Free movie distribution service: Barfly

Ha! I found Barfly on the Youtubes:



No lie, when I was young my band's bassist said "you know who you remind me of? That guy from Barfly."

I guess I looked like Mickey Rourke back then, or I was quite the drinker and shit-disturber and broke all the time with the wacked-out poetry, or maybe it was cos at some point I unknowingly repeated Henry's lines from this exchange:

Wanda: I can't stand people. I hate them.
Henry: Yeah?
Wanda: You hate them?
Henry: No, but I seem to feel better when they're not around.

Anyway, it's a classic movie, so get out the Doritos and beer or whatever your poison is.

Some weekend reading

Here's a few things I tripped over last night on the way to the loo:


Bonddad - weekly indicators. Consumer spending is good.


Slate - the economics of Goldfinger: James Bond as enforcer for Harold Wilson's doomed austerity policies. Someone on Fark mistakenly suggested that Goldfinger is the embodiment of the Ayn Rand hard-money ideal: obviously they never watched the movie, because why would a goldbug want to destroy all the gold in Fort Knox? What'll be left to back the currency? In fact it's more like this:

Anyway, the article is a great read.


IKN - a message for Tahoe Resources:

Peter Hall from Export Development Canada has no clue about this "gold" thing we've been talking about

Here's Daniela interviewing Peter Hall from Export Development Canada about, um, gold:



How wrong is this guy?

1. He thinks gold goes up in times of stress, when actually scrap supply floods the market and gold collapses.

2. He has never read a balance sheet so he thinks the high all-in cash costs data is a pile of hooey.

3. He doesn't know fuck all about civilian gold demand in EMs. He probably should go check out the World Gold Council site and edumacate himself.

4. He still thinks Whitey has anything to do with the gold price.

5. At about 5:54 Daniela has to remind him of this thing called "supply and demand".

There's one civil servant our country should toss out into the street.

The case for rest-of-world

Here's CIE, a Canadian ETF that tracks some sort of developed world ex-US index:

On the bad side, it's got a lot of stuff you don't want to own in a DM bull, like Canada and Australia, and sectors like mining.

On the good side, it gives you 22% Japan, plus Europe including Germany, UK and Switzerland. Lots of consumer goods and stuff.

And it seems the rest of the world potentially has a lot of catching up to do, just to catch the USA, no? Not that it should, but at least it should try to close the gap made by the past several years, I'd have to think.

I have no clue what else a Canadian can buy on the TSX (i.e. Canadian-listed) to get exposure to DMs ex-US, aside from mutual funds. Stuff mutual funds. And it doesn't look like it'll be particularly necessary to be picky nation-wise for the next while.

Oh and by the way: look at that chart closely. From about May 2012 to today, it's essentially printed one big white engulfing candle that's about to negate all the doomstery from 2009 on.

Thar she blows!

And the great white whale Rio Alto finally surfaces after months of sucking the seafloor.

Next stop $5 bitchez!*

---

* - no not really

The case for a consolidation instead of a top

RSP, the equal-weight ETF, is outperforming the SPY in this advance.

The relation holds over more recent periods.

Makes me think that this horizontal period on the S&P is just the hedgies puking their favourite plays (homebuilders, banks etc) and going to cash; the broader (ex-hedgie) market is still looking positive.

Not sure, but it seems that the data is leaning this way, no?

a few more newsbits

Five newsbits with a side order of snark.

Ritholtz - stocks: cheap or expensive? As he notes, pundits who have focused on the Shiller P/E as the be-all and end-all are being quite selective in their data and feeding a massive confirmation bias. I.e. they're deluding themselves. Oh, hi Jojo!

Reuters - Italy's bond premium hits 2-year low. Doom in Europe, so you say? Uh... but then what about the data? Oh, all lies, eh? Communist lies, you say? Oh, okay then.

Reuters - Greek industrial output rises WTF? Huh? Greece has an industrial output?

Michael Shaoul - China credit issuance data. Seems to suggest China will recover for a few months, then the credit tightening works its way into the system and they slow down bad. Problem is, by then the October plenum will have happened and the situation will be framed differently in investors' minds, no?

FT Alphaville - prepping for bank bailouts in China. I don't think this system is meant as a bailout, but if people are going to think that, well, bullish for China.

And now, the news

Bunch of stuff to ponder....

BI - SPY still cheap by 15 valuation metrics. Included in this is an explanation as to why the Shiller P/E is stupid and you should quit paying attention to it.

Bonddad - will the second half print strong growth? The ISM suggests the US economy really wants to grow faster; whether or not the Republicans let it, though, has an obvious answer.

BI - Tom Lee at JP Morgan sees bullish signs in wealth management attitudes. The hedgie cokeheads are all looking to short or stay out; so the US is far from a sentiment top.

Bonddad - India analysis. The only hope is the BJP winning the election in 2014, really, I think.

Reuters - monsoons ease. Nice thing is, Indian farmers will end up with a good harvest. Sad thing is, India doesn't even know how to export surplus grain because they're so incompetent.

FT beyond brics - more on the China economic data. A bunch of opinions on China, all vaguely positive - or at least not apocalyptic.

Reuters - China developing new bank loan platform. Well, as Ritholtz said in 2008, "there's no such thing as a security that's worthless - only a security that's overpriced". And perhaps bringing price discovery into the situation can clean things up a smidgen.

Mineweb - Cookie and van Eeden with advice for gold exlorecos. Hey Kitco News - did you send Daniela Cambone down to Reno to cover this event? Or did you let Dorothy Kosich scoop your sorry asses cos you'd much rather interview apocalyptic Republican hard-money wackaloons? Something tells me that your viewers would have learned more from Cookie & van Eeden interviews than they were listening to a clown like Steve Forbes, and those other idiots who are out promoting their new books to the Republican crowd.

Zerohedge - "Hello, Scotia Macotta? This is JP Morgan. We urgently need some of your gold." I'm sure there's a sane explanation; but hopefully the insane one takes root among the gold traders on Wall Street.

Ritholtz - on the value of not knowing. A lot of goldbug newsletter writers would be well-served to admit the limits of their knowledge, and especially the limits of their understanding of first-year economics. It's actually very freeing to admit you have no clue what's going on, and that you're stuck watching for signals and estimating probabilities.

Friday videos - Steely Dan

Yeah no really, I like Steely Dan.

Just figured out this week that all these songs were done by the same band, actually.

OK, maybe listening to Ned Goodman isn't a good idea

Oh my. He really fucking put both feet in.


Financial Post - Ned Goodman says blah blah hyperinflation blah blah Zimbabwe.

Ned Goodman, founder and chief executive officer of holding company Dundee Corp., shed the last of his bank shares after forecasting global inflation will make investments such as gold stocks and organic beef more rewarding.

[...]

With the U.S. Federal Reserve and other central banks printing money, it’s only a matter of time before currencies lose value and inflation rises, Goodman said.

“The world is totally upside down right now — it’s completely crazy,” Goodman said, clicking off his Rolex watch and slinking the chain between his fingers. “I don’t know of another time when every country in the world was printing money.”

Hey dumbass! Where's that inflation been for the past 5 years, then? Hm? Where's the inflation?

Actually yes, there is inflation - stagflation, in fact. But it's over there in the very emerging market countries that make up the vast majority of gold demand. And they're not printing money, so your point is still worthless. Their inflation is happening because the cheap credit that drove the most recent EM burst has gone away, and now their currencies are collapsing as the hot money leaves, so their central banks have to resort to horrible rate rises that kill their economy... wait, why don't you know this already? Do you need someone to buy you a Financial Times subscription?

Fed Chairman Ben S. Bernanke began so-called quantitative easing in 2008 during the financial crisis, and the bank is buying $85 billion in bonds each month in an effort to keep interest rates low and spur economic growth. Japan and the European Central Bank created similar programs.

Goodman said he doesn’t know when inflation will rise or how drastically, but that his investment strategy is a pre-emptive strike against that risk.

“I don’t wait for inflation,” he said. “It’s hard to call, but it’s impossible for me to see the U.S. getting out of trouble without printing more money and it’s impossible to see how Europe survives in the form that it’s in. You look around the world and you say: ‘We’re going to have to have some inflation.’ I want to own assets that are inflation-proof.”

Hey dumbass! If you simply subscribe to three publicly available blogs - Calculated Risk, Bonddad, and Michael Shaoul - you'll have access to all the data necessary to learn that the US is recovering and Europe is well on the road to surviving. There's really no fucking excuse for remaining ignorant.

On the other hand, if you keep listening to fruitcake Republican clowns from the goldbug doomer world, all you'll learn is the same idiot stories that they feed the Tea Party mailing lists that they troll for new pump & dump victims.

Seriously. Google "Tea Party" "pump and dump" gold. Do it. Then read all the articles. It'll open your fucking eyes.

Canada’s annual inflation rate was 1.2 percent in June and is forecast to average 1.7 percent for the year, 2.4 percent in 2014 and 2.7 percent in 2015, according to analysts’ estimates compiled by Bloomberg. Inflation for the U.S. will average 1.6 percent this year and 1.9 percent in 2014, up from 1.8 percent in June, according to estimates while globally, inflation is expected to average 2.3 percent this year and 2.8 percent in 2014.

Again dumbass, where's the fucking inflation? This is empirical data here, and it proves your theory wrong. So how long do you want to stay wrong? And how stupid are you if you still want to stay wrong?

Miners of precious metals are “dirt cheap,” Goodman said. The largest single stake, or 10 percent, of the C$50 million Goodman Gold Trust is invested in Toronto-based Barrick Gold Corp., the world’s largest producer of the metal. The Trust dropped 48 percent in the last 12 months; Barrick dropped 52 percent.

Yup, you sure got that right! Miners sure are dirt cheap. Too bad you didn't sidestep this multi-year crash in miner prices, as evidenced by the fact your Goodman Gold Trust has lost almost as much money as a straight investment in Barrick. I guess you didn't want to make any money, or even hedge your losses with some nice fat downside puts.

Frankly I'm going to set this guy under the rubrik "people who sometimes have valuable things to say, but then destroy any respect I had for them by coating it all in a thick miasma of feces".

Because whatever he says, he's been a failure at the gold thing for over the past year. I don't listen to failures. And it seems he's been a failure cos he's wilfully ignoring reality, and I also don't listen to people who ignore reality.

And yes I know he's going to see this post.

And on how stupid the hedge funds are, and thus how stupid the pension fund operators who use them are, and thus how you're going to be eating cat food when you retire

Reformed Borker (Bork Bork Bork!) - confessions of an institutional investor.

You guys know junior gold, right? So you can smell a scam a mile away, right?

Okay, let me quote half the article at you:

The high fees, under performance, leverage and lack of transparency for this investing style has been well documented over the past few years, but I have seen other risks above and beyond these issues.

Making contributions to hedge funds is easy. They want your money, so you can usually invest on a monthly basis without much notice. But try getting your money out. You usually need at least 90 days’ notice and even then you can only redeem on a quarterly or annual basis.

If you decide to cut ties with the fund altogether and redeem all of your capital you typically only get 80-90% of your money back from the hedge fund at redemption. The other 10-20% “holdback” doesn't come back to you until the hedge fund’s annual audit which could be up to a year later. So you are forced to sit and wait as your money earns nothing while they make sure the NAV is correct. Contrast this with index funds and ETFs that are priced every second of the trading day.

If your hedge fund closes for any reason you get to see the true colors of the illiquid crap these guys are really investing in. Hedge funds can close because of the loss of large investors, untimely investments or simply bored managers that have more than enough money and are sick of meeting client expectations.

Our institution was invested in a hedge fund that decided to return capital to investors. They gave us the choice of taking a huge write-down up front or getting the money back as the investments were sold off. We decided to wait and it ended up taking four years to get the entire investment back. And each time they sent chunks of money back the remaining funds got marked down even further. This is a huge opportunity cost.

To reduce the risk of a blow-up like this, institutions diversify among multiple hedge funds and strategies, which only increases the likelihood of picking below average funds.

Funds normally have at least a 1 year lock-up with your initial investment but it’s possible that the lock-up can be 3-5 years in some cases before you can pull your money out. I also witnessed multiple funds side pocket hard to value positions or lock up all investments during the financial crisis. You tell me whether it’s worth it to pay 2 & 20 or even more for this deal.

I've done due diligence on some hedge funds with fees consisting of expenses & 30. Those expenses can run in upwards of 6-8% in good years. So, it could be an 8% management fee & 30% of profits.

Private equity also comes with huge opportunity costs. You don’t simply hand over the amount you commit to the fund on day one and start investing. With extensions, the investment period could last up to 10 years.

How is the original investment thesis still valid after a decade? And what do you do with your money while you wait for it to get called by the fund? Hold cash? Index funds? Plus, you only get about 2 weeks’ notice before a capital call is due for investment with no idea about the size so you cannot plan your liquidity ahead of time.

PE fees are a sweet deal for the managers too. With the majority of funds, you don’t pay management fees on your invested capital. That would make too much sense. You pay on your committed capital. So if you have $30 million committed to a fund but they only call $500,000 in year one, your 2% management fee is over 100% of invested capital. Sounds reasonable, right? Especially when most PE funds can’t outperform a simple small cap value ETF.

You also must diversify among PE funds by vintage year and strategy to avoid having a single fund blow-up. More chances to be wrong. And good luck finding a PE fund that doesn’t claim to be top quartile. Somehow they think they’re all top quartile.

What the fuck, eh?

Hope those few of you with real pension plans don't have them invested in hedge funds. There's going to be a lot of civil servants eating cat food and living in cardboard boxes in 20 years, methinks.

More news

Here's more stuff for you:


Ed Yardeni - the accelerator effect. The US is holding back capital spending, and when that finally spooges it'll be an awesome boost to the US economy.

Jeff Matthews - the most important article you didn't read today. I think everyone's read your blogging about it, Jeff; have you looked at the action in Santander today? They just don't read the WSJ cos it's a pile of fascist propaganda, and the people need real information for their investment decisions. That's also why people don't listen to the IMF: it's a puppet organization controlled by the rentier-class plutocrats, so of course its economic forecasts are always going to be wrong!

FT beyond brics - about those China's rebounding exports. Some peeking under the hood. Not all bad, but even still.

Michael Shaoul - China trade report. Again with the looking under the hood. Exports to the rest of the world show improvement. Who knows? Can China piggyback on Eurozone and US growth?

Michael Pettis - the debate over China's economy. A very long article, probably will show up on Sinocism's feed tonight. Sums up the basic problem facing China.

FT - Rajan to modernise India's banking system. Or to at least spend a few months trying before the ambition is crushed out of him by a worthless government and incompetent bureaucracy. That's why this is the first time I've mentioned Rajan on my blog.

Mineweb - has the US influence over gold prices begun to wane? Yes, Julian, thank you so fucking much for giving me credit.

Mining.com - now is the time to short miner volatility. Interesting:

Volatility in Market Vectors Gold Miners ETF (GDX) is at multi-year highs and "never sustains these levels," providing a unique short sale opportunity for those focused on options trading, according to Michael Purves, Chief Global Strategist and Head of Equity Derivatives Research at Weeden & Co.

If so, that volatility you're shorting is the downside fear premium/discount/whatever. Which might indeed mean this is the bottom.

Mining.com - BHP CEO says the best days are still to come.

According to head of the world's largest mining company, Australia hasn’t kissed the resources boom goodbye just yet. On the contrary, he claimed that for many of the commodities the country's resources industry produces there is a good chance to witness a demand increase of about 75% in the next 15 years.

Well isn't everybody just all damn hopeful all of a sudden!

Phil Pearlman - how do you know a stock is broken? Goldbugs please pay attention.

RIO breakthrough?

Here's Rio Alto breaking through the SMA(50), perhaps as people realize it's a decent gold miner:

See Rio run, run Rio run?

After all, next stop is a punch through the +2SD line. That's usually a very positive thing for price.

I reiterate that I was fliptrading Rio around $1.60-$1.90 back before they even had a mine.

Let's look in awe at Jaguar Mining's chart shall we

Jaguar weekly candles behold!

From $8 down to $0.26 in 18 months. That's about a 97% loss. Pretty good. That beats Liberty Silver which was an outright pump & dump scam.

What's interesting to me is someone's still willing to pay 26 cents for a stock that turned in a net loss of 74 cents per share this quarter.

Their total market cap, $22M, is now lower than the drawdown in their credit facility.

God, let's just delist actual miners with mines. That mine PMs. In mines. Where there is actual mining going on.

Popular sectors rolling over (still or nearly still)

Let's look at some rollovers.

Japan certainly looks to be rolling over. The reaction to the May crash has seen dwindling volume. This is the US-listed iShares ETF, so I guess the American coke-heads are bailing.

Looks like the US auto sales (and in the case of GM, China auto sales) meme is feeling a bit tired. Does this find support at the SMA(50) and the previous pivot at $35? Or does it break down? After all, America is doomed, right?

ITB looks like it's topped after a very long run. What the market does here will probably affect everything else in the US. Again, the US is doomed because it rejected The Lord Jesus and his particular brand of right-wing libertarian Chicago School economics.

I guess the interest rate spread widening story is played out now? After all, when even Tanashian has clued in it's probably already over.

Are EM bonds rolling over? Actually, I dunno, this looks suspiciously like gold to me. But I don't see why you'd get a spurt upwards over the SMA(50) in this case - there are no fundamentals supporting an advance in EM bonds.

Is China not as bad as we all thought? Well, we'll know soon enough. This seems similar - a pop over the SMA(50) and a dwindle down that could be seen as a rollover to a lower low if you're a pessimist; or as a consolidation before a move up if you're an optimist.

We'll see.

On owning a bunch of really beaten down shit

I'm happy that peripheral Europe is finally catching a bid. I guess once Josh Brown and everyone else start talking about it being a good idea, you can't help but see prices go up.

I actually held those (EWI, SAN and GREK) through a bit of a drawdown as they retested their latest low. Frankly, Michael Shaoul's data was persuasive enough that I had no problem holding through a drawdown.

Now I'm going thru the same thing with the junior miners. RIO's beaten down tremendously and a certain individual has been hammering the table like crazy saying the price is a steal; however, despite him being a straight-arrow, I have still lost some confidence in his calls over the past year so I'm a little touchy about holding this stock through any sort of drop. Who the fuck knows what's going on with the price? LYD certainly surprised most everyone. Shit happens.

I just grabbed some SVL at the AM open, thinking silver would go up today. I have all sorts of confidence in Eric Feir and friends, but frankly haven't checked out any news at all on the SVL front. But $1.50 is a bit of a dumb price if they're still advancing their mine: these guys have proven they can build on the cheap, frankly to me they match up well with Alex Black, and so I'm okay holding a small position there. Frankly I'm just lazy and buying because of my respect for Eric Feir.

What really freaks me out is BCM. They still have one of the five largest silver mines that will be built in the next 5 years. And yet? BCM was essentially going no-bid yesterday.

Yes, that's right. Almost the entire order book was bots. There were maybe 1 or 2 human beings in the entire market, the rest was just bots with placeholder prices. I do not like that.

I know BCM's not garbage and I'm pretty certain they're welcome in Corani and I betcha they keep giving us good news. But even still, an empty order book can send a viable stock down to pennies, at which point it doesn't matter how good their property is: you can't finance when it's going to be massively dilutive. We've seen this again and again.

So there you go. Drawdowns. They're easy to hold when it's Italy and you know things can't get any worse; they're impossible to tolerate when a stock might conceivably go to zero.

Anyway, gold and silver are surging today, so I feel smart and stuff. Will we see gold and silver both break their SMA(50)s? That was the threat for the last two weeks; then we saw a mild back-off, but now what a pretty advance! I betcha the PM scene spooges its load all over the place the second the PMs break their 50s.

Vacation comedy reading

A lot of people are on vacation right now, apparently, cos my stats are way down.

So if you're off having your little sabbatical and you're looking for some fun reading, why not try this:

Yahoo Finance - Jaguar Mining announces Q2 financial results

Too long? I'll sum it up for you with an animated gif:

For all you brokerage clowns who don't know how to do your job, that was a very, very bad financial statement. Much worse than B2Gold.

Regonal banking ETF - rolling over?

Here's the regional banking ETF rolling over:

All these roll-overs might just be the result of hedgies cashing up before their month off in the Catskills.

Still, the rollovers might then get interpreted as data, and then you might get a no-fucking-reason-let's-just-do-it August pukefest. After all, stuff is a little extended, no? And people might be expecting a top, but they ain't expecting a puke.

Some more noonday noos

Here's some stuff and junk. And stuff.

Bonddad - yes Virginia, the Republicans want to destroy America. Apparently there's a magical formula that proves GDP is negatively impacted by government cutbacks. Apparently it's not as magical as Jesus though, so the Republicans ignore it. Because America.

Reformed Borker (Bork Bork Bork!) - 361 Capital weekly research briefing. Cash is building in the system (the Hamptons effect maybe? What happens come September?). Also, here's a sensible quote about the EZ:

European stocks are still relatively inexpensive. The companies behind them generate plenty of cash and pay solid dividends. And Europe itself is less of a worry than one might think: European companies, especially big ones, generate a greater proportion of sales outside Europe than their U.S. peers do overseas. In short, if Europe's economy even stabilizes, bulls say, European stocks are a good way to benefit from the earnings power of big, developed-world companies—at a better price than U.S. shares and without the stomach-turning volatility of Japan.

So if you're in the business of buying low and selling high, what do you think your position would be re Europe right now?

Reuters - Italian risk premium at 10-week low. Because socialism.

WSJ China realtime - China appears to be stabilizing. The October plenum will be a possible source of good news. Or at least good feelings.

FT beyond brics - Genghis bonds no longer investors' delight. And so the "mud-hut" premium returns to the EMs.

Bloomberg - China gold imports slow. OMG sell sell sell!

Ritholtz - the uncertainty trope. Simple and clever point. "Uncertainty" is the pundit buzzword for those times when your delusions are intruded upon by a reality which doesn't agree.

“It finally dawned on me what the uncertainty trope is all about. It took a conversation with a nervous chief executive to reveal it, but I teased out the answer.

Most of the time, people exist in a happy little bubble of self-created delusion. We engage in selective perception, seeing only the things that agree with us. Our selective retention retains the good stuff and disregards most of the rest. In our minds, we are all younger, better-looking, slimmer, with more hair than the camera reveals.

In short, we construct a reality that bears only passing resemblance to the objective universe.

During those brief instances when the facade fades, the curtain gets pulled back and the ugly reality becomes clear. We get a glimmer of understanding about our own lack of understanding. That’s when the grim reality of the human condition is revealed — and it terrifies us.”

Let's test this. If the ITB drops below support like it's threatening to do, that will produce "uncertainty" about the staying power of the housing recovery, and the S&P will take a nice solid faceplant, no?

Cambridge TRIC still looks sick, and by sick I mean ill, and by ill I mean sucks.

The Cambridge House September thing in Toronto is still looking like it'll be almost a total waste of time.

Yeah, I can go see Ned Goodman on Friday, that'll be the highlight of the day. But I would also want to see Coffin on Friday, and that would mean I'd have 7 hours in between to kill.

Katusa, Taylor and Calandra are all scheduled to speak at the same time, so unfortunately I'll only be able to post a review for one of them.

I guess I wanted to see Roulston, but it's always hard to get very excited about him. He seems a sensible fellow, but not one who gets the blood pumping.

The panels are a joke. Fine, put Mickey and Kaiser on a panel on exploration, it's better than nothing; but what the heck is Calandra doing on that panel? And what the hell do Frank Holmes and Danielle Park know about "economic outlook"? Seriously? Why not Adrian Day and Ian Graham again? Where are they?

And there are only a few "corporate presentations" scheduled so far, and nothing that interests me in the ones already listed.

And hey: why is Cookie not going to this thing? Is it because they gave him a crap speaking location last year? Or can they just not afford him anymore? Day and Graham? Hell, even Jojo and Brodrick aren't on the speaker's list this year. What's up with that?

Is Cambridge House just trying to make the conference look so damn boring that they successfully convince me to stay away? Is that it?

Dammit, now I wanna go, just to spite them.

Homebuilders rollover, and what it means

I've had a sneaking suspicion that despite everything else going on, the S&P should have a big rollover, maybe here in August.

Part of it is because we're apparently about to go into a quiet period for data releases. And since it's quiet, the event-driven hedge funds will have nothing to do, except sell.

I think there'll also be raised expectations of continued Republican sabotage of the economy, met by continued Obama gutlessness. And there'll be fear and trepidation about Merkel's upcoming election victory and what it'll mean for worldwide growth.

But also it's because of the homebuilders.

The economic-positive US data so far has been autos and housing. Why worry when auto sales are getting strong and housing is heating up? After all, those are two really huge parts of the US economy.

But then I look at homebuilders:

This ETF is constantly banging its head against $21.50. As you saw months ago with gold, constantly banging at support can eventually break support - and strongly.

And then there's the weekly candles:

Not only is it a rollover, but it's a rollover that better stop damn soon or it'll break the weekly SMA(50).

To be fair, the chart already had a fantastic run. And longer-term, apparently there's a strong demographic trend in the US that should demand a lot of homebuilding in the future. And I'm sorry, but people with jobs in a growing economy will be damn happy to buy a house on a 4-5% mortgage - it's not like that's an unheard-of rate, after all.

But this is the one scary chart for the S&P right now.

Zack Weiner on economics

It's funny because it's true!

Some news

Here's some morning news:

BI - June trade balance. US trade deficit shrank. Exports are up on capital goods, imports are down thanks to oil. The numbers don't lie: the US is becoming energy independent and is growing exports to other countries. A crisis, you say?

Michael Shaoul - the data from Italy.

FT Alphaville - threats to a European rebound. Interestingly, they note "a hopeful outlook on the European economy has apparently become a non-contrarian view". That's good. Matt King of Citigroup also notes, of course, that the "threats to a European rebound" are entirely political. Which we knew. You've just got to wonder how long the Europeans will put up with the continued intentional destruction of the European standard of living by the rentier-class plutocrats.

Bonddad - is the EU recession ending? Again with everybody piling into Europe. Y'know, if the S&P is going to roll over for the next few weeks, and Japan's advance is done for the next while, it might be that you see some of the money move into Europe. I mean, since everyone is so fucking concerned with high American P/E valuations and Europe's are so much lower.

Michael Shaoul - German factory orders. Data supports EU recovery.

FT beyond brics - the EM situation is gloomy. There's a broad-based decline in EM PMIs, and they aren't getting any lift at all from improvements in the DMs: almost as if they can no longer ride coat-tails, no? After all, how can they after their cheap credit dries up?

NYT Dealbook - Bill Bishop on smartphones in China. Posted cos he also links to a useful read from Capital Economics, which suggests China will see more of a muddle-through than any actual crisis.

Reuters - Indian government is pathetic. Mannmohan Singh can't get the government to pass any bills. What a pathetic country.

Mineweb - slump in recycled gold. I like how Marcus Grubb makes statements about gold that are based on supply and demand.

Mineweb - Indians now buying silver. Wouldn't count on it having too much of an effect on either gold or silver prices, but at least it shows you can't stop Indians from buying shiny things.

Yahoo Finance - BTO says quit selling their stock, morans. Do you think the numbers in this NR suck? This didn't read like an NR from a company that sucks, to me. And y'know, I so wanted to buy some BTO yesterday, even on the US market. And I didn't. So I guess I'm stuck buying BCM... after it's done collapsing, of course.

Vancouver Venture - Pinetree sucks. Those of you who feel Sheldon Inwentash's patronage is important in any way to any stock you're thinking of buying, pay attention to how Pinetree's got themselves into serious trouble. Shelly's got a whole pile of junior positions down 90%, and no way to unwind because the shares are so illiquid.

Yahoo Finance - Santa Barbara Resources says "hey, we're still here!" Drilling starts in September, Rio Alto is their partner, Rio is spending $4.5M on drilling and yet SBL is being valued at a $1M market cap. I guess the market must think they don't have any gold, and Rio likes wasting $4.5M on charity plays.

Speaking of which, here's Don Herzfeldt's The Meaning of Life

Don Herzfeldt's The Meaning of Life:



BTW, I agree entirely.

And here's a link to Herzfeldt himself explaining what's going on.

Boring day short film

It's a boring day, so in case you haven't yet seen it, here's Rejected.

What's the problem, Clive?

B2gold continues to experience the falling sensation:

So what's the problem? Nicaragua declare war on Namibia again?

Where does this stop? I'd take an interest at the -2SD line, but then again junior miner stocks can plunge through that.

Earnings are apparently released Aug 12th. I'd be interested to see what happens then.

A few newsbits for the morning

Canada is closed for the day thanks to our August holiday, aka We're Not Even Trying To Justify A Reason For A Long Weekend In August Day.

Here's some newsbits I came across last night:

BI - Kenneth Rogoff says the US needs an unorthodox central banker to save them from deflation. Seriously? Even Kenneth Rogoff, the arch-conservative Austerian? Even he has backtracked from "debt is bad!" to support doing what it takes to avoid an economic depression? Do you think Merkel and Cameron are paying attention to this?

Ritholtz - is this the best it can get? John Mauldin repeats what Josh Brown was thinking this weekend: that the S&P is already well above fair value and this is as good as the US market can get. My response? I wonder why both of these guys think there won't be any earnings growth from now on to justify today's multiple. Why are people buying this multiple? Why is multiple expansion happening? Stupidity? Also, this is not the "good as it gets" super-high multiple of 1999. And the Shiller P/E, frankly, is horseshit. Frankly, if the market is going to agree with these bozos, then I'm going to buy the next pullback: you don't hit a secular top when everyone doubts the market can go up anymore.

Reuters - GM says China sales up 11% yoy. That's actually very positive for China. But:

Reuters - Asia's exports miss out on US revival. So even if the economies are doing well, they're not successfully riding Western coat-tails anymore. So this isn't so much an argument against buying e.g. the Chinese market (as noted here before, China tech like CQQQ has been doing fantastic); it's rather an argument against supposing that the EMs will continue to grow simply because they can continue to export to the West. Though it'll be interesting to see if they can respond to improvement in Japan and the EZ.

BI - the potash market has blown up. You could take this as yet another element of proof that the broader commodities bull market has ended. And it's a good thing when you see an end to commodity speculation and artificial commodity price inflation: because that means the money can again flow to productive business (in this case agriculture), instead of into the pockets of monopolist cartels and investment banks. However, as the Globe and Mail notes, this move might simply have been a bluff by Uralkali to bring Belaruskali to heel. Still, as noted, the ramifications for Saskatchewan are similar to the possible ramifications to Chile of a copper price collapse. Something to keep in mind.

Mining.com - top ten writedowns of the summer. The top ten alone amount to $24 billion in gold mine writedowns. This quarter. Sorta looks bottomy for gold. Then again, I wasn't around in the 80s, so I have no perspective for comparison.

Decent quote from the comments section

Cos nobody reads the comment section, I'd like to point out comet52 recently posted the following, in reference to Eric Sprott's bullishness:

Also buy junior miners because they are the best bet in an apocalypse. The run in metals will be gargantuan, epic, and other adjectives normally put between the words "Eric Sprott is a" and "fuckwit".

Well played!

FWIW, I don't mock Sprott as much as I mock his little Sprottlings - Jason Mayer I've mocked lightly once.

Charles Oliver too, more than once, which is easy given he puts himself out there in the media. So, he's called GUY a buy at north of $7, and BCM a buy at $4 (in fact he owned it at $12 before that evil Humala took Santa Ana away from them).

Frankly, it's as if Sprott is eternally jealous of Doug Casey, and so he long ago set out to hire his own adoring mob of assclowns to destroy his own clients' portfolios. Using that as analogy, I guess Rick Rule is Sprott's own version of Jeff Berwick.

Frankly I'd rather have Berwick on my goldbug team than Rule.