Trading Blog: TnT Group

Pretty interesting video. This was posted on youtube about a month ago, so many of you may have seen it, but for those that haven’t it is quite interesting. The video may be a bit over the top, however we have seen what can happen in these markets and with everything that the is happening in the world and what our government is doing these results are  not out of the realm of possibility.

I receive Bill Gross’ Investment Outlook in my email every time he comes out with a new one on Pimco’s website. The newest one he put out is an amazing piece on his thoughts about numerous topics including Americans blindness towards the ever increasing deficit, the ultimate destruction of our future generations due to our selfish spending, and how we do not realize the effects of a lower dollar on our wealth.

Click on the link below to see the entire article.

http://www.pimco.com/Pages/OffWithOurHeads.aspx

Bill Gross is very forthright in his views. Brian and I have had many conversations about the exact notion Bill Gross is explaining when he goes into the fact that we think we are all richer when the stock market goes up by 10% but the dollar is depreciating at the same time, basically wiping out that appreciation in the stock market.

People (because it is not that visible to most) tend to forget that when the dollar goes down we are losing wealth and purchasing power. Because we got into the mess of becoming much more of a service country instead of  the manufacturing country we once were we need to import most of our items which adds to the problem.

I am glad someone, especially someone with such a strong name as Bill Gross, came out and said our future is in trouble. Everyone wants to get out of this mess right now, including Washington, because it does not look good on them if we are in this for a while. No one is taking into account the absolute shit storm we are creating for future generations. Trillions of dollars in the hole is going to take its toll, and it is going to to hit hard at some point.  If not now, then our children and possibly their children will.

I am moving to Canada…

Good morning all. I hit on this a litle bit in my webcast. I wanted to go a little more in depth about it though. When I left for vacation over the holidays I left a gold and S&P market that seemed to be somewhat correlated. To say it was a great correlation would be an absolute lie. However it seemed like gold was being traded solely as part of the commodity basket and was rising with oil, copper, rubber, etc which was also followed slowly but surely by equities and the free money that was being pumped into them.

Now after my first day back from vacation and stepping back into these markets it seemed as if there was a definite change of scenery. Overnight gold was getting hit harder than Brett Favre’s head on the frozen field in Minnesota while equities, continuing there impressive day from yesterday, gradually rose higher (as I type S&P 500 Minis are up 4.25 trading 1269.50 while gold is down 14.7 trading 1408.2). This was not a small divergence from what had been happening before I left. This was a farely large change of thought. Are people or the markets now thinking, more than we have in a while, that the economy may be on track?

Below is a daily chart showing the somewhat correlated gold and S&P markets and the slight divergence over the last few days.

The overnight session really made me think that way. We had a ton of risk on trading happening. Minis up 4.25, euro trading up 30 some pips, yen getting hit farely hard down 87 pips, debt (both US and European) down a good amount, and gold getting clobbered. Oil had a tough time doing anything overnight. I understand it. Do they want to rally it because of equities rallying and a slight sell off in the dollar or is it confused because gold is getting pounded. It eventually rallied slightly, as it should if the markets are showing signs of adding risk and the outlook being somewhat positive.

Below is a 5 minute  chart of last night session and the distinctive inverse relationship of gold and Minis.

I am not coming out and saying that our economy is back on track and let the jobs rain down from the heavens. I still whole heartedly believe we are nowhere near where we need to be. My point is to keep an eye out for this inverse type relationship as it will tell a story as to risk on or risk off trade. It is hard to deny how these markets moved last night and is something to pay close attention to moving forward into this new year.

Dollar shelacking once again against the Yen and Euro.  Even with dollar weakness, equities had a hard time holding bid through the morning and eventually came off with the bonds around 10am.  We thought the PPI would have been bad for the long end of the market and what do ya know, the curves end up getting hammered while 30 years make new highs.  Curves continue to stay weak going into the 30 year auction.  *Update*  My boy Ranger Rick Santelli rated the Bond auction a D- and covered the shorts at 13210.  You couldn’t get on the initial sell off, basically sell the low and watch some dork come in bid for 1500, once the order got picked off it got clubbed like a baby seal.

Same story we’ve been preaching for weeks in the commodities.  Dollar down, buy all commodities with both hands, Gold especially.  Wish I could talk more about the Grains but it’s all old news, lock limit bid a few days back.  Took a shot selling some beans at 1193 after the dollar started basing above 76.80.

Copper, well, it’s the copper market.  A little weaker on the day after making new contract highs on it’s stairway to heaven.  Oh yea, unless you’ve been living it up in a mine shaft for the last 2 months, you’d know the Chilean copper guys surfaced yesterday sportin Oakleys with collars popped.  It’s all good.

Have a good one.