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The Credit Crisis Financial Stocks Short Journal
- Thread starter Daal
- Start date
Didnt post the link
http://pragcap.com/were-turning-japanese
Dif between fed and boj. This is why I dont expect a japanese outcome in the US
http://pragcap.com/were-turning-japanese
Dif between fed and boj. This is why I dont expect a japanese outcome in the US
Jobless claims hit 500K, private NFP might turn negative. Interesting, tons of people called for a 'slowdown but no recession'. This 'recovery' produced real final sales avg a little over 1%, NFP bellow 100K(though it was negative for a number of months). It doesnt take much of a slowdown to create a recession here, the weakest recovery on record(by a number of metrics) is also the one most vulnerable to a double-dip, so its the most risky to say slowdown but no recession, am I the only one who sees how obvious this is?
The ECRI leading index correlates with future manufacturing activity. Now philly fed is negative, apparently this is a 'surprise' to a lot of people, though I'm sure this will be followed by barry ritholz and the people that built the index saying everything is ok and the chances of a double dip are nil(Even though they expect a 'slowdown', what is the buffer to absorb that slowdown they wont reveal)
I dont understand what is going on with gold. I liquidated a while back($1200 IIRC) 50% of my position(and swaped to other currencies to hedge USD exposure)
It seems that people are sniffing out some QE and future inflation but at the same time, the 30y shouldn't be too happy with that and they are. Commodities are taking a hit yet gold continues to gain ground
Maybe this time is really different and a collapse in the CRB(triggered by worse than expected economic data) would actually be good for gold?This would be deflationary and get the Fed to be more aggressive which would get gold buyers to quickly jump in. In any event, I dont have high confidence in that view so the 50% position is warranted
It seems that people are sniffing out some QE and future inflation but at the same time, the 30y shouldn't be too happy with that and they are. Commodities are taking a hit yet gold continues to gain ground
Maybe this time is really different and a collapse in the CRB(triggered by worse than expected economic data) would actually be good for gold?This would be deflationary and get the Fed to be more aggressive which would get gold buyers to quickly jump in. In any event, I dont have high confidence in that view so the 50% position is warranted
Quote from Daal:
I dont understand what is going on with gold. I liquidated a while back($1200 IIRC) 50% of my position(and swaped to other currencies to hedge USD exposure)
It seems that people are sniffing out some QE and future inflation but at the same time, the 30y shouldn't be too happy with that and they are. Commodities are taking a hit yet gold continues to gain ground
Maybe this time is really different and a collapse in the CRB(triggered by worse than expected economic data) would actually be good for gold?This would be deflationary and get the Fed to be more aggressive which would get gold buyers to quickly jump in. In any event, I dont have high confidence in that view so the 50% position is warranted
I agree with your assessment that gold is going up due to 'sniffing out some QE and future inflation'.
Although you are correct that the 30y shouldn't be happy with this, I remember reading (on Mish Global Economic Analysis dot com) that the 10y-30y spread has been rising in recent weeks. So even though the 30y yield has been falling, it's not declining as much as the 10y yield.
On a side note I repeat my confidence in my (long gold and short S&P 500) trade. If governments and central banks suddenly realise that debt problems could be resolved by allowing defaults to occur, then gold would decline, but the decline would not be as bad as that experienced by equities.
On the other hand, the more likely situation is that governments and central banks will continue to interfere in financial markets, and this will continue to support the price of gold, when measured in just about any fiat currency.
Current quotes of ES SEP 2010 at 1072.50 and ZG gold DEC 2010 1233.50
1233.50 / 1072.50 = 1.15
I am targetting a gold:S&P 500 ratio of 2.0.
Quote from Daal:
Whats most amazing is that over the last few months, gold has rallied when commodities declined(May,August) significantly and sold off when commodities rallied(Jun) significantly
I dont know how sustainable this trend is and how stable the new correlation is
Gold sold off in June when commodities rallied? I guess it depends on what price points you're looking at. I believe the most significant decline in the (US Dollar) price of gold in the last four months (since the late-April peak in the stockmarket) was in July, from the mid-1200s to 1160-ish. But this decline was less than 10%, and I don't want to waste too much energy analysing every single 1% move here or there.
As for correlations, I believe that gold has a stronger correlation with the S&P 500 than with other commodities, however I willingly confess that I don't have any objective statistical measures to prove this.
Of more importance to me is that
(1) since late April there haven't been any declines of greater than 10%
(2) strong outperformance versus S&P 500 since late April.
(3) Despite a $100 plus decline in Dec 2009 to January 2010, gold reached a new USD high in May 2010.
(4) There have been many days like today where the stockmarket declines and gold is flat / up; ie, it would take a more severe (2008 style?) bout of risk aversion to hit gold. If and when this happens, we know that it's highly likely the money printers will arrive on the scene (like they did in September and October 2008), which would probably result in gold going up as a result.
Quote from m22au:
Gold sold off in June when commodities rallied? I guess it depends on what price points you're looking at. I believe the most significant decline in the (US Dollar) price of gold in the last four months (since the late-April peak in the stockmarket) was in July, from the mid-1200s to 1160-ish. But this decline was less than 10%, and I don't want to waste too much energy analysing every single 1% move here or there.
I'm looking at a RJI chart against GLD. I meant Jul, put Jun by mistake