Various thoughts

Bad Sushi

May 1…)

*YELLEN: I’M CONCERNED ABOUT WHERE WE’RE GOING WITH THE DEFICIT (file this one under “things I really wish I didn’t say.”)

Tuesday was a uniformly bad day for everything. Gold and silver fell in London and extended their ranges lower on modest volume in NY. Then, at 11 AM they simply stopped trading at the dead low in silence. For markets with such stunning gains everywhere but NY in March and April, a stealthy correction might at least trade the pit close in NY. But not. Usually, a market that clings to its lows means unfilled selling above.

XAU and XAG ETF holdings were essentially unchanged yesterday. XPT holding rose 44k, following 37k and 104k on Monday and Friday which is extraordinary for PGMs. Platinum prices barely moved. An opinion on XAU: the marginal excess of gold is not long, it is owned. There is a difference. I still think the weak side of the market is above us.

Stocks and bonds fell rather hard, which seemed out of character for Day 1 of an FOMC meeting. Equities are rarely in a hurry to shout “fire” before the movie starts. Another declarative tell; AMZN shook off an earnings miss with 100 billion for web services, but the S&P went down in the post anyway and they’re down this morning.

There is a laundry list of stuff troubling the S & P including: the superusers episode at the BLS, a beanstalk of T debt, “bad is good” big tech earnings, and the Yen kerfuffle is awfully one sided. No one is asking, “Who is the loser?” I assure you there is one.

Bitcoin has two problems… ETFs, options and futures have added unlimited supply to an asset whose primary attraction was an inviolate cap on replication… meaning wider derivative access creates leverage and hypothecation. And also, the trouble with bitcoin is nobody hates it.

Elsewhere, Cocoa finally came to Jesus on Monday and coffee made its contritions with a brutal drop yesterday. Copper (chart below) had an outside reversal down on the lowest volume in a month. Everything was down yesterday, some markets with real authority or some just marginally lower, but breadth was thin. Sort of a low volume panic. The BCOM fell under its 200 MA in the largest range up or down since December.

My vibe

DOE data today. OPEC and the FOMC have a lot in common. Both are charged with mandated stability in a fixed price market. Instead of a political war in the congress with which the Fed does the best it can, OPEC manages an ancient biblical war. Peace is equally illusive to them both.

Chair Powell has his work cut out for him. Yellen wants his job. The easy out for the BOJ is a cut. France is trying to shame him into cutting. Stocks and bonds look like sht. ‘No cuts’ for those that want them is a hike. And ‘no hikes’ for those that don’t want them is a cut. Bad sushi, imo.

**always a taker of ideas and views**

Good luck today.

JJ

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