Free Editorial

Ms. Congeniality

From the April 3, 2016 HRA Journal: Issue 249

So far so good.  We’re a month past PDAC and the world has not come to an end yet.  Well, there’s always tomorrow.

Markets, especially the NY variety, are happy and the rally that started there in February presses on.  I still don’t expect new highs near term but I admit I’m not far from being wrong on that one.  We’ll see if the fun continues once the next earnings parade starts and the share buybacks are blacked out for a few weeks.

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The Central Bank Trifecta

From the March 13, 2016 HRA Journal: Issue 248 

Another PDAC and Subscriber Summit down and resource stocks –so far—are relatively unscathed.  The remaining central bank meetings during the next week will set the tone at least until the next earnings season starts in a month.

Mario Draghi will be a tough act to follow for other central bank heads.  He went out of his way not to disappoint this time. The markets are pricing in a dovish duet by Janet Yellen.  Probably a correct read but this would be a good time for the Fed to raise rates if they really want to do it.  It might be worth waiting to see how that turns out.  A hawkish stance would be something of a surprise and an actual rate increase would be a shock to the markets.

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Losing Their Religion

From the February 26, 2016 HRA Journal: Issue 247

The markets have certainly stayed interesting and have been a happy place lately if you’re bullish on gold.  We’ve seen bounces before, especially this time of year so it’s no surprise that resource stock traders need more convincing.  Q2 can be a weak time for gold and we’ve all seen the “PDAC curse” too many times to count.

There’s a bit of a pullback going on now. So far $1200 has been strong support for gold prices which is pretty impressive given where we were a couple of months ago.  We’ll see if it keeps holding but as you already know I do think the bottom is in for gold.  It’s more a question of what the rally looks like and how long it goes.

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2016 Preview Part III; Metals

From the January 31, 2016 HRA Journal: Issue 245-246

This is the third of three parts of the 2016 preview that appeared in HRA Journal Issue 245-246.  This part deals with the outlook for various metals.  The assumptions about what the economy will do (see Part I) underlie the discussions on metals though each has unique supply/demand issues. In most cases the supply demand balance looked better than expected though, obviously, market sentiment will drive markets short term.  Volatility will be high.

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2016 Preview Part II: $US, China and Oil

From the January 31, 2016 HRA Journal: Issue 245-246

This is the second of three parts of the 2016 preview that appeared in HRA Journal Issue 245-246.  This part deals with the outlook for the US Dollar, China and oil.  The final section, dealing with several metals, will be issued shortly.

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2016 Preview Part I; Markets

From the January 31, 2016 HRA Journal: Issue 245-246

It’s been a wild month, and a busy one.   It’s convention season in Vancouver and elsewhere.  I’m finishing this issue at conference number four for me in the past 10 days.  That will be it for a month though so things should get back on track.

This is a long double issue.  I’d recommend a pot of coffee.  I’ve laid out my thoughts on what I think several markets and commodities will do this year.  That gives me a chance to be wrong on multiple levels.

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Yellen Comes Down the Chimney

From the December 31, 2015 HRA Journal: Issue 244

You heard it from Janet Yellen.  “Economic expansions (and by extension bull markets) don’t die of old age.”  That’s true.   But they do die from excess, policy mistakes and Wall St Stoopid. 

Seven years of zero interest rates have created plenty of capital misallocation, mal-investment and yield chasing.  We’ve seen some minor debacles in the high yield space this month.  Nothing earth shattering but certainly disquieting. Big problems often start small and go unnoticed until the tsunami is on the horizon.  Keep an eye on bonds.  The credit market funds a large percentage of the buying underpinned the bull market.  We’ve got a problem if it stops.

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Year-End Inflection Points: Dead Ahead

From the December 2, 2015 HRA Journal: Issue 243

Over to you, Draghi and Yellen.

This month, like many other months recently it’s the intentions of central bankers that are dominating the markets.   It’s widely expected that the ECB and US Fed will drift even further apart in their basic policy stances this month.   I’m pretty sure that view will turn out to be correct though as always the devil will be in the details.

Increasing certainty about upcoming policy moves has traders increasingly certain about how different markets will move and they are placing bets accordingly.   Traders in New York are expecting Santa to deliver new all-time highs.   He may grant that wish on momentum alone but if we get many more sub-par economic readings the jolly old elf may decide to break out the coal lumps to stuff stockings with.

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Janet's Kool-Aid Stand

From the November 10, 2015 HRA Journal: Issue 242

It’s all good.  Just ask Janet Yellen or any hawkish Federal Reserve board member.  Indeed, there have been some better readings on the US economy lately but things are far from outstanding. 

Plenty of equity traders suddenly expect new highs on the major markets any day now.  The bond market is pricing in 70%+ probability of a December rate hike.  This time around markets are not jittery because the Fed has assured us offshore problems won’t touch the US.  Let’s hope they are more right about that than they were four short months ago.

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Bad News Is Good News. For Now.

From the October 21, 2015 HRA Journal: Issue 241

Since the last issue the “optimistic scenario” has been the clear winner.  Traders continue to expect the Fed to hold off.  That has been enough to keep NY trending higher though the trajectory is flattening out.  Economic readings haven’t improved.  It will take plenty of upside surprises though earning season to keep the trend alive.

The trend has been more evident in Europe, Japan and China. All released weak readings and all have traders that expect their respective central bankers to refill the punchbowl.  Let’s hope they do.

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