Free Editorial
Hunting Season
From the September 6, 2016 HRA Journal: Issue 257
Ok, Happy now?
All you traders that were wringing your hands and calling tops for the sector since PDAC finally got a correction to call your own. It wasn’t much of one. I don’t think I’d get it framed or bronzed, but it’s yours. You can all relax now in the knowledge that you won’t be the one buying the top. That top, at least.
With a correction (of sorts) and a clear interim bottom in the gold price the deck is cleared for the mountain of news releases headed our way. Expect high volumes and high volatility. We know traders want to own these companies as they prepare to report but we don’t know yet what sort of results will satisfy shareholders. That will be a company by company decision and management's ability to convey and explain their results will be a big factor. Read More
Legends of the Fall
From the August 16, 2016 HRA Journal: Issue 256
New highs for New York and even more new highs across the junior resource space. We haven't gotten to September yet and we already seem to be staring the Autumn lift off. It’s nice to be in the sector the rest of the market is jealous of for a change.
The Venture is currently one of the world’s best performing indexes, perhaps THE best performing. That move continues to be dominated by gold explorers that have captured the attention of traders. It’s been five years, at least, since I have seen the levels of anticipatory buying we’re getting for some stocks. That is a great place to be if you’re already in. That is why HRA keeps looking for situations where the crowd hasn’t arrived yet.
Central Bank Roulette
From the July 26, 2016 HRA Journal: Issue 255
Major equity markets continue to perform well, though the rally is looking a little tired. We’ll know in hours whether the Fed plays it dovish or hawkish and that in turn will determine if we see near term new highs. We’re into Q2 earnings season. There is plenty of the usual cheerleading about “earnings beats”. Nice, except that the earnings are beating expectations that have been lowered yet again.
Its early days but already looks like we may get another quarter of declining overall earnings. That would make six in a row. If you’re wondering when the last time was that we saw this long a string of earnings declines coupled with new highs for the market the answer is “never”.
ZIRP Über Alles
From the July 12, 2016 HRA Journal: Issue 254
Wall St’s doing the happy dance again. You’d think the SPX is well through a massive rally instead of just a couple of percent higher than it was 15 months ago. Never let facts get in the way of a good story.
Traders are pleased about June’s strong payroll numbers and even more pleased that there isn’t more obvious Brexit fallout. I don’t think the Brexit story is over yet. It may not harm markets further but that will depend on how messy the divorce between Britain and the EU ultimately turns out to be. Read More
Tsunami
From the June 23, 2016 HRA Journal: Issue 253
Well, ok then. Unexpected.
You already know what the big story is this issue. I ripped out the old editorial and rewrote it in the wake of the Brexit vote. I hate sounding like I’m making too big a deal out of an issue that is only a few hours old but this is one of those cases where any number of long term effects are obvious.
Risk Off is back. With a vengeance. Unlike some recent episodes gold is very much benefiting from the change in tone. The foundation for that was laid when generalist money started entering the space. One of the most likely outcomes of Brexit is lower for longer interest rates and vast liquidity injections by central banks. All of that, for a change, is gold positive. I don’t think this is a market where gold will be punished or be one of the first assets jettisoned when things get scary. Read More
Was That It?
From the June 5, 2016 HRA Journal: Issue 252
Well, if that was the correction I’d have to call it underwhelming. Ok, I admit the payroll report debacle was a bit of a “save” at least where the producers are concerned. They were down several percent and things clearly could have gotten worse if the payroll number had been a huge beat rather than a huge miss.
It’s a piece of news that is making everyone happy at least for now. Wall St bulls see an accommodative Fed, whatever the reason, as the path to new highs they have been pining for since last May. They might get their wish if there are enough FOMC members making dovish speeches in the next few weeks. That said, given how foolish they currently look, said FOMC members might be wise to just clam up for a while. Read More
Early Innings
From the May 18, 2016 HRA Journal: Issue 251
“Fed Fear” is back. In the past few sessions we’ve seen the first sizeable decline in gold prices since the rally started early in the year. “Sizeable” is a relative term. There are plenty of traders heading for the hills but, really, we’re talking about a 3-4% down move.
Could it drop further if the Fed really does pull the trigger next month? Possibly, though I don’t think it would fall more than another $20-30 and I’m not sure we’ll see even that. As I explained in the last Journal the bulk of the Outside Money coming into the space is basing their decision on the view that we will be in a negative real interest rate environment in most major currency blocks for some time to come. While those traders will also be influenced by market sentiment and currency gyrations their basic thesis is not the same as a gold bug treating bullion as the “anti-dollar.” Read More
We're Due: A New Bull Market
From the April 29, 2016 HRA Journal: Issue 250
You think it would be easy writing an issue at the end of a month like this. You know “smile to the crowd, take a victory lap, etc.” Not so much. The month was SO good I was left struggling how to couch updates for stocks that have doubled or tripled in a couple of weeks. I’m not complaining. It’s a good problem to have obviously but you’ll understand if I sound a little bipolar in spots. It’s hard not to be paranoid after moves like that. Read More
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.
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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