Archive for February, 2014

This is a breaking news. This technically could start the “blow off top condition” for a March top

The return of Gold

Posted: February 11, 2014 in Uncategorized

Gold is creeping up the major resistance 1,172/1,175 while the market are rallying.

This tells you that the issues are not all finished.

I think we are re -establishing a bull trend in Gold, just wait for a catalyst (reduce tapering, research house price revision, another crisis). There is a lot of physical demand from the Emerging markets.

Historically there is another instance  in which gold performed in a similar way.

Gold in 1970 was $30 and, with the dismissal of the Gold Standard, went up to $200 in 1975. Then retraced to $100 (1976) and everyone was proclaiming the end of the Gold bull and instead went to $800.

We could be in something similar (Gold retraced 30% from the peak)

 

The last big Australian manufacturer has gone. In total somewhere between 25,000 and 50,000 jobs will be lost (probably excessive figures as some small manufacturer will be smart enough to tap into the Asian markets, but not by much.

All blame the Australian Dollar…..but in reality that was just the last nail in the coffin. The main manufacturing costs are workforce and utilities and rents.

I arrived in Australia in 2003 and Australia was at least 30% cheaper.

Housing costs from 2003 soared as the real estate market rocketed fuelled by tax discounts (negative gearing) and Asian demand  (it is extremely easy to circumvent, legally, the no-foreign ownership rules). Plus electricity and water bills went up and up.

Wage naturally had to increase – less than the property market – but they had to increase.

On top of this the various government made a lot of free trade agreements with countries have manufacturing cost much lower than us (Thailand and South Korea, for example, that are large car manufacturer).

On top of all this, the manufacturers concentrated on low cost cars (it really does not work building cheap cars in high cost countries…the Germans understand that very well).

So the Australian Dollar was the last nail in the coffin.

Naturally the political class is to blame – not just Tony Abbott. Once upon a time, instead of the cheap solution of offering subsidies they should have looked into what was the problem.

Too late, bye bye Toyota. I wish it was so easy…..what about Australia?

 

markets: relief rally

Posted: February 10, 2014 in Uncategorized

The markets kept on rallying on bad job data in the US. Please do not be confused: this is not the continuation rally from last year, it looks like more a relief rally from deeply oversold.

Translation: use this bounce to clean up your portfolio, as the corrective move as still to go (target SPX 1,700 or lower).

Welcome Hunter Killer

Posted: February 7, 2014 in Uncategorized
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If you remember Hunter Killer was the Terminator movie support aircraft to the Terminator Robot.

Now we welcome for real Taranis (Celtic God of Thunder) – the first “secret but public” Deep Mission Drone.

What makes it different from other drones is…quite a lot.

Deep Mission drones is the new evolution of combat drone made to penetrate a heavily defended airspace (the current drones are very good at hunting terrorist, but they cannot operate in an hostile environment) at supersonic speed and with manoeuvrability higher than the latest generation of fighter as it does not have to support a pilot and its G-Force limits.

But what it makes it really different is, if you read carefully the being ‘a fully autonomous intelligent system’ together with applications in ‘deep missions’ and having a ‘deep target attack’ capability. Deep Target Attack in military jargon means “beyond the reach of a remote pilot”. So it practically have autonomy to hunt and kill.

Naturally the government is hurrying to say that this functionality is not activated yet – probably they wait Skynet to do it for them.

PS> I am not an advocate of the theory that robot will exterminate humans. If (or when) they will become intelligent their intelligence will grow so quick that probably they would not even bother to exterminate us. I just point out at the evolution.

Apparently the maiden flight was over Woomera, Australia

I like what he says as he has direct connections with Central bankers.

In a short summery.

The exodus from EM is not finished. Going towards US Bond, US Tech and healthcare stocks, but temporary.

Talked to FED and they are not worried about EM market – not because it does not worry them, but because it fits their purposes…it makes bond go up (yield down), improve lending condition and mitigate asset bubble.

THERE IS CONTAGION RISK Foreign Debt outflow (Hungary, Philippines, Indonesia, Poland, Turkey and Mexico) and Stock outflow (Hungary, Taiwan, Korea, Brazil and Thailand). It will persist over the year.

VIX around 19 signal Bearish undertone. (14.5 rally over 21 massacre).

Summary: lot of technical damage, but he thinks there could be a last leg up (under the recent top) before the end of the rally started March 2009. Pretty dangerous condition.

Google

Posted: February 5, 2014 in Uncategorized
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How funny day by the day, Google keeps reminding me of the Orwellian style corporation (or Blade Runner style…lots of sci -fi books and movie on that style).

At first there was Google

Then Android

Then wearable devices

Then it buys all the robots /Artificial Intelligence companies it can find (yes, you missed one, a UK company (Deep Mind Technologies) that is researching how the human brain is mapping information and memory for 400 million pounds).

Apparently does a bad deal selling Motorola for USD2.9 billion to Lenovo (bought for USD 12Bn a few years ago). In reality When Google bought Motorola, Motorola had over USD2.5 billion in cash. Google sold part of Motorola Home in 2012 for USD2.35 billion. Plus it did not sell the 17,000 patents that Motorola held, nor Motorola’s “Mad Science Division*” headed by the previous head of Darpa (Darpa is the “mad weapon” division of Pentagon in charge to study future weapon technology..

Google soon will announce it changes its name in Skynet. Sci Fi fans will know what I mean.

 

Thank God that the motto of Google is “do no evil”.

As the Italian comedian Pirandello says”It is so!if you think so”

* The Mad Science Division pet projects, that I am aware of, pills that work as password tokens, tattoo that works as digital wallet, an augmented version of Apple’s Siri, a modular phone with 3D printed parts. They fit together with Google ones (intelligent contact lenses, self driving car etc.)   

And Syrian keeps on dying

Posted: February 4, 2014 in Uncategorized
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As I told you in a post before the Swiss peace talk became quickly a farce, but the powers had to show that they were doing something.

The famous deal about the gas weapon is also a farce (4% of the supposed stockpile has been destroyed…missing completely the deadline).

The main battle is now between the Pro Western Syrian versus the pro Al -Qaeda militants (and expanding in Iraq) that seized the main oil fields in Syria and are allying themselves with Assad.

Nobody has a real interest in ending the war that more and more is a Saudi vs Iranian battleground, with Iraq and Lebanon as collateral damage.

And the most efficient  weapon dispersion control  is done by Israel that keeps on plucking out of the field the most dangerous weapon system.

Almost a definition of Middle Eastern Hell. Pity Syria was such a beautiful and multi cultured country.

Stock market: back to reality

Posted: February 4, 2014 in Uncategorized

Well, now most commentator are saying “don’t worry, this is another buy the dip occasion” – this is an healthy correction.

What if it is not?

In the next few days the indexes will probably move higher….but it will most probably a swan song, helped by an oversold condition (which now the software driven algorithm will buy into), helped by a secretive move by the FED.

But the emerging market are in a rout. Almost all American company have at least 40% of the revenue from the Emerging market – revenue that will be hit if not by the EM consumer spending, by the currency crash.

I still do not think that this is a crisis to be scared of (in the 2008 sense of scary), but it is not a a simple blip in the radar …more of a 10/15% correction (S&P500 1,600 is my re-assess value – first point of control area is 1,700)

Behind the scenes the market situation looks even more ominous than the already bad looking reality.

Looking at the institutional charts is evident that someone pumped a lot of money in the futures before market opening (specially Wednesday and Friday) to prevent  a total collapse – and they managed it, just.

It must be the FED (they could not NOT taper as that would have sent even a worst message…that there is contagion risk).

The fact is that a USD 10 billion hole (the tapering) is equivalent of the monthly investment inflows for India, Turkey, Ukraine, Chile. Argentine, Thailand and Indonesia put together. It is like a shock wave.

And as hot money in search of yield are now going back to the US …..the Emerging Market issues will be a feature of 2014…on and off (a bit like the EU crisis).

They say the FED always win. Maybe it is true – but it is true also that this is a new game also for them.