# (Bull) Market June 2021



## ducati916 (29 May 2021)

So why is June looking good?

Well first off our seasonality data which has been remarkably accurate all year so far.







But more importantly:











Look at the bottom in March 2020. 30 March. 1 April we made the move higher.

Why? The Fed. rode to the rescue.






Look at the 2020 data. Now I couldn't circle or mark this (beyond my technical skills) but the peak of the Fed. intervention via RRPs was 30 March/1 April. Now look at the latest data. The max (so far)...28 May.

The market was seriously wobbling in mid to late April. It could have fallen apart in May. But it didn't. Buying support came in. The Fed. The stock market is a massive carry trade that cannot be allowed to unwind. Not anytime soon anyway.

Look at 2017. The last big RRP intervention.






2016 was wobbly. Boom in comes the Fed. and the market just takes off to the upside.

2019 was the Taper Tantrum. Far from coming into the market, the Fed. was trying to takeaway support. Stocks started to crash. The Fed. caved. Stocks resumed their upward trajectory until the extrinsic shock.

The size of the current intervention tells us something of the risks in the market currently, hidden from view below the surface. While I have no evidence, I would suggest that the blow-up of debt lies somewhere in there. Somewhere in probably the financial system (banks, hedge funds) there is or has been an issue.


jog on
duc


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## ducati916 (30 May 2021)

Inflation:

First off, inflation is an expansion of money and credit. Inflation is not a one-off change in the price level caused by a short-term distortion to protect profit margins but is a persistent acceleration in prices. It is a condition that lasts for years; it is not something that is temporary. There has never been a natural disaster or a policy response to a natural disaster that ushered in a permanent change in the inflation trend, all they do is create short-term disturbances, distortions, and deviations. The question therefore is/was COVID a natural disaster?

Inflation searches are on the up:







What the pandemic has not changed are the secular disinflation fundamentals that have been around for decades. These are still in full force. The ageing of the population for one; the fastest growing segment of the population that is also grabbing the highest share is the 65-years-and-up cohort and this trend will continue for the next decade. While there are some folks who claim this is inflationary from the supply side, they ignore the much more powerful effect this has on aggregate demand because no other age category has seen such a sudden decline in annual expenditures than this segment of the population, whose share will continue to rise. 










The accelerating pace of technological change has not changed either and is actually picking up momentum during this pandemic as businesses figured out they can do more with less labor input. Here we had the worst economy since 1946 last year and yet business volume spending on automation, IT equipment and software, expanded more than 6%. The share of business spending on productivity enhancements in the past 15 months has risen to an all-time high. And so, look at what is happening fundamentally in the real economy and we saw this in spades in the first quarter, where productivity accelerated at a 4% year-over-year rate, or double the historical trend. 












The accelerating pace of technological change has not changed either and is actually picking up momentum during this pandemic as businesses figured out they can do more with less labor input. Here we had the worst economy since 1946 last year and yet business volume spending on automation, IT equipment and software, expanded more than 6%. The share of business spending on productivity enhancements in the past 15 months has risen to an all-time high. And so, look at what is happening fundamentally in the real economy and we saw this in spades in the first quarter, where productivity accelerated at a 4% year-over-year rate, or double the historical trend. The earnings of the Big 4 highlights this surge in productivity and earnings due to technology (love it or hate it).

Some say that debt is affordable because interest rates are so low, but the causation runs the other way. Because the debt situation is so onerous, interest rates must stay extremely low to prevent the economic and financial system from collapsing, as we saw, for example, when bond yields got as high as 5%-plus in the summer of 2007 and to 3%-plus in late 2018. There is a reason why these levels of market interest rates were unsustainable, even in the context of what appeared to be an economy operating at or near full employment. This could be an argument for higher inflation IF the Fed. has to step in to suppress yields. If that were to happen Gold/Silver would be off to the races. It hasn't happened yet. It has happened in the past. Without a doubt, that debt must come down at some point.











Higher debt growth past a certain limit is deflationary and exerts downward pressure on interest rates. In the past three decades, we have seen a 90% inverse correlation between the all-economy debt-to-GDP ratio and the 10-year Treasury note yield. There is a 75% inverse correlation between the debt ratio and core inflation — the debt morass and adding to it ends up being a future drag on real GDP growth and hence the downward pull on inflation and interest rates. 

Now with the re-opening and fiscal juice boosting demand ahead of supply, we have a temporary inflationary situation on our hands that will get resolved in the second half of the year. It may take some time, as Jay Powell told us at the last FOMC meeting. Or it may spiral out of control. Time will tell.

It is 100% true that this time around, the pandemic has triggered supply chain disruptions and the lingering effects of COVID-19 have restricted the supply of some key materials and this is also the case on the labor front — though there is more than ample supply of idle workers waiting in the wings whether in manufacturing, construction, resources or consumer cyclical services. 

And then there is this other little matter, which has accentuated the shortages of materials, which is the unprecedented consumer spending on durable goods during this crisis — soaring 44% in the year to March and well over 20% above the pre-COVID-19 peak. And keep in mind that this segment of personal consumption expenditure is more than double the areas of services that are primed for a post-COVID-19 recovery. That so-called “pent-down” demand, since nobody is building another deck in the backyard or fitting a second table in the dining room, may well provide a huge offset to the service sector rebound. What we then end up with is the government deficit bumping against massive surplus savings in the household sector, which then splashes a lot of cold water on the hawkish inflation and bearish interest views that have dominated the market narrative for much of this year. 











So while the deficit boom has resulted in the federal government having “dis-saved” by $3 trillion over the past year, household savings have ballooned $4 trillion and the net savings in the corporate sector have expanded $100 billion (internally generated cash flows minus capital spending). In other words, we are still stuck in a savings glut. 

What we have in fiscal stimulus resembles far more the debt/GDP ratios of the war years than of a recessionary bust. These were government (Federal) run deficits. The 1970's was a Commercial banking expansion of the money supply as can be seen from the chart below. This was a period where home ownership and huge mortgages (to offset the inflation of the time from the war time government deficits) expanded the money supply even further, but without concomitant increases in productivity. In fact productivity fell, but wages through COLA agreements were rising. So you had a situation of low(ish) interest rates and a tremendous double whammy of a credit expansion. From the loan to deposit ratio (above) we can see that currently this is not the case. The economy is in a saving mode.

Now that can change. If enough people start to 'believe' that inflation is a thing and permanent, that can lead to taking loans that will be inflated away over time. It will have to be the banking system that facilitates this, although, with digital currencies just around the corner, it could become Central Banks that undertake this.







This episode was essentially a 'war' on the virus.

To get a true inflationary shock, a number of things will need to continue their trends; (a) DXY needs to be heading towards the 70's, (b) commodity prices broadly need to keep rising and at least double from here, (c) 10yr yields will need to be artificially kept low should they start to rise and finally (d) all other economies need to stop expanding their credit and debt levels while the US continues, which will accelerate and drive the fall of DXY.

The last component would be the breakdown (total) and reversal of globalisation that has occurred over the last 20yrs +. While relations with China are tepid to cold, this hasn't occurred yet either, which is not to say that they can't. A Cold War definitely seems to be brewing in the background.

We will have better optics as to what is really happening towards the end of this year and the start of 2022. The data will have had time to settle and indicate where the economy is actually moving to.

Even if we are in a 1970's style inflation, it will take higher rates than we have currently to crash the market. There will be plenty of time and warning to exit the market if rates continue to rise without any sign of Fed. intervention.


jog on
duc


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## qldfrog (30 May 2021)

Such a detailled and extensive analysis.thanks.
May i come back to 2 of your points:
One a potential black swan which could occur any time even in June
Anyone with half a brain knows that Covid leaked from the wuhan lab
While it has been hidden, then moved to the conspiracy area ,or Trump lunacy then FB banned etc, now it seems even the US intelligence does not want to be muzzled.
I actually understand the williness of the western governments to hide this, i like truth,above all, but that truth will cause heavy casualties
Should a credible enough source CIA, f.e. show or accept proofs of that origin, this could very quickly heats up and we should see talk of reparations which i doubt China will accept,
 this could cause pretty choppy time for the market, going to full economic/software war.
I know a black swan can not come from known issues but i keep this on the back of my mind.
As dangerous as junk bonds imho.

A second point you touch about is the increasing 65y+ population, there is indeed a consumption effect as you pointed, but maybe even more important for us, this cohort will very quickly move from net buyers of shares and investment tools to net sellers.
We will not see that next month but sooner or later this could reverse the perma bull into a perma bear, don't you think?


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## ducati916 (30 May 2021)

qldfrog said:


> Such a detailled and extensive analysis.thanks.
> May i come back to 2 of your points:
> One a potential black swan which could occur any time even in June
> Anyone with half a brain knows that Covid leaked from the wuhan lab
> ...





Re. the weaponisation of viral agents: unfortunately everyone is playing this game. China either by accident or design let the genie out of the bottle. I'm not sure how this plays out.

Re. selling down: I'm of that age cohort (almost). Many are still working and plan to continue to work either through choice or necessity. It might become a thing. If it does, I think it's still some time off.  I don't think the transition to the younger investors will not create a major issue though.

jog on
duc


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## Smurf1976 (31 May 2021)

qldfrog said:


> One a potential black swan which could occur any time even in June
> Anyone with half a brain knows that Covid leaked from the wuhan lab
> While it has been hidden, then moved to the conspiracy area ,or Trump lunacy then FB banned etc, now it seems even the US intelligence does not want to be muzzled.



I'll keep out of the "where did COVID originate from" debate and simply note that nationalist sentiment was rising even before the pandemic.

Any blow up relating to COVID is thus akin to pouring petrol on the fire but the fire itself had already been lit some years ago in my view.


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## qldfrog (31 May 2021)

Smurf1976 said:


> I'll keep out of the "where did COVID originate from" debate and simply note that nationalist sentiment was rising even before the pandemic.
> 
> Any blow up relating to COVID is thus akin to pouring petrol on the fire but the fire itself had already been lit some years ago in my view.



Sure, but here we are talking about billion dollars liabilities and million of deaths.
Covid or anything else of that magnitude would be a major detonator.Whether purposely or not, (see my opinion month ago and clearly outside this thread), the governments via measures and scares have really primed the opinion, and having a clear culprit makes it sure that the situation becomes explosive.
Just another factor which is difficult for gov to control, and us to assess but can lead to extreme world/market  conditions.


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## ducati916 (31 May 2021)

Some interesting developments in both the Gold & Crypto markets.

1. The Basel regulations that pertain to the derivative gold market (paper gold) take effect in Europe at the end of this quarter. The London gold market will likely with a high probability follow Europe in Jan. 2022. Essentially the UNALLOCATED gold futures market will cease to exist as the Banks withdraw and close down their trading desks.

2. A large % of the physical gold is now held in Asia. China has been buying physical gold for quite some time. They will undoubtably support the BIS position.

3. Which leaves the US.

4. Goldman Sachs issued a position paper:









Which rather infers that GS will leave the gold market (and associated commodity markets as per Basel regulations) and move into the crypto markets.

A good thing?

If you have ever traded gold you'll quickly realise, no, this is a terrible thing. The gold market has been manipulated for decades, suppressing the POG etc. If GS and the other Bullion Banks are out of gold and into Crypto, great for gold, sucks for crypto.

Goldman in 2020 released a very negative report on Crypto. In 2021 their position has moved 180 degrees. Now crypto, BTC, is an ASSET class.































All interesting and useful (positive) information. Almost makes you feel safe.

GS is the bloodsucking octopus. Their trading desk trades against (sometimes with) customer order flow. If GS are promoting BTC and simultaneously setting up a trading desk, watch out!

Chart on all coins:






WTF is 'Polygon' (another coin obviously)?


Interesting times ahead.


jog on
duc


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## ducati916 (31 May 2021)

When you look at the longer term charts, support looks a long way down:












jog on
duc


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## Skate (31 May 2021)

@ducati916 is it possible to reload this screen capture again as I'm unable to read the notations. (Maybe a thumbnail as well)






Skate.


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## ducati916 (31 May 2021)

So the point of all the BTC analysis etc. is to actually trade a position. However the only way that I am going to trade BTC is on my own terms. Getting sucked into the crazy world of BTC is just not going to happen. When you trade vol. you need to be able to harness and control that vol. otherwise it eats your position alive.

Below is BTC to RIOT. RIOT obviously to date trades on moves in BTC. RIOT is my proxy. I will use Options.






As can be seen, this mirrors to an extent BTC's vol.






Which is exactly what I want, but it allows me to control it on my own terms and trade size (not quite M. Burry size) which makes the effort worthwhile.

Unless BTC rallies, RIOT will likely gap down come US markets re-opening on Tuesday:







jog on
duc


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## ducati916 (31 May 2021)

The arguments are fundamentally flawed.



Watch for yourself. 


jog on
duc


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## Skate (31 May 2021)

ducati916 said:


> The arguments are fundamentally flawed.
> 
> 
> 
> ...





*My takeaway from the YouTube video*
Michael Saylor says "I think" at the beginning of his answers. I'm unsure if he "thinks a lot" or he just doesn't know.



ducati916 said:


> So the point of all the BTC analysis etc. is to actually trade a position. However the only way that I am going to trade BTC is on my own terms.




*When I read those two paragraphs above*
I nearly fell off my chair.



ducati916 said:


> Getting sucked into the crazy world of BTC *is just not going to happen.*









*I could be wrong*
From memory, I'm sure @Value Collector called Bitcoin "fairy dust" & I'm sure you wouldn't trade "fairy dust" or would you?

Skate.


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## Value Collector (31 May 2021)

Skate said:


> *My takeaway from the YouTube video*
> Michael Saylor says "I think" at the beginning of his answers. I'm unsure if he "thinks a lot" or he just doesn't know.




The people that think the most, are the normally the ones that are least likely to say "I know", look at scientists for example, the concepts that are supported by the most evidence, are called "Theories", its not that science is unsure or doesn't know anything, its just in science over confidence is looked at as a weakness not a strength.

I often purposely say "I think" rather than "I know", especially when in reality we are dealing with things that might be unknowable.

A member of this forum once said to me that the fact I said "I think" so much rather than "I know" showed that I my positions were weak, I actually believe its the opposite, over confidence is a weakness, where as cautiously accepting that you don't know everything, and that you are willing to be proven wrong is in fact a strength.


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## ducati916 (1 June 2021)

So in the above video Mr Saylor makes the following claims for BTC:

(i) Will become the dominant settlement protocol worldwide, essentially based on 'trust' which is a function of the technology;
(ii) Suggests that Bond Funds, Insurance Companies etc. replace Bonds with BTC; 
(iii) Return to the Gold Standard using BTC.

Essentially these 3 drivers will drive 100's of thousands of Corporations and 5Billion people to adopt BTC, keeping its price rising for 100's of years.

(i) Sure it could become a settlement system. To do so however because it is limited to 350,000 transactions/day, the value of each coin would need to become very high, possibly $1B/coin or more. Mr Saylor has BTC compounded gain at 160%/annum. To get to that $1B/coin it will have to maintain that growth rate for the next 11yrs from a current price of $30K/coin. Not impossible. Probable?

(ii) If Bond Funds et al were to adopt BTC and it did continue its 160% compounded annual growth rate, then certain issues could well disappear. The problem is matching your assets (BTC) to your liabilities as they fall due. To bad if at an inopportune moment, it gets chopped in half. In other words, volatility is an issue, unless it never falls in price.

(iii) The last claim is a return to the Gold Standard, using BTC. Governments will NEVER willingly return to a gold standard as that removes the most important pillar of their power. If the US blows up DXY then all currencies linked to DXY also blow up. At this point, the only way government could foist another government currency on us (hopefully we are smart enough) is to back that currency with gold or BTC. As governments don't hold any BTC and with no asset to purchase it with, it would be gold, which they do hold.


By far the most egregious error that Mr Saylor is prone to is that he doesn't seem to understand that 'money' or a currency is not wealth. Wealth is the productive capability of an individual, community, country. Money is simply a tool to facilitate transactions in exchange where no common agreement exists of that production. Money is not a store of value, its value fluctuates, but not to the extent that Mr Saylor anticipates (ie 160%/annum). You can't have it both ways: money fluctuates in a fairly predictable range, unless inflationary forces take hold, which is the problem with fiat, not really with gold as the cost to mine more inhibits its production to a level that has essentially no effect.

The next major error is that IF BTC goes to derivatives (paper BTC) your speculative growth rate of 160%/annum goes down the pan. This is exactly the issue with gold/silver. Paper gold can be manipulated. Its price can be suppressed and has been for decades. The irony is or is it more than coincidence, paper gold is set to disappear and paper BTC is to be introduced. There will be no need to make BTC 'illegal' its price will be squashed.

As for this shite:






Honestly, only half-wits need apply.

These guys:






Are quintessential TRADERS. Druckenmiller came up under Soros. He will sell in a heartbeat. Same with Tudor Jones. I doubt Dalio will hold to zero. All these chaps will play while it shows them a profit.

Mr flippe-floppe-flye:






Remember the story of the shoe-shine boy to Rockerfeller:






jog on
duc


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## ducati916 (2 June 2021)

So the markets re-open meh.











Pretty self-explanatory.

Some long term market history:






Real returns.






Rents:








Mr flippe-floppe-flye:






Some more on cryptos:









That is the game. Old as the hills. A new generation of wannabes are set to be fleeced.

Today's market is I think reflecting these 2 charts:

The first is the PUT/CALL ratio. Calls got ahead of themselves and I guess the MM are having a bit of a shakeout.






The VIX is an interesting one:






As part of my analysis (not shown) I include a time element. Due to the change of the month, this time element has changed. The VIX today however is correlating to May. This, if I am correct and not smoking something funny, should correct tomorrow with a fall in the VIX. Essentially today we are bouncing off of a May support level. We'll see.

Just on the Reverse Repo. data, this looks very similar to Operation Twist that we have seen before. This is where short end Treasuries are being fed into (see that pun) the market to the banks (spike) and the cash is used to buy long end curve Treasuries, thereby keeping yield down. The short end Treasuries are then repurchased at maturity. New short end curve Treasuries are then issued or not as the case may be.

Now if that is the case and logically it will be, how can a sovereign debt load of x130 GDP be allowed to rise? It will bankrupt the US. The game is kick-the-can and keep kicking it to allow the US time to inflate out of this mess.

So, Tech. Tech. hates high yields because Tech. is valued on growth, not current earnings. Growth can't live in a high yield world. But since we are going to be in negative real yields for a looooooong time, Tech. should recover and start to perform or possibly outperform once again.

Yields are obviously critical. On a straight analysis I have yields at 1.61%. They were at 1.58%. I would expect a 3 basis point move higher. Today we are seeing that move higher. If however the Fed. is getting involved in a de facto YCC, then I would expect to see those come off.

The difficulty is that there is so much noise in the market currently. The 'trend' is chop. Do we worry about basis point moves?






June is starting like the most of May was: choppy, messy and meh. I think we rally, if not from here, certainly into the end of the week and the S&P500 along with NASDAQ  move higher.




jog on
duc


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## ducati916 (2 June 2021)

Skate said:


> @ducati916 is it possible to reload this screen capture again as I'm unable to read the notations. (Maybe a thumbnail as well)
> 
> View attachment 125240
> 
> ...



 Mr @Skate 

Attached is the Goldman Report.

jog on
duc


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## ducati916 (2 June 2021)

Oil news:


-    The average retail price for gasoline in the U.S. jumped above $3 per gallon last week, the highest price since 2014.

-    Memorial Day travel is expected to be 50% higher than the same weekend in 2020.

-    California saw the highest prices at over $4 per gallon, while Texas saw the lowest at $2.72.  

*Market Movers*

-    *Pembina Pipeline (TSE: PPL) *will acquire* Inter Pipeline (TSE: IPL) *in an $8.3 billion all-stock deal, creating one of the largest pipeline companies in Canada. 

-    *Kinder Morgan (NYSE:KMI) *agrees to acquire the Stagecoach Gas Services natural gas pipeline and storage joint venture from *Consolidated Edison (NYSE:ED)* and *Crestwood Equity Partners (NYSE:CEQP)* for $1.225B.

-    *BP (NYSE: BP)* and *Eni (NYSE:E)* are in early-stage talks for the Italian energy firm to take over BP's assets in Algeria, Reuters reports.

*Tuesday, June 1, 2021 *

Oil prices rose by 1 percent early on Monday, driven by expectations that recovering demand with summer travel and reopening economies will easily accommodate the gradual increase in OPEC+ production.

But oil prices rose even more sharply on Tuesday, with Brent topping $71 per barrel, the highest level in more than two and a half years. “The demand growth is pretty OK, the OPEC+ discipline is very good, inventories are going down,” Fereidun Fesharaki, chairman of consultants FGE, said in a Bloomberg television interview. “If there is no Iranian shadow on the market, prices could hit $75-$80 by the middle of the third quarter.”

_*OPEC+ reaffirms trajectory. *_OPEC+ officials met for a virtual meeting on Tuesday and reaffirmed its current plans to gradually increase production in July. The Joint Technical Committee (JTC) of the OPEC+ group maintained at a meeting on Monday its outlook for global oil demand growth at around 6 million barrels per day (bpd) this year.

_*Bullish sentiment gathers again.*_ Even with Brent at the $70 marker, some analysts see more room to run. “We see demand outstripping supply in the order of 650,000 barrels per day and 950,000 bpd in Q3 and Q4 respectively,” ANZ analysts said.

_*Supply shortage? *_“The market is now facing the exact opposite dilemma of April 2020,” said Louise Dickson, an analyst at consultancy Rystad Energy. “Producers now have just as delicate of a task to bring back enough supply to match the swiftly rising oil demand. If markets over-tighten, a flare-up in prices could jeopardize the global economic recovery.”

_*Iran aims to ramp up supply. *_The U.S. and Iran are nearing a deal to restore the terms of the 2015 nuclear agreement, and Tehran is already eyeing an increase in oil production. “The next Iranian government should make it a top priority to raise oil production to 6.5 million barrels a day,” Iranian oil minister Bijan Namdar Zanganeh told reporters. The higher output will “improve the country’s security and political might.” Separately, an Iranian official said they hoped for a deal by August, dampening prospects that a deal would be reached this week.

_*OPEC+ enjoys new era with oil majors constrained. *_Western oil companies are under escalating pressure to constrain their production as the energy transition gathers pace. But with supply kept in check, OPEC+ could see new tailwinds with space to bring production back online even as oil prices remain at relatively high levels. “We see a shift from stigmatization toward criminalization of investing in higher oil production,” said Bob McNally, president of consultant Rapidan Energy Group and a former White House official.

_*Equinor and Exxon go forward with $8 billion Brazil project.*_ *Equinor (NYSE: EQNR)* and *ExxonMobil (NYSE: XOM) *said on Tuesday that they would proceed with an $8 billion oil field in Brazil, which is slated to come online in 2024 and have a production capacity of 220,000 bpd.

_*Shale merger wave on the way. *_The U.S. shale sector could be in for another consolidation wave. This time, unlike last time, drillers seem to be willing to stick with the new agenda of capital discipline.

_*Intel Warns: Chip Shortage Threatens EV Boom.*_ The current global chip shortage could take until 2023 to be overcome, semiconductor maker Intel said on Monday in another warning that the microchip supply crunch could delay the electric vehicle (EV) revolution.

_*Gas bans in homes rattle industry.*_ A growing trend of banning new natural gas hookups in homes and businesses is ratting the gas industry. Some utilities are fighting aggressively to head off bans, others are taking a second look at growth scenarios. “We welcome the opportunity to avoid investments in new gas assets that might later prove to be underutilized as decarbonization efforts progress here in California,” a spokesperson with PG&E told the WSJ.

_*Asia refinery margins crash to $0. *_Asian refiners are struggling with a major slump in profit margins because of the resurgence in Covid-19 infections in the region, Bloomberg has reported, citing the latest trends in complex refining margins in Singapore.

_*Business school grads shun fossil fuels. *_New business school graduates choosing a career in the oil and gas industry have declined by 16% since 2019, and by 40% since 2006.

_*Yamal LNG’s fourth train reaches capacity. *_Yamal LNG’s fourth train reached full production capacity. Sales will go on the spot market.

_*BP invests $220 million in U.S. solar.*_ *BP (NYSE: BP)* announced a $220 million investment in renewables in the U.S. with the purchase of 9 GW of solar projects from developer 7X Energy. The purchase is the oil major’s first big solar investment since 2017.






Re. 'Transitory Inflation':

Some interesting DXY data. For PPI inflation to take hold, we definitely need to see DXY decline and decline into a 70 handle. On the way down through the 80 handle, transitory will probably bite the dust. For that to happen, yields need to fall or at least stop going up. Hence the Operation Twist reintroduction.






Semiconductor shortages are on their way to being history.






The sale of second hand cars, which was massive in the data, was largely driven (another pun) by shortages in new cars. This is set to change.

Pretty self-explanatory. 






Unemployment has stayed high due to some States' very low minimum wages. This meant that people 'earned' more on government handouts than by working. As the handouts wind-down, this is set to change.






Banks are not currently expanding credit (as they did in the 1970's). Hence, currently we have asset price inflation, not CPI inflation. The commodities drive PPI inflation.








So we really need to track 3 forms of inflation: (i) asset price (tick), (b) PPI prices (commodities & DXY) (tick) and (iii) CPI (tick currently). Only the CPI inflation will be transitory. The other 2 will continue and gradually leak into CPI numbers, even as manipulated as they are. 


jog on
duc


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## ducati916 (2 June 2021)

Funny day.

An inside day on candles, but....






Breadth up:











And NYMO:






Risk on:








Data:






Unusual activity:






Oil news:






Mr flippe-floppe-flye:








jog on
duc


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## ducati916 (3 June 2021)

A strange trading day. As I write this post:






On the surface, all seems well enough. Under the surface, something just smells wrong:






May amount to nothing. However I have trimmed the directional element of the trading book (see trades) closing all. So essentially I am sitting 100% hedged.

Mr flippe-floppe-flye:









The sectors:















jog on
duc


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## qldfrog (3 June 2021)

My unknowledgeable routine in the morning:
quick look:
Market flat, USD up, gold and silver up, oil up, and BTC up 5%  
Mr LeDuc will like this ;-)
A bit of fear back in market and switch to relatively safe assets?
Usually leading to a slight down ASX day
Will check VIX in a couple of hours but would expect slightly higher or flat
Then i read the in-depth analysis from @ducati916 .

Am I the alone in this kind of wakeup market check process?


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## Dr.Stock (3 June 2021)

Gday sir frog

nope not alone
Tis what I check and some more
Trying to learn from all u good people


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## Skate (3 June 2021)

ducati916 said:


> On the surface, all seems well enough. Under the surface, *something just smells wrong*:
> May amount to nothing. However I have trimmed the directional element of the trading book *(see trades) closing all*. So essentially I am sitting 100% hedged.




@qldfrog, Duc's posts are compulsive reading for me each morning & throughout the day as it gives me a perspective of the U.S. markets. His most recent post (above) gives me concern. I'm sure there will be more posts to come on the subject. Duc is the master of seeding, expressing his views succinctly in a few words or a single passage or two.

*I love this capture*
If trading is to be explained with a picture instead of words this would be it.







Skate.


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## ducati916 (4 June 2021)

So a bit choppy in the early going with SPY down early but bouncing and now moving nowhere.






VIX:






From here I think the VIX calms. Which should mean stocks generally move higher.






Tech. is struggling atm.  This sector is holding the broader market down as we have some really major caps in there, GOOG, AMZN, MSFT, etc. All of those sectors are lagging.

Inflation ticking higher.






Probably driven by the major run in oil that we have had this week.

In response Yields back up:






Which of course all of our Tech. based stocks hate. Now yields have been trading sideways in a pretty tight band for a while. The Fed. doesn't want higher yields, but just how active they are in the market, tick-by-tick, who knows. Therefore yields could rise short term, which is probably not great for the market overall, very skittish currently. This chop could continue for quite some time.

DeFi. Full article: https://www.wsj.com/articles/defi-i...ket-boomand-its-recent-volatility-11622712602






Certainly bullish for the crypto craze. Thing is which ones first survive, then which thrive. The powers that be cannot like this. I guess the question is what can they do? So for the moment, BTC is not going to zero.

Mr flippe-floppe-flye:








Meme stocks are a thing, but you would have to live on the various message boards to keep track of these.

It is having a broad effect: Short sellers of AMC are estimated to showing losses of $2.77B on Wednesday alone and total losses of $5.22B. Of GMC currently for 2021 $7B+.






Take AMC: not only has the stock speculation run rampant, but through the stock price rising, AMC could sell stock and recapitalise, so the bonds rose from the dead:






The flow on effect is even being felt in the bond market. Overall then there is a quantifiable effect, which looks set to continue.

Speaking of the Bond market:








Want a Bull market? How about Brazil?











The market as a whole is somewhat trendless currently in the shorter timeframes. Whether it can re-establish the longer time frame trend remains to be seen. There are a number of newer variables that seem to be pretty reckless and impervious to risk, whether they survive or thrive remains to be seen. However currently they are a 'thing' and are having a market impact.

Then we have the Fed. withdrawing 'life-support' as the market is deemed 'healthy'. Not sure about that. The major caps. probably. The mid down through small (if they could even access Fed. support) maybe not so much so.

Then we have the yes/no inflation question and whether Bond yields will rise and if they do rise, will the Fed YCC or Twist? Currently it looks like Twist. Is that enough?  Rising rates will kill this market. At 3% its over. Possibly even 2.5%

My model predicts 1.57%. Yesterday we were 1.59%. Obviously today we are trading higher. Technically, we sit on the cusp.

Oil. Who knows what happens here. Looks to be moving higher longer term. Short term we might pull-back slightly as we have had quite a run.

DXY having a price spike higher. Off sets the POO rise for the moment. We have reached that support level that has held in the past. This could well be short covering, taking profits. The test will come in the next couple of weeks. Personally I remain short DXY. I think we break that long term support and DXY heads lower.

The 'pattern' seems to be: quick runs higher, profit taking and the trend (for the most part) re-establishes itself. You either have to be really nimble or suffer the quite regular loss of open profits, fingers crossed that it is profit taking and not a collapse. For the moment this is a price target market.

jog on
duc


----------



## gartley (4 June 2021)

Is a corrrecion looming?


----------



## Porper (4 June 2021)

gartley said:


> Is a corrrecion looming?
> View attachment 125506



My issue is that the rally off the 2009 lows looks corrective in nature. An expanded flat pattern would mean further strength...possibly for several years before another crash like scenario. For now just trading what's in front of me. Strength in the Aussie market is selective though. False breakouts are still an issue.


----------



## gartley (4 June 2021)

It's not any easy wave count and there are multipile intepretations.  One being that the advance from 2009 is corrective probably a B wave .  It may have a little further to run ( and maybe not), but what follows will be impulsive, to the downside.


----------



## ducati916 (4 June 2021)

As we move into the end of the short week, this quote seems particularly appropriate:






It is one of those markets currently.

Sentiment:

























Mr flippe-floppe-flye:






jog on
duc


----------



## ducati916 (4 June 2021)

Worth a watch.



jog on
duc


----------



## ducati916 (5 June 2021)

Ending the shortened week:














Pretty self explanatory.

The 2 top performing sectors are essentially 'inflation' sectors. An article summarising the 1970's inflation:






The problem of course is that there are 2 terrible choices. Deflation or Inflation. Of the 2, inflation is the less terrible. So we have the Fed. pursuing the lesser of 2 evils (in their opinion). A deflation, which is a widespread default of debt and bankruptcies is what actually needs to happen. The consequences in the short term would just be hideous due to decades of kicking-the-can down the road. To avoid this outcome, the Fed and all Central Banks in combination with Fiscal policy are pursuing a combination of monetary and MMT policies.

Mr flippe-floppe-flye:









A little bit of history on Mr flippe-floppe-flye. His blog started out in 2001 +/- and at that time he was known as 'Broker-A' and was located in New York. Currently he has relocated to Georgia. Anyway, he ditched that moniker and Broker-B with whom there were daily exchanges for 'The Fly' shortly afterwards. His blog, which the name of escapes me currently, eventually after a number of years was closed and iBankCoin, was launched. iBankCoin pursued a Quant based methodology which after a few years and many iterations has resulted in Stocklabs, to which he sells subscriptions.

There have been quite a few contributors over the years, one of the earliest was Danny who used to live here: https://spydercrusher.wordpress.com/ and when I first met him he was a San Diego university student into skateboarding. He at the time was into trading and developing a mechanical or quant based methodology, which he did, falling out with Mr flippe-floppe-flye along the way. The chap who has now been with him the longest is Mr Rajun Cajun, who I think owns a gym or chain of gyms in the southern US.

Some of you might remember (if you traded Options) the 'Option Addict' who also had a successful blog. He joined iBankCoin for a while and was a very popular contributor, his trading was very transparent and were swing trades using...Options. He in conjunction with Mr flippe-floppe-flye, put on a trading convention in Las Vegas several years ago, they might have done 2. Las Vegas is actually a hot spot for Prop. trading shops, Bright Trading HQ. there. One of the brothers who owns Bright plays poker after the markets close, as do a number of their traders.

So what was the purpose of this short history? I'll actually provide the answer in my trading thread.


For the moment at least, it seems that the market will end the week on a positive note, nicely up for the day. I would not expect any late day sell-offs.






jog on
duc


----------



## ducati916 (5 June 2021)

Market wrap:

Cryptos:










While that is obviously true, it just doesn't feel that way.






Oil:






Oil news:

WTI is testing the $70 threshold, and the oil bulls are out in full force this week. 

_*Oil Prices Poised For A Breakout As WTI Nears $70. *_Oil prices were rising early on Friday and headed to a second consecutive week of gains after the U.S. signaled that there may not be an imminent announcement of an agreement for the United States and Iran to return to the Iranian nuclear deal.

_*More room to run. *_“The fact that oil prices maintain and even extend a bit their high levels this week is a clear sign that the market considers a $70 plus dollar level sustainable for a barrel of oil,” Louise Dickson of Rystad Energy said in a statement.

_*Canada’s oil sands braces for investor pressure.*_ In the wake of the *ExxonMobil (NYSE: XOM) *defeat by Engine No. 1, Canadian oil producers – which on average emit more than U.S.-based companies – are bracing for heightened pressure from shareholders to cut emissions. “By my calculation, about half of all Canadian (oil) production is now backed by a net-zero pledge of some type,” one analyst told the Financial Post. A Citibank analyst said: “The goal posts are moving, or evolving.”

_*Biden suspends ANWR leasing. *_The Biden administration suspended new leases in the Arctic National Wildlife Refuge, halting a process put in motion by the Trump administration. There was only tepid interest in a January auction from the industry. Alaskan officials decried the move, and it could spark litigation, but the time-consuming process likely keeps ANWR off the table for the foreseeable future.

_*Rystad: Last big year for oil state revenues.*_ Global petrostate revenues could reach $975 billion this year, but it will be the last year that revenues approach the $1 trillion mark as the energy transition takes hold. “As the energy transition ramps up, countries highly dependent on tax revenue from the upstream industry may have no other option than to diversify their economy to sustain state budgets,” Rystad analysts said.

_*Colombian Oil Production Slips Amid Deadly Protests. *_An existing security crisis, anti-government protests, and road blockades are impacting economic activity and the petroleum industry putting Colombia’s crucial economic recovery is at risk. The current political turmoil has seen fuel shortages emerge in many parts of Colombia further constraining economic activity and oil industry operations in the affected regions.

_*LNG prices rise on strong demand. *_Asian spot prices for LNG rose for a second consecutive week and touched their highest since January, pushed higher by strong demand in China and Europe, according to Reuters.

_*LNG trade rose to record in 2020. *_Global trade volumes for LNG hit a record high in 2020, although the pace of growth slowed due to the pandemic.

_*Biden wraps up EV supply chain review. *_The Biden administration is putting the finishing touches on a review of the EV supply chain, which looks at critical minerals, and the results could be unveiled next week.

_*SunPower sees 100 million solar rooftop market.*_ “There’s about 100 million people in the U.S. that, if they switched over to solar tomorrow, would save money,” said *SunPower’s (NASDAQ: SPWR) *CEO Peter Faricy.

_*Ford produces more electric mustangs than gasoline.*_ *Ford (NYSE: F) *built 27,816 electric Mustang Mach-E models in the first quarter, and only 26,089 gasoline-powered versions of the Mustang, the first time that electric models outstripped traditional ones for the company.

_*Iran investigates explosions.*_ An explosion at an oil refinery in Tehran and a fire on board one of Iran’s navy ships that led to its sinking occurred this week.

_*ExxonMobil surrenders Ghana interests.*_ *ExxonMobil (NYSE: XOM)* gave up its 80% interest in offshore blocks in Ghana, “prioritising near-term capital spend on the most advantaged assets with the lowest cost of supply in the portfolio,” a spokesperson said.

_*Engine No. 1 secures third seat.*_ Engine No. 1 saw a third of its four candidates elected to *ExxonMobil’s (NYSE: XOM)* board, after a tight vote count.

_*Chevron open to selling Canadian assets.*_ *Chevron (NYSE: CVX) *said it would consider selling its 20% stake in Canadian oil sands mines amid investor pressure to cut emissions.

_*EU looking at climate tariff.*_ The European Union is planning to put a carbon tariff on steel, cement, and aluminum produced in countries with lower environmental standards.

_*Dominion builds offshore wind ship. *_*Dominion (NYSE: D)* is building a ship capable of installing offshore wind turbines. The Jones Act is a century-old law that requires goods transported between two U.S. ports to be carried by a U.S. ship and manned by a U.S. crew. The new Dominion ship would be the first ship to comply with the law, and could be a “game-changer” for the offshore wind industry in the U.S.

_*Weatherford International relists. *_Shares of* Weatherford International (NASDAQ: WFRD)*, once the world’s fourth-largest oil-field services company before being felled by an oil bust, relisted on the NASDAQ this week.

_*Oilfield services margins could improve with company exits. *_With smaller U.S. oilfield service companies going out of business, margins for the sector could improve. “Weaker and lower-tech competitors are struggling to get work. They offer very low prices, and not prices they can sustain for the long-term. We do not match those prices,” Chris Wright, CEO of* Liberty Oilfield Services (NYSE: LBRT)*, told Reuters.

Nothing new under the sun:






jog on
duc


----------



## ducati916 (6 June 2021)

So as we draw closer to Basel 3 and the closing of the paper gold/silver (and other manipulated paper markets) how sits the situation:









The markets are not yet reflecting the re-pricing that will eventuate. The gold market has started to move, but is still not a free market. The COT numbers are however reflecting the two separate markets, Gold is moving Silver is stuck (currently).











Look at the OI numbers. In the gold market +/- 50% reduction which is being reflected in the bounce higher in gold. Silver's OI numbers are still the same. However, as gold reprices, so will silver.

The war between the US and the China/Russia axis for control of hegemony of money and toppling the DXY from its primary place atop the reserve currencies is well under way.

Both Russia and China have been buying physical gold in the thousands of tons. So much so that monetary gold is largely concentrated in their Central Banks. BIS, responsible for enforcing Basel 3, was as rumour has it threatened by Mr Putin that if they didn't enforce the Basel 3 regulations, then both Russia and China would back their currencies with their gold reserves.

That essentially would have been the end of DXY. Poof, zero.






So the BIS is going to enforce Basel 3...for real, which means the end of the paper gold market. Now I have heard all manner of price projections for gold moving forward, suffice to say, it will be higher.

There is actually a broad spectrum of commodities that will also benefit from these regulations when they come into effect 28 June 2021. I haven't had time to dig into all of the documents and the language is banker jargon x5.

So currently I like Gold/Silver and commodities generally long, DXY short and stocks not a great deal. There is a really nasty divergence signal playing out in the S&P500 atm. Whether it takes hold, we'll have to see, but I'm keeping a close eye on it.

Meanwhile, Mr flippe-floppe-flye is still playing the crypto markets:









Beyond pathetic.

If you haven't read the GS Report, well worth a read. As the paper gold market ends, so the paper crypto market begins. If history teaches anything, BTC is now doomed to lacklustre performance going forward as JPM's Jamie Dimon et al crush it.




jog on
duc


----------



## ducati916 (8 June 2021)

Start of the week meh. But, potentially going to get worse before it gets better:







DXY again weak.









Cryptos either weak or going nowhere for the moment. They just had their big conference in Miami this w/e. I watched a few of the speakers, Mr Saylor in particular. He addressed the energy requirements, as if that was a big deal. It would seem that I was not the only one unimpressed.








Staying on the BTC theme for the moment:






The chart below is the cost of a BTC transaction.






The 'Tethers' that are supposed to be $1: 1 Tether are anything but. Below is the actual breakdown of 1 Tether. This is important because Tethers provide liquidity for the trading of crypto. When your liquidity dries up, guess what happens to price?







VIX setting up for a move higher:






Mr flippe-floppe-flye:










Housing:






In this 'inflationary' environment:






The market overall looks shakey. Not a massive drop, just this continued chop, going nowhere in particular. It lacks conviction to move higher. XLRE is by far the strongest sector currently.

jog on
duc


----------



## ducati916 (8 June 2021)

Using the EOD close, the market looks quite weak.

VIX:

We have had trouble moving below this point on numerous occasions. I think tomorrow is another one of them.






The 2 NYMOs:









Not looking terribly confidence inspiring.

Junk bonds running to Treasury paper. This is ALWAYS a concern.






Lumbar:













BTC:













Mr flippe-floppe-flye:











jog on
duc


----------



## ducati916 (9 June 2021)

So today, another meh day in the indices. Chop.






Sectors:






Yields back down. Operation Twist is in full flow. Yields (for the moment at least) are not going to move meaningfully higher. That should be good for stocks, but they are really struggling.







Commodities generally higher. PMs marginally lower. With Basel 3 approaching, this might be the last gasp to suppress PMs. We'll see. I have big positions in gold miners and Sprott physical silver so not exactly unbiased here.







BTC getting smashed again. That $30K support level will be tested again. I don't think it holds this time. The HODLers have had plenty of time to talk it up, they had their conference in Miami at the w/e, Mr Saylor, perma-bull presented and still it is getting put under pressure. If (and it is an if) BTC breaks below that $30K then it is headed far lower.






Mr flippe-floppe-flye:






If that is your thing:










DXY having a 'bounce':






Probably accounts for the loss in PMs today. I remain short DXY.

DXY will be tied up in the upcoming Basel 3 regulations re. PMs and other commodities. This current support level is important. If it fails we are headed lower:






A lower DXY pari passu, means higher inflation. We know that the Fed. will not allow higher interest rates, sitting currently at 1.58% and will either Twist them lower (hold steady) or move to YCC in the extreme case. As all of this is being 'paid for' by monetary policy, combined with a profligate fiscal policy moving forward, inflation is the position.

The other big risk is that the zombies start to fail, kicking off a deflation. If, whatever product/services are sold by the zombies have their prices raised, due to inflationary pressures and they are not selling sufficient at lower prices, then there will be issues, solvency issues. Their debt, probably already Junk, will sell-off (which it is starting to currently) as a run on Treasuries ensues, taking yields lower.

Stocks do not like Bond market runs. The S&P500 has done pretty much nothing for a month. If the Junk continues to sell-off, I think we have a problem. 

Currently:






Not looking too flash atm.


jog on
duc


----------



## frugal.rock (9 June 2021)

ducati916 said:


> Oil Prices Poised For A Breakout As WTI Nears $70.



And so it came to be.
A rather bullish night last night with a small sell down towards the close, but still closing up somewhere around
+ 1.8%
1 month chart, 5 hour bars






Looking good on the oil long stance.

US Job openings also up 12% for April beating expectations by approximately the same amount.


----------



## ducati916 (9 June 2021)

Roundup:

Oil news:







-    More than half of Vietnam’s electricity comes from coal. 

-    But renewables are growing quickly, and now make up 5% of the total.

-    Vietnam plans on adding nearly 18 GW of solar over this decade but will need to build out its grid capacity.   

*Market Movers*

-  *  Plains All American (NASDAQ: PAA) *agreed to sell its natural gas storage assets to Hartree Partners for $850 million.

-    *Pembina Pipeline (NYSE: PBA)* announced a partnership with the Haisla Nation to develop the $3 billion Cedar LNG project in British Columbia. 

-    *KKR's Independence Energy* and* Contango Oil & Gas (NYSE:MCF)* are near a merger deal that could value the new business at $5.5B including debt, Bloomberg reports.

*Tuesday, June 8, 2021 *

Oil prices held their gains at the start of the week, with Brent at $71 and WTI just below $70 (after briefly touching that threshold on Monday). Analysts see investors pocketing gains at these roughly two-and-a-half-year highs, allowing the rally to take a breather. 

_*Oil pauses at $70. *_“For many, the $70 per barrel oil signal may be enough for investors to cash out of the bull cycle early – likely what happened today -- which would stifle the upward price trajectory forecasted by our bullish crude balances,” said Louise Dickson, an analyst at Rystad Energy.

_*Options bets on $100 oil. *_Investors are scooping up options bets on crude that pay off if oil prices soar to $100 per barrel.

_*OPEC lost $1 trillion in the 2015 oil price crash. *_The members of OPEC lost a collective $1 trillion in foregone revenues during the last crisis in 2015 and 2016. With the Covid-19 crisis hitting the oil industry a lot harder than the 2014-2016 crisis, chances are the losses that OPEC producers suffered last year would be even greater than $1 trillion, but these are still being calculated.

_*G-7 backs climate disclosures. *_G-7 nations backed initiatives to force banks and companies to disclose their climate-related risks.

_*Shell case could affect TotalEnergies. *_The recent court case in the Netherlands that went against *Royal Dutch Shell (NYSE: RDS.A)* could be a warning to *Total Energies SE (NYSE: TOT)*, the French oil giant that was known as Total until a rebranding last week. A French court is expected to make a decision on a similar case in September.

_*Rosneft warns of oil shortage.*_ Rosneft warned that the global push towards energy transition could result in a supply shortage if there is too little upstream development for new oil supplies. “The world risks a severe deficit of oil and gas,” Rosneft CEO Igor Sechin said. “The world consumes oil, but isn’t ready to invest in it.”

_*Texas passes weatherization bill. *_The Texas legislature passed a bill that would require electricity providers to weatherize their assets, and it now goes to the Governor for consideration. 

_*Higher oil prices boost M&A. *_Higher oil prices offer oil companies and private equity firms the opportunity to sell off U.S. shale assets. In the first five months of 2021, land deals have totaled $6.9 billion, nearly as much as the $7 billion in total deals for all of 2020. 

_*Fiat announces EV-only transition. *_Fiat said it would sell only electric vehicles by 2030 and begin a phaseout of the internal combustion engine beginning in 2025.

_*Canada’s oil consolidation hits white-collar jobs. *_BNN Bloomberg looks at the loss of jobs among management in Canada’s oil and gas sector as the industry has consolidated in recent years. 

_*U.S. LNG terminals looking at carbon capture. *_Under pressure from investors and the Biden administration, several U.S. LNG export facilities are exploring carbon capture. Virginia-based Venture Global LNG said it would implement carbon capture and sequestration at three export terminals in Louisiana. But 60% of a project’s emissions come from upstream and midstream – leaking methane at well sites and in pipelines.

_*LNG faces headwinds. *_U.S. LNG exports face multiple headwinds, including surplus supply, rising costs “fickle” demand, and surging Qatari investment, according to a new report.

_*BP CEO: Strong Oil Demand Growth Is Here To Stay. *_Global oil demand is set to rebound and remain robust for some time, BP’s chief executive Bernard Looney told Bloomberg News on the sidelines of an economic forum in Russia, reiterating views expressed by most forecasters and analysts. “There is a lot of evidence that suggests that demand will be strong, and the shale seems to be remaining disciplined,” Looney said.

_*Pipeline regulator tells pipelines to prepare for methane regs. *_The Pipeline and Hazardous Materials Safety Administration (PHMSA) sent an advisory to oil and gas pipeline operators, telling them to prepare for methane curbs.

_*Enbridge sees big protests of Line 3. *_Indigenous communities and environmental activists blockaded sections of the Line 3 pipeline in northern Minnesota. 

_*Carbon dioxide in the atmosphere hits a record high.*_ The amount of carbon dioxide piling up in Earth’s atmosphere set a record last month, rising to 417 parts per million, the highest in human history.

_*DOE announces hydrogen “Earthshot.”*_ The Department of Energy launched an “Earthshot” program to cut the costs of hydrogen to $1 per kilogram within a decade.

_*State Department says Nord Stream 2 “fait accompli.” *_U.S. Secretary of State Anthony Blinken called the completion of the Nord Stream 2 pipeline from Russia to Germany a “fait accompli” and said the U.S. is now working with Germany to limit how dependent Europe’s energy system will be on Russia after it is finished.

_*U.S. claws back millions from ransomware. *_The FBI has seized $2.3 million of the $4.4 million paid to the ransomware attackers of the Colonial Pipeline.

_*China’s Efforts To Curb Oil Prices Are Futile. *_Crude oil imports into China dropped by almost 15 percent annually last month. There is speculation that China is tapping its strategic reserve to tamp down on import costs, although it isn’t working.

_*How oil companies use bankruptcy law to avoid cleanup. *_Oil and gas companies use the bankruptcy process to shed liabilities. “It's basically bankruptcy for profit.” Here’s how they do it. 







Full story here: https://www.marketwatch.com/story/h...the-colonial-pipeline-cyberattack-11623182259

While on the subject of BTC:







































While on the subject of falling yields:






They have certainly slowed their rate of ascent however. We'll see how this pans out over the next few weeks. Certainly Operation Twist seems to be holding rates steady to lower currently.

The thing is, the Fed. doesn't want rates too low, just below inflation. The reason? Well if the market tanks and they need to cut rates again, it helps to have something to cut.






I again after looking at the EOD charts am thinking weakness tomorrow. Not a collapse, just more meh. VIX is a little lower, but, it refuses to go lower past those support levels. If it remains where it is, it will gradually build a base for a spike higher. Nothing major unless it is tied to an unexpected (news) development that was unexpected.

DXY remains key as far as inflation expectations are concerned. DXY is weak against many if not all of the commodity based currencies. It it has also broken key levels of support against the Russian Ruble, Chinese Yuan, and the South African Rand – which are three of the five BRICS Currency Index components. The Brazilian Real is currently a holdout. So the Fed. will be trying to balance the decline of DXY and rates. If both decline together then the rate of inflation accelerates, probably more than they would wish. 


jog on
duc


----------



## ducati916 (10 June 2021)

So before we get to the market proper, you need to read this article and watch the 30sec. video.








Full article and video: https://blairbellecurve.com/seismic-shift/

So the market as I write this post:









Inflation. Two conflicting views:


















The contra-case:















continued....

jog on
duc


----------



## ducati916 (10 June 2021)

Part deux:

































continued...

jog on
duc


----------



## ducati916 (10 June 2021)

Part trois:




































continued...

jog on
duc


----------



## ducati916 (10 June 2021)

Part quatre:










Mr flippe-floppe-flye:







So those are essentially the 2 arguments. Neither one mentions the DXY. Odd? Commodities are mentioned, as having no correlation to inflation at all, therefore, a non-event. I'll post up those charts later with some discussion.

Whichever way you lean, I think you'll need to decide as positioning for the longer term (short term traders don't really need to worry) could and probably will, make quite a difference. I'm thinking gold, silver, BTC, etc. as opposed to growth stocks, Tech et al.

More later, off to work!


jog on
duc


----------



## qldfrog (10 June 2021)

ducati916 said:


> Part quatre:
> 
> View attachment 125821
> View attachment 125822
> ...



Well, mister Duc, this was quite a piece of (great )work again today and a lesson in french counting😊
Only missing part: btc jumping higher at +9%..yeap..9 years of term deposit returns overnight..no wonder the tiktok generation is not opening saving accounts😊


----------



## ducati916 (10 June 2021)

Roundup:

Start with this: https://www.bloomberg.com/news/vide...bout-the-s-p-500-10-year-treasury-yield-video











So this is commodities charted against DXY:






DXY:






10yr






So re. inflation, it is there. Commodities are rising faster than just the decline in DXY would suggest. Now that may well be 'speculation', but it doesn't really make any difference what the reason is: the fact is that input prices are pretty much rising across the board. That will eventually flow through to consumer prices either as higher prices or smaller serving sizes for the same price (grocery trick).

With yields falling (Operation Twist) and no buyers other than the Fed. money supply on the Fed Balance Sheet will continue to rise, driving if nothing else the continued speculation and falling DXY, which will drive PPI inflationary pressures.

The argument in this morning's post was essentially an argument about CPI inflation and whether it will catch fire as it did in the 1970's. The 1970's had both, CPI and PPI. If and it is an if, we catch a pernicious CPI inflation, then the market will have issues. ATM it seems willing enough to (for the most part) simply ignore the PPI issues.

VIX

Creeping higher. It is not at a critical point to explode higher, but neither is it falling. Therefore I would expect continued weakness in the indices.






NYMO

Pretty much confirms the VIX. Weak to meh. No big bull rallies higher tomorrow. Just more chop.






A catalyst is probably underway but simply isn't visible yet. Now that could be a catalyst in either direction. The thing with directionless markets is that when they make a move, it tends to be substantial. Given the macro conditions, that move is likely to be higher, but not tomorrow methinks.






jog on
duc


----------



## barney (10 June 2021)

ducati916 said:


> More later, off to work!




Lol ... That actually made me smile @ducati916 

Amongst all these incredible postings on ASF ... You still have time to "work"    lol.

Your content is nothing short of excellent and much appreciated


----------



## ducati916 (11 June 2021)

So the market at time of posting +/-















Today was the CPI data.  First the % month change.







And less relevant due to COVID, the YoY:






Commodities (PPI inflation) with falling yields, moving higher:






So we have increasing PPI & CPI inflation. We also have rising wages. Nothing outrageous currently, but they can never be taken back. So the situation is on all fronts inflationary. Debt is at all time highs. The leverage inherent in debt, the money multiplier effect, is not working as it once did and GDP growth is not sufficient to grow out of the debt load.

DXY is stalled atm:






But only a matter of time before it breaks lower. A weaker DXY, obviously accelerates PPI inflationary pressures, which will at some point impact on companies COG reducing cash-flow and profits. The impact on cash-flow is actually more important as highly leveraged companies can write down depreciation and lower profits, but as depreciation is a non-cash cost, cash-flow is unaffected. Rising COG however are a cash cost and reduce cash-flow, which, makes debt servicing and coverage higher risk.

The alarm bells in stocks are obviously on mute:






Junk continues to sell-off and move into Treasury, which is a guaranteed loss. Why? Because of the risks to cash-flow. This, unless it reverses, will become an issue at some point. The 'when' is the question.

Energy, one of the really big PPI components. 






Oil continues to move higher, 3 steps higher 1 step lower. Currently the Arabs & Russia seem to have things under control. As yesterday's chart demonstrated, green energy, the market is not yet a believer. 

Mr flippe-floppe-flye:






On cryptos and meme stocks...






As yesterday's video amply evidenced.


jog on
duc


----------



## ducati916 (12 June 2021)

Week end.

Another meh day.






Sectors:






For the week.








Doesn't really require too much comment.

DXY:

Still fighting the breakdown. I remain steadfastly short.






BTC:

Another fighting the same war to stay above lower levels. Technically, an equilateral triangle is developing, especially when you look at the weekly chart. Technically, it could break either way. When it arrives, vol. will pick up significantly again and the move (higher/lower) will be substantial.

You don't want to be on the wrong side of it.










Mr flippe-floppe-flye:





Junk Bonds.

Apart from being an 'indicator' for risk-on/risk-off, as an asset class:

They (Junk Bonds) correlate reasonably closely to stocks (risk on).







Lower vol. than stocks, which, can be a good thing.






Especially when you talk about drawdowns:






Of course you give up some of the upside.






to be continued....

jog on
duc


----------



## ducati916 (12 June 2021)

Part deux:


Some historical returns:





The next chart is interesting because it demonstrates that Junk can be up when stocks are down (55%) and when stocks are up, Junk is also up (88%).






Last but not least: Junk in an environment of increasing yield, do not fall as much as Treasury paper. Essentially a higher coupon and shorter maturity, provides a lower duration which makes them less sensitive to rising rates.








So how would you play the Junk market?

First you have to hold a lot of them. Individual issues are very risky and can blow-up. You hold them as an ETF (HYG) or some-such. A ladder structure would be even better and further mitigate the risk of rising rates. HYG might already do this (not sure).


Energy:

Will likely remain a hot sector (but volatile) for a while. OPEC does not seem to be flooding the market having achieved the (pretty much) destruction of the US shale industry (certainly in the short term) they are now manipulating prices higher. I (way back) speculated mid-70's was about it. That may turn out to be too conservative. We may see $100 oil again.






The low wage group are all day trading. Not interested (as long as UBI persists) in going back to work.






Inflation hurting small businesses.






Some inflation quotes:






Looking forward to next week:






















Not overly optimistic.

We are in a bit (indices) of a holding pattern. Meh. As such, we need to be very careful moving forward. Chop and short trends will likely continue to dominate until they don't.


jog on
duc


----------



## bsnews (12 June 2021)

From what I have seen yesterday it looked a like like the smarties shorted the bond market at opening punting the the Fed would buy up big. And they did and they made a lot on money. Where would the Fed be at now 10 Trillion?
And how do they stop QE? China looks like it has a handle on inflation while the US?
Not looking good ATM for US in my opinion.


----------



## ducati916 (12 June 2021)

Oil news:

*Friday, June 11th, 2021*

Oil prices showed modest gains on Friday, after a selloff on Thursday. 

_*Oil prices drop after U.S. lifting sanctions on Iranian officials. *_The U.S. Department of the Treasury said on Thursday it is removing several Iranian officials from its list of designated persons, including three directors of the National Iranian Oil Company (NIOC). Oil prices declined on the news.

_*Rystad: OPEC+ will have to loosen output limits. *_In early trading Friday, oil was back up, on positive economic news in the U.S. and accelerating global vaccination campaigns, according to Rystad Energy. But the firm warned that there is going to be rising pressure on OPEC+ to loosen production constraints in order to avoid the oil market overheating.

_*IEA: OPEC+ should “open the taps.” *_The IEA said that global oil demand will rebound past pre-pandemic levels by the end of 2022. After declining by 8.6 mb/d in 2020, oil demand will rebound by 5.4 mb/d this year, and by another 3.1 mb/d next year. The agency reiterated that OPEC and its allies needed to “open the taps” to boost oil production and keep the world well supplied.

_*High-profile EV SPAC running out of cash.*_ *Lordstown Motors (NASDAQ: RIDE)*, a SPAC aimed at manufacturing EV pickups out of an old GE plant in Ohio, disclosed that it does not have sufficient cash to start commercial production and issued a going concern warning through the end of the year. Lordstown was one of several EV SPACs that went public in the last year.

_*Biden looks at offshore wind in Gulf of Mexico. *_The Interior Department said on Tuesday that it will examine potential areas of the Gulf of Mexico that are suitable for offshore wind.

_*Solar industry’s costs are rising. *_Rising costs for labor, freight, steel and aluminum are pushing up the cost of solar power, ending more than a decade of steady cost declines, at least temporarily. Contract prices for solar were already up 15% in the United States in the first quarter compared with last year due to higher interconnection and permitting costs. There is uncertainty over how long the cost increase will last.

_*First Solar to build Ohio plant. *_*First Solar (NASDAQ: FSLR) *said it would build a $680 million factory in Ohio to manufacture solar panels. The move is highly significant as the U.S. has largely ceded manufacturing capabilities to China – the U.S. relies on imports for 85% of the panels used in domestic projects.

_*U.S. LNG set for export record. *_U.S. exports of liquefied natural gas (LNG) are set to surge this year from the already record levels in 2020 as demand in Asia and Europe is high, even in the off-peak season.

_*ExxonMobil announces another Guyana discovery.*_ Exxon has made yet another in a long string of discoveries offshore Guyana in the Stabroek block, the company said this week.

_*Can oil sands be banned? *_The oil sands of Athabasca seem to be at an especially vulnerable crossroads – just when oil sands production could finally surge unimpeded with new pipelines allowing for higher exports abroad.

_*Oil could hit $80 this summer, but there’s a catch.*_ There is more room to run for oil. “There's an incredible case where the oil price could get to $80, but there would be a reaction to that. That would start to affect demand, and also there would be a political reaction to that.”

_*Board shakeup could result in capex changes for Exxon.*_ Investors want a “fundamental rethink on strategy,” Anne Simpson, investment director at shareholder California Public Employees' Retirement System, told Reuters “The big measure” being its $16 billion-$19 billion annual project spending, she added.

_*European banks face huge financial threats from energy transition.*_ A rapid and chaotic energy transition would leave Europe’s biggest banks in financial peril comparable to the subprime crisis that U.S. lenders faced in 2008, according to Bloomberg.

_*RBC downgrades Callon Petroleum, upgrades Marathon.*_ RBC downgraded *Callon Petroleum (NYSE: CPE) *and *Continental Resources (NYSE: CLR)*, saying their stock has strengthened far enough. The bank upgraded *Marathon Oil (NYSE: MRO) *and Range Resources (NYSE: RRC) on a more bullish outlook for crude oil and natural gas, respectively.

_*Gas pipeline building spree at an end. *_The years-long building spree of long distance natural gas pipelines in the U.S. is coming to an end, as political and financial barriers turn against the industry, according to S&P Global Platts.

_*Biden considers relief for refiners on biofuels. *_Under pressure from labor unions, the Biden administration is considering providing relief to oil refiners related to their biofuels blending requirements.

_*Permian basin gas pipeline connections increase. *_The recent completion of a handful of gas pipelines has connected Permian basin gas to the Gulf Coast, and also to Mexico, boosting Waha Hub prices.

_*LNG prices see upside.*_ LNG prices could continue to rise due to strong demand in China. Spot prices have already posted strong gains in recent weeks. We believe this has been driven by a tightening of Asian LNG balances led by strong generation demand in southern China at the same time that South Korea reached peak nuclear maintenance, while Covid-hit India LNG demand has stabilized,” analysts from Goldman Sachs said in a note earlier this week.

Market roundup:









ARKK short:






BTC in VWAP squeeze:









						Bitcoin is caught in a giant VWAP squeeze: Getting Technical
					

Brian Shannon, founder of AlphaTrends.net joins Yahoo Finance's Jared Blikre to break down the powerful anchored volume weighted average price indicator and what it's revealing for bitcoin traders.




					finance.yahoo.com
				




jog on
duc


----------



## ducati916 (14 June 2021)

Odds and Sods:

Inflation:







A guaranteed loss currently.





Meme stocks other than the other 2:









VIX at lows:

Just makes everything that little more dangerous.






The generations:






How they think:







Oil Reserves in Billions/barrels and as a % of world reserves:






Steel production:






Its uses:











And Art:






With the VIX at lows and the market at highs, the risk of entering new positions becomes much increased. Shorter term trades have to have this increased risk factored into the strategy. Either position size, iSL, target profit taking or all of the above.

Advancing issues are at 74% which is sufficient to move the market higher, but it has been, like the index, stuck at that level for several days. Consolidations can move in either direction.

NYMO is now showing a divergence, which is or should be cautionary. NYSI is bullish and quite strongly so.

Therefore the overall message is bullish...but be prepared to bail out very quickly.


jog on
duc


----------



## ducati916 (15 June 2021)

Start of the new week, pretty much the same as last week, meh.












Tech. continues its run higher or rather bounce higher. The 'commodities' areas have come off the boil, XLB, XLE, along with XLF (Financials) reflecting the weakening (although bouncing) yields from Operation Twist.

All the indices are (pretty much) in the overbought range. Hence we have a chop sideways while they correct in time rather than a price correction, although that cannot be ruled out as VIX is very low, but again threatening to have a bit of a bounce itself.






Sectors:

XLRE is (currently) a beast. Relentless. Shrugging off everything.






So breaking down XLRE:






The top handful weekly and intraday:












The bottom handful:












VIX:







Mr flippe-floppe-flye:






Which brings me nicely onto BTC.

Ignoring Mr Musk, Mr Saylor has issued another $400M in debt via MSTR and bought more BTC. Essentially he is treating MSTR as a perpetual, which in theory a company actually is. In reality, companies go bust all of the time and disappear from the firmament. The issue for MSTR will be: will the volatility and potential drawdown coincide (at some point in the future) with a loss of cash-flow (earnings) of MSTR? If yes, then, to service the debt, currently at $1B (in BTC) MSTR would have to sell some BTC in a falling market. MSTR is now pretty much a Hedge Fund holding BTC, its capitalisation is based on BTC.

El Salvador. These guys.

So, they have a domestic currency but also use a tremendous amount of DXY. They are buying BTC and making it legal tender, which one must suppose becomes exchangeable into currency. This is essentially a true GOLD STANDARD, which governments abolished finally with the watered down version being closed by Nixon in 1971. These chaps have unilaterally chosen to go back on. It is fairly unimportant given the size (small) of their economy, but odd nonetheless.

Needless to say, with all of the recent machinations, BTC is and by extension all of the junk, having a good day and bouncing back into a $40 handle.

PPI Inflation continues to move higher as measured by $TNX & DXY. This is the dangerous one for the market. CPI inflation, which if it starts to change consumer behaviour, could also become dangerous. Asset price inflation is resting near all-time highs to see how the other 2 make out.

Commodities are having a sell-off today. It is mostly in the agricultural sector. Energy, the big one, is pretty much unchanged. Now the Arabs & Russia are unlikely to turn on the taps to bring price down. After destroying the US shale production, which cost them significant money, they are looking to recoup. Russia for all intents and purposes is probably at war with the US and is applying the economic squeeze. Meanwhile the West has gone all 'green'. BP, Shell, Exxon, etc are all cutting back on oil everything and investing in green. The result being that the ability going forward, is an inability to cover an energy war with the East.

With the Fed. 'Twisting' the 10yr lower, I don't see commodities lower over time. Hence inflation could be far stickier than expected. If it is, psychologically the consumer will be conditioned and even CPI inflation could become a real issue. I see that Bill Gates has put huge sums into farmland.

Here is Rosenberg arguing that it will be transitory:




jog on
duc


----------



## ducati916 (15 June 2021)

Monday round-up:

So markets rallied into the close. All about the Fed.? Possibly, although if the Fed. starts talking about tapering, the Bond market could well have a spazzie, which does not bode well for stocks.

Stocks are in a funny position:











With as you can see weakness in and around that 50 EMA.

NYMO is diverging. New entries will be at risk from chop.






Tech. was the leading sector earlier today. ARKK moving higher.








And AAPL:








Lots on BTC:




















Mr flippe-floppe-flye:






So the Fed. will be sitting again tomorrow. Therefore we can probably expect a bullish day. The issue will be on Wednesday when the Fed. speaks. That could turn into a really volatile day as if markets are pricing in 'nothing changes' and something changes, positions could flippe-floppe faster than Mr flye.

If the message is 'nothing changes' commodities, gold and probably BTC will likely move higher as the 'inflation' trade is back on. The question is what will stocks do? I guess we'll find out Wednesday. It will likely be one of the more interesting Fed. announcements for a while, they have been pretty dull recently.


jog on
duc


----------



## ducati916 (16 June 2021)

More mindless chop and rotation ahead of the Fed. tomorrow.









Sectors just rotating through. Yesterday's high, today's low.

Oil news:






New Mexico’s oil production hit a record high in March 2021, averaging 1.16 mb/d, and natural gas output hit 6.19 Bcf/d.

-    The March increases were the largest monthly increases on record (although some of the gains came from restarted wells that shuttered during the February blackouts). 

-    In 2020, New Mexico’s oil production rose by 133,000 bpd, or 15%.    

*Market Movers*

•    *BP (NYSE: BP) *is aiming to enter offshore wind in Norway.

•    *Earthstone Energy (NYSE: ESTE) *announced that it has acquired working interests in Eagle Ford assets for $48 million in cash. 

•    Six oil majors are vying to partner with Qatar to develop the country’s natural gas fields and LNG projects. The list includes *ExxonMobil (NYSE: XOM)*, *Royal Dutch Shell (NYSE: RDS.A)*, *Total Energies SE (NYSE: TOT)*, *ConocoPhillips (NYSE: COP*), *Eni (NYSE: E)*, and* Chevron (NYSE: CVX).

Tuesday, June 15, 2021 *

Oil prices are up at the start of the week on growing demand optimism. “Oil prices really are in a positive June upswing as demand and supply are recovering in an unequal speed,” Rystad’s Louise Dickson said in a statement.

_*Oil prices hit 32-month high.*_ Oil prices rose early on Monday, with the U.S. benchmark hitting a 32-month high and Brent rising above $73 per barrel as the market is growing increasingly bullish on demand while the return of Iranian oil looks more distant than initially thought.

_*Shell considers selling Permian assets.*_ *Royal Dutch Shell (NYSE: RDS.A)* is considering a sale of its Permian assets, hoping to rase $10 billion. Shell’s Permian operations produced 193,000 barrels of oil equivalent per day in 2020, or about 6% of the company’s total output. 

_*Shipping costs driving up prices.*_ The skyrocketing costs of shipping are driving up prices for commodities across the globe. Shipping costs are up 547% relative to the seasonal average for the last five years. 

_*Investors see green push leaving oil market short on supply. *_Bets from hedge funds and money managers are becoming more bullish, and analysts say that a growing number of investors see a supply shortage coming as a global push for energy transition leaves the world short on oil supply in the years ahead. “This is the basis for the next oil crisis,” Leigh Goehring, managing partner at commodities-focused investment firm Goehring & Rozencwajg Associates, told the WSJ. “We’re in uncharted territory.”

_*RBC: U.S. shale might be needed. *_RBC argues that OPEC+ may not have enough spare capacity to satiate the market next year, and more U.S. shale supply might be needed. “In the event that the U.S. remains status quo and does not grow next year, global stocks could be nearly 400 million barrels lower, from entry to exit in 2022,” wrote Michael Tran, commodity strategist at RBC Capital Markets. “Put another way, market balances only begin to reach a state of equilibrium if U.S. production grows by 1.2 million bpd next year. Anything short of that and balances will remain tight. And this comes after virtually all of OPEC+ spare capacity has returned to the market.”

_*G-7 call for end of coal finance. *_G-7 countries did not agree on a full phaseout of coal, but agreed to cut off government-backed financing for new coal projects that lack carbon capture. G-7 countries also agreed on a goal to cut emissions in half by 2030.

_*G-7 backs away from EV target.*_ The G7 nations failed to set targets for EV sales in their push towards the electrification of transport at their latest meeting, pledging only to “intensify efforts in enhancing the offer of more sustainable transport modes”, the group said in its final communiqué today.

_*Nevada lithium project delayed.*_ *Lithium Americas Corp (NYSE: LAC) *delayed a highly-anticipated lithium mining project in Nevada while a court reviews whether the project was hastily approved during the Trump administration. 

_*Commodity traders bet on Russian oil. *_Two commodity trading giants are betting big on a Russian oil project in a rare move that could make or break the oil traders’ fates - and oil market observers should be paying close attention.

_*Equinor ups renewables investment. *_*Equinor (NYSE: EQNR)* outlined a strategy to ramp up renewables, setting a goal of having 50% of capex go to renewables by 2030, compared to 4% last year. It aims to have 12-16GW of renewables installed by that date. But the company declined to set declining targets for oil and gas production. 

_*Natural gas prices shoot up. *_A heatwave in multiple parts of the U.S. has pushed up natural gas futures, with July Nymex contracts rising to $3.35/MMBtu.

_*Europe turns to coal as gas grows scarce. *_Coal use in Europe is up 10-15% this year due to cold weather and low natural gas inventories. 

_*Lumber prices falling. *_Lumber prices staged a historic rally in recent months, but prices are now crashing, down by 42% since early May. “The rapid decline suggests a bubble that has burst and the question now is how low lumber prices will fall,” the Wall Street Journal wrote. 

_*BofA: Exxon probably will raise its dividend. *_Bank of America believes shareholders who voted in favor of the board shake-up were likely focused on one thing: the dividend.

_*Japan bets on hydrogen.*_ Japan is making a long-term bet on hydrogen, which critics view as unrealistic, but if it succeeds, could help build out a global supply chain. 

_*Saudi Aramco borrows to fund its dividend. *_*Saudi Aramco (TADAWUL: 2222)* returned to the global debt market to raise cash despite higher oil prices, raising $6 billion in Islamic bonds. Aramco generated $18.3 billion in free cash flow in the first quarter, just short of the $18.75 billion in dividends it shelled out.

_*Biden administration looks to auction offshore wind tracts in NJ.*_ The Biden administration on Friday announced that it would begin the formal process of selling leases to develop offshore wind farms in shallow waters between Long Island and New Jersey as part of its push to transition the nation to renewable energy.

_*Oil demand could surge by 8 mb/d.*_ S&P Global Platts Analytics expects global oil demand to surge by 8.2 million b/d from May to August as major economies continue to recover from the pandemic. 

_*Renewable energy’s employment problem. *_As the world reopens and the global and national economies begin to return to normal, the clean energy industry has run into the same problem as so many other economic sectors--there just aren’t enough workers.

_*The biggest threat to Europe’s battery boom.*_ Weak carbon dioxide (CO2) emission rules for car sales across the European Union and the UK in the near term risk undermining what is shaping up to be a booming battery manufacturing industry in Europe, a clean transport campaign group has warned.

BTC:

Astrological analysis: https://www.washingtonpost.com/technology/2021/06/13/maren-altman-tiktok-astrology-bitcoin/

Mr flippe-floppe-flye:










Essentially the market is rangebound in this chop awaiting direction from the Fed. tomorrow. If the message is inflation is transitory and we continue the monetary policy, inflation assets will move: commodities, gold, BTC and Tech. stocks. If there is a mention of a Taper of thinking about a Taper, the Bond market will likely puke and stocks across the board (initially) will sell-off and probably quite hard. Value will recover, but after how much damage?

So you have to ask yourself:



jog on
duc


----------



## ducati916 (17 June 2021)

As I am writing this post, the Fed. announcement is only 30mins or so away. Meh.






The basis of any discussion will be inflation, too hot, too cold or just right. 


























A number of prices. Most if not all have a constrained supply. Some of those supply issues are transitory, car rentals, some less so, building of new homes. The point: supply side driven inflation is transitory, for the most part. 

Expansion of the money & credit is not (generally) but it is not enough on its own to trigger a hyper-inflation, which is the fear.

A hyper-inflation requires that there be a significant expansion of money & credit AND a political manifestation: ie. all confidence is lost in the currency. That is not yet an issue.

So then we have the garden variety inflation:






Where are we?









On the way, but still a long way to go, assuming that we get there. Having said that, DXY is headed down. Once we hit, if we hit, a 70 handle, then we will have some serious inflation and depending on the political situation, potential could then exist for a hyper-inflation, but that is still a ways off.

No one is expecting a Bear.






DXY falling against the Russian currency. Russia is all about commodities.








to be continued....


----------



## ducati916 (17 June 2021)

Part deux:

Sectors:






The 'Skew'






Ratio:






Recently, the Options market has been quite a leading indicator. Both the skew (spread between PUT and CALL prices at the same strike) confirms the PUT:CALL ratio.

Add in very low vol. and we have a bit of a heady mix.

Energy, set to continue its run higher.






Dr. Copper. A blip or a warning?







Post Fed. action:






Mr flippe-floppe-flye:







And the Fed. just spoke:






Obviously not exactly what the market wanted to hear.

Often the initial move reverses. We'll see if that is the case today.

jog on
duc


----------



## ducati916 (17 June 2021)

Part trois:

So Mr Powell has started to think about a the 'Taper'.....











Will the bounce take hold?








jog on
duc


----------



## peter2 (17 June 2021)

Perfect report from the Fed for me. Perfectly predictable reaction from the market. Thank you. I bought the VIX (via UVXY) before the news and sold it after the news. 

The only bummer was one of my MT4 providers had server problems right about the time was due to report. I was unable to buy the index off the lows. Very disappointing and just a little sus.


----------



## ducati916 (17 June 2021)

peter2 said:


> Perfect report from the Fed for me. Perfectly predictable reaction from the market. Thank you. I bought the VIX (via UVXY) before the news and sold it after the news.
> 
> The only bummer was one of my MT4 providers had server problems right about the time was due to report. I was unable to buy the index off the lows. Very disappointing and just a little sus.




For those day trading, the index vol. is obviously a very tradable event.

The issue longer term for the market will be Bonds:






They spiked as stocks fell. While stocks have bounced from the lows, Bonds have pretty much held onto their spike as has DXY:






Neither is good for stocks if those trends take hold and continue.

We will get a better idea tomorrow and into the w/e as to the more sustainable nature of the various moves in TNX, DXY and their impact on SPY.


jog on
duc


----------



## ducati916 (17 June 2021)

Roundup:


So today the Fed. essentially reaffirmed that they will continue Operation Twist, QE and other programmes designed to elevate risk assets through to 2023. Hence yields will come back down, DXY will resume its trend lower, commodities will trend higher as will inflation. How far and how fast might be an issue for stocks. Other than a correction, the Bull market in stocks looks set to continue.






I would expect yields to fall into the EOW.






Secular, yes. That does not however prevent a ramp up in volatility.






We have definitely lost momo. in the SPY. Which means, we will probably have an uptick in vol. and some market weakness. This is pretty much confirmed by the internals:











I would expect a bounce in copper. Ready to snap back into trending higher.






Lots of inexperienced investors/traders in there.







Mr flippe-floppe-flye:








Gold/Silver:

From Mr Rederob:











PMs are (of course) correlated with real interest rates. Real interest rates are significantly negative (-4%) by CPI numbers and even more negative if the true rate of inflation, probably 9% +/- is used. As yields fall (again) due to Fed. intervention, so PMs regain their mojo.

Second, Basel III approaches. Now this may turn out to be a bit of a non-event, but I don't think so. The Bullion Banks will probably choose to comply and close their trading desks as the Balance Sheet penalties to non-compliance, make the trades hardly profitable. If and it is still an if, the BB do close down their trading desks on (paper, unallocated) gold, then the contraction of liquidity in COMEX will be profound, allowing the trading of allocated physical to dominate. The current imbalances will require significantly higher prices.

So why the dip today? In part due to $TNX and DXY bounces higher, which are unlikely to be sustained.

Second, if the BB are still short, which by definition they have to be: then today with the confusion of a Fed. announcement, which was always going to be taken as a stand on policy re. inflation, which is a primary driver for POG, this was a short term opportunity to drive POG lower, prior to 28 June and Basel III.

Tomorrow looks bad for stocks. I am expecting short term weakness and a continued move lower in the indices, which may well run into next week.


jog on
duc


----------



## Beaches (17 June 2021)

In regard to commodities and the recent sell off

_China has stepped up its campaign to rein in commodity prices and reduce speculation in a bid to ease the threat to its pandemic rebound from soaring raw material costs._​​_State-owned enterprises were ordered to control risks and limit their exposure to overseas commodities markets by the State-owned Assets Supervision and Administration Commission, according to people with knowledge of the matter. The companies have been asked to report their futures positions for Sasac to review, said the people, who asked not to be identified because the information is confidential._​​_In a second development, the National Food and Strategic Reserves Administration will soon release state stockpiles of metals including copper, aluminum and zinc, the agency said in a statement Wednesday. The metals will be sold in batches to fabricators and manufacturers, it said, without giving the volumes to be released. ..._​​_“We haven’t seen the country release state reserves for years,” said Jia Zheng, a commodity trader with Shanghai Dongwu Jiuying Investment Management Co. “This will boost short-term supply, sending a bearish signal to the market.”  ..._​​_While China has accelerated its efforts to curb inflationary pressures, the moves have had mixed results. Chinese Premier Li Keqiang stepped up the rhetoric on May 12, urging the country to deal with soaring prices. Iron ore slumped in the latter part of May following his comments, though it’s since rebounded, and base metals prices remain much higher than last year despite a recent retreat._​​_Goldman Sachs Group Inc. said last month the country’s efforts are likely to be in vain as China is no longer the buyer dictating pricing, with the price dip a clear buying opportunity._​









						China’s Campaign to Control Commodities Goes Into Overdrive
					

(Bloomberg) -- China has stepped up its campaign to rein in commodity prices and reduce speculation in a bid to ease the threat to its pandemic rebound from soaring raw material costs.State-owned enterprises were ordered to control risks and limit their exposure to overseas commodities markets...




					au.finance.yahoo.com
				




Despite the best efforts of China to date, Iron Ore remains sticky at over US$200/t.

.


----------



## ducati916 (18 June 2021)

Post Fed. we look like this:






Pretty meh.

Sectors:






DXY:






And the effect on commodities:






Carnage.


Mr flippe-floppe-flye:









So some questions:

(a) Is the DXY rally sustainable; and
(b) Where to with TNX; 
(c) Where to with commodities;
(d) Where to with stocks.


The Fed. will continue to buy $120B/month of Treasury & Mortgage Bonds. Rates will not rise appreciably (add in Twist to that) in the near term. The TNX is back down already.






What other catalyst remains for DXY?

Well nothing. The huge move is probably: (a) short covering, (b) algos chasing short term moves. Of course we cannot discount fully (c) DXY is entering a new uptrend. Time will reveal all. I remain short and bearish DXY.

So if I am correct on DXY and TNX, then commodities would be expected to recover. Commodities and DXY (TNX) are all quite tightly correlated.

Same chart, 1 without lines, 1 with.

Resolution could be expected reasonably quickly. There may well be false moves that break down, but reasonably soon it will become apparent pari passu, what the situation actually is.











Stocks by contrast are out on their own currently. The sectors continue to rotate through. Tech. with the drop in TNX is strong, XLE with strength in DXY is weak. At the moment most of the internals are signalling weakness. Not a major collapse type of weakness, just a meh weakness. If Tech. can continue to rally and it looks that it will, it will exert a disproportionate effect due to the number of mega-caps contained FAANGMA. With low rates going forward for 1yr+, they continue their march higher.

For the moment, the Bull looks safe.

jog on
duc


----------



## Smurf1976 (18 June 2021)

ducati916 said:


> What other catalyst remains for DXY?
> 
> Well nothing. The huge move is probably: (a) short covering, (b) algos chasing short term moves. Of course we cannot discount fully (c) DXY is entering a new uptrend. Time will reveal all. I remain short and bearish DXY.



Wondering if you have any thoughts on the AUD?

I don't trade forex but I note the sharp down move in the AUD and it's at a point that would seem somewhat critical. 75 cents so a nice round sort of number and one which has been support through 2021 thus far.

I don't trade it, just something that stood out and came to my attention so wondering if you have any thoughts looking at it from that perspective, AUD specifically, rather than the USD versus other currencies in general?


----------



## ducati916 (18 June 2021)

Smurf1976 said:


> Wondering if you have any thoughts on the AUD?
> 
> I don't trade forex but I note the sharp down move in the AUD and it's at a point that would seem somewhat critical. 75 cents so a nice round sort of number and one which has been support through 2021 thus far.
> 
> I don't trade it, just something that stood out and came to my attention so wondering if you have any thoughts looking at it from that perspective, AUD specifically, rather than the USD versus other currencies in general?





Mr Smurf,

So AUD is considered a commodity backed currency as are Brazilian Real, Russian Rouble, CAD, EUR. With the sell-off in commodities, you will also see the sell-off in commodity based currencies.







I would expect all to reverse once the fallacy of the Fed. position is really thought through. However, how you might play this is obviously important as while I would expect DXY to continue its trend lower, that (a) could take some time + increased vol. or (b) it doesn't reverse.

AUD will move with commodities. Therefore whatever your position is on commodities, will be your position on AUD. The story with commodities would seem to be twofold: (a) DXY weakness + speculation and (b) longer term constrained supply issues. Over time (b) will dominate, but short term (a). ATM AUD is experiencing (a). Over time it will correlate to (b).

Is (a) over? Probably not. I can see DXY moving higher in the shorter term and AUD lower. Eventually, economic reality will prevail. As you know, as you yourself have explained it, commodity supply issues are not overnight fixes. They take time, assuming that they are even being tried to be fixed. POO is the big one. I do not believe that the Arabs/Russians are going to open the taps to alleviate supply shortfalls. Venezuela is a basket case currently, so its reserves although significant, are probably unavailable.

We have a whole host of drivers for other commodities: infrastructure build-outs, transitioning to green technologies, etc. All are commodity intensive. Therefore I would be bullish commodities longer term. Also, commodities have been in a pretty severe bear market and look to be breaking out of that bear market.

Therefore unless DXY can move higher, a lot higher and enter its own bull market, inflationary pressures (PPI) will continue to build. These could be countered by higher rates, but, that's not happening until 2023 at the earliest and 25 basis points. So increased demand, constrained supply will drive commodities higher. That means AUD higher over time.

DXY will in my opinion move lower. By a lot. The US is on the verge of MMT. They are trying to hold off with essentially monetising fiscal spending debt via the Fed. That may not be enough as the debt ratios to GDP etc are now truly out of control with no end in sight. I don't know if they go the full monty and implement MMT, but you never know.

AUD remains a fiat money, but at least it is linked to commodities (as are other commodity backed currencies) however tenuously and will fare better than DXY unless DXY collapses, in which case all fiats die.

With regard to PMs: if you don't hold it, you don't own it.

I am short DXY OTM PUTS. Fixed risk. Therefore, big moves against the position do not alter my risk profile.

So a rather long winded answer.

jog on
duc


----------



## qldfrog (18 June 2021)

ducati916 said:


> a rather long winded answer.



That is clear and most welcome


----------



## ducati916 (18 June 2021)

Roundup:

So someone bullish on DXY:






A take on Benjamin Graham's voting and weighing machine:






Which is pretty much where we are with DXY.

Some history:






Longer term, US liabilities:






Obviously these have risen since 2018. At current levels, if interest rates were to climb to slightly over 3%, that would consume 30% of US GDP just to service interest payments. That is equivalent to what has been spent on COVID since it hit just over 1 year ago. That is simply not sustainable.

Further:






These liabilities are not priced in dollars. These are fixed in services to be provided. Thus, they cannot be inflated away. They remain. Of course as people die, so those liabilities reduce. Who dies first? Patients or DXY?

Inflation:






The inference being that the 'Cover' is wrong. Maybe. Early days yet. But that essentially says you believe the Fed. and Government.

Sectors:






Not sure what this coin was...gone.









And Gold:






The OI continues to shrink, rather inferring that the BB are gradually leaving the market in anticipation of Basel III. We'll see.


jog on
duc


----------



## ducati916 (19 June 2021)

Closing out the week:

Nothing to get excited about:






Sectors for the week:






DXY:






VIX:






NYMO:






NYSI:








Inflation:











Fiscal spending (potentially) continues.






Mr flippe-floppe-flye:










The interplay between growth, value, inflation, yields and the Fed's intentions 18mths hence took centre stage and risk assets rotated wildly from Wednesday and the Fed. announcement.

The Bond market is so manipulated that it is really difficult to ascertain any real information from prices. Currently we have the 2yr spread with the 10yr contracting. Not great for financials and they are broadly selling off (XLF). The 2yr yield rising and 10yr falling:






Commodities have stabilised today after just the mere mention of a 25 basis point hike, which if the 2yr continues higher will actually need to be a cut.

Which leaves DXY. This really has to become the chart of choice for price discovery as it really cannot be manipulated by the Fed. alone. It would require all the Central Banks to be onboard and coordinated, which even then probably wouldn't be sufficient. Needless to say, they aren't. DXY has shot higher, but already its momentum is starting to fade. With more spending proposed and likely to eventuate from Congress, the continued Fed. purchases of Treasuries and MBS to the tune of $120B/month, the expansion of M2 will not slow anytime soon.

The stock market looks ready to test its 50EMA, which has held solid on the last 6 occasions that it has been tested. Does it hold next week, which is another (long weekend) shortened trading week with Martin Luther King day? At the moment I'm thinking no. I think we break the 50EMA which will certainly set the cat amongst the pidgeons and engender some small measure of panic. I'm thinking circa 400 on SPY. So my stock exposure is now 100% hedged.

Commodities will fare as DXY moves. If DXY rallies higher, commodities come under further selling pressure. If DXY falls, commodities will resume their upward trajectory. I would be bearish DXY and bullish commodities. We'll see. In this space I am short DXY, long silver via PSLV and actual physical (if you don't hold it, you don't own it). I also hold a hedged derivative trade in silver via SLV options.

My yield model has 1.54%. Yields were sitting at 1.52%. About right. I am expecting that model to adjust lower. 


jog on
duc


----------



## qldfrog (19 June 2021)

Could this be influencing today:
https://finance.yahoo.com/news/quadruple-witching-friday-see-818-171011439.html


----------



## ducati916 (20 June 2021)

Week's roundup:

Oil news:

*Friday, June 18th, 2021*

The months-long oil price rally hit the pause button this week, following a shift in outlook from the U.S. Federal Reserve. “Inflation is your friend until it isn’t,” Louise Dickson of Rystad Energy said in a statement. “The oil market is re-learning this lesson in the past two trading days after the US central bank hinted at potential interest rate hikes in 2023, which would make oil more expensive in non-dollar denominated economies and could damper demand.”

_*$100 oil looking more likely.*_ Many oil traders see oil remaining above $70 per barrel for the foreseeable future, with $100 oil no longer an impossibility.

_*Court shoots down Biden’s public lands freeze. *_A federal court said that the Biden administration’s pause on new leases for drilling on public lands was illegal. But the administration still has leverage to slow walk or delay leasing.

_*GM to ramp up EV spending by 30%.*_* GM (NYSE: GM)* will increase EV spending to $35 billion through 2025, a 30% increase over its previous guidance. It will also build two new battery plants in the U.S., although the locations are to be determined. The decision comes a few weeks after* Ford (NYSE: F)* said it would spend $30 billion on EVs through 2030.

_*It’s too late to avoid supply crisis.*_ The level of drilling and by extension capital investment is insufficient and has been for a number of years to sustain oil production at current levels. The lack of new drilling will start to show in a decline in production as early as next year.

_*Renewables boom has barely impacted fossil fuels. *_Oil, gas, and coal still represent over 80 percent of final energy consumption, not much different from a decade ago, despite the rising share of renewable energy in the world’s total energy consumption.

_*India’s oil demand rebounds.*_ India’s oil demand rebounded in the first half of June, offering bullish momentum to the oil market.

_*Oilfield services prices are on the rise. *_The steady and substantial climb in oil prices has led to more business for oilfield service providers and higher prices. “We are already beginning to see a positive increase in activity and an upturn in service pricing will hopefully be reflected in the coming months,” Packers Plus Energy Services’ chief executive Stuart Wilson told Reuters.

_*OPEC urges members to continue oil investments. *_The energy transition should not crowd out any source of energy as all energy sources of today will be required for the foreseeable future, OPEC Secretary-General Mohammad Barkindo said.

_*Iraq to boost West Qurna 1 by 40%.*_ Iraq plans to boost the production capacity of West Qurna 1 by 40% to more than 700,000 b/d over the next five years.

_*OPEC sees little shale growth this year, more in 2022. *_OPEC officials heard from industry experts that U.S. oil output growth will likely remain limited in 2021 despite rising prices, OPEC sources told Reuters. “The general sentiment regarding shale was it will come back as prices go up but not super fast,” said a source. “It looks like the shale oil genie is going to stay in the bottle for now,” said the source, adding: “OPEC and Saudi Arabia have a lot of power at this time.”

_*Shell’s Permian exit a “litmus test.” *_The potential sale of *Royal Dutch Shell’s (NYSE: RDS.A) *Permian assets will offer a “litmus test” for how the industry values the prospects of U.S. shale. Shell is hoping to raise $7 to $10 billion, which would value its acreage at $40,000 per acre. Most Permian deals this year have closed between $7,000 and $12,000 per acre, according to Reuters.

_*China to release metals from reserve. *_China announced plans on Wednesday to release industrial metals from its national reserves to curb commodity prices

_*Booming first quarter for solar and wind. *_The U.S. added 3.3 GW of new wind in the first quarter, and 5 GW of solar. For wind, it was a 75% year-on-year increase in new capacity.

_*Siemens overwhelmed by wind demand.*_ Siemens (ETR: SIE) is being overwhelmed with requests to build turbines in countries tapping wind resources. “The challenge we have is how many countries are saying, ‘Hey, you need to build a factory here,’” Chief Executive Officer Christian Bruch told reporters.

_*Oil traders transition to both oil and renewables.*_ Vitol said that it aims to have 50% of its investments in renewables, gas and power, and the other 50% in oil within five years. Other traders are viewing a similar transition. “We will keep oil trading activities as we see strong demand for oil in the next 10 years,” said Torbjorn Tornqvist, CEO at Gunvor. “We are also increasing our power trading, investing in technologies to decarbonize, and looking at existing solar and wind assets.”

_*Sumitomo withdraws from new oil development. *_Sumitomo Corp. (TYO: 8053) has decided to no longer develop new oil reserves and transition its fossil fuel business to renewables over time.

_*Australian LNG industry pivots in support of carbon price. *_Australia’s liquefied natural gas (LNG) sector is changing from an industry that was vociferously opposed to any form of carbon taxes or trading to one that views a price on emissions as vital to its future.

_*China may crackdown on private refiners. *_In April, officials from China’s economic planning agency began probing teapots for suspected violations of tax and environmental rules. “Recent moves by the Chinese government indicate a change in the wind against the smaller independents,” an analyst told Bloomberg. “This is likely to hand power back to the majors.”


Petrol prices:
















The expectation is lower.

The internals continue to weaken.













Nowhere near enough breadth to push the market higher on these numbers. Unless there is a pretty dramatic shift, the indices are headed lower. There is a pretty major divergence between NASDAQ and S&P/Dow indices currently (reflecting the Tech. strength).


DXY Bull.







Shorter term, definitely possible.













Certainly that is what the Fed. needs.






Related to yields and their spreads.


BTC.






continued.....


----------



## ducati916 (20 June 2021)

Part deux:

Mr flippe-floppe-flye:











Year 2 markets:






Bubbles:














David Rosenberg on inflation:



jog on
duc


----------



## peter2 (20 June 2021)

@ducati  Helpful round up there. If the US weakness in financials and materials spreads to the ASX then were in for a dip very soon. The potential size of the dip is incalculable. We'll have to wear it whatever it is. 

The strong DXY is my main concern because of its downward pressure on most commodity prices. I must admit that most commodity prices have rallied too fast and got too high. There had to be a correction. If this correction is due to the rising DXY then so be it but I can't see the DXY rallying too high either. The swift commodity selloff is a concern as it'll take longer to stabilise and then build demand for the next inevitable rally. We'll have to be a little patient before we get into the next commod rally. I've started a position in copper but I may be much too early. 

Oil price is not a factor atm. It can just sit where it is and everyone will be happy for a while. 

The FED will mention the word "taper" again soon and the market will have another fit. They have to taper and then raise rates eventually. It'll be needed sooner than they think. The FED's biggest problem is convincing the market that the economy is healthy enough to stand on its own without assistance. 

Unleaded gas seasonality, heh? Interesting, I'll keep an eye on the gasoline chart. It's normally highly correlated to oil.  Maybe a spread opportunity, sell gas, buy oil for the next month.

I enjoy the humour and emotional ups and down of FFFly. He keep me informed of the "stocks du jour". They're always good to monitor for a trade.


----------



## Smurf1976 (21 June 2021)

peter2 said:


> Oil price is not a factor atm. It can just sit where it is and everyone will be happy for a while.



One thing I note is that looking back there's a high correlation between oil price run ups and market tops.

It's not perfect but there's been plenty of instances where the oil price runs up then a few months later there's either a recession underway or the market has topped (or both).

Oil's worth watching even for those who don't trade it and who don't own oil stocks for that reason. It has often been and early warning.


----------



## ducati916 (21 June 2021)

The data supporting secular inflation from Double Line and Gundlach:

China providing an increased proportion of finished goods to imports (US). Obviously (shown later) a significant impact on trade deficits and DXY.






Consumer sentiment in an 'inflation' is actually very important. If the consumers spending habits modify, that can have a significant impact. The data suggests that this is from a sentiment case, happening.






Certainly commodity markets for food based items are bullish to higher prices.







PPI moving higher. Has come off the boil recently. Can easily heat up again.






Inventories are as low as they have ever been. Lower. This correlates to an extent with the container ships (inflationary freight charges) sitting offshore waiting to unload. After it all shakes out, this may improve somewhat.







This is a great chart and one for @peter2 . The correlation twixt DXY and deficits is a strong one. This chart only suggests DXY has one direction to go.






House prices on fire. No inventory. Unlikely to be any coming down the pike, builders are just not building.











Real Estate agents must be hurting.







Certainly contributing to housing issues.






Consumer spending set to continue. Job openings at all time highs. Many simply better off not working.







All of the above evidence that inflation is unlikely to be as transitory as the Fed. are spinning. If we take the deficit spending combined with the imports from China/exports from US, this just looks set to continue while the unemployment benefits persist.

How is that financed? By monetising increased debt via the Fed. DXY follows the deficit spending, which means an increasingly weak DXY, which means higher commodity prices, which flow through to CPI data, which can change spending habits.

Can the US increase interest rates? No. The level of debt is so high that 3.5% yields would consume 30% of GDP. Not possible. Thus interest rates stay low or lower, further preventing any hikes into the future.

Soon I think the US contemplates going the full monty: 100% MMT. Forget issuing debt to monetise, just print cash. It happens if/when we see a digital dollar.

Stocks are simply unstable at these levels. That does not mean they cannot go higher, what it means is the higher they go, the less stable they become with less and less required to cause a major decline. They become increasingly fragile to anything and everything.

Portfolio:

Stocks: 100% hedged. I'm giving up a certain amount of upside to protect the downside (Collar at credit).
Commodities: increased exposure significantly, mostly in agricultural commodities (Wheat, Coffee, Cocoa, Sugar).
PMs: increased exposure: Silver via PSLV (physical silver) + actual physical.
DXY: short.

jog on
duc


----------



## ducati916 (21 June 2021)

Part deux:

Retail (the tail) wagging the dog.






Weak DXY, strong commodities. Strong correlation.






Interest rates, broken. Hardly surprising given the level of manipulation in the market:






Mr flippe-floppe-flye:











jog on
duc


----------



## qldfrog (21 June 2021)

ducati916 said:


> PMs: increased exposure: Silver via PSLV (physical silver) + actual physical



Mr Ducati, from reading your posts, it is clear that you always invest in an agile way, ready to jump in or out of an etf (usually) weekly if not daily .
If i read you well above, you purchased some actual silver coins/ bars..that you stored in a safe or buried under the lemon tree in the garden.
With the time and hassle it takes to buy the real thing, not forgetting the costs involved, i assume you take here with silver a multi months if not year bull position.
Do i read you well?


----------



## ducati916 (21 June 2021)

qldfrog said:


> Mr Ducati, from reading your posts, it is clear that you always invest in an agile way, ready to jump in or out of an etf (usually) weekly if not daily .
> If i read you well above, you purchased some actual silver coins/ bars..that you stored in a safe or buried under the lemon tree in the garden.
> With the time and hassle it takes to buy the real thing, not forgetting the costs involved, i assume you take here with silver a multi months if not year bull position.
> Do i read you well?





Yes.

So I am in the camp of persistent inflation. While I have a lot of respect for Mr Rosenberg, I think on this he is incorrect. If the US moves to a 100% MMT rather than simply QE etc, DXY is really running a risk of a collapse or a hyper-inflation and it will take most fiats with it, given that it is the premiere reserve currency. If they stick with QE, then the debt load continues to accumulate and deficit spending becomes ongoing (tax revenues fall far short) as does continued monetary policy to cover interest payments. Then you have the BoP issue. Currently the US does not produce anywhere near enough 'stuff'. Those BoP continue to increase, driving DXY lower.

All add up to a weak DXY. A weak DXY means higher commodity prices = +PPI = +CPI = higher inflation, which cannot be fought with higher yields....hence it becomes pernicious.

So I do not think that for the remainder of the year that stocks have significant upside. They may continue to rise slightly, but conversely the downside risk is potentially enormous.

So essentially I have 100% hedged stocks with a collar. If a collapse comes, all fine. If the market rises significantly I'll miss out on some, but can always roll higher.

If DXY continues weakness, then commodities will run. ATM I like those listed. I'm hoping for a deeper pullback in copper, I'll BTD. This is where I'll make up for the weakness in stocks (I think).

PMs.

So we have Basel III at the end of June, which (ignoring inflation for the moment) is a catalyst for higher prices. Silver due to greater leverage (ratio currently to gold) if they run, will run further. So here I have PSLV which is the Sprott ETF backed with physical and actual physical, in my SDB. Essentially these are just hold largely as an insurance policy.

I have a large derivative position in SLV, which is more of a trading exposure. SLV is essentially unallocated silver to retail, only the BB can access the physical silver held by the ETF (same with GLD). There will be the usual fun and games in these for some time. Goldman Sachs just purchased the Australian Mint's ETF for gold. They have already re-written the contracts. No longer is that backed with physical.

Cash. I still hold cash against a deflationary bust, which could so easily eventuate.

So a bull for commodities, DXY bear, stocks neutral, cash neutral.

The trading positions disclosed on the other thread will be/are hedged, so market neutral. Trading the spread.


jog on
duc


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## qldfrog (21 June 2021)

ducati916 said:


> Goldman Sachs just purchased the Australian Mint's ETF for gold. They have already re-written the contracts. No longer is that backed with physical.



My understanding is that this only affects nyse listing.
And asx pmgold remain unaffected and redeemable for bullions here in oz
Do you know otherwise?
Disclaimer: pmgold is my goto etf for physical gold on the asx, so i have some pretty heavy interest in this matter


----------



## ducati916 (21 June 2021)

qldfrog said:


> My understanding is that this only affects nyse listing.
> And asx pmgold remain unaffected and redeemable for bullions here in oz
> Do you know otherwise?
> Disclaimer: pmgold is my goto etf for physical gold on the asx, so i have some pretty heavy interest in this matter




Not sure about ASX version. In the US retail are stuffed. This Basel III reset is really causing all manner of machinations.

jog on
duc


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## qldfrog (21 June 2021)

Thanks will try to investigate asx: pmgold


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## qldfrog (21 June 2021)

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02276769-2A1247783?access_token=83ff96335c2d45a094df02a206a39ff4
		

Last release of product statement document on 03/09/2020
It clearly states


So we have a backing of 1/100th of troy ounce physical gold
Seems we are safe with asx listed pmgold.
Sorry for the diversion but it might be useful information to others


----------



## Smurf1976 (21 June 2021)

ducati916 said:


> The expectation is lower.
> 
> The internals continue to weaken.



First I must thank you for your excellent ongoing analysis.   

I was however hoping that you'd be wrong on this occasion but it seems not, quite a few of my trades were sold due to hitting stops today.

The good news is at least they were mostly in profit at the sold price. But I'd still rather they went up than down.


----------



## ducati916 (22 June 2021)

The start of a new week:










Everything higher. Nice bounce after last week. On EOD data I'll be interested to see how breadth is doing.

Cryptos:
























Not so good.

The Fed. and transitory inflation:
















Stocks (asset price inflation) fuelled almost (one would think) via the Fed. Balance Sheet and perpetual QE. Which is why when the 'Taper' word is uttered, even 2 yrs away, stocks puke.

So the Fed. is pretty much handcuffed to stocks/bonds and additionally has taken on Fiscal spending. How this inflation, which is leaking out of asset price inflation into CPI/PPI inflation isn't transitory is a challenge to prove.

continued....


----------



## ducati916 (22 June 2021)

Part deux:







Housing:






This was part of the problem in 2006 as this facility disappeared into 2007 as banks started to realise their problems. Early days obviously, but potentially (in part) explaining the ability not to return to work. Where is the money actually going?

Mr flippe-floppe-flye:






Bounce or continuation to new highs?

I'm with Mr fff on this one: it looks and feels more like a bounce. VIX would disagree and indicate a move higher into ultimately new highs. So I think tomorrow we move lower. If a bit of a panic does not eventuate, then we will likely move to potentially new highs. If however we do sell off again tomorrow, but we get a bit of a panic on, things might turn a bit more serious.






The EOD data will help in clarifying those possibilities. Of course that's pretty useless when you want to position today.

Yields continue lower on my model. Yields also having a bounce today:






DXY lower.

DXY will continue to weaken and sell off, giving commodities fresh legs. 







This is the chart that has me concerned: this is the classic 'risk off' chart. Only a matter of time until equity markets either pay attention or get caught by a surprise. The Bond market is often early to leave the party, but once the hot girls leave, the party is over anyway, only the piss-heads remain.








We also have (the beginning of) confirmation from the equity market: the defensive sector is catching a bid.







I remain very cautious re. equities.


jog on
duc


----------



## Thegoat (22 June 2021)

qldfrog  I have been following you since the age of 10 years


----------



## qldfrog (22 June 2021)

Thegoat said:


> qldfrog  I have been following you since the age of 10 years



Arrrgg that's a kick in the guts..😊
Hope you learnt and still learn from my endless mistakes
My lessons so far: listen to knowledgeable people like @ducati916 , if you think too much you are right far too early and the market is slow and dumb, so you loose a lot of opportunities
Even covid
i was warning about covid and wuhan lab escape in December 2019 due to my tight links to China then, moved to cash ,bonds and bear investments for the non systemic part.did ok , some small profit, no loss but was far to early
Be optimistic or if not, stick to systems
And do not trust gov or fed banks, in 2021, most is in narrative, not knowledge or truth


----------



## qldfrog (22 June 2021)

That post got stuck yesterday
In term of US market and dxf, in an environment of currency manipulation and collapsed / fake economy, have you thought mr Ducati to Russia

Strong currency after nearly a decade of gold buying by central bank, huge reserves of gas and oil, minerals with a ready market in China, outside any western interference..

So in a world of USD collapsing, oil crisis following the west woke addiction and self suicidal western democraties, i am keen to see the Russian currency and market as a potential saviour.

But unsure what to purchase..medium long term.

There is a 3x ETF but not good for anything but short term.

I ordered a few vaneck Russia etf : RSX

Does this sounds too crazy?


----------



## frugal.rock (22 June 2021)

peter2 said:


> Oil price is not a factor atm. It can just sit where it is and everyone will be happy for a while.



It soon will be....
I'm "happy" when it sits up overnight   + 2% nice bullish bar.
Plenty of room left in a oil trade, one of the surer bets at the moment imo.


----------



## ducati916 (23 June 2021)

Byte of a crypto day:
















In 1 hour:











The low was $28K +/-. The trading range looks to be collapsing lower. HODL, Diamond Hands, Laser Eyes, etc. are not actual strategies.


Meanwhile:













Stocks, pretty much across the board inch higher.

Stocks to Commodities:






Now of course that doesn't mean commodities can get cheaper and stocks more expensive. But thinking in probabilities, which end of the trade would you rather be on going forward? I don't mind holding cheap stuff and waiting a while for it to get more expensive.

There was an article (seems to have disappeared) on weather (too hot, no water) in the US currently. Agricultural crops are being laid waste. Now harvest time is +/- September. If this article is correct and if weather remains hot/dry, those futures will start creeping higher and higher, adding too inflationary pressures via reduced supply (in this case).

Mr flippe-floppe-flye:






For @qldfrog:






Russia being an oil producer, looks to be benefitting. The issue for me is this: is it a 1 trick pony (oil) and if so, why not just trade oil? I know they historically grew lots of wheat. Still the case? Also, how closely correlated to 'equities' are they?

On my weekly chart, RSX looks set for a bit of a pullback, even on this chart. 


jog on
duc


----------



## ducati916 (24 June 2021)

Still lots of noise in the markets, so a number of today's charts are weeklies to stand back somewhat from the noise.

Oil news:

Coal stockpiles declined by 16 million tons in February 2021, the largest inventory decline since July 2011.

-    Typically, coal stocks decline in the summer months, when coal demand surges. 

-    Rising natural gas prices in late 2020 and early 2021 have also increased coal demand, with coal generation up 16% in December 2020 and January 2021, from a year earlier.     

*Market Movers*

-    The Biden administration is considering a ban on polysilicon from Xinjiang, China over the use of forced labor. Solar stocks trade mostly lower on Monday, with* Sunrun (NASDAQ: RUN)* down 4.7% during midday trading.

-   * Devon Energy (NYSE: DVN) *announced new emissions targets, including net-zero targets by 2050 for Scope 1 and 2. 

-    *Cimarex (NYSE: XEC)* was upgraded to a Buy rating by Bank of America, which said it likes the stock “in spite” of the pending acquisition of *Cabot Oil & Gas (NYSE: COG)*. BofA said the deal also may not close.  

*Tuesday, June 22, 2021 *

Oil prices shot up on Monday as bullish sentiment around demand took hold, but in early trading on Tuesday, prices were slightly down on news that OPEC+ might start increasing production. 

“Reports that OPEC+ is already discussing, ahead of its scheduled meeting, to increase its output from August indicates that the demand-supply gap is already becoming an issue and that the alliance is working on a plan to tap that deficit,” Louise Dickson of Rystad Energy said in a statement. “The OPEC+ chatter to raise supply is the most bearish risk for the recent oil price rally, which has been propelled on strong summer demand and an overall conservative supply environment.”

_*OPEC+ discusses oil increases.*_ OPEC+ is discussing a further easing of oil output cuts from August as oil prices rise on demand recovery, but no decision had been taken yet on the exact volume to bring back to the market, sourced told Reuters. “It is highly possible to increase gradually from August,” said one of the sources.

_*BofA: Oil could hit $100. *_Bank of America is out with one of the bullish calls yet, predicting that Brent could surge to $100 per barrel next year. “There is plenty of pent-up oil demand ready to be unleashed,” said Francisco Blanch of BofA.

_*What about $130?*_ From $35 per barrel to $130 per barrel—this is the range for oil prices in the next few years that we could see, according to a commodity trading group.

_*Exxon prepares job cuts.*_ *ExxonMobil (NYSE: XOM)* is planning on culling its workforce by as much as 10% over the next three to five years using an internal management system that ranks its employee performances against one another. 

_*Gas drillers perform well as prices rise.*_ Gas drillers such as* Range Resources (NYSE: RRC) *and *Antero Resources (NYSE: AR)* have been among the best performers of the energy sector with Nymex natural gas prices up more than 90% over the past year. Demand is up on hot weather while production is far below the December 2019 peak. “In the past we’ve had these demand gains, but they were all overwhelmed by production increases,” an energy analyst told the WSJ. “We don’t have that any more.”

_*U.S. shale finally making money. *_U.S. shale industry on track to generate $30 billion in free cash flow this year, which comes on the heels of a decade-long string of losses totaling $300 billion in negative cash flow. 

_*Colorado regulators prepare orphan wells regulations. *_Colorado oil and gas regulators looking to avoid a rash of abandoned and unplugged oil and gas wells are proposing to increase financial guarantees by operators for each of their wells — a price tag that could add up to billions of dollars.

_*Iran stores oil, readying for sanctions relief.*_ Iran could quickly export millions of barrels of oil it is holding in storage if it reaches a deal with the United States on its nuclear program. Iran has been stashing oil on tankers at sea, readying for a breakthrough, according to Reuters.

_*New Houston oil contract launched.*_ *Magellan Midstream Partners (NYSE: MMP)*, *Enterprise Products Partners (NYSE: EPD),* and Intercontinental Exchange (ICE) announced the establishment of a new futures contract for the physical delivery of crude oil in the Houston area.

_*EU considering phaseout of ICE vehicles. *_The European Union is considering a mandatory phaseout of sales of gasoline and diesel cars by 2035. The final text of the European Commission’s new rules are set to be published on July 14.

_*EIG Global Energy Partners to buy Aramco assets for $12 billion.*_ U.S.-based EIG Global Energy Partners said on Friday a consortium it led has closed a deal to buy 49% of Saudi oil producer *Aramco's (TADAWUL: 2222)* pipelines business for $12.4 billion.

_*SEC prepares climate disclosure rules.*_ The Securities and Exchange Commission is preparing to require public companies to disclose more information about how they respond to threats linked to climate change. A proposed rule could be issued by October, according to the WSJ.

_*Moody’s: Gulf states need 10 years to end oil dependence. *_Countries in the oil-exporting Gulf will remain heavily dependent on hydrocarbon production for at least the next ten years as efforts to diversify economies have made limited progress since the 2014-2015 oil price shock, Moody's said.

_*India’s LNG imports drop in May, but now rebounding.*_ India’s LNG imports declined in May due to coronavirus restrictions. However, India returned to the spot market more recently after a two-month absence, a sign that demand is on the rebound. 

_*Caribbean refinery shuts.*_ Limetree Bay Energy will shut its St. Croix refinery indefinitely due to financial problems, following the forced closure of the 210,000-bpd facility by the EPA over environmental concerns.

_*Senate energy committee to hold hearing on bill. *_A Senate committee that’s led by key swing vote Sen. Joe Manchin (D-W.Va.) has released a 400-page energy infrastructure proposal that it will weigh at a hearing scheduled for Thursday.

_*Oil traders beefing up renewable fuels trading teams. *_Oil traders and investment firms, including Citadel, Gunvor, and *Trafigura (TRAFGF.UL)* are bolstering U.S. teams that specialize in trading renewable fuels as demand soars, according to Reuters.

_*Reddit-fueled stock rally for oil driller. *_Tiny oil company *Torchlight Energy Resources Inc. (NASDAQ: TRCH)* saw its shares more than double in a week after it became the latest stock touted on Reddit as a possible short squeeze.

Some random stuff:

The retail guy, back in a big way.











The 'narrative' is an important part of this retail investment engagement. I have no idea whether Buffett like considerations are given to the 'numbers', but I doubt it. When I encounter this 'age group' they can barely add 2 + 2. I digress.

A Hedge Fund (probably just a small one) blew itself up over GME.






One for the 'narrative' buyers.

Commodities in pullback mode. Buying opportunity or end of the story?







The biggest 'narrative' of them all"






Mr flippe-floppe-flye:






One of the popular 'narrative' strategies is buying OTM CALLS. Noisy on the daily:






On the weekly:






A clear bias from 2020 can be seen. Option volumes have exploded making the Options market far more important in moving stocks. Gamma squeeze has been at the forefront of this OTM strategy and to be fair, due to an all in mentality, has succeeded far more than expected. A number of Long/Short strategies have just collapsed in the last year or so.


On a weekly basis, we are still in 'risk on' mode. The recent noise in the market could well dissipate.






We'll also find out how commodities play out. Dead and buried or just getting underway?







VIX looking VERY dangerous here.








to be continued....


----------



## ducati916 (24 June 2021)

Part deux:


NYMO:

Looking bullish:






Sectors:







As I post, we are here, noisy.











So lots of noise and chop. Longer term the (stock) market looks bullish, as does the commodity market. The two are not incompatible. Both can rise together, particularly if rates stay low, which we pretty much can take to the bank. Ultimately, I think commodities will start to outpace stock indices. If inflation does catch fire into next year, stocks can rise, but will come under increasing pressure. Obviously some sectors will be far stronger. Historically you could identify what traditionally worked. Will it work today with a very different market mindset?

With the second half of the year approaching and historically a very nervous part of the year, I prefer to play some defence. If the Reddit crowd are currently 'in charge', then the game they are playing carries very high risk. Anecdotally, you see evidence of many being carried out on their shields. True, some hit the jack-pot, but gradually attrition will have its say. The numbers to replace the dead eventually grind lower and the ability to keep throwing additional capital into narratives will fail. Until it does however, fast rotations will continue to prevail, hot one day, stone cold the next. The very definition of noise. Overall however, indices rise as one sectors loss is another sectors gain. Two steps forward, one step back.

I think (obvious now in hindsight) that the lockdowns in the US provided the time to participate all day long in the various forums about stocks/etc. and move as a crowd into various names, which then moved the stock. With record numbers 'giving up work', this looks set to continue for some time. Why would you want to go back and work at McDonald's for pennies when you can play the market all day for dollars? The Reddit crowd have become their own giant Prop. Shop. Pure Momo. 

The thing is it is not sustainable in the long run. You cannibalise your own. The fast eat the slow. Gradually, you run out of the slow. What is left are the traditional players, not following the narrative, uninterested in whatever and the initial push into 'X' is not followed, with nothing much happening, trapping the fast with no follow through, unless they can cause a short squeeze. ATM they can. The slow even get a bite to eat and survive a bit longer. That game has a lifespan.

So as I said earlier, we are fast approaching the second half of the year which traditionally has been quite dangerous for stocks. It remains to be seen if there is enough bullish firepower to blast through to new highs and beyond in this period.


jog on
duc


----------



## ducati916 (25 June 2021)

Good day for markets, pretty much everything across the board is higher.














Some seasonality data for coffee:






This is an interesting metric:






Which rather confirms the commentary that has dominated most of 2020/2021 and some of the strategies employed via Options etc. I suppose the issue is where that debt came from and its stability. Margin debt is highly unstable. Equity withdrawals fairly stable (assuming that you continue to pay the mortgage) but we know or can at least infer this is not the source as these generations are largely renting. Bank loans? Unlikely, bank data has lending near all time lows and loans for market speculation...hardly. Possibly from the DeFi platforms.

Now I came across this:






An interesting use of blockchain. Potentially solves 1 (the primary) argument of the BTC crowd re. ease of transport for gold & silver bullion.

Mr flippe-floppe-flye:






Speaks for itself:








Today has been a pretty complacent sort of day. Pretty much everything rising nicely. The VIX is now signalling some instability and I would expect tomorrow to be a pullback, possibly to close the gap. Nothing particular to worry about unless that instability continues, which is possible, though less probable at this stage.






There is an argument that this is 'bullish', stocks climbing a wall of worry.






However a run to Bonds is never a good thing.






This has been a recurring risk highlighted across blogoland. It is a real risk that ALWAYS bites. The thing is, it takes time, sometimes so much time that it sends everyone to sleep and they just ignore it.

Typically what happens is that the market continues to make a new high. Not much of one, not a high volume thrust higher with everything off and running, just a meh new high. Underneath, a bit of a collapse is occurring.

With the mega-caps recovering, it is actually very easy for the index to make a new high with everything else treading water or falling. That seems to be the situation currently. The market will probably require a catalyst of some nature to trigger a fall. Whether we get one or the breadth starts to improve, nobody knows.


jog on
duc


----------



## ducati916 (25 June 2021)

Roundup all about the breadth!

From NASDAQ to S&P500:






















DXY:







Aussie:






With yields dead, Financials are not going to catch a bid atm.







ARKK on the comeback trail:






With Indices at ATH or very close, the Skew suggests lots of hedging going on:






And Vol. low:






So we have the internals signalling issues. We have Skew signalling issues. We have VIX at ATL. Markets at ATH. Weekend fast approaching. I simply wouldn't want to be naked directional into the w/e, long or short. I'm not a great volume chap, but the volume data (falling) with a rising market smells of market makers preparing to get short.

Re. climbing the wall of worry (the earlier argument posted with the Fear Index): there hasn't been any bad news/data. That is the true argument for climbing a wall of worry. When stocks rise into bad news, more bad news and even worse news, that's when you know you are safe. When stocks creep and inch higher on endless 'good' news, that's when you need to worry.

Bad news, of almost any description, will tank the market 5%. A more reasoned consideration of that bad news might make that a BTD type of decline or worse, tank it another 5%. If we had a 10% decline, with the amount of leverage in the system, does that create a further decline? Not sure. Not interested in finding out with my capital either.


jog on
duc


----------



## ducati916 (26 June 2021)

Despite the terrible internals, the market is sitting at ATH.

Sectors: daily/week









Up across the board. Energy however at some point becomes a negative for the rest of the market. Green energy data:






Oil news:

*Friday, June 25th, 2021*

Oil appears set to close out another week of gains, although trading became choppy this week as OPEC+ readies production increases. 

_*Biden supports Line 3. *_The Biden administration supported the contentious Line 3 pipeline in Minnesota in a court filling.

_*Amazon buys up renewable energy. *_*Amazon (NASDAQ: AMZN)* said it would purchase 1.5 GW of renewables from 14 different solar and wind projects. Amazon is the largest corporate purchaser of renewables worldwide.

_*U.S. LNG grows costlier.*_ Even as U.S. LNG exports have expanded, supplying liquefied natural gas to the growing Asian market has become more expensive for US producers this year, a Rystad Energy report reveals. Rystad Energy estimates that the short-run marginal cost (SRMC) of US LNG exports to the Asian market has risen to about $5.60 per MMBtu as of June 2021, up 65% from $3.4 per MMBtu in mid-2020 and 30% higher than last year’s average of $4.30 per MMBtu.

_*Venezuela’s Descent Into Anarchy Is Fueling Maduro’s Desperation.*_ After more than 15 years of U.S. sanctions which caused Venezuela’s one mighty petroleum industry to collapse, the crisis-driven Latin American state now appears on the verge of failure.

_*Chevron won’t cut oil and gas production.*_ Unlike European supermajors, U.S. Chevron doesn’t have any plans to reduce its oil and gas business to invest in solar or wind power, chief financial officer Pierre Breber said at a Reuters conference on Thursday.

_*BP to stick with oil and gas for decades.*_ *BP (NYSE: BP)* will continue producing oil and gas for decades to come and will benefit from rising oil prices even as it reduces output as part of its shift to low-carbon energy, Chief Executive Bernard Looney told Reuters on Tuesday.

_*Japan restarts nuclear reactor.*_ Japan restarted the first nuclear reactor in more than three years, restarting a unit that has been offline for a decade. Only 10 of Japan’s 33 operable nuclear units have resumed operations under the regulatory regime created in the wake of the Fukushima nuclear disaster.

_*Court shoots down FERC permit for pipeline.*_ A rare rebuke of FERC occurred in federal court this week. The court nixed a permit for a gas pipeline, saying that that the pipeline company did not show that its project was needed, and FERC should have scrutinized it more. The decision could have broader implications for pipeline permitting.

_*Uncertainty looms for Canada’s oil sands.*_ Just one of Canada’s five biggest oil companies, *Suncor Energy (NYSE: SU)* has a plan to cut emissions. Reuters looks at the tough road ahead for Canada’s oil sands.

_*Schlumberger sets net-zero goal. *_*Schlumberger (NYSE: SLB)* set a net-zero goal by 2050 for Scope 1 and 2 emissions, and a goal to cut Scope 3 emissions by 30%.

_*Indian utility goes big on renewables.*_ India’s largest power generator, NTPC Ltd., doubled its long-term commitment to renewables, promising to build 60 GW by 2032, up from a 32 GW goal it announced last year.

_*Judge closes case against Dakota Access, for now.*_ A U.S. district court closed a long-running case against the Dakota Access oil pipeline on Tuesday, but allowed for Native American tribes and other opponents of the line to file additional actions against it, according to Reuters.

_*Honda goes all-in on electric.*_ Honda Motor Co. has become the first of Japan’s automakers to state publicly it will phase out sales of gasoline-powered cars completely, setting 2040 as the goal

_*400% increase in fracking crews. *_Even a more than 400% jump in the number of fracking crews working the U.S. shale patch isn’t enough to send oil output soaring, according to Bloomberg.

_*Gas infrastructure in Europe leaking methane. *_The potent greenhouse gas methane is spewing out of natural gas infrastructure across the European Union because of leaks and venting, video footage made available to Reuters shows.

_*Army Corps to review Line 5.*_ The U.S. Army Corps of Engineers said Wednesday it would conduct an extensive review of Enbridge Energy's plan to build an oil pipeline tunnel beneath a Great Lakes channel in Michigan, which could significantly delay the project.

_*Gas inventories down, global gas prices rising.*_ A rebound in demand for gas and LNG is pushing up prices, just as heat waves hit parts of North America and Europe. Now there is a danger of not enough supply to go around. Prices are up sharply in Europe, resulting in more coal burned.

_*EU to tighten carbon market. *_The EU is set to remove some allowances in its carbon market in an effort to slash emissions. The decision is still in flux and will be part of a suite of new policies to be revealed in mid-July, but the move could raise the cost of carbon, pushing out coal and imposing higher costs on gas.

_*Oil companies see shortfall by 2023. *_A new Dallas Fed survey finds that three out of four oil and gas industry executives see a global supply shortfall by 2023.

_*Refiners win at Supreme Court.*_ Oil refiners won a major court case at the Supreme Court regarding federal biofuels blending requirements. The court said that the EPA has broad authority to issue waivers to refiners.

Political news that seemingly (currently) is having no impact:









Crypto:






Commodities:













Mr flippe-floppe-flye:







BTC:






Looking like its under pressure.

If support does break, then $20K is the next stop and it will fall very quickly to that level, TSLA and MSTR will have major issues. Both of them are now trading with BTC. The tail is wagging the dog.









You can add RIOT to this list, but as 'blockchain', its business in some form is BTC.

TSLA is a major player in the S&P500 by market cap. If BTC collapses down to the $20K mark and TSLA follows, that will have a negative impact. Combine that with the rotten (current) internals and the fact that BTC trades 24/7 (ie. through the w/e) giving stocks no chance to adapt and you have a bit of a market risk. 

Just watching prices trade currently, the bulls are hanging on and putting in a furious goal line defence. Whether it holds or not I have no idea. If it hits $31K I think the bulls are in trouble, short term at least.


jog on
duc


----------



## qldfrog (26 June 2021)

ducati916 said:


> Despite the terrible internals, the market is sitting at ATH.
> 
> Sectors: daily/week
> 
> ...



Doesn't the BTC chart look like a wide head and shoulders pattern to you? We should ask TA gurus.
Does not seem too good ....

The only positive certainty i see medium/long term is POO and i think Chevron position is admirable..will probably lead to backlash but tempted to buy in stages.
Thanks for another interesting week of pure knowledge.
On a quiz  level:
I was surprised at the low figures in US renewables of solar AND hydro. @Smurf1976  will have noticed.
Usually you have one or the either(climate based), but here none so the US has definitively some potential left.
But they still need oil for a (long) while. How would you be long oil ,medium term Mr @ducati916  knowing that the producers themselves could be bashed by regulations and narratives/shareholders lobbying but that the black gold itself will go higher and higher.
Quite a unique situation.
Have all a great weekend


----------



## ducati916 (26 June 2021)

qldfrog said:


> Doesn't the BTC chart look like a wide head and shoulders pattern to you? We should ask TA gurus.
> Does not seem too good ....
> 
> The only positive certainty i see medium/long term is POO and i think Chevron position is admirable..will probably lead to backlash but tempted to buy in stages.
> ...





So let's take a look at various markets from a different perspective.

In no particular order:

SPY a long way above its 200. 






QQQ 







BTC (now that was a bubble)







GLD






SLV






Commodities broadly:






DXY






And Oil






Where would you feel 'safe'?

Combine DXY and USO as an analysis with current monetary and fiscal policy...where would you feel comfortable? Add to that analysis gold/silver and commodities broadly any change to your thinking?

Stocks make me nervous (although I think the blow-off top of the bubble is still to come) and BTC made/makes me nauseous.


jog on
duc


----------



## qldfrog (26 June 2021)

ducati916 said:


> So let's take a look at various markets from a different perspective.
> 
> In no particular order:
> 
> ...



I get your point Mr Duc, but i have a huge exposition to PM already, and with the absolute destruction of fossil energy exploration, infrastructure in the west,i can see a pending crisis so be it in gold, usd, aud, or Yuan, i expect petrol to shot up the sky with the watermelons cheering.
Nevertheless it is a good reminder to refresh my overall assets exposure page summary and check various exposures in term of PM (gold/Silver), cash split by aud/usd/euro, real estate assets and shares (systems vs investment)
My current feeling is that i am actually quite exposed PM wise but nothing beat raw numbers.
Thanks for your feedback


----------



## ducati916 (27 June 2021)

Sunday morning coffee. As usual, I have many more charts than space allows in a single post.

Bubble data, Ray Dalio and Bridgewater:












Looking at consumers debt: 






US Debt broad:







Older data:










Cost of debt:






Three major risks immediately stand out:

(i) Interest rates CANNOT RISE; and
(ii) US must print to service interest costs even at these low rates as tax receipts do not cover; and
(iii) DXY will continue to devalue, with an endgame of a hyperinflation of DXY.

Now that is an EXTREME case.  The Weimar hyperinflation of 1923 was eventually halted because there was an alternative real money that could be substituted: a gold backed DXY. In 2009 Zimbabwe halted their inflation by substituting DXY. Venezuela is currently in an hyperinflation, a work in progress.

If the US DXY went into a hyperinflation, what exists as a stable money to replace it? Another fiat?

With the US currently experimenting with UBI and MMT, people refusing to return to work because they receive more in a welfare payment than they earn going to work....how sustainable is this?

Creation of wealth (real):





Risks:






Real productivity needs to at least match if not exceed monetary inflation to keep DXY from blowing-up.


to be continued....


----------



## ducati916 (27 June 2021)

Part deux:

For daytrading US stocks, stocks that moved on earnings releases:






Current state of the market:









Keeping an eye on new and expanding lows:









So the data suggests that all declines remain BTD. To date, it has worked well. Each time however, the risk just grows that little bit bigger. Now certainly the FED talking about talking about raising interest rates is just so much BS. With debt where it is and growing the only move is lower, not higher. However bear markets can and have existed in low rate environments, especially where there is nowhere to go (rates wise). The FED would essentially have to print money to directly buy stocks.

What would happen?

BTC continues to trade through the w/e. Looking ugly for the HODLs.







At what point does the TETHER issue blow-up? $20K? If $30K fails, next stop (fast) will be $20K and possibly the TETHER ponzi scheme busts wide open.

So for the moment, the Bull continues. If it is a bubble, then at least another leg higher. If it is a bubble, that leg will come pretty fast, much as did the BTC acceleration into its recent high and the 1999 expansion. Hopefully it rolls over slowly before accelerating to the downside, giving some a chance to exit with a high % of profits. Those that BTD, they get killed.

Technicals help, fundamentals are worthless and sentiment is King. Sentiment is a slippery metric. It is best measured by liquidity. Liquidity is a really hard metric to see and measure: one second its there, next second, poof, its gone.

Possibly now that we are at ATH, we see that acceleration higher, breaking out of the doldrums of the last month or so.


jog on
duc


----------



## qldfrog (27 June 2021)

The frog checked figures and his PM exposure: miners, paper and physical PM is 7% of total assets (inc PPOR), with a 1/3 or so physical
He also noticed that BTC resisted pretty well this weekend and the right shoulder does not seem such a shoulder anymore ..probably due to the batrachian offloading nearly all what he had left in BTC at the lowest of the weekend or around


----------



## Smurf1976 (27 June 2021)

ducati916 said:


>



The top 1000 companies are only 4% of market cap so even collectively they're pretty much irrelevant?

Am I reading this wrong?

I'd have guessed that they'd be far, far higher than that as a %. I've misunderstood something here???


----------



## qldfrog (28 June 2021)

Smurf1976 said:


> The top 1000 companies are only 4% of market cap so even collectively they're pretty much irrelevant?
> 
> Am I reading this wrong?
> 
> I'd have guessed that they'd be far, far higher than that as a %. I've misunderstood something here???



True label a bit confusing, i thought the "biggest of " .as pc of the market.
 Currently for sp500,apple at around 5% of total market cap of sp500.
https://www.investopedia.com/top-10-s-and-p-500-stocks-by-index-weight-4843111
If my understanding is right, then with both apple,microsoft,amazon and goógle on similar numbers,i would say the curve is a bit misleading as only antitrust laws are preventing the fangs to be even more agglomerated..and so higher.so not sure the historical comparison is really right
A disclaimer even that reading does not really fit. Aka 5% not right on scale graph..but not sure of actual date of graph in yoyo market.so probably wrong too


----------



## ducati916 (28 June 2021)

Smurf1976 said:


> The top 1000 companies are only 4% of market cap so even collectively they're pretty much irrelevant?
> 
> Am I reading this wrong?
> 
> I'd have guessed that they'd be far, far higher than that as a %. I've misunderstood something here???





I think the way it is read is: of the top 1000 companies, only 4% of their combined market cap could be considered as a bubble. Whereas in 2000, many, many small companies, most without earnings of any description had impressive market caps.

jog on
duc


----------



## ducati916 (28 June 2021)

Weekly roundup:

BTC pretty boring:







Dr Burry:















Housing:














Inflation data:






Far broader look at the market:









jog on
duc


----------



## ducati916 (29 June 2021)

With June coming to a close another meh day.

Sectors:









Chop.

As I scrolled through the news feeds what becomes quite apparent is that there is no central theme, meme or otherwise. Just really random stuff all mixed in together. This is being reflected in the quickfire trading through the sectors and stocks. Pretty much anything and everything is rising somewhat, only to fall back as something else rises a little more the next day.

To be sure, stepping back to weekly charts, possibly even monthly charts in some cases, is actually very beneficial cutting back on the noise of the daily. So with this in mind, actually I was also thinking about 'reversions', I thought I'd play around with some settings. This is what I came up with.

First I had a look at currencies: so currencies (generally) trend for long periods. They also tend to revert. Rather than price, I looked at performance to a 110 SMA.






Then I looked at a stock:






And finally a commodity:






And 2 Indices:









And even $VIX:






Using the EMA and I got quite a different look:







Anyway, the point of the exercise was to try and filter out excessive noise. A combination of performance against a more traditional price chart gives a different perspective. Personally, of the 2, I think I prefer the SMA as it correlates better (eyeball test) to a standard price chart. Either way it just adds something slightly different to the decision making process.

On crypto:






The silver market: as the chart indicates, physical supply is very tight. With Basel III fast approaching, there is great expectation in the silver market.

Personally I don't think there will be any great fireworks with an explosive move upwards, but I do think over time there will be a consistent move higher. The effect of paper suppression will recede allowing increased price discovery in the market.






So a pretty quiet start to the week. 


jog on
duc


----------



## ducati916 (29 June 2021)

Daily roundup:

So Risk On Factors at 52%:






Which is a coin toss. So markets remain pretty directionless, meh and risky if something unexpected happens. 






And it's what you don't see, just around the corner that jumps out and crushes your position.

Well commodities, yes definitely. NG is a really dodgy one to trade.











Pet care? Really? Added to my list (an ETF).

Mr flippe-floppe-flye:









While I continue to be risk averse into this market. I continue 100% hedged, simply trading spreads and vol. I am also in the process of researching some commodity producer stocks for some new trades. As they are (can be) very volatile, I am trying to be reasonably selective in this space. An old favourite, CENX will probably make the list.


jog on
duc


----------



## ducati916 (30 June 2021)

Approaching the end of June. We have some seasonality data.






Semi's ripping:






As is Tech. generally. Growth back in vogue as interest rates are going to stay very negative or just negative.

Commodities:






Credit:






We are (later chart) seeing a move from Junk to Treasuries, which is a signal of risk avoidance.

What's the difference?






Again, a risk on signal.






BTC:






Mr flippe-floppe-flye:



















Options with unusual activity:






to be continued....


----------



## ducati916 (30 June 2021)

So blogoland remains bullish on balance. Now the divergences:

Breadth remains weak and is simply not recovering as the index continues to hit new highs. Generally speaking, you need about 60% of stocks to safely drive indices higher. The current 52% is dangerous. Now of course capitalisation weights matter.  But from the previous post we know that some of the mega-caps are neutral.

Now that could be bullish, they pick up some steam and they will lift the index. 






So looking at the mega-caps:















Obviously they can continue to run etc. but, they have had a pretty good run recently.

NYMO:






VIX:






Junk to Treasuries:






None are filling we with confidence that there are significant gains ahead. Rather, caution, especially given that we are heading into the traditionally more dangerous half of the year.

Mr flippe-floppe-flye:







jog on
duc


----------



## ducati916 (1 July 2021)

Last post of June:

Oil News:

Demand for gasoline, distillate, and jet fuel is on the rise in the U.S. as mobility increases.

-    For the week ending June 18, the four-week average demand for gasoline was 94% of the four-week average for the same week in 2019, distillate was 98%, and jet fuel was 74%, according to the EIA.

-    At their lowest points in 2020, gasoline demand fell to 56% of its corresponding 2019 level, distillate demand to 80%, and jet fuel demand to 31%.

*Market Movers*

-    *Total Energies SE (NYSE: TOT) *is partnering with *Uber (NYSE: UBER) *to offer recharging points for drivers of EVs in France.  

-    *ExxonMobil (NYSE: XOM)* workers in Chad continue their strike. 

-    *California Resources (NYSE: CRC) *plunged by more than 8% after Goldentree Asset Management, which owns 10% of the company, sold shares.

*Tuesday, June 29, 2021 *

Oil edged up on Tuesday after posting a loss on Monday due to demand concerns. 

_*New Covid restrictions. *_The spread of the Delta variant is raising some red flags, with new restrictions on visits implemented in Hong Kong, Spain, and Portugal in recent days. New flareups in cases have occurred in the UK and Australia, among other places. The Delta variant could pose some oil demand risks, and oil prices have tapped on the brakes as a result.

_*OPEC+ optimistic ahead of meeting. *_OPEC+ says that the overall conditions in the oil market have significantly improved in recent months. The group was optimistic as this week’s meetings began, with a decision on whether they will ease the production cuts further expected on July 1.

_*U.S. shale still showing restraint. *_Despite WTI hitting a two-year high, shale drillers are not rushing back with a wave of new drilling. “I'm still confident the producers will not respond” to the run-up in prices, said Scott Sheffield, CEO of *Pioneer Natural Resources (NYSE: PXD)*.

_*Anger in Texas after huge gas bills from February storm.*_ Utilities across multiple states in the central U.S. are suffering losses related to the widespread blackout in Texas in February. Lawmakers and regulators in Minnesota, Oklahoma, Missouri, Arkansas, and Kansas have called for investigations into market manipulation and are exploring regulatory changes.

_*EU approved climate target into law. *_European Union countries on Monday gave the final seal of approval to a law to make the bloc's greenhouse gas emissions targets legally binding. The bloc will cut emissions by 55% by 2030.

_*VW to end ICE cars by 2035.*_ German carmaker Volkswagen will stop selling combustion engines cars in Europe by 2035, but slightly later for its sales in the United States and China.

_*California approves 11.5 GW of new clean energy. *_California approved an 11.5 GW procurement package composed entirely of clean energy resources that will come online in the middle of the decade, marking its largest-ever capacity procurement ordered at once.

_*Shell buys BP’s stake in North Sea gas field. *_*Royal Dutch Shell (NYSE: RDS.A)* bought *BP’s (NYSE: BP)* stake in the Shearwater North Sea gas field, raising its stake in the field to 55.5%.

_*DUCs drop 27%. *_The number of drilled but uncompleted wells (DUCs) in the U.S. shale patch has declined by 27 percent since the peak in June 2020, the Energy Information Administration (EIA) has estimated.

_*Biofuels groups urge EPA not to issue waivers.*_ After the Supreme Court handed a victory to oil refiners in their dispute with ethanol groups, the biofuels industry is hoping the EPA will nevertheless keep waivers limited.

_*Russia struggling to boost oil production. *_Russia is having trouble reversing an oil production decline it implemented under its agreement with OPEC+. Russia has been producing some 10.42 million bpd of crude oil and condensates since the start of the month, which is lower than May’s average of 10.45 million bpd.

_*Supreme Court rules in favor of Penn East.*_ The U.S. Supreme Court ruled in favor of PennEast Pipeline Company in a high-profile case over eminent domain, overturning a lower court decision in favor of the state of New Jersey which sought to protect landowners. 

_*Aramco bets on blue hydrogen.*_ *Saudi Aramco (TADAWUL: 2222) *outlined plans to invest in blue hydrogen as the world shifts away from dirtier forms of energy but said it will take at least until the end of this decade before a global market for the fuel is developed.

_*Smaller oil sands keep pumping. *_Despite the push towards decarbonization, carbon-intensive oil sands operations are boosting cash flow and performing well in the short run.

_*Qatar: Peak gas around 2040.*_ One of the world’s largest liquefied natural gas (LNG) exporters, Qatar, expects global natural gas demand to peak at some point around 2040. According to Qatar’s state-owned giant, worldwide natural gas demand still has two decades to grow.

_*Brazil’s oil boom continues. *_Latin America’s largest oil producer Brazil is one of the worst affected countries globally by the COVID-19 pandemic. By March 2021 petroleum and natural gas production was in decline with total hydrocarbon output falling by nearly 3% year over year to an average of 3.6 million barrels of oil equivalent per day. Nevertheless, by April operations began to recover and the country’s economically critical oil output was rising.

_*Natural gas prices soaring. *_A historic heatwave in the Pacific Northwest, along with other heatwaves in parts of the U.S., has contributed to a huge spike in natural gas prices. The August contract surged 7.3 cents higher in Monday’s session, a rally that analysts at EBW Analytics Group attributed to near-term heat and corresponding strength in the physical market.

_*Europe natural gas prices also soaring.*_ TTF prices for natural gas shot above $11/MMBtu in recent days. On Tuesday, Russia declined to add more gas to its pipeline system through Ukraine, another bullish spark for European gas markets.

Sectors.

The Daily, again, pretty quiet with some gentle rotation.






For the month, Tech. has been the comeback story:






For the last 6 months:






The Bond edition:





















To essentially summarise: all year the Bond market has been bullish for stocks. Now it is still so, however a few cracks are starting to emerge. Whether that worsens into an issue is impossible to say. What we can say is: the probabilities of it getting better is low. The probability of it getting worse is higher. The probability of no change is somewhere in the middle.

Today agricultural commodities had a big day:






Why? I have no idea. I do know that the US is in the middle of a heatwave, water is short, crops have been put-to-the-sword so to speak for lack of available water. Harvest time is Sept/Oct.

Gold as against DBC:






Mr flippe-floppe-flye:






BTC and cryptos seem to be stuck in a pretty broad range, which will frustrate everyone who are (slightly) longer term bulls or bears. The daytraders probably love it. From periods of extended nothing come big moves when they finally come. Because it is not really correlated to anything else, it can only be analysed to itself, a notoriously ineffective method, let's call it 50/50. What we can say with some certainty is that if it breaks down, it's headed to 20K. If higher, probably back to its highs and beyond.

Stocks are in a somewhat analogous situation. While it is true that they continue to wrack up new ATH with alarming regularity, the % increase in those new ATH is marginal. It is taking an increasing amount of effort to do so. Each new high comes with a struggle for days to get there. Meanwhile, the internals are haemorrhaging at an alarming rate and the patient is bleeding out from an undiagnosed wound.

In my afternoon travels through blogoland, the mood is largely festive and bullish. There are mentions of the internals from time-to-time, but mostly I come across bullish seasonality charts, everything from the time of day, to decades. While markets do rhyme, Mark Twain, often they do not. When markets are priced for only good news, as they are currently, bad news has a bad effect. Markets will climb higher in the face of bad news when they are already pricing in disaster, like last March/April.

Take 'Banks' as an example: in the depth of market despair last year banks were not allowed to (a) pay dividends and (b) buy back stock. Banks across the board have risen significantly. Now, they can pay dividends again and are set to buy back a couple hundred billion in shares. Why are bank stocks not off to the races? Already priced in. It will be interesting to see how bank stocks react to shares being repurchased, it does for sure put a bit of a floor under the price, will it do much else? The point being: when good news fails to ignite a bit of a rally, there are issues.

The FED's Reverse Repo reached almost $1 Trillion today. WTF. Banks are choking on cash. They are sending it back to the FED for 0.005% interest. They cannot lend it out more profitably. Corporations that a creditworthy enough to borrow, can float their own debt more cheaply to buy back shares. Meanwhile there are increasingly shortages of everything. Smaller businesses (those that are still there) obviously are not getting loans (assuming they are asking) from the banks as they must be poor credit risks.

Housing: not enough being built, those that have been built are now owned by Blackrock. Prices are going stratospheric again. This is no sub-prime bubble, Blackrock and the other Hedge Funds (one supposes) are well financed and can make payments. But you must wonder at the FED buying $40B MBS each month, for what purpose? Will they continue? Yanks moan to their Congress and Senatorial representatives continuously. If the FED yanks MBS support (as they should) what happens to markets?

Jog on
duc


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## Smurf1976 (1 July 2021)

ducati916 said:


> Stocks are in a somewhat analogous situation. While it is true that they continue to wrack up new ATH with alarming regularity, the % increase in those new ATH is marginal. It is taking an increasing amount of effort to do so. Each new high comes with a struggle for days to get there. Meanwhile, the internals are haemorrhaging at an alarming rate and the patient is bleeding out from an undiagnosed wound.



My far less scientific thought is that it is now July.

After July comes August.

After August come the months of _September_ and _October_ which don't have the best reputation.

That leads to thoughts of events of the "1987" variety as a possible scenario. Keep grinding higher with the internals falling apart until sometime in September - October when it's game on. Just my


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## qldfrog (1 July 2021)

Smurf1976 said:


> My far less scientific thought is that it is now July.
> 
> After July comes August.
> 
> ...



And october will see the start of winter aka flu season..which in covid time means another set of scares and lockdown..so if markets look ahead, a good time to have a reason to crash.


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## ducati916 (27 January 2022)

Some internet issues.

All waiting on the Fed:






Markets, unless Mr Powell has a very benign message, will likely roil after the announcement.

Mr flippe-floppe-flye:












Essentially if the Fed moves to QT, how it drains the liquidity is also important. Banks are the crucial middle link that transmit Fed policy. Their Balance Sheets are at massive risk if the market does not like the message that the Fed delivers.

Proxy for BTC







US deficit continues to expand:






Further pressure on the Fed to monetise, which of course increases inflationary pressures.

Russia:






The risks of investing (trading) producers as against the physical:






Didn't have the reserves actually claimed. Of course on the upside for holders of the physical, a further reduction in supply.

The physical raid is on:






With COMEX deliverable at almost all time lows, BAC short (rumoured) 800 million ounces (taken over from JPM) things could become interesting.






With potential conflicts brewing with Russia, China and its own population, things don't look so good for the US. DXY hegemony is/will come under tremendous pressure from China and Russia who have already bypassed the SWIFT system and set up an alternate payments system. SWIFT is one of the major tools that the US has employed to hold DXY hegemony through the decades.

Bottom line: depending on what the Fed does (I'll plump for trying to thread the needle) support stonks or let stonks collapse, they are caught either way. The correct way is to let stonks collapse, have the Depression and try to move forward afterwards. If they try to save stonks and by extension the economy (which has been financialised) they will destroy DXY, which will take down the stonks and the economy in any case. The trouble is, as the primary Reserve Currency, they probably take down all fiats with them.

Godot is due to arrive shortly.

jog on
duc


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## frugal.rock (27 January 2022)

Any thoughts on the roil now @ducati916 ?


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## ducati916 (27 January 2022)

frugal.rock said:


> Any thoughts on the roil now @ducati916 ?




So Mr Powell has tried to appease the market by talking Hawk but acting Dove. Mr Biden's ratings are below Mr Trump's, so there will be political pressure to control the inflation, without crashing the market.

I 'think' markets will move higher in the short term, a risk-on bounce. However, the Taper is still on. The mechanics of the taper cannot help but remove a support for stonks. I think the sell-off resumes shortly.

Meanwhile (currently) they are hammering gold/silver (COMEX expiry). 

The roil will continue all week.

jog on
duc


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