In this weeks Digest:
Stuck in the Middle with You – Quiver Financial
The Tragic Decline of Gibraltar’s Spanish Neighbor – John Mauldin
Since the Summit it’s the Germans Against the Rest – David McWilliams
Which Gold Miner ETF is Right For You? GDX vs. GDXJ vs. RING – Minyanville
The One Chart Every Commodity Trader Must See – Minyanville
Stuck in the Middle with You
“Clowns to the left of me,
Joker’s to the right,
Here I am
Stuck in the middle with you”
Steve Miller Band
There are times when financial markets have a clown to the left of them (The Fed) and a joker to the right (The Global Economy) and as a result we are all stuck in the middle with you.
In our previous missive we recapped 2 themes from our “5 Things You Need to Know for 2012,” which by the way are still playing out quite well. Since that writing a lot has happened in global markets while most financial indexes have become stuck in the middle, producing net 0 or negative results. In fact, a closer look at most U.S. equity sectors would reveal that this pattern of being stuck in no man’s land has been going on for over a year as investors wrestle with the opposing forces of a recession in Europe, slowing growth in China and a slowing of the so called “U.S. financial recovery” vs. the liquidity and bail out efforts of central banks and various governments across the globe.
Fundamentally things have deteriorated over the past few months as reflected in this quote by Sterling Tactical in their most recent newsletter.
“The American manufacturing sector contracted in June, and that hadn’t happened in nearly three years. The Institute for Supply Management’s manufacturing index slipped 3.8% to a 49.7 reading. In light of that and a slight increase in the jobless rate in May, Wall Street wondered if the Federal Reserve would ease this summer.”
As manufacturing looked stagnant, consumer confidence also seemed to be flagging. The much-watched Thomson Reuters/University of Michigan consumer sentiment survey finished June at 73.2, a 6-month low. The Conference Board’s consumer confidence polldropped to 62.0 in June from May’s 64.4 reading. Consumer spending was flat in May, the Commerce Department noted; consumer prices had fallen 0.3% in that month, yet retail sales also fell 0.2%. Annualized consumer inflation was down to just 1.7%. Producer prices fell 1.0% in May; durable goods orders rose a solid 1.1% with transportation orders behind most of the gain.”
On the other side of this have been the central banks of the world united in their efforts to provide liquidity in the hopes of keeping some sanity in markets. As we have stated before there will be a tipping point where one of these opposing forces will win and with the recent soft patch of economic reports in the U.S. and China that time may be closer than many would prefer.
As for market trends it appears the intermediate trend in equities has turned down. Some would say in response to the recent slowdown in economic numbers. However, we would like to point out that the economic sensitive sectors of the market have been reflecting weakness since the middle of last year and have recently picked up steam to the downside. This can be seen in the price of most commodities such as gold, silver and oil…. all down double digits in recent months. Then add to this the persistence of bond yields moving to record lows and you have the recipe for most investors to say “Oy Vey…..now what”
Bridging the gap between the oppositions in the world economies and the opportunities that exist is found within portfolio design and allocation. Having a Quiver of options that are both traditional and alternative will help most investors bridge this gap. We invite you to join us on July 26th at 12 to discuss the current market environment and the opportunities that exist for investors. For those of you that can’t join us for lunch that day we encourage you to contact us to discuss the options that may be available to you.
The Tragic Decline of Gibraltar’s Spanish Neighbor
July 10, 2012
I was on the ground in Spain a few weeks back, and then I ran into this piece in Spiegel Online about a small, struggling town on the Spanish border with (British) Gibraltar. This essay resonates in some of the same ways as the Michael Lewis piece on Greece. This is just one town, and Spain has many regions, some more prosperous than others; but in a country where there is 23% unemployment and 50% among youth, there is plenty of suffering everywhere. The general story is one of deep problems, especially with regard to inefficient labor laws.
Since the Summit it’s the Germans Against the Rest
July 20, 2012
Since the summit it’s the Germans against the rest
First off, however it happened, the Government should be applauded on keeping Irish concerns on the EU’s agenda. Clearly, the Italians and the Spanish did the heavy lifting for us. Had the Spanish and Italians not been in serious trouble, the Germans couldn’t have cared less about us. But a deal is a deal and one on debt sharing for Irish bank debt is a huge result. It might seem premature to talk of “results” but now we have a great chance to reduce our odious debt burden.
Which Gold Miner ETF is Right For You? GDX vs. GDXJ vs. RING
By Commodity HQ
July 20, 2012
In recent years, gold miner ETFs have become some of the most popular investment tools, offering “indirect” exposure to gold prices without the headache of futures trading or physically holding the precious metal. Considering today’s rocky environment, gold mining stocks can be a more appealing option than investing in physical bullion since these securities tend to generate meaningful cash flows. But like every other company, the profitability of gold miners depends on the price of the products they are selling, meaning that spot gold prices are a major factor in the cash flows of the underlying company. And with the evolution of the ETF industry, there are now a number of products that allow investors to add gold miner exposure to their portfolio with ease. Below, we outline the three most popular gold miner ETFs and which one will fit your investment objectives
The One Chart Every Commodity Trader Must See
By commodity HQ
July 20, 2012
The past few years have seen the global economy fall on some hard times. At the head of it all has been the U.S., whose fiscal policies and rampant immoralities led to some of the biggest banks in the world bringing down the local economy. In order to keep our heads above water, the Federal Reserve has stepped in on numerous occasions, offering bailouts for hundreds of billions to try and salvage the economy. But the economy has done little to make a solid recovery and instead seems addicted to its regular injections of quantitative easing. As such, the financial situation surrounding the U.S. and our debt policies is beginning to grow concerning.