DXY hit a double top, intra day, 3/1 and 3/2 at 98.57 and 98.58-now down around 97.60 gold/silver continue to run It also improves the backdrop for stocks, but with the ECB meeting next week and the odds of Draghi not doing everything the market expects, just as in Dec, I still think it is prudent to harvest gains from trading shares including gold/silver stocks.
FED data comes out after the close today, they are my most important indicators. M2 has been up 8.5% annualized the last 10 week moving average, but in order the get the DXY down below 95, I think M2 has to grow 10-11%.
EIA data out today has oil imports up a huge 8.3 mbpd for the week end 2/26. The last 4 weeks oil imports average 7.8 mbpd-up 7.2% y/y.
Again it begs the question. why is the US importing so much oil when we are "swimming" in it? Are the EIA's numbers correct or do the users of oil-primarily the refiners-"see" production falling off so fast that they are worried about supply. Perhaps, those that are short oil, in the futures markets, are importing oil to get the price down (storage constraints)-borrowing cheaply to buy the oil, but levered 10-30X in the futures markets to make more that what would lose on the oil itself.
Despite oil making a double bottom at $26, I think there is one more move to new record lows before the bottoming process is over.
Since my call (2/8), that some oil dynamics did not jive with the bearish consensus view, oil made a double bottom near $26 on 2/11 and moved higher, close to $34, in the last 3 weeks.
Dipped my toe with buys of SM and WPX and am up marginally. Still don't have enough conviction to go big.
near 98.25 with the Yuan moving down, the British pound hitting 7 yr lows recently and the Euro weakening in recent days. I am consistantly reading that S&P 500 and Dow 30 earnings estimates are coming down for 2016. Also read that, for 2015, S&P 500 proforma earnings were $118, but on a GAAP basis it was $91.50. By the GAAP measure, stocks are way over-valued with the backdrop is especially poor when the DXY is moving up and earnings estimates are moving down.
Today's macro data was weak with Pending Home sales, Chicago PMI and Dallas FED all below expectation with the latter two in recession range.
Still, gold and oil have moved higher the last couple weeks in face of a stronger $-which bodes well for the future, making both buyable, but after pullbacks in my view.