Timing & trends

Trader Bullishness Hits Three Year High As NYSE Margin Debt Jumps Most Since April 2015

Posted by ZeroHedge

on Wednesday, 31 August 2016 19:27

NYSE margin debt july 2016Having plumbed the depths of despair in early 2016, market participants are now in a state of near-record euphoria. One indication of this comes from the latest NYSE margin debt data, which showed the biggest jump since April 2015, rising by $27 billion to $474.6 billion, the highest since last July, as investor net worth calculated by the difference of Margin Debt from Free Credit Cash Accounts and Credit Balances in Margin accounts, once again dipped lower.

…..continue reading and view charts HERE

 

…related: 

Marc Faber Rings the Alarm Bell, Predicts a 50% Near Term Correction in Stocks

Sovereign Debt Crisis – Banking Crisis – Derivative Clearinghouse Risk

Posted by Martin Armstrong - Armstrong Economics

on Wednesday, 31 August 2016 18:55

Martin Armstrong was asked this QUESTION: “What comes first – The banking Crisis or the Sovereign Debt Crisis?

Swiss-1000-CHFANSWER: The central banks are trapped. They can no longer even hope to sell the bonds they have bought in a vain attempt to stimulate the economy. So government can, in theory, keep their rates at zero as long as the central banks buy it, but they won’t be able to sell it to the public. The Sovereign Debt Crisis is already here. The liquidity is collapsing and central banks are rapidly becoming the only buyer.

True, German 10-year notes have sold well, but that is a bet AGAINST the euro surviving rather than people willing to pay just for the state to hold their money. They count on the central bank buying if they want to sell. What happens when the central banks stop the buying? I would not want to own any government paper. I would expect its price to drop 25% in the first three months from the turn.

As for banks, well, in Europe they are like the “Walking Dead.” The real telltale break may be Deutsche Bank. I seriously doubt the German government can stand by and do a bail-in. They might do that to accounts with a lot of cash, but then they will be wiping out companies and that will come back to haunt them in unemployment.

There is a THIRD DANGER… …in the equation that nobody seems to be talking about. Oh, there are people talking about the amount of derivatives. Some even place the derivative book at Deutsche Bank at least at 5 times the GDP of Germany. But that is looking at things from a gross perspective, which is like adding up all long and short positions in a futures market and claiming the open interest is both combined. The true amount is the net offset, not the combined totals. But what they ignore is not the banks directly, but the pretend clearing houses setup after 2007.

The Bank of International Settlements (BIS) has issued a report on the derivative clearing houses. Unquestionably, there is a high concentration of risk among the 10 central derivatives counterparties and clearinghouses, which they lack the ability to manage. Some central counterparties mentioned without names in the report have no guidebook to explain how to judge the extent of financial risk in such complicated instruments. The total value of these contracts in the world is more than $600 trillion, according to the BIS. However, the BIS is proposing standards to try to get a handle on that risk.

The one thing to come out of the 2007-2009 debacle was the LACK of central clearinghouses. The movie “Big Short” illustrates how, without a central clearinghouse, the banks could refuse to acknowledge a loss until they have covered themselves. Now, the clearinghouses would eliminate that problem if they remained free of bribes and political pressure to hide losses. So with these clearing houses, they may not be capable of defining the risk. They will probably be susceptible to rigging the game to try to hide a default in hopes that it will go away in a day or two. That could make things much worse during a panic.

…also from Martin: It’s Time To Turn The Lights Out In Illinois

….and Holding Cash – Prelude to the Crash & Burn

Aug 30, 2016

  1. At the current pace of quantitative easing, Japan’s central bank is buying so many bonds that it now has about 24 months left before there are no more bonds left to buy.
  2. The BOJ is buying close to $800 billion (USD) of bonds annually. The bank’s QE program is truly gargantuan, and Kuroda made a key speech at Jackson Hole indicating he has no intention of tapering it at all. 
  3. Please  click here now. Gold is extremely well-supported now, by both equity fund and FOREX money managers.
  4. Kuroda hinted at Jackson Hole that while he won’t taper QE, he has substantial room to increase the use of his negative rates program. He’s making another key speech next Monday, and I expect him to make it clear that as enormous as his QE program is, he’s going to lower interest rates further, and make it even more important policy than QE.
  5. The US jobs report is scheduled for release this Friday at 8:30AM. When Janet Yellen hiked rates last December, a huge institutional panic out of stock markets and the dollar developed.
  6. These institutions surged into gold and the yen. A big jobs report number is likely to spur Janet to unveil a second rate hike at the September 21 FOMC meeting. 
  7. This is probably the most important jobs report of the entire year, and Janet’s reaction to it could begin a major stock market and US dollar crash.
  8. The September and October timeframe is what I call, “US stock market crash season”. The worst stock market crashes have historically occurred during these months, and Friday’s jobs report has the potential to create another one.
  9. Gold price enthusiasts should pay keen attention to all the upcoming speeches made by key players at both the BOJ and the Fed. Those speeches and policy decisions are likely to create important changes on the charts that gold market technicians focus on.
  10. On that note, please  click here now. Double-click to enlarge this daily bars gold chart. Ahead of the US jobs report, gold is likely to briefly decline to the $1310 area or a bit lower, but Kuroda’s speech on Monday is likely to bring in fresh buying. The bottom line:
  11. If the jobs report shows not many new jobs were created, gold is likely to rally nicely. If the report shows lots of jobs were created, Janet is likely to hike rates and create panic buying of gold as the stock market tumbles. It’s truly win-win for the Western gold community at this point in time.
  12. Indian buying has also started to pick up again, and Chinese New Year buying begins in December.
  13. Please  click here now. Double click to enlarge this daily bars T-bond chart. There are a few different ways to interpret this chart, but it’s beginning to look like a big double top pattern may be forming, with highs in the 175 area, and the neckline at about 168.
  14. Please  click here now. Double-click to enlarge this daily bars oil chart. The T-bond took a bit of a tumble after Janet’s first rate hike, but then it acted as a safe haven. 
  15. That’s because the oil rally from about $34 to $53 was not an inflationary concern. Janet can justify a September rate hike with a good jobs report, but if oil begins a fresh rally higher, she may find that institutional money managers begin losing confidence in her ability to keep the T-bond price elevated in the face of a rise in inflation.
  16. Low rates are crushing bank profit growth in Japan, Europe, and America. An oil price surge can create a major problem for central bankers in these areas; rate hikes help bank profits, but raise the risk that governments may lose control of their enormous debt servicing costs. 
  17. The PBOC could announce a major yuan devaluation if Janet hikes rates in September, and that could potentially unleash the type of stock market crash that occurred in 1929. It’s clear that risks are growing in a myriad of ways, and gold is the safe haven beacon that shines brightest.
  18. Also, Janet is faced with a US election, a French election, an Italian referendum, as well as the “meat and potatoes” of the Brexit. 
  19. At Jackson Hole, she discussed the possibility of negative interest rates and new forms of QE as tools to manage the next US economic recession. The use of these tools is more good news for gold.
  20. Please  click here now. Double-click to enlarge this daily bars silver chart. Solid support sits just below the current price level. Note the nice “bull hook” that is taking shape on the Stochastics oscillator, at the bottom of the chart.
  21. Silver is one of the greatest assets of all time, second only to gold on the greatness scale. Price enthusiasts can be buyers in the $18.50 – $16 zone. I’m one of those enthusiasts!
  22. Please  click here now. Double-click to enlarge this daily bars GDX chart. This price correction is a bit different from the other corrections that have occurred in 2016.
  23. That’s because of the enormous importance of Jackson Hole, the jobs report, and the upcoming Fed and BOJ meetings. There is some clear technical damage, and GDX is unlikely to make new rally highs until after the September central bank meetings.
  24. The current area is a buying zone for eager gold stock investors, but where the correction low occurs will be determined by Janet & Kuroda, not by technicians looking at the GDX price chart. Note the extremely low position of my Stochastics indicator, at the bottom of the chart. It suggests that gold stocks are poised to rally strongly, and that is likely to happen right after Friday’s jobs report is released! 

Thanks! 

Cheers
st

Stewart Thomson  
Graceland Updates website: www.gracelandupdates.com

…..related: The Precious Metals Sector and the Fed

Live From The Trading Desk: Brace Yourself

Posted by Michael Campbell & Victor Adair

on Monday, 29 August 2016 13:47

Victor tells Michael that the Stock Market has become fat and happy under the acronym “Tina”….which means “there is no alternative”. He has put on initial short positions in anticipation of a sudden change moving into the fall given both volatility and complacency are in dangerous territory. Bottom line, big changes are afoot in Stocks, Bonds and Currencies and just about everything else as we move into the fall, short positons are the alternative to take advantage although not in the US Dollar in which he is bullish.

 

Also featured guest Ryan Irvine’s New Dividend Growth Recommendations

traders

 

The Most Popular 3 Articles of the Week

Posted by Money Talks Editor

on Saturday, 27 August 2016 13:24

d0f12dcd91f5d6f11eb12f42d646611d1. Why Are Germans Stockpiling Food and Cash?

As reported in German newspaper the Frankfurter Allgemeine Zeitung, for the first time since the Cold War, Germans are being urged to stock food, medical supplies and, significantly, cash.

….read more HERE

2. Marc Faber Rings the Alarm Bell, Predicts a 50% Near Term Correction in Stocks

Volatility is the name of the game. Stocks are acting up, but standing strong. Oil is propelling higher and the US dollar is falling. Turmoil around the world has never been higher and an ominous shadow is lurking in the background, ready to strike.

…..continue reading HERE

3. Eric Coffin’s 11 gold stocks – average rise 340% – what now?

   by Michael Campbell & Eric Coffin

Writing an investment news letter is the ultimate “what have you done for me lately” game. Hard Rock Advisory’s Eric Coffin has had a dream year – 11 new recommendations – 340% average return. It seems only natural we’d ask what’s now.

….more HERE