Chris has an explanation as to why small news stories swing the markets more than they have in the past
Chris joins Cory to chat about the article posted earlier today regarding daily news stories leading to larger than normal market buy ups and sell offs.
Click download link to listen on this device: Download Show
Chris, as often, is spot on on many counts.
On the liquidity from, it’s also that there are less petro$ around to bid some assets (esp. on the FI side)
I am really eager to witness what late Sept-Early Oct have in store…
Best to all and GL investing/trading.
LPG
Meant to write “on the liquidity FRONT” in the post above.
Apologies for the typo.
Best to all,
LPG
Good points on the diminishing Petro$ LPG.
Great interview on the liquidity crisis Chris and Cory. There was an article out today about Russian increasing its gold reserves again recently to assist with it’s own liquidity crisis in the falling Ruble environment.
An interesting article out today that is telling of the China/Russian partnerships growing, and also that institutions are bottom fishing the fertilizer marketplace:
China expands stake in Russian potash miner Uralkali
http://www.mining.com/china-grabs-stake-in-russian-potash-miner-uralkali/
I think that massively discounting treasury bills while walking a fine line between inflation and deflation is what’s behind U.S. indeces’ rally. But market participants are almost certainly engaged in hyperbolic discounting of future returns:
Re: the Greece/Russia gas talks, here’s the latest from Zero:
http://www.zerohedge.com/news/2015-04-21/europe-isolated-greece-may-sign-russia-gas-deal-soon-today
Best,
LPG
I’ve been working feverishly on my investment thesis this morning, and elated to find a method for evaluating the bull market in gold prices. The trend that I wanted to underline and make obvious was interest rates below inflation leads to higher gold prices. Instead of using inflation figures per se, I decided to use the PRING index, which is a way of measuring the waxing and waning of inflation throughout the business cycle.
This is the result I came up with, and very happy to share it:
You might want to accompany this article with the chart:
Great chart FranSix! I appreciate your effort. Now just imagine how that chart would look if real inflation rates were recorded by the less restrictive inflation standards of the past.
From the various methods of attempting to pin down inflation, hedonic or otherwise, this one is a measure that has worked very well under the circumstances, probably because it partly relies on changes in the CRB. You might use any other measure of inflation, real or imagined, but this one appears to provide the best factual trend available.
One good example of negative real interest rates is one that might use ShadowStats, as your rate of inflation, which would give you the following results:
Thanks for that link to now and futures FranSix. Very interesting.
The inverse correlation could not be clearer (I wonder how close the correlation coefficient (r) is to -1?). Now … what is the expected future pattern for PRING?
I added the correlation with the gold price below. Plus the KST indicator.
In answer to the question, I believe that interest rates on the ten-tear treasury bill will remain below inflation, or below the PRING index, and that gold prices will adjust as a result. A new wrinkle might be introduced should interest rates turn nominal negative on treasury bills. Long-term inflation-adjusted values for gold are probably wrong, given the low interest rate regime. Despite low rates, there’s a very noticeable amount of inflation in the system.
Stan, like all wall street executives, will not or does not want to look at how manipulated and controlled all markets are today. He wants to bring in the old market rules when it suits his argument but he wants to negate the idea that markets are under domination and manipulation for the benefit of the 1%ers. We will never overcome this idea that markets are no longer free to move in the direction that capital flows dictate.
I love it.
After years of investigation the government wants us to believe the flash crash was a one-off cause by some rogue geek in the UK who crashed the market all by himself. But isn’t the parent broker also criminally liable too under the long standing common law of agency.
….And isn’t it interesting that the government names the trader without naming the parent broker or what the relationship was to the parent broker–an employee perhaps??? ICould it bebe that having friends in high places trumps centuries of common law and jurisprudence?
Crazy, huh bj? Much like the occasional jailing of mortgage brokers and appraisers in the wake of the housing/mortgage blowup some years back. In that case, too, those people were scapegoats who were merely following the leads of higher-ups.
I’ve said many times since that if the REAL architect of all that foolishness, the boom and then the mortgage/housing bust were brought to justice, Alan Greenspan would be washing floors in the toilet of a federal prison; not out making a fortune giving speeches in an effort to sanitize his “legacy.”
Agreed Mr. T.
Great interview today, guys.
Re-posting the below
******
BLOOMBERG INTERVIEW:
Stan Druckenmiller Is Betting on Three Market Surprises in 2015
It’s 43 mn long and a must-listen, IMHO:
http://www.bloomberg.com/news/articles/2015-04-15/druckenmiller-bets-on-market-surprise-with-china-boom-oil-rise
Giving credit where it’s due, it was in (Casey Research) Ed Steer’s Daily Gold & Silver Dispatch on April 21.
Best to all and GL investing/trading.
LPG