MolyCorp (again)

I've been doing some bottom picking in MCP lately. Despite the bad news. This stock is down a long way from the heady days a few years ago when China was restricting exports of rare earth metals.
There is even news of China raising quotas now. MCP up today through recent resistance.

And how would a serious trade war with Russia and China affect imports of rare metals?

MCP looks like it could go back to $3 for a start here.

control risk,
gh


Later at the end of the day:

MCP is looking technically challenging. To say the least.........

gh

Next

The stock indexes down sharply at the open today. The strong economic news yesterday and the increases in wages paid numbers this morning caused interest rates to rise, bonds to fall. But the weakness in stocks is only partly due to the prospect of rising interest rates and seems mostly to be a result of the increasing tension with Russia. A trade war with Russia, with the specter of a shooting war, as well as the increasing tension with China over trade and quality issues is putting a crimp in the international profits of international companies.

Stepping back. Does a trade war cause inflation the same as conventional shooting war does?

Over the longer term, as far as the Fed and interest rates go, I would be surprise if the Fed continued or proceeded with "tightening" if international tensions rise, and a trade war ensues. There is an election coming up in two years and that is traditionally a cause of easy monetary policy, but aside from that the Fed will take the future into account. And a looming trade war will cause them to put their obligation to tighten behind the mandate to maintain full employment.

This will cause the inflation that a war typically causes. Down the road. And in spades.
If this happens.

Just thinkin',
again............

gh

What Next

U.S. GDP Grows at 4% Rate


The Fed will release the minutes of the latest meeting later today.
Will those minutes reflect this latest information?

Probably not.
How will that affect the outlook of traders? Investors?

Take your marks!

gh

World Trade War I

The parallel between the assassination of Archdude Ferdinand and the start of WWI and the downing of the Malay airliner in Ukraine may persist in a trade war.


U.S.EU Ready New Russsian Sanctions as Fighting Rages

And from STRATFOR:

Russia: Lawmakers Draft Legislation Against 'Aggressor Countries'
 Situation ReportsTuesday, July 29, 2014 - 08:21 Print Text Size

Russian lawmakers have drafted proposals to designate nations that have imposed sanctions as "aggressor countries" and restrict their companies' operations within Russia, United Russia party deputy Yevgeny Fyodorov said, RFERL reported July 29, citing Izvestia. Earlier, the European Union imposed asset freezes and travel bans on business figures closely associated with Russian President Vladimir Putin as well as restrictions on trade with Crimea, according to an EU official, EUbusiness reported.

Read more: Russia: Lawmakers Draft Legislation Against 'Aggressor Countries' | Stratfor
Follow us: @stratfor on Twitter | Stratfor on Facebook




The stock markets seem indecisive.
Bond yields continue to decline.
Housing is weak with low interest rates.
Dry bulk rates do not rebound.
There is still talk of a Euro crisis.

Control risk, the bull market won't last forever.

gh

Wrong Again

Wrong again on the direction of the markets in the short term.

Close short positions in the averages and sold volatility. For now.

PLUG treated me well over the last three days.

Got some SLV and SSRI.

The stock market is more resilient than I am.

Controlling risk,
gh

Simon Black/Sarejevo/Ukraine

O'kay. So I get these emails from some dude named Simon Black who travels the world and gives his impression of the state of the world under the "Sovereign Man" heading.

And this is what he sent.

And I was there first.

July 21, 2014 Andorra la Vella, Andorra Russians aren't exactly known for having a great sense of humor. But the language is full of bizarre, often hilarious expressions like "perebrasyvanie kakashkami". Literally translated this means "throwing shit". And it applies right about now—when a bunch of people is standing around blaming one another for something that has gone heinously wrong. "Heinously wrong" is somewhat of an understatement. The MH17 disaster is so bad that it's made people forget about the roving army of fanatics that has taken over half of Iraq and parts of Syria in their quest to build a global caliphate. This is much bigger. And there’s so much pent up tension between rising powers right now, there’s serious risk of it turning into a much greater conflict. It seems ironic that the world was in a similar situation exactly a hundred years ago. After the assassination of Archduke Franz Ferdinand in Sarajevo, Austria-Hungary issued a series of ultimatums to the Kingdom of Serbia, and ultimately declared war on July 28, 1914. Tensions in Europe and around the world were at boiling point. The primacy of the British and other European colonial powers was waning, as recently formed unitary states of Germany and Italy were on the rise. With so many rising powers, it was inevitable that conflict would ultimately ensue. Even if Franz Ferdinand’s assassination wouldn’t have happened, some other tinder would have lit the fire. Similar conditions exist today. Just like a century ago when waning British power invited a power struggle among rising nations, waning US power is creating conflict with Russia, China, etc. A century ago, they settled it on the battlefield. Everyone knew war would eventually come to Europe. But the great miscalculation was they presumed it would be just another 19th century limited war. It was anything but. The great war brought brutal mass killings, bombings, heavy artillery, gassing, etc. And it changed warfare forever. This time around, the way we conduct war is different. Similarly, leaders are miscalculating, thinking that they can scare their opponents with warships and fighter jets. But modern warfare isn’t fought with boots on the ground. In 2014, cyberwar and economic war looms. And this type of war is something that will affect literally every person who is plugged in to the global financial system. I invite you to explore more with me on this critically important topic in today’s podcast. You can give it a listen here: http://www.sovereignman.com/podcast/podcast-012-echoes-of-1914-14708/ Until tomorrow, Simon Black Senior Editor, SovereignMan.com       Sigh,   gh Neither this email communication nor content posted to the website SovereignMan.com is intended to provide personal financial advice. Before undertaking any action described in this letter, financial or otherwise, you should discuss your options with a qualified advisor-- accountant, financial planner, attorney, priest, IRS auditor, Tim Geithner... Also, nothing published in this letter constitutes encouragement to avoid or evade tax obligations in your home country. Furthermore, you should understand that SovereignMan.com may in some instances receive financial compensation for products and/or services which are mentioned in the letter, and in other cases, SovereignMan.com receives no compensation. The needs of the community come first, and the presence or lack of financial compensation in no way affects the recommendations made in this letter. If you'd like to update your email address or no longer wish to receive our daily emails, click the link below:  Update/Unsubscribe Blacksmith Pte. Ltd. publisher of Sovereign Man No.4 Kiarong Complex Gadong 2nd Floor Block D BSB, Brunei-Muara BE1318 Brunei Darussalam

OooohH!

I got my shorts squeezed today..... Kinda uncomfortable way down low.

If you know what I mean.

gh

Interesting site

Archduke Ferdinand Assassinated


The sidebar is interesting.
Here's what it looked like:

Malaysian Passenger Plane Shot Down

This just in:

Ukraine

Markets down sharply.

IF this plane WAS shot down and was at 30,000 ft. as reported it would have been done with a larger ground to air weapon. Not a handheld weapon.

Have I mentioned that the Russians are traders. It would be like them, two days after sanctions are increased against them, to short the market and then shoot down a plane.

But, I speculate .................


gh

Just About to the Edge

That is what it feels like to me. Just a little push and the market will crack.

Let us see what happens.

One.  Two.  Three.

sell!

gh

International Race to the Bottom

Here is an article from a few hours ago out of Sweden. 

GulfNews

The Swedish central bank is considering cut in interest rates. The ECB recently cut rates and there is continued talk of more rate cuts. The "strength" in the Euro has hampered recovery in the Eurozone by restricting exports.

That has been the ongoing competition in the world for at least 20 years now. The race to create domestic jobs by devaluing the domestic currency to stimulate exports. But it only works until every country catches on and does it. And then it is a race to the bottom.

Cutting interest rates encourages the taking on of debt by the public and private enterprise. If the debt is able to be worked off by increased exports, and thus flows of money into the country, the debt has been productive for the country. The country is richer.

But if the whole world tries the same thing it doesn't work. We can't all be net exporters.

The situation reminds me of the competition between large banks that led to the housing crisis and the financial debacle of a few years ago. The banks were in competition with each other and each had no choice but to continue to lower lending standards to stay ahead of the competition and to retain market share. And it led to ruin, and a bailout by the Federal government(s).

Who will bail out the world? Who will bail out a country when all countries are in the same pickle?
Can all countries end up in the same situation?
That question must presume a worldwide currency crisis. Can all currencies decline and precipitate financial collapse? That would be the result of a return of bond vigilance. But there must be a safe haven currency. The best of a bad lot, so to speak. What would it be? A currency must be backed by the economy of the country. What country?

And why do interest rates need to be cut if the world economy is picking up? The answer must be to discourage "rentier" money from being parked in interest bearing instruments. And to try to further stimulate demand with more debt. But demand and debt only go so far together, and then the realization on the individual level is that the money must be repaid or go bankrupt.

Which will it be?

And the elephant in the room, as far as indicators of demand go is the Baltic Dry Index.
It is going nowhere after six years of scraping along the bottom. If there was some pickup in world activity it seems it would show in dry shipping rates.

something is going to crack.
Sometime. LOL
gh

Heading for the Cave

Well, I can't help it. I am going to the cave for awhile. ;

I love these new cameras. Here is a selfie and the view from my cave.

I've turned sort of bearish for awhile.................
gh

Hmmm......

An interesting open in the markets this morning. To say the least.

At the risk of getting out of touch with what is going on I have to say my first impression of the open for gold and the averages is that something is fishy. Particularly with the GLD open. It doesn't fit with the way gold has been trading lately.

And todays open in the stock averages, to me, tastes like that bubble gum in the big package from way back. Bubblicious.

I try not to argue with the markets.  But, this don't feel right.

No changes just yet,
gh

Friday D.I.

It is early in the day on Friday, July 11, 2014.

gh

later:
1100 pst

DECK is under pressure.
Will the broad averages succumb to selling?

gh

End of day:

So it was a big down day for Deckers on heavy volume, although it appeared that the heavy selling was bought as the price held steady and sideways on the heavy volume. More buying on the dips. I guess the question is: "Who is buying on the dips?". If mom and pop are buying the dips I wouldn't put much faith in their staying power or their continued buying. And what big fund/hedge fund would be buying on weakness in retail after five years of low interest rates and with rising rates sure to come. (Someday. ;)  )
I can go either way as far as the averages are concerned. But this week seems like one of those warning signs that at this stage of the bull market are roundly pooh-poohed. The odd thing is that energy is weak and gold is strong this week. And the dollar held up well.
I am cautious about continued summertime advances in the broader averages. I think the DECK index is portending some more losses in the DIA. It just seems that something is up. The problems with the bank in Portugal remind me of the problems that happened in early '07 I think it was. A day or two of weakness and then forgotten for awhile. In retrospect it is always that way. A top is a process. We may be at the right ear of a major Head & Shoulders top right now.
Or not.

Was that helpful?
gh

The D.I.

A follow up on the DECK indicator that I have been developing. ie, the predictive value of watching Deckers Outdoor trade as an indicator of where the major averages may go.

I didn't post it yesterday, but was watching what looked like distribution in DECK. There was heave and sustained volume with sideways to down movement of the price. This coming near long term highs tells me the stock is being sold to willing buyers as much as possible. Or at least there seemed to be a change of heart with many holders of the stock. Retailers have been disappointing lately with earnings and outlook.

The major averages down sharply on the open today. Buying appears as expected early in the day. Dip buyers are a feature of any older bull market. Time will tell if this day is any different, but one should pay attention to that Yen trade/chart that I have highlighted in earlier posts. Something may be afoot.....

gh

AU

It feels like it is time to buy

gh

Later:

Here are the long term charts of AU and GLD. We may have formed bottoms in the miners and the metal.

control risk,
gh

DECK By a Nose

Intraday of the DECK indicator and the DOW.

Will Deckers point the way?

gh

"My Approach......"

Here is some sage advice from Soros.



This is on my office wall.
I should use it as a disclaimer.....
But no-one is listening anyway.
gh

Trade Well

If I can trade well the money will take care of itself.

AK Steel continues to be strong. I put on a trade several months ago because I felt strongly that it was going to go up. The problem was that I put on too big of a position too soon. The stock dropped back to trendline and my fear of a gap down caused me to close the whole position. THAT was the bottom. The chart tells the story.

The Baltic Dry Index is due for another move up. It has had a few up days lately. I did a post on the correlation between gold and inflation fears/hopes and the BDR. We'll see if the correlation holds up. Gold is acting strong, as are the gold stocks.

Thompson Creek continues to tease me with the price pattern. I think it will eventually go above resistance for a move to $4 or so. BUT......

It seems like iRobot (IRBT) is going to run out of steam. The volume has not improved on this run up lately. IRBT and the Russell Small Cap ETF IWM seem to track the same though and the small caps have been strong for a change lately. I think the specter of rising rates due to an improving U.S. economy may have to be resolved though.

And finally, energy is due for a pullback and seems to be getting weak. USO and UNG in particular. And this will probably spell a decline for solar as well. SCTY and SPWR.

The charts with notations:

My apologies for the double screen shot.
I am NOT doing it over.

Control risk,
gh