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Feb 4 2015
Charts and analysis follow after headlines from today..........
GoldTrends continues to favor its forecast from a couple of years ago that a major global liquidity squeeze coming.
Is It Socialism Or Just Failure?
Submitted by Tyler Durden on 02/03/2015
The US, like Western Europe, is in the midst of a massive failure of its brand of capitalism. There are no free markets, no price discovery, there are asset bubbles being blown with money that belongs to our grandchildren as people are thrown into despair, while others attain unparalleled riches, and the whole grossly distorted movie is fed to everyone by a well-oiled spin machine. Yes, 40 million Americans are on food stamps, 100 million are not even officially in the labor force, and perhaps as much as most Americans are receiving some sort of government assistance, but that doesn’t make it socialism. It makes it a failed capitalist system. Socialism is supposed to be about a society that cares, and that’s not what those US government handouts are about. They’re about keeping people quiet in a failed system.
GoldTrends has pointed out on numerous occasion that “LIQUIDITY” is the major concern…………..
Rates Don't Matter - Liquidity Matters
Submitted by Tyler Durden on 02/03/2015
If the U.S. economy is now dependent on marginal lenders and borrowers, then it is exceedingly fragile. The cure for systemic fragility is not low interest rates forever--it's a market that transparently prices credit and risk for lenders and borrowers, qualified and marginal alike.
“LIQUIDITY” needed even for the supposed new global economic powerhouse.....
Impact Of China 0.5% RRR Cut Is Equivalent To RMB 630 Billion Liquidity Injection, Goldman Finds
Submitted by Tyler Durden on 02/04/2015 -
To say that the PBOC is confused at this moment is a very big understatement: on one hand, yesterday the PBOC moved its reference rate for the yuan outside the daily trading band for the first time in 21 months, forcing the currency to strengthen as authorities seek to limit volatility in capital flows. And then just hours later, as reported first thing this morning, the same PBOC announced its broad RRR cut - the first one since May 2012 - an attempt to ease ongoing, and thus tightening, capital outflows, and pushing the currency lower in the process. In short: unlike other central banks who hope that institutional and retail investors figure out their FX intentions and help them out by "frontrunning" their moves (which may never come) in what is now a clear and global currency war, China is certainly not making it easy for FX traders to figure out what will happen
GoldTrends also forecasted that the banking industry has very little HIGH COLLATERAL assets and they are the assets that matter.
S&P Downgrades Numerous European Banks, Warns Deutsche Bank May Be Next
Submitted by Tyler Durden on 02/03/2015
Just hours after apparently settling its suit with the USA (not at all retaliation for downgrading them), S&P has taken the big red marker out on a slew of European banks:
•Downgrades: Credit Suisse, Barclays, Lloyds, Bank of Scotland, RBS, HSBC, and Ulster Bank
•On Watch Negative: Raiffeisen Zentralbank, MBank, Unicredit, Commerzbank, and Deutsche Bank
The driver of the shift in perspective is the apparent removal of the 'bailout put', as the prospect of "extraordinary government support" appeared less likely under recently passed bail-in legislation.
GoldTrends postulates if USA was really EMPLOYED, interest rates wouldn’t be at zero. In fact, gold used to react positively to bad economic data and that is because the market would ANTICIPATE lower rates and that economic activity (think inflation) would improve. Since there’s no room lower in rates, and with the US, EU and Japan QE failing to turn things, gold is and has been MOVING LOWER (as we maintained that it would) on bad economic data.
Gallup CEO: "America's 5.6% Unempoyment Is One Big Lie"
Submitted by Tyler Durden on 02/03/2015 -
"There’s no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie. And it’s a lie that has consequences, because the great American dream is to have a good job, and in recent years, America has failed to deliver that dream more than it has at any time in recent memory. I hear all the time that “unemployment is greatly reduced, but the people aren’t feeling it.” When the media, talking heads, the White House and Wall Street start reporting the truth -- the percent of Americans in good jobs; jobs that are full time and real -- then we will quit wondering why Americans aren’t “feeling” something that doesn’t remotely reflect the reality in their lives. And we will also quit wondering what hollowed out the middle class." - CEO of Gallup
The Layoffs Begin: ADP Misses, Lowest Since September As "Businesses In The Energy Industries Are Scaling Back Payrolls"
Submitted by Tyler Durden on 02/04/2015
Having beaten expectations for the past 4 months, in the face of a surge in jobless claims across Shale states, it appears January's print is finally catching down to a weaker expectations as layoffs dominate headlines as even Mark Zandi is forced to admit "Businesses in the energy and supplying industries are already scaling back payrolls in reaction to the collapse in oil prices, while industries benefiting from the lower prices have been slower to increase their hiring." At 213k, this is the lowest print in 4 months, missing expectations of 223k and dramatically down from December's upwardly revised 253k (from 241k) - the biggest drop since August as small business job growth slides significantly.
Here’s the latest of the BRIC’s who supposedly are going to take over global economic activity and erase the US dollar from existence. (Someday maybe --- but certainly not now).
CEO Of Brazil's Energy Giant Petrobras Resigns In Corruption Scandal Which Halted Sales Of Brazil Sovereign Debt
Submitted by Tyler Durden on 02/04/2015 -
Back in September 2010, Petrobras conducted what was then the largest share sale (to date) in history, when US$72.8 billion worth of shares in the company were sold on the BM&F Bovespa stock exchange. Upon its IPO, Petrobras became the fourth-largest company in the world by market capitalization. Those days are long gone now, and following the triple whammy of a Brazilian economy in tatters coupled with plunging oil prices and an unprecedented corruption scandal, not only is its stock plumbing unseen ultra deep water depths, but Petrobras has rarely been in a worse shape than right now. Which is perhaps why moments ago the CEO of the semi-national company - which was the largest in Latin America by revenue as recently as 2011 - Maria das Graças Foster, "resigned" according to a filing with Brazil's securities regulator.
(Our thanks to www.zerohedge.com for the above articles)
Gold Overview
For those still wondering why the US dollar is going higher and every other currency lower, the above should at least provide some inkling. As much as USA sucks, world debt clocks in at 338 TRILLION dollars and the US at 17 Trillion.
The liquidity squeeze coming is mammoth and the panic will be in order of safety and HIGH COLLATERAL:
3. US treasuries
2. US dollar
1. GOLD
The real rally in gold comes when the Debt defaults begin and interest rates explode higher. The control boyz have everyone thinking that gold goes lower when interest rates go up.
Then how come rates rose from 1968 to 1981 and gold went up from 1968 to 1980 ?
Ultimately, CONFIDENCE is what drives gold.
For interest rates, it's EITHER economic activity or a LOSS OF CONFIDENCE. Thus the next interest rate cycle will develop from a LOSS OF CONFIDENCE. While gold will sell off initially on interest rate increases, it will REVERSE and move much higher once the cat is out of the bag.
Gold Chart
The 1255 area has been the support as it is the same as the 200 day average, a key Fibonacci re-trace, and the Oct 2014 high. Elliot Waver’s are all over this 1255 area. In fact, so much emphasis has been on this number that even the CNBC talking heads were discussing it yesterday. And that probably means the control boyz might try and take it out. If they do, then odds favor gold goes to the 1238-1242 area as next support. It is still possible for 1255 to hold. We need to see a close above 1272 for STARTERS and then at least 1286 to confirm that gold is heading for the next upper targets of 1312-1322. Resistance remains the same as last nights website update, 1266-1272 and 1278-1286. Today high so far has been 1272 (one of our weekly reversal numbers). In summary, either 1255 or 1237 has the best odds for a low this week. Lastly, the next reversal number is 1222 and just happens to be where the next FIB number is should 1237 fail.
The bottom line is its decision time for gold. Between now and Friday’s close, gold should decide and begin to move in its selected direction into mid-Month. A close above 1286-1292 favors it will be higher. A close below 1255 opens the door to 1237-1242. Until we close above 1286, the very short term trend is still pointing down.
 
Cycles
The odds favored pullback to the blue cycle due Feb 3rd (plus or minus 72 hours) has taken place as price pulled back from the last red cycle. It’s not over yet, as the Window is still open this week and so nothing is cast in stone yet for this next cycle that runs to Feb 19th (plus or minus 72 hours). Any daily close above 1286 would tilt the oods that a low is in. Last week’s low was at the 200 day moving average and any close below 1251 after Feb 6th will favor lower to mid Month. Otherwise odds are 70% that gold moves higher in this new blue cycle that is about to begin. As long as gold holds above that upper black trend line, the upside remains in favor. But that means we can still see 1239.
Silver
We like how silver is still 40 cents above its low but what we don’t like is the look of the price pattern since the low. It’s choppy and overlapping and that is not usually a good sign of higher prices. It’s usually the opposite. Once in a while, a choppy pattern will morph into a bullish impulsive one like what happened when the Swiss peg was removed and both gold and silver morphed. But most often it’s a sign of underlying weakness. Support is 16.80-17.10 and 16.50-16.64. Resistance is 17.60-17.80 and 18.50. In summary, silver very short term trend is neutral. A close below 16.80 flips it bearish. (Metal summary follows silver chart)
Metal Summary
The short term trend is due to change to up between now and Friday’s close. Odds are 70%. The other 30% lies in the fact that the short term cycle DOES invert at times. The question is whether the US dollar is ripe for a pullback (Euro is certainly due to bounce) but the fact remains that Gold, the US dollar, and the US Treasury market is considered the safe place to hide at the moment. SINCE November, gold and silver has been bucking the commodity trend, but commodities must make some type of short to intermediate term bottom soon in order to give gold a chance to continue moving higher.
The bottom line is that gold is about to decide the next two week trend between now and Friday’s close. A close above 1286 will favor higher. Any close below 1252 has to favor the 1238-1242 area and potentially 1222. We favor more so than 1222. But if we get a cycle inversion, gold can sell off.
The time is set, and gold will enter a medium term window next week where moves have a chance of being GOOD SIZED. A close above 1286 will favor higher. Otherwise, be cautious. A lot is unraveling in much the same manner as 2008…………only this time its NATIONS, not corporations.
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