At first sight, the following chart is pretty jaw dropping: WTI Crude Oil (spot) vs. XLE Thus far in the month of December WTI crude oil is down more than 22% while the XLE (SPDR Energy ETF) is up 1%! This tremendous outperformance by the large integrated energy companies that comprise the XLE (Chevron, Exxon… Continue Reading
It’s a bit of a tradition among market commentators to come up with a list of ‘surprises’ for the new year. Some of us like to combine both macro/geopolitical events with market events. I have decided to limit my 6 surprises to market events as that is my area of expertise and the primary focus of… Continue Reading
Gold posted an impressive one day gain on Friday and is once again closely gravitating to the $1200/oz level: The $1200 level holds significance for a number of reasons as we enter the final 3 trading sessions of 2014: The 2013 closing price for gold was $1204.80 – whenever a market is ending near the… Continue Reading
From the McClellan Report: “….the 2008-09 drop in stock prices saw an echo in the 2013 drop in gold prices, which has now had its further echo in 2014 for crude oil prices. There is a similarity in the way that investors panic out of their holdings in each, and that common physics/psychology shows up… Continue Reading
There is one stock in particular that caught my attention last week after displaying impressive strength following a ‘weak’ earnings report. Then yesterday it rallied aggressively and posted a highly significant chart pattern breakout. The stock is Canada’s favorite fallen angel, Blackberry (BBRY): The monthly chart shows how far BBRY shares fell after the company began to… Continue Reading
Given a 50% drop in crude oil prices during the last 6 months you might expect a significant washout in net speculative length (# of long contracts minus number of short contracts of both large & small speculators) in crude oil futures. You would be wrong… The shocking fact is that not only has net speculative… Continue Reading
Gold enters the final ten days of 2014 in a very interesting, and far from clear, position. Some observations in no particular order: Gold in US dollar terms is down slightly less than 1% year to date while it has actually had a very good year when priced in other currencies There is a great deal… Continue Reading
An excerpt from the latest Howard Marks gem (The Lessons of Oil): “Further, it’s hard for most people to understand the self-correcting aspects of economic events. A decline in the price of gasoline induces people to drive more, increasing the demand for oil. A decline in the price of oil negatively impacts the economics of… Continue Reading
Looking over several investor presentations from some of the senior gold producers I came across two interesting slides which both relate to the idea of peak global gold production. The first slide, from Newmont Mining, shows global gold mine supply at a key turning point with supply falling in 2015: This slide shows a roughly… Continue Reading
Over the weekend we pointed out this would be a crucial week for markets. This week’s volatility hasn’t really cleared anything up although there are some notable observations to be made after today’s trading session: Equities found support at an area of previous resistance and a key Fibonacci level Today’s large rally in interest rates is… Continue Reading
The big news across financial markets this morning is the huge sell-off in the Russian ruble overnight. The Ruble was trading below 60 vs. the US dollar early Monday morning and surged to over 80 rubles to the dollar overnight – there are even reports of currency brokers asking 100 rubles for a greenback on the streets… Continue Reading
The 5-year break-even inflation rate fell below 1.2% for the first time since the summer of 2010: This level of inflation expectations is certainly testing the lower bound of the FED’s comfort zone. In fact the last time that the 5-year break-even fell below 1.2% the FED began floating the idea of QE2 and former… Continue Reading
We just completed the worst week for the S&P 500 since May 2012 and there are more warning signs out there across markets than there are Christmas lights on my neighbor’s house. However, every time things have begun to look bleak this equity bull has picked up its horns and trampled over anyone who has dared to… Continue Reading
The massive decline in the price of crude oil turns out to be a significant net positive for multinational miners. Not only are the lower oil costs are a huge positive on the costs side, but the resulting currency moves (big drops in AUD/USD and CAD/USD) also turn out to benefit miners whose revenue comes… Continue Reading
It seems like everyone’s got an opinion on oil these days. Some people think oil is heading to $40 while others are of the opinion that the sell-off has been too harsh and prices should rebound rapidly. Sorry to disappoint but I don’t fall into either camp. Here are my thoughts on crude oil in… Continue Reading
