Bill Cara’s Blog for Mar 13, 2012

CTA Trading Desk Morning Report

[7:00am ET] Good morning.

While not all sector stocks are cranking on all cylinders, it’s a fact that the US equity market is now at the highest price level since June 2008.

This morning, buoyed by stronger global economic data and a further period of low interest rates and quantitative easing that will eventually help restore the financial strength of the major international banks, traders have adopted the ‘risk on’ mind-set.

Europe is in the green today and it’s not even St. Patrick’s Day!

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Metals are a tad late to join the party, but I believe they will. You cannot afford to be missing the low prices in some of the metals stocks.

Have a good day. Today I get back to trading!


Good morning, Geoff here.

February Retail Sales came in at 1.1% which exceeded January’s 0.6% and is the largest since September. Are consumers spending more? Two-thirds of the increase is due to rising gasoline and auto sales. Excuse me, but why is a rising gas cost seen as positive? Oh well, who am I to stand in front of the algos if they want to run the market to new highs on headline numbers.

The FOMC announcement is scheduled for release at 2:15 ET. The Fed is expected to leave rates unchanged and traders will be looking for clues of future stimulus. Regardless of what the official statement says, if it isn’t clear to you by now that stimulus is not stopping anytime soon, I don’t know what to tell you.

Don’t be surprised to see the market trade in a fairly narrow range until after the Fed announcement. We may get a new closing high in the S&P 500 so be prepared for that.

Have a great trading day!


Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.

Symbol Name Last Trade Change Related Info
^ATX ATX 2,170.34 6:44AM EDT Up 28.15 (1.31%) Components, Chart, More
^BFX BEL-20 2,307.98 6:59AM EDT Up 26.90 (1.18%) Components, Chart, More
^FCHI CAC 40 3,529.84 6:59AM EDT Up 39.78 (1.14%) Components, Chart, More
^GDAXI DAX 6,975.14 6:44AM EDT Up 73.79 (1.07%) Components, Chart, More
^AEX AEX General 330.01 6:44AM EDT Up 3.91 (1.20%) Components, Chart, More
^OSEAX OSE All Share 484.39 6:44AM EDT Up 3.63 (0.76%) Components, Chart, More
^OMXSPI Stockholm General 346.37 6:59AM EDT Up 3.67 (1.07%) Components, Chart, More
^SSMI Swiss Market 6,234.40 6:44AM EDT Up 44.54 (0.72%) Components, Chart, More
^FTSE FTSE 100 5,941.48 6:44AM EDT Up 48.73 (0.83%) Components, Chart, More
FPXAA.PR PX Index 990.90 6:59AM EDT Up 5.00 (0.51%) Chart, More
MICEXINDEXCF.ME MICEX Index 1,608.72 7:44AM EDT Up 4.98 (0.31%) Chart, More
GD.AT Athex Composite Share Price Index 743.27 6:44AM EDT Up 9.38 (1.28%) Chart, More

http://finviz.com/futures.ashx

http://finviz.com/fut_chart.ashx?p=m5&t=ES

http://finviz.com/fut_chart.ashx?p=m5&t=ZB

http://finviz.com/fut_chart.ashx?p=m5&t=DX

http://finviz.com/fut_chart.ashx?p=m5&t=GC

http://finviz.com/fut_chart.ashx?p=m5&t=SI

http://finviz.com/fut_chart.ashx?p=m5&t=CL

The team will check in during the day, reporting in the Discourse when there is a new entry.

Enjoy your day.


Cara on Trends & Cycles


Vad’s Catch of the Day


Kaimu’s Sound Money


CTA Trading Desk Mid-Day Report


CTA Trading Desk Post-Close Report


  1. McEwen Mining announced new discoveries on it's Mexican... [#106229]
    By: papadynamite (446 comments) Go to top ↑

    McEwen Mining announced new discoveries on it’s Mexican properties, very rich in silver. Go to the company’s web site to read the details.

  2. 7:30 AM ET NFIB Small Business Optimism Index 7:45 AM ET... [#106230]
    By: davefairtex (5215 comments) Go to top ↑
  3. 1 in Accumulation Zone 1 in Buy alert 2 in Distribution... [#106231]
    By: davefairtex (5215 comments) Go to top ↑
    • 1 in Accumulation Zone
    • 1 in Buy alert
    • 2 in Distribution Zone
    • 7 in Sell alert

    Accumulation Zone: Monthly 4, Weekly 2, Daily 12
    Distribution Zone: Monthly 12, Weekly 22, Daily 10

  4. ... [#106234]
    By: Bull Hunter (3552 comments) Go to top ↑
  5. Some longer meanderings under this heading for those... [#106233]
    By: Juniorgoldminerseeker (228 comments) Go to top ↑

    Some longer meanderings under this heading for those interested in the risk or value offered by gold and juniors on the end of yesterday’s thread.

    By the end of today following the FED will all be much clearer no doubt..!

  6. ... for non-FB... [#106238]
    By: Vadym Graifer (4341 comments) Go to top ↑

    … for non-FB users:

    http://tradinglog.realitytrader.com/2012/03/mar-12

    (Posting it a day late… Has been off-line whole day yesterday right after finishing 1st hour of trading, as wind storm took down power. Nothing like a day without Internet, phone and TV to remember normal temp of life :)

  7. ... [#106239]
    By: Les (7233 comments) Go to top ↑
  8. ... [#106240]
    By: Les (7233 comments) Go to top ↑
  9. AAPL - numbers raised at Jefferies. Shares of AAPL now seen... [#106241]
    By: Bull Hunter (3552 comments) Go to top ↑

    AAPL – numbers raised at Jefferies. Shares of AAPL now seen reaching $699, Jefferies said. Estimates also raised on early production evidence of iTV. Buy rating.

  10. We are all waiting for the FMOC announcement this... [#106242]
    By: Jeff B (715 comments) Go to top ↑

    We are all waiting for the FMOC announcement this afternoon, the key factor in these speeches are ques for future QE.

    With any positive indicator, be it a trumped up employment number, a faulty leading indicator or a spending statistic (as Geoff noted based largely on rising gas prices), it allows the Fed to buy time and proclaim that in spite of persistant weakness, there are “signs” or building strength.

    This is what Public Relations firm specialize in when they craft phrases like:

    “We are working tirelessly to help our clients, and while challenges remain, we are encouraged by signs that some sectors are pointing to renewed strength in the future, should current conditions remain stable.”

    The Fed needs a perfect storm of conditions in which to work their faulty magic act: With the stock market not tanking, economic indicators not showing accelerating weakness, the USD remaining strong in the face of ongoing EU weakness, and gold remaining somewhat stable, there is no reason for them to show their hand and even suggest subsequent rounds of QE at any time.

    At best, they will acknowledge as they always do that the FED is ready to act in the event things change.

    My prediction, and Ill be the first to admit if Im wrong:

    The fed gives a cautious but slightly optimistic read on the economy, stocks rise a touch and gold falls.

    If Im wrong, lets discuss why Im such a bad fortune teller!!!! ;)

    Good luck.

    • In the egg on face competition; I wonder if an... [#106244]
      By: Juniorgoldminerseeker (228 comments) Go to top ↑

      In the egg on face competition;

      I wonder if an announcement on Mortgage backed paper purchases, (played as helping the little homeowners, not big financials in an election year) takes “action” on US housing issues and justifies the tell in housing stocks pointed out here the other day. Fed “action” with some market direction already behind it.

      In reality Housing / MBS “fixes” banks
      Banks flow liquidity; massive recent deflation fear bond flows look overdone.
      Gold smells liquidity and takes recent safety flows from those still wary of property and an over-stretched stock market?

      Fed stands ready to sterilise, but not yet…

    • If significant "action" by the Fed is required during 2012... [#106256]
      By: Juniorgoldminerseeker (228 comments) Go to top ↑

      If significant “action” by the Fed is required during 2012, for example as twist expires, how long can it be left in an election year before it becomes deeply political and seen as partisan?

      Should “actions” be taken now, can they be left much longer?

      $, Gold coil indeed.
      Does it have to be broken first before “actions” can be taken to fix?

      I notice Steve Saville today writing of sterilised QE being inflationary. Hussman writes of exits from QE and interest rate increases from here being inflationary.

      • Juniorgoldminer, 1. I dont understand your question, how... [#106258]
        By: Jeff B (715 comments) Go to top ↑

        Juniorgoldminer,

        1. I dont understand your question, how long can “what” be left?

        2. your 3rd sentence makes no sense either.

        3. Yes Steve Saville wrote that, and Hussman wrote that as well.
        You offer no detail, context, commentary or observation.

        This is a shell post.

        Tell us what you think, what you observe or where you found your sources of interesting information. Thats what this community is all about. We know you have some interesting things to say, so show us what you got!!

        Thanks,

        • Jeff, Sorry for that brief post, it really followed from... [#106312]
          By: Juniorgoldminerseeker (228 comments) Go to top ↑

          Jeff,

          Sorry for that brief post, it really followed from my previous one replying to yours where I did put some wider imaginings of the FOMC, and am still wiping egg from face, no MBS purchases after all, I was just adding the thought that maybe the Fed was running out of time to take grand actions, before appearing partisan in an election year. By actions of course I mean QE3 in whatever form so many expect to be required just to finance the deficits and to clear what so many assume to be underlying weak balance sheets in the financial sector, though the stress tests “officially” challenge that assumption it seems.

          As for the FOMC Vad and yourself nailed it again.
          I guess gold’s follow through tomorrow will determine the direction of HUI and the miners, we might have followed the Dow lower when that had problems but I’m sure we’ll follow gold lower if that is weak too even if the Dow parties.

          I have been getting in trouble for linking here so maybe you can PM me and I can be clearer what I should and shouldn’t link, I have tried to a) exclude links to my blog and b) some of the “forums” / “blogs”, e.g. FT Alphaville I read recently and stick to more formal news / facts.

          My third sentence was alluding to yesterday’s discussions of coiling markets in precious metals. A breakdown of the “inflation trades” here would seem to indicate that we must first see something much uglier before the Fed will intervene, I just wonder if, as Bill’s WIR so often says, the “powers” have learnt something from 2008 and will seek to “prevent” rather than imagine they can cure something so extreme.

          The Hussman / Saville references were alluding to things I have discussed previously but of course that is pretty useless for someone just reading that post, I was trying to be brief (for once!) as I realised FOMC is a big traders’ day here.
          The reason I raise these two references is that many are assuming sterilised QE, only a trial balloon so far it seems, would be less inflationary, Saville, who tends to lean to the deflationary bias, makes a case it would overcome the lack of FED holdings of short dated paper with which to undertake QE. I would link but he offers a paid service and I’m assuming that is one of the things I’m getting picked up on linking to..?

          The Hussman reference is that counter-intuitively, to my mind at least, he lays out an economist’s argument that increasing interest rates, without an immediate unwinding of the FED balance sheet, would be highly inflationary. I previously referenced here.
          http://caracommunity.com/content/bill-caras-blog-m

          I have also previously discussed the recent huge flows of capital into bonds and compared those values to the “bubble” GLD ETF. The value is GLD x10 in last year’s corporate bond flows.
          http://caracommunity.com/content/bill-caras-blog-m

          I think a few here today have pointed to the possibility that there will be serious flows out of bonds which might flow to equities.
          There would be an argument that these could also flow to gold/miners and all move up strongly. Clearly the market has not shown that today, though gold can behave strangely on FOMC days so we shall see tomorrow.

          The upshot of Hussman / Saville, just that any exit from the zerobound or changes to QE style might be less gold negative than we imagine. I’m sure the market will tell us soon.

      • ... [#106274]
        By: Grym (5469 comments) Go to top ↑
    • My prediction, and Ill be the first to admit if Im... [#106268]
      By: Jeff B (715 comments) Go to top ↑

      My prediction, and Ill be the first to admit if Im wrong:

      The fed gives a cautious but slightly optimistic read on the economy
      stocks rise a touch and gold falls

      Yup, right on que, gold has been getting smacked down these days during FMOC announcments, there was a time when it was the opposite.

      My broader question is:

      If economic indicators continue to at least stop declining, and the stock market continues to at least not trend down, how will gold fare? to me not very well.

      That being said, there is too much tinder on the global plate, all it needs is a spark.

  11. ... [#106243]
    By: ennar (21 comments) Go to top ↑
  12. There could be some volatility, right? Edit: it shouldn't... [#106246]
    By: jack black (2306 comments) Go to top ↑

    There could be some volatility, right?

    Edit: it shouldn’t be too bad: http://www.forbes.com/sites/greatspeculations/2011

  13. I see where he is coming from, but I feel there should be... [#106249]
    By: jack black (2306 comments) Go to top ↑

    I see where he is coming from, but I feel there should be one more push up before shorting opportunities.

  14. just registered today. Last time we had such a low reading... [#106250]
    By: jack black (2306 comments) Go to top ↑

    just registered today.

    Last time we had such a low reading was end of march 2010. That was circa 1 month before equities crashed but good time to invest in miners and PM.

    Lets see if history repeats itself.

  15. Last week we have discussed a trap set for headline... [#106252]
    By: Vadym Graifer (4341 comments) Go to top ↑

    Last week we have discussed a trap set for headline believers who tried to short the market based on “default and crash” hype. To quote, “you better believe that before this happens, many prematurely established short positions will be destroyed. There is just no way such widely advertised event (bankruptcy and related market drop) happens as advertised.”

    You also saw Bill warning for months against falling into trap of obviousness and taking position on those headlines instead of trusting market reactions. Market creeping up against the background of frightening news is a classic case of information-price divergence.

    Seeing continuous destruction of bears, hope all this kept the blog readers and participants from shorting this move.

    • "Seeing continuous destruction of bears, hope all this kept... [#106254]
      By: 4ever (612 comments) Go to top ↑

      “Seeing continuous destruction of bears, hope all this kept the blog readers and participants from shorting this move.”

      Yes, indeed. Many thanks. Paying attention to the WIR & blog has been a wonderful education over the past few years.

  16. (US) Preview: FOMC rate decision due around 14:15ET - With... [#106253]
    By: Vadym Graifer (4341 comments) Go to top ↑

    (US) Preview: FOMC rate decision due around 14:15ET

    - With the economic data showing steady improvement for the last several months and Europe stabilizing, no new policy initiatives are expected from the Fed today. A press report last week stirred the pot for QE3, reporting that Fed officials are considering a sterilization option for potential future bond purchases with the intent of easing concerns the newly printed money could increase inflation pressure. But the question of QE3 is expected to be put off until later in the year as the expiration of ‘Operation Twist’ approaches in June.

    - The focus today will instead be on the economic outlook in the policy statement. The Fed has been cautious about the outlook, even cutting its 2012 GDP forecast at the last meeting (though also cutting 2012 unemployment forecast), but may add some tweaks to today’s statement to reflect the stronger data seen so far this year. If the FOMC becomes significantly less cautious about the economic outlook it would reduce market expectations for QE3, but the Fed is most likely to keep its options open today with no big revisions. On inflation the Fed may again tweak the description from “subdued” (vs “moderated” in the Dec statement), but is likely to maintain that inflation will run at levels at or below those consistent with the dual mandate.

  17. John Hussman is one of my favourite reads, Sadly I noticed... [#106255]
    By: Jeff B (715 comments) Go to top ↑

    John Hussman is one of my favourite reads,

    Sadly I noticed his most recent performance numbers for his flagship funds:
    which can be found on his website: (http://hussmanfunds.com/theFunds.html)

    Annualized Total Returns
    as of 2/29/12

    1 Year -1.35%
    3 Year -1.87%
    5 Year -1.87%
    10 Year 3.36%

    Since
    Inception
    (07/24/00) 5.89%
    ____________________________

    I no longer will be reading what John Hussman has to say.

    Another writer bites the dust.

    • Enjoy Hussmann too, someone who has been bearish in a... [#106257]
      By: Juniorgoldminerseeker (228 comments) Go to top ↑

      Enjoy Hussmann too, someone who has been bearish in a secular bear, favoured precious metals at times during a secular bull and yet loses money over 5 years, what a hard game this is!

      Killed by volatility?
      Over-trading?
      The cost of all that hedging?
      Or just too slow to believe the cyclical bulls can happen with massive intervention and too based in historical “facts” drawn from different times? He has written himself of the under-performance caused by models which are rooted in a different environment and has written of trying to address that.

      • In this case I agree. I hate to see someone who makes such... [#106259]
        By: Jeff B (715 comments) Go to top ↑

        In this case I agree. I hate to see someone who makes such cogent points mess up application of said points.

        Yes he has written of his poor performance, but this offers little by way of any help to his clients sitting on annualized losses or paltry gains for their risks over the past decade.

        Ultimately he continues to write and get featured in the big websites and is given a measure of respect. This is the core problem with financial commentary, if you cant earn at the very least better than bond returns for your clients for more than a few years, you have no business earning money or accodlades from your market commentary.

        • Performance not good agreed, but you could look at his... [#106261]
          By: westcoaster (1130 comments) Go to top ↑

          Performance not good agreed, but you could look at his results as capital preservation in a deflationary period (say when measured against an investment in a second home 5-10 years ago.) Better results to be obtained here, but we have the benefit of being small and nimble.
          Trouble with Hussman is in the long run we are all dead.

        • Jeff B, I don't know why I feel I need to defend the guy... [#106277]
          By: Grym (5469 comments) Go to top ↑

          Jeff B,

          I don’t know why I feel I need to defend the guy, maybe because I too want the rules to work. His situation reminds me of several of my former clients whose stock I owned and whose annual reports I designed. During the tech boom ’90s CEOs at these companies complained their earnings were good, their dividends continued to increase, but the dot com craze got all the action.

          Hussman seems to me like a guy who still thinks the old “rules” apply. Perhaps they eventually will once again. He appears willing to await and hold on to tactics of the past. I don’t see the Bernanke theory working very well and it would have been seen to be a failure if not for two administrations willing to let it ride unchallenged.

          • He eventually will be correct after another crash when he... [#106279]
            By: jack black (2306 comments) Go to top ↑

            He eventually will be correct after another crash when he preserves his client money again.

            Like everyone said before: you cannot reliably time markets, it’s as reliable as a long term weather forecast.

        • If one reads Hussman's weekly, then they should know why... [#106285]
          By: Milesquare (281 comments) Go to top ↑

          If one reads Hussman’s weekly, then they should know why he’s underperformed since 2009. He has said WHY a half dozen times in his weekly comments:

          Who knew 9 Trillion of debt would be 16 Trillion (in Obama’s 1st term) and Ben would blow up a 3 Trillion Fed Balance sheet (now levered 60-1) This is a death sentence.

          ——————————————-

          “It’s likely that for some investors, our defensiveness since 2009 bleeds into a general inclination to take our concerns about risk with a grain of salt. On that subject, it’s important to recognize that our defensiveness in 2009 did not result from unfavorable valuations or hostile indicator syndromes, but from the inability to distinguish prevailing conditions at the time from much of what was observed during the Depression-era. In response to the credit crisis, and what I continue to view as a misguided “kick-the-can” policy response, I insisted that our methods should perform well with reasonable drawdowns not only in post-war data, but also in Depression-era data (when for example, stocks lost two thirds of their value even after they were priced to achieve 10-year total returns in excess of 10% annually).

          The resulting ensemble methods allow us to make distinctions that we were not able to make in 2009, but that period of stress-testing also left us with a “miss” (2009-early 2010) when the same indicators and methods that are so hostile today would have been much more favorable toward investment risk. One could ignore that fact, and use our miss in 2009 as a reason to ignore demonstrably hostile evidence today. But one would also have to overlook the fact that the narrow syndrome of conditions we observe today mirrors what we observed at the 2000 peak and the 2007 peak, and very few times in-between (including the 2010 peak and the runup to the 2011 peak – see last week’s comment for a chart). Notably, whatever market returns we missed by being defensive too early in those instances were wiped out in short order anyway during the subsequent declines. Yes, stocks might move even higher before the present bull-bear cycle moves to completion. But you have to ask yourself one question. Do I feel lucky? “

    • ... [#106273]
      By: Grym (5469 comments) Go to top ↑
  18. Vad, You're trading FCX a lot. Do you have a read on the... [#106260]
    By: westcoaster (1130 comments) Go to top ↑

    Vad,
    You’re trading FCX a lot. Do you have a read on the new Indonesia Gov’t proposals to force foreign miners to divest their equity down to 49% after 10 years?

    http://www.reuters.com/article/2012/03/08/us-indon
    TIA

  19. (best I can tell, this is what send market up... [#106263]
    By: Vadym Graifer (4341 comments) Go to top ↑

    (best I can tell, this is what send market up screaming)

    15:04:25

    JPMorgan Chase and Co *TO INCREASE DIVIDEND 20% TO $0.30 FROM $0.25; AUTHORIZES $15B BUYBACK PROGRAM (9.3% of market cap)
    - The dividend is payable on April 30, 2012 to stockholders of record at the close of business on April 5, 2012
    - Authorized a new $15 billion equity repurchase program, of which up to $12 billion is approved for 2012 and up to an additional $3 billion is approved through the end of the first quarter of 2013
    - The Federal Reserve has informed the Firm that it completed its 2012 Comprehensive Capital Analysis and Review (CCAR) and that it did not object to the Firms proposed capital distributions submitted pursuant to CCAR.
    - CEO: We expect to repurchase, at a minimum, approximately the same amount of shares that we issue for employee stock-based incentive awards. Beyond this, we intend to repurchase equity only when we are generating capital in excess of what we need to fund our organic growth and when we think it provides excellent value to our existing shareholders.”

    - Reminder: The Fed’s stress test results are due on March 15, and on 3/18/2011 JPM last raised dividend and approved a share buyback program in close conjunction with last year’s stress tests (CCAR)

    • Dimon just forced the Fed to do his bidding and release the... [#106275]
      By: NYUGrad (4750 comments) Go to top ↑

      Dimon just forced the Fed to do his bidding and release the results today at 4:30.

      • only 4 of the 19 need more capital under stress scenarios?... [#106281]
        By: NYUGrad (4750 comments) Go to top ↑

        only 4 of the 19 need more capital under stress scenarios? Dow 20,000 up up and away

      • Front running the Fed announcement. How quaint. I guess... [#106284]
        By: Les (7233 comments) Go to top ↑

        Front running the Fed announcement. How quaint. I guess from their results that MF Global doesn’t matter after all. My first thought was I’ve got a short date with bankers, but the energy is clearly long, at least in equities. Let’s see what JPM does when it reaches 3 year highs 5 points from here.

  20. According to this chart, we have record high profit margins... [#106264]
    By: jack black (2306 comments) Go to top ↑

    According to this chart, we have record high profit margins in gold miners:

    http://static.seekingalpha.com/uploads/2012/3/11/s

  21. Just thinking out loud........ I alluded the other day to... [#106265]
    By: BillySundance (1355 comments) Go to top ↑

    Just thinking out loud……..

    I alluded the other day to a potential for a breakdown in treasuries coupled with a melt up in equities. I think that may be in play right now. Seems to me that a lot of money may be forced out of fixed income as yields start to gradually rise from this point – it doesn’t necessarily have to be a profound increase in yields to put the wheels in motion – simply a collective realization that yields can’t get lower and we could see money flooding into equities. I admit, it sounds a little to simple, but that’s what I think may be happening.

    Although I have been a fairly passive observer since exiting equities in early Feb, I have allocated a bit back into Small Cap funds as ^RUT dipped under 800 last week. I am, albeit cautiously, looking for new highs in equities soon on the back of a flood of money exiting treasuries – I actually think this may cause the equity market to overshoot to the upside in the short-term. I’m thinking of it as equity capitulation in reverse – a potential upside capitulation in the next few months as money competes to find a home “safer” than treasuries/fixed income. Sadly, much of this money is swapping into equities exceptionally late in the current bull move.

    • Just wanted to add, sounds crazy, but I think now maybe the... [#106266]
      By: BillySundance (1355 comments) Go to top ↑

      Just wanted to add, sounds crazy, but I think now maybe the time to re-examine just how wild things can get, ala 1998-2000 dotcom. I don’t think this is the same situation as then but simply the market behavior – what can happen when a lot of money abruptly seeks a new home…..

      • Agree 100% with your assessment. Too bad that none of that... [#106272]
        By: jack black (2306 comments) Go to top ↑

        Agree 100% with your assessment. Too bad that none of that exuberance is flowing into the miners where I placed my bets. Sometimes value investment loses to momentum chasing.

        • jack - I have been wrong, wrong, wrong on miner trades as... [#106278]
          By: BillySundance (1355 comments) Go to top ↑

          jack – I have been wrong, wrong, wrong on miner trades as well. Fortunately I kept those strictly in the speculative port which is only 10-15% of the overall. Right now we have treasury yields moving up, giving at least temporary dampening effect to their non-yield providing alternative, gold.

          For awhile now the thought has been that miners are not “believing” that these gold prices are here to stay. I admit to having been in the camp that eventually miners would *realize* that high gold prices were here to stay. My confidence in that statement is certainly waivering.

          • Thanks for the sympathetic words. Fortunately, I went long... [#106282]
            By: jack black (2306 comments) Go to top ↑

            Thanks for the sympathetic words. Fortunately, I went long miners only at the later part of december, so I’m still in green on the trade, but barely.

            I checked gold performance during the periods of falling bonds (most of 2009, later part of 2010, and 2005/2006) and it was very strong. That coincided with falling dollar of course, but i believe dollar should be falling soon as well.

  22. Equities up. USD up. Gold down. Silver down. EUR... [#106267]
    By: Vadym Graifer (4341 comments) Go to top ↑

    Equities up. USD up. Gold down. Silver down. EUR down.

    • It is interesting how the buck and the equities are up at... [#106270]
      By: davefairtex (5215 comments) Go to top ↑

      It is interesting how the buck and the equities are up at the same time.

      After this explosion of happiness from the US banking establishment, I think it is just about time for Ma & Pa Kettle to come back into the market. Sell those bond funds and buy stocks again. I’m sure the european situation will work out just fine.

      • "just about time for Ma & Pa Kettle to come back into... [#106271]
        By: BillySundance (1355 comments) Go to top ↑

        “just about time for Ma & Pa Kettle to come back into the market. Sell those bond funds and buy stocks again”

        That sums up where I think we are at…..October was a great time to buy stocks on value (with a margin of safety)….Now much of that value has been compensated for and we are in a momentus phase…..lots of money yet to be made in equities but you’ve gotta be more nimble (than the value phase)

      • Corporate earnings in 7 of 10 sectors in the SP500 are... [#106287]
        By: MoKat (531 comments) Go to top ↑

        Corporate earnings in 7 of 10 sectors in the SP500 are predicted to fall against 2011 earnings. If recent Apple and AIG earnings are taken out of the statistical pie, earnings were up only 1/2 of a per cent. That usually says a top in markets is near. Mom and Pop piling in at the end may indeed signal the end the cyclical bull market as we approach the election.

        If oil continues to rise, the blow up feel good rally top may falter and short circuit the move.

        As oil and politics mix, if I were a big oil company I would want Obama to lose the election and take any actions which would prop the oil price as high as possible to decrease Obama’s chance of re-election. Taking a bunch of refineries off line for maintenance certainly helps. Higher priced foreign gasoline will be imported to compensate for loss of production from the offline production facilities here in the USA as summer demand kicks in. Obama has openly criticized oil traders as the culprits for the price rise at the pump seeking to deflect blame from his policies. His open confrontation of the oil industry may come back and bite him in the butt.

        20 % of the population contributes 80% of the consumer economy. The top 5% are perhaps in a feel good shopping mode but high gas prices will suppress the shopping habits of the other 15%. High fuel prices will ripple out and put inflationary pressure on essential goods further lowering money available for discretionary goods. I doubt consumers will forget the trouble excess credit creates and max their cards out and seek second mortgages for spending on discretionary consumer goods. IMO, high gas prices will dampen the urge to spend on non essential goods so consumer spending will not strengthen the economy to any significant degree. If in reverse, the consumer does go on a tear, it will raise the trade imbalance and weaken the dollar.. and put upward pressure on oil and other commodities creating inflationary conditions.

        On the flip side, with the central banks of Japan, EU and the FED all printing, and Euro bonds exhibiting new risk and super low UST rates, maybe all the liquidity will flow into the stock markets seeking higher returns and push the Dow upwards towards 14500 or higher before a downturn begins.

        As someone said…. a lot of tinder out there waiting for a spark. Running for the exits has a whole new meaning now with HFT. My guess is that risk is underestimated at this point in time. Players should exhibit caution.

        Tax selling is also an upcoming issue. If Obama appears set to win the election, lots of folks will be taking profits expecting higher taxes early in a new Obama term. I don’t think they will wait until November unless it’s too close to call.

        Interesting times we live in.. no doubt.

  23. 83.31 is the February high.....we're getting... [#106269]
    By: BillySundance (1355 comments) Go to top ↑

    83.31 is the February high…..we’re getting close

  24. currently at 1%:... [#106276]
    By: jack black (2306 comments) Go to top ↑
    • There's surely not much of it out there, and it's hard to... [#106295]
      By: bluesky (98 comments) Go to top ↑

      There’s surely not much of it out there, and it’s hard to share. Obama can’t really make policies to “spread the gold around”. Last night I was reading about the famous “cross of gold speech” by William Jennings Bryan. It talked about how the European Private Bankers didn’t want to see bimetallism take hold over in America, because they wanted better control of the money supply. Gold was highly concentrated in very few hands, and introducing silver to the monetary system would have been harder for them to control at the time. (The US might successfully create their own monetary system). Doing the “anti-QE” of their day by putting the country onto a gold-only standard allowed the Private Banks to take over ownership of land in the United States by massive defaults.

      Interesting reading, and it makes me wonder how things might play out in the future.

      • ... [#106309]
        By: ea32da32 (2362 comments) Go to top ↑
        • I think Williams Jenning Bryan and our recent Fed Heads... [#106314]
          By: Ilya (572 comments) Go to top ↑

          I think Williams Jenning Bryan and our recent Fed Heads could be seen as two peas in a pod. Both have/are advocating ‘free, cheap money.’

          Bryan, the populist from Nebraska pushed hard for a 16 to 1 silver to gold ratio in his failed 1898 presidential bid. The ‘western’ farmers and others wanted to discharge their debts in something other than ‘hard’ money. Sound familiar?

          Bryan was also a ‘free trade’ man. I have a framed handkerchief given to me by my great grandfather. It has the likeness of Bryan and Arthur Sewall from Maine. At the top is printed ‘FREE COINAGE’. In the middle is ’16 to 1′ and at the bottom ‘TARIFF FOR REVENUE ONLY.’

          Bryan was indeed and educated man and never passed up an opportunity to buy support from the indebted so-called underclasses with other peoples money.

          I fear the saver class is being destroyed with financial repression ( zero interest rates ) and ‘FREE COINAGE’. Were he alive today, Bryan would be thumping is chest with approval…Just my read on history.

          A brief comment on the Bank Stress Tests. How does one stress test a black hole? Has anyone other than the FED and FDIC, AKA Disneyworld shills been allowed to audit any of the big banks marks to market? Of course not! The Dick Bove’s et al haven’t a clue.

  25. The explosion in the SPX today was the perfect setup. The... [#106286]
    By: davefairtex (5215 comments) Go to top ↑

    The explosion in the SPX today was the perfect setup. The broad market looked to be forming a negative divergence on the RSI, ahead of the Fed meeting where predictably Bernanke would say he’s still not going to print money, which would likely rally the dollar and tank equities. So of course the market bounces – I’m not really sure why – and then when JPM announces everything is fantastic in the US banking world the SPX jumps for the moon and just never looks back.

    My macro view remains: as long as the US government is borrowing and spending 1.3 trillion per year (40% more than the USG takes in taxes) the overall economy will continue looking positive, and outsized profits will keep rolling in for corporate america (low wages, low interest rates, massive government borrowing = high corporate profit margins). Its all one big sugar high, its completely unsustainable, and we’ve kept it going since 2009.

    The eurozone is looking more than slightly unhealthy right now; that could cause some issues as the recession there bites, but I’m guessing all our spending using borrowed money will decouple us to an extent.

    • "as long as the US government is borrowing and spending 1.3... [#106288]
      By: BillySundance (1355 comments) Go to top ↑

      “as long as the US government is borrowing and spending 1.3 trillion per year (40% more than the USG takes in taxes)”

      Dave, I’m no master when it comes to breaking down big pieces of macro data like this, but what do you think the indications are if that 40% you mention starts to narrow? Do you think it is possible that markets are anticipating that after a few years of our ZIRP policies, we may actually start seeing tax revenues increase as a percentage of the budget. After all, much of the “losses” that our corporations generated in 2007-2009 became tax shields for them in 2010 and 2011. So if that 40% gap you speak of starts to narrow, is that real progress?

      • Billy - Honestly I have no idea what the markets are... [#106289]
        By: davefairtex (5215 comments) Go to top ↑

        Billy -

        Honestly I have no idea what the markets are anticipating.

        Corporate taxes aren’t a huge chunk of federal receipts; if they grow, it won’t move the needle much.
        Payroll Taxes: 40%
        Income Taxes: 42%
        Corporate Taxes: 9%
        The Rest: 9%

        http://www.taxpolicycenter.org/briefing-book/backg

        Most of Western Europe has been spending unsustainably, and now that they’re being forced to cut back, every one of them are going right back into recession. Their sugar is being cut off; they are being forced into sustainability. Unfortunately, now they have to deal with the reality that their excessive debt burden will keep them from growing, likely at all, until they pay it down.

        We’re in the same place. Private + Public Debt/GDP of 280% (close to an all time high) along with high oil prices will cause us to spiral down into serious “reality” once the sugar is cut off. It just remains to be seen when exactly this happens.

        To paraphrase Clinton – “its the debt, stupid.” Our debt load will keep us from going back to business as usual.

        Its either inflate, or default. I’m not sure which one we’ll do.

    • isn't the automatic USA spending limit kicking in in 2013?... [#106294]
      By: jack black (2306 comments) Go to top ↑

      isn’t the automatic USA spending limit kicking in in 2013? combine with the iran war (near or after elections) and I see lot’s of pain and suffering ahead.

      The market bounced on short covering. There was too much shorting in the last week or so. I will be looking for shorting opportunities in a few weeks.

    • davefairtex, "Its all one big sugar high, its completely... [#106315]
      By: loannetter (1298 comments) Go to top ↑

      davefairtex,

      “Its all one big sugar high, its completely unsustainable, and we’ve kept it going since 2009.”

      Couldn’t agree with you more!

  26. TBT looks like a break... [#106290]
    By: Tower Dog (90 comments) Go to top ↑

    TBT looks like a break out

  27. (US) Federal Reserve completes stress tests (CCAR): 15 of... [#106291]
    By: Vadym Graifer (4341 comments) Go to top ↑

    (US) Federal Reserve completes stress tests (CCAR): 15 of the 19 (79% pass) bank holding companies were estimated to maintain capital ratios above all four of the regulatory minimum levels under the hypothetical stress scenario

    - Suntrust, Citigroup, Ally Financial’s, and MetLife capital plans did not pass hypothetical scenario >

    - Fed statement: Reflecting the severity of the stress scenario–which includes a peak unemployment rate of 13 percent, a 50 percent drop in equity prices, and a 21 percent decline in housing prices–losses at the 19 bank holding companies are estimated to total $534 billion during the nine quarters of the hypothetical stress scenario. The aggregate tier 1 common capital ratio, which compares high-quality capital to risk-weighted assets, falls from 10.1 percent in the third quarter of 2011 to 6.3 percent in the fourth quarter of 2013 in the hypothetical stress scenario. That number incorporates the firms’ proposals for planned capital actions such as dividends, share buybacks, and share issuance.
    - The 19 bank holding companies that participated in those tests and in the 2011 and 2012 CCAR have increased their tier 1 common capital levels to $759 billion in the fourth quarter of 2011 from $420 billion in the first quarter of 2009. The tier 1 common ratio for these firms, which compares high-quality capital to risk-weighted assets, has increased to a weighted average of 10.4 percent from 5.4 percent.

    - for more: http://www.federalreserve.gov/newsevents/press/bcr

    • c down 3.5% in afterhours trade. There will be some damage... [#106301]
      By: bigwad1 (768 comments) Go to top ↑

      c down 3.5% in afterhours trade.
      There will be some damage control headlines by morning.

  28. Wednesday, March 14: * Ben Bernanke Speaks... [#106292]
    By: Tower Dog (90 comments) Go to top ↑

    Wednesday, March 14:
    * Ben Bernanke Speaks 9am

    • He is going to blow smoke. We know well what is happening:... [#106293]
      By: jack black (2306 comments) Go to top ↑

      He is going to blow smoke. We know well what is happening: damn the inflation, full press ahead.

  29. Up to the last report, the mass exodus out of mutual funds... [#106296]
    By: NYUGrad (4750 comments) Go to top ↑

    Up to the last report, the mass exodus out of mutual funds has increased despite rising prices. however i am suspecting that with the warmer weather and now this stress test, along with AAPL racing to $600, the wall st marketing machine will soon convince mom and pop back in.

    I am thus allocating some of my time and capital to look for individual companies for swing trades.

    I am also suspecting partial rotation out of metals/mining/bonds/treasuries, into things that have perception of get rich quick ie Facebook ipo.

    Jamie Dimon just put a floor on JPM stock, banking sector, and potentially the markets for a little while longer.

  30. Dow /Gold Ratio drops back to 8 from 6 since last September... [#106297]
    By: johnuk (860 comments) Go to top ↑

    Dow /Gold Ratio drops back to 8 from 6 since last September , it happens that the Ratio drops like this , see medium term chart here:-
    http://tinyurl.com/2sp36

    I am 85 % long bullion, Gold and Silver with 10% miners

    • Thanks for mentioning that. We are back to the March 2009... [#106298]
      By: jack black (2306 comments) Go to top ↑

      Thanks for mentioning that. We are back to the March 2009 levels. So much for the “bull market” since 2009. Smoke and mirrors thanks to the money printing. Investors lose, traders get rich.

      • "Investors lose, traders get rich." Depends on what you... [#106299]
        By: Vadym Graifer (4341 comments) Go to top ↑

        “Investors lose, traders get rich.”

        Depends on what you invest in. SPY rose how many % since then? Why does it all have to be about gold? There is life on other planets…

        • I have done very well being in Gold these last few years... [#106300]
          By: johnuk (860 comments) Go to top ↑

          I have done very well being in Gold these last few years, performance has been quite good since 2005 for me.

          • Great to hear. Another argument against blanket statement... [#106302]
            By: Vadym Graifer (4341 comments) Go to top ↑

            Great to hear. Another argument against blanket statement “investors lose.”

          • I agree, I am an investor and will remain long bullion for... [#106303]
            By: johnuk (860 comments) Go to top ↑

            I agree, I am an investor and will remain long bullion for years to come.

          • Hi John, what will convince you the gold run is... [#106305]
            By: Juniorgoldminerseeker (228 comments) Go to top ↑

            Hi John, what will convince you the gold run is done…?
            You’ve done very well to stay in sterling gold, I should have kept it far simpler than miners and juniors for the past 4 years. Keep feeling their time will come but been wrong again last year.

  31. Costco: Chicken breasts +10%; walnuts +10%; coffee +30%... [#106304]
    By: tradylady (205 comments) Go to top ↑

    Costco: Chicken breasts +10%; walnuts +10%; coffee +30% (the latter I don’t understand as futures lowest in a year, yet continual retail price increases)

    But hey, there’s no inflation. I wish one of those insightful people in Congress would ask Bernanke a question for me: “Ben, what do you pay for a pound of chicken breasts”?

  32. Did not someone here say that TLT would dip to it's 200dma... [#106306]
    By: dberryclan (687 comments) Go to top ↑

    Did not someone here say that TLT would dip to it’s 200dma soon. Looke like it’s on it’s way…

  33. Going to sit this one out for now. Four of the major... [#106307]
    By: Tower Dog (90 comments) Go to top ↑

    Going to sit this one out for now. Four of the major financial institutions didn’t pass. JPM jumped the gun, people were likely thinking they had all passed, shorts covered, who knows… If it’s for real it will show it’s hand. Not going to chase it. VIX Index dropped to its lowest level since 2007. Quadruple-witching on Friday. Fish starting to bite at the lake, think I’ll just take a few days off.

  34. Oh my, it is so hard sitting on my hands while tracking the... [#106311]
    By: baz22 (2875 comments) Go to top ↑

    Oh my, it is so hard sitting on my hands while tracking the PM’s… as Fleck wrote today, ‘ not only does money printing cause currency debasement and inflation, it apparently also causes amnesia ‘…

  35. Gold down on the lack of QE. Silver not down much. GDX /... [#106313]
    By: Juniorgoldminerseeker (228 comments) Go to top ↑

    Gold down on the lack of QE.
    Silver not down much.
    GDX / GDXJ only down a little. 0.5%
    Looking through the list of Denver Gold show stocks, majors and large juniors there is a good spread of -3% to +3%

    Here is a long list of international gold stocks and their moves and market caps, obviously the “change” will update here, bias to down but not the massacre I expected. We’ll see what tomorrow tells.

    http://www.miningfeeds.com/gold-mining-report-all-