Rarified Earth

Up about 45 percent since I posted this one in January. It's been quiet on the rare earth front considering the geopolitics.

Doomed Banks

As I've said with other bank posts, most of these patterns repeat over and over. Not every example is included. I'm barely into the As and I've already seen several that looks like ABCB.

For ETFs, I like the KRE April 14 $68.50 put for ultra aggressive speculators (if you like taking 100-percent losses in pursuit of 500-percent or more gains) expecting an immediate drop and the KBE May 20 $50 put for those who are highly aggressive. More charts after the jump below.

Financials XLF

Rising interest rates benefit XLF, but now I think they've bottomed, or at least a big bounce off long-term support will follow. This will be murder for financials in the context of a wider sell-off in stocks.

The Bear is Back: What Goes Up, Must Come Down

I don't care what sends the market down, but if you make my guess, my hunch is earnings warnings.

ROKU BTC Still On Target, Amazon Still Small Caps

Good Life Index

Energy intensive consumer luxuries. Pools, ride on lawnmowers, jet skis, RVs and an RV park REIT.

Signature Launch

On the launch pad.


I'm expecting a major flush if the broader market turns lower. Might get a drop anyway, by wider weakness would open the trap door.

Baizuo Admin Compounds Stupidity, Dumps U.S. Emergency Oil Reserve

These people are criminally incompetent or traitors. Take your pick. Even though I expect oil will drop and thus this might end up being a profitable "trade," one does not trade strategic reserves!

ZH: Biden Admin Unveils Response To "Putin's Price Hike At The Pump"

The White House has released its fact sheet on how the Biden administration will respond to what they are calling "Putin's Price Hike" by releasing 1 million barrels/day from the Strategic Petroleum Reserve

Rise and Shine and Shrek

Santana Minerals updated their investor presentation. PDF: BENDIGO-OPHIR GOLD PROJECT – NEW ZEALAND

I found this stock via type-o, kept it on a watchlist because why not, and I put a red flag on it because it was a terrible chart heading into the summer of 2021. It still receives very little coverage. I don't see any coverage from my usual sources. I bought it as a pure chart play and it has been working out with the breakout underway.

Volume is coming off a bit, but still strong considering the history. It's a drill story now. They're shooting for 1 million oz this year and the stock price tells me investors expect results. It could consolidate down towards the horizontal at 42 cents if the crowd loses interest. On the upside, there is very little resistance.


Somebody Noticed the Yen and Yuan

ZH: Yen At Risk Of "Explosive" Downward Spiral With Kuroda Trapped... And Why China May Soon Devalue
The yen's recent nosedive has heightened fears of a vicious cycle as Japan's worsening current-account balance threatens to spur more selling while the BOJ's dovish scramble to prevent rates from blowing out means that even modest countertrend buying will promptly reverse.

While a soft yen has long been seen as a boon to Japan's economy, not to mention the stock market, and was one of the key drivers behind the launch of Abenomics whose anchor pillar was printing ginormous amounts of yen (and monetizing just as massive amounts of JGBs to monetize Japan's prodigious deficit), now that benefits have tilted toward certain exporters and the wealthy while individuals and small businesses feel the pain of higher commodity prices, Japan may need to rethink a fundamental assumption of its economic approach.

As argued here, inflation is a yen killer. If yen tanks, then what do Korea, China and Europe do? All of them are also energy importers, plus food for Japan and Korea.
But while Japan may be a lost cause, a bigger question emerges: how will Japan's latest devaluation impact its fellow exporting powerhouse competitors, i.e., China, and as Edwards frames it, "this beggars the question how will China react? Maybe just like they did in August 2015 when the PBoC devalued? Back then persistent yen weakness had dragged down other competing regional currencies and left the renminbi overvalued."

Wait, yen weakness leading to China devaluation? According to Edwards, that indeed was the sequnece: as he shows in the chart below, the super weak yen of 2013-15, by driving down other competing Asian currencies, ultimately led us to the August 2015 renminbi devaluation.

Yen and yuan both strengthened as soon as the yen made it into headlines and financial media attention, but barring a major reversal in King Dollar, this will only be a consolidation. More over, both currencies are at major turning points. USDJPY's next up move will clear a 20-year base and USDCNY sits right below a decade-plus support line. Since China has said it won't follow Japan in the 1980s, then it isn't going to let its currency appreciate...even if that was in the cards.
I've argued for years that the yuan can experience a major devaluation. Nothing in the fundamental economic argument has changed. If anything, Europe's reaction to Russia's invasion of Ukraine has made the euro far weaker than it was. I had previously expected the yen and euro could absorb some currency flight from a yuan devaluation, but now it looks like the dollar may rise alone in a scenario where nearly all fiat currencies collapse.

Sieg Heil! Sieg Heil! Sieg Heil!

The infrastructure is all there. For good or ill, Germany awaits its next authoritarian leader.

Gateway Pundit: Germany Conducts Mass Raids Over Online ‘Insults’ Against Elected Officials

The German government has begun prosecuting its citizens for thought crimes, raiding the homes of hundreds of Germans who have allegedly leveled insults against politicians online.

In an effort to prosecute ”criminal content” contained in over 600 statements posted on the internet, Federal Criminal police raided scores of apartments and houses for incriminating evidence on Tuesday and interrogated 100 people across 13 German states for allegedly posting hateful remarks against elected officials and question the results of the 2021 federal election, the German news publication Der Spiegel reports.


Tagged it.
Peru probably done too, maybe along with the rest of LatAm.

Bye Banks

Couldn't Fill the Gap

Kroger Line Respecting

My hunch is it goes back into the pattern.

Kinross Shareholders Should Purge Management

Kinross: Kinross to suspend Russian operations
Kinross Gold Corporation (TSX:K; NYSE:KGC) (“Kinross” and the “Company”) is deeply concerned about the loss of life and destruction in Ukraine and wishes to express its sympathy and support for the people who are suffering because of this tragic situation.

The Company today is announcing a donation of $1,000,000 to the Canadian Red Cross Ukraine Humanitarian Crisis Appeal to assist those people most in need. Kinross is hopeful for a peaceful and diplomatic solution in Ukraine.

The Company is suspending all activities at its Udinsk development project. The Company is also in the process of suspending operations at its Kupol mine, with the focus on the safety and well-being of its more than 2,000 employees and in recognition of its obligations to manage and mitigate the mine's environmental impact on an ongoing basis.

The Company intends to adhere to all sanctions and legal restrictions that have, or will be, announced by relevant governments.

Everyone who signed off on this decision should be fired from the company. Donating to the Red Cross is fine, but shutting the mine is not acceptable behavior. Companies should not be invovled in politics. If management wants to virtue signal, they should have resigned en masse and said they cannot in good conscience work for a company operating in Russia. Instead, they have trashed the value of their Russian assets. I doubt the courts would be amenable, but I'd love to see a shareholder lawsuit target all of the management and board with personal lawsuits to clawback any future losses.

With this management, the company is done in Russia. They will be lucky to sell the mine at a good price because they cannot go back to normal. This mine will probably be targeted for environmental or labor violations. It is an impaired asset under current Kinross management and every potential buyer knows it.

That said, I wouldn't sell today. "The market" doesn't think ahead like that. They will restart the mine as soon as there's a permanent ceasefire or peace agreement because at that point, they will be in clear violation of their legal obligations to shareholders. Plus I expect gold will rebound. Longer-term though, I wouldn't stick around. Plenty of other mining stocks with better upside.

Companies should stick to doing business and not play politics. I don't think the management is necessarily "woke" in their beliefs, but their behavior is "woke" in the sense of destroying corporate value in pursuit of political or ideological goals, or in this case the moral vanity of the management.

At this point, many companies are engaged in reckless ideological games. BigTech is cruising for complete destruction with their political interference in elections and violating fundamental rights such as freedom of speech. Disney has no trouble doing business with autocratic and repressive regimes, but they go all out against a bill protecting children from sexual abuse in Florida. Many major companies are beyond saving if the political winds suddenly change because they have thrown caution to the wind and expressly chosen one side over another. Managements will be crucified by their shareholders if unrecoverable losses start piling up. Lest it be forgotten, or if you didn't know:

Long-Term Capital Management did business with nearly everyone important on Wall Street. Indeed, much of LTCM's capital was composed of funds from the same financial professionals with whom it traded. As LTCM teetered, Wall Street feared that Long-Term's failure could cause a chain reaction in numerous markets, causing catastrophic losses throughout the financial system.

After LTCM failed to raise more money on its own, it became clear it was running out of options. On September 23, 1998, Goldman Sachs, AIG, and Berkshire Hathaway offered then to buy out the fund's partners for $250 million, to inject $3.75 billion and to operate LTCM within Goldman's own trading division. The offer was stunningly low to LTCM's partners because at the start of the year their firm had been worth $4.7 billion. Warren Buffett gave Meriwether less than one hour to accept the deal; the time lapsed before a deal could be worked out.[24]

Seeing no options left, the Federal Reserve Bank of New York organized a bailout of $3.625 billion by the major creditors to avoid a wider collapse in the financial markets.[25] The principal negotiator for LTCM was general counsel James G. Rickards.[26] The contributions from the various institutions were as follows:[27][28]

$300 million: Bankers Trust, Barclays, Chase, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, Merrill Lynch, J.P.Morgan, Morgan Stanley, Salomon Smith Barney, UBS

$125 million: Société Générale

$100 million: Paribas, Credit Agricole[29]

Bear Stearns and Lehman Brothers[29] declined to participate.


Copper Miners

Ignore Western Ideas of Money in Asia

Zh: Rabobank: Don't RUB Me The Wrong Way
Meanwhile, Russia is pressing ahead with plans to insist on a switch EU payment for its gas to RUB by Thursday. It has underlined it won’t export it for free, while the EU says it won’t pay in RUB. That is as binary a trade as you can get, and the potential outcomes should be obvious. The FX market seems to think so anyway, with EUR/RUB strengthening from 165 at its low to 105 at time of writing. But are we really going to see Russia “win” like that given the huge geopolitical and geoeconomic implications?

The much-vaunted Russia-India RUB-INR trade flaunted as the previous catalyst for “the end of the dollar!” is, according to the Indian press, looking far more mundane. The Business Standard reports India and Russia may keep RUB out of the proposed INR-RUB trade, given its high post-sanctions volatility: payments for the rising level of commodity trade that is indeed happening are likely to be settled in INR *pegged to the dollar*, and deposited in an Indian bank account. Under the proposed trade mechanism, when India imports goods from Russia, INR equivalent to the dollar value will be deposited in an Indian bank account. When India exports goods to Russia, Indian exporters can be paid from the same account in INR. You know who used a similar arrangement to work around sanctions? Nazi Germany. I’m sorry, I mean “Nasty Germany”.

The key points are that:

1. commodities will continue to be PRICED in DOLLARS, as we saw with the purported Saudi CNY oil sale;

2. Russia, for now, is still accumulating new USD and EUR reserves via its energy trade surpluses; and

3. nobody wants to touch RUB. Not even India, an emerging ‘neutral’ heavyweight in what article after article now say is a bifurcating world economy.

...If countries want to hold fewer USD reserves because of geopolitics and economies halting exports of the vital commodities USD are supposed to allow others to freely purchase, then that is not negative for the US dollar. Quite the opposite! It is negative for global trade. That may be in USD, and so there is less physical demand for them, but Eurodollar debts still have to be paid back, with rising interest, IN DOLLARS - and when there are less USD reserves, and flows, to do so with. That backdrop is arguably positive for the US dollar for now – unless, and I repeat, you are trading an avalanche of Eurodollar defaults.

Where we are seeing global FX reserve diversification, it is 75% driven by shifts into the likes of Canadian, Aussie, or Singapore dollars for example, all of which are still under the emerging Western/Anglosphere geopolitical umbrella. (Canada finally just opted for the F-35 as its fighter jet of choice, underlining that fact.) Such a development opens up some opportunities: Australia might be able to shift to invoicing more regional trade in AUD in ASEAN over time, for example.

However, we are not yet seeing the much-touted global switch to holding reserves in “commodity-backed” currencies of the future like CNY or RUB. That will require a game-changing economic policy shift or geopolitical event first. The first is seen as theoretically possible if politically unlikely, and the latter as perhaps strategically inevitable, but not necessarily to the dollar’s detriment: being nasty again, one could have made the same trade in the 1930s – and see how that worked out.

Westerners upset with Western central banks and Western governments created a false image of Russia, but especially China, as a heroic opponent. If you limit your expectations then yes, to some extent Russia and China are opponents of the globalists. They could slow or hobble the Baizuo by causing them unrecoverable political losses.

Yet there is no positive agenda that follows. There is no desire of the part of China or Russia to free Western peoples' from their own destruction at the hands of the Baizuo. They want to ensure that destruction remains in the West and isn't spread to Russia and China. They seek quarantive, not conquest. They could care less if the dollar collapses or not, as long as their economies are damaged by Western monetary policy. All the better if the dollar survives and the Baizuo can remain in power, selling off their nation and destroying it from within.

China is winning right now. Plenty of nations have become too aggressive too early, and maybe China will follow that path. If they stay on course and avoid war though, the Baizuo will complete the destruction of America as a global power by the 2030s.

In conclusion, nothing is going to change until change is forced via total economic collapse or total war. And what will follow? If I was the CCP, I'd think the U.S. has a pretty good setup! How about we keep the global financial system, but restart it with the yuan at the center? China takes "the exorbidant privelege" for itself? If China emerges victorious from a WWIII, I'd wager the new system would be far close to that than something desired by powerless Westerners hoping the near tyrant loses to the far tyrant.

Russell 2000 Violates Topping Pattern

The Russell 2000 Index has violated its topping pattern. A 50-percent retrace is around $216 and the 200-day moving average is at $218 per share. A brief/limited move over the 200-day wouldn't be a clear signal that new highs are coming, as that level was violated in 2008 and offered no hope for bulls. Bear markets are brutal.

In Libertarianism, We Die

Libertarianism is a gateway to totalitarian government and immiseration because it is created in theory, not reality. Libertarians said the Internet would unleash freedom and freedom of speech. Instead, China constructed the world's most complete social monitoring system, so successful that Western tyrants and petty tyrants are rushing to copy it and apply it in a totalitarian manner. Cryptocurrency will likely unleash totalitarian economic control via central bank digital currencies. Crypto-enthusiasts helped kill cash and ushered in the digital tyranny because, as with the Internet, they believe technology alone suffices.

The story is the same with free trade policy extended beyond national borders.

Epoch Times: The Impossibility of Autarchy

Some believe that if our nation produced everything we needed, we would all be better off because we wouldn’t depend on others. The idea comes from a deep lack of understanding of economics. There’s no such thing as autarchy. There’s no such thing as covering all the needs of a population based on the limit of a politically defined border. It makes no sense.
Pure autarchy is idiotic and a strawman. Some fools out there are no doubt calling for pure autarchy, but most people are talking about maximizing domestic capital and labor. And even then, the majority of those people recognize economic efficiency. What most libertarians do not recognize is borders at all or any sense of collective action. They don't want to be part of a nation and therefore only see coercion when it comes to shared prosperity.
The other fallacy about autarchy that anyone can understand is that limiting the economy to the confinement of a random area of land is a poor way to develop, grow, and prosper. It’s almost laughable to read from politicians in the eurozone about how they want to achieve full independence and limit imports while at the same time they brag about the bloc’s enormous trade surplus. It’s funny to see how the most autarchic politicians want to increase exports at the same time. Close our borders to evil foreign commerce that destroys our factories! Let’s build more manufacturing capacity so that we can export to them!
The latter part is correct, many politicians are morons. Yet the first sentence is also absurd. One should not focus on improving one's own land, to grow and prosper? This only makes sense if one sees land and people as interchangeable widgets. I do not believe this author is a globalist, but you can see the camel's nose in the tent. The extermination of nations and culture flow from this economic assumption, that a nation should not seek to maximize its domestic fortunes first.
How can autarchy and protectionism be sold to citizens? By selling the false idea of a zero-sum game in the economy. If someone is selling oil to us, they win, and we lose. If someone is selling solar panels to us, they win, and we lose. We would win if we sold everything to ourselves. Really? The math doesn’t work like that. Politicians that sell a zero-sum game in the economy know it’s false, but they also know that protectionism and autarchic aspirations give power to them and make citizens more dependent on political power.
It's a much simpler question. Do you want 10 million angry unemployed people for neighbors, and 20 to 30 million underemployed, underpaid workers angered by the crappy jobs and declining standard of living for neighbors so that you can save 10 percent on a solar panel? Or so you can make $10 billion shipping their jobs off to China? The reason why China is wealthy today is not because they embraced free markets. Their economy is struggling because it didn't. They let markets in to some degree, but a major factor was short-sighted Western countries sold their middle class to China. The Chinese, and all of East Asia for that matter, recognize that wages are a function of capital and labor. Increase capital investment and wages will follow. In the financialized West, maximizing returns on capital is the main goal, labor be damned.

As for politics, the thorn in the side of all economic policy is corruption. There will be corruption in whatever policy is chosen. Minimizing that corruption should be a goal no matter the overall system, but the choice of system is itself corrupted. Anti-labor, short-sided, high time-preference individuals want to maximize their take now, long-term be damned. The current economic system that eschews a focus on long-term national prosperity is instead hijacked by short-term parasites who take control over businesses from long-term thinkers who, rationally, will not put their company into risk of bankruptcy by taking on massive amounts of debt. Businesses that are well-managed are "cheapened" by an economic system that favors economic parasitism. That rewards atomized individualistic behavior taken at the expense of neighbors. 

I will note here that most libertarians will point out the monetary system as a great villain in this story, and I agree. It still doesn't change my argument on this topic, moreover I see a move on trade as being more politically palatable then abolition of the Federal Reserve. Put another way, if I was dictator, I might move trade down the list of economic reforms, something to be tackled after first seeing how regulatory and tax cuts affect the economy. Perhaps trade will fall off the list. In the current context of U.S. politics though, trade looks like one of the few areas that could muster bipartisan support...

It may be true that some nations have taken advantage of an open economic system in order to sell more while making it more difficult for others, but the solution isn’t protectionism but more open trade. If a nation decides to harm itself by being protectionist, we’re reaping the benefits, not them, because we benefit from trade growth and prosperity while they end in stagnation.
Please explain this to the once prosperous rural and suburban areas of the USA that now resemble Ukrainian cities being shelled by Russian forces. Who exactly is prospering? The trick here is a general gain is substituted for a specific loss, which is a favorite trick of the free traders. GDP is up 0.01 percent thanks to this trade deal, but sorry we totally destroyed Youngstown, OH in the process. Learn to code and here's some food stamps and fentanyl.
The world’s supply problems can’t be solved by adding massive overcapacity in every country. That leads to a collapse in productivity and, much worse, real wages. There are plenty of great nations that can cooperate with us to deliver prosperity to everyone. Trade is the blood of the economy. Autarchy only leads to zombification and, ultimately, decay.
The nations that are free will prosper. The nations that are not free, who implement socialist and anti-market systems, will fall behind. It is time the United States and other free nations focused on making their own people prosperous first, which yes includes some free trade. There are a whole range of policies between immiserating open borders and immiserating autarchy. For example, the United States could implement a 25-percent general tariff on all imports. Would this eliminate trade? Hardly. It would shift some production from offshore to onshore. The tariff could be used dollar-for-dollar to eliminate taxes on productive use of labor and capital.

Something Always Beats Nothing  

Political extremism is on the rise. Thoroughly debunked economic theories such as socialist planning are already making policy (the Green New Deal and associated environmental policies are pure central planning) because the right and neoliberals embraced a libertarian, international-capital (corporatist, not capitalist) view of economics. They abandoned their people. If you want to live in a country that embraces capital uber-alles, the best spots are undemocratic countries such as Singapore or Arab Gulf States. These polities can run roughshod over political opposition. Or embrace the Baizuo's tyrannical takeover in the West, and along with it their economic central planning. Or instead reject both and focus on improving the lives of the average citizen.

There is no political utopian position. Man is fallen. Man is corrupt. What works in a theoretical utopia of perfectly rational individual actors is blown to smithereens when there are subversive groups who gang up and exploit those individuals. And when those individuals complain, they are told to suck it up, that's the market. Don't be surprised when those people turn to whatever policy response is offered up. When the alternative is death by dehydration, any consumable liquid will be accepted a thirsty man.

China Lockdown Victims Rebound

It looks like the lesiure and hospitality sector has bottomed out.

Game Over Equity Bears

Not quite over the finish line for Nasdaq and the Russell 2000 yet, but close. The bear market has moved into commodities and that's "bullish" for stocks in a world where the trade-weighted average holding period is probably measured in days at best. Is the bear market over? Hardly. If there was a chart of the fundamental value of stocks, it would be making new lows daily. Fundamentals don't matter in the short- or intermediate-term though. Also, while I don't expect a big rally this year, the 1970s show stocks can churn with 50 percent swings up and down, but still relentlessly bleed value because of inflation. There is no rescue for the stock market except the low growth, deflationary condition that allows unrestrained QE. Which comes with more unemployment, deaths of despair, political violence in the West and so on.

Totalitarian Health Controls Remain Until Physical Removal

Eugyppius: The End of Corona?
Omicron has proven to be incompatible with the containment regime, at least as currently organised. After a few months, the vaccines enhance Omicron transmission. The hardliners used their non-pharmaceutical interventions to drive everyone into the arms of the vaccinators, and now that the vaccines drive Omicron infections up, they just have no policies left. All that remains is the petty legal harassment of the unvaccinated.

As if that weren’t enough, Omicron has unpredictable seasonality and it has finally made an open farce of contact tracing. The understanding that infection waves have their own dynamics, which like the weather are beyond our influence, is now implicit across establishment media. And finally, as I’ve noted before, billions of people now have personal experience with SARS-2 infection, which makes state propaganda about the grave threats posed by the virus a far harder sell.

...There will be no repudiation of lockdowns, masking, and vaccine coercion for a generation or more. Millions of people across the world will now demand their governments respond in this way to every future pandemic threat. The institutional framework and legal understandings necessary to satisfy this demand is in place everywhere. Politicians and pandemicists know how much is possible, they know how much the people will put up with, and the next time they will push beyond even these boundaries.

What I call the ‚pandemic industry‘ has been massively expanded.

All it will take is a new virus and governments will destroy the global economy again. At least until a significant minority, or a significantly-motivated smaller minority, realize the real virus are the ruling class and their ideology. The argument for cutting off China 100 percent from critical trade makes sense because you cannot trust a regime that will shut down the economy in response to a seasonal flu. The same logic applies for removing 100 percent of Baizuo from Western governments and governing institutions.



Stocks Rise When the Fed Hikes Rates

It's amazing to me the nonsense being trotted out by Wall Street when anyone with a computer can pull up long-term data. The latest is stocks rise when rates are first hiked. True in the past 40 years because the Fed hiked when the economy was recovering and to head off inflation. Draw your attention to around March 1966. The stock market rose until rates hit about 4.75 percent and then it was game over for a decade. Stocks would test that high area, but wouldn't clear that old high until 1983.

Leave aside that there is really no precedent for the current situation, outside of possibly Japan. In which case, the precedent is not good for stocks.

This is what stocks look like under high inflation. The Federal Reserve can no longer rescue the market without creating high inflation. Federal Reserve Chairman Jerome Powell openly stated in his latest confirmation hearings that the Fed can do nothing about supply, but can stimulate demand. Any student of econ 101 knows that stimulating demand when supply is fixed or falling will create explosive prices increases. The Fed knew exactly what it was doing. It will do it again. Next time though, the market knows what to do. Buy crude oil, copper, fertilizer, wheat...

Tesla Up 47pc in 10 Days

Still not seeing anything that doesn't scream bear market. Autos look bearish and Tesla looks like meth-addled speculation again.

BTC Nears 200-Day

IWM during the 2008 bear market below. The 200-dayu should act as resistance or a magnet following a brief overthrow if there's any bearishness left in the market.