Date: Fri Apr 01 2005 15:23
trotsky (Hambone@pm stocks) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
quite right...as i've noted earlier, Rydex timers have capitulated and withdrawn a big chunk of money from the pm fund, but the big boys have bought what they coughed up. the very short term is always a bit of a coin toss, but this could become a significant turn imo.
Date: Fri Apr 01 2005 12:33
trotsky (frustrated@Greenboink) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
knowing what he probably knows, i'm sure he's mighty glad that he won't be around for getting the blame when the recriminations start.
Date: Fri Apr 01 2005 12:31
trotsky (GM, AIG...) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
all those recent troubles have a decidedly Enronesque air...already junk bonds have received a good whacking.
we don't see it clearly yet, but the silhouette of the mother of all debt crises can be glimpsed in the distance.
Date: Fri Apr 01 2005 12:21
trotsky (art) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
well, no doubt the PTB don't want gold to attract too much attention,and they're sure using their ever diminishing share of the global stock of gold to the best effect ( with sales agreement smokescreens such as the WAG, and the frequent attempts by the socialist menace Gordon Brown to get the IMF to sell its gold, etc. ) .
but it's simply not credible that the day-to-day wiggles in the PoG are all the result of such efforts. there's big speculative participation in the gold market, and from my read of the tea leaves, most of the short term action is the result of the actions of the hedge and commodity funds trading gold futures.
i refuse to accept this wide-spread victimology philosophy in gold bug land. gold is up 70% from its double-bottom low logged in '99 to '00, in a progression that has all the hallmarks of a perfectly normal bull market. among the various currencies competing with gold, it is one of the best performers during this stretch to boot ( in spite of not paying any interest ) .
the fact that the 'official sector' plays a role in the market of course suggests that intervention is a part of the market...but so what. in due course it may very well begin to work to our advantage ( see e.g. the recent buying by Argentina's central bank ) .
Date: Fri Apr 01 2005 12:07
trotsky (frustrated) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
nevertheless, has Greenspan ever said anything but that he expects the resolution of the trade deficit problem to be 'benign'?
isn't the mainstream financial press ( see a recent editorial by Malpass, posted here by Bleuler ) assuring us practically every day that we should focus on the capital account as 'proof' of the foreign desire to invest in US financial assets as oppsed to the current account which displays the consumption profligacy?
i'm only trying to make the point that i don't believe the FOMC is fretting about this issue. if push really came to shove, i'm sure they rely on the BoJ jumping into the breach.
Date: Fri Apr 01 2005 11:57
trotsky (frustrated) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
all eyes are on this report, but NOT because anyone believes that a decline in foreign buying will seriously imperil the financing of the deficits. the reason why traders are watching is because they hope to get clues on whether to buy or sell treasury futures contratcs.
mind you, one day there may really BE worries about the financing per se ( especially as the maturity spectrum of the outstanding treasury debt has been dangerously shifted to the shorter end, which raises the frequency of refinancings ) . but as far as i can tell, no such worries exist today. all you ever hear from the mainstream is that it is not US overconsumption which is at the root of the deficits, but the foreign investors' desire to sign over their savings to the US as fast as possible, since they couldn't be possibly put to better use anywhere else.
Date: Fri Apr 01 2005 11:48
trotsky (art) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
this may surprise you, but yes, it is 'normal market action'.
during the bull market in stocks from 1982 to 2000, there have been several days when the Dow Industrials went down by over 500 points in a single day ( just what i recall off the cuff: 1987, 1997, 1998, and 2000 ) , on one occasion the 500 point 'dip' amounted to 22% of the Dow's value, the biggest single day crash in the averages history.
but there wasn't even one day during the entire bull market when it actually went up by that much. and yet, no-one ever doubted that it was a bull market, or that the large single day downswings were the result of a manipulative scheme to hold the Dow down.
the opposite tends to happen in bear markets by the way ( slow grind down, punctuated by huge single day rallies ) .
Date: Fri Apr 01 2005 11:40
trotsky (art_vandila) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
obviously you didn't read my post too carefully. we did have just such a day on occasion of the LAST jobs report. it came in quite a bit above expectations, and gold had a big rally ( 5 or 6 dollars if i recall correctly ) .
it was the same situation, only in reverse.
Date: Fri Apr 01 2005 11:15
trotsky (frustrated, 9:56) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
you underestimate the hubris of the bureaucrats. i don't believe they give even one thought to the possibility of foreign buying drying up a this point. after all, Japan is a reliable vassal, and the mainstream has long ago convinced itself that it's not foreigners funding the deficits, but the deficits 'allowing' foreigners to deploy their savings in the most desirable paper on earth.
i'm pretty certain that this consensus holds sway just about everywhere, including the FOMC.
Date: Fri Apr 01 2005 11:09
trotsky (silverfox, 9:51) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
calm down. were you also complaining when the LAST jobs report came in ABOVE expectations and the gold price went UP?
do you really believe that every little wiggle in this market is the result of 'manipulation'?
it happens quite often that markets move in a direction different from that generally expected on account of a news item. 'news' are generally discounted beforehand, and even day-to-day market moves on 'surprising' news are generally irrelevant to the larger trend.
i can even make an educated guess as to why the market reacted the way it has today. prior to today, speculators held a sizeable net long position in COMEX gold futures contracts. no doubt many of them hoped to sell into a spike on 'bad jobs news' ( since about 50,000 spec contracts are likely underwater at this point ) and alternatively posted stops to react to 'good jobs news'.
too many 'spike sellers' right at the outset then triggered the downturn that triggered the stops...perfectly normal market action.
Date: Fri Apr 01 2005 10:49
trotsky (US employment picture) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
there is no reason to believe that US employment trends are any better than say those in continental Europe ( note, 'trends', not absolute numbers, which clearly are worse in Europe ) .
since basically the bulk of the payroll gains reported over the past few months owes its existence to BLS's 'guessing game', or 'number improvement scheme' known as the 'birth/death model' , only phantom jobs have been created. they get revised away once a year, and are quite similar to the hedonic indexing trick, which counts money that no-one ever spent or received for the purpose of prettifying the GDP.
the 'official' US economy is nothing but a Potemkin village.
Date: Fri Apr 01 2005 10:39
trotsky (pm stocks) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
Rydex timers have removed nearly $60 million from the Rydex pm fund over the past week - equating to almost 25% of the fund's assets ( they even sold on up days, which is rare ) .
in short, sentiment among small traders has gone from overly bullish to overly bearish in an extremely short time period. at the same time, big traders have accumulated shares in the sector at an impressive rate.
none of this means that the short term correction is done - only that it soon will be, and that a sizeable intermediate term up move will be the next likely major development.
it's even possible that a longer term rally will soon begin - for the first time in quite a while, this possibility is coming into view. the trigger will be a pause - followed by a reversal - of the Fed's rate hike campaign. they are already far ahead of the curve in view of the economy's persistent output gap. the idea mentioned on occasion of the last FOMC statement about 'returning pricing power' is laughable. before pricing power can return, real incomes must rise sharply, the world's manufacturing capacity glut must be liquidated, and savings must be rebuilt. none of this has happened, and when it happens it will produce a bust, which implies that the bureaucracy will lower rates again ( since it won't countenance a bust ) .
the bell has just rung - the beginning of the end of the global real estate bubble is here ( see earlier post on the UK's function as a leading indicator ) .
if the FOMC hawks persist ( which is what they actually SHOULD do, in order to hasten the necessary liquidation of malinvestments ) , it will only happen that much faster.
in any event, the pm sector, as a consequence, is getting closer to a medium to a long term low, short term gyrations notwithstanding.
Date: Fri Apr 01 2005 09:55
trotsky (UK house price 'dip') ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
worst monthly fall in house prices in a decade?
get used to more headlines of this sort. and of course, the UK economy leads the US by about 6 months to a year - as can be seen in the time lag in their respective interest rate cycles.
real estate speculators better brace for 'interesting times'.
Date: Fri Apr 01 2005 09:51
trotsky (Donalds, 6:51) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
"snip: If the number announced Friday is, as I expect, stronger than Wall Street expects, interest rates will jump sharply. "
yes, everybody is trendily bearish on bonds, and that includes of course the financial and non-financial press alike.
bond futures speculators hold by far the largest net short position acrosss the entire maturity spectrum in history...the Rydex timer bearish consensus remains stuck at 99.97% ( shorts exceeding longs by 30 TIMES in terms of invested funds ) , the closed end bond fund TLT sports a short ratio of 21 and a put/call OI ratio of 6.5.
so everybody 'knows' bonds can only go down, which of course means that the only way for them to go is up and away. the path of least conviction and thus the path of least resistance.
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