evening wrap,january 14
market vibes
Wednesday news items
PPI data was mixed to higher. The important number core yoy was 3% vs 2.7% expected and 2.9% last. Stocks were lower already on Iran and accelerated down. Representatives from Denmark and Greenland met with Leadership in DC to find a way forward. Later in the day Trump said things might be improving in Iran.
The dets about the $3 billion eccles building boondoggle are finding their way in to the news on social media. Numerous requestes for info were ignored so finally the DOJ went for a grand jury. JPM’s 60 floor 2.5 mm sq ft palace on Park ave. cost $3 billion and the price of the New Federal reserve, which is a private bank, might cost more than $3 billion. Bill and Hillary might be in contempt of congress. They vote tomorrow…Spicy stuff.
stock markets
Tech and Mags continue to trade in a featureless horizontal range… These little islands of blue DMI bars in NDX indicate brief failed efforts of longs to take control of the trend since late October and the aging range shows very little sign of resolution.
silver and gold
Early this week BBG said in reference to silver, “China’s metal markets are in the grip of a speculative frenzy.” I don’t see anything of the kind on the COMEX.
This is silver in hourly data for the entire 5 sessions of BCOM silver rebalencing. Zero implication of panic or stress, just a steady uptrend with a well-calibrated imbalance of buying. Silver is trading aggresively higher but higher prices not necessecarily negative unless you’re short. I think this is not the short driving the auction any more. it’s longs, and a lot of them, trading with old longs getting out.
Silver in daily data (next chart) for the same period. I think…Someone wanted to buy all of the BCOM silver and they bought it. We’ll see if they’re in for more tonight in Asia. Keep in mind dynamic margins mean everyone has to pony up another 7% variation and initial margin tonight. Not a problem for the longs.
Comex silver open interest is not moving. Until it does silver will be as indifferent to prices at $90 as it was at $70. Margin on each side of the book is circa $6.2 billion tonight. The longs collect $4 billion variation credit. The short side of the book (hedged) pays $4 billion plus 9% to stay in… You see how this is a self-fulfilling outcome?
