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Markets better prepare for stagflation

Big Al
April 27, 2018

Chris and Doc at various times have suggested we may get a prolonged, somewhat monotonous period of stagflation unfolding; no major moves up or even down for stocks broadly, BUT an environment where a grinding, internal correction within markets is at work…and where commodities finally outperform financial assets again.

In this piece linked below –by Danielle DiMartino Booth, a former advisor to the Dallas Fed — she underscores how pricing pressures are bubbling up at a faster rate. Even during this otherwise positive earnings season, some companies are telling of margins getting squeezed more due to higher costs they pay. Among other things, this is going to compel investors to do their homework and focus on companies able to raise prices and benefit from stagflation…and shun companies which can’t, and whose profits are thus getting whittled down.

 

https://www.linkedin.com/pulse/markets-better-prepare-stagflation-danielle-dimartino-booth/?published=t

Discussion
101 Comments
    Apr 27, 2018 27:57 AM

    Looks like 10 year bond leads the way , and inflation will slowly return. Food and gasoline prices are already ahead on price increases. Unintended consequences of massive tax cuts . Laffer curve wont solve this problem . Gold and silver should benifit. s

      Apr 27, 2018 27:14 PM

      well, this sure is interesting……..on a Friday…..

        Apr 27, 2018 27:30 PM

        The comment section in that article about Toronto exchange being down were hilarious.

          Apr 27, 2018 27:23 PM

          Ditto………. agree……….

      Apr 27, 2018 27:22 PM

      You beat me to it!

    Apr 27, 2018 27:22 PM

    This looks fishy to me:
    https://www.streetinsider.com/General+News/TMX+Group+Says+it+Will+Shut+Markets+for+Remainder+of+the+Day/14109902.html?si_client=intbro

    I can’t recall ever seeing any “technical difficulties” when gold and silver is falling nor can I recall losing the final hour+ of a week. Weekly closes are important and this one might end up well below where it should have been.

      Apr 27, 2018 27:25 PM

      I have to agree with you………fishy…….

    Apr 27, 2018 27:22 PM

    Just another Friday. So………..another straight arrow congressman resigning rather than undergo an ethics probe: http://www.msn.com/en-us/news/politics/gop-rep-patrick-meehan-to-step-down-friday/ar-AAwqZzr?ocid=ientp

      Apr 27, 2018 27:29 PM

      Going to be more …..I bet……

    Apr 27, 2018 27:23 PM

    AUN is ready to go…
    http://schrts.co/zqMxF6

      Apr 27, 2018 27:40 PM

      Yes, indeed. I was happy to see the pop in AUN today and it’s about dang time… 🙂

      ____________________________________________

      $AUN $AUNFF Aurcana Corporation – Kevin Drover, President & CEO
      April 19, 2018 – European Gold Forum – #CorporatePresentation #Video

      #Silver #Zinc #Lead #Developer and near-term #Producer #Texas

      http://www.europeangoldforum.org/egf18/company-webcast/AUN:CN/

    b
    Apr 27, 2018 27:25 PM

    so much for analysis.
    Ive considered the market closing,brokers going broke etc the biggest risk there is for investing for a long time.
    Im sure it will pass, but eventually, it wont.
    I think there have been a couple times markets got shut down for months.

    Apr 27, 2018 27:27 PM

    The Canadian dollar turned up where it “should have”…
    http://schrts.co/8K9rMM

      Apr 27, 2018 27:37 PM

      More forks…
      http://schrts.co/Dw267z

      Apr 27, 2018 27:29 PM

      A Shooting Star Forecasts Dollar Weakness

      Gary Wagner – Friday April 27, 2018

      http://www.kitco.com/commentaries/2018-04-27/A-Shooting-Star-Forecasts-Dollar-Weakness.html

        Apr 27, 2018 27:01 PM

        The dollar does look like it will take a break very soon but I think it will continue a little higher in a week or two.
        http://schrts.co/s84mNi

          Apr 27, 2018 27:02 PM
            Apr 27, 2018 27:12 PM

            Yes, I could see the dollar moving a bit higher, but the fizzling out and rolling over for the next move down to 88 and then major support around the 84 area.

          Apr 27, 2018 27:15 PM

          That inverse hammer candle that makes it a “shooting star” pattern is typically a sign of a short-term reversal. It may dip down, make one more run higher, but then the dollar will move down much lower than dollar bulls ever imagined.

            Apr 27, 2018 27:19 PM

            I have no doubt that it will eventually go below that 84 area support.

            Apr 27, 2018 27:46 PM

            Well that should be a boon for commodities then, but there should be considerable resistance around the 84 level as there is a confluence of prior peaks and troughs there.

            Apr 28, 2018 28:02 AM

            *Considerable support around the 84 level… 😉

            Apr 28, 2018 28:27 AM

            There are several reasons why I do not expect the 84 area to provide much support once price gets there:

            — The 200 week ma has already been broken (it offered support under 80 at the time the 2014 spike began).

            — The 600 week ema was thoroughly tested recently and will have been broken (currently 89ish) when 84 is reached (it offered resistance at 84 at the time of the spike).

            — Vertical moves of the kind witnessed in 2014 are extremely likely to be 100% retraced and that means a move below 84 is extremely likely.

            — Last but far from least, the uptrend that began in 2011 will have been smashed by the time price reaches 84 and the bear market will finally be obvious to those who just can’t see it right now.

            My minimum target is just under 80.

            http://schrts.co/zogDom

            Apr 28, 2018 28:34 AM

            The recent lows also tested support that goes back 17 years. So if it gives way, the 84 area will probably only offer a blip of support.

            http://schrts.co/NdZjuX

            Apr 28, 2018 28:40 AM

            Interestingly, the P&F chart shows a PO of 79:
            http://bit.ly/2r5Zchh

            Apr 28, 2018 28:19 PM

            haha. Yes I misspoke there. Considerable support (not resistance). 🙂

            Apr 28, 2018 28:25 PM

            I just took everything out of this chart for simplicity’s sake, and there are a number of prior peaks & troughs that line up in the 82-82 area that should offer a reasonable level of support where traders get long at those levels.

            http://schrts.co/3a1Y9B

            Longer term, I agree that the high 70s are in order, but I believe that 82-84 area will be hard for the dollar to get through the first couple go-rounds.

            That chart that David Vincent posted on the KER a while back projecting the US dollar dropping into the high to mid 70s seems very reasonable, but that was 2-3 years out.

            Apr 28, 2018 28:13 PM

            Yup, I got what you said but think that the big deal is the 88 area that it is now bouncing from. When that level breaks, a lot will change between the ears of a lot of dollar bulls. We’ll find out — and probably sooner than David Vincent thinks.

    Apr 27, 2018 27:36 PM

    Tesla shareholder wants to remove Elon Musk from chairman position

    Megan Rose Dickey – 2 hours ago

    https://techcrunch.com/2018/04/27/tesla-shareholder-wants-to-remove-elon-musk-from-chairman-position/

      Apr 27, 2018 27:53 PM

      $NMX $NMKEF Nemaska Lithium Inc. attracts financing for Whabouchi

      by: Trish Saywell April 18, 2018

      “Nemaska Lithium has landed two big financing deals in as many weeks with Japanese multinational conglomerate SoftBank Group Corp. and private equity firm Orion Mine Finance.”

      “The two companies agreed this April to put their shoulders to the wheel and help Nemaska turn its spodumene lithium hard-rock deposit in Quebec into a mine, along with a processing plant that will transform the mine’s spodumene concentrate into lithium hydroxide and lithium carbonate for use in the lithium battery market.”

      http://www.northernminer.com/news/nemaska-lithium-leaps-ahead-on-financing-whabouchi/1003795546/

    Apr 27, 2018 27:23 PM

    Project Survey 2018: Commodity Comeback Drives New Investments

    By Joseph F. Govreau

    “Higher metals prices and new market opportunities are driving the trend toward
    increased project spending after a prolonged investment slump.”

    http://cdn.ceo.ca.s3-us-west-2.amazonaws.com/1de6glj-EMJ%20Project%20Survey%202018.pdf

      Apr 28, 2018 28:20 AM

      Soaring Dollar plays Spoil-sport in Commodities Bullish Supercycle
      April 26, 2018

      “Since the commodities supercycle began unwinding 10 years ago, many investors have been waiting for the right conditions to trigger mean reversion and lift prices. I believe those conditions are either firmly in place right now or, at the very least, in their early stages. Among them are factors I’ve discussed at length elsewhere—a weaker US dollar, a steadily flattening yield curve, heightened market volatility,overvalued U.S. stocks, expectations of higher inflation, trade war jitters, geopolitical risks and more.”

      “In addition, nearly 60 percent of money managers surveyed by Bank of America Merrill Lynch believe 2018 could be the peak year for stocks. A recent J.P. Morgan survey found that three-quarters of ultra-high net worth individuals forecast a U.S. recession in the next two years.”

      “All of this makes the investment case for commodities, gold, and energy more compelling than at any other time in recent memory…”

      http://www.commoditytrademantra.com/gold-trading-news/soaring-dollar-plays-spoil-sport-in-commodities-bullish-supercycle/

    Apr 27, 2018 27:31 PM
    Apr 27, 2018 27:49 PM

    (MAE) Maritime Resources just announced a sleazy poison pill financing in an effort to throw a wrench in the gears of the merger with (ANX) Anaconda.

    This move should tell current $MAE investors everything they need to know about the current management team and how they value their shareholder base. People that don’t vote their shares for the merger will only be schooled with more pain. That has been my point that $MAE thinks nothing of diluting their existing shareholders with transactions like that.

    > What do investors think will happen if they ever dream of becoming a real miner and develop a strategy to go into #production? They’ll have to dilute the snot out of existing shareholders to build out everything that they’d need.

    The combined company makes all the sense in the world, and these attempts to make it poison pill to disrupt the deal, rarely end pretty. How people can’t see where they’d be better off with consolidating this company w/ Dustin & the team at $ANX, who actually have delivered over and over is mind-boggling.

    ** Peter “Newton” Bell is holding a Twitter poll on if investors support the Anaconda takeover of Maritime Resources.

    _______________________________________________

    @peternbell
    “As a $MAE.V shareholder, I support proposed takeover by $ANX @Anaconda Mining”

    https://twitter.com/peternbell/status/989935109850591232

      Apr 27, 2018 27:51 PM

      The 2 responses Peter got back about Maritimes actions on this financing nailed it:
      _______________________________

      Goldendreams @jfostertm – “Maritime announcing a below market private placement when the company is in play is definitely not the right thing to do – no matter whose side you are on. $MAE $ANX ”
      1 reply 1 retweet 2 likes
      __________________________________

      David @effectemergence
      22m22 minutes ago

      “Seems they did it in an attempt to thwart the #takeover, no position”

      Apr 27, 2018 27:34 PM

      $ANX $ANXGF Anaconda Scores Home Run After Home Run

      Bob Moriarty – Apr 27, 2018

      “I happen to be a big fan of saddle reef deposits. Their latest results from Goldboro in Nova Scotia showed 11.27 g/t gold over 13.5 meters, 9.93 g/t gold over 7.5 meters, 10.55 g/t Au over 6.1 meter and 5.10 g/t Au over 9.6 meters. It’s all part of a 30 hole, 7,200-meter drill program at Goldboro. Those are all home run holes.”

      “Anaconda is currently producing about 16,000 ounces of #gold yearly at Point Rousse in Newfoundland. By 2021 they expect to be adding an additional 41,000 ounces a year from Goldboro according to their PEA. The company is in the process of making a bid for $MAE Maritime. It’s an interesting bid…”

      http://www.321gold.com/editorials/moriarty/moriarty042718.html

        Apr 27, 2018 27:38 PM

        Checking in with the Unknown Geologist on Goldboro, Anaconda Mining (ANX)

        by @Newton on April 25, 2018

        > Unknown Geo: “One thing is fantastic about their recent press releases and Dustin’s appearances on the Korelin Economics Report. I listened to that new recording today and the images with the last few holes are great.”

        “There have been some comments online about the fact that the recent intercepts have narrow widths, but those are very typical of the East Goldbrook system. If you look at the 9100 East section, it’s a beautiful image – one of the best images I’ve ever seen of the deposit. These guys know how to do things and their model looks fantastic. I wouldn’t disagree with anything that they have there.”

        “They’re drilling way out on the limbs and targeting the hinge of the anticline. In doing so, they’re finding the East Goldbrook System is pretty juicy far down the limbs but narrow. There was one intercept with 250 plus grams over 0.4 meters that led some people to stick up their nose and say, “too narrow to mine.” but I disagree. When I saw that result, I was impressed. That’s twice as good as anything they ever mined at Forest Hill Nova Scotia. The best results that we mined in Forest Hill over two years was one vein that was 20 centimeters wide. ”

        https://ceo.ca/@newton/checking-in-with-the-unknown-geologist-on-goldboro-anaconda-mining-anx

    Apr 27, 2018 27:50 PM

    Jerry…..They should have just asked the crew at the KER , about the Russian Collusion,
    we could have told them over a year ago, that it was bullshit, thus saving the American tax payers millions of $….& embarasment…..The fecking lying scumbags.

    Apr 27, 2018 27:58 PM

    Yikes. The silver CoT is ugly. Even with the huge selloff through Tuesday, the commercials added a huge amount to their net short position. As I have been saying, the fact that large specs were net short is meaningless.

    What is more, on the daily chart, $silver put in a very ugly black candle today with tons of air beneath it.

    Just ugly stuff. Next week could be another serious shakeout (yet again). Silver has just been absolutely awful for years now. We could easily break above the recent peak in the gold:silver ratio. Everyone has been crowing about how the 80 level is an automatic buy–tell that to people going long silver in the early 1990s. The gold silver ratio went to 100 in 1991.

    I could see silver dropping 40 or 50 cents at the open on Monday, if not more. I pray it doesn’t but this setup in the very short term is about as ugly as it gets.

      Apr 27, 2018 27:03 PM

      If, gold keeps rising and silver has JPM holding it down, ….it will be one heck of a spring ride,……Silver will go parabolic in a hurry……

        Apr 27, 2018 27:21 PM

        Nah, more likely silver drifts lower for a long time and gold puts in a much more serious and prolonged correction than most are anticipating.

        All of the progress the miners have made vs gold in the past few weeks can be wiped out in a couple of days.

        I hope I am dead wrong about this ill-feeling, but sheesh silver didn’t go anywhere price wise and the commercials still stacked on a ton of shorts.

        It’s the small specs (retail) that are net long the most they have been in a long long time. That can’t be a good sign. The next few weeks could be extremely ugly (or should I say even uglier) in silver. It is primed for serious damage. The daily chart is extremely vulnerable.

        Apr 27, 2018 27:49 PM

        Ira Epstein’s Metals #Video (4/27/2018)

        Commodities, Technical Analysis, Gold, Silver, Copper, Platinum

        https://www.youtube.com/watch?v=mZ0Ct-aU21A

    Apr 27, 2018 27:05 PM

    Mr. Big Al Korelin, Jerry, and all of you,

    You see this? Dang, will the Clinton Body Count ever stop growing???

    I sure hope none of you boys have crossed the Clintons!

    https://www.freedomsphoenix.com/News/239180-2018-04-27-us-surgeon-who-exposed-clinton-foundation-corruption-in-haiti-found.htm

    Apr 27, 2018 27:55 PM

    Testing

      Apr 27, 2018 27:00 PM

      Roger Roger Charlie. Doctor Doctor gimme the news….

    Apr 27, 2018 27:57 PM

    Okay, now I’m good to go. Expect pressure on silver and gold into the first half of May for a good buying opportunity and then an abortive move up. Then most likely more sideways move into the fall. More of the same on GDX and GDXJ.

    Apr 27, 2018 27:03 PM

    Gold Has Explosive Potential – Gundlach

    Neils Christensen – Friday April 27, 2018

    “Famed hedge fund manager and “bond king of Wall Street” Jeffrey Gundlach continues to be bullish on gold, reiterating his call that when the market breaks above through critical resistance at $1,360 an ounce, gold will push $1,000 higher.

    According to recent Reuers article, Gundlach presented his bullish case for gold Tuesday at an event for DoubleLine clients. He also said that he is bearish on U.S. Treasury bonds.

    U.S. government bonds “are not attractive,” he said.

    Looking at classical technical gold charts, Gundlach said that “something big is happening.” He added that the market has “explosive potential energy” as it continues to build a strong base.

    “Gold is maintaining an upward pattern above its rising 200-day moving average, which is extremely good,” he said. “I’m not predicting it….I’m letting the market prove itself.”

    http://www.kitco.com/news/2018-04-27/Gold-Has-Explosive-Potential-Gundlach.html

      Apr 27, 2018 27:36 PM

      Gold Stocks’ Spring Rally 3

      Adam Hamilton – Apr 27, 2018

      “The gold miners’ stocks have mostly been consolidating low this year, exacerbating bearish sentiment. Even with gold grinding higher in a solid uptrend and nearing a major upside breakout, the gold stocks just can’t get any love. But that may be about to change, with gold and its miners’ stocks in the midst of their spring rally. Strong seasonal tailwinds make May one of the best months of the year in gold-stock bulls.”

      http://www.321gold.com/editorials/hamilton/hamilton042718.html

        Apr 27, 2018 27:30 PM

        Gold Should Bounce

        Todd ‘Bubba’ Horwitz – Friday April 27, 2018

        http://www.kitco.com/commentaries/2018-04-27/Gold-Should-Bounce.html

        Apr 27, 2018 27:30 PM

        With all due respect, Hamilton is a permabull. Just saying something is undervalued doesn’t make it so.

          Apr 27, 2018 27:34 PM

          I’ll agree with you there spanky. Adam is a permabull, but I felt he made a few other good points in that article on seasonality & sentiment.

          “Gold stocks exhibit strong seasonality because their price action mirrors that of their dominant primary driver, gold. Gold’s seasonality generally isn’t driven by supply fluctuations like grown commodities experience, as its mined supply remains fairly steady all year long. Instead gold’s major seasonality is demand-driven, with global investment demand varying dramatically depending on the time within the calendar year.”

          “Sentiment exceedingly influences investing, which requires optimism for the future. Investors won’t risk deploying their scarce capital unless they believe it will grow. And the glorious expanding sunshine and warming temperatures of spring naturally breed optimism. The vast majority of the world’s investors are far enough into the northern hemisphere that spring has a major impact. This seasonality extends to stocks too.”

          “Since it’s gold’s own demand-driven seasonality that fuels the gold stocks’ seasonality, that’s logically the best place to start to understand what’s likely coming. Price action is very different between bull and bear years, and gold is absolutely in a young bull market. “

    Apr 27, 2018 27:26 PM

    Let’s Gooooo with Crypto Wars — Issue No. 22

    April 27, 2018

    Your dose of crypto news and analysis from @BTO and @Goldfinger

    https://ceo.ca/@bto/lets-gooooo-with-crypto-wars-issue-no-22

    Apr 27, 2018 27:57 PM

    (TK) Tinka Announces Closing of Upsized & Oversubscribed Second Tranche Private Placement Financing of C$2.4 Million

    by @newswire on April 27, 2018

    https://ceo.ca/@newswire/tinka-announces-closing-of-upsized-oversubscribed

    Apr 27, 2018 27:38 PM

    Yes, Tinka (finally) looks great. Breakout coming, no doubt.

      Apr 27, 2018 27:49 PM

      TK looks like a purchase this summer.

        Apr 27, 2018 27:42 PM

        Agreed. It’s finally done it’s big pullback and financing, so it is getting time to reload on Tinka.

          Apr 27, 2018 27:53 PM
            Apr 27, 2018 27:56 PM

            On further reflection there may be a bit more downside in the near-term, based on that chart.

            Even still, Tinka is looking much more attractive here than it’s loftier highs last year, and they be drilling full steam ahead which should provide some new catalysts.

            Time to stalk this stock…..

            GH
            Apr 28, 2018 28:53 AM

            I agree, it’s just about time for Tinka:

            http://schrts.co/UcvT32

            Daily chart says not quite yet.

      Apr 28, 2018 28:44 AM

      (TK) Tinka Resources Ltd. (Graham Carman) – #CorporateOverview

      Metals Investor Forum, March 3, 2018 #Video

      https://www.youtube.com/watch?v=pxCh5rnTEVg