The US Cash Deficit for November came in at $161B compared to $157B last year pushing the 2017 cash deficit through 11 months to $700B, $17B over last year’s $683B. No real surprises here… revenues and outlays are up about 3%, and with the bigger base of outlays, we have a small increase in the deficit through 11 months. December, as a quarter end should bring in quite a bit of extra revenue and should post just a small deficit assuming all of the timing issues flow through the same… last year was just $14B… my current model has this December at a $9B cash deficit. So… with 11 months in the books, absent a surprise, it looks like th...
I’m going to use the GDX and GDXJ as a proxy for the rest of the PM stock indexes which are very similar to these two. Last Wednesday we looked at the short term daily charts to the longer term weekly charts to see how things were setting in the PM complex. We first looked at the short-term daily chart which was showing the H&S top and the smaller blue consolidation pattern that was building out below the neckline. The smaller blue patterns were kind of morphing but were giving us a hint of what they would eventually look like when they competed. Below is the short term daily chart for the GDX which shows the H&S top with the comple...
You do have to wonder to whom the increasingly shrill bond market declarations are being directed. It’s very likely that Bloomberg’s now daily haranguing “the yield curve can’t possibly be right” tirades aren’t meant for UST investors. Rather, it is perfectly evident that the treasury market is going to do what it does regardless and that the media, in general, is instead simply trying to muddy its very clear negative signal for whoever might not be familiar enough. For one thing, the bond market just isn’t listening to the parade of excuses. By bond market I mean, of course, the UST futures market. Over the last few weeks o...
If it ain’t broke, don’t fix it. That was the approach I took this past month. Apart from some modest rebalancing, I made no major portfolio changes. And barring any expected new opportunities, I’m not expecting to make many major changes between now and year-end. Frankly, we are already well allocated to the sectors that I consider the most attractive on a valuation basis. And if investors continue to rotate out of growth names and into value names – a trend that has been in effect in the first few trading days of December – we should enjoy a very strong finish to the year. After all fees and expenses, the Dividend Growth portfol...
EUR/USD 4 hour The EUR/USD is building a bearish correction as expected. The choppy and corrective price action is making a wave 1-2 (pink) pattern more likely. The bearish channel could take price down lower to the Fibonacci levels of wave 2. A break below the bottom (purple box) invalidates this wave pattern. 1 hour The EUR/USD broke below the support trend line (dotted green) and fell below 1.18 but is a sturdy pullback. This could be part of a wave B (green) within a larger bearish ABC zigzag. USD/JPY 4 hour The USD/JPY is testing the bottom / support (green) of the uptrend channel. An impulsive bullish bounce could indicate that price is...
Shakespeare, in Richard III, uses the phrase “Winter of our Discontent” as a way for King Richard to express his feelings about living in a world that hates him. Interestingly, while Richard expresses his own discontent, he is also celebrating the fortunes his family has gained. The U.S.’s political scenario certainly mimics the time of Richard III in several uncanny ways. The Year of the Fire Rooster is not quite over (February 16th is the start of the new Chinese Year). However, winter’s water has begun to supplant summer’s fire. Our Rooster will be replaced by the Earth Dog in 2018. I will have commentary on the essence of what ...
Let’s investigate what happened after the last 3 major tax reforms. Another “reform” is on deck. I picked up this idea from Holger Zschaepitz, @Schuldensuehner, who made the following Tweet, posting a chart from Bloomberg. Proposed US tax overhaul, 3rd major change to US tax code over past 40yrs, will drive the Dollar, but not the way you would expect. Index plummeted 16% in 1986 after Reagan’s reform. After George W. Bush cut taxes on dividends in 2003, the currency slid 15%. (via BBG) pic.twitter.com/hKcFrMCYaH — Holger Zschaepitz (@Schuldensuehner) December 5, 2017 In the following chart, I add a key piece of legi...
During yesterday’s trading, the majors showed a variety of trends. The dollar index (#DX) kept the current levels and closed the trading session with a slight increase (+0.14%). Support is still provided by the possible implementation of the tax reform in the United States. At the same time, the growth of the US currency was moderate due to weak economic reports. In November, the index of business activity in the non-manufacturing sector of the US from ISM fell by 4.5% to 57.4. Market expectations were at the level of 59.0. The Australian Bureau of Statistics reported that in the third quarter the country’s GDP growth slowed to 0....
After opening the day flat, share markets in India witnessed choppy trades and are presently trading below the dotted line. All sectoral indices are trading in red, with stocks in the metal sector and stocks in the PSU sector leading the losses. The BSE Sensex is down up by 145 points (down 0.4%) and the NSE Nifty is trading down by 53 points (down 0.5%). Meanwhile, the BSE Mid Cap index is trading down by 0.6%, while the BSE Small Cap index is trading down by 0.2%. The rupee is trading at 64.46 to the US$. In news from the GST space. In an effort to help revive exports, the government announced a series of steps to revive expor...
In a blog post earlier this week I briefly argued that “government-controlled cryptocurrency” was a contradiction in terms. It depends on what is meant by “cryptocurrency”, but now that I’ve done some more research on the subject I understand how a central bank could make use of blockchain technology and why the government would want to implement a type of cryptocurrency. My understanding of the subject was improved by reading the white paper on the “Fedcoin” published a few months ago by Yale University. I also read about the difference between “permissioned” and “permissionless” blockchains. As a result, I now und...