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PM Weekly Market Commentary – 4/18/2019

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  • Sat, Apr 20, 2019 - 03:08am

    #1

    davefairtex

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    PM Weekly Market Commentary – 4/18/2019

On Thursday, gold rose +1.73 [+0.14%] to 1279.99 on moderately heavy volume, and silver climbed +0.03 [+0.20%] to 14.96 on heavy volume. The buck jumped +0.50%, both crude [+0.31%] and SPX moved higher [+0.16%], as did bonds [10Y -3.2 bp].

The metals were split this week; palladium staged a strong rally along with platinum, gold fell, while silver managed to squeak out a gain. Roughly speaking the industrial metals look relatively stronger, PM was mixed, and the miners looked weak, with juniors leading the seniors lower.  That’s bearish for PM.

Name Chart Chg (W) 52w ch MA9 MA50 MA200 50/200 Last Crossing last
Palladium $PALL 4.83% 37.34% rising rising rising falling ema9 on 2019-04-17 2019-04-19
Platinum $PLAT 1.30% -3.98% rising rising rising rising ema9 on 2019-04-18 2019-04-19
Silver $SILVER 0.23% -13.02% falling falling falling falling ema9 on 2019-04-11 2019-04-19
Copper $COPPER -0.78% -7.70% rising rising rising rising ema9 on 2019-04-18 2019-04-19
Gold/Euro $GOLD:$XEU -1.00% 3.59% falling falling rising falling ema9 on 2019-04-11 2019-04-19
Gold $GOLD -1.17% -5.50% falling falling rising falling ema9 on 2019-04-11 2019-04-19
Silver Miners SIL -3.90% -22.44% falling falling falling falling ma200 on 2019-04-15 2019-04-19
Senior Miners GDX -3.92% -7.14% falling falling falling falling ema9 on 2019-04-11 2019-04-19
Junior Miners GDXJ -5.01% -12.95% falling falling falling falling ma200 on 2019-04-18 2019-04-19

Gold fell -15.16 [-1.17%] to 1279.99 this week, breaking below the previous low of 1285. The confirmed shooting star pattern was bearish, and although forecaster bounced somewhat, it remains in a fairly strong downtrend. Thursday’s daily print of a short white candle was also a bearish continuation. Gold remains in a downtrend in all 3 timeframes.  There’s no hint of a reversal for gold.

The May 2019 rate-cut chance is now at 1%, and the Dec 2019 rate-cut chance is 43%, and a 9% chance of 2 rate cuts. That’s a very minor change from last week.

COMEX GC open interest fell -7,421 contracts this week.

No COT report – that comes on Monday. I think.

Silver rose +0.04 [+0.23%] to 14.96 this week, strongly outperforming gold. While the spinning top candle was a bearish continuation, forecaster moved higher, and is quite close to a buy signal – close but just a little short. Silver is now in an uptrend in both the daily and monthly timeframes. It really looks as though there is a strong bid for silver under 15.  Silver could be ready to put in a low here; if gold can avoid collapse, it just might do so.

The gold/silver ratio plunged -1.24 to 85.16. That’s bullish.

COMEX SI open interest rose 2,750 contracts this week.

Miners were hit hard; XAU fell -3.81%, breaking down through its uptrend line. The long black candle was a bearish continuation, and forecaster fell deeper into a downtrend. XAU remains in a downtrend in both the daily and weekly timeframes. There was no reversal for the miners this week – and the break of the uptrend line looks fairly ominous.

The GDX:$GOLD ratio fell -2.78%, and the GDXJ:GDX ratio dropped -1.14%. That’s quite bearish.

USD

The buck rallied +0.48 [+0.50%] to 96.93. Most of this week’s gains came on the big rally on Thursday, when the buck broke out to a new monthly closing high. The buck is once again poised to break out above the 97 level. If it does so, it will probably be caused by some unpleasant news out of the EU, where rates are negative, and are scheduled to stay there in perpetuity. The long white candle is a bullish continuation, and forecaster moved higher into an uptrend. The buck remains in an uptrend in all 3 timeframes.

The big currency moves: EUR [-0.75%], GBP [-0.67%], AUD [-0.46%]. The Euro is continuing a steady decline: it ended the week at 112.31. That’s not a new low, but one is only 50 cents away.

SPX fell -2.38 [-0.08%] to 2905.03. Basically SPX spent the week chopping sideways in a narrow range; momentum appears to have stalled out about 30 points below the all time high. The northern doji candle was a bullish continuation, and forecaster was unchanged, remaining in a reasonably strong uptrend. SPX remains in an uptrend in all 3 timeframes.

Sector map was a mixed bag; sickcare led prices lower, along with REITs, while industrials and tech did best. The selling in sickcare was about the “threat” from Congress that the sickcare cartel’s harvesting tricks might be coming to an end.  The easy profits for sickcare might be behind them.  We can only hope – 20% of GDP is quite enough.  This looks like a relatively positive sector map to me.

Name Chart Chg (W) 52w ch MA9 MA50 MA200 50/200 Last Crossing last
Industrials XLI 1.33% 2.85% rising rising rising rising ema9 on 2019-04-12 2019-04-19
Technology XLK 1.31% 14.63% rising rising rising rising ema9 on 2019-03-29 2019-04-19
Homebuilders XHB 1.21% 0.32% rising rising rising rising ema9 on 2019-03-25 2019-04-19
Cons Staples XLP 1.19% 7.55% rising rising rising rising ema9 on 2019-04-08 2019-04-19
Cons Discretionary XLY 0.80% 14.28% rising rising rising rising ema9 on 2019-03-12 2019-04-19
Financials XLF 0.74% -0.40% rising rising rising rising ma200 on 2019-04-11 2019-04-19
Defense ITA 0.30% 0.12% rising rising rising rising ema9 on 2019-04-12 2019-04-19
Materials XLB -0.52% -3.62% falling rising rising rising ma200 on 2019-04-01 2019-04-19
Energy XLE -0.55% -8.66% falling rising falling rising ema9 on 2019-04-18 2019-04-19
Telecom XTL -0.75% 2.86% rising rising rising rising ma200 on 2019-04-01 2019-04-19
Utilities XLU -1.58% 12.80% falling rising rising rising ma50 on 2019-04-17 2019-04-19
REIT RWR -2.97% 12.26% falling rising rising rising ema9 on 2019-04-16 2019-04-19
Gold Miners GDX -3.92% -7.14% falling falling falling falling ema9 on 2019-04-11 2019-04-19
Healthcare XLV -4.33% 3.23% falling falling rising falling ma200 on 2019-04-12 2019-04-19

The US equity market was at the bottom of the heap this week.

Name Chart Chg (W) 52w ch MA9 MA50 MA200 50/200 Last Crossing last
Latin America ILF 0.93% -11.46% falling falling rising falling ema9 on 2019-04-11 2019-04-19
Eurozone EZU 0.65% -10.47% rising rising falling rising ema9 on 2019-04-01 2019-04-19
Emerging Asia GMF 0.60% -4.24% rising rising rising rising ema9 on 2019-04-16 2019-04-19
Europe IEV 0.31% -7.12% rising rising rising rising ema9 on 2019-04-01 2019-04-19
Developed Asia VPL 0.10% -9.28% falling rising falling rising ema9 on 2019-04-12 2019-04-19
United States VTI -0.28% 6.39% rising rising rising rising ema9 on 2019-03-29 2019-04-19

VIX rose +0.08 to 12.09.

Rates & Commodities

TLT rose +0.19%, bouncing back into the green at end of week, printing a swing low on Thursday. TLT is in a daily uptrend. TY moved up +0.06%, also printing a swing low Thursday. The weekly bullish harami pattern might be a reversal (42% bullish), but forecaster moved lower, resulting in a tentative TY sell signal. TY is now in a downtrend in both the daily and weekly timeframes. The 10-year yield was unchanged at 2.56%.

JNK fell -0.22%, with the daily forecaster issuing a sell signal on Thursday. BAA yields rose 1 bp, but remain in a downtrend. The BAA.AAA differential was unchanged, and it too remains in a downtrend. The credit markets continue to suggest there is no danger ahead.

Crude rose +0.15 [+0.23%] to 64.09. Crude spent the week basically chopping sideways. The northern doji was a bullish continuation, and forecaster dipped but remains in a strong uptrend. The EIA report was only mildly bullish (crude: -1.4m, gasoline: -1.2m, distillates: -0.4m) and that seemed to disappoint the market, ending up taking crude below its 9 MA for the first time in a month. Still, crude remains in an uptrend in all 3 timeframes.

Physical Supply Indicators

* The GLD ETF tonnage on hand fell -6.17 tons, with 752 tons remaining in inventory.

* ETF Discount to NAV:

 PHYS 10.38 -0.98% to NAV [increase]
 PSLV 5.41 -3.83% to NAV [increase]
 CEF 12.28 -4.34% to NAV [increase]

* Premium for physical (via Bullion Vault: https://www.bullionvault.com/gold_market.do#!/orderboard) vs spot gold (loco New York, via Kitco: https://www.kitco.com/charts/livegoldnewyork.html) shows a $2 premium for gold, and a 5 cent premium for silver.

* Gold dealer big bars premiums were: gold [1kg] 1.36% and silver [1000oz] 3.77%. The silver premiums continue to slowly increase.

Grey Swans & Geopolitics

  • Ebola: total cases 1290, with 833 deaths. That’s 104 new cases this week, yet another new high. The number of new cases have continued to move higher for three weeks in a row. Supposedly most of the new cases are confined to a “limited geographical area” in two provinces. The WHO Emergency Committee convened last week concluded that the current situation didn’t constitute a “Public Health Emergency of International Concern” (helpful acronym: PHEIC). https://www.who.int/csr/don/18-april-2019-ebola-drc/en/

  • EU – Scheduled for May 23rd. Before formally launching, Nigel Farage’s BRExit Party was polling at 15% in the UK. Now, post launch, support has rocketed to 27%, pulling from UKIP, Labor, and the Tories; the BRExit party (at least in the context of the EU elections) is in the #1 slot in the UK. Nigel Farage favors “hard BRExit”. https://yougov.co.uk/topics/politics/articles-reports/2019/04/17/brexit-party-leading-eu-parliament-polls

  • EU Recession: new item this week triggered by an article by Mohamed El-Erian, the former CIO at PIMCO. He places the odds of an EU recession at 50-60%. The current issues: BRExit, a change in German political leadership, protests in France, upcoming elections in Spain, and the new Italian government. https://www.scmp.com/economy/global-economy/article/3006233/china-economy-more-risk-eu-recession-us-trade-war-economist

  • China – Trade: Lighthizer and Mnuchin are traveling to Beijing 10 days from now; officials hope to announce a deal when Liu He visits Washington the week after. Trump’s most recent timeframe laid out on April 4th was: 4 weeks to agree on the framework, and another 2 weeks to sort out the details. https://www.scmp.com/news/china/diplomacy/article/3006694/two-more-rounds-talks-set-may-amid-hope-us-china-trade-war

  • BRExit: no news.

  • Yield Curve Inversion: the 1-10 spread rose +1 bp to 13 bp.

  • North Korea: North Korea conducted a new “tactical guided weapons firing test”, which supposedly was just an anti-tank weapon, but it was also a not-so-subtle message to Washington that North Korea is displeased with the progress of the talks. Additionally, they demanded the removal of Pompeo from the process, suggesting that if he were to be involved, “the table will be lousy once again and the talks will become entangled.” Which sounds disagreeable, certainly. Maybe Trump should leave him at home.

US Recession Watch

We saw some mixed evidence this week: Retail Sales (RSAFS) grew 1.6% m/m, which is a fairly brisk move higher. Even with autos & gasoline removed, this month’s print was still a 0.9% move – or 11% annualized. It was a large improvement over January & February.

Industrial Production (INDPRO) looked quite weak, dropping -0.1% m/m. Industrial production is now more or less moving sideways, and has done so for the past 3 months.

So that’s one vote this week for a possible-recession, and one vote against. The consumer looks happy, while manufacturing has basically flatlined.

The housing market continues to have issues: housing starts (HOUST) are trending lower (more evident when viewed through a 12-point MA), but the 120 bp rate increase in mortgage rates (MORTGAGE30US) starting in late 2017 may have been the cause. Months of Home Supply (MSACSR) seems to bear that out, roughly speaking; as mortgage rates have fallen, so has supply, from a peak of 7 in October down to 6.1 this month. This ties in with the thesis: “free money drives asset prices higher” – the converse is, when money becomes more expensive, asset prices fall. Given the leverage employed, the housing market is quite sensitive to changes in rates. Since rates have recently plunged 80 bp (at 4.2% now, down from the peak of 5% in December 2018), it will be interesting to see if housing picks back up again in the next month or two.  Median New Home Sale Prices (MSPNHSUS) lags by a month – it could be a good indicator of that.

Auto + light truck sales (ALTSALES) have been moving slowly lower since early 2016, but they remain above 17M units (roughly the levels from 2003-2006), so it isn’t a cause for alarm.

I’ll formalize this section more in the coming weeks, as time permits.

Summary

Gold’s breakdown this week affirmed gold’s medium-term downtrend – the pattern of lower highs and lower lows continues with this week’s breakdown. Miners joined gold, making a new low of their own. Silver had a surprisingly good week, managing to chop sideways while the other two components fell. The fall in PM had little to nothing to do with currency: the rise in the buck happened on Thursday, and gold actually managed to move higher while the Euro was falling.

This week, the rest of the market didn’t do very much – just palladium, which managed to jump almost 5% in the last two days of the week.

Big bar gold premiums on gold remain low, silver’s premium increased slightly, most ETF discounts increased. There is no shortage of gold or silver at these prices.

No COT report this week.

What’s the problem with gold? Well it is the same problem with the 10-year treasury, although gold has been hit harder: nobody is worried about risk right now. You can also see this in the VIX: it is at 12. Given the way things currently behave, as long as nobody is worried about risk assets, then gold won’t have much of a bid.

Financial signals in the US markets are entirely benign right now, and the medium-term economic signals in the US are mostly-benign.  Ultimately it seems to boil down to the cost of money, and the amount of confidence in government.  Currently money is still reasonably cheap (and it may even get cheaper in the medium term), while confidence in government remains strong – perhaps it even increased after the release of the Mueller Report.  Partisan sniping aside, when Glenn Greenwald provides Chapter and Verse on “no collusion and no obstruction” (https://theintercept.com/2019/04/18/robert-mueller-did-not-merely-reject-the-trumprussia-conspiracy-theories-he-obliterated-them) it will probably satisfy the center, and it will almost certainly satisfy foreign capital which only cares about the safety of its money.

Weekly trends (in order of strength):

Uptrend: SPX, BAA debt, crude, DJI, USD, platinum, copper.

Downtrend: miners, gold, gold/euros, silver, 10-year treasury.

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  • Sat, Apr 20, 2019 - 03:37am

    #2

    davefairtex

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    Greenwald: a Backfire Effect Exercise

I’m curious if anyone who believed in Russiagate can make it all the way through Glenn Greenwald’s lengthy takedown of the many “bombshell” claims, which he was helpful enough to first quote, then append the Mueller Report’s conclusions which effectively destroyed each particular “bombshell”.

I’m betting the Backfire Effect – created by two years of watching endless repetitions of “bombshells” on CNN, MSNBC, and others – will make it very hard for you to do it.

In case you don’t know, Glenn Greenwald is emphatically not a Trump supporter.  Prior to becoming a journalist, he was a constitutional attorney for 10 years, and he was Snowden’s key contact in 2012 and 2013.  He is a demonstrated “old fashioned liberal” – first amendment supporter, critic of the intelligence services and the DoD, thorn in the side of the Washington bureaucracy.  (full disclosure: he’s one of my heroes).

https://theintercept.com/2019/04/18/robert-mueller-did-not-merely-reject-the-trumprussia-conspiracy-theories-he-obliterated-them/

Those responsible for this can refuse to acknowledge wrongdoing. They can even claim vindication if they want and will likely be cheered for doing so.

But the contempt in which the media and political class is held by so much of the U.S. population – undoubtedly a leading factor that led to Trump’s election in the first place – will only continue to grow as a result, and deservedly so. People know they were scammed, that their politics was drowned for years by a hoax. And none of that will go away no matter how insulated media and political elites in Washington, northern Virginia, Brooklyn, and large West Coast cities keep themselves, and thus hear only in-group affirmation while blocking out all of that well-earned scorn.

I wonder if “Newsguard” will change any of the ratings it has assigned to any of the news organizations who got this story so horribly wrong.  Bets, anyone?

Greenwald is an example of a liberal who got the story right.  I think Taibbi is another.  Getting a story right whose conclusions run contrary to your own political leanings is the litmus test of good journalism.  Both of these guys passed with flying colors.

We should come up with our own list of “trusted news sources”, with the test being, “did they get the tough story right?”

 

  • Sat, Apr 20, 2019 - 07:43am

    #3

    sand_puppy

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    Telling RIGHT from WRONG

Dave, please do not try and confuse me with details and complexity.  I just want to know RIGHT from WRONG.  And I do know it.

Russia = Trump = BAD

USA = Obama = Children = Apple Pie = GOOD

Now stop posting confusing details

Ha ha.

  • Sat, Apr 20, 2019 - 09:30am

    #4
    skipr

    skipr

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    Is Greenwald the new Assange?

Glen Greenwald is my hero too.  Since he now resides in Brazil, he may want to consider moving deep into what’s left of the Amazon.  President Bolton will probably want to make Assange his roommate.  All Bolton’s neocon cohorts have to do is get their latest zipperhead to impose crippling Ecuador/Venezuela style sanctions that will be immediately forgiven when his head is served on a platter.  If Brazil still has some oil left we may have to invade,  Oops, I mean liberate the Brazilian people.

  • Sat, Apr 20, 2019 - 07:50pm

    #5

    dabenham

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    Greenwald in Brazil which does not extradite

Greenwald is a hero of mine too.  Brazil does not honor extradictions, so he should be safe from being taken out the front there.   Kidnapped and taken to a small airstrip in amazon to meet a CIA plane, well yes that is plausable.

A few years ago, some of the left media did hit pieces on The Intercept.  Glen needs to hit back hard!
https://www.politico.com/magazine/story/2015/02/ken-silverstein-the-intercept-115586

 

  • Sun, Apr 21, 2019 - 10:40am

    #6

    mikeg

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    COT

Hi Dave,

For some reason the CFTC WAS able to key in the date, then push “COT Report” on Good Friday (but it took 6 weeks to get the reports up to date AFTER the shutdown ended…lol)!

Never thought anything of it before, but the COT format is clearly a mainframe report printout that could be isssued Tuesday at 4:00 pm… must everything be corrupt?

Oh, and it’s a doozy… Banks went seriously less net short… one of the biggest moves in years.

But my guess is they stay flat to month end and then they take out the 200 day gold before we begin another slow leg up… to $1349.99 of course  🙂 

  • Sun, Apr 21, 2019 - 10:44am

    #7

    mikeg

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    deleted

deleted

  • Sun, Apr 21, 2019 - 10:08pm   (Reply to #6)

    #8

    davefairtex

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    COT report!!

Mikeg-

Thanks for pointing this out!  Clearly the hamster they have assigned to the task was actually able to run on his little wheel even on a holiday.  As you say, one might expect the hamster could run equally well on Tuesday.  Although I’m sure there are “reasons” why, in this age of literally instant notification of the latest cat picture posted to your facebook feed, the banksters simply can’t provide us with the information at end of day.

So…

In gold, the commercial net position rose by +54k contracts, a large move; mostly that was short covering (-41k) but also some new longs (13k).  Commercials often, but not always, make large long purchases right near the lows.  So maybe 1-2 more weeks of this and we’ll be at a turning point.  Managed money net fell by 52k contracts; that was both new shorts (31k), and fewer longs (-22k).  The managed money long position is mostly gone.  It also looks like 1-2 weeks before a turning point for managed money.

In silver, the commercial net position rose by +14k contracts, also a large move.  That was almost all new longs (15k) minus some new shorts (1361).  No short covering by the commercials just yet.  Managed money net fell -9k contracts, almost all new shorts (9k) plus a handful of new longs (427).  Managed money is piling in short – while commercials are going long.  In fact, the commercials have a historically high long position right now.  Does that matter?  Commercials generally don’t go long silver; when they do, it indicates a low more often than not.  The lack of covering by the commercial shorts is a somewhat negative sign.

So no “smoking gun”, although definite improvement in both silver and gold.  The historically large commercial long position in silver is curious, and probably a sign of something good.  One hopes.

  • Mon, Apr 22, 2019 - 03:18am

    #9

    davefairtex

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    Bill Binney – DNC files: leak-not-hack

Here’s a recent interview of Bill Binney, formerly employed by NSA for 20 years and now a critic, who provides some insight in this interview into why he says the DNC files were leaked, not hacked.  Why do we care?  If the DNC files were a leak, then it was a DNC insider, rather than a “Russian Hacker” that did it; this cripples a big chunk of the Russiagate narrative, as well as the “push towards war” that we are seeing from the MI complex and their Dem/Rep toadies in Congress.   As a reminder, the (leaked?) DNC files proved conclusively that HRC meddled in the US elections by rigging the Dem primary so she would win.  Conclusion: HRC was better at meddling in our elections than Russia ever could have been.

Binney believes that the DNC/leak forensic evidence is clear, he seems to relish a chance to present it in a court of law, he says that their work is open to peer review – but for some reason, there don’t seem to be any peers willing to review it.

I’ve reviewed the forensic analysis in detail.  I find it quite credible – and also, technically fascinating.  I believe Binney.  He’s another one of my heroes.  Chris talks about integrity: that’s the connection between Binney and Greenwald.  And of course Snowden too.  Binney and Snowden both threw away their careers in their efforts to inform the public.  I wish I could say that I’d have done the same thing were I in their position – but honestly, I don’t know if I would have had the courage to do so.

  • Mon, Apr 22, 2019 - 07:05pm

    #10
    kz7

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    Binney is very credible and

Binney is very credible and as yet no one has taken up the “challenge ” of proving him wrong.

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