Market Profile – A Primer
Apr 21st, 2009 by Doug Tucker Printer Friendly
- this article from Mr. k Ref
Refer to the graphic above courtesy of Linda Raschke. The vast majority of traders focus only on #3 – Indicators and Oscillators. Indicators and oscillators can be useful tools, but they cannot predict where a market will go, at least not with enough consistency to generate trading profits over time.
For TradeStation users, the code for the Market Profile, along with instruction, is easy to find in the Easy Language forum. It is not the same as the TradeStation activity bars. It is not included with TradeStation, but is a separate indicator, with several versions in ELD form. Market Profile should not be considered an indicator, but in TradeStation it must be inserted as an indicator. There are also third party plug-ins. Ninja Trader also has a plug-in that can be purchased. CQG was the first vendor that offered the profile, and was the platform that Steidlmayer preferred at least when I studied at his Market Logic School in 1987. Many vendors offer superior profiles to what is available in TradeStation, but the TradeStation profile suits me.
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asr: this seems old concepts, with Vantage we can get definite range for day ..
Market Profile Basics
- examples ( see one given by esignal )
- seems this explains funda
Friday, October 31, 2008
20% of U.S. Homeowners Have Mortgage Higher Than House Is Worth
Oct. 31 (Bloomberg) -- Almost 20 percent of U.S. mortgage borrowers owed more on their loans in the third quarter than their house was worth as foreclosures depressed prices and the economy weakened, according to First American CoreLogic.
More than 7.5 million properties already have negative equity and another 2.1 million will follow should home prices decline another 5 percent, Santa Ana, California-based First American, a seller of economic and real estate data, said in a report today. Six states account for almost 60 percent of homes with negative equity, led by Nevada and Michigan.
Nevada had the highest share at 48 percent, followed by Michigan at 39 percent, Florida and Arizona each at 29 percent, California at 27 percent, Georgia at 23 percent and Ohio at 22 percent, First American said.
New York had the lowest share of homes with negative equity at 7 percent, followed by Hawaii at 8 percent, Pennsylvania at 9 percent and Mo
``As long as job losses continue and people face resets on their mortgages, the housing market will be under severe distress,'' Sam Khater, a senior economist at First American in Tysons Corner, Virginia, said in an interview. ``We've created an entire class of homeowner that is very sensitive to price changes.''
asr: very true, we created this new class.
Home prices fell in August in all 20 metropolitan areas measured by the S&P/Case-Shiller home-price index, which dropped 16.6 percent from a year earlier and has fallen every month since January 2007. U.S. foreclosure filings rose to a record in the third quarter, and will probably increase as the economy worsens and the availability of financing shrinks, RealtyTrac Inc., a seller of default data, reported on Oct. 22.
The number of houses with loans higher than the property's value may increase to almost 25 percent should prices keep falling, First American said.
More than 7.5 million properties already have negative equity and another 2.1 million will follow should home prices decline another 5 percent, Santa Ana, California-based First American, a seller of economic and real estate data, said in a report today. Six states account for almost 60 percent of homes with negative equity, led by Nevada and Michigan.
Nevada had the highest share at 48 percent, followed by Michigan at 39 percent, Florida and Arizona each at 29 percent, California at 27 percent, Georgia at 23 percent and Ohio at 22 percent, First American said.
New York had the lowest share of homes with negative equity at 7 percent, followed by Hawaii at 8 percent, Pennsylvania at 9 percent and Mo
``As long as job losses continue and people face resets on their mortgages, the housing market will be under severe distress,'' Sam Khater, a senior economist at First American in Tysons Corner, Virginia, said in an interview. ``We've created an entire class of homeowner that is very sensitive to price changes.''
asr: very true, we created this new class.
Home prices fell in August in all 20 metropolitan areas measured by the S&P/Case-Shiller home-price index, which dropped 16.6 percent from a year earlier and has fallen every month since January 2007. U.S. foreclosure filings rose to a record in the third quarter, and will probably increase as the economy worsens and the availability of financing shrinks, RealtyTrac Inc., a seller of default data, reported on Oct. 22.
The number of houses with loans higher than the property's value may increase to almost 25 percent should prices keep falling, First American said.
Thursday, October 30, 2008
United States public debt
On 30 September 2008, the total U.S. federal debt passed the $10 trillion mark, for the first time[2], with about $32,895 per capita (that is, per U.S. resident). Of this amount, debt held by the public was roughly $5.3 trillion.[3] Adding unfunded Medicaid, Social Security, Medicare, and similar obligations, this figure rises to a total of $59.1 trillion, or $516,348 per household.[4] In 2007, the public debt was 36.9 percent of GDP [5], with a total debt of 65.5 percent of GDP.[6] The CIA ranked the total percentage as 27th in the world.[7]
National Debt Graph: Bush Sets 50-Year Record
National Debt Graph: Bush Sets 50-Year Record
Bond (finance) / Treasury Bonds
asr: for 1 month T-bills , people are in Q lines to give money for 0% interest.
"The world's been divided into two classes, Treasurys and risky assets," said Russ Koesterich, head of investment strategies at Barclays Global Investors. "Risky assets are anything that's not Treasurys."
The rally in Treasurys has resulted in some jaw-dropping low yields.
Earlier this week, the U.S. government sold $32 billion in four-week Treasury bills at a yield of 0%, meaning that investors were willing to lend the government money for nothing except the assurance their principal wouldn't decline.
"If you want to buy Treasurys, you have to get in line with everyone else," said Karen Wiggen, who manages Charles Schwab & Co.'s $34 billion U.S. Treasury Money Fund
Even though they accepted zero yields, many investors only got a portion of the securities they had hoped to buy at Tuesday's auction. Demand outpaced bills on offer by four-to-one, said the Treasury Dept.
"Anything labeled the full-faith and credit of the U.S. government creates a comfort level for quite a few people," she said. See earlier story on zero yields.
The U.S. Treasury will sell $16 billion in 10-year notes on Thursday. In the secondary market, that means securities' yields (UST10Y:
this month breached their lowest levels since at least 1955. They recently traded at 2.69%.
----------------
For example, say you buy a bond with a face value of $1,000, a coupon of 8%, and a maturity of 10 years. This means you'll receive a total of $80 ($1,000*8%) of interest per year for the next 10 years. Actually, because most bonds pay interest semi-annually, you'll receive two payments of $40 a year for 10 years. When the bond matures after a decade, you'll get your $1,000 back.
Measuring Return With Yield
Yield is a figure that shows the return you get on a bond. The simplest version of yield is calculated using the following formula: yield = coupon amount/price. When you buy a bond at par, yield is equal to the interest rate. When the price changes, so does the yield.
Let's demonstrate this with an example. If you buy a bond with a 10% coupon at its $1,000 par value, the yield is 10% ($100/$1,000). Pretty simple stuff. But if the price goes down to $800, then the yield goes up to 12.5%. This happens because you are getting the same guaranteed $100 on an asset that is worth $800 ($100/$800). Conversely, if the bond goes up in price to $1,200, the yield shrinks to 8.33% ($100/$1,200).
Yield To Maturity
Of course, these matters are always more complicated in real life. When bond investors refer to yield, they are usually referring to yield to maturity (YTM). YTM is a more advanced yield calculation that shows the total return you will receive if you hold the bond to maturity. It equals all the interest payments you will receive (and assumes that you will reinvest the interest payment at the same rate as the current yield on the bond) plus any gain (if you purchased at a discount) or loss (if you purchased at a premium).
Knowing how to calculate YTM isn't important right now. In fact, the calculation is rather sophisticated and beyond the scope of this tutorial. The key point here is that YTM is more accurate and enables you to compare bonds with different maturities and coupons.
Putting It All Together: The Link Between Price And Yield
The relationship of yield to price can be summarized as follows: when price goes up, yield goes down and vice versa. Technically, you'd say the bond's price and its yield are inversely related.
Here's a commonly asked question: How can high yields and high prices both be good when they can't happen at the same time? The answer depends on your point of view. If you are a bond buyer, you want high yields. A buyer wants to pay $800 for the $1,000 bond, which gives the bond a high yield of 12.5%. On the other hand, if you already own a bond, you've locked in your interest rate, so you hope the price of the bond goes up. This way you can cash out by selling your bond in the future.
Price In The Market
So far we've discussed the factors of face value, coupon, maturity, issuers and yield. All of these characteristics of a bond play a role in its price. However, the factor that influences a bond more than any other is the level of prevailing interest rates in the economy. When interest rates rise, the prices of bonds in the market fall, thereby raising the yield of the older bonds and bringing them into line with newer bonds being issued with higher coupons. When interest rates fall, the prices of bonds in the market rise, thereby lowering the yield of the older bonds and bringing them into line with newer bonds being issued with lower coupons.
"The world's been divided into two classes, Treasurys and risky assets," said Russ Koesterich, head of investment strategies at Barclays Global Investors. "Risky assets are anything that's not Treasurys."
The rally in Treasurys has resulted in some jaw-dropping low yields.
Earlier this week, the U.S. government sold $32 billion in four-week Treasury bills at a yield of 0%, meaning that investors were willing to lend the government money for nothing except the assurance their principal wouldn't decline.
"If you want to buy Treasurys, you have to get in line with everyone else," said Karen Wiggen, who manages Charles Schwab & Co.'s $34 billion U.S. Treasury Money Fund
Even though they accepted zero yields, many investors only got a portion of the securities they had hoped to buy at Tuesday's auction. Demand outpaced bills on offer by four-to-one, said the Treasury Dept.
"Anything labeled the full-faith and credit of the U.S. government creates a comfort level for quite a few people," she said. See earlier story on zero yields.
The U.S. Treasury will sell $16 billion in 10-year notes on Thursday. In the secondary market, that means securities' yields (UST10Y:
this month breached their lowest levels since at least 1955. They recently traded at 2.69%.
----------------
For example, say you buy a bond with a face value of $1,000, a coupon of 8%, and a maturity of 10 years. This means you'll receive a total of $80 ($1,000*8%) of interest per year for the next 10 years. Actually, because most bonds pay interest semi-annually, you'll receive two payments of $40 a year for 10 years. When the bond matures after a decade, you'll get your $1,000 back.
Measuring Return With Yield
Yield is a figure that shows the return you get on a bond. The simplest version of yield is calculated using the following formula: yield = coupon amount/price. When you buy a bond at par, yield is equal to the interest rate. When the price changes, so does the yield.
Let's demonstrate this with an example. If you buy a bond with a 10% coupon at its $1,000 par value, the yield is 10% ($100/$1,000). Pretty simple stuff. But if the price goes down to $800, then the yield goes up to 12.5%. This happens because you are getting the same guaranteed $100 on an asset that is worth $800 ($100/$800). Conversely, if the bond goes up in price to $1,200, the yield shrinks to 8.33% ($100/$1,200).
Yield To Maturity
Of course, these matters are always more complicated in real life. When bond investors refer to yield, they are usually referring to yield to maturity (YTM). YTM is a more advanced yield calculation that shows the total return you will receive if you hold the bond to maturity. It equals all the interest payments you will receive (and assumes that you will reinvest the interest payment at the same rate as the current yield on the bond) plus any gain (if you purchased at a discount) or loss (if you purchased at a premium).
Knowing how to calculate YTM isn't important right now. In fact, the calculation is rather sophisticated and beyond the scope of this tutorial. The key point here is that YTM is more accurate and enables you to compare bonds with different maturities and coupons.
Putting It All Together: The Link Between Price And Yield
The relationship of yield to price can be summarized as follows: when price goes up, yield goes down and vice versa. Technically, you'd say the bond's price and its yield are inversely related.
Here's a commonly asked question: How can high yields and high prices both be good when they can't happen at the same time? The answer depends on your point of view. If you are a bond buyer, you want high yields. A buyer wants to pay $800 for the $1,000 bond, which gives the bond a high yield of 12.5%. On the other hand, if you already own a bond, you've locked in your interest rate, so you hope the price of the bond goes up. This way you can cash out by selling your bond in the future.
Price In The Market
So far we've discussed the factors of face value, coupon, maturity, issuers and yield. All of these characteristics of a bond play a role in its price. However, the factor that influences a bond more than any other is the level of prevailing interest rates in the economy. When interest rates rise, the prices of bonds in the market fall, thereby raising the yield of the older bonds and bringing them into line with newer bonds being issued with higher coupons. When interest rates fall, the prices of bonds in the market rise, thereby lowering the yield of the older bonds and bringing them into line with newer bonds being issued with lower coupons.
Treasury sales could top $1 trillion to fund bailout
U.S. could also bring back 7-year note, do more frequent sales - Oct. 30, 2008
NEW YORK (MarketWatch) -- Major bond dealers say the United States may have to issue more than $1 trillion in debt during its current fiscal year, by far the most ever, to fund massive programs designed to bail out the banking system.
That would be a "staggering" increase from recent years, said Michael Cloherty, an interest-rate strategist at Bank of America Corp., one of the 17 primary government-security dealers required to bid at Treasury auctions.
The Treasury Department will announce Monday how much of that full-year borrowing it anticipates selling in the first half of the government's 2009 fiscal year, which began this month.
'This year's financing needs will be unprecedented.'
— Anthony Ryan, U.S. Treasury
In its past fiscal year ended September, the government sold $724 billion in notes, bonds and inflation-indexed debt, according to Wrightson ICAP, a research firm specializing in government finance.
If the debt issue swells to $1 trillion, as Barclays Capital, Credit Suisse and others anticipate, the issuance would represent a 38% increase in one year.
"This year's financing needs will be unprecedented," the Treasury's acting undersecretary for domestic finance, Anthony Ryan, said Tuesday.
The Treasury gave its last quarterly estimate in July, before the government took conservatorship of mortgage giants Fannie Mae (FNM:
Fannie Mae
FRE 1.11, +0.03, +2.8%) , and Congress passed a $700 billion package to buy bad assets from financial institutions and inject capital into struggling banks. At that time, it said it expected to borrow $142 billion in this quarter.
Also since that earlier estimate, the Federal Reserve has ramped up its multiple programs designed to ease strains in short-term lending markets by loaning out Treasurys and increasing currency swaps with other central banks so they could loan dollars.
These programs will pressure the Treasury to offer more debt more frequently and by using different types of securities, according to analysts.
One unknown is how much it will have to pay up for all this debt.
A good time to borrow?
So far, the government has been getting a deal when it taps investors because of the credit crisis and anxiety about losses in equities, commodities and global assets. Treasury yields are near multiyear lows as investors have sought the relative safety they offer. The lower yields go, the less the government pays to finance its programs.
"The debt is going into really good hands because everybody is looking for the safest, government-guaranteed paper, given the stock-market turmoil and weak economy," said Alex Li, interest-rate strategist at primary dealer Credit Suisse.
Chart of UST30Y
UST2YR 1.54, 0.00, -0.3%) , the traditional beneficiary of safe-haven bids, remain near the lowest in decades.
Foreign investors, which hold a little more than half of all U.S. debt in the market, have shown no signs of a curbed appetite. They have increased purchases of Treasurys as other forms of debt and equities have been falling.
Current low yields may not last, however. Bond analysts and investors are worried because more issuance tends to mean higher yields, since more supply reduces the value of current holdings.
"We see the tables really turning hard against the Treasury market" as Treasury borrowing rises "meteorically" past $1.5 trillion, said William O'Donnell, U.S. government bond strategist at primary dealer UBS Securities.
The Treasury already asked its 17 dealers about what timing, sizing and maturities of debt could be best absorbed by the marketplace. That input always goes into how much it sells in its quarterly refunding, which it will announce on Nov. 5. End of Story
NEW YORK (MarketWatch) -- Major bond dealers say the United States may have to issue more than $1 trillion in debt during its current fiscal year, by far the most ever, to fund massive programs designed to bail out the banking system.
That would be a "staggering" increase from recent years, said Michael Cloherty, an interest-rate strategist at Bank of America Corp., one of the 17 primary government-security dealers required to bid at Treasury auctions.
The Treasury Department will announce Monday how much of that full-year borrowing it anticipates selling in the first half of the government's 2009 fiscal year, which began this month.
'This year's financing needs will be unprecedented.'
— Anthony Ryan, U.S. Treasury
In its past fiscal year ended September, the government sold $724 billion in notes, bonds and inflation-indexed debt, according to Wrightson ICAP, a research firm specializing in government finance.
If the debt issue swells to $1 trillion, as Barclays Capital, Credit Suisse and others anticipate, the issuance would represent a 38% increase in one year.
"This year's financing needs will be unprecedented," the Treasury's acting undersecretary for domestic finance, Anthony Ryan, said Tuesday.
The Treasury gave its last quarterly estimate in July, before the government took conservatorship of mortgage giants Fannie Mae (FNM:
Fannie Mae
FRE 1.11, +0.03, +2.8%) , and Congress passed a $700 billion package to buy bad assets from financial institutions and inject capital into struggling banks. At that time, it said it expected to borrow $142 billion in this quarter.
Also since that earlier estimate, the Federal Reserve has ramped up its multiple programs designed to ease strains in short-term lending markets by loaning out Treasurys and increasing currency swaps with other central banks so they could loan dollars.
These programs will pressure the Treasury to offer more debt more frequently and by using different types of securities, according to analysts.
One unknown is how much it will have to pay up for all this debt.
A good time to borrow?
So far, the government has been getting a deal when it taps investors because of the credit crisis and anxiety about losses in equities, commodities and global assets. Treasury yields are near multiyear lows as investors have sought the relative safety they offer. The lower yields go, the less the government pays to finance its programs.
"The debt is going into really good hands because everybody is looking for the safest, government-guaranteed paper, given the stock-market turmoil and weak economy," said Alex Li, interest-rate strategist at primary dealer Credit Suisse.
Chart of UST30Y
UST2YR 1.54, 0.00, -0.3%) , the traditional beneficiary of safe-haven bids, remain near the lowest in decades.
Foreign investors, which hold a little more than half of all U.S. debt in the market, have shown no signs of a curbed appetite. They have increased purchases of Treasurys as other forms of debt and equities have been falling.
Current low yields may not last, however. Bond analysts and investors are worried because more issuance tends to mean higher yields, since more supply reduces the value of current holdings.
"We see the tables really turning hard against the Treasury market" as Treasury borrowing rises "meteorically" past $1.5 trillion, said William O'Donnell, U.S. government bond strategist at primary dealer UBS Securities.
The Treasury already asked its 17 dealers about what timing, sizing and maturities of debt could be best absorbed by the marketplace. That input always goes into how much it sells in its quarterly refunding, which it will announce on Nov. 5. End of Story
Bernanke makes it official. We are Japan.
Commentary: Race to zero didn't work then, won't work now
SAN FRANCISCO (MarketWatch) -- It's official. We are Japan.
At least when it comes to monetary policy. The Federal Reserve's decision to slash interest rates by a half percentage point to 1% on Wednesday to help boost the economy was snubbed by the stock market, even though it had demanded the cut like a petulant child for more than two weeks. See full story
There was nothing the Fed could do, and it's likely the European Central Bank will fall in line next week, as well as the Bank of Japan on Friday. Central bankers know they need to show coordination and the ability to do something -- anything -- in the teeth of this bear market.
But Bernanke is quickly running out of monetary bullets, with the risk of having to take the extraordinary step of someday lowering interest rates to zero just a bank run or two away right now. Japan, which spent five unproductive years at zero between 2001 and 2006 before boosting to a half percentage point, is now talking about a quarter point cut and possibly a return to zero, even though it didn't work last time. See full story.
The economic theory behind zero rates, called quantitative monetary easing -- a term so heinous it isn't recognized by my computer's spell check -- allows a central bank to run monetary policy by focusing on money supply instead of the cost of the money, i.e. interest rates.
It also means that Joe the Plumber and his elderly parents would get nothing on their savings account or certificates of deposit, which so many people depend on for their fixed-income lifestyles. How's that for an invitation to go out and spend?
Arguably, it was a dramatic easing of interest rates after the tech bubble collapsed that plunked us into the systemic soup in the first place, allowing people to take out mortgages at ridiculous rates and Wall Street to make a killing by packaging the mortgages and playing various rates off each other. But it won't work this time around. Nobody's lending, and nobody is borrowing.
SAN FRANCISCO (MarketWatch) -- It's official. We are Japan.
At least when it comes to monetary policy. The Federal Reserve's decision to slash interest rates by a half percentage point to 1% on Wednesday to help boost the economy was snubbed by the stock market, even though it had demanded the cut like a petulant child for more than two weeks. See full story
There was nothing the Fed could do, and it's likely the European Central Bank will fall in line next week, as well as the Bank of Japan on Friday. Central bankers know they need to show coordination and the ability to do something -- anything -- in the teeth of this bear market.
But Bernanke is quickly running out of monetary bullets, with the risk of having to take the extraordinary step of someday lowering interest rates to zero just a bank run or two away right now. Japan, which spent five unproductive years at zero between 2001 and 2006 before boosting to a half percentage point, is now talking about a quarter point cut and possibly a return to zero, even though it didn't work last time. See full story.
The economic theory behind zero rates, called quantitative monetary easing -- a term so heinous it isn't recognized by my computer's spell check -- allows a central bank to run monetary policy by focusing on money supply instead of the cost of the money, i.e. interest rates.
It also means that Joe the Plumber and his elderly parents would get nothing on their savings account or certificates of deposit, which so many people depend on for their fixed-income lifestyles. How's that for an invitation to go out and spend?
Arguably, it was a dramatic easing of interest rates after the tech bubble collapsed that plunked us into the systemic soup in the first place, allowing people to take out mortgages at ridiculous rates and Wall Street to make a killing by packaging the mortgages and playing various rates off each other. But it won't work this time around. Nobody's lending, and nobody is borrowing.
At $14 trillion, the U.S. market represented about 44% of the world's $32 trillion in stock-market value at the end of August 2008
asr: Wow US stock market represents close to half of world in terms of value ( market cap)
At $14 trillion, the U.S. market represented about 44% of the world's $32 trillion in stock-market value at the end of August, according to Russell Indexes. But that means the rest of the world's markets combined eclipse the U.S. stock market. And Winters -- whose fund does own stock in Buffett's Berkshire Hathaway Inc. (BRKA) -- is of the mind that the best investment opportunities are outside the U.S.
Indeed, after several years of standout performance, international stocks have taken a much tougher drubbing this year so far than their U.S. counterparts. The average world-stock mutual fund lost almost 19% through August 2008, versus a 10% decline for diversified U.S. funds, according to fund researcher Lipper Inc. The downturn abroad, particularly in Europe, may have been one reason that Buffett -- the quintessential bargain buyer -- took a European "shopping tour" in May.
At $14 trillion, the U.S. market represented about 44% of the world's $32 trillion in stock-market value at the end of August, according to Russell Indexes. But that means the rest of the world's markets combined eclipse the U.S. stock market. And Winters -- whose fund does own stock in Buffett's Berkshire Hathaway Inc. (BRKA) -- is of the mind that the best investment opportunities are outside the U.S.
Indeed, after several years of standout performance, international stocks have taken a much tougher drubbing this year so far than their U.S. counterparts. The average world-stock mutual fund lost almost 19% through August 2008, versus a 10% decline for diversified U.S. funds, according to fund researcher Lipper Inc. The downturn abroad, particularly in Europe, may have been one reason that Buffett -- the quintessential bargain buyer -- took a European "shopping tour" in May.
Wednesday, October 29, 2008
Tuesday, October 28, 2008
Personal transformation
A quote that I think we have all been told in some form or another has much clearer personal meaning after reading this book.
"When it comes to personal transformation, the most important ingredients are
- your willingness to change,
- the clarity of your intent,
-and the strength of your desire."
"When it comes to personal transformation, the most important ingredients are
- your willingness to change,
- the clarity of your intent,
-and the strength of your desire."
Monday, October 27, 2008
Help Wanted: Mass Layoffs Increase Strain on American Economy
As if a housing crisis and global market meltdown aren't bad enough, layoffs are rising too: September was the worst month for "mass" layoffs since 2001, the WSJ reports.
And the hits just kept coming in October:
"In just the last two weeks, the list of companies announcing their intention to cut workers has read like a Who's Who of corporate America," the NY Times reports: "Merck, Yahoo, General Electric, Xerox, Pratt & Whitney, Goldman Sachs, Whirlpool, Bank of America, Alcoa, Coca-Cola, the Detroit automakers and nearly all the airlines."
The good news for investors is that stocks typically bottom long before the economy and unemployment turn a corner. The bad news is rising joblessness and its impact on the real economy -- most notably housing and consumer spending -- may just be getting started.
Economists are now debating how high unemployment will rise from its still relatively low 6.1%. Among the milestones currently being targeted:
* Recent peak of 6.3% in June 2003 (seems like a lock)
* Early 1990's recession peak of 7.8% (likely)
* Late 1982 recession peak of 10.8% (extreme, but not unthinkable)
* Great Depression 25% (unthinkable)
At this point the best hope for jobs growth appears to be a massive program of fiscal spending by the Federal government, regardless of who wins the election. That isn't what champions of free-market capitalism want to hear but their complaints are likely to fall on deaf ears as private corporations continue to shed jobs.
And the hits just kept coming in October:
"In just the last two weeks, the list of companies announcing their intention to cut workers has read like a Who's Who of corporate America," the NY Times reports: "Merck, Yahoo, General Electric, Xerox, Pratt & Whitney, Goldman Sachs, Whirlpool, Bank of America, Alcoa, Coca-Cola, the Detroit automakers and nearly all the airlines."
The good news for investors is that stocks typically bottom long before the economy and unemployment turn a corner. The bad news is rising joblessness and its impact on the real economy -- most notably housing and consumer spending -- may just be getting started.
Economists are now debating how high unemployment will rise from its still relatively low 6.1%. Among the milestones currently being targeted:
* Recent peak of 6.3% in June 2003 (seems like a lock)
* Early 1990's recession peak of 7.8% (likely)
* Late 1982 recession peak of 10.8% (extreme, but not unthinkable)
* Great Depression 25% (unthinkable)
At this point the best hope for jobs growth appears to be a massive program of fiscal spending by the Federal government, regardless of who wins the election. That isn't what champions of free-market capitalism want to hear but their complaints are likely to fall on deaf ears as private corporations continue to shed jobs.
Sell bullion, buy gold stocks
Sell bullion, buy gold stocks
The pricing of listed gold stocks is at an all time low vs. the dollar price of gold bullion.
Author: Barry Sergeant
Posted: Wednesday ,08 Oct 2008
JOHANNESBURG -
Hedge funds and speculators, in particular, have left lots of
wreckage across all lanes of the global resources highway, but as in
the case of any pile up that can be seen from outer space, there are
gems hidden all around and within the carnage. One of the finest ideas
that made landfall on Tuesday, following one of the worst days in
global credit, equity, commodity and currency markets history, was that
the pricing of listed gold stocks is at an all time low vs. the dollar
price of gold bullion.
Some specialist traders believe that first, gold bullion is poised
for a sharp correction back to physical demand support at USD 800 an
ounce from current levels around USD 775 an ounce, and that, second,
listed gold equities will rally in line with a broad based equity rally.
PRECIOUS METALS | USD/oz | From high* | From low* |
Gold | 875.50 | -15.2% | 20.4% |
Platinum | 998.15 | -56.6% | 7.5% |
Palladium | 200.75 | -66.3% | 3.7% |
Silver | 11.44 | -46.4% | 11.4% |
* 12-month |
|
|
|
Earlier on Tuesday, with gold bullion at USD 882 an ounce, and the
Philadelphia Gold and Silver (XAU) trading at 105, a ratio of 8.4:1 was
produced, an all-time extreme level, translating directly into the
message: "gold stocks cheap, gold bullion expensive". The world's 13
listed gold stocks that comprise the global Tier I grouping are
currently trading at a weighted average of 53% below peak prices, hit
just months ago.
The average explorer and developer, or junior, gold stock is trading
a massive 71% below price peaks, also seen just months ago. Some Tier I
names have suffered aggravated price losses due to regional issues:
Polyus, down on extreme turmoil in Russian equity markets; Zijin down
on the bursting of a general equities bubble in Chinese markets;
AngloGold Ashanti and Gold Fields, down on various South Africa
related, and Freeport-McMoRan, down on its exposure to copper, which it
ranks as its primary output. On the flip side of regional issues,
Australian dollar gold prices on Tuesday made 25-year records at AUD
1,210 an ounce.
This puts a positive light on Newcrest, currently one of the world's
top performing gold stocks, not least on the back of its Australian
dollar cost base, good sovereign risk, and growth story.
- Barrick, the world's biggest gold stock in terms of ounces mined, and also most
heavily capitalised, is also trading well, on its liquidity, balance
sheet strength, low sovereign risk, and relatively low base metal
revenue contribution.
- Newmont is also trading well; it is the only
gold stock in the S+P 500, and offers the additional attractions of a
dollar cost base and unhedged gold production.
In more general terms, specialist traders believe that gold bullion
should be sold as the global credit markets thaw proceeds, and that
gold equities should be bought. It is fairly widely anticipated,
however, that gold bullion will head up to new highs in 2009,
surpassing its record dollar levels seen in March this year.
Global tier I gold stocks |
|
|
| |
| Stock | From | From | Value |
| price | high* | low* | USD bn |
USD 26.31 | -50.0% | 16.1% | 19.171 | |
USD 23.00 | -71.3% | 43.8% | 4.384 | |
USD 8.44 | -42.0% | 32.3% | 3.404 | |
AUD 2.35 | -47.2% | 38.6% | 3.710 | |
USD 17.81 | -63.7% | 13.1% | 6.245 | |
CNY 4.28 | -80.5% | 13.8% | 6.448 | |
USD 31.33 | -42.8% | 20.4% | 27.328 | |
AUD 24.25 | -40.1% | 30.4% | 7.930 | |
USD 7.48 | -61.8% | 18.7% | 4.886 | |
USD 13.90 | -49.3% | 21.2% | 9.847 | |
USD 34.66 | -39.8% | 7.4% | 15.224 | |
USD 20.34 | -52.6% | 28.2% | 5.591 | |
USD 42.98 | -66.2% | 15.1% | 16.502 | |
USD 86.71 | -13.7% | 20.5% | 21.071 | |
Tier I averages/total |
| -51.5% | 22.8% | 151.742 |
Weighted averages |
| -52.6% | 19.1% |
|
|
|
|
|
|
TIER II | Stock | From | From | Value |
| price | high* | low* | USD bn |
CNY 32.00 | -78.2% | 40.4% | 1.644 | |
USD 4.53 | -56.6% | 7.8% | 1.339 | |
ZAR 2.45 | -62.6% | 8.9% | 0.294 | |
USD 6.67 | -66.5% | 13.4% | 4.666 | |
CAD 0.47 | -86.6% | 38.2% | 0.131 | |
USD 5.27 | -43.6% | 9.8% | 1.929 | |
USD 46.75 | -44.0% | 18.0% | 6.723 | |
CAD 2.89 | -82.0% | 25.1% | 0.566 | |
USD 35.91 | -36.2% | 16.1% | 2.744 | |
CNY 37.00 | -69.0% | 40.2% | 1.882 | |
GBP 4.49 | -73.4% | 14.0% | 0.640 | |
USD 3.74 | -71.6% | 22.2% | 0.477 | |
USD 1.23 | -71.9% | 7.9% | 0.263 | |
CAD 17.62 | -29.4% | 29.3% | 1.600 | |
GBP 2.34 | -59.3% | 14.3% | 2.955 | |
USD 3.10 | -68.5% | 0.0% | 0.977 | |
CAD 4.95 | -46.5% | 73.1% | 0.845 | |
CAD 3.65 | -62.6% | 6.7% | 0.701 | |
CAD 1.08 | -69.1% | 3.8% | 0.250 | |
Tier II averages/total |
| -62.0% | 20.5% | 30.626 |
Weighted averages |
| -60.3% | 18.3% |
|
|
|
|
|
|
TIER III | Stock | From | From | Value |
| price | high* | low* | USD bn |
CAD 1.32 | -68.0% | 20.0% | 0.163 | |
CAD 1.59 | -58.5% | 16.1% | 0.310 | |
Sino Gold | AUD 4.57 | -48.5% | 54.9% | 0.961 |
CAD 5.63 | -33.0% | 29.1% | 0.488 | |
Highland | GBP 0.39 | -84.5% | 59.2% | 0.223 |
PanAust | AUD 0.44 | -64.8% | 0.0% | 0.457 |
AUD 4.05 | -35.7% | 21.3% | 0.272 | |
Int'l Mining | CAD 3.30 | -50.4% | 26.0% | 0.287 |
Allied Gold | AUD 0.27 | -73.8% | 10.2% | 0.080 |
First Uranium | CAD 2.10 | -82.5% | 23.5% | 0.249 |
Novagold | CAD 5.34 | -73.7% | 20.0% | 0.509 |
Pan African | GBP 0.03 | -67.1% | 17.4% | 0.065 |
Citigold | AUD 0.24 | -53.0% | 56.7% | 0.125 |
Jaguar | CAD 4.89 | -66.2% | 7.0% | 0.283 |
Pamodzi Gold | ZAR 0.99 | -94.2% | 10.0% | 0.010 |
Oceanagold | AUD 0.35 | -90.3% | 1.4% | 0.041 |
DRDGold | ZAR 3.65 | -64.4% | 8.3% | 0.155 |
Central African | GBP 0.02 | -94.6% | 0.0% | 0.007 |
Resolute | AUD 1.05 | -59.0% | 0.0% | 0.212 |
Integra Mining | AUD 0.15 | -79.6% | 7.4% | 0.040 |
USD 35.74 | -9.5% | 34.7% | 1.213 | |
Chenzhou | CNY 8.52 | -84.2% | 13.4% | 0.667 |
Aurizon | CAD 2.24 | -58.7% | 10.9% | 0.300 |
Kazakh Gold | USD 4.70 | -84.2% | 0.0% | 0.225 |
CAD 6.59 | -43.9% | 13.6% | 0.714 | |
Crew Gold | CAD 0.20 | -90.0% | 11.1% | 0.094 |
Lingbao | HKD 1.78 | -76.2% | 28.1% | 0.068 |
Zhaojin | HKD 4.18 | -81.4% | 38.9% | 0.235 |
Rusoro Mining | CAD 0.41 | -84.1% | 0.0% | 0.147 |
CAD 7.18 | -48.9% | 27.8% | 0.324 | |
Andina Minerals | CAD 1.10 | -80.0% | 22.2% | 0.079 |
Crystallex | CAD 0.61 | -81.9% | 8.9% | 0.163 |
Tier III averages/total |
| -67.6% | 18.7% | 9.165 |
Weighted averages |
| -68.1% | 21.7% |
|
|
|
|
|
|
DEVELOPERS | Stock | From | From | Value |
| price | high* | low* | USD bn |
Anatolia | CAD 1.80 | -72.7% | 40.6% | 0.135 |
Andean | CAD 0.72 | -67.9% | 0.0% | 0.209 |
Norton Gold | AUD 0.16 | -76.3% | 28.0% | 0.040 |
European Gold | CAD 2.06 | -71.4% | 7.3% | 0.334 |
Banro | CAD 1.84 | -85.8% | 75.2% | 0.087 |
Greystar | CAD 0.80 | -90.5% | -5.9% | 0.033 |
Medusa | AUD 0.80 | -48.1% | 0.6% | 0.084 |
Osisko | CAD 2.95 | -59.3% | 58.6% | 0.432 |
Central Rand | ZAR 7.50 | -63.5% | 33.9% | 0.209 |
Tamaya | AUD 0.01 | -95.9% | 0.0% | 0.013 |
CAD 1.35 | -56.7% | 12.5% | 0.312 | |
Mintails | AUD 0.15 | -79.9% | 3.4% | 0.075 |
Moto Goldmines | CAD 1.15 | -81.1% | 2.7% | 0.091 |
Detour Gold | CAD 7.64 | -69.9% | 1.9% | 0.310 |
Centamin Egypt | CAD 0.47 | -70.6% | 6.8% | 0.374 |
CAD 16.01 | -58.9% | 24.3% | 0.541 | |
Gold Reserve | CAD 1.00 | -83.3% | 6.4% | 0.051 |
Goldplat | CAD 0.10 | -48.1% | 26.2% | 0.020 |
AUD 1.89 | -35.1% | 29.9% | 0.381 | |
St Barbara | AUD 0.26 | -74.0% | 41.7% | 0.239 |
Jinshan | CAD 0.49 | -84.8% | 8.9% | 0.073 |
Metals Exploration | GBP 0.08 | -80.8% | 0.0% | 0.016 |
Mercator Gold | GBP 0.05 | -94.9% | 0.0% | 0.006 |
Archipelago | GBP 0.13 | -64.5% | 0.0% | 0.044 |
China Goldmines | GBP 0.56 | -66.9% | 0.0% | 0.047 |
Cluff Gold | GBP 0.25 | -78.2% | 4.3% | 0.042 |
Apex Minerals | AUD 0.41 | -71.2% | 86.4% | 0.115 |
CAD 1.00 | -41.9% | 37.0% | 0.193 | |
B2GOLD | CAD 0.50 | -80.6% | 10.0% | 0.073 |
Beadell | AUD 0.08 | -84.2% | 29.5% | 0.005 |
CAD 0.90 | -54.5% | 45.2% | 0.051 | |
Aflease Gold | ZAR 1.59 | -57.3% | 6.0% | 0.094 |
Wits Gold | ZAR 40.00 | -77.8% | 4605.9% | 0.126 |
Uruguay Minerals | CAD 0.95 | -74.3% | 18.8% | 0.042 |
GBP 0.53 | -30.6% | 151.2% | 0.057 | |
Mineral Deposits | AUD 0.50 | -67.5% | 11.1% | 0.174 |
CAD 4.50 | -48.9% | 10.3% | 0.233 | |
CAD 0.90 | -37.5% | 50.0% | 0.013 | |
Buffalo Gold | CAD 0.07 | -93.6% | 27.3% | 0.007 |
Cassidy Gold | CAD 0.10 | -82.1% | 5.3% | 0.007 |
Colombia Goldfields | CAD 0.16 | -89.0% | 3.2% | 0.013 |
Coral Gold | CAD 0.28 | -81.2% | 0.0% | 0.006 |
Entrée Gold | CAD 1.19 | -64.5% | 29.3% | 0.101 |
Exeter Resources | CAD 2.07 | -65.0% | 18.3% | 0.094 |
Gitennes | CAD 0.07 | -85.4% | 16.7% | 0.003 |
Golden Goose | CAD 0.16 | -83.2% | 0.0% | 0.007 |
Grandview Gold | CAD 0.14 | -86.2% | 35.0% | 0.004 |
Kirkland Lake | CAD 5.14 | -64.8% | 26.9% | 0.259 |
MacMillan Gold | CAD 0.22 | -80.0% | 10.0% | 0.012 |
Molycor Gold | CAD 0.06 | -78.0% | 37.5% | 0.003 |
Moneta Porcupine | CAD 0.08 | -73.2% | 25.0% | 0.007 |
Nautilus Minerals | CAD 1.41 | -68.6% | 11.0% | 0.187 |
Navasota Resources | CAD 0.33 | -61.6% | 106.3% | 0.017 |
CAD 0.70 | -44.0% | 75.0% | 0.016 | |
Queensland Minerals | CAD 0.10 | -84.6% | 0.0% | 0.004 |
Rainy River | CAD 1.46 | -75.5% | 12.3% | 0.076 |
Reunion Gold | CAD 0.10 | -93.8% | 25.0% | 0.004 |
Searchgold Resources | CAD 0.04 | -89.1% | 16.7% | 0.004 |
Skyline Gold | CAD 0.07 | -76.7% | 16.7% | 0.005 |
Staccato Gold | CAD 0.10 | -73.2% | 26.7% | 0.009 |
Sunridge Gold | CAD 0.20 | -90.7% | 81.8% | 0.011 |
UC Resources | CAD 0.08 | -87.1% | 23.1% | 0.008 |
Yukon-Nevada | CAD 0.09 | -95.1% | 12.5% | 0.015 |
Tanami Gold | AUD 0.01 | -88.9% | 28.6% | 0.023 |
Tasman Goldfields | AUD 0.07 | -76.8% | 30.0% | 0.003 |
Focus Minerals | AUD 0.03 | -80.8% | 4.2% | 0.022 |
AUD 1.45 | -19.4% | 93.3% | 0.070 | |
Leyshon Resources | AUD 0.22 | -68.8% | 0.0% | 0.035 |
Regis Resources | AUD 0.07 | -93.6% | 11.1% | 0.012 |
Goldstar Resources | AUD 0.06 | -88.0% | 0.0% | 0.007 |
Gryphon Minerals | AUD 0.14 | -83.1% | 8.0% | 0.011 |
Barra Resources | AUD 0.08 | -84.7% | 0.0% | 0.012 |
Conquest Mining | AUD 0.22 | -74.7% | 13.2% | 0.042 |
Hill End Gold | AUD 0.14 | -73.1% | 12.0% | 0.031 |
Dioro Exploration | AUD 0.54 | -79.7% | 80.0% | 0.026 |
Shield Mining | AUD 0.09 | -79.3% | 6.3% | 0.003 |
Dragon Mining | AUD 0.06 | -61.3% | 93.3% | 0.031 |
Zedex Minerals | AUD 0.09 | -77.5% | 0.0% | 0.018 |
Red 5 | AUD 0.05 | -73.5% | 21.6% | 0.021 |
Adamus Resources | AUD 0.28 | -68.2% | 0.0% | 0.029 |
AUD 0.80 | -48.1% | 0.6% | 0.084 | |
Hampton Hill | AUD 0.26 | -55.2% | 65.6% | 0.024 |
Navigator Resources | AUD 0.20 | -81.8% | 14.3% | 0.019 |
Keegan Resources | CAD 1.31 | -77.6% | 14.9% | 0.034 |
Oromin | CAD 0.82 | -80.2% | 0.0% | 0.048 |
Bear Creek Mining | CAD 1.35 | -85.6% | 8.0% | 0.068 |
AUD 0.20 | -41.2% | 42.9% | 0.024 | |
AUD 0.10 | -59.4% | 5.6% | 0.014 | |
CAD 0.92 | -59.3% | 7.0% | 0.146 | |
Linear Gold | CAD 0.85 | -74.2% | 13.3% | 0.021 |
Metallic Venture | CAD 0.30 | -88.8% | 0.0% | 0.014 |
Mundoro | CAD 0.33 | -74.6% | 46.7% | 0.012 |
Stratagold | CAD 0.03 | -94.4% | 20.0% | 0.005 |
Tyhee | CAD 0.17 | -79.3% | 41.7% | 0.026 |
Queenstown | CAD 1.25 | -67.4% | 13.6% | 0.060 |
Miranda | CAD 0.28 | -79.3% | 3.7% | 0.011 |
Mariana | GBP 0.04 | -68.5% | 0.0% | 0.003 |
Tribune Resources | AUD 1.25 | -43.2% | 38.9% | 0.045 |
Atna Resources | CAD 0.40 | -79.4% | 5.3% | 0.030 |
Condor Resources | CAD 0.18 | -89.7% | 0.0% | 0.004 |
Australian Solomons | CAD 0.21 | -80.0% | 5.0% | 0.013 |
Brazauro | CAD 0.30 | -66.7% | 36.4% | 0.023 |
NWM Mining | CAD 0.06 | -75.5% | 50.0% | 0.005 |
Geoinformatics | CAD 0.02 | -95.2% | 0.0% | 0.003 |
Hawthorne Gold | CAD 0.36 | -85.1% | 9.1% | 0.010 |
Inter-Citic | CAD 0.39 | -84.6% | 28.3% | 0.029 |
Int'l Tower Hill | CAD 1.91 | -22.0% | 60.5% | 0.076 |
Midway Gold | CAD 0.67 | -85.7% | 1.5% | 0.031 |
PMI Gold | CAD 0.11 | -66.7% | 37.5% | 0.008 |
Verena | CAD 0.10 | -78.5% | 25.0% | 0.009 |
Vior | CAD 0.07 | -72.0% | 16.7% | 0.005 |
Developer averages/total |
| -72.0% | 63.6% | 7.563 |
Weighted averages |
| -70.5% | 22.1% |
|
|
|
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|
|
Overall averages/total |
| -67.7% | 47.0% | 178.026 |
Overall weighted averages |
| -58.4% | 19.1% |
|
* 12-month |
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|
Source: market data; tables compiled by Barry Sergeant | ||||
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