• Same story, different day...........year ie more of the same fiat floods the world
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Charts from the Lunatic Fringe.

Goldhedge

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Jim’s Formula:
September 1, 2006


1. First interest rates rise affecting the drivers of the US economy, housing, but before that auto production goes from bull to a bear markets.

2. This impacts many other industries and the jobs report. An economy is either rising at a rising rate or business activity is falling at an increasing rate. That is economic law 101. There is no such thing in any market as a Plateau of Prosperity or Cinderella – Goldilocks situations.

3. We have witnessed the Dow rise on economic news indicating deceleration of activity. This continues until major corporations announced poor earnings, making the Dow fall faster than it rose, moving it deeply into the red.

4. The formula economically is inherent in #2 which is lower economic activity equals lower profits.

5. Lower profits leads to lower Federal Tax revenues.

6. Lower Federal tax revenues in the face of increased Federal spending causes geometric, not arithmetic, rises in the US Federal Budget deficit. This is also true for cities & States as it is for the Federal government.

7. The increased US Federal Budget deficit in the face of a US Trade Deficit increases the US Current Account Deficit.

8. The US Current Account Balance is the speedometer of the money exiting the US into world markets (deficit).

9. It is this deficit that must be met by incoming investment in the US in any form. It could be anything from businesses, equities to Treasury instruments. We are already seeing a fall off in the situation of developing nations carrying the spending habits of industrial nations; a contradiction in terms.

10. If the investment by non US entities fails to meet the exiting dollars by all means, then the US must turn within to finance the shortfall.

11. Assuming the US turns inside to finance all maturities, interest rates will rise with the long term rates moving fastest regardless of prevailing business conditions.

12. This will further contract business activity and start a downward spiral of unparalleled dimension because the size of US debt already issued is of unparalleled dimension.

Therefore as you get to #12 you are automatically right back at #1. This is an economic downward spiral.

I heard all this “slow business” as negative to gold talk in the 70s. It was totally wrong then. It will be exactly the same now.
 

Goldhedge

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cool pic...


The U.S. Yield Curve Just Inverted. That’s Huge.
The move ushers in fresh questions about the Fed and the economy.
By
Brian Chappatta
December 3, 2018, 10:27 AM MST

Strap in.
Photographer: Chris Ratcliffe/Bloomberg
Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.

It’s a moment that the world’s biggest bond market has been thinking about for the past 12 months. I wrote around this time last year that Wall Street had come down with a case of flattening fever, with six of the 11 analysts I surveyed saying that the curve from two to 10 years would invert at least briefly by the end of 2019. That’s not exactly what happened Monday, though that spread did reach the lowest since 2007. Rather, the difference between three- and five-year Treasury yields dropped below zero, marking the first portion of the curve to invert in this cycle.


The First Inversion
After years of flattening, the yield difference between some Treasury notes falls below zero

Source: Bloomberg

The move didn’t come out of nowhere. In fact, I wrote a week ago that the spread between short-term Treasury notes was racing toward inversion, and Bloomberg News’s Katherine Greifeld and Emily Barrett noted the failed break below zero on Friday. Still, I wasn’t necessarily expecting this day to come so soon. Rate strategists have long said that being close doesn’t cut it when talking about an inverted yield curve and the well-known economic implications that come with it, namely that the spread between short- and long-term Treasury yields has dropped below zero ahead of each of the past seven recessions.

It’s important to keep in mind the timeline between inversion and economic slowdowns — it’s not instantaneous. The yield curve from three to five years dipped below zero during the last cycle for the first time in August 2005, some 28 months before the recession began. That this is the first portion to flip isn’t too surprising, considering how much scrutiny bond traders place on the Federal Reserve’s outlook for rate increases. All it means is that the central bank will probably leave interest rates steady, or even cut a bit, in 2022 or 2023. I’d argue that’s not just possible, but probable, given that we’re already in one of the longest economic expansions in U.S. history.

Click here for a QuickTake on the yield curve
The more interesting question might be why this part of the yield curve won the race to inversion, rather than the spread between seven- and 10-year Treasuries, which looked destined to fall below zero earlier this year. One reason could be that the Fed’s balance-sheet reduction is putting more pressure on 10-year notes than shorter-dated maturities, which wasn’t the case during past periods of inversion. Indeed, policy makers have shown no signs of easing up on this stealth tightening.

On top of that, the Treasury Department is selling increasing amounts of debt, which disproportionately affects the longest-dated obligations because buyers have to consider the duration risk they’re absorbing. Remember the curve from five to 30 years, which fell below 20 basis points in July? That spread is about 46 basis points now, driven by stubbornly higher long-bond yields.

Given the recent pivot from the most important Fed leaders — Jerome Powell, Richard Clarida and John Williams — this flirtation with inversion among two-, three- and five-year Treasury notes probably isn’t going away. The bond market is fast approaching the point where traders have to ask themselves whether a rate hike now increases the chance of a cut in a few years. Other questions include “what is neutral?” and “can the Fed engineer a soft landing?” To say nothing about whether the assumed relationship between the labor market and inflation expectations is still intact.

Those are big questions without easy answers, and the first inversion of the U.S. yield curve offers only one clue. The Fed wants to be more data dependent going forward. Odds are the market will do the same.
 

Zed

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-3% loss for SPX DJI COMPX in the month of December, thus far

This has only occurred in SP500 three times in the last 68 years:

The monumental crashes of:

1987

2000

2008
Yes, I wouldn't want to scream FIRE in this world of AI and HFT but I'm standing outside the theatre, across the road.
 

Zed

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Note that the volume has dropped right off in that S&P Futures Daily chart.

I backed up and took a look at the long term volume pattern to see if it is just a normal pattern, daily volume does seem to cycle but it is low currently. Anywhooo I noticed this.... so, WTF is happening to S&P futures volume long term? Is this players walking away from a rigged game? That is assuming that the .gov PPT is operating in this market as described by the alt universe of pundits. Thoughts?

Screenshot from 2018-12-06 10-53-38.png
 

Zed

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Mid session wisdom from one of the mainstream Aus brokers...

The Australian sharemarket is having its second consecutive challenging session, with the ASX 200 down 1.25 per cent at lunch. The enthusiasm which hit markets on Monday has faded quickly on a number of concerns including confusion over US-China trade progress, worries about the US economic outlook and ahead of major events in coming days.
Not great but not panic...
 

louky

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Note that the volume has dropped right off in that S&P Futures Daily chart.

I backed up and took a look at the long term volume pattern to see if it is just a normal pattern, daily volume does seem to cycle but it is low currently. Anywhooo I noticed this.... so, WTF is happening to S&P futures volume long term? Is this players walking away from a rigged game? That is assuming that the .gov PPT is operating in this market as described by the alt universe of pundits. Thoughts?

View attachment 118077
Yep, retail gonna be left holding it
 

Goldhedge

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CANADA ARRESTED HUAWEI'S CFO AT REQUEST OF U.S. AUTHORITIES

why ES futures are dumping?
I wonder what they arrested the CFO for...?
 

nowon

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I wonder what they arrested the CFO for...?
supposedly selling tech to Iran against US embargo, there's a story on ZH about it...makes no sense why the hell the US would go forward with the arrest of that lady Chinese exec at this time....fragile start of potential turnaround in relationship with China and it looks like a fricking slap in the face
 
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It's dangerous for those with passive funds out there. I'm in cash and watching it seesaw back and forth. If there was a lucky time of the year, it has happen in 2019 (19 is a bad luck number), and Dow settles at 18,000 and Gold settles at 18,000, that would be pretty cool. (18 is a lucky number!)
I'm just making this thing up. If I'm right, who's gonna' buy me an ounce gold coin?
 

Zed

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Flat day for the general market down here, totally unspooked by the US goings on. For my interests about +3.5% across the board. Hmmmmmm... I wonder what madness awaits us in Thursday trade State side.
 

Goldhedge

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US Factory Orders Tumble Most In 15 Months
by Tyler Durden
Thu, 12/06/2018

But, but, but.... ISM Manufacturing jumped?!!

US Factory orders tumbled in October - dropping 2.1% MoM (worse than expected), the biggest drop since July 2017...



Worse still, September's data was downwardly revised to just +0.2%.


Furthermore the final durable goods orders data dropped 4.3% MoM (much worse than the 2.4% drop expected)...

All of which is sending warnings about the US economy...

“Capex is the No. 1 story,” said David Woo, head of global rates and foreign exchange strategy at Bank of America Corp. “There are hundreds of data points coming out every month but that’s the one that I watch,” and bond traders should too.​
Is this the same US economy that has "never been better"? That The Fed was so exuberant about just a month ago?
 

jelly

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Gold is rallying but the miners are acting like the gold rally will go nowhere, despite gold making a higher high. The past 4 trading days have been nothing but indecision and weakness in the miners.
My thoughts:
(Stochastics look weak, and has room to fall)
gdx.png