Wrapping up one of the worst quarters for stocks in years
Doc and Chris join us today for our market wrap. We talk about the conventional markets, oil, and gold.
Click download link to listen on this device: Download Show
I loved the “Down, down, down!” – reminded me of Clark Gable in ‘Run Silent, Run Deep’.
Gold will be up on FRIDAY……
I’m sick of hearing about Armstrong and 2015.75 – what the hell has changed in our society?
Obviously if you are a Syrian refugee, Greek pensioner or Texas oil worker, things are different, for the worse.
But for Joe average in North America, Europe? Nothing. Ok, commodities have tanked, bond yields are lower, and global equity markets are off their all time highs. But people still have jobs, can pay down debt, and lazy union workers and unemployed system-gaming scammers can still collect checks.
Government keeps spending and spending despite all the warnings, junk status credit downgrades, Meredith Whitney howling in the wind for years. NOTHING changes.
And now I’m being told by Armstrong, Savage and others that markets will go to new highs after this correction. Really? More of the same low interest rate ponzi scheme “Fed’s got your back” garbage?
Give me a break, we either get a 1929 style crash to reset all the leverage built up over the years, or the status quo will CONTINUE indefinitely until long after I die.
I’ve been working at a brokerage firm in margin accounts for the last 8 years and it’s the same old same old. Clients are underwater on their investments, but not outrageously so, still have jobs, and their financial advisors are still collecting trailers from funds. Nothing changed even after the 2008 crash.
It is what soothsayers have been doing for thousands of years – making predictions of the world about to end.
I wonder just how many ‘idea of March’ went by with doom warnings before a soothsayer got lucky and Julius Caesar got assassinated on that date?
Thanks for the reality injection here Plunge…we need more of that
Oil production declines next year should upset the balance the other way while demand picks up. Production appears to have reached the maximum possible level with the Saudis running at full capacity. Shale production is not going to add significantly. The next energy crisis is just around the corner and this is the time to stock on high dividend oil companies and wait.
Russia is positioning itself superbly in the Middle East after 70 odd years of the US and UK dominating the area. From Syria through Iraq and Iran the Russians are going to have influence that they never got even during the height of the Soviet Union. They are pushing the US and UK out leaving them with Gulf States and Saudi.
Saudi is the interesting bit – anyone remember that Saudi Minister who travelled to Msocow just when Syria was falling apart. There were all sorts of rumours going on at the time about arm shipments, threat of oil price cuts, etc. Now, a few years later, Putin is about to have a load of influence just above Saudi Arabia – the country that is depressing the oil price and, in doing so, is crippling the Russian economy.
I think things are going to get very interesting very quickly in that part of the world – once Russia has killed vast numbers of ISIS and anyone else they don’t like. As a result I think the oil price will be much higher much sooner than most people think.
Prescient comments, Bob – I agree.
Bob , this is absolutely logical. Let’s see whether oil can be printed.
I would love Doc’s call for oil back in the high 30s to happen – and to happen soon – as I think it would provide a great buying opportunity in energy stocks.
I have been keeping a close eye on several drillers – the likes of Transocean, etc – and wondering how long they could carry on re all the debt they carry. But have mainly held off buying into them because of the potential for an October crash below the October lows… but the whole Russia involvement in the Middle East is making me whether pullling the trigger on the oil stocks now is the way to go.
The Qatari pipeline to the Med through Syria now looks dead as a dodo – something that many think was the real reason behind the attempts to overthrow Assad.
There is a real war going on unlike the coordinated one before. Now the situation will be out of control. Anything can happen. I wish I can get more oil shares in October. buy, Buy , BUY.
Today might be quarter end widow dressing for both gold and DOW. Gold might be up and stocks mighvt be down next week. The stocks might be waiting for the hint of QE
Just for the record Gentlemen.
All your talk about your technicals Cory and Doc, you know absolutly NOTHING. Garbage!
THERE is a outright BUY signal in the Gold Stocks TODAY.
It tells me you guys know NOTHING about NOTHING.
Just talk.pretending you know something about technicals.
Put your money where your mouth is. Talk is cheap pretending you know something.
And Big Al stay on the sideline it is a safe place for you, other wise you’ll get run over.
Have a nice evening gentlemen!
Peter
American Water Works Company Inc (AWK) has held up well relative to S&P 500.
Will consider buying if/after we get an October flush in the markets.
MorningStar research says:
“…we expect 6% earnings per share growth through 2019 with earned returns on equity reaching 9.5%, hardly a case to trade at a significant premium to regulated gas and electric peers. There is clearly value in controlling water, but that value is severely limited by regulation. Investors would be well served to remember this regulatory oversight when considering an investment in American Water Works, regardless of the fine job that management has done within its business model.”
http://stockcharts.com/h-sc/ui?s=AWK&p=D&yr=3&mn=0&dy=0&id=p62586720684&a=422805920
Irwin; technically, that’s a pretty good looking chart.
Thanks for the feedback, Doc.
Trading gold and silver for purchases. Personally whenever I am making a cash transaction, ie Craigs list, garage sales, auto, motorcycles, boats etc I ask the seller if he is interested in gold or silver rather than cash…SO FAR I HAVE NEVER FOUND A TAKER. Has anyone else tried or succeeded in a barter?
This article by peter schiff is very interesting:
http://schiffgold.com/the-trade-price-explained/
That’s an interesting link, Bobby.
About a week ago I made a comment along the same idea of “trade price” using C$ value of silver. I called it my “real price of silver”.
I think it would be useful for websites to start using Schiff’s “trade price”.
Russia started attack ISIS intensively. Saudi must be shaking in their boots. If they don’t change, a coup is likely. Saudi is surrounded by enemies. They caused grief to Canada, I hope it is punished.
WTI Crude looks just like it is going to curl back up to its August highs which is major resistance. I had been betting on a decline but that no longer looks like its in the works.
S&P should be in for a continued bounce. So going short volatility. Copper meanwhile took off just as predicted….up more than 5% in two trading days. Very nice and it looks good to go awhile longer based on the Bollingers.
Gold MAY have bottomed short term although with gold you always need to heed your gut instinct reservations. For the moment anyway I would lean to the long side despite its drop these past few days.
Anyway, that’s my take this morning. Stock markets look pretty positive as most are putting in lows at good support and October does not look anywhere near as threatening as it did just a few days ago.
I feel kind of positive, tell the truth…..but maybe its just this comfy new office chair thats cheering me up. And its a rocker which helps a Iot get dizzy looking at charts!
OK….I just listened to the show. I thought Chris rebuttal to Al that Iraq, Iran and Syria don’t produce gold was kind of amusing. He’s right of course. Why indeed would precious metals rise if war breaks out in an oil region, especially as gold has never really been inclined to rise on such news?
Fundamentals don’t apply here (if they ever did). When I look at the markets I try not to overthink anything if I can help it. That always muddies my brain and leads to wrong conclusions.
Instead I take a walk across the currency and commodity charts and see if they can tell me anything I need to know that’s not even in the daily news. The two most important charts I see today are copper and the Canadian dollar.
Both look like they have put in long term bottoms and prices are in fact already on the rise.
Any sustained bounces in those two charts are going to be bullish for other parts of the markets…..(copper for stocks and CAD for commodities) particularly oil and gold. It is too early to draw any final conclusions of course but I think its important to watch where they head in the coming days and weeks.
And keep in mind that the Canadian dollar and gold have been on a similar path since middle 2011 so a rise in the Loonie is positive for gold if the general correlation holds. A rise in the Loonie will also be telling us oil is going to head back up despite what a million and one naysayers claim is years of gloom for the future of energy markets.
Usually the gloomers are wrong. So a good starting point is discount the worst of the predictions and to try to keep an open mind. Especially if other important charts are not confirming what they are claiming.
Secondly, copper, which has also been in a 4 year bear market may have put in its final bottom. Look at a monthly chart if you have doubts about my thinking. While we cannot say conclusively its *final* bottom has arrived there are sure good technical reasons to suspect that the path will now be up and that should reflect positively on the better copper miners if I am correct.
Likewise the Canadian dollar could be signalling inflation will be on the rise in resource prices and it too may have hit its bottom. Most here will doubtlessly disagree strongly with that assessment as the primary narrative recently has been that the world is mired in a deflation trap that will not end until the fundamentals of China, Europe, Japan and the US improve.
Well I don’t know if anyone else here really follows the copper or oil markets where China is concerned but consumption is up and rising. I hate getting bogged down in a theme that makes no bloody sense. EG: unless China gets back to double digit growth numbers we are all dooooomed!
Sure China is slowing. I agree with that. But if consumption is still on the rise what we likely have is more of a problem of excess production and supply in the markets, and less of a problem with growth.
But that would not stop the price of copper from rising in any case if the technical picture turns bullish so as often is the case there is a conflict of thinking between fundamental reasoning and chart dynamics.
I will go with the charts in this case. They are telling me we *may* be at a multi-year inflection point for the two items already noted and that implies changes across the entire range of commodities, stock charts and currencies if that assumption proves to be correct.
I am just saying…..lets not get trapped in ideas that don’t fit the technical patterns.
Interesting thoughts.
A few days ago the Chinese govt reduced taxes on cars up to 1.6 litre engine size – imagine it that kick-started demand in China. Tens of millions of new cars all drinking oil daily?
And also see my remarks below about a clampdown on the outflow of Yuan from China. The government there is intent on seeing more of its citizens spent WITHIN the domestic economy even as it curbs currency leakage abroad and your story plays into that nicely into that theme. This is probably just a response to the less than robust export economy of China now and a realization that the countries fortunes will rest more on a consumption driven boom than on more capital investment.
Good read Listener.
I think your right about copper, the inflation I figured was the loon devaluing.
My copper stock pick, seems to have bottomed awhile back, (month or so) up 50% from there.
Been awhile since I looked at Uranium, but I agree with Chris, Uranium looks to have huge upside potential.
BB, what company did you buy if you don’t mind me asking? And did that 50% appreciation come in just the past week as copper hit a double bottom?
I lied, sorry, it bottomed Dec 2014 and has been bottom bouncing ever since.
cuu copperfox tsx
I havnt purchased it, liquidity concerns, and besides, I like PMs. lol
If you like copper, you might want to keep an eye on this one.
Chris,
How do you explain the fact that gold crashed along with everything else in 2008 when the financial world was on the edge of systemic failure? Why would gold react differently if it happens again?
Ah, good point, Armstrong explains it well, check his blog. Gold Is NOT money.
The big difference back then, PF, was that the US dollar had been the favored carry trade currency with which traders borrowed and bought many other assets, including gold. Gold back then was leveraged just as stocks, etc. When the dominoes started to fall and people had to buy back dollars, they sold other assets that had risen due to the weak dollar, gold being one of them.
Of late, there is no such carry trade worked into the gold price; certainly, nothing of any great significance. So in any crash there is not likely to be the forced selling of gold as there was back then. This is not to say it would go to the moon necessarily; I am merely pointing out that it’s far from automatic that we’d see gold plunge further. And it’s clear that, back during that mini flash crash in August, gold caught a little bit of a bid.
Did not know that about gold in 2008. Very interesting.
+1 Temple
In addition, gold was at a record high in 2008 while the USDX was at a record low. Today, gold is 4 years and 40% off of its high. In ’08, it was also very overbought versus stocks (Dow/S&P/etc) even on the monthly chart; today it is coming off oversold readings.
The usual spin opportunity taken. You never give up do you Matthew? It is soooo tiresome. How about this instead?……its a bear market in gold!!!! Been that way for 4 years already and we still don’t have a bottom. Stop reliving the past as if it implies the future because it is……it is……so boring.
You REALLY need to go away. Your reply has nothing to do with anything mentioned in my comment. Now run along. You heard me, SCOOT!
You are a broken record.
Chris, that makes sense.
OK, here is an amazing story that should interest just about everyone here.
It is about China and an announcement today to institute capital controls on all its overseas citizens and Chinese traveling abroad who will now be subjected to a maximum annual withdrawal of 100,000 Yuan.
The control is being managed via China’s domestic UnionPay Co. bank cards which handles virtually all of the transactions of citizens when they travel outside the country. Because UnionPay is under the direct control of the government it is the obvious means by which to stem the outflow of capital leaving the country.
The maximum *daily* withdrawal can no longer exceed 10,000 Yuan (1570 dollars)
The maximum permitted for the last quarter 2015 will be 50,000 Yuan (7860 dollars)
Next year the TOTAL maximum cannot exceed 100,000 for the entire year. (15,720 dollars)
But on an annual basis this starts to hurt because that same 15,720 dollars amounts to a paltry 43 USD dollars daily if averaged across the year and after that the enterprising individual living abroad will have to come up with another way to get his cash out of the country since his UnionPay will have been max’ed out.
But of course the more interesting part of the story is how this is just part of a larger theme countries are employing to retain foreign reserves or repatriate their own currencies. In the US for example the law as it is now written (FATCA) obliges all foreign banks to report on US citizen accounts abroad.
Most refuse to do it and instead have reacted by simply banning Americans from opening overseas bank accounts and thus leaving Expats and investors unable to shift money out of the US or keep their holdings in the foreign country in which they reside.
The net effect?….US dollars flow back home (or never leave in the first place).
This recent Chinese announcement takes the cake though and its actually pretty severe. Forty-three lousy dollars a day TOTAL? Are they kidding? Even those poor abused Greeks were permitted to withdraw 60 Euro daily at the worst depths of their crisis. So this UnionPay clampdown is about as harsh as it gets by my reckoning and will no doubt have serious repercussions.
Maybe in Vancouver and other West Coast US cities for example, where billions of converted Yuan have been spirited too in the past few years to snap up homes and business’s that are out of the reach of the Mainland Chinese government.
Looks to me like the window on capital flight just got slammed shut on the fingers of those Chinese who don’t trust their own government. For those poor saps who did not make a flight move before yesterday….. well…..their money is now trapped back home and they will have to learn to live with whatever the future brings.
From today’s article at ZeroHedge:
“China has capped the amount of money Chinese holders of bank and credit cards can withdraw outside the country, in its latest effort to discourage people from moving badly needed capital offshore. China’s foreign-exchange regulator put a new annual cap on overseas cash withdrawals using China UnionPay Co. bank cards, a UnionPay official said on Tuesday. Under the new rules, UnionPay cardholders can withdraw up to 50,000 yuan ($7,854) overseas during the last three months of this year, and the amount will be capped at 100,000 yuan for all of next year, the official said”.
The rest of the article is here:
A Desperate China Caps Card Withdrawals In Frantic Attempt To Stem Outflows
http://www.zerohedge.com/news/2015-09-30/desperate-china-caps-card-withdrawals-frantic-attempt-stem-outflows
I saw that Listener, just capital controls which we have all been expecting for years.
Doug Casey was the first I heard it from.
Anyway, bitgold, the gold can be bought in the home country and stored else where.
Until they close it down anyway.
Actually, I guess a guy could buy a jet, fly it out and sell it too.
The controls at this point is for people over seas, but they will get to “locals” soon enough.
CFS might have some ideas if he is around.
Bit Gold is not going to be closed down and Americans can fly out all the gold they want without buying a jet.
The conversation was about the Chinese.
As for Jets, your right, there are many ways to “skin a cat”.
WTI just broke out to the upside.
One of the unusual outcomes yesterday was the RSI weakening below 70 on the weekly $TNX:!PRII. You would be expecting the same on the monthly chart, but for the moment, interest rates stayed where they are during the rally in the conventional markets, while commodities rallied. This indicator has clearly topped out, a rally in gold prices should follow.
Another positive outcome for gold prices is the narrowing spread between near dated and longest dated futures. We are just that much closer to entering into backwardation.
http://quotes.ino.com/charting/index.html?s=NYMEX_GC.Z15_M21.E&t=l&a=0&w=1&v=dmax
I’ve had this one bookmarked since you pointed it out the first time. 🙂
Thanks for all your contributions, FranSix.
Gold is mildy down in early trading today and if it opens here, we should see the low for this cycle some time toward the end of next week or just after. The price will be lower then the intraday low for today. In other words, don’t look for any significant rally for gold in the near term. As mentioned yesterday, keep your eye on the volatility charts to ascertain where the conventional markets are going the next 2 weeks. The volatility charts are telling you the conventional markets will see no huge move down in the next 2 weeks and the markets should meander sideways to lazily up over the next 2 weeks.
Another consideration would be an interim decline on the dollar and a notable low in the silver/gold ratio.
The dollar, I believe, is meant to decline with major indeces, and in so doing, gold prices aught to rally against silver prices. The one commodity that had not seen backwardation during the so-called supercycle is gold. So we await the advent of the final leg up in the gold bull market.
I completely agree.
The supercycle, really an oil price mania, has distracted almost everyone from the presumed inflationary effect of China, where commodities can stabilize in a bear. Inflation remains low, but the inflationary expectation is much higher.
At the same time, you have low interest rates not seen since the depression:
Anyone else here think we have a recipe for trouble in Syria?
We now have the Syrian Air Force combined with a Russian deployment of missiles, fighters and arms mixing it up in the airspace that is also being used by the US, England, Turkey, Israel, France and Lord knows who else (Saudi Arabia and the UAE maybe?).
It’s a damned dogs breakfast of mixed signals and conflicting agendas over the skies of the Middle East even as mixed decisions are being made about who is an enemy and who is a friend as Nato, uncoordinated with Russia, Turkey or other combatant Arab states all simultaneously seek to kill off a bunch of guys in Toyota pickup trucks (better known as the Islamic State and other mixed acronyms).
So is this a WTF moment or what?
You just can’t have all those air forces doing the same (supposed) job at the same time against a rag tag army of Assad supporters, disloyal Syrians, rebeles and extremist Muslims before two planes run into one another and start shooting each other down.
Who the hell is in charge over there??????
Always best not to have the military forces of opposing sides in close proximity to one another – especially when they are packing weapons.
Btw, it is the UK – not England 😉
Sorry, its a provincial thing. We still call you England.
Long live the Queen!
My guess, the Russians are going to straighten things out, the Americans are already ticked as the Russians killed a bunch of guys the Americans support to fight Assad.
Thing is, the Chineese have sent their carrier over, lol
Iran Iraq and Russia are shareing info, this is a huge embarasment for the americans, but they will do nothing.
It is possible the Russians come out of this percieved by the rest of the world to be the new tuff kid on the block.
It is of paramount importance for Russia to deal with isis, american “tool” or not.
Europe will support Putin or at least not hinder, the refuges have their influence.
The tide should turn rather shortly, the Russians have Syrian regulars choosing targets for their jets, and with actual air support, those regulars will be looking for some “payback”.
Actions will be measured and calculated, they are not going to mess this up.
At least in Syria for now, its bye bye isis, you scum god talkin pedophile savages.
Did I mention I dont really approve of isis?
No bb. I have never heard you mention ISIS before. Ha!!!
Canadian dollar weekly chart; it’s a start…
http://schrts.co/S7VWaj
Try to keep up Matthew. I already noted it a long time ago.
Fib arc resistance levels:
http://schrts.co/GHIRUq
Daily forks:
http://schrts.co/MRMhIA
Exactly my thoughts pal.
Forks.
It figures that your “thoughts” are no greater than a five letter word.
Doc is right on oil……