Gold prices edged lower on Monday as investors took profits from a recent rally that pushed the market to the highest level in five months. U.S. stock markets reversed some of the steep losses witnessed last week, making gold less attractive. Gold’s surge last week was fueled by heightened geopolitical risks and President Donald Trump’s comments on both the strong dollar and interest rates. Of course, Trump has no control over the Fed’s policy, and the central bank is still expected to hike interest rates in June. Prices are residing above the daily and the 4-hourly charts; plus we have positively aligned Tenkan-Sen (nine-period moving ...
National Economic Council Director Gary Cohn, formerly President of Goldman Sachs, startled markets last week by suggesting that the United States should re-impose the Glass-Steagall division between commercial and investment banking. That is probably desirable on balance, but the U.S. and global financial system was already a mess when Glass-Steagall was removed in 1999. We should do more, beyond restoring Glass-Steagall, to restore finance to its proper state. The U.S. and British financial systems developed in different directions after 1870 or so. In Britain, the merchant banks were private partnerships, so were forced to stay small. Brok...
Short term Elliott Wave view in Gold (XAU/USD) suggests that cycle from 4/10 low (1246.92) is unfolded as an impulse Elliott wave structure where Minute wave ((i)) ended at 1257.2, Minute wave (ii) ended at 1250.8, Minute wave (iii) ended at 1279.75, Minute wave (iv) ended at 1271.69 and Minute wave (v) of (a) ended at yesterday’s peak 1295.6. Below there, Gold has started the Minute wave (b) pullback to correct 4/10 (1246.9) cycle and that could be done already in 3 swings at earlier low 1281, where Sub minute wave a ended at 1285.6 and Sub minute wave b ended at 1292.6. However it needs to break the 1295.6 peak first for final con...
We spend a lot of time writing about public pensions because the aggregate underfunding levels, $3 – $5 trillion on the low end, are simply staggering and at some point they will be realized for the ponzi schemes that they are and the systemic risk they represent to the global financial system. Until then we’ll just keep shouting into the abyss. And while we don’t spend as much time on corporate pensions, for some companies their underfunded defined benefit obligations will almost certainly result in their demise at some point in the future. As a recent study from Pensions & Investments points out, the top 100 corporat...
Sellers once again lost their advantage as the S&P 500 (SPY) came roaring right back from its ugliest close since the U.S. Presidential election. The bullishness on the day was on full display with the number of new all-time highs well out-pacing new all-time lows by 181 to 79. While the S&P 500 still has to prove itself with a fresh close above its 50-day moving average (DMA), I decided to examine some scans at SwingTradeBot to identify some of the strongest stocks in the market – stocks I might want to buy on the next major market pullback (assuming another one actually occurs one day). What I found greatly surprised me. I us...
Worries about the nearing first round of the French presidential election may preoccupy investors as European markets return after the Easter Monday holiday. The leading four candidates are clustered near the 20 percent support mark, making it unusually difficult to divine who might move on to the second round after an initial poll in April 23. The markets are particularly leery of an outcome that pits far-right Marine Le Pen against far-left Jean-Luc Melechon, both of which are seen as potentially destabilizing. Needless to say, the Euro is most directly vulnerable if the uncertainty of French politics spooks traders. The possibility tha...
First quarter GDP in China rose 6.9%, better than expected and above the government’s target (6.5%) for 2017. It stands to reason, however, that if Communist officials thought they could get 6.9% to last for the whole year they would have made it their target, especially since 6.5% would be less than the GDP growth rate for 2016 (6.7%). In only that one way is China’s GDP statistic meaningful. Due to unanswered questions about its accuracy, it barely rates any mention at all. The problems with China GDP appear to be spreading to other statistics, particularly Industrial Production. IP had been almost perfectly stable exhibiting, like GDP,...
The US dollar had an Easter Monday slump, mostly against the yen on geopolitical worries. However, things turned around when US Treasury Secretary Steven Mnuchin contradicted his boss’s words about the US dollar. The recently minted Secretary gave an interview to the Financial Times and said (emphasis mine): As the world’s currency, the primary reserve currency, I think that over long periods of time the strength of the dollar is a good thing He went on to explain that the strength of the greenback is a function of the confidence in the economy. And what about President Trump’s comments complaining about a strong dollar? Mnuchin ...
Over the past several years we have repeatedly stated that despite protests to the contrary, the single biggest factor explaining the underperformance of the active community in general, and hedge funds in particular, has been the ubiquitous influence of the Fed and other central banks over the capital markets. Specifically, back in October 2015, we wrote that “as central planning has dominated every piece of fundamental news, and as capital flows trump actual underlying data (usually in an inverse way, with negative economic news leading to surging markets), the conventional asset management game has been turned on its head. We have...
After rallying impressively since the election, the markets may finally be starting to show signs of fatigue. For the first time since November, the S&P 500 has closed below its 50 day moving average. Volatility has begun to move back up, albeit modestly, and geopolitical events could begin putting real downward pressure on stocks. The S&P 500 currently sits around 3% below its all time high, also a level it hasn’t seen since November. A 3% pullback isn’t anything out of the ordinary but it’s easy to see it extending further if tensions remain high in North Korea or if companies start missing 1st quarter earnings estimates. Spea...