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DrBubb's Diary - Oct. 2019 Trading - v.129


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BTC all data: 8yr: 4yr: 3yr: 12mo: 6mo 1mo 10d 10d 5d / SLV-lv

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OIL PRICE in EUR

WTI Crude in EUR

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Brent Crude in EUR

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GCM - Buy here?  Or await the break down to 4.25-4.50, or lower

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Still waiting to see if WTI-toGold ratio can revere its downtrend

Ratio: WTI-toGold

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Sprott CEO hunting for bargains among beaten-up gold companies

Canada’s $8 billion precious metals-focused fund manager is bargain-hunting for stakes of mining firms that have seen valuations tumble.

“Look for the companies that are beaten up,” Sprott Inc. Chief Executive Officer Peter Grosskopf said, sharing his company’s investment strategy. If the bigger producers of the metal don’t end up buying their smaller rivals, “the juniors will consolidate among themselves to create bigger companies,” he said.

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Sprott CEO Peter Grosskopf (Source: Adobe Stock)

Gold miners may become attractive targets as the supply pipeline of their bigger rivals start running dry. Reserves still buried in mines owned by the largest producers have fallen by more than half from a 2011 peak, according to data from Bloomberg Intelligence.

Detour Gold Corp. is an example of one those beaten-up companies and “somebody missed that one as an acquisition candidate,” Grosskopf said in an interview in New York Tuesday. In August, Sprott agreed to buy Tocqueville Asset Management’s gold strategy business. Tocqueville owns a 4.6% stake in Detour Gold.

Tocqueville had started investing in Detour Gold a few years ago when the miner was in bad shape, he said.

Detour Gold shares have climbed 70% this year after Paulson & Co. convinced shareholders of the mining company to overhaul its board of directors, including its interim CEO, ending a nasty six-month proxy battle.

Torex Gold Resources Inc. is another attractive asset that could be a potential target, according to Sprott.

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On 10/19/2019 at 9:23 AM, drbubb said:

Will they finally Break the Buck? Test coming

DXY -trade weighted USD ... 2yr : eur / last: $97.14

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: eur / last: $1.117

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Commodities, are still too early to call maybe

OTHERS... ON FX, Others Are Agreeing now

Deutsche Bank argues the U.S. dollar has peaked and the euro has bottomed out MarketWatch

Here’s some news that probably will cheer up one of its clients, President Donald Trump — Deutsche Bank believes the U.S. dollar has peaked.

In a monthly note on its cross-asset strategy, Deutsche Bank’s argument against the dollar is more about an argument for the other side of the trade, the euro.

The bank says European interest rates are already near the effective lower bound, leaving little room for more cuts. Plus, the manufacturing data between Europe and other markets are at extremes, where they tend to rebound. With markets expecting so little from Germany, Deutsche Bank sees the potential for a positive surprise.

Deutsche Bank also has turned bullish on the pound, arguing the risks around Brexit have receded.

As for the U.S., Deutsche Bank expects three more Federal Reserve interest-rate cuts over the next two quarters. The bank says the U.S. economy will slow to 1.5% growth in 2020 from 2.2% in 2019.

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If the USD is turning against EUR fhen should be turning against some other FX too

AUD ... all-data : fr.2006 : 5yr . 2yr: / Last; 0.685, still looks weak

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CAD ... all-data : fr.2006 : 5yr . 2yr: / Last; 0.764 - testing 1-yrMA now

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AUD ... 2-yrs: / Last; 0.6854

AUD ... 2-yrs: / Last; 0.6854

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Gold’s Performance During Times Of Global Monetary Easing

The fresh round of global monetary easing ends the short period when major central banks talked of, and some even tried, to normalize the monetary policy after all the unconventional measures undertaken in the aftermath of the Great Recession. The Fed probably advanced the most, but even the U.S. central bank failed to return the interest rates and its balance sheets fully back to pre-recession levels.

The last time when the central banks eased their monetary policies in such a unison was during the financial crisis. Today’s situation is not as grave as in 2008, but the central banks all around the world take the trade tensions and the U.S. yield curve inversion seriously. They worry about the risk of recession and try to prevent it, or to cushion the blow.

What does the global monetary ease mean for the gold market? Generally speaking, the central bankers’ aboutface seems to be very bullish for the yellow metal. The lower policy rates should translate into lower real interest rates, while some bond yields may fall even further into negative territory. Thus, the environment of low interest rates and elevated recessionary risk – otherwise, the central banks would not ease their stance – is fundamentally supportive for the gold prices.

What is particularly encouraging is that the Fed is also easing its monetary policy. It implies that the divergence in monetary policy will not widen, or it may even narrow somewhat – abstracting from the QE, the ECB cut its target rate by 10 basis points, while the Fed by 50 basis points – which is a fundamental reason for a weaker the U.S. dollar, which could remove some downward pressure from the gold market.

. . . although the price of gold did not always rise during the Fed’s easing cycles, the last two instances were positive for the shiny metal.

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What is crucial here is that the Fed’s easing cycles were accompanied by the narrowing divergence in the long-term interest rates in the United States and the eurozone. The chart below shows the difference between 10-year Treasury yields in both areas and the federal funds rate. As one can see, when the Fed was cutting interest rates, the spread was usually diminishing or even becoming negative.

Chart 2: The spread between the 10-year US and euro area government bonds (blue line, right axis, in %) and the federal funds rate (green line, left axis, in %) from January 1971 to August 2019

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It is a great piece of news for the gold bulls. As the chart above shows, the difference between interest rates in America and in Europe is at record highs. This is what has recently supported the value of the greenback, keeping gold from rallying more intensely. Now, with the Fed’s new easing cycle, the spread may diminish somewhat. It means that there is further room for the gold prices to go up in the medium term if it does indeed translate into lower USD values.

> https://www.investmentwatchblog.com/golds-performance-during-times-of-global-monetary-easing/

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PHILIPPINES STOCK WARNING
I posted on a viber chat:

"The more I look into the charts, the more Dangerous I think this setup looks!"

PSEI - vs. SMPH, ALI, MEG ... from 8/2016 : VIX : 10d / Last: 7,947, smph: 38.80, ali: 49.00, meg: 4.86 (agi: 11.74)
RKdIFMR.gif

Why is this Dangerous?
PSEI looks weak, barely holding up, on the bottom of the long term upwards channel.

The upmove in Property stocks, to a likely cyclical peak in JULY, gave PSEI a Right Shoulder (RS#1= "Prop.Peak")

Many Stocks appear to be running out of momentum.
+ After the July peak, MEG stock collapsed as fear of a loss in POGO demand hit the market
+ MEG and PSEI made a low in Sept.  MEG fell xx% (P6.xx > 4.xx), and PSEI fell xx% (0,000 > 0,000)
+ Some of the fears were dismissed, and PSEI rallied back, led by a few "front-liners", like SMPH and ALI.
+ Many other stocks, and PSEI as a whole remained weak. (I made some money trading a bounce in AGI)
+ The front line property stocks appear to be losing momentum

What is NEXT?  
Another drop very possibly, and if this one is sharp enough, it will break the uptrend in PSEI
BE CAREFUL; Take some profits maybe, use some stops (if you like that technique), & hold off on new Buys.

====
MORE charts & comments at the Link below - scroll down!

===

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WONDERFUL JOB by Mr Rogan

Joe Rogan Experience #1368 - Edward Snowden
3,087,596 views /  Oct 23, 2019
 

Edward Snowden is an American whistleblower who copied and leaked highly classified information from the National Security Agency in 2013 when he was a Central Intelligence Agency employee and subcontractor. His new book "Permanent Record" is now available.

Who goes to jail when you break the law? You do.
Who goes to jail when you catch the government breaking the law? Still you.
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Using BDO's chart, my added trendlines highlight a likely Right Shoulder in place
KEAT91m.png

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GOLD versus (Philippines) STOCKS:

Current level iof PSEI is about 10% of the Gold price
… Calculated like this...
PSEI ( 7,947) / Gold ( $1507 x 51.14= Php 77.07k)= 0.103 Oz.

Simple Rule of thumb for Recent Range may be: Expect approx.10% of an Gold Oz to buy you the PSEI.

Or: One Ounces buys approx. 10x the PSEI

GOLD,  Monthly prices since 2000

au00-pres.gif : $1507 x 51.14= P77,070

PSEI / Phil. Stock Index, since 1988: 10yr.: 5yr.: 1yr. / LAST: 7,947 - chart w/o Labels

zOGkUB5.gif

SIMPLE RULE?  worked since about 2000...

Buy PSEI below 0.080 oz. / Sell PSEI above 0.120 - or something like that

YrEnd: PHP/$ : Gold : PHgold: +1yr % : PSEI  : +1yr % : PS/oz.
1990 : 28.00 : $392.8 : 10.99k: ===== : 0,651.:  ===== : 0.059:
1991 : 26.67 : $353.2 : P9420: - 14.3%: 1,152.: +77.0%: 0.122:
1992 : 25.32 : $332.9 : P8429: - 10.5%: 1,256.: +9.03%: 0.149:
1993 : 27.79 : $391.8 : 10.89k: +29.2%: 3,196.: +155.%: 0.293:
1994 : 24.15 : $383.3 : P9257:  - 15.0%: 2,786.: - 12.8%: 0.301: End of Millennium "HIGH" for PH stocks??
1995 : 26.21 : $387.0 : 10.14k: +9.54%: 2,594.: - 6.90%: 0.256:
1996 : 26.29 : $369.3 : P9709:  - 4.25%: 3,171.: +22.2%: 0.327:
1997 : 37.17 : $290.2 : 10.79k: +11.1%: 1,869.: - 41.1%: 0.173:
1998 : 39.07 : $287.8 : 11.24k: +4.17%: 1,969.: +5.35%: 0.175:
1999 : 40.62 : $290.3 : 11.79k: +4.91%: 2,143.: +8.84%: 0.182:
2000 : 49.90 : $272.7 : 13.61k: +16.6%: 1,495.: - 30.2%: 0.110:
2001 : 51.79 : $276.5 : 14.32k: +5.22%: 1,168.: - 21.9%: 0.082:
2002 : 53.52 : $347.2 : 18.58k: +29.7%: 1,018.: - 12.8%: 0.055:
2003 : 55.45 : $416.3 : 23.08k: +24.2%:  N/A - : ===== : =====:
2004 : 56.18 : $435.6 : 24.57k: +6.46%:  N/A - : ===== : =====:
2005 : 53.61 : $513.0 : 27.50k: +11.9%: 2,096.:  ===== : 0.076:
2006 : 49.47 : $632.0 : 31.27k: +13.7%: 2,983.: +42.3%: 0.095:
2007 : 41.74 : $833.8 : 34.80k: +11.3%: 3,622.: +21.4%: 0.104:
2008 : 48.09 : $869.8 : 41.83k: +20.2%: 1,873.: - 48.3%: 0.045: LOW: only 0.045 Oz will buy the PSEI index
2009 : 46.42 : 1087.5 : 50.48k: +20.7%: 3,053.: +63.0%: 0.060:
2010 : 43.95 : 1405.5 : 61.77k: +22.4%: 4,201.: +37.6%: 0.068:
2011 : 43.65 : 1531.0 : 66.83k: +8.19%: 4,372.: +4.07%: 0.065:
2012 : 41.01 : 1657.5 : 67.97k: +1.71%: 5,813.: +33.0%: 0.086:
2013 : 44.10 : 1204.5 : 53.12k: - 11.9%: 5,890.: +1.32%: 0.111:
2014 : 44.69 : 1206.0 : 53.90k: +1.47%: 7,231.: +22.8%: 0.134:
2015 : 47.23 : 1069.0 : 50.59k: - 6.15%: 6,984.: - 3.42%: 0.138:
2016 : 49.82 : 1145.9 : 57.09k: +12.8%: 6,841.: - 2.05%: 0.120:
2017 : 50.39 : 1291.0 : 65.05k: +13.9%: 8,558.: +25.1%: 0.132:
2018 : 52.77 : 1279.0 : 67.49k: +3.75%: 7,466.: - 12.8%: 0.111:
9/’19 : 52.11 : 1485.3 : 77.40k: +14.7%: 7,779.: +4.19%: 0.101: = 10.1% of an Gold Oz req'd to buy PSEI
=====
Sources: PesoCross.XL > www.bsp.gov.ph/statistics/excel/pesocross.xls

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ROLLING OVER? Led by MEG possibly

MEG / Megaworld... vs.AGI, PSEI ... update / Last: P4.80 -0.04, -0.83% /

MEG is weaker than PSEI (7,972, +0.21%), and may be sliding away from resistance near P4.95 > 10d

HHGZZnx.gif

I think MEG is right now a key bellwether to watch, since it was the strong property sector which has helped to hold up the PSEI,

after it made a record high back in Jan. 2018

PSEI (7,972, +0.21%) - maybe be backing off from "round number" resistance at 8,000

exZrx1G.gif

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BTU & Coal broke down (on BTU's earnings)... while XLE looks better on rising USO

XLE-etc ... wk-fr.-1/2016 1/2018 : w/OIH /Last

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USO-etc ... 12 mo /

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==

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USO : $11.69 +0.39, +3.45% / x4.807 = WTI: $56.20

WTI Crude.  : $56.20 +2.02, +3.73%
Brent Crude: $61.69 +2.07,  +3.47%

==> Prices: https://oilprice.com/oil-price-charts

GLOBAL MARKETS-Shares, crude prices rise on US, China ...

Reuters-9 hours ago
Crude prices rise on hopes for U.S.-China trade deal ...
NEW YORK, Nov 1 (Reuters) - World equity markets surged and crude oil prices jumped on ... Brent crude rose $2.07 to settle at $61.69 a barrel, while WTI crude settled ...

Both Brent, the global benchmark, and U.S. benchmark West Texas Intermediate rose more than 3%.

Brent crude rose $2.07 to settle at $61.69 a barrel, while WTI crude settled up $2.02 to $56.20 a barrel.

The dollar slid as optimism that the United States and China will reach a deal to end their trade war reduced safe-haven demand for the greenback.

. . .

A Reuters survey showed that oil prices are likely to remain pressured this year and next. The poll of 51 economists and analysts forecast Brent crude would average $64.16 a barrel in 2019 and $62.38 next year.

Meanwhile, US crude production soared nearly 600,000 barrels per day in August to a record of 12.4 million, buoyed by a 30 per cent increase in Gulf of Mexico output, according to government data released on Thursday.

Those numbers came as a Reuters survey found output f ..

Read more at: //economictimes.indiatimes.com/articleshow/71845649.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

A Reuters survey showed that oil prices are likely to remain pressured this year and next. The poll of 51 economists and analysts forecast Brent crude would average $64.16 a barrel in 2019 and $62.38 next year.

Meanwhile, US crude production soared nearly 600,000 barrels per day in August to a record of 12.4 million, buoyed by a 30 per cent increase in Gulf of Mexico output, according to government data released on Thursday.

Those numbers came as a Reuters survey found output f ..
 
A Reuters survey showed that oil prices are likely to remain pressured this year and next. The poll of 51 economists and analysts forecast Brent crude would average $64.16 a barrel in 2019 and $62.38 next year.

Meanwhile, US crude production soared nearly 600,000 barrels per day in August to a record of 12.4 million, buoyed by a 30 per cent increase in Gulf of Mexico output, according to government data released on Thursday.
 

Big Oil Under Pressure To Cut Production By 35%

Nov 01, 2019 at 10:33 | Irina Slav

Big Oil companies need to reduce their oil production by 35 percent by 2040 in order to preserve shareholder value in a changing world, think-tank Carbon Tracker has warned.… 

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ROLLOVER, Crack Phase#2 ? Is it ALI's turn to lead stocks lower?

ayala-land-logo_E5AB2B8EAB284713A8B02A12

Watch! Will we see a further rise in volume and more follow-thru on Thursday?

ALI-etc: ... 6mo : fr. May 5, 2019 : 10d/

ALI: 47.00 -4.08%, SMPH: 38.80 -4.43%, PSEI: 8026 -2.32%, MEG: 4.86 -1.82%, AGI: 11.50 -2.04%

4gaQRaA.gif

Some Property related comments from TS's 3A viber chat

TS: What's your view on physical properties?

DB: Overpriced. And especially new properties which are overpriced by maybe 20-30% vs the secondary market,  Yields are poor on new properties.  Buyers will need at least 5-10 years to breakeven

Some properties in the secondary market with yields on 8-10% or more may be worth buying, But not in places like Manila Bay, where rental yields are propped by temporary factors, which may be reversed in POGOs move to specific areas, and away from M-Bay

Property stocks will rollover as awareness spreads that there is INTENSE buyers resistance to the high priced new properties.  (This phase is called "buyers remorse", since after the turn buyers of new properties will regret their purchases, and developers will be left with a glut of returned and unsold properties.  Banks may even choke, and refuse to finance the very high balloon amounts, presently on offer - like 80% at Completion. Ugh! They will need more bank finance than they are worth.)

(Are you sorry you asked?  haha)

TS: Nope because that would have been my answer too and maybe even more dire

As proven by history, bubbles normally correct the rise by as much as 80% in 3 years. Recall that I put here the screen shots of my forecast of a bubble top for bitcoin right at the 20,000 level in Dec 2017.  I said it will fall by as much as 70-90% in 2-3 years.  I was wrong. It fell by 80% in one yr.

DB: (Something that annoys me off is how totally IGNORANT the sales people are within the big developers.  They don't know what YIELD is.  If you ask them how much a property will rent for, they tend to invent "Daily" rates from the AirBNB market, and then multiple those figures by x30 days.  This is highly. er, disingenuous, and gives highly inaccurate yields - since Airbnb properties rarely rent out from more than 50-65% of a month, and there are extra costs in running a Short term airbnb business. haha.

TS: I prefer the Warren Buffett way of being in stocks than property. Oh not just stocks but all tradeable instruments and both on the long and short side, if warranted.

DB: ILLIQUIDITY may become a big problem in the property market soon,,, as the mainland Chinese who bought here find that they cannot sell their completing properties at anything near the prices being listed by developers.  Then we may see a very swift correction of 20-30% in prices of New properties

( BTW, there is a regular Saturday morning meet up in Makati. Where we discuss property investing.  My views are informed by conversations I have had with many people at those meetups.)

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