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Friday thoughts from Chris

Big Al
September 26, 2014

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Discussion
39 Comments
    Sep 26, 2014 26:24 PM

    Just curious, but if you guys were the Fed how would you weaken the dollar? Seems obvious that the market is driving it higher. Is it just speculation though or is it an outcome of the Euro devaluation plus weakness in most other major currencies? I would suggest the dollar is functioning as it is based on all the problems elsewhere where we simultaneously saw the Yen, Sterling, Euro and CDN all dropping at once. Honestly, I don’t know if anyone can move it off its current course. It will take more than just jawboning.

      Sep 26, 2014 26:44 PM

      Very true. At the least, if this keeps up, I suspect the full FOMC next time around will follow up Lockhart’s call from yesterday, and suggest they will not raise rates with this dollar strength.
      Crazy thing is, based on the fundamentals, both the euro and the yen relative to the US$ should ALREADY be toilet paper. But if the dollar keeps going up unchecked, it will blow up emerging markets and other things.
      So I suspect the mad scientists at the Fed who created such bloated and speculative markets are on the phone to Igor–or someone–to see if these currency trader monsters can be reined in.

      CFS
      Sep 26, 2014 26:28 PM

      I would do what the Fed is actually doing. Buying Eurobonds, written by Germany.

    CFS
    Sep 26, 2014 26:27 PM

    How do you explain the divergence between gold behavior and silver behavior?

      Sep 26, 2014 26:41 PM

      My gut tells me that, on the downside, silver did not have quite the retail buying support, nor the central bank support, that gold does.

        CFS
        Sep 26, 2014 26:31 PM

        But that does not explain why silver is going up right now as gold drops.

        Someone is buying physical.
        I wish I knew who or which country.

          Sep 26, 2014 26:00 PM

          Well, that happened today. Copper, oil and nat gas also bounced, even though gold dropped a little. But for the most part, silver has been beaten up more than gold.

            Sep 26, 2014 26:14 PM

            Chris, the Sprott silver trust traded at discounts to NAV of a little more than .70% at the lows of both June and December, 2013. During this low, and despite being much more oversold, we’ve seen premiums (not discounts) to NAV as high as 5%+ (3.35% today). In fact, the last time PSLV traded at a discount was back on January 2nd at a tiny .06%.

            To me, this is more evidence that the bear market is in its final days. Do you have an opinion, for or against that conclusion?
            http://stockcharts.com/h-sc/ui?s=PSLV&p=D&yr=1&mn=5&dy=0&id=p18586204238&a=369256731

          Sep 26, 2014 26:47 PM

          There’s generally fear or stress somewhere in the system when gold outperforms silver. Whatever the reason, it is positive for the whole sector when silver leads gold decisively, so the glimmer in silver today is welcome.
          I think PMs will be kept in check through Tuesday, the end of the quarter.

    CFS
    Sep 26, 2014 26:30 PM

    TLT is trending up, but other corporate bonds, which would expected to be going up are not so doing. TLT vs. HYG. Seems to me some foreign central bank might be deliberately buying long-dated treasuries.

      Sep 26, 2014 26:46 PM

      The ECB has been rumored to be doing just that this week.

      Corporate bonds are a time bomb. All the old firms who used to sell and make markets in them, esp. the lower grades — Lehman, Paine Webber, Bear Stearns, et all–are out of the game. If/when the economy really starts to deteriorate and people want to sell, nobody will be buying; and prices for this type of debt will crash unlike ever before.

      Sep 26, 2014 26:41 PM

      CFS,

      May be but it is more likely in part due to the yield spread between High Yield Bonds aka junk bond, and Treasuries being narrow that people are selling junk bonds perhaps in favor of Treasuries. The extra yield is not worth the risk. Also with some European bond yields being lower than U.S. Treasuries, more money could be flowing into Treasuries because of that.

    Sep 26, 2014 26:43 PM
    CFS
    Sep 26, 2014 26:55 PM

    This explains post 9/11 Middle East behavior in 2 minutes:
    https://www.youtube.com/watch?v=9RC1Mepk_Sw

      Sep 26, 2014 26:18 PM

      I no weird don’t worry YES CFS day plan ALL NO WW3 ALL IS PLANT THE USSRA WILL NEVER SELL DOLLARS ALL MONEY WILL FULLOW THE NEW electronic currency ALL ALL ore day will BOME YOU !!!!!!!!!!!!

    Sep 26, 2014 26:02 PM
    Sep 26, 2014 26:22 PM

    Franky is one of my brothers, I have a lot of brothers.

    CFS
    Sep 26, 2014 26:25 PM

    Off Topic:
    Autism rate in Boys in UK: 1 in 40,

    Autism among Amish boys in Pennsylvania, barely measurable. About 1 in 10,000.

    Genetics or environmental? Or due to vaccinations?

    CFS
    Sep 26, 2014 26:38 PM

    As I have been reporting in this forum, the big zero is NOT killing ISIL:

    http://21stcenturywire.com/2014/09/24/us-bombed-empty-buildings-in-raqqa-in-airstrikes-on-isil-in-syria/

    Obama is mostly concentrating on attacking Syria, not ISIL in Syria.
    (I admit he is not directly and obviously attacking Assad, but he is not hitting ISIL as hard as he could)

    CFS
    Sep 26, 2014 26:44 PM

    Love the visual of the US market “resting on a bed of nitroglycerine”

    http://www.theguardian.com/business/2014/sep/26/bill-gross-quits-pimco-janus-capital

    Sep 26, 2014 26:21 PM

    The S&P 500 priced in miners has one foot in the grave and the other on a banana peel, in my opinion.
    http://stockcharts.com/h-sc/ui?s=$SPX:$GDM&p=M&yr=20&mn=11&dy=30&id=p33151726393&a=367597106&listNum=1