The sell off today in US equities and bonds globally
The US market sell off was lead by the tech sector with all the major averages closing at their lows. A sell off also happened in the bond markets globally. The German bund, Italian, French and Spain yields were up. Also the US 10 year is just below 2.2%. The question is will the sell offs in bonds be the start of a more significant sell off all thanks to the central banks talking up a tighter monetary policy. Right now it is all talk but if the largest player (central banks) exits a market people need to take note.
Crude Oil In a New Bear Market?
This post comes from our friend Chris Vermeulen, The Gold And Oil Guy. We typically chat about either gold or oil on our calls and since Chris is not around today I figured I should post his thoughts for everyone.
Chris is mostly looking at the technical outlook for oil but he does mention that companies are adjusting for a lower oil price in their forward guidance. This is part of a bigger story that includes the Chinese slowdown, rising US rig counts (that are now at record levels), and huge question marks around the middle east. Both the supply and demand side of the story for oil is weak. That being said there is the possibly that too many investors are down on oil that it may be due for a bounce. It should only be that though, a short term bounce.
Click here to visit Chris’s site.
The newest bear market is in crude oil. The definition of a bear market is when an ‘asset class’ is down more than 20% from its recent high: (Bear Market Rally Definition Investopedia). It has been more than five years since the market fell so hard so fast from its’ high. Two months later, it was even lower. During the past 20 years, the SPX has struggled when oil fell into a bear market!
Oil prices broke to a fresh seven-month low on June 21st, 2017, with WTI Crude Oil dropping to $42 per barrel. The renewed and heightened pessimism over the pace of rebalancing has sunk in as O.P.E.C., is struggling to reduce its’ inventory. U.S. shale continues to grow production. There are large volumes of supply back in the market at the worst possible time!
WTI Crude Oil Now Technically Bearish
Most oil companies are now adjusting to “lower for longer.”
The Wall Street Journal reports that “most in the oil industry are resigned to low prices for years to come, recognizing that a range of $50 to $60 might be a semi-permanent equilibrium.”
Between 2014 and 2015, 105 oil producers and 120 oilfield service companies went through bankruptcy.
In short, these extreme price movements and key support levels can provide some fantastic opportunities to trade oil like my last trade in SCO for a 21% move a couple weeks ago. If you want to get involved in the next oil ETF trade subscribe here: www.TheGoldAndOilGuy.com
Marina Update on the Mariana and Sandstorm Deal
The business combination between Mariana and Sandstorm is actually called a scheme thanks to the jurisdiction it is taking part in. I brought on the CEO of Mariana, Glen Parsons to discuss the recent court ruling moving the deal ahead and recap the work that is currently underway. We also discuss future work planned for the other projects in Mariana’s portfolio which will be part of the spinoff.
Shorting the NASDAQ and lower targets for Volatility
Rick Ackerman’s subscribers are making some good money on the short side of the NASDAQ. He breaks down the opportunity he saw as well as outlining his volatility outlook. We also wrap it up with a general comment on the markets.
Rye Patch Site Visit Pictures and Videos
Below are a number of pictures and videos from our recent site visit the Florida Canyon Mine owned and operated by Rye Patch Gold. Be sure to listen to last week’s weekend show where we comment on the site visit in segments 5 and 6. Click here to visit that weekend show posting.
Florida Canyon Mine panorama
Florida Canyon New Leach Pad
Weighing of the dore bar
Holding the dore bar. This thing was pretty heavy!
The full site visit crew.
CRB, Palladium, Treasuries, Corporate Buybacks – Tying It All Together.
Sometimes we all get too focused on individual markets and lose sight of the big picture. Today with Doc we look at everything from US markets to treasuries to commodities and tie it all together.
A New Guest Who Runs His Businesses On Giving Back To The Community
Steve Down is an entrepreneur who runs his business with the goal of making a profit but also giving back to the communities they are set up in. Steve has done everything from writing a book to starting a sandwich restaurant franchise as well as coaching individuals on how to manage their finances. It’s the later business that we focuses on today, called Financially Fit (click here to visit the website).
You can also call Financially Fit and set up a free coaching session at 1-888-7wakeup.
The Issues in China Continue
We have discussed the issues that China is facing pretty much all this year. It seems things are not getting better. Weak expected Q2 GDP along with debt continuing to skyrocket all contribute to a recent Moody’s downgrade of China’s credit rating. Read the Factset post below that outlines why the concerns about China are more than just rumors.
… Click here to visit the original posting page…
China’s Indebtedness in the Face of Slowing Growth
Last month, Moody’s downgraded China’s credit rating from AA3 to A1 for the first time since 1989. Investors have long feared the world’s second largest economy is heading toward a “hard landing,” so the downgrade does not come as a surprise. However, Moody’s cautionary outlook once again puts the spotlight on Beijing’s difficulties, which officials in there argue are a natural by-product of rebalancing of its economy.
In its statement, the ratings agency cited a weaker growth outlook and mounting debt pressure as the most urgent issues for the Chinese economy. Here, we’ll examine the numbers behind those concerns and the prospect of a turnaround.
For more, see our previous post: How to Measure and Manage Your True Exposure to the Slowdown of China.
Slow GDP Growth Leads to a Slow Re-Balancing Act
China’s Q1 GDP growth reached 6.9%, the highest growth rate in two years and marginally higher than expectations. While the economy grew in Q1 (which can also be seen in China’s alternative measure of growth, the Li Keqiang Index), Q2 expectations suggest that GDP will grow by only 6.7% and that 2017 annual growth will decrease to 6.5%. After a period of rapid growth and an ongoing rebalancing of its economy from an investment-driven to a consumption-based model, lower Chinese growth rates are, perhaps, to be expected. Officials in Beijing have repeatedly stressed that lower growth rates are probable during this period of transition, reflected in the GDP target cut to 6.5% for 2017. The medium-term outlook suggests that GDP growth will decline further to 6.2% in 2018 and 5.8% in 2019.
The latest GDP figures also suggest that reform is proceeding slower than expected, particularly in the service sector, which is expected to play a crucial role in the country’s economic future. The service industry accounts for more than 50% of China’s total GDP according to 2016 figures, compared to 42% 10 years ago and 34% 20 years ago. Despite the impressive growth, this is significantly lower than the global average of 74% for developed countries. Chinese GDP growth in the tertiary industry (service sector) grew at a slower pace in Q1 than the secondary industry (construction and manufacturing sector); tertiary GDP saw a slight increase from 7.6% to 7.7% compared to last year while secondary GDP grew at a faster pace of 6.4% vs 5.8% in the previous year. Despite the slower growth in tertiary GDP, recent key releases suggest that Q2 values will see a steady rise; retail sales increased 10.7% compared to last year and fixed …read more
Comments on Gold, Central Banks Policy, and Recapping Our Trip to Rye Patch Gold
This was a very fun week for us as we went down to Reno to visit the Rye Patch Gold projects including the producing Florida Canyon Mine and saw a gold pour. We will post pictures and video taken from the visit this weekend in a stand alone post.
On this weekend’s show we recap the site visit to kick off the second hour. In the first hour we focus a lot on gold as well as how central banks have been the sole driver of the equity markets.
We want to thank everyone for taking time out of their weekend to tune in to the show. We hope everyone has a great weekend! Feel free to contact us at anytime with questions on companies, topics and guests you would like to see on the show. I can be reached at Fleck[at]kereport.com.
Segment 1: We kick off the show with Chris Martenson and his #1 concern – Growing tensions between Russia and the US.
Segment 2: George Gero, Managing Partner at RBC Wealth Management explains why this is a frustrating market for gold investors.
Segment 3: David Erfle: Fed rate hike cycles are historically good for gold.
Segment 4: Peter Boockvar, Chief Market Analyst with The Lindsey Group, shares his opinion on how Central Bank policies around the world are changing and the markets don’t seem to care.
Segment 5 & 6: We open up KER Politics with Marshall Berol, Rick Ackerman, and Bill Howald recapping our trip to the Rye Patch Gold properties.
Segment 7: Big Al talks politics with Daniel McAdams of the Ron Paul Institute for Peace and Prosperity.
Segment 8: We wrap up KER Politics with Jim McKinney and Big Al discussing the hole that the Democrats seem to be digging for their party.
Doc is back! Let’s chat Gold and Silver
I am happy to report that Doc is back and should be with us on a bit more regular basis! Today I get Doc’s updated opinion on the precious metals. We chat about the physical price and the underlying stocks. Doc is not changing his views but he does provide some updated targets.