Chris Temple from The National Investor – Fri 9 Sep, 2016

The market is finally starting to price in an interest rate hike

Chris Temple join us today on a day when we are seeing selloffs across the board. Earlier today we had the Boston Fed President Eric Rosengren drive home the point that investors should be expecting a rate hike later this month. We also heard of a nuke test from North Korea earlier this morning. the question is which of these is the largest player in driving the markets down today?

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Featuring:
Chris TempleAl KorelinCory Fleck

Comments:
  1. On September 9, 2016 at 10:05 am,
    Birdman says:

    The market is finally starting to price in an interest rate hike, and part of the way it is doing that is by selling off precious metals. That is noteworthy for those who keep saying a hiking cycle will be a positive for metals.

    Oh really? Well then why isn’t gold jumping as bonds and equities sell off?

    • On September 9, 2016 at 12:06 pm,
      Gator says:

      Bird…the metals are consolidating following the run up…simple as that..sorry to disappoint you…

      • On September 10, 2016 at 8:15 am,
        Birdman says:

        Maybe Gator. Maybe it is time for gold to shine. Until it actually breaks out though it is still technically in a bear market. And until that happens all the guys like you who are pumping it are just blowing smoke. Wake me when we bust 1400…….Simple as that.

  2. On September 9, 2016 at 10:10 am,
    Birdman says:

    I do have one big question for you though Chris….do you think a rate hike (or two) at this time of year is political and related to the election and if so who does it help or hurt?

    • On September 9, 2016 at 10:59 am,
      Temple says:

      Not really…I think the Fed is thinking more about itself and its credibility (gag!) — They are still somewhat flying blind, but want to change things up again.

      • On September 9, 2016 at 11:33 am,
        Birdman says:

        Yeah, probably right Chris. They have enough variables to consider already without adding elections as one more hindrance. But you just know they will take the heat if it causes the market to turn down around the time the vote counting starts.

  3. On September 9, 2016 at 10:51 am,
    James the Lesser says:

    if the FED is actually stupid enough to believe their own crap then they deserve what they get.

    It’s too late for hiking. The FED is cornered and they know it.

    This whole phony stock market bubble is based on one thing, and one thing only, cheap money.

    Everyone knows it.

    The FED is actually arrogant enough to believe they have actually fixed everything.

    We are on the edge of a cliff about to fall off.

    Let the whole dame thing collapse and get it over with already.

    one measly 1/4 of appoint means nothing, nothing!

    • On September 9, 2016 at 11:00 am,
      Temple says:

      That’s the problem, as I said, with full-of-themselves but in the end DUMB policy wonks in charge.

    • On September 9, 2016 at 12:38 pm,
      Richard says:

      Ah, another bubble. The majority does not admit it, but it is here. They thought they wouldn’t be fooled again.
      One amazing chart, that represents interest in the market, is the Russell. Look at the boring positive bias since July. Amazing. No real people in the markets in mass.

      • On September 9, 2016 at 12:38 pm,
        Richard says:

        And in one or two or three days the whole thing is back to where it started!

  4. On September 9, 2016 at 10:51 am,
    CFS says:

    The farcical things is that 0.25 interest rate change only affects psychology or appearance of the economy. Does anyone really think even a whole 1% change actually affect investment decisions of real businesses, unless they are over-leveraged?
    It may affect housing prices, because some buyers have been buying more than they can afford.
    Will it affect credit card interest rates? Should it? They have not been going down while bank rates have been going down.

    We are in the summer news doldrums. The interest rate story is blown out of proportion.

    It is all a mirage.

    • On September 9, 2016 at 11:02 am,
      Temple says:

      It’s a mirage until everyone wants to sell at the same time, and asset prices drop 20-30% in a matter of days…then it won’t be a mirage. That’s what the Fed is risking by seemingly getting religion a bit now again.

      I hope to be able to talk about that specific subject further later n with Cory.

      • On September 9, 2016 at 11:39 am,
        Birdman says:

        True that. It a small door everyone will want to escape through. I suspect we just don’t know how steep the sell off might be. But if and when bonds go out of favour the whole world is in trouble because they all need to keep rolling over issues to keep the public funding game going.

        So who will be buying? (other than Central Banks and their agents)

        • On September 9, 2016 at 12:40 pm,
          Richard says:

          Bird, the problem is much of this buying is automated and linked to the currency and interest rates. These are not logical people buying stocks at these levels. It will show no logical response on the downside until technicals are at screaming levels.

          • On September 9, 2016 at 1:20 pm,
            Temple says:

            Exactly, Richard — Cory and I just discussed that in a subsequent segment

  5. On September 9, 2016 at 10:54 am,
    Dick Tracy says:

    If the rate hike comes and it is more than .25%, Wall Street will be hit by a selling tornado, the economy couldn’t withstand the shock. DT

    • On September 9, 2016 at 10:56 am,
      Dick Tracy says:

      Maybe that is the plan, would we then have elections?

  6. On September 9, 2016 at 11:30 am,
    CFS says:

    https://soundcloud.com/sprottmoney/sprott-money-news-weekly-wrap-up-9916

    discusses the Fed rate hike and Japan’s action.

  7. On September 9, 2016 at 11:40 am,
    CFS says:

    It seems to me the bullion banks are taking advantage of the general panic in the market to lower PM prices, but it does not make sense to get out of stocks AND precious metals; since their movement is usually anti-correlated more often than not.

    • On September 9, 2016 at 1:21 pm,
      Temple says:

      Except when the same types of investors have used the same types of leverage. BUT, I’ll throw in that gold (the metal itself, not the larger-cap mining stocks) should at least do less bad than most other things. If the selling in bonds/stocks REALLY goes nuts, gold should even rise.

    • On September 9, 2016 at 3:33 pm,
      LPG says:

      CFS,

      Your comment “puzzled” me.
      Quote: “It seems to me the bullion banks are taking advantage of the general panic in the market to lower PM prices […]”

      So I’ll say 3 things:

      a) I’ve lately been of the view that the market was mispricing the risk of a rate hike. I think I mentioned that to Bob Uk last week on KER (Friday maybe ?), if I am not mistaken.

      b) Given the way I see the world and some basic macro correlations, the market smelling a rate hike = gold should FIRSTLY go lower. [It’s pretty straight forward to me].
      So after last week’s pop, my thought process was that IF I was correct in my view that the Fed would hike in Sept OR just that the market starts to realize that a hike is actually quite a real possibility, then this would lead to lower levels on gold and PM stocks. A move down, imho, was made even more easy after the rip on Friday, and the sort of follow-through on Tuesday. I pulled a bunch of PM stocks charts over the WE, and I thought they were ripe for another little roll-over.
      Which brings me to my next point.

      c) I try to think of fundamentals, and then look at charts for confirmation for my views.
      Based on the charts I looked at over the week-end and my views (fwiw), I’ve spent the week trimming PLENTY of positions on pops/rips (I was mentioning this yesterday to C. Temple and Richard/Doc).

      So, without trying to look arrogant, the price action this week didn’t really surprise me: a follow through on Tuesday for stocks on the upside first, then start of move down for many stocks. As the sound of a rate hike grew louder, it seems to me the move down became more intense. Nothing surprising to me. If anything, the ECB doing nothing yday (which I was expecting) increased my confidence in a rate hike – something I mentioned to Chris privately.

      *********

      So I took a view on macro (fwiw), looked at charts for confirmation, and this week was pretty much per the script I had in mind: I got lucky.
      But please note that AT NO POINT IN TIME DID I ever ever ever think “bullion banks” or try to figure out what they would do.

      Some people as yourself seem to understand or able to spot/know when the bullion banks (or the PPT, or Central Banks, or hedge funds in other circumstances) are in the market, and what they do here and there.
      I don’t know how you do it, to whom you speak to, but you seem to be suuuuuuuuper informed about all of these market participants !

      Me, I don’t think about bullion banks, PPT, hedge funds. EVER.
      I don’t think about them coz I don’t need to.
      I look at things in simple ways: I’m a simple mind.

      My 2cts.

      LPG

  8. On September 9, 2016 at 12:04 pm,
    FranSix says:

    The move in $VIX is too big to ignore today, and there is more volatility to come, but the ‘new low’ in $VIX is not going to happen.

    http://schrts.co/CemKiw

    • On September 9, 2016 at 12:09 pm,
      Excelsior says:

      ProShares Ultra VIX Short-Term Futures (UVXY)
      Add to watchlist

      I trimmed a part of my UVXY today on this strength as an escape hatch, because I was getting a little nervous earlier in the week. I left a small position in place in case we get more volatility at the beginning of next week.

      ProShares Ultra VIX Short-Term Futures (UVXY)
      $21.43 up +$4.50 (+26.59% gain)
      As of 3:06 PM EDT. Market open.

      • On September 9, 2016 at 12:15 pm,
        FranSix says:

        Looking to see if a challenge to previous highs on the hourly chart.

      • On September 9, 2016 at 1:21 pm,
        Excelsior says:

        Darn I left a buck per unit on the table trimming earlier today, but still have a small position left in place to participate in any follow through next week.

        ProShares Ultra VIX Short-Term Futures (UVXY)
        $22.45 up +5.52 (+32.60% gain)
        At close: 4:00 PM EDT

  9. On September 9, 2016 at 12:06 pm,
    FranSix says:

    Also? I’m thinking that $VIX should exceed the previous high post-EU referendum vote end of last June.

    • On September 9, 2016 at 12:11 pm,
      Excelsior says:

      That would be interesting to see as it is overdue for the markets to have a good shaking of the tree.

        • On September 9, 2016 at 12:27 pm,
          Excelsior says:

          CFS – from that article:

          “But is all this about to change and will Labor Day be the trigger? The return of fund managers and traders to their desks may prompt a serious rethink in terms of gold investment policy and this could take the gold price in either direction depending on consensus. This makes the past two months’ gold price mostly range-bound movements perhaps the calm before the storm.”

          We shall see if it is just a pop up storm, or a 3 Hour Tour….. a 3 Hour Tour……

          https://www.youtube.com/watch?v=kvA0pd_1MxQ

          • On September 9, 2016 at 1:50 pm,
            Excelsior says:

            The clear winner in the Silver space today up almost 664% !!!!!!

            Rio Silver Inc (RYOOF)
            $0.11 up $+0.10 (+663.89% Gain)

          • On September 9, 2016 at 1:54 pm,
            Excelsior says:

            Some other positive mentions in the Silver miners today in an otherwise challenging day for the PMs:

            BAYHORSE SILVER INC KXPLF 19.42%
            SILVER GRAIL RESOURCES LTD SVGAF 7.61%
            MAYA GOLD MYAGF 5.97%
            KLONDIKE SILVER CORPORATION KLSVF 5.56%
            PROSHARES ULTRA SHORT SILVER ZSL 5.37%
            CANARC RESOURCE CORPORATION CRCUF 4.06%
            DOLLY VARDEN SILVER CORPORATION DOLLF 2.59%
            SIERRA METALS INC DBEXF 1.19%
            TREVALI MINING CORP TREVF 0.17%

          • On September 9, 2016 at 1:59 pm,
            Excelsior says:

            It is encouraging to see I own shares in the top 3 Small Gold producers today, and have been closely watching the 4th one as well:

            ALKANE RESOURCES LTD ALKEF 10.00% gain
            AUREUS MINING INC ARSMF 9.33% gain
            EL CAPITAN PRECIOUS METALS INC ECPN 5.26% gain
            CALEDONIA MINING CORPORATION CALVF 0.45% gain

          • On September 9, 2016 at 2:02 pm,
            Excelsior says:

            I also own shares in Bayhorse Silver, Maya Gold & Silver, Klondike Silver, and Sierra Metals up in that silver list. Encouraging to see investors start to wake up to them as they are some of the few undervalued silver stocks that actually have a great deal of upside compared to their peers.

          • On September 9, 2016 at 2:09 pm,
            Excelsior says:

            There weren’t any positive Gains that I’m aware of in the Mid-Tier Gold or Major Gold companies. (hence the dangers to the downside of the more liquid widely held stocks, and the power of small producers and development companies to overcome the macro trend.

            Here are some Development companies that did well today. I have positions in Hummingbird Resources, Mexus Gold, and SantaFe Gold. I wish I would have pulled the trigger on TMAC and Victoria gold a while back, but you can’t own them all… A number of investors on here follow Novo Resources and it had a strong day.

            INCEPTION MINING INCORPORATED IMII 22.81% gain
            HUMMINGBIRD RESOURCES LTD HUMRF 9.44% gain
            COREX GOLD CORPORATION CGEKF 7.96% gain
            MEXUS GOLD US MXSG 5.00% gain
            BARKERVILLE GOLD MINES LTD BGMZF 4.37% gain
            NOVO RESOURCES CORP NSRPF 4.18% gain
            SANTA FE GOLD CORPORATION SFEG 3.58% gain
            VICTORIA GOLD CORPORATION VITFF 2.60% gain
            TMAC RESOURCES INCORPORATED TMMFF 2.31% gain
            GOLD ROAD RESOURCES LIMITED ELKMF 2.02% gain

          • On September 9, 2016 at 4:33 pm,
            Excelsior says:

            Looks like I missed a Silver development company on my recap of out-performers today:

            Taranis Resources Inc (TNREF)
            $0.12 up + $0.04 (50.00% gain)

          • On September 9, 2016 at 5:45 pm,
            Excelsior says:

            After reviewing the Taranis Resources website, even though they have a large Silver/Gold/Copper/Lead/Zinc resource, and they just hit some great Silver intercepts, it seems their focus is still more on the Gold, so I’ll move them over to the Gold Development list.

            Here’s a recent press release that caused me to think they were more Silver than Gold at first:

            Taranis Discovers Two New Bedded Sulfide Zones 33 & 61m Under Great Northern Zone at Thor Grading up to 684 g/t Silver, 0.53 g/t Au & 9.2% Combined Cu-Pb-Zn

            http://www.jjgmining.com/uploads/2/7/0/2/27029932/trosept92016nrv3.pdf

  10. On September 9, 2016 at 12:08 pm,
    LPG says:

    Re: North Korea….

    FWIW, even the algos didn’t give a damn about it last night when the story came out.
    Maybe it makes headlines on CNBC or CNBC “Pro” (wtf !!!) coz they love the sensational BS aspect of anything as they need retailers to be hooked by sensational headlines. Maybe… But I don’t know: I stopped listening to this rather idiotic channel long time ago.

    My 2cts.

    LPG

    • On September 9, 2016 at 12:18 pm,
      Excelsior says:

      Oh come now LPG – you don’t want to be a CNBC “Pro” ? 😉

      • On September 9, 2016 at 12:24 pm,
        LPG says:

        lol

        Funny Shad.

        Everytime I hear about headlines on N.Korea, I imagine people running like headless chickens “North Korea… nukes !!! North Korea… nukes !!! North Korea !!! North Koooorrrreeeeaaaa !!!”.

        Have a good WE.

        LPG

  11. On September 9, 2016 at 12:08 pm,
    Chartster says:

    Breakout the popcorn… ( crash helmet and parashoot )

    The ” Great Unwind – fiat everything) ” has begun!

    No safe haven for PMs, JNK, TLT, blue chip stocks, oil…

    8 year cycle – 2008 replay
    80 year cycle – monetary policy change. (Aug 1936 fractional res banking )
    800 year cycle – Magna Carta

    • On September 9, 2016 at 12:22 pm,
      Excelsior says:

      I’m going to break out Popcorn and high-gravity liquid bread (craft beer) and will use that to wash down a few DoomEX pills from watching the Crimex rollercoaster. In addition, I’m already wear my Crash Helmet for equities and my Precious Metals Depends. Bring it!

      • On September 9, 2016 at 12:42 pm,
        Chartster says:

        Ex, now is a good time to shop EMs…

        • On September 9, 2016 at 12:46 pm,
          Excelsior says:

          Thanks for the heads up Chartster. I’ve been hearing more chatter about larger funds starting to position in EM funds. I’ll be taking a look at some of the ETFs this weekend for ideas.

          All the best!

    • On September 9, 2016 at 12:26 pm,
      LPG says:

      Come on Chartster !!! Bring the doom !
      Bring it on !
      What u’ve got for the 8000 yr cycle ??? 😉 😉 😉
      Hope all’s well.
      Best,
      LPG

      • On September 9, 2016 at 2:23 pm,
        GH says:

        The sinking of Atlantis?

        • On September 9, 2016 at 2:41 pm,
          Excelsior says:

          + 8,000

        • On September 9, 2016 at 3:51 pm,
          LPG says:

          lol GH. Funny.
          LPG

      • On September 9, 2016 at 3:20 pm,
        Pete says:
        • On September 9, 2016 at 3:41 pm,
          Excelsior says:

          Hilarious Pete. Look at those eyes….. “Would I lie to you subscribers?”

        • On September 9, 2016 at 4:02 pm,
          Pete says:

          Lol, LPG and Excelsior.

    • On September 9, 2016 at 12:53 pm,
      Matthew says:

      There will be no 2008 replay and gold is going to continue to smoke the U.S. dollar along with every other currency. It should go without saying that no market moves in a straight line.

    • On September 10, 2016 at 4:56 am,
      Robert Moriarty says:

      Chartster:

      You got it. Think of this as the poop hitting the fan

  12. On September 9, 2016 at 12:31 pm,
    Chartster says:

    No doom and gloom my friend…
    Magnanimous buying opportunity 😉

  13. On September 9, 2016 at 12:39 pm,
    James the Lesser says:

    This too shall pass…all it takes is Yellen and Draghi and the helicopters.

    When the FED doesn’t hike in two weeks this all reverses.

    Nothing to see here.

  14. On September 9, 2016 at 12:43 pm,
    Chartster says:

    The fed employees might look goofy, the owners are not.

  15. On September 9, 2016 at 12:45 pm,
    James the Lesser says:

    all these jerks like kudlow and company always want the fed to raise, just not now.

    I hope this whole manipulated bubble casino comes crashing down and wipes out everyone

    • On September 9, 2016 at 12:49 pm,
      Richard says:

      It would definitely help the laziness and arrogance that has developed in society. Wait until those jobs in the $100,000s income range are wiped out. People will definitely rethink things.

  16. On September 9, 2016 at 12:54 pm,
    James the Lesser says:

    when the smoke clears will we be able to say this about gold and silver?…

    https://www.youtube.com/watch?v=LODkVkpaVQA

  17. On September 9, 2016 at 1:51 pm,
    Richard says:

    Look at the FEDs actions back in 2012, more QE for the election.
    Now, I believe this has gotten well out of control of the FEDs hands, not necessarily the QE aspect, but the corporations that have been taking advantage of cheap money to subsidize earnings, buybacks and dividends with debt issuance. On top of that, companies are issuing layoffs while buying back stock. There has been no capital investment over this duration. Now they are stuck. Look at some balance sheets and the cash flows on these companies with dividends and interest going out. In order to maintain the status quo, they must issue more debt, OR cut dividends and enter into possible asset sales. It is simple mathematics. This is going to be big because IF interest rates rise 100bps or more, these companies will have difficulty in the debt markets.
    The concern for the market is that they are beginning to realize the FED is boxed into a corner by the corporations, government, and foreign investors. Corporations will perform layoffs before asset sales. Can this unwind gently while European rates remain negative? We don’t know.

  18. On September 9, 2016 at 2:49 pm,
    Jason Weishaupt says:

    I accidently stopped out of my core position on ASM today. I was like WTF!? Did not mean to put a stop in. Gross profit was 1.98 before taxes. No commission charges on Robinhood.

    • On September 9, 2016 at 2:55 pm,
      Excelsior says:

      Jason, I still have not checked out Robinhood, but there has to be a catch somewhere if they are not charging any commissions on trades. Are there higher fees on trading OTC stocks, (and can you trade directly on the Candian, Australian, or London exchanges)? Are their higher fees for re-organizations, or options?

      I just don’t understand how they can let everyone trade for free, but with a name like Robinhood, something tells me that they are charging really high fees on some of the other areas of trading outside of the US. Just curious if you have tried trading outside of the US with that platform?

  19. On September 9, 2016 at 2:54 pm,
    b says:

    The Silver Shorts Are Getting Concerned! – David Morgan
    Posted on September 9, 2016 by The Doc

    So much for worry today.

    • On September 10, 2016 at 5:00 am,
      Robert Moriarty says:

      B:

      It’s not the silver shorts who should be worried, they are the strong hands. It’s the speculator longs who are spending the weekend thinking about suicide. They are the weak hands and are about to get creamed one more time.

      • On September 10, 2016 at 8:52 pm,
        b says:

        Yup Bob, thats why I posted David Morgan saying the shorts are getting concerned.
        It would seem nobody knows anything.

  20. On September 9, 2016 at 3:32 pm,
    Ebolan says:

    The Flub is going to look awfully silly when they don’t raise rates this month.