Daily Market Wrap – Wed 10 Oct, 2018

Recapping The Worst Day For US Markets In 8 Months

With US markets down across the board there is a lot for Chris Temple and I to chat about. We look at why this was expected but also why it is not yet a time to panic.

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Featuring:
Chris TempleCory Fleck
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Comments:
  1. On October 10, 2018 at 2:42 pm,
    Matthew says:

    A lot of miners were up nicely today despite the selloff in stocks. After being conditioned by the action in 2008, not many have been expecting such a divergence.

    It’s too soon to say that the miners are finally ready for a real move up, but today’s action adds to the possibility that the low is in place…
    http://schrts.co/XB8Efm

    • On October 10, 2018 at 7:46 pm,
      Ozibatla says:

      Matthew, your point of divergence is a good one. You are right, many have become conditioned from what happened during the GFC. Whilst history may rhyme, it is said it never repeats. What we are witnessing may just simply reflect the difference in economic landscape between 2008 and 2018. Some factors still remain from those times but many have changed also.

      Interesting to see if there is going to be some follow through in this paniced selling or if it is just another flash crash moment like many that have taken place over the last 2-3 years.

      • On October 10, 2018 at 9:44 pm,
        Matthew says:

        One of the easiest differences to notice between 2008 and today is that gold hit a new all-time high that year and the PM stocks had been in a bull market for many years. So plenty of large and small investors had significant exposure to the space and therefore plenty to sell when their margin calls (and/or fear) came.
        An outright crash in stocks would still be bad for the PM miners but bear markets in stocks are historically very good for them.

        • On October 10, 2018 at 10:49 pm,
          Ozibatla says:

          In other words, probably more limited downside potential for both miners and physical due to the current beat up condition they find themselves in.

          Another big difference to note that relates to the broader global economy is the increase in overall debt the world is exposed to now compared to 2008. Whilst still extremely high in 2008 it has apparently grown another 50%+ currently. The chickens will come home to roost eventually, it is inevitable.

          • On October 10, 2018 at 11:09 pm,
            Matthew says:

            Yes, the day of reckoning is inevitable and so is a raging bull market in the gold and silver miners.

          • On October 11, 2018 at 8:36 am,
            Excelsior says:

            This was a good thread and I agree the points made on the difference between 2008 and 2018 if there was to be a broad market selloff and how the PMs and mining stocks are in a much different position today, than then, and they would stand to do better as money rotated out of expensive general equities into the much better valuations in the commodity & precious metals sectors.

          • On October 11, 2018 at 9:04 am,
            Matthew says:

            Here’s a HUI chart to watch:
            http://schrts.co/zkfkFf

          • On October 11, 2018 at 11:09 pm,
            Excelsior says:

            Nice pop and bullish candle in the HUI.

  2. On October 10, 2018 at 2:49 pm,
    Matthew says:
    • On October 10, 2018 at 11:38 pm,
      Ozibatla says:

      I hope your right about another PM bull.

  3. On October 10, 2018 at 2:57 pm,
    Matthew says:

    Sugar Rush: Breakout on big volume…
    http://schrts.co/Fappk9

  4. On October 10, 2018 at 4:56 pm,
    BDC says:

    Salient comments from both. Powell will unlikely weaken.

  5. On October 10, 2018 at 7:38 pm,
    Bonzo Barzini says:

    Matthew, after watching Hickok45 on the LCR .327 mag I think I have finally found the best small carry revolver for me. It weighs 17 oz vs 15 oz for the .38 and 14 oz for the .22 It holds 6 rounds instead of 5 for the .38+P, but is better for defense than the .22LR. Have you any experience with the .327 magnum? Do you prefer a concealed hammer for pocket carry? Thanks.

    • On October 10, 2018 at 9:55 pm,
      Matthew says:

      Bonzo, I’ve had no experience with the .327 mag but I think it’s safe to say that it would make a great defense round. As for the hammer, I think it makes perfect sense to go with the slickest gun possible but I still like the exposed hammer.

      • On October 10, 2018 at 10:20 pm,
        Bonzo Barzini says:

        Thanks, Matthew. I also like an exposed hammer which gives you the option for single action, but it might snag while pulling it out in the heat of action. This gun has many options of ammo. The Federal .327 mag is more powerful than 9mm+P; the .32 H&R is similar in kick to the .38 special; the .32 S&W long is similar in power to a .22 mag; the .32 S&W short is similar in kick to the .22LR . It also can shoot the .32 ACP which is what James Bond shot in his Walther PPK. “M” called it a manstopper. Very tempting…

        • On October 10, 2018 at 11:13 pm,
          Matthew says:

          Plenty of power + low recoil; what’s not to like?

          • On October 11, 2018 at 10:14 am,
            Bonzo Barzini says:

            The downside to the LCR .327 is that it costs about $200 more than the LCR .38 or the LCR .22LR, and the ammo is harder to find. But I still want one, although the LCRX .327 with exposed hammer is tempting too.

    • On October 11, 2018 at 4:15 am,
      Whit says:

      For what it’s worth, I was always taught never keep a round behind your hammer. That way in an accidental fall, pulling the fire arm out…shit happens, you don’t blow your leg off. Unless your hammer acts like a safety. Half cocked, then the hammer isn’t close primer. Like a good saddle rifle….always half cocked. ☺

      • On October 11, 2018 at 6:47 am,
        Matthew says:

        That’s good advice for a lot of guns but the transfer bar system found on most modern guns eliminates the danger of an accidental discharge.

        • On October 11, 2018 at 8:42 am,
          Whit says:

          Matthew, about when did manufactures start adapting the transfer bar system.

          • On October 11, 2018 at 9:25 am,
            Matthew says:

            I think Ruger has been using the transfer bar for 40 or 50 years and am pretty sure Smith and Wesson’s equally safe hammer block design has been used on all S&W revolver for 20 years or so. I think the N-frame had it in the 1930s.

          • On October 11, 2018 at 9:43 am,
            Whit says:

            Much obliged for that info. I have a few that have it, and a few that don’t.

          • On October 11, 2018 at 12:24 pm,
            Matthew says:

            This video might be of interest to you:

            Hickok45 Was WRONG! (Hammer Blocks and Transfer Bars)
            https://www.youtube.com/watch?v=CqypovuFS2A

          • On October 11, 2018 at 7:15 pm,
            Whit says:

            Very nice…. I have a hand full of colts and rugers I’m gonna sit down and check out.

  6. On October 10, 2018 at 7:49 pm,
    Steven Rowlandson says:

    Today might be part of a process of correction and it may take a while before the process is complete. There is much debt, greed and corruption to purge. Capital preservation should be a priority.

  7. On October 10, 2018 at 7:59 pm,
    Ozibatla says:

    Interesting to note bitcoins fall off a cliff today. It seemed to follow the dow to an extent. The most popular crypto has been doing alot of muddling throughout the year, especially compared to last year. Would todays slide indicate its sentiment has somewhat moved away as an alternate safe haven investment and more towards the conventional markets?

  8. On October 11, 2018 at 2:23 am,
    Markedtofuture says:

    Crypto We are Officially at war with China and Russia. Stock market drop 800 points Bitcoin

    https://www.youtube.com/watch?v=9z0qe9PkClE

  9. On October 11, 2018 at 6:13 am,
    Ozibatla says:

    So theres an article on kitco claiming gold rises on the back of lower than forecasted inflation… this is either a complete bulls*!t article or gold is no longer an inflation hedge???

    • On October 11, 2018 at 8:42 am,
      Excelsior says:

      It is a confusing point of view, but I went and found that article you were discussing and it appears their rationale is that lower inflation = weaker dollar = stronger metals prices and fixed income assets.

      Here is that article and passage that gets into their thinking on the potential effects:

      _____________________________________________________
      Gold Rises Firmly Above $1,200 As U.S. Inflation Undershoots In September
      Anna Golubova – Thursday October 11, 2018

      “Analysts said the September CPI report showed another “soft” month for inflation, adding that the data should be negative for the U.S. dollar and thus benefit gold prices.”

      “Core CPI inflation is now tracking 2.2% which likely implies a tick down in the Fed’s preferred measure of inflation, core PCE, to 1.9%, a touch below the central bank’s target. As a result, the slight downside miss should be moderately negative for the US$ and positive for fixed income,” CIBC World Markets senior economist Katherine Judge wrote in a note to clients.”

      http://www.kitco.com/news/2018-10-11/Gold-Rises-Firmly-Above-1-200-As-U-S-Inflation-Undershoots-In-September.html

      • On October 11, 2018 at 8:47 am,
        Excelsior says:

        I personally agree with you Ozibatla, traditionally higher inflation = lower dollar, and lower inflation = higher dollar.

        Also, Jim W. seemed to get at the real reasoning for the quick jump in gold and metals prices in his comment in that same article:

        “Prior to the release, gold was already trading solidly higher, supported by safe-haven demand amid steep sell-offs in world stock markets overnight, said Kitco’s senior technical analyst Jim Wyckoff.”

        _____________________________________________________________

        Basically, when the poop hit the fan in the stock markets, Gold and related securities got a bid as protection. So much for those claiming the PMs are no longer safe havens, or that Cryptos would steal all the safe haven appeal (because they were a big nothing burger during the last 2-3 days during the uncertainty, and actually sold off a bit).

        • On October 11, 2018 at 8:51 am,
          Excelsior says:

          I also saw the VIX surged 43% yesterday, so in the panic, the right assets acted as safe havens.

        • On October 11, 2018 at 4:47 pm,
          Ozibatla says:

          This was my point in my rant the other day about gold and silver being stuck between rock and a hard place these days. Higher inflation in the ideal world would be gold friendly yet it is also associated with a higher dollar and vice versa. So perhaps in todays crazy world, the inflation hedge theory doesnt carry as much creedence as yesteryear.

          In light of todays big surge in gold, we are seeing its safe haven influence coming to fruition. Yet I have also witnessed people viewing other assets as a better safe haven in the past ie: the dollar and bitcoin.

          What is different this time? It is possible that the masses out there are starting to realise that deficits and debts are becoming unfeasible as interest rates continue to climb. This idea was originally swept under the carpet when rates initially started climbing back in 2015 because they were rising from next to zero and the perceived threat was still far enough away in the future to not worry about. Now as we approach what is deemed the neutral range for interest rates, all of a sudden this problem is now in the foregeound. This is validated by Trumps hissy fit about the Feds interest rate hikes making it harder for him to control the governments deficits.

          Funnily enough, the dollars decline didnt match golds rise so the inverse relationship wasnt really in play on todays basis. Everything is skewiff!

          • On October 11, 2018 at 9:37 pm,
            Excelsior says:

            Yes, well people forget that both the Dollar and Gold can move in tandem during true safe haven plays, so there isn’t always an inverse relationship. The other thing to clarify is that the dollar actually falls in value during inflationary period, because it takes more of them to buy the same goods or services. The dollar increases during deflationary periods where it takes less of them to buy the same goods. That is why I disagreed with that article suggesting:

            “Analysts said the September CPI report showed another “soft” month for inflation, adding that the data should be negative for the U.S. dollar and thus benefit gold prices.”

            That is ass-backwards, as soft inflation is positive to for the dollar and negative for the metals. The metals do better in mildly inflationary periods where the fed is behind the curve, and where the dollar is falling, so their rationale was wacked out.

            I’ll agree that people didn’t rush into cryptos during this panic attack, because this was sudden and scary, and so they bought something they can count on Gold/Silver or the VIX as a hedge. This may be fleeting if there isn’t continued pressure and uncertainty, but the reaction from the PMs was exactly what one would expect to see in such a scenario.

    • On October 11, 2018 at 8:50 am,
      Matthew says:

      Yup, complete bullsh!t.

  10. On October 11, 2018 at 11:55 pm,
    Ozibatla says:

    I agree wholeheartedly Ex. I suppose the point I was trying to make is that fear seems to override rationale when sh*t hits the fan and therefore fundamentals sometimes fall by the wayside. So yes the dollar and gold can move in tandem together, especially during safe haven plays. On the premise of yesterdays action alone, one could surmise that gold is a better safe haven bet than the dollar.

    Like you accurately point out, this could just be a fleeting panic and the status quo resumes soon enough. Gold has given back some gains already.

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