get if purchase precious metals stock vs the metals. A 40% rise in the spot silver equaled almost a 700% rise in the stock. In 2011 First Majestic was producing 7 million ounces of silver and the stock price was $25. Today they are producing closer to 20 million ounces and the current stock price is $15.41/share. Keep in mind, in 2015, 800 million ounces of silver were produced and 1.1 billion ounces were consumed. I would love to see this metals downtrend continue but I am not going to bet on it.
How are the markets going to open up tomorrow? Those watching the S&P 500 will need to watch just above 2130. It made a run at its 52 week high on Friday. However towards the close heavy selling volume entered the market. If your a short term trader it maybe a good day to sit it out and let the market decide which way its going to go. Since the beginning of June gold and silver have made relentless moves to the upside. Seasonally, its out of the norm. More times than not, a good rule of thumb is to buy the metals just after the 4th of July. Not the case this year. This is occurring in spite of a dollar that is remaining stable and climbing on the US dollar index. On June 23rd the dollar was at the 93 handle. As of July 10th it is remaining above 96.
The European Union isn't just dealing with BREXIT. As of yesterday Italy has banned the short selling of all its banks. Monte dei Paschi, its third largest bank was in free fall. Black Rock made a statement earlier in the week to get out of all EU bank stocks. Low yields around the world is putting pressure on the banking industry. Stock prices for Deutsche Bank and Credit Suisse hit all time record lows. 400 billion dollars is the current number Italy is giving for all the bad debt attached to their banks.. In England three property funds have suspended outflows. Spain made an announcement their version of social security will expire in 2018. This may bump the euro down and push the dollar up in the short term. http://www.zerohedge.com/news/2016-07-06/italy-bans-short-selling-monte-paschi-three-months-forgets-ban-buying-cds
I clicked on yahoo finance for a quick scan of the markets and I see the 10 year treasury at 1.37%. This is an all time low and is probably one of the higher yields around the world. If you are not aware mortgage rates are determined by the US 10 year treasury. According to yahoo finance, this puts a 30 year mortgage at 3.36%. In my opinion these low rates are sending false signals to the market. To me cheap rates = over priced assets. Before the end of the decade I envision 35 year mortgages being rolled out in mass to keep the housing market propped up. The propping up of real estate will make the REITs I talked about 2 days ago more attractive. We are following Japan down the road of stagflation where you can get a 35 year sub 2% mortgage. Fannie and Freddie are back with the 3% down payments. The plan is the same in every sector of lending cut the interest rate and extend the loan. An interview I listened to last week mentioned a Ford dealer in the southwest claiming a large majority of his business was selling cars with 84 month loans. (7 years time to look at puts on F and GM) 60 years ago people probably bought their home in that amount of time. Then you pile on paying off school 10-20 years later. Then put some interest free furniture in your house, and if you can't buy the $600-800 I phone, just build it in your plan. Instead of letting prices fall, cheap credit and easy money is all that is left propping up the market. https://ycharts.com/indicators/sales_price_of_existing_homes
With the Dow approaching 18,000 and the S&P closing in on 2,100 I would expect a downside correction to occur. The selloff after the BREXIT was massive and volume that followed was not as robust. This leads me to believe the bear market is starting to set in. The dollar firming up will also keep the equities in check. It might be time for investors and traders to do their homework in the real estate market. Real estate will become its own S&P sector in August of 2016. At the moment real estate is under the umbrella of the financial sector. Institutions will increase holdings with this change, especially with REITs offering high dividend yields. http://www.fortunebuilders.com/real-estate-awarded-its-own-sector-in-the-sp-500-48158/