Big Picture

Amid the European mess and weak emerging markets, the US has seen The Housing Recovery Strengthen at esoltas.  Both Home Prices and Rents Rise at CNBC.  Auto manufacturing and sales are a strong tailwind at the Detroit News.

The good news continues as The US private economy is growing as the government economy slows at Value Plays.  Further, US Intermodal Volume Hit Record in July at JOC.  This is not the data of recession.

“…we now estimate an upward revision to about 2.5% for Q2 from an original government report of 1.5%.” (First Trust)  Diametrically opposed is David Rosenberg: The Coming Negative Export Shock giving pause at Pragmatic Capitalism.

Further concern:  “China’s export growth collapsed and imports and new yuan loans trailed estimates in July, adding to signs the global economy is weakening…” from Bloomberg.  “China’s crude steel output may fall for the first time in 31 years this year…” in the WSJ.  The world’s largest miners continue to trim capex a billion dollars at a time:  Globe and Mail.

“Real Wages Much Lower Than They Were Four Decades Ago” at Ritholtz.  The unemployment rate for 18 to 19 year olds is 22.2%.  FED

“Stockpiles of the biggest crops will decline for a third year…” at BloombergU.S. Corn-Crop Estimate Cut as Midwest Drought Hurts Yields by BloombergGrain markets may be on verge of final blow-off top by Peter Brandt.

The CRB Index Has Another Date With Resistance at All Star Charts.  Miners to reflate?  Marketwatch

Ten stocks which have payed an uninterrupted dividend more than 110 years and increased their dividend for at least the last 10 years:  Dividend Growth Stocks.

Our current place in the secular bear which began in 2000:  Zeal.  Perhaps the market price low occurred in March of 2009, with the valuation low still years ahead.

No wonder the stock market is such a tough place!  Go Comics


Saturday Gold Bugs

“The last time this kind of sentiment was seen after the stock panic, gold was just launching its biggest upleg of this entire secular bull!”  Zeal  “There currently is a large short position in the Comex gold market, which could set the stage for a short-covering rally in gold prices.”  WSJ

“Business Insider offers a deep dive into the world of gold, looking at what moves its price, who is invested in the commodity, and how it’s made.”  Scribd

It’ll get papered over:  “Growing Fear That Cities Will Default–Not Out of Necessity but as a Strategy”.  WSJ  With “Key price indexes are uniformly running below the Federal Reserve’s 2% objective” the door is open (WSJ).  Housing is adding to GDP (WSJ).

Agnico-Eagle (AEM) stock has returned from the dead, in a really bad tape for gold miners,  as operations have been turned around (Mining Weekly).  I wrote about it at SA.  Meanwhile, Barrick (ABX), Newmont (NEM) and Goldcorp (GG) reported lousy quarters.  Gold Bugs Index (HUI): Buy, Hold or Sell?  Safe Haven.

Deflation Now. Inflation Later by Bill Bonner.

More on Gold Set for a Huge Breakout by Robert SinnTriangulation galore — Gold and British Pounds are set to move by Peter BrandtGold & Silver ‘Chart Mania’ at KWN.


Both energy and industrialization of China related:  China to Cut Retail Fuel Prices at WSJ.  “Car makers are falling over themselves to get a slice of the action in China, the world’s biggest market.”  Telegraph

The structural economic problems are huge, real and weigh heavily on sentiment (Hussman Funds).  But a thought process going around suggests auto’s and housing, yes those red-headed step children, might contribute meaningfully in a positive fashion going forward:  Econbrowser.  Before laughing, continue reading.

Indeed, auto sales are on track to be the best since 2007:  “Strong June sales…prompting analysts to revise their consensus forecast of  13.9 million upward, to 14.2 million.”  Detroit News

Additionally, for ten consecutive months the construction sector has shown year-over-year job growth:  WSJ.  I believe residential rents have begun a secular climb with stellar fundamentals.  Supply is so tight for decent rental housing that it is almost impossible to find, demand is pent up, and market psychology has shifted:  WSJ.  Even homeowner equity has improved after collapsing:  Mortgage News.

Meanwhile, seems everyone wants easy money.  Fed’s Evans Supports More Aggressive Action to Aid Weak Economy at WSJChina’s Wen says policy fine-tuning needed to spur growth at Reuters.  Remember, ever more stimulus is required to keep the party going:  Ritholtz.

“He is probably the most successful long-term performer in the hedge-fund industry who has managed to stay out of the spotlight.”  A nice little write-up on Seth Klarman:  Economist.

“Given that China’s nominal GDP has soared at double digit rates for decades, why is anyone surprised Chinese house prices have risen rapidly?”  Money Illusion.  India’s is having a tough year, but expectations going forward are strong:  India Times.

Goldbug Central

Gold Stock Valuations at Zeal.

Note the deflationary period in Weimar marks relating to gold:  Casey Research.

About this gold consolidation since last August:  Kimble Charting Solutions.  A forty year silver chart with its recent consolidation:  Kimble Charting Solutions.  Platinum to gold ratio:  Bespoke.

The credit bubble, of course, drives the fantastic gold fundamentals.  Prior to the financial crisis, housing was the largest driver.  I continue to observe decent low middle income housing being in shortage, mortgage rates being suppressed and McMansion pricing pressure.  The housing market is not so bad out there, let’s check in:

  • He chronicled the housing bubble, now a February explanation of the two bottoms:  Calculated Risk.
  • So Housing is Local…  at Value Plays
  • Fannie Mae expects some GDP growth from housing, finallyHousingwire
  • US housing: shadow supply meets shadow demand:  Sober Look

Since the financial crises, debt sponsored by sovereigns has been driving the credit bubble bus.  Here is a chart of the disasters in the West:  Chart of the Day.  (Note how much runway China has in front of themselves.)