Wonderland

By: Gary Tanashian of Biiwii.com

“If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn’t. And contrary wise, what is, it wouldn’t be. And what it wouldn’t be, it would. You see?” –Alice in Wonderland

Silver out performs gold as both rise with Treasury bonds, which are in turn rising with stocks, as Junk bonds hit new recovery highs while USD remains firm as inflation expectations are out of the picture. This is highly atypical, maybe even unprecedented.

Some, deeply dug into their particular disciplines and biases, might say it is dysfunctional, as this backdrop simply does not make sense using conventional methods of analysis. Why again did I name this service Notes From the Rabbit Hole?

When the S&P 500 was robo rising month after month, year after year as it did from 2011 to 2015, you did not need the market report with the funny name because all was linear and as it should be. The same actually, could be said for gold. It was linear and as it should be in its relentless downtrend. Casino patrons simply ride the trends!

But today things are making sense simply because we don’t have a need to make them make sense as linear thinkers would do; we go with the indicators and charts. Continue reading "Wonderland"

Yen Spike: An Opportunity in the Making?

Lior Alkalay - INO.com Contributor - Forex


The BOJ Governor, Haruhiko Kuroda, never disappoints when it comes to producing a juicy headline for the newswires. Last time, if you will recall, it was the surprise addition of new stimulus. This time around, in his speech to the Shūgiin, Japan's House of Representatives last week, Governor Kuroda exclaimed that "the Yen is fairly valued." He then continued to outline how the merits of monetary policy have limits.

And what was investors take on Kuroda's message? Clearly fearful. That was evident by the avalanche of investors who failed to consider the underlying message and quickly switched to crowded Yen buying. The USD/JPY move was brutal, with the pair taking a nose dive of 300 pips. Of course, soon after, analysts and experts provided their own take. Opinions ran from "The remarkable rise of the USD/JPY has finally come to an abrupt end" to "the BOJ will not add more stimulus." In fact, big bets on more and more stimulus are now well off the table. But, before you decide to follow the crowd, take a moment to stop, ponder and try to see this for what it very well may be. Simply put, perhaps the spike in the Yen's value is actually an opportunity to sell it high.

Kuroda Vs Bernanke

Markets are looking at Kuroda's speech as the BOJ saying, essentially, that shorting the Yen from here on out might not be such a good idea. It might also suggest that if the BOJ is pleased with the current value of the Yen, that they might then be less accommodative. Of course, no one knows what exactly goes through the governor's head except Kuroda himself, yet we can speculate. Before I do that, let me first draw a comparison to another central banker, Ben Bernanke, the now retired chairman of the Federal Reserve Bank. Continue reading "Yen Spike: An Opportunity in the Making?"

Poll: Even Ben Bernanke Cannot Get A Loan

Former Federal Reserve Chairman, Ben Bernanke, was addressing the National Investment Center for Seniors Housing and Care conference in Chicago on Thursday and said that, "I recently tried to refinance my mortgage and I was unsuccessful in doing so." He went on to explain that lenders "may have gone a little bit too far on mortgage credit conditions" according to the Bloomberg report.

I thought I would ask you the same question today....

Do you think lenders have gone to far on mortgage credit conditions?

View Results

Loading ... Loading ...

As always, I would love to hear you thoughts on the subject. Please take a moment to vote and leave a comment.

Every Success,
Jeremy Lutz
INO.com and MarketClub.com

Yellen's Wand Is Running Low on Magic

By Doug French, Contributing Editor

How important is housing to the American economy?

If a 2011 SMU paper entitled "Housing's Contribution to Gross Domestic Product (GDP)" is right, nothing moves the economic needle like housing. It accounts for 17% to 18% of GDP.

And don't forget that home buyers fill their homes with all manner of stuff—and that homeowners have more skin in insurance on what's likely to be their family's most important asset.

All claims to the contrary, the disappointing first-quarter housing numbers expose the Federal Reserve as impotent at influencing GDP's most important component.

The Fed: Housing's Best Friend

No wonder every modern Fed chairman has lowered rates to try to crank up housing activity, rationalizing that low rates make mortgage payments more affordable. Back when he was chair, Ben Bernanke wrote in the Washington Post, "Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance."

In her first public speech, new Fed Chair Janet Yellen said one of the benefits to keeping interest rates low is to "make homes more affordable and revive the housing market." Continue reading "Yellen's Wand Is Running Low on Magic"

Gold's Grinding Message

Precious metals boosters will see gold's nominal price break upward and probably get excited.  They will marshal the troops for what could one day turn out to be a full fledged tout, as if the 40% decline of the last 2.5 years had never happened.

gold

But it is gold’s ratios to positively correlated assets that tells the interesting story.  Vs. Crude Oil, the story could be shaping up to be a positive one for the gold mining industry, which is counter cyclical and obviously energy and fuel intensive. Continue reading "Gold's Grinding Message"