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Timing & trends

Insights from a Wall Street Legend

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Posted by Brent Woyat, OceanForest Investment

on Friday, 02 November 2012 11:46

Brent WoyatAs the leaves begin to turn color, we’re now three quarters through a very eventful 2012.
 
I’m writing to provide perspective on what’s happened this year and to share my thoughts on how to position portfolios for the period ahead. To help do that, I’ve tapped into insights from Barton Biggs, a legendary observer of the investment scene who passed away earlier this year after 40 years in the investment industry. Before we get into his views, here’s a summary of 2012 to date.
 


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Timing & trends

4 Reasons to Look Out Below

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Posted by Josef Schacter via The Energy Report.

on Friday, 02 November 2012 08:01

Screen Shot 2012-11-02 at 8.05.30 AM

Investor Complacency Ends – Market Decline Underway

(Ed Note: This is an excerpt from Josef Schacter's 15 page Energy Report)

The risk on trade of the last three months, as the central bankers announced another round of quantitative easing, now appears to have ended as worries about the US “fiscal cliff” and the ongoing debt crisis in Europe once more impacts investors. The “risk off” trade has returned. Bond prices are on the rise again, and the long US Treasury Bond would signal another round of significant “risk on” focus with a rise above 149. On November 6th the US has one of the most seminal elections in its history. Both candidates for the top job have evaded the issue of how they would cut the trillion dollar annual budget deficit and bring the overall government debt burden under control. It should be a hard fought and very tight race. The winner may in fact be a loser, as they are forced by the markets and the “fiscal cliff “cuts that take affect on January 15th, 2013, to tell the American people that the government has been living a lifestyle that can no longer be afforded and that tax increases and significant cuts to popular spending programs and entitlements would need to occur. If the winner does not take charge and make the tough choices quickly, nearly 5% of GDP will be removed (in an economy barely growing at 2%) as spending cuts and taxes rise. Another recession in the US would unfold quickly and, would in short order, drag down the world with it.

Economic Releases Warn of More Trouble Ahead

We continue to watch for “at the margin problems” in the world economy that would highlight an upcoming synchronized slowdown and problematic period. These are some of the recent events that are weakening the underpinnings of the current positive consensus view and may indicate that many parts of the world will face a pronounced slowdown and possible recession in 2013.

Europe

  • France continues down its path of solving its fiscal deficit via tax increases. The marginal income tax rate is being lifted to 75% and the capital gains rate has been proposed to be doubled to 60%. Interestingly, the biggest opposition to this increase is coming from young entrepreneurs who are campaigning in favour of new business creation and the upside win if successful via capital gains. Their call of “les pigeons” or “suckers” for taking the risk of starting new businesses is gaining traction and the government is looking at taxing passive gains at the higher rate and are looking to propose a lower rate for job creating entrepreneurs.
  • European car sales continue to collapse. In September sales fell 11% to 1.13M registrations, the lowest level in 19 years according to the European Automobile Manufacturer’s Association.
  • Spain is edging closer to a bailout request from the ECB as bad bank loans rose to 10.5% of all loans (and larger than their equity). This amount now is 178B Euros and is larger than the proposed 100B Euro bailout for Spanish banks.
  • Greece needs a new funding deal (and the next installment of new loans) from the EU/IMF in the next 30 days or it will run out of funds to pay its bills. D-day or default day is closing in again

China

  • China’s auto sales fell in September 2012 by 1.8% - the first such decline in many years, as the weakening economy impacted demand and the ongoing dispute with Japan over the Diaoyu Islands escalated and plunged sales of Japanese car sales by 41%. Commercial vehicles sales in China, fell by a more disconcerting 7.6%. Overall, the dispute between China and Japan is taking a severe toll on the Japanese economy which saw overall exports fall by 10.3% in September. Japan may now be entering its second quarter of its next recession.

US

  • US third quarter earnings have been somewhat disappointing and most importantly the negative guidance for Q4/12 and into 2013 has spooked investors. Such noteworthy companies as: Amazon, Caterpillar, DuPont, Google, IBM, McDonald’s Microsoft, Texas Instruments and Xerox have noted their concern for the upcoming year. Stocks had been priced for quantitative easing monetary policy heaven, and are now reacting to real world profit deterioration. A 20-30% price decline may be needed to fully discount the ongoing fiscal and economic problems. 

Markets still have big downside risk – be careful!  Hold large cash reserves. Be ready to buy during upcoming tax loss selling season into mid-December - Josef

 

About Josef Schacter

Josef is one of Michael Campbell's favorite analysts. He writes research reports for:

Maison Placements Canada Inc.

2116-130 Adelaide Street West

Toronto, Ontario

M5H 3P5

Telephone:    416.947.6040

Fax:    416.947.6046

Maison Placements Canada Inc.,  an independent, Toronto-based investment dealer providing a comprehensive array of financial services to institutional investors and small to midsize corporate clients. Founded in 1955, Maison has established a reputation of providing Corporate Canada with high quality strategic investment banking advice and access to sources of financings. The heart and strength of the company is research, a small team of specialists providing both research and expertise. Maison has been able to execute successful financings, mergers, and acquisitions. Maison is committed to the resource industry offering a broad range of services including corporate finance, mergers and acquisitions, venture capital and institutional research. Maison’s principals believe that the business landscape is changing greatly and will continue into the next decade. Increased trade between Canada and Asia Pacific countries will help create new industries and business opportunities, instigating growth in the region. Maison is ideally positioned to act as a catalyst for this change.

As a company that markets financial services, Maison’s major assets are its people. John Ing’s industry experience spans forty years in the investment business. John is a recognized expert in the resource industry and is one of the most knowledgeable gold analysts in the world.

Maison’s strategy is to:


1. provide high quality and high growth companies with strategic advice and access to sources of capital


2. staff transactions with focus, experience, senior banking professionals.


3. execute successful financings, mergers, acquisitions, and strategic partnerships.


4. dedicate long term support to these companies;


5. generate high quality, money making investment research ideas.

 



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Timing & trends

Sandy's Market Impact - From the Known to the Uncertain

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Posted by Mohamed A. El-Erian - Pimco

on Thursday, 01 November 2012 08:49

Four observations seem warranted based on available information - and they range from the certain to the highly uncertain.

First, the greatest impact is in individual sectors where we may see distinct winners and losers.

Screen Shot 2012-11-01 at 8.44.24 AM



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Timing & trends

Dennis Gartman: Sell stops likely building in Gold below $1,700/oz, 1,300 Euros

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Posted by Mark Leibovit & Dennis Gartman

on Wednesday, 31 October 2012 10:17

"Watch then as gold trades toward $1,700 and toward 1,300 (euros), for we fear that under there shall be severe stop losses that shall be touched off…sufficient to send gold perhaps to $1,625-$1,635 and toward 1,245-1,255 (eruos)/oz".

NEW YORK (Commodity Online): Investor and newsletter writer Dennis Gartman suspects that a large number of sell stops in gold are likely building below $1,700 and 1,300 euros per ounce.

Stops are pre-placed orders to buy or sell when certain chart points are hit, often used by traders to exit trades that are going against them.

Gartman describes himself as currently holding a “core” position in gold rather than being aggressively long. He looks for central banks to remain buyers during periods of weakness but not to chase the market higher.

Global gold prices are higher in trading early on Wednesday. Some bargain hunters have stepped in to buy the dip, and some short covering is also seen. The major storm  shut down most of the U.S. eastern seaboard, including New York City, that had traders all over the world waiting for the New York markets to reopen.

At 1:16 EST or 10:16 PST December gold last traded up $12.80 at $1724.9 an ounce on the Comex division of the New York Mercantile Exchange. December Comex silver last traded up $0.54 at $32.35 an ounce.

Mark Leibovit Midday Update (9:38 PST)

PRECIOUS METALS (Spot prices):

The overall strategy here is to be looking for a significant long entry trading entry point sometime between now or just after the election based on seasonal studies.

Gold is up today 14.10 at 1723.10.

Silver is up .59 today at 32.34.

Platinum is up 21.00 at 1567.00.

Palladium is up 11.00 at 605.00.

Should weakness resume (gold under 1697.20 and silver under 31.44) into early November, theoretical retracement levels in gold are now 1676 and 1642 with 31.27, 30.05, 29.63, 28.96 and 28.50 outstanding in silver.

That said, we are long CEF, GDX and GDXJ here anyway.

If you don't own the precious metals, anytime is a good time to buy them. The expression goes: 'Don't wait to buy gold - buy gold and wait'!

Do you subscribe to the Leibovit VR Gold Letter? I hope so. Here is the link:

www.vrgoldletter.com The October 26 edition has been sent to subscribers this morning. New subscribers receive a 50% discount during the first month.

Leibovit's CANADIAN NEWS:

The TSX is up 66.27 at 12,443.72 or +0.54% and the TSX Venture is up 7.51 at 1,210.43 or +0.58%. The Canadian Dollar (using FXC) is down .23 at 99.43or -0.23%, trading as high as 102.96 on September 14. The U.S. Dollar Index is up .006 at 79.937. Its recent low was posted on September 14th at 78.601. I've been of the view that we're going to see a new low in the Dollar Index, following the October correction or after the Presidential Election.

Canada's economy slipped into reverse in August, the first decline in six months, led lower by the manufacturing and energy sectors, Statistics Canada said Wednesday. Gross domestic product contracted by 0.1% during the month, following a 0.2% gain in July. Economists had expected the economy to match that growth in August. August marked the first monthly decline since February, and lends credence to the view that higher interest rates are a long way off. Canada's economic growth remains on track for the year despite unexpectedly weak gross domestic product data for August, Finance Minister Jim Flaherty said Wednesday. The Bank of Canada, in its quarterly Monetary Policy Report released last week, was still predicting growth of 2.2% for all of 2012. The central bank's outlook for next year is 2.3% and 2.4% in 2014.

Bulletin

WATCH THE MOVIE: 2016 HERE! A must see!

http://tinyurl.com/9vjylme

VRTRADER.COM Trial Signup: Use this month to kick our tires. Pay 50% for the first 30 days (No refund) and sample our Silver or Platinum service and then decide what works best for you. Just send an email to mark.vrtrader@gmail.com" or call 928-282-1275

 IF YOU HAVE NOT SIGNED UP FOR THE LEIBOVIT VR GOLD LETTER, HERE IS YOUR CHANCE. THE October 5th EDITION IS HOT OFF THE PRESS. HERE IS THE LINK: WWW.VRGOLDLETTER.COM. YOU GET A 50% DISCOUNT FOR THE FIRST MONTH.

 



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Timing & trends

Superb Hugh Hendry Interview on Gold, Hyperinflation, Treasuries, Stocks, Japan, China, Real Assets

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Posted by The Economist & Mike Shedlock

on Tuesday, 30 October 2012 03:27

Great-wall-of-China-picOn US Treasuries: "Don't tell me China will sell their US treasuries. If they sell their treasuries, the renminbi goes higher and higher and higher. And their companies that export go bust."

That is something I have been saying for years. Indeed, the Fed and the US Treasury would be pleased to have China dump treasuries.

On Chinese GDP: "We have a roadmap from the 1920's. The UK played the role of the US and the US played the role of China.  With the leverage of the creditor cycle, UK GPP peak to trough fell 8%. One year, in America, in real terms, GDP fell 23%. That's the leverage. Now am I sitting here with video cameras saying the Chinese economy will contract 23%? Of course I'm not. But if we have a coffee later I might say something different."

That last sentence above generated tremendous laughter at the conference .

Negative 23% is excessively negative, but we are in the same general camp. China is going to surprise way to the downside. China will not economically pass the US as The Economist expects.

For further discussion, please see The Dating Game: Michael Pettis Challenges The Economist to a Bet on China

There was an interesting comment on gold at the end. Hendry had been long gold and short the S&P in  a paired trade since 2006. That trade worked exceptionally well through 2008. He still likes gold but not as enthusiastically as he did, and he does not like the miners.

Regarding miners, I disagree.

via Mike "Mish" Shedlock - http://globaleconomicanalysis.blogspot.com who says "The interview is well worth a play in entirety, covering Gold, Hyperinflation, Treasuries, Stocks, Japan, China, and Real Assets. It's the best interview I have seen lately".

Ed Note: You have to enter your email address to play, but I doubt it has to be accurate as there was no verification process. 

Click HERE for the entire interview

Also:



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