Market Talk – July 25th, 2015
Commodities and their currencies continued to suffer this past week to complete what has been probably the worst week in a very long time. Oil lost another 1% leaving TWI at $47.95 whilst Brent lost 1.5% last seen at $54.45. Natural Gas is still unable to show any signs of recovery and it was last trading at 2.785(another 1% drop). Commodity based currencies (A$, Rouble, C$ etc.) all had very bad days with the worst being the Russian Rouble down on the day -2.35% at one stage.
Asian equities closed weaker on the Friday as Europe followed suit and late this evening the US markets were also heading into negative territory. The Dow has still been unable to make new highs in dollar terms, but the underlying support has come from foreign investors on a currency play. Even the huge rally seen in Amazon was not enough to turn the stock market positive by the end of the day, yet Amazon is demonstrating the technology shift as it goes toe-to-toe with WalMart for the title of biggest sales organization. The flight to quality continues in the bond market and the US Treasury curve continues to benefit as money leaves the stock market.
The 2yr Note was last trading -1.6bp at 0.678% whilst 10’s and 30’s were trading 2.26 and 2.96 respectively. The spread US/Germany TY/RX spread was unchanged at 156bp.
Few traders starting to talk JGB yields again as the Western economic numbers start to disappoint! Just when a number of houses were building short positions the bond market turns positive and closes its best week in months.
The weekly close in Gold saw the key Bearish Reversal at 1084 hold for now, but this is the line of demarcation. A weekly and month-end closing beneath this should signal we will break the $1000 barrier and test the 1980 high of $875 to $904 level. Copper was also a talking point down to its lowest level in 6 years.
Politics & the Risk of a 3rd Party for 2016
Historically, it has always been the Republican Party that splits. It has been a odd mixture of liberalism from the viewpoint of citizen rights before those of the government and the original constitutional goal of preserving the sovereignty of the states v the the Federalists. This liberal view has often taken the position of Libertarian whereas the so called “liberal” view of the Democrats is not liberal at all, it is liberal with other people’s money in the battle-cry of Marxism. This Republican “libertarian-ism” is what Trump is tapping into as is Bernie Sanders in the Democratic party. Both the traditional Republicans are owned by the NY banks as is Hillary Clinton, in who more people now distrust Hilary than trust her.
This Republican “libertarian-ism” actually traces back to Thomas Jefferson – the ultimate anti-Federalist. Jefferson championed the Bill of Rights that both the Republicans and the Democrats no longer respect as demonstrated by Obama’s actions being indistinguishable from Bush regarding the NSA and both sides called Snowden a traitor.
The humility of Jefferson further showing his Libertarian views can be demonstrated simply by reading his tombstone. There is no mention of him being President of the United States. His accomplishments regarding liberty and for his home state are duly noted. He omitted any mention of being President since he was an anti-Federalist.
The Party Republicans are dreaming of chasing Donald Trump away since he is dominating the agenda and they want this to be politics as usual. What they fail to grasp is the rising resentment of politicians is the resurgence of Jeffersonian Libertarian-ism. Personally, I seriously doubt that mainstream Republicans will even allow Trump to take their ticket. I cannot imagine John Bohner not engaging in some covert action to try to prevent a Republican Trump ticket.
The Republicans keep publicly rebuking the Trump for his inflammatory comments, yet he climbs in the polls. The very reason the majority of Democrats distrust Hillary Clinton is the foundation as to why Trump is so popular. They at least know he is not beholding to Goldman Sachs as both Bush and Hillary are most assuredly. There is no doubt that a Bush or Hillary victory in 2016 will be indistinguishable for both will represent business as usual.
Where Ran Paul could have been a real contender, he seems to have lost his appeal for he too is trying to stay within the party and play politics as usual. The Republicans could chase Trump out and we could end up with a Trump third-party Libertarian surge. That would be the potential nightmare scenario for the GOP which our computer has been warning about for decades into 2016. NO, we are not advising Trump to answer the questions on this topic.
A populist outsider with unlimited resources attacking the Republican and Democrat nominees in the general election will be perhaps the most interesting presidential election of all time. This will be really raising political hell and our computer has been projecting just that but at the same time a rise in the people voting for 2016 attracting votes from both Democrats fed up with Hillary and Republicans tired of politics as usual.
The Republican Party mainstream establishment are out of touch and are not in tune with what is really happening. They cannot grasp they the emperor has no clothes. They are playing with disaster by trying to go after Donald Trump minimizing him and excluding him. They cannot see that times are changing – out with the old and in with the new.
Trump has become a their favorite punching bag since launching his White House campaign. Questioning Sen. John McCain as a war hero was really spot on. He said:
- Trump: “He’s not a war hero.”
- Frank Luntz, interjecting: “He IS a war hero.”
- Trump, chewing on his words, speaking quickly, with annoyance: “He is a war hero because he was captured. I like people that weren’t captured, OK?”
A person who was a true War Hero did something magnanimous. McCain himself has acknowledged that he was a less-than-stellar Skyhawk pilot. He was a bit too reckless, and, had he made better decisions, might have avoided his shoot-down in 1967. Being captured does NOT make someone a war hero. If that is the standard, then it diminishes all those who received the Congressional Medal of Honor for being a real hero. So Trump was actually very correct and any Vet who respects those who went beyond the call of duty to save their fellow soldiers would agree calling McCain a war hero tarnishes the memory those who died saving their comrades by placing McCain in the same category. Sorry – Trump was right on that one.
Trump has repeatedly declined to rule out a third-party White House run, saying in an interview with CNN’s Anderson Cooper earlier this month that he’s constantly being asked to run as an independent. He has said that his decision to run as an Independent will depend on “how I’m being treated by the Republicans.”
If Trump took up a Third-Party, it might be the biggest shot we have at saving the country insofar as it would at least turn Capitol Hill into a new playing field. It really would not matter who the Third-Party candidate would be, Washington needs to be shaken and stirred vigorously to let these people know being a “representative” is supposed to be OF THE PEOPLE, not of yourself, the Party, and government. Whatever it takes to upset the apple-cart, at this point, we need rather desperately for we are headed in a direction that will destroy our future and these morons are demonstrating that they do not get it and are pissed off at Trump for not playing their game of never telling anything the way it is, sugar coat everything, promise the moon, and deliver nothing.
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