If
there is one data point that Charles Biderman, of TrimTabs, relies
upon, it is the series of salary and wage growth (or real-time tax
with-holdings) that his firm keeps an extra special eye on. Critically,
in our opinion, he notes the very recent shift from positive growth in income growth (after inflation) to negative for the first time since Q1 2010.
The picture is particularly worrying since he notes that this is right
before the all important holiday sales period which he suspects will
significantly disappoint (as we are already seeing in data post Black
Friday). Of course, we have long held that the decoupling of the US with Europe (and Asia for that matter) is more a lag than a simple decoupling, and given Biderman's insight on income growth (after inflation) we tend to agree with the Bay Area brain-box that the slowing economic outlook of Q1 2012 will herald the FOMC's push to QE3.
Also noteworthy is that the last time they enacted LSAP (QE2) saw the
peak in income growth (after inflation) and so their hope that this
printing of money will juice a pre-election-cycle economy and while Obama may hope this brings him back from the edge, we suspect, like Charles, that it will not be enough.Did The Fed Quietly Bail Out A Bank On Tuesday?
Over
the past month we have been closely documenting a major funding
squeeze in the all important shadow economy - the "synthetic liquidity"
conduit which far more than traditional sources of cash, has become all
important for proper bank functioning over the past decade. Courtesy
of adverse development in Europe, one by one various components of this
unregulated funding scheme have become frozen necessitating the first
of many central bank interventions on November 30 to provide liquidity
to global banks, primarily to offset such shadow conduits as locked up
commercial paper, repo and money markets. Logically, as noted over a
week ago, European banks scrambled to obtain cheap dollars by borrowing
over $50 billion from the Fed, and plug dollar shortfalls. Yet as all
band aid measures designed to offset a broken liquidity equilibrium fail
eventually, it was only a matter of time before we saw a direct bail
out by the Fed of one or more banks in the aftermath of the November 30
global "bail out." Sure enough, we have our first clue that "something"
happened in the week ending Wednesday December 14 that involved an
upgrade of the Fed's indirect (and thus untargeted) bailout of global
banks, to a focused, and very much targeted rescue of one (or more) banks. And with some additional diligence, it may be possible to narrow down the date of an actual bank bailout: Tuesday, December 13.Saxo Bank's 10 "Outrageous Predictions" For "2012: The Perfect Storm"
As we wind down 2011, the time for predictions for what is to come as nigh. Having posted what UBS believes their biggest list of surprises for 2012 will be earlier, we next proceed with out long-term favorite - Saxobank's list of "Outrageous Predictions" for what the bank has dubbed "2012: the Perfect Storm." Mostly proposed tongue in cheek (unlike predictions by other pundits who actually believe their own delusions), the list of 10 suggestions represents nothing less than an attempt to force people "out of the box" and look at the world with a set of "what if" eyes. Because if there is anything 2011 taught is, it is not to discount any one event from happening. As Saxo says: "Should one, two or three of our Outrageous Predictions come to pass, it would make 2012 a year of tremendous change. This may not necessarily be a negative thing either - and given the structure and uncertainties in the marketplace here at the end of 2011, we would suggest that even if none of our predictions come to pass, equally important and totally unanticipated events will. Sometimes we need to get to a new starting point before we can gain the right perspective. We hope 2012 will be the year where we start on the long march towards re-establishing jobs, growth and confidence." Naturally, the best outcome for 2012 would be the end of the broken status quo model, and a global fresh reset... but not even we are that deluded to believe that the quadrillions in credit money (real or synthetic) will allow such a revolutionary event to occur in such a brief period of time. At least not before everything is thrown at the intractable problem unfortunately has just one possible long-term outcome. In the meantime, here, to help readers expand their minds, is Saxo Bank's list of "Outrageous Predictions" for 2012.Huge gold deliveries/More sovereign downgrades/
Good morning Ladies and Gentlemen: After a 3 week hiatus, the FDIC decided to best to place two banks into the morgue: Bank NameCityStateCERT # Western National BankPhoenixAZ57917 Premier Community Bank of the Emerald CoastCrestviewFL58343 end. Friday saw the stock market initially rally into triple digit gains by the Dow but as the day wore on, selling commenced and finally the Dow
Traders in the market (what little is left of them) always seek out the investment thesis with the highest upside/downside ratio to a delta in any fundamental forecast. In other words, what derivative play to a secular trend generates the higher IRR? A good example is the ABX which allowed contrarians in 2006 and early 2007 to bet on a collapse in subprime and put on a "short" at next to now cost of carry, with practically no downside if the thesis ended up being wrong, and unlimited upside (just ask Paolo Pellegrini and Kyle Bass). Well, as we just learned, one of UBS "surprises" for 2012 is that oil could drop below $70/barrell. Is this possible? Absolutely - should the Eurozone collapse, and/or China experience the long-overdue hard landing, a deflationary shock (which will naturally only precipitate the central banks into an even more rapid devaluation of legacy paper currencies) can and likely will send crude tumbling (Iran geopolitical concerns aside) as happened back in early 2009 when crude collapsed to around $30/barrel however briefly. So is there a better option to play crude downside than merely shorting CL? Perhaps one idea with better "upside" in case of a deflationary collapse in crude is to get bearish on Boeing instead. As the following chart from Goldman shows, 3 of the 4 biggest widebody (and thus most profitable) aircraft orders are from Gulf airline companies - Emirates, Qatar and Etihad. Together, they amount to about 450 profitable future orders... which could well be cancelled if Gulf states revert to their panicked state last seen so vividly in the spring of 2009 when they were cancelling orders left and right.
UBS' Top Ten Surprises For 2012
Unlike other, more humorous instances, such as Byron Wein and his 10 endlessly entertaining year end forecasts, some banks take the smarter approach not of predicting what will happen, because only idiots think they have any clue what tomorrow may bring with any sense of certainty, especially under global central planning - a regime that is by definition irrational, but instead of stating what would be a surprise to a base case forecast. And with "surprise" now the new normal, it would be prudent to anticipate what to the status quo may represent as fat tails in the coming year. Especially since even UBS now mocks the Wall Street consensus, and the traditional upside biad: "Let’s face it: Bottom-up consensus earnings forecasts have a miserable track record. The traditional bias is well known. And even when analysts, as a group, rein in their enthusiasm, they are typically the last ones to anticipate swings in margins." Which is why, with that advance mea culpa in hand, we bring to readers the Ten Surprises for 2012 from UBS' Larry Hatheway: "At the end of each year, in our final strategy note, the global asset allocation and global equity strategy teams join up to consider possible surprises for investors in the year ahead. Inside, we briefly describe ten such outcomes, and also provide a review of how last year’s surprise candidates fared." For those pressed for time, here is the full list: i) The consensus of bottom-up earnings estimates is right; ii) Financials outperform; iii) The euro rallies; iv) Oil prices fall below $70/barrel; v) Sovereign default outside the Eurozone; vi) Rising Treasury yields; vii) An Italian sovereign upgrade; viii) EU or EMU disintegration; ix) Fewer than five governments switch hands and, last but not least, x) Britain does Great at next summer’s Olympics. Let's digGuest Post: ParaNoyer
The gloves are off! As the French prepare for the loss of their AAA status, the governor of the Bank of France, Christian Noyer, suggests that the UK should be first in the firing line as the data for inflation, real GDP growth and government deficit to GDP are worse across la Manche from where he sits. A month ago French 10 year yields were 3.8%. Today they are just above 3%, so maybe the markets are giving him the benefit of the doubt, but let us not forget that the maturity timeline of French bonds is considerably shorter than the UK. They are about to have a funding problem and that is one of the many issues that the much maligned ratings agencies are concerned about.China's epic hangover begins.
Eurozone crisis poses military risk, warns defence chief General Sir David Richards
Cancer patients have operations cancelled after thieves steal copper cable from hospital
Top US General Fears Euro Unrest
Real Unemployment at 11%
France Fears Credit Rating Cut Despite Bid to Ease Eurozone Crisis
Long-term Jobless Eye Bleak Future as Benefits End
Bank Run in Latvia
Ellis Martin Report With Jim Sinclair On Gold’s Recent Contraction
Eric,
Much of the recent bearishness is based on primary school TA, a
broken trend line of a triangle that moved almost to its apex and the
200 day MA.
The best long term market predictor that I know may well not be the
best short or medium term trader. People need to stay within the bounds
of what they are historically best at.
Gold is the most manipulated market on the planet. Painting charts to
accumulate has been a fact since 2003. China is a master painter of the
world cash gold chart. That is why in this entire gold bull market
every major up move in gold has been proceeded by a horrid technical
formation or break that reversed out of nowhere.
If a simple trend line breaks or 200 day moving averages were consistently good, everyone would be a billionaire.
Next week could surprise the bears in gold.
I would not, now, be stampeded by a great long term predictor’s short
term outlook or a fellow who screams, dances, blows whistles, and horns
when reporting on markets who recently declared the gold bull market
dead for the second time in a year.
The first declaration was hardly a death.
Regards,
Jim
Jim
One Mind – One Voice
CIGA Eric
Dave,
It’s hard to market time with so many voices. This is why the trading masters invariably followed one mind – one voice. That voice was their own. There’s no denying that the sovereign debt crisis and the secondary and tertiary problems associated with it are intensifying. Gold’s increasingly volatile chop reflects this growing reality. This is why investors my follow time and money flows, the inherent message of the market, while ignoring the many, often conflicting, voices.
The window of time for a turn in gold falls between December and July with a mean in March. That’s a pretty big window of opportunity, so the message from the markets must be studied to know when to turn patience into action.
Some of the messages discussed on Insights are as follows:
(1) Trend Strength
(2) Changes in ETF Gold Total Assets 1-2-3
(3) Lease Spreads
(4) Leverage Money Flows Concentration (see below)
The general message still suggests that gold is still marking time. That is, chopping wildly while money quietly repositions against the noise and misdirection of well-timed headlines. The message at D-wave bottoms tends to be focused and consistent across all market and intermarket relationships. When the body of evidence (weighted probabilities of analysis) favors a bottom it’s time to turn patience into action.
For example, the leveraged money flow footprint of a D-wave bottom is highly specific. Notice the specific money flow setup in 2006 and 2008 (circled blue). The message, when it comes, will be undeniable.
Gold London P.M Fixed and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Long & Short As A % of Open Interest
For now, patience reigns.
Hello Eric
Just read Armstrong’s post of Dec.15. Not too pleasant a read for any holder of gold. Seems, he is using two arguments. First, , the market is just tired, and the longs worn out, with no more on prospect.
Second, and maybe his main argument, TA forecasts much lower prices-much lower.
I would rather believe what influential people like you and Jim Sinclair are saying, but do remember Armstrong predicting in the summer that gold and others would be turning in a very bad market month of September-proved correct.
Furthermore, consider the huge short positions-continuing-in shares of stocks like Goldcorp and Kinross, with Kinross making a new low this week-seems it might mean something.
Good Lord-so many different outlooks. Hamilton forecasting an overblown USA $ soon to fall, with resulting rebound in price of gold.
What is one to think?? I distinctly remember in the seventies-some very wild swings.
So, maybe the major manipulators will surprise us and let deflation overwhelm everything-no more QE…..Then, what??
Sincerely
Dave
Canada
More…
Dear CIGAs,
Please click the link below to listen to this week’s metals wrap up from King World News, featuring our very own Trader Dan Norcini.
Click here to listen to the weekly metals wrap up…
Jim Sinclair’s Commentary
You really believe that QE to infinity is not coming?
These Are The 29 Massive Banks That Could Take Down The Global Economy
Click here to view the full list…
Jim Sinclair’s Commentary
Only two so far this weekend.
Bank Closing Information
December 16, 2011 These links contain useful information for the customers and vendors of these closed banks.
Western National Bank, Phoenix, AZ
Premier Community Bank of the Emerald Coast, Crestview, FL
Jim Sinclair’s Commentary
John Williams’ www.ShadowStats.com speaks the truth.
- Consumer Financial Distress Hampered Retail Sales and Production
- Nonsensical Hype Over Regularly Mis-Adjusted Jobless Claims
- High Oil Prices Still Inflating Broad Economy
- November’s Annual Inflation: 3.4% (CPI-U), 3.8% (CPI-W), 11.0% (SGS)
- Gold Remains the Ultimate Hedge
www.ShadowStats.com
Jim Sinclair’s Commentary
Swaps are in action. Liquidity is spread thick while financial leaders talk out the other side of their mouth.
The Spanish bond offering yesterday was oversubscribed. This is totally counter intuitive so guess who financed the buyers. Yes, you are right. The US Federal Reserve via last week’s swaps.
It is amazing how many of you are overwhelmed by MOPE.
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