Whenever I see a stock that acts strong as others are weak, or as the underlying fundamental would suggest weakness, I pay attention.
gh
Tuesday, June 23, 2015
Silver Standard Strength
Why is Silver Standard Resources going up as silver goes down......?
Whenever I see a stock that acts strong as others are weak, or as the underlying fundamental would suggest weakness, I pay attention.
gh
Whenever I see a stock that acts strong as others are weak, or as the underlying fundamental would suggest weakness, I pay attention.
gh
Thursday, June 11, 2015
Paradoxical Effects
Sometimes there are unexpected effects from changes that otherwise are interpreted to cause a particular change.
One of these may be the effect of a rise in interest rates on shale oil and gas producers. It is my understanding that the boom in shale and in fracturing technology over the last few years has been in great part a product of low interest rates. If rates start to rise, and in particular if they rise too rapidly as they have of late, those oil and gas producers with high borrowing costs and high debt levels may be impacted enough to destroy supply in this sector. This would be an example of a paradoxical effect. Normally rising interest rates are thought to constrain demand. But producers going broke would cause a supply constraint. Come to think of it, low interest rates and the general "supply side" emphasis over the last decades seems to have resulted in the commoditization of everything, with low prices worldwide. Not discounting the effect of cheap labor. A double whammy, perhaps? And deflation prompts lower interest rates. (See Soros on "reflexivity") If this phenomenon reverses there could be hell to pay. Someday......
I am making no predictions about these companies, the charts are just a couple of those that I watch, but are two that have had trouble keeping up despite the rising price of oil lately, and to a lesser extent do not seem to be well correlated with any small bounces in the price of natural gas.
just thinking,
gh
One of these may be the effect of a rise in interest rates on shale oil and gas producers. It is my understanding that the boom in shale and in fracturing technology over the last few years has been in great part a product of low interest rates. If rates start to rise, and in particular if they rise too rapidly as they have of late, those oil and gas producers with high borrowing costs and high debt levels may be impacted enough to destroy supply in this sector. This would be an example of a paradoxical effect. Normally rising interest rates are thought to constrain demand. But producers going broke would cause a supply constraint. Come to think of it, low interest rates and the general "supply side" emphasis over the last decades seems to have resulted in the commoditization of everything, with low prices worldwide. Not discounting the effect of cheap labor. A double whammy, perhaps? And deflation prompts lower interest rates. (See Soros on "reflexivity") If this phenomenon reverses there could be hell to pay. Someday......
I am making no predictions about these companies, the charts are just a couple of those that I watch, but are two that have had trouble keeping up despite the rising price of oil lately, and to a lesser extent do not seem to be well correlated with any small bounces in the price of natural gas.
just thinking,
gh
Monday, June 1, 2015
Where is the Exit?
It seems like the long bond market is coming around to the reality that interest rates WILL rise at some point and that point is getting closer every day now. Economic numbers out this morning show an U.S. economy that is picking up steam.
It has been a 30 plus year bond bull market. At some point the idea will start to spread that it may be time to shift from long bonds to a shorter duration bond, at the least. And given the length of time that bonds have been in an uptrend there are surely some lopsided positions out there in the aggregate.
It does seem that the bond market may be setting up for a rout of sorts...
Although I don't know what the reasonable alternative might be.
Can money just vanish? I guess we know the answer to that. The financial markets are THE saving vehicle in these times and there is no real backing to any of it. Except the liquidity in markets that set prices. And there are rumors of a lack of liquidity in the bond markets.
The bond FUNDs may lead the way facilitated by the interconnectedness of modern "investors". Are there any real buyers left?
control risk,
gh
It has been a 30 plus year bond bull market. At some point the idea will start to spread that it may be time to shift from long bonds to a shorter duration bond, at the least. And given the length of time that bonds have been in an uptrend there are surely some lopsided positions out there in the aggregate.
It does seem that the bond market may be setting up for a rout of sorts...
Although I don't know what the reasonable alternative might be.
Can money just vanish? I guess we know the answer to that. The financial markets are THE saving vehicle in these times and there is no real backing to any of it. Except the liquidity in markets that set prices. And there are rumors of a lack of liquidity in the bond markets.
The bond FUNDs may lead the way facilitated by the interconnectedness of modern "investors". Are there any real buyers left?
control risk,
gh
Friday, May 22, 2015
Reading GLD
I watch charts closely and in real time. Yesterday GLD went below the low of the 2nd and 5th previous days and there was NOT a sharp move down. This is unusual for gold and GLD. And it indicates, so far, that there is not much nervousness in this market and perhaps that there is accumulation by stronger hands. Time will tell and things change. Let's watch.
Read the chart:
Read the chart:
A lower open this morning and the volume is subdued.
Control risk by keeping your eyes open.
gh
Wednesday, May 13, 2015
Japan Debt
As interest rates look set to rise in the U.S. and in Europe as these economies seem to be picking up steam it may be wise to wonder what effect higher interest rates in the world will have on Japan. The search for yield makes the money flow, in general, to those places paying the best return while taking risk into account.
Japan depends on debt to keep their government running. In fact they have one of, if not THE highest debt to GDP ratios in the world. This has been so for some time. Usually when a country reaches the 90-100% debt to GDP level alarm bells start to go off for lenders to that country. This happened in the U.S. a few years ago, and the bells rang loudly, particularly in the political circles. The U.S. debt, as a percentage of GDP has improved. Of course this is a ratio, and is dependent on the level of debt as well as the level of economic activity. (GDP)
Investors are always on the lookout for the next BIG thing that may derail a recovery or cause turmoil in financial markets. Japan may be a big deal in the future with the level of debt they are in and if interest rates rise around the world. Japan has been the source of lending from Japanese banks at the same time their government has propped up those banks with borrowed money. This has been going on for decades now, since the 1990's real estate bubble burst in Japan. (the US has repeated the pattern remarkably so far) Japan's government does hold a high level of domestic debt, meaning they have borrowed from their own citizens to a great extent. How much more they can save and lend to their government is an open question, particularly if exports take a hit due to decreased competitiveness caused by currency or energy.
Here is a list of world countries and statistics of debt. Pay attention to the debt/GDP numbers.
World Debt Levels
And the chart of the Japanese Yen as represented by the FXY ETF.
The chart says look out for a rise in the value of the Yen. A rising Yen makes repayment of debt more difficult and usually is the result of a rise in interest rates in a country, but is actually a valuation RELATIVE to the world. Any rise will crimp a country with a high level of debt. And there is a good chance of a financial dislocation with any sudden moves. ( google "Reflexivity") A rising currency makes exports less competitive and Japan depends on exports.
Safe havens like gold usually do well in these scenarios.
Just thinking,
gh
Japan depends on debt to keep their government running. In fact they have one of, if not THE highest debt to GDP ratios in the world. This has been so for some time. Usually when a country reaches the 90-100% debt to GDP level alarm bells start to go off for lenders to that country. This happened in the U.S. a few years ago, and the bells rang loudly, particularly in the political circles. The U.S. debt, as a percentage of GDP has improved. Of course this is a ratio, and is dependent on the level of debt as well as the level of economic activity. (GDP)
Investors are always on the lookout for the next BIG thing that may derail a recovery or cause turmoil in financial markets. Japan may be a big deal in the future with the level of debt they are in and if interest rates rise around the world. Japan has been the source of lending from Japanese banks at the same time their government has propped up those banks with borrowed money. This has been going on for decades now, since the 1990's real estate bubble burst in Japan. (the US has repeated the pattern remarkably so far) Japan's government does hold a high level of domestic debt, meaning they have borrowed from their own citizens to a great extent. How much more they can save and lend to their government is an open question, particularly if exports take a hit due to decreased competitiveness caused by currency or energy.
Here is a list of world countries and statistics of debt. Pay attention to the debt/GDP numbers.
World Debt Levels
And the chart of the Japanese Yen as represented by the FXY ETF.
The chart says look out for a rise in the value of the Yen. A rising Yen makes repayment of debt more difficult and usually is the result of a rise in interest rates in a country, but is actually a valuation RELATIVE to the world. Any rise will crimp a country with a high level of debt. And there is a good chance of a financial dislocation with any sudden moves. ( google "Reflexivity") A rising currency makes exports less competitive and Japan depends on exports.
Safe havens like gold usually do well in these scenarios.
Just thinking,
gh
Tuesday, May 12, 2015
Safe Bulkers?
Although this stock is still in a downtrend technically speaking, it seems the selling is about done, and given the general rotation going on in the market it may be time to buy this one.
From the profile on Yahoo!:
SB
Control risk,
gh
From the profile on Yahoo!:
SB
Control risk,
gh
Monday, May 11, 2015
What High Interest Rates Mean
From the Wiki definition of "interest rates":
Economy: Interest rates can fluctuate according to the status of the economy. It will generally be found that if the economy is strong then the interest rates will be high, if the economy is weak the interest rates will be low.
http://en.wikipedia.org/wiki/Interest_rate
All I have heard for months if not years now is how the economy, and most certainly the stock market will crash if the U.S. Federal reserve raises, or allows interest rates to rise. The are said to have a mandate to optimize employment and to ensure stable prices. (Here)
If the economy is strong enough to let the Fed finally act after these years of low interest rates and lack of growth it will be past time.
And furthermore interest rates will not be raised, but allowed to seek a more natural level. If interest rates go up it will be because the economy is strong and that means there is more demand for money and debt, and less demand for the safe haven of U.S. Treasury Bills.
More demand for money.
Need I repeat that.
More demand for money.
More dollars will come into circulation and the velocity will increase.
There will of course be some fluctuation in stocks since there are many still dependent in their minds on the Fed and "cheap" money. But the fact that interest rates rise is proof of demand.
Sell those bonds. Buy stuff that is real or does real things.
gh
Economy: Interest rates can fluctuate according to the status of the economy. It will generally be found that if the economy is strong then the interest rates will be high, if the economy is weak the interest rates will be low.
http://en.wikipedia.org/wiki/Interest_rate
All I have heard for months if not years now is how the economy, and most certainly the stock market will crash if the U.S. Federal reserve raises, or allows interest rates to rise. The are said to have a mandate to optimize employment and to ensure stable prices. (Here)
If the economy is strong enough to let the Fed finally act after these years of low interest rates and lack of growth it will be past time.
And furthermore interest rates will not be raised, but allowed to seek a more natural level. If interest rates go up it will be because the economy is strong and that means there is more demand for money and debt, and less demand for the safe haven of U.S. Treasury Bills.
More demand for money.
Need I repeat that.
More demand for money.
More dollars will come into circulation and the velocity will increase.
There will of course be some fluctuation in stocks since there are many still dependent in their minds on the Fed and "cheap" money. But the fact that interest rates rise is proof of demand.
Sell those bonds. Buy stuff that is real or does real things.
gh
Wednesday, May 6, 2015
What To Buy?
Lets see. US Dollar going down. Oil going up. Bonds going down.
And people are selling stocks.
What are they going to do? Buy bonds?
They are going to have to buy those stocks back.....
gh
And people are selling stocks.
What are they going to do? Buy bonds?
They are going to have to buy those stocks back.....
gh
Tuesday, May 5, 2015
Dry Bulk
The main theme of the year so far has been the volatility in the tech stocks, with may high fliers dropping overnight, including the biotech darlings of the last few years. The money seems to be rotating into the materials. The possible reversal of the US Dollar strength along with firming in the price of energy has contributed. I have been anticipating this for some time. Probably because my heart is in the commodities, imprinted like a turtle, if you know what I mean....
It is about time to see a bottom in the dry bulk shippers. The charts support this with volume drying up even as new lows are made. This, if it proves a bottom would be for a long term trade as it may take a couple years for things to get really going again....
Buy as the price firms up. Don't get in a hurry.
Control risk,
gh
It is about time to see a bottom in the dry bulk shippers. The charts support this with volume drying up even as new lows are made. This, if it proves a bottom would be for a long term trade as it may take a couple years for things to get really going again....
Control risk,
gh
Subscribe to:
Posts (Atom)