Here are today’s gold stock screens and data, along with cycle conditions and projections for gold and HUI index, and Chart of the Day...
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Money and The Fed
Reports on the Fed and Treasury, primary dealers, foreign central banks, money market and mutual fund flows, and other factors that affect market liquidity
ECB To Pinch Hit During Fed Quiet Time, But Market Expects It
The Fed settled a huge chunk of its forward MBS purchase contracts last week, adding significantly to market liquidity while confronted with moderately heavy Treasury supply. It was enough to keep the stock pot simmering, while Treasuries sagged. It was also enough to boost systemic liquidity generally. The next big Fed purchase probably won’t...
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Primary Dealers Prepare to Abandon Ship
The bulge in tax withholding has ended and so has the brief semi-vacation from huge Treasury supply. That will make conditions a little tougher on the Treasury bulls. Also making it tougher will be the likelihood of a normal cyclical downturn in foreign central bank buying due over the next few weeks. A recent...
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Monetary and Liquidity Flows Level Out Enough To Allow Minor Corrections
Liquidity indicators were mostly weaker last week. I have downgraded the intermediate trend on 2 of them from Bullish to Neutral. The majority are now rated neutral. This might mean that conditions are more conducive to a correction in both stocks and bonds, but I see no reason yet to expect an extended decline.
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Treasury Market Panic Reversal Due To Little Known Forces Called Supply and Demand
The Treasury market panic saw a bit of a reversal this week, partly due to an unexpected, large increase in supply because of a sharp drop in Federal tax revenues over the past couple of weeks, and partly due to the market misunderstanding of Thursday morning’s news. The “better than expected” weekly unemployment claims...
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Liquidity Composite Still Bullish
Liquidity indicators were mixed last week, but overall they remain firm, with trend indications split between bullish and neutral.
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Bulls In Clover While TBAC Is Smoking Dope As Usual
The Treasury market panic continued this week, with yields heading for new lows, thanks partly to a return of central banks to the table at a modest level, but mostly due to a ratcheting up of public buying. Bond fund inflows hit a record last week. It’s sheer panic. Bedlam. The panic atmosphere has...
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Market Fueled By Huge Rumored ECB Print Job And Corporate Fortress BS
Liquidity indicators backed off slightly from their recent strength last week, but overall they remain firm. I see no reason to expect either a big selloff or a big move higher in either stock or bond prices. The rangebound behavior of the markets shouldn’t change, except for one thing. The rumors are that the...
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The Mighty Ben
Treasury yields reached the top of the recent range and appeared headed for a breakout when along came Ben, with his mighty arms outstretched he lifts up the playing field and tilts it, and back down yields went, in spite of the big week of Treasury auctions and the market facing a big wad...
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Liquidity Is Bullish Is All
Those who don’t know me well have sometimes accused me of being a permabear. Those of you who do know me via these reports know that I always strive to be just like Faux News, “fair and balanced.” I think this week’s report exemplifies that high ideal. It’s as bullish as I’ve ever been,...
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Hints of Sea Change In Treasury Market
Treasury yields fell to a key resistance level, and then rebounded sharply to break a 6 month downtrend line this week. It’s too early to call a turn, but the fact that it happened during a week when Treasury supply was non-existent—actually there was a paydown—and when foreign central banks showed up and actually...
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Casino of The Absurd
Deposit flows into US banking system (apparently from EU) continue at shocking levels. In the liquidity model of the market, there is no way the markets can decline as long as this continues. Meanwhile, the Fed continues to quietly tap the brakes, without explanation or comment, while the US money supply explodes. The Fed...
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European Panic Sweeps 700 Pound Gorilla Under The Rug
The Treasury rally got some help this week from a surge in Federal Withholding Tax collections that is helping to keep new supply down. Whereas new supply had been exceeding TBAC estimates for the past couple of months, it has come back in line with estimates, and could be reduced even further in the...
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Housing Fundamentals Improved, But Not Enough
Housing data in the past couple of months has been mixed. Lagging closed sales data shows prices declining. The problem with that is that the most current data represents sales closed in November, which for the most part were sales that went under contract in September. That tells us nothing about the current market....
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Fed Transparent Only If The “Facts” Are Bullish
Liquidity indications have remained neutral over the two weeks since I last updated this report. Panic outflows from Europe boosting theUSsystem seem to have taken a breather, or been covered up, in the wake of the massive ECB liquidity operation just before Christmas. However, other indicators which had been bearish such as bank purchases...
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Huge Surge in Withholding Taxes Shows How Great Wall Street Is
Treasury supply is moderating as a result of a surge in Federal Withholding Tax collections in the second half of December. I suspect that this is a one time event due to Wall Street doling out much larger bonuses than last year, thanks to the wonderful job its bankers have done in guiding our...
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Not Too Bearish, Not Too Bullish, But Certainly Not Just Right
The mad panic into Treasuries suddenly stopped this week. 1.80 on the 10 year yield looks like a floor. The question now is whether there’s enough follow through selling to break the major downtrend line which is now around 2.03. Wouldn’t it be ironic if this week’s massive ECB Long Term Refinancing Operation was...
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Fed Finally Settles First Round Of MBS Offsetting Other Negatives in Liquidity
Liquidity indications were neutral this week, thanks to ongoing panic inflows of cash from Europe, as well as the fact that the Fed finally started settling the MBS purchase commitments that have been building up, but had gone unsettled since October. These positive flows offset the negatives of bank and FCB selling of Treasuries....
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The Last Ponzi Game
This is an extended excerpt from the Wall Street Examiner Professional Edition Treasury Report, a companion report to the Fed Report to be posted later this weekend. Subscriber link to the complete report is at the end of the excerpt. A heavy Treasury auction schedule with a big settlement on Thursday was enough to...
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Liquidity Stagnant as Fed Sits on Hands, US Market Health Dependent On European Bank Diarrhea
Liquidity indications were mixed last week, with the Fed still not doing much while foreign central banks were net sellers (see Treasury update). Commercial banks started dumping Treasuries again, but their non-Treasury/non-GSE trading accounts did uptick against a bearish trend. The big plus was again bank inflows which surged massively. Meanwhile the FOMC statement...
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Waiting For The Fed Report?
So am I. I was hoping to get it posted tonight, but the economic chart service I use is having “issues.” As a result the ETA for this report now looks to be tomorrow afternoon. I apologize for the delay. I can tell you that the composite liquidity indicator continues to mark time. It...
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Unreported Bedlam In Treasuries Signals Massive Panic
The following is an extended excerpt from the Wall Street Examiner Professional Edition weekly Treasury update. The subscriber link to the full report is at the end of this summary. Last week was a light auction week with a net of just $3 billion in new supply settling on Thursday. That took the pressure...
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You Can Have One or The Other But Not Both
Liquidity indications were mixed this week, with the Fed still not doing much while foreign central banks were net sellers (see Treasury update). Commercial banks at least stopped dumping Treasuries but they are liquidating their trading accounts. The big plus was again bank inflows although they were not at the panic levels seen last...
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TEOTWAKI Can Not Be Ruled Out
Withholding tax data suggests that we may soon see weaker economic data. That would argue for lower yields and lower stock prices. Meanwhile, foreign central banks (FCBs) sold Treasuries last week, turning away from the record accumulation of recent weeks. Click here to download complete report in pdf format (Professional Edition Subscribers) including 19...
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Liquidity Increase Too Little To Boost Markets
Liquidity indications were mixed this week, with the Fed still not doing much but bank inflows ballooning. This has been the biggest reason the markets haven’t collapsed. But is this sustainable?
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Does Treasury Market Turkey for Bulls Mean Stock Market Turkey for Bears?
Foreign central bank (FCB) buying of Treasuries was again heavy this week, two weeks after hitting a record level. Their buying binge of recent weeks pumped plenty of cash into US markets. That normally leads to a stock market rally, but not this time. Meanwhile, there’s evidence that withholding tax collections are weakening versus...
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Market Liquidity Flat With Hints of Weakening Ahead
The composite liquidity indicator fell sharply last week. There was some distortion to the indicator the previous week when the Fed’s SOMA fell due to transactions outside dealer channels, but that was reversed in the latest data. Bank inflows were flat. FCB buying dropped back sharply from a record rise. Bank non-Treasury trading accounts...
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Housing Outlook Clouding Up Again, And It’s Not Just Supply
Housing data over the past month has weakened. Part of that is normal seasonality, but the drop in contracts on existing homes in September was the worst in percentage terms since the housing collapse began. Although I believe that the supply problem is overblown, the last thing the market needs is further weakening in...
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The Big Withdrawal and Other Liquidity Facts
Earlier I posted this piece on the facts that we know about the big withdrawal from the Fed last week and the atypical Fed actions it appeared to trigger. Here’s more of the story, along with the behavior of other related indicators along with what their actions might mean for the markets.
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Hit With Big Withdrawals, Fed Sells Assets, Borrows Cash
The Fed was hit with withdrawals of $83.3 billion last Wednesday, the largest withdrawals from its deposit accounts that were not associated with quarterly tax payments since February of 2009. $7 billion of that was the net cash transferred to the US Treasury from its note and bond sales less outlays. The Fed still...
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