Chris Temple from The National Investor – Tue 19 Jun, 2018

Trade War Fears, International Red Flags, All Deflation Concerns not Inflation

Chris Temple joins me on a day when markets everywhere are getting hit. All around the trade war fears are dominating, we discuss how the US markets are still holding well compared to other markets. We also look at the rise in the USD and commodities continuing to drop.

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Comments:
  1. On June 19, 2018 at 9:38 am,
    Matthew says:

    The CRB is still up 26% since the 2016 low and is sitting at the 2016 and 2017 highs. It could fall a long ways without violating the uptrend that began in 2016.
    http://schrts.co/9pc4jh

  2. On June 19, 2018 at 9:57 am,
    Matthew says:

    Treasury Inflation Protected Securities are also up significantly in the last 2.5 years but, unlike most commodities, appears to be readying itself for a breakout to new highs…
    http://schrts.co/xftXck

  3. On June 19, 2018 at 10:09 am,
    spanky says:

    GCC could bounce here in the next week or two, but so much damage has been done, it is almost guaranteed to make a lower low a few weeks later. And like I said, that nasty gap from December 2017 is *going* to get filled.

    I think the miners could bounce with GCC here. Hopefully they can positively diverge from GCC and not have to make a lower low than this next low.

  4. On June 19, 2018 at 10:13 am,
    Matthew says:

    It’s been a year since gold had a good rally versus commodities and it will soon do so again.
    GLD priced in GSG:
    http://schrts.co/eJdhuH

    • On June 19, 2018 at 10:53 am,
      Matthew says:

      Notice that, despite pulling back 25% from the recent high, GLD:GSG is still up 100% since 2014.

  5. On June 19, 2018 at 10:17 am,
    spanky says:

    Once that Dec. 2017 gap gets filled in GCC I think it will be a pretty safe buy, although it is possible, maybe even likely, we could break below the December 2017 low briefly. In any event, it is a spot for a long term investor to take a stab IMO.

  6. On June 19, 2018 at 10:26 am,
    spanky says:

    It’s possible silver miners like EXK and AG have bottomed (i.e., the 2017 lows won’t be broken) and it is also possible that EXK won’t test its 200 dma for a long time. But even if that is true, I think the upward move is going to be a long long slog for years.

    Again, I’ll refer you to the NVDA chart between 2010 to date. I think EXK is going to play out extremely similarly. Will it be $40 or $50 by say 2023? I think it is possible, but the majority of that move will come at the tail end after years of slowly grinding upwards. Just my 2 cents.

  7. On June 19, 2018 at 10:30 am,
    Snowy says:

    If tariffs were equally implemented by two parties trading an equal amount of goods I would think there would be a wash. Immediate inflation and no immediate deflation.

    Supply glut resulting from tariffed items exported should cause deflation. Items that were imported and now have a tariff would see an immediate price increase as we build infrastructure to compete with the imported items that are now tariffed.

    However China has a trade surplus. China is able to produce items at a cheaper cost, and we buy more Chinese items than China buys American items. If a trade war does start with China their trade surplus with the US should cause US items to both immediately and long term inflate? We may see food items like the Soy Beans / Pork experience deflationary affects, but overall I can’t figure out how the US would experience deflation when we are at a trade deficit with these nations?

    • On June 19, 2018 at 10:32 am,
      Snowy says:

      Question to Chris.. and I meant “not immediate inflation and no immediate deflation”

      • On June 19, 2018 at 10:52 am,
        Matthew says:

        Snowy, I have to disagree. If both countries implement tariffs, the immediate result would be higher prices and contracting trade — stagflation.

        • On June 19, 2018 at 11:00 am,
          Snowy says:

          I completely understand where you are coming from. And would argue a little to say that the immediate supply glut from exported item tariffs would counter act the imported tariff inflation to cause neutral prices (maybe even slight inflation).

          But I do not understand how Chris is concerned about deflation, or where he is coming from?

          • On June 19, 2018 at 11:13 am,
            Matthew says:

            I think your angle is a good one in that producers of goods would share the “hit” with their customers but am not sure it would be significant — at least not for long. Producers will simply do what they always have in order to survive and cut corners where they can, and they always can. One way or another, the consumer will pay the price.

            It’s too bad that most (especially on the left) do not understand how it is the government, not business, that cheapens life while simultaneously making it more expensive.

          • On June 19, 2018 at 11:44 am,
            Snowy says:

            Matthew, We are living in one giant experiment right now, but yes I think the consumers always end up carrying these heavy costs for a while.

            Hopefully this goes down in the textbooks and, as you say, the government will realize some of its mistakes and take warning for future policies. But probably not, and if the left takes over in November there will be a whole new list of fears.

    • On June 19, 2018 at 1:54 pm,
      Excelsior says:

      > For anyone with a pulse that lives on planet Earth, inflation is far more than what is being reported by government metrics, and deflation is not something that keeps me up at night.

      The US dollar has had it’s rally that most projected, but unlike the 2016 surge in Gold that took out many key levels, this latest move up in the US Dollar is temporary and part of a much larger fall in the Greenback that will only dip lower over the next 2 years, continuing to spike inflation.

      Look – this isn’t rocket science, and the inflation is hiding in plain sight:

      The cost of movie tickets, sport tickets, lawn services, dental medical services, college educations or private schools, home prices, insurance, and on and on… is WAY OVER 2%.

      When a family goes out for dinner is it more or less than it was a few years ago. Here’s a clue – it’s way more because inflation shows up in all kinds of areas of normal life and I don’t give 2 chits what the government says it is. Go out in the real world and there is plenty of inflation – year over year.

      This doesn’t even get into Shrinkflation where packaging and products are getting smaller to account for the inflation in goods, and most consumers are oblivious that they are getting much smaller portions/products and yet the price creep is edging up.

      I was just walking the campus with the guy that decides menu prices for one of the largest restaurant chains in the country and I asked him are you raising or lowering pricing. He smiled and said “raising prices of course.” He didn’t remember the last time they actually lowered them across the board.

      >> Give me a break from the nonsensical dingbats on the lame stream media that claim there is no inflation.

      • On June 19, 2018 at 2:09 pm,
        Matthew says:

        What about those of us who do not have a pulse and do not live on planet Earth?

        • On June 19, 2018 at 2:16 pm,
          Excelsior says:

          Those folks either:

          1) already died and it depends on when on what inflation bracket they were in when the kicked the bucket

          2) they are an android without a pulse and will outlive all economic cycles and will probably have a job as they replace humans,

          3) they may live on a friendlier planet without cost creep inflation.

          🙂

          • On June 19, 2018 at 2:31 pm,
            Excelsior says:

            let me try the first one over again:

            Those pulseless folks living on another planet or moon besides Earth:

            1) already died; and it depends on when and at what inflation bracket they were in when they kicked the bucket….

  8. On June 19, 2018 at 10:31 am,
    b says:

    Always good to hear Chris.

  9. On June 19, 2018 at 11:33 am,
    Matthew says:

    Silver still looks good versus gold but will probably be range-bound for a little while. SLV:GLD…
    http://schrts.co/y9db8K

    • On June 19, 2018 at 1:25 pm,
      Charles says:

      USAS had a nice reversal today. Not quite engulfing. See what it does tomorrow.

      • On June 19, 2018 at 2:06 pm,
        Matthew says:

        I would bet that we’ve seen the low.

        http://schrts.co/3oTMCm

        • On June 20, 2018 at 8:06 am,
          Charles says:

          Nice chart. ISVLF still holding my 30 cent line in the sand pretty well. Looks like a backtest to me that is just about completed as the 10 and 20 dma have a positive cross. I also note that it has taken considerable volume effort by the bears just to get back down to the $0.30 level and much less effort by the bulls to push the stock up last week from $0.29 low to $0.35 level. That is a pretty positive divergence in my book. Its also holding above the 50 week moving average which has begun to turn up. It may still consolidate for a few days, but I think the next move will be up and not down.

          • On June 20, 2018 at 9:23 am,
            Matthew says:

            I agree.

  10. On June 19, 2018 at 12:27 pm,
    CFS says:

    So soyabeans took a major hit today.
    But why? They are used for feed. Are animals/humans going to actually eat that much less soya? Brazil or where else has lower tariffs cannot ramp up production that much instantaneously. Some big boys are playing a game, if you ask me.

  11. On June 19, 2018 at 12:55 pm,
    Matthew says:

    Re: “Are animals/humans going to actually eat that much less soya?”

    That’s not analysis, CFS. When corn was recently up 10% ytd, did ask if animals/humans were going to eat that much more corn?

    “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” — Benjamin Graham

    • On June 19, 2018 at 7:14 pm,
      CFS says:

      Usually the movement in grain prices is more supply/demand weather related.

  12. On June 19, 2018 at 1:10 pm,
    Matthew says:

    CORN looks appealing to me:
    http://schrts.co/43X21R

  13. On June 19, 2018 at 1:16 pm,
    BobUK says:

    Trump is not going to get many US cars sold in Europe between tarrifs and a strong US Dollar. Ditto stuff like computers.

    • On June 19, 2018 at 2:32 pm,
      Excelsior says:

      Were there a lot of US cars being sold in Europe?

      • On June 19, 2018 at 2:40 pm,
        Excelsior says:

        Chevrolet USA

        “Chevrolet USA has been a marginal player in Europe for decades, as the brand never had an official European importer, which means the cars were imported by individual “grey-market” importers, who had a small but loyal group of buyers ”

        http://carsalesbase.com/european-car-sales-data/chevrolet-usa/

        • On June 19, 2018 at 2:41 pm,
          Excelsior says:

          Chrysler

          “Chrysler sales and market share in Europe had been stable from 2003 through 2006 and declined every year since. Chrysler was officially pulled out of the European car market in 2009”

          http://carsalesbase.com/european-car-sales-data/chrysler/

          • On June 19, 2018 at 2:43 pm,
            Excelsior says:

            Dodge:

            “The Dodge brand was officially withdrawn from the European car market in 2011 due to slow sales. Less than 100.000 cars had been sold in the seven years from 2005 through 2011.”

            http://carsalesbase.com/european-car-sales-data/dodge/

          • On June 19, 2018 at 2:44 pm,
            Excelsior says:

            Ford

            “Ford-auto-sales-statistics-EuropeFord European market share has declined every year from 2009 to 2016”

            http://carsalesbase.com/european-car-sales-data/ford/

          • On June 19, 2018 at 2:45 pm,
            Excelsior says:

            so yeah…… who really cares about US auto sales in Europe…..

    • On June 19, 2018 at 2:52 pm,
      Excelsior says:

      What does the United States export to the United Kingdom? (2016)

      Computers were 1.6% and Cars were so small it barely even registers….

      https://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/usa/gbr/show/2016/

      • On June 19, 2018 at 7:18 pm,
        CFS says:

        The US does not ‘export’ much to the UK, since it owns many UK companies.
        Imports tend to be materials, and knowledge.

  14. On June 19, 2018 at 11:43 pm,
    b says:

    Mining News Digest
    Wednesday 20 June 2018

    US-China trade spat wipes $57B from top mining stocks in fortnight
    Copper, iron ore prices drop, mining majors punished as US threatens more tariffs on “predatory” Chinese imports and Beijing calls it “blackmail”.

    read »


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