Monday April 29, 2013
We announced that the Great Recession of 2013-2015 had begun, just two weeks back. Every day that passes validates that outlook.
Economy
On the front page of the WSJ today,
Hiding behind the profit gains of America's biggest companies is a worrying slowdown in sales growth.
U.S. companies ranging from International Business Machines Corp. IBM +0.33% toUnited Technologies Corp. UTX 0.00% to 3M Co. MMM -0.25% to Xerox Corp.XRX +0.12% have missed revenue forecasts, hurt by a combination of Europe's malaise, a stronger dollar and sluggish consumer spending.
On page A 17 Vanguard economists estimate policy uncertainty just since 2011 has cost $261 billion.
ON page R 7 franchises attempt to stay open longer hours but just end up with more tired workers.
Shilling - Not much oomph left in the economy
Politics
The Editorial page notes Congress is trying to exempt itself from Obamacare, possibly the biggest policy uncertainty and coming to all of us this October.
With Obama re elected and Congress facing 2014, there is little reason for his own party to co operate. And so the sequester, the gun ban, the FAA fiasco have the President's own party looking out for their own interests, not his. This of course simply leads to more policy uncertainty.
International
In the mid 1970s, the US effort in Viet Nam finally collapsed with fleeing refugees clinging to helicopters from the US Embassy Roof. ON the front page Washington cannot figure out what to do about Syria, on page A 17 John Bolton notes the lack of follow through by Washington on use of chemical weapons. Iran is of course watching. The parallel now and then is clear, policy uncertainty.
Bottom line, markets detest uncertainty.
Gold and Crude Oil
On the two hour chart, USO for oil and GLD for gold are tracking one another. At bottom MACD is getting close to turning over to the downside. A tug of war goes on here. The dollar is falling this morning but might well bottom as USO and GLD top short term.
Here is a quote from Gold Rally May Lose its Steam on page C3
ETFs held about 73.41 million troy ounces of gold at the end of trading Friday, down about 5.2% from April 11, before the slide, and down 13% from the start of the year, according to data from RBC Capital Markets.
"You've had so much come out of the ETFs," said Frank McGhee, head precious-metals dealer with Integrated Brokerage Services. "Ultimately, somebody has to buy it. That's going to be sloshing around as an overhang in the physical" market, and that will also begin to weigh on futures prices, he said.
The number of open gold-futures contracts has also fallen. Speculative traders have also reduced their net bet on higher gold prices by 25% in the week since gold's record two-day plunge, according to the Commodity Futures Trading Commission.
"Everyone is questioning why they're holding that gold, and so they're just putting it on the market," said Anthony Lazzara, a principal of investment firm Lido Isle Advisors. He has bet that gold prices will fall further in coming months as more investors shed gold.
I am still watching the markets and have done nothing thus far. The big Picture story here is the parallel to 1973-74 when stocks fell 50%.
Two Views - a new reader of TMP makes this observation
On a non log chart HUI may be headed for its long term support line.
A log chart which shows a constant precentage change reveals a different picture.
Here the uptrend line appears to have been broken, A close below that line at month end, tomorrow, would be a negative. Granted MACD in the lower panel has declined considerably but has not bottomed.
Hmm that got me to thinking about the long term oil price.
$WTIC
Crude oil exhibits a series of lower highs since its top in 2011. Could it be subject to a new bear market just like gold? I have not read a single article suggesting that might be the case, let's keep this on the radar screen. support lies at the 200 month moving average.
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