Archive for May, 2016

Share Market Supports

Posted: May 20, 2016 in Uncategorized

The Fed speak hawkish and the market already start to panic…the usual.

There is two connotation to this

  • Market is addicted to support, but the FED needs to look at the economy and it needs to create ammunition in case there is a US recession.
  • China stabilized only because the USD got weaker – a rate hike will strengthen the USD (the Yuan is pegged) and wreak havoc again in China which will have to devaluate – already, just after the Fed speech, the USDCNY spiked to 6.55) re igniting the August 2015 issue.

So what are the supports now?

SP 2040/1,990. After that there is 1,940 and then the infamous 1,830

oil (brent) is USD$42 and USD$32

Gold is $1250. But if it consolidate above USD1,200 a flag to 1,280 indicates a bullish movement ($1,300-1,500)

ASX 200 respected 5,400 – the support is at 5,200 and 5,000 – baseline is at 4,600

 

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The car revolutions

Posted: May 18, 2016 in Uncategorized

This article should be read with my previous posts.

First Volkswagen has a pollution scandal, then Mitsubishi and now Suzuki have different scandal (fuel consumption levels).

Fiat, Opel (GM Group)Peugeot are under investigation. BMW and Mercedes launched their own internal investigation.

All the car world seems under investigation.

This fact with the rise of Tesla (which, by launching the Model 3, attacks the most lucrative German brand market) and the future incoming of Google and Apple….will change the world as we know it.

Think about the various potential consequences

  • Car production shifting from Europe (Germany) to US and probably China
  • Oil becoming obsolete
  • States needing to change the car taxation as they lose the massive amount of tax from fuel (most likely from fuel consumption to pay per use/kilometer model)
  • Arabic states loosing the oil pricing power (probably becoming more and more like Africa…where millions dies, but nobody cares as there is no oil)
  • Millions more unemployed in Germany

so many consequences the above just scratches the surface. And all this scandals are accelerating the transformation so fast you will not recognize the industry in 5 year

The US Senate voted YES in a bill that will let 9/11 victims sue Saudi Arabia for its alleged involvement in the terror attack.

This is a major slap in the face to President Obama that is even threatening to veto the bill to ..well I have to say…to protect Saudi Arabia.

I do not know if the veto will be used, simply because it could seriously damage the fellow Democrat Hillary Clinton. Definitely it will not damage Trump as probably he will be the first to sue Saudi Arabia, just because he can!

Saudis have issued all sort of economic threat (a classic rhetorical question -why so worried, if you are innocent?), some of them tantamount to mutual assured economic destruction (Saudi and US).

Now the bill moves to the House.

SP 500 lower highs pattern

Posted: May 17, 2016 in Uncategorized

This is the one year chart (Japanese candlesticks) of the SP500

There is quite a similarity in the pattern before the sell off of August and January – it has always just preceded by a two to three lower highs pattern/lower lows.

Going by statistical analysis we could be in for quite a brutal June/July. Not a prediction…just a warning.

PS Not included also the first top goes in three (the top was 2,130, May 21, 2015)…so one more top around 2,080/2,100 could still be expected – but there is quite a bit of weakness around.

Capture Decreasing pattern

2016: The return of Gold?

Posted: May 16, 2016 in Uncategorized

After a few years of pain…gold in 2016 has been the asset to be in 2016!

On the back of negative rates and the Reserve Banks that seems to have start to run out of ammunition the gold holding have increased by one quarter between investors.

Quite a few pro gold position

  • Interest rates increase bets  in US  where 75% at the start of the year…now just 4% (US rate hikes means stronger dollar and so weaker gold)
  • Negative rates have made quite a few investors scared – both as it shows that the Central Banks are running out of ideas and as “value refuge”
  • Volatility in general

For my point gold is a quite good for diversification.

Moreover, as I say from 2013, pay attention to the 1970s

1970 Gold Ounce USD35

1974 Gold Ounce USD 195

1976 Gold Ounce USD 100 (equivalent to a now $900/950…but the drop did not arrive there – probably as there is too much uncertainty in the world))

1980 Gold Ounce USD 920 (equivalent to now almost $9,000 – or even 12,000 (!!!!!) if you take into account inflation

Still hopefully this will not repeat o the letter…if gold goes to $12,000 something really bad would have happened. But a strong multi year rally could really be in the cards

Last year the great Chinese stock market blew up. As I told a few months ago the same money went into commodities trading.

Now history is repeating. The government put some brakes on…but there is no substance in the rally and iron ore already collapsed from $70 in April to $55 with strong repercussions on BHP and Co.

If you did not see it coming as I did it, you are in good company. The Australian Budget model is based on iron ore at $55. And it is already failing.

My issue is why we pay those consultants so much, when the Budget model fails in a few days where you just needed to google it to understand what was happening?

Cold War Reloaded

Posted: May 14, 2016 in Uncategorized

It is from 2013 that I rant about the we are in a new cold war.

In effect all started just post the Soviet era where the US promised not to expand NATO at the border of Russia (and specially not within the ex USSR) if the USSR stood down.

Since 1995 there has been a steady infiltration of the US/NATO on the border of Russia.

Now unfortunately the new anti ICBM station in Romania is the last straw.

Now the treaty against tactictal nukes will be shelfed (in reality was already in its way out…it blocks US and Russia developments while China is building up its stock).

So we are in a new arms race (including quite a few next generation nukes).

As the Romans was saying…who is beneffitting from this?

Well as the Governments know that the Reserve Banks praactically exhausted their tools…this is none the else that Quantitative Easing number 4.

But the last time they did something similar unfortunately was 1938….you know how it ended.

The next US President will be very important. More than you think. And Hillary Clinton is more dangerous…in the political circus her nickname is Killary…and she is fully supported by the military industry lobbies. Plus Trump already extended an olive branch to Putin

And President Roosevelt was Democrat as Killary