Free Editorial


From the HRA Journal: Issue 319

It's all good. Highest unemployment rate since the Great Depression? Record breaking quarterly loss in GDP on the way? Looming deflation and debt defaults? Pffftt! Down markets are for losers. The Fed's got your back!

Wall St is already flirting with 3000 again only a few weeks after bottoming at 2200. The ruling narrative is that traders are "seeing past -covid-19". They are, but they are also assuming this will be a V shaped recovery for Wall St, whether it is or not for everything else. The party line is that this is investors being far sighted but let's get real here. Its all about trader's believe that whatever bad stuff happens, the Fed can fix it with the sufficient application of money.

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Infinity and Beyond!

From the HRA Journal: Issue 318

Apologies for not getting this issue to you quicker. Things have been moving fast and I kept rewriting and updating (and, yes, lengthening) the editorial that makes up the bulk of this issue.

It's hard to deal with the current situation short form, because there are so many moving parts. Having now (I hope) laid out something of a framework, I plan to put out a few issues closer together that will deal with one aspect of the crisis or another, rather than trying to update so many things at once.

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Panic Responsibly

From the HRA Journal: Issue 317

Ugly, ugly, ugly.

That didn't take long. We went from all-time high to bear market in record time. And so far, we haven't been getting any love for gold stocks, junior or senior, even though gold is one of the best performing asset classes.

I don't know where the bottom is for equities. The only thing I'm comfortable is that it should come fairy quick, even if it's much lower. Covid-19 will clearly get worse before it gets better but, even here, the impacts should start to lessen after a couple of months if we don't screw it up.

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Zombie Apocalypse

From the HRA Journal: Issue 316

It's a gold bull market. It was one already, of course, but we've got a clean breakout now and a path to much higher prices. Gold still isn't making the front page, which I'm very happy about. I want to see a nice sustained rally, not something parabolic that goes down in flames.

As I feared it would, covid-19 is making its way around the globe. While the infection rate outside China is still quite low, the growth rate in places like Italy, South Korea and Iran has been alarming. It's still very early days. We haven't seen infections really accelerate in North America. We don't know if that's luck or they just haven't shown up on the radar yet.

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Black Cygnet

From the HRA Journal: Issue 315

It's not just beer anymore. Corona stole the headlines, and that's saying something for a month that included impeachment trials, almost war in the Mideast and (!) locusts.

But liquidity uber alles. Even in the face of all the real and potential bad news, markets fared pretty well. Traders continued to BTFD and to treat interlopers who wondered if stock markets occasionally go down with (barely) tolerant amusement.

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Gold’s Big Picture

From the HRA Journal: Issue 314

The fun doesn't stop. Waves of liquidity continue to wash traders cares away. Even assassinations and war mongering generate little more than half day dips on Wall St. It seems nothing can get in the way of the bull rally that's carrying all risk assets higher.

It feels like it could go on for a while, though I think the liquidity will have to keep coming to sustain it. By most readings, bullishness on Wall St is at levels that are rarely sustained for more than a few weeks. Some sort of correction on Wall St seems highly likely, and soon. Whether its substantial or just another blip on the way higher remains to be seen.

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Santa Kicks Ass

From the HRA Journal: Issue 313

Santa Claus is coming to Wall Street and many other bourses near you. Clearly, traders have all been nice this year as most charts are very much "lower left to upper right" lately.

The market right now is all about liquidity. There's little point in looking at things like earnings estimates or trailing P/E estimates. None of that matter right now. As long as the US Federal Reserve is pumping "non-QE" money into the repo market it seems prices have nowhere to go but up.

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Eye of the Beholder

From the HRA Journal: Issue 312

How about that SPX eh? Ever since the start of October it seems Wall St can do no wrong. US metrics have improved some and impeachment is a non-event as the US Senate would never vote for it. Both of those things calmed traders. Calm enough that they suddenly don't seem concerned about the US-China trade deal. That's convenient, since it looks like that deal almost certainly won't happen now. A lot of traders are also bullish because the US yield curve has largely un-inverted. That just tells me a lot of traders don't understand yield inversions as a signal (spoiler alert-sudden steepening after an inversion is not a good thing).

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Jay’s Got Your Back

From the HRA Journal: Issue 311

FOMO is back on Wall St, so are positive liquidity flows. Nothing else seems to matter much, as traders know Powell is going to give them the rate cut they want this week. The announcement will take some careful scripting, traders will be saying "what have you done for me lately?" about five minutes after the announcement. I really don't think the FOMC is in the mood to promise or imply more rate cuts, but they'll try not to be too obvious about that.

All that sunny positivity on Wall St hasn't been helping the gold price. It's very much a risk on market, and that doesn't drive traders to want more bullion. Gold's not trading terribly, but it does look like it's going to drop through support so we could have choppy seas for another few weeks. Bullion does tend to do better towards year-end, so there's that.

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