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Hand Keeps Improving with YCS
...The missing card for an all in position shorting UST is YCS (short yen).
The yen is a defensive currency that enjoys winter but hates spring.
Given we are moving into spring it only stands to reason the yen should begin weakening, which fortunately it is. A nice confirmation that spring is on the way...maybe by the close today !!!
Good Chance the Hive Will Swarm Today/Tomorrow.
...Looks like the new QB will be, PST.
This means a full out hot spring! Not quite +200 because a few bees will remain in the gold hive.
I determine the actual temp once the move takes place.
Again, rather incredible. I was expecting four moves for the entire year, and this will be the fourth in a little over one month!
Bee Hive's January Performance.
What a month! The hive started out the first trading day getting slammed unmercerfully having a QB position in LQD effectively ending the period called 'Goldilocks'. The hive quickly swarmed to JNK, where it too took a beating. About mid-month it swarmed again this time to gold which made up the losses from both LQD and JNK. Overall the QB position was a break-even for the month.
The other half of the fund, the UST long short, had a better month with a full PST short position. This was offset some by a 33% TLT long which was gradually reduced during the month, turning to zero a couple of days ago. Now that the pivot point for TLT:TBF has crossed the hive holds a full position in TBF.
Here are the numbers with comparison funds/indexes:
Best...BSIIX +1.4% Rick Rieder / BlackRock unconstrainted bond fund.
Bee Hive...+.70%
Alternative Credit / Lipper Category...+.60% (unconstrained bond fund index)
JUCIX...+.60% Bill Gross's unconstrained bond fund
DFLEX...+.20% Jeff Gundlach's unconstrained bond fund
FPNIX...0%
Worst...(1.10)% AGG...US aggregrate bond index
Starting off the first trading day in February the QB position in GLD is effectively hedged to 0% leaving the hive holding a 50% cash position. The other half is split 50/50 between PST and TBF. Minor positions are held in FXY and JJG. Hopefully the first day of February will start off better than January.
I've Used Various XIV/VXX Timing Pairs...
these are my current pairs. I'll leave it up to you to determine the pivot points for each.
TBX:SJB and JNK:SJB with each confirming the other before a switch is made from XIV to/from VXX.
To complicate things i have a 'run to the yen/ yen short signal of XIV:FXY for XIV, and VXX:YCS for VXX.
Right now I have a positive read on TBX:SJB a negative one on JNK:SJB and a negative 'run to the yen' signal until it's all sorted out...waiting on JNK:SJB to come back around and the XIV;FXY to turn positive.
Now it's also possible that TBX:SJB will also roll over (unlikely soon) and in that case I'll move into VXX.
Until that occurs I'll either be in XIV or FXY (which I currently am).
Hope this helps.
Like the song says... time keeps on ticking... ticking... into the future...
Gldtimer, is zroz:dog still a good measure of entry and exit points for xiv/vxx ?
One of Two XIV Measurements Turned South.
...I have my XIV money comfortably parked in FXY. As long as one of the two remain positive I'll not switch to VXX, playing the XIV bounce sometime down the road.
Now if the other measurement goes south I'll play VXX.
Sure, but when it all implodes is anyones guess.
...could be tomorrow; could be in ten years.
ECONOMY:CHINA : 2009-2017 ; ever since SUB-PRIME crisis of US n EUROPE > CHINA has been buying all commodities ,US Treasuries all Metals , Coal , Crude to keep the world going for last 8-9 years. Now China holds $1.5 trln ( 6% of all ) US Treasury. almost @50% of all world Metals, @50% of world Coal, more than 50% of all Commodities !
this is funded by UNSUSTAINABLE Credit Boom ( 300% debt ) from China Banking system n Local Govts (NPA is about @25%)
Last 24 months $1 trln has left China, after which China has put in Capital Control to stem the outflow.
FREE FLOAT of YUAN will devastate the valuation of ASSETs of CHINA n China will be exposed as the BIGGEST HOAX of 21st century.
As correspondent Bart D. explains, opportunities to boost productivity via new infrastructure are scarce:
Why anyone believes that building 'infrastructure' somehow promotes economic growth in this day and age (as though it were 1950’s) is delusional. The reason 'infrastructure' worked back then to build economic activity was simply because it lagged behind the burgeoning private industry. These days there is no ‘hard industry’ left to 'lag behind.' Building a bigger road between the suburbs and the Mall won’t create prosperity for anyone except the owners of the road building company. Unlike a 1950’s road linking a steelworks to a port or a Beef farm to a meatworks."
In other words, when commerce already exists but is cumbersome, infrastructure that smooths the flow yields enormous productivity gains.
One example of this from history is the construction of the first stone bridge across the Seine River in Paris. This single structure changed commerce, tourism and social relations in the city, as it enabled two carts to pass side by side and enable pedestrians to cross the river safely.
For more on this impact of a single durable, commerce-enabling bridge in Paris, read this book: How Paris Became Paris: The Invention of the Modern City.
Replacing existing infrastructure is also problematic. It may well be necessary, but since it won't boost regional productivity (since it's merely replacing existing structures), it acts as a tax on the regional economy: if the replacement costs $1 billion and generates no real gains in productivity, it is in essence a tax that bleeds capital from the economy that could have been productively invested elsewhere.
Rebuilding a bridge generates higher spending on materials and wages, but if it doesn't generate additional productive capacity equal to its cost, this additional spending (in our world, always paid for with borrowed money that accrues interest for decades to come) runs out once the project is complete, but the costs of paying for the replacement continue on for decades.
You can only be the vacuum cleaner of the world for so long...
GLD is a Dog to FXY...
and probably GCC by tomorrow.
T +1
...reworked my pivot points over the weekend. What you want to do is find a pivot point that doesn't move you in too early, getting whipsawed; nor one too late, missing out on the pop.
The new pivot point is shorter than the old, giving me confidence to now be 23% in PST and 23% in TBF.
On the gold side I'm 1005 hedged with DUST which crossed my pivot point (very short time horizon on this one) in fine fashion today.
GLD still has quite a ways to come down before I'll be 100% short bonds adding 50% into TBX.
For the record I'll effectively 50% short UST bonds and 50% in cash.
T-minis 12 and Counting.
Given the current rate of decay, in 12 trading days I'll be down to a 0% allocation in the UST long bond (TLT) and then initiate a short position buying TBF.
In a perfect bond bear environment the portfolio will have PST as the QB, with both the 10 and 20+ bonds being shorted with PST and TLT.
CAT Digging Itself Into a Deep 2018 Hole
https://www.bloomberg.com/news/articles/2017-08-14/hedge-fund-betting-on-70-yuan-crash-digs-in-as-currency-rallies
...way I see it CAT is probably down 6% for January as the Yuan and China market explode upward.
2017...Annus Horribilis for CAT
https://www.crescat.net/wp-content/uploads/CGMC-Report-2017-12.pdf
...worst year performance, ever, both absolute and relative.
GLD Worst Than FXY for the Year.
FXY loves deflation GLD inflation.
http://stockcharts.com/h-sc/ui?s=gold%3Afxy
This of course is confined by the 'no show' SLV:GLD price movement.
Yesterday's key bond movement was in LQD which is a deflationary loving bond.
GLD has been moving like a currency, lost step with the Yen as the dollar has tumbled.
There is nothing special (higher inflation) that gives it a premium to other currencies.
Gold is totally at the mercy of the currency markets.
Two Gold Worries...SLV and UUP
Silver still fails to confirm an inflationary breakout, and the USD has been so oversold its not even funny.
Under normal situations, with gold as the QB, 50% of the portfolio is allocated to GLD.
Given both potential negatives, I've practiced the axioms: 'you never go broke taking a profit, and better safe than sorry' reducing the percentage down to a measly 12%.
Now if silver moves ahead of gold, and gold rises against a strengthening USD, I'll move all in.
This Is Not Goldilocks...but is Gold.
...FXY exploding in a huge risk off move.
Sold XIV and parking it in FXY. Maybe soon to also sell a small part of GLD and move it into FXY as well.
Market being buffeted with falling dollar, which is inflationary, and the rush to FXY, which is deflationary.
Mean while Queen Been sits high on her throne, comforted by the very strong move in silver.
Thanks Gld. Very helpful.
Interesting question.
Using the Rule of 72, which give the number of years to double 2/1 or half 1/2 and the historic annual rate of inflation @3.5% per year. The dollar should be worth 1.5 cents (98.5% loss of purchasing power) by roughly 2030.
This of course is under the HUGE assumption that the rate of inflation remains unchanged.
Note the dollar can never go to zero, instead zeros are added. Example: if the dollar was worth 1/100 of one cent vs 1913 purchasing power the loss in purchasing power would be 99.9%
Another way of saying this is that what cost $1.00 in 1913 would cost $1,000 !
Or losing 99.99% of purchasing power equals $10,000 !
Inflation is a product of the monetary base x turnover. If QE 2x the money base but turnover falls by 50% prices are unchanged.
Queen Gold Reasserts Herself Over PST.
...a huge surprise with a stronger yen even after the BoJ said it's not tampering (when it really is).
The strong yen signals risk off favoring both UST and GLD, both of which love lower growth.
Trouble with gold as I've mentioned before is that SLV fails to confirm her right to the throne. I'm therefore keeping the queen's wings clipped with a 50% cash position.
Gld, Monetarism, as you know Formulated by Milton Friedman, argues that excessive expansion of the money supply is inherently inflationary, and that monetary authorities should focus solely on maintaining price stability.
My question here is: after $4.5 trillion of QE can we determine the debasement value of the dollar in percentage terms? So, if the dollar has lost 97% of its value since 1913, what has been the additional erosion since the Fed began QE in 2008?
Neg Vol Pops and GLD Remains Below PST Event Horizon
...PST still has a ways to go before the hive swarms away from GLD. Unless all hell breaks loose with GLD crashing and PST soaring, GLD will keep the crown this week.
Interesting thing is that GLD and PST are running a solid one/two with the third place animal far down the track. This wasn't the case when JNK became the QB over LQD. At the time JNK became queen it was already under the event horizon vs. GLD.
The debate the market is having concerns growth, with higher inflation the given. GLD favors slower growth and PDT faster. Time will tell which has it right.
What is the Difference Between Cryptos and Collector Plates?
...there is none.
Bunch of plates come out in a 'limited edition', but the total issue is completely elastic to what people are willing to pay.
Simply put gold is scarce, collector plates and cryptos are not.
Selling Bitcoin to Buy Gold (Jewelry)
https://www.thesun.co.uk/tech/5370989/bitcoin-moon-lunar-new-year-2018-price-crash-january/
Intersting in that historically two best months to own gold are Jan/Feb.
The other best times are Aug./Sept. India's wedding season.
So is the run up in gold a monthly one off, or the beginning of a secular move?
Stay tuned.
CAT Continues to Implode...Down 20%
https://www.crescat.net/wp-content/uploads/CGMC-Report-2017-11.pdf
These guys are certainly not weak sisters locked in what appears to be a 'take-it-to-the-grave' position shorting China and the world. One huge problem for them is obviously redemptions as their investors don't have the stomach for losses the management does.
Interesting that the recent letter to investors says in a nutshell...don't sell is now, you'll be sorry later.
This is the classic use of fear (missing out on the pop), used to combat the fear of further losses to keep investors from fleeing...cute how they used Warren Buffett as an example.
Nasty being a CAT holder faced with the possibility of two negative outcomes.
ECRI Growth Rate Pop
https://www.businesscycle.com/ecri-news-events/news-details/economic-cycle-research-ecri-lakshman-achuthan-business-cycle-u-s-weekly-leading-index-rises-2/6
The growth rate pop favors spring assets (JNK/PST) and the fall asset LQD. The question is which way is inflation headed...higher favors the spring assets lower LQD.
The market is answering the questions by driving PST higher and taking down LQD. The increase in growth is bad news for GLD, but the dollars slide has investors putting a premium on rising inflation expectations overshadowing the increase in growth.
On balance however between PST and GLD the economics support PST.
So When will the Hive Move From XIV to VXX?
...No times soon as long as JNK and TBX out perform SJB. The key is BOTH need to go negative against SJB. Currently JNK is is a downtrend, but TBX is stronger than ever. Last good movement SJB had vs. both was in late 2015 early 2016.
SO WHEN WILL PST BECOME THE QB?
...no way of knowing future price action, but looking back maybe in a week or so if there is a sizable correction in GLD coupled with strength in PST.
On the other hand is gold strengthens and/or interest rates fall and PST declines it will continue being queen for a while as LQD and JNK are falling further behind the yellow metal.
Late Surge in PST and Fall in GLD...
puts GLD back below the events horizon. Accordingly, I move some money from the QB to PST.
Most interesting how GLD is following FXY in lockstep. Looking at the daily price movement, as of late, you'd think they were the same asset.
I'm Thinking Stocks...Will Neg Vol to Catch Up
as I mentioned yesterday...
https://www.zerohedge.com/news/2018-01-19/stocks-and-volatility-both-rise-whos-right
Gold Above Event Horizon.
Gold bulls have pulled the yellow metal above PST, so no selling gold to move into PST
The long bond (TLT) is a different story now well below its event horizon calling for further liquidation.
If the long bond trend continues in three weeks I'll be completely out of the stuff and then move into TBF.
JJG Crossed From Sell to Buy.
...I use a very esoteric measurement to determine the pivot point.
Huge Trading Day for TBF and PST
Both crossed over the 'event horizon' line with TBF now the favorite to overtake TLT as a long term hold, the same for PST over GLD.
Still one day is only one day, but the ball is in the court of TLT/GLD bulls now down rather than up.
Vol is More Bad News for GLD.
By one of my two measures neg. vol 'should have' reached an all time low today, but if you look at XIV
http://stockcharts.com/h-sc/ui?s=XIV
It's slightly down for the year as stocks have soared.
So why is my measure bad news for gold?
Simply because XIV has another leg up. This will hit interest rates hard and gold along with it.
Gold would love to see the general market sell off...interest rates to come down...and gold to go up. As I said my vol numbers are not suggesting this will happen at all with the reverse being more likely.
Queen Bee GLD Holdings.
GLD is the long run pick among: GLD, TIP, TBX, JNK, LQD, IEF and SJB.
Furthermore, GLD is 18/18 against the six over three different short-run comparisons.
A perfect Summer day with a temp of zero.
The 18/18 call for a 46% share of the portfolio + a 4% GLD short-term trading account for a whopping 50% of the portfolio.
Other holdings are PST @23% and TLT 6%, XIV 1% and DUST 1%, with the balance in cash.
However, I'm picking up a possible queen bee shift from GLD to PST so GLD has been cut to approximately 40% and PST increased to 32%. If the trend continues I'll be cutting back other GLD and TLT on a daily basis adding the proceeds from TLT to cash, and the proceeds from GLD rolled into PST.
Is Another Short Reign in the Cards.
...yep, unfortunately I believe it is. Nothing could make me happier than if GLD ruled for the entire year. After all I'm called gldtimer. But being a timer there's a time to buy and a time to sell. The economics don't appear at this time to support the yellow metal...lack of SLV support on the inflation side, and rapid global growth This is how I see the year being played out.
The industrial production/cap utilization was very impressive. So impressive that it now puts the Fed one full percentage points (four 25% rate increases) in the accommodative column. That means if the capacity utilization remains unchanged for the year the Fed will most likely raise rates four times!
Once the market realizes this the dollar will become the black hole as it strengthens sucking all global bonds and stocks into it. My asset of choice will of course be PST in the beginning stages and SJB when things really start falling apart. This has us moving back into a super hot +200 degree spring and then falling into a -200 degree winter. Should be a fun year.
Stay tuned.
Thanks Gld. I just downloaded his paper: Real Exchange Rate and Economic Growth that he gave at Berkeley a few years back. Looking to delve a little deeper.
Gold Coronation Later today (if gold strengthens)
...but certainly tomorrow.
Bees have been hyper active first swamping from LQD => JNK after the first six trading days of the year. Now they'll be taking up residence in GLD after only five trading days !!!
Starting the year I figured the bees might swamp four or five time during 2018, and half way through the first month they've moved twice!
Mars vs. Venus
Barry Eichlegreen came up with what moves a currency. One side is the RRR or relative rate of real return taking each currencies countries short interest rate and then subtracting the domestic rate of inflation, the last step is comparing the numbers...which would put the uS way out in front of the Yen / Euro.
The other side deals with military protection (Japan etc.) openness, and global leadership. This is what has been driving down the dollar or another way of saying it... DonaldTrump ! An America first policies will put the dollar last. Gold is appearing to pick up the pieces along with the Euro.
Now Trump LOVES a lower dollar so maybe acting bat-shit crazy is all part of his grand plan, or maybe he's just bat-shit crazy--LOL.
The dollar has been taking a pounding. I was living in Rome from last December to April. In January of last year, the dollar to Euro was $1-€1.04. Fast forward one year later and the Euro is now €1.22. The Bloomberg Dollar Index is down another 2% in the last few days.
What’s the theme here?
https://www.zerohedge.com/news/2018-01-15/dollar-collapsing
Changing the Theme of the Portfolio.
Having hung up my sextant, I'm no longer the captain of the Sea Wolf.
Opting for dry land and the sweet smell of clover fields I've become an apiculturist.
https://d1yn1kh78jj1rr.cloudfront.net/image/preview/HqviomN9gizquzdm9/graphicstock-scene-with-bees-flying-around-beehive-illustration_HGzX3gCR2l_SB_PM.jpg
Job is now to harvest the honey without getting stung.
Coronation for the Gold Queen Bee
...early this next week.
Two things drive gold, commodity strength and dollar weakness. Between the two dollar weakness is obviously what driving gold up. Commodities also support (ex. grains), but to a lesser extent.
I'd have much more conviction in gold if it were the other way around. Still who am I to argue with the tape... which I put on a very short leash after she puts on the crown.
JJG Buy Signal On Hold.
Crop report today was super bearish as is evident by the plunge to new lows.
Grains for the longest time have been a mill stone around the commodity indexes and will continue to be unless grain can get off the mat. Rather than buy on rumor, sell on news; grains suffer from sell on rumor, and sell more on news.
JJG Very Close to Giving a Buy Signal
http://stockcharts.com/c-sc/sc?s=JJG&p=D&yr=3&mn=1&dy=0&i=t58156156231&r=1515703234831
Needless to say I use a very special buy/sell pivot point in analyzing JJG.
THE Problem with GLD is SLV.
For gold to be an inflationary loving asset, there must be inflation. As I've mentioned before I look to a SLV:GLD trend to show inflationary pressure. When SLV:GLD points down it favors TLT more than GLD.
So what to do if GLD becomes the queen bee, but silver says it shouldn't be.
I'll put GLD on a very short leash and then run to cash and an alternative investment.
In that case gold would still be the queen bee, but with no bees in her hive.
What a GLD Queen Bee Would Mean.
GLD (summer) and LQD (fall) are direct opposites of each other. So for GLD to be the Queen LQD would have to first give up the throne to either a spring or winter asset, and then move to winter
Since JNK is now the new Queen it's a set up of sorts for GLD. To put it in growth and inflation terms, the year started off with LQD (goldilocks) forecasting higher growth with lower inflation/deflation. JNK is now saying higher growth with higher inflation. If GLD becomes Queen then low growth/recession with higher inflation (summer aka stagflation) will be the order of the day.
Quite a whirlwind in a couple of weeks time. Things they are a changing.
Could GLD Become the Next Queen Bee?
Yep, there's a chance the temp could fall back to zero if GLD outperforms TBX and LQD over the next week or so.
Last LQD Bee to Leave Tomorrow or Friday for JNK.
That will raise the temp to an even +100.
Even though JNK is a hot spring asset, it's only 1/2 as hot as TBX. In order to reach the temp max of +200, TBX has to be 18/18.
From JNK to TBX Will Take Awhile.
Now that the bees have settled in to JNK where will they be off to next?
There's a much greater chance they'll fly back to LQD than move to TBX based on how far the pivots points are from each other.
However, on a short-term basis TBX is favored over both JNK and LQD. The question is does the short term trend stay in effect becoming a long term trend... or will it all reverse itself?
Stay tuned.
Temp @ Close 1/9/18 +94 Degrees.
Finally settlement at end of the day.
Of 46.5%
JNK 11/18
TBX 3/18
GLD 3/18
LQD 1/18
Of 46.5%
50% PST
16.5% TLT
33.5% MM
Of 7%
GCC 3%
GLD 3%
XIV 1%
Total 100%
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