While we are busy arguing whether the Fed’s exit will consist of rising rates, reverse repos or the trimming of its massive portfolio, the Fed may well be fooling all of us. Investors must have been swallowing lots of blue pills not to see the illusion hiding in plain sight.
Which appears more likely—a straight-line extension of the past two years' rise in stocks, or another "impossible" decline to complete the megaphone pattern?
I don’t typically emphasize price charts in analyzing the market, however something unusual has been happening in the spot (physical) silver market. It did not happen in the silver futures market, nor in the gold market.
Markets often do talk to us, if only we would listen. Our ears serve as only part of listening. An open mind is also required. Regrettably, minds receptive to new thoughts and questions have been somewhat outmoded in the investment world for many years. Why else do so many seem to ignore what commodities are saying?
There are many successful investors who have accumulated decades of experience and have drilled down their pearls of wisdom to insightful lists. One such list, or ten rules to remember, comes from legendary investor Bob Farrell who spent decades at Merrill Lynch & Co. and retired as their chief stock market analyst in 1992.
The Fed is still pumping liquidity into the banking system, albeit at diminished rates, and the large cap indices are still showing no signs of trouble, with the DJIA making higher highs and higher lows.
In 2013 global natural gas production advanced 1.1% to a new all-time high of 328 billion cubic feet per day (Bcfd). Except for a one-year decline in 2008-2009, global gas production has risen fairly steadily for about three decades, and production has more than doubled during that time span...
Weekly initial jobless claims fell 19k in the week ending July 18 to 284k. This represents a new cyclical low. The four-week moving average, used to smooth out this volatile series, also has fallen to new lows.
Given how well the credit markets warned of the last two major turning points in the market I respect the message of the credit markets over the stock market when the two do not confirm each other, as they are currently.
The standard way to make forecasts of almost anything is to look at recent trends and assume that this trend will continue, at least for the next several years. With world oil production, the trend in oil production looks fairly benign, with the trend slightly upward (Figure 1).