Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Post-Draghi Implications

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By Biiwii

So now the dust settles on global markets that were given quite a stir yesterday by the ECB’s proclamation “We are ready to act if needed. We are open to a whole menu of monetary policy instruments.”

These things come on a nice, neat menu now? As if they are codified, tried and true and simply ready for implementation?

Well, if the US – where they showed ’em how it’s done – is a good example then yes, it is as simple as that. I used to write about Ben Bernanke’s big brain as he took policy innovation (interference?) to previously unheard of levels. It was ‘Check out the big brain on Brad Ben’…

big brain on brad, after the ecb qe statement

What it actually is is a global deflationary whirlpool sucking things toward the drain. But the valiant fight is kept up by our policy heroes in a sometimes competitive, sometimes alternating fashion. Right now they are alternating.

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Gold Stocks: Different This Time

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By Biiwii

The title does not include a (?) after it and that is for a reason. The gold sector’s fundamentals, both sector-specific and macro, are improving and this was not the case during the last exciting upturn in the sector circa summer 2014.

Back then, everything from Russia’s move into Ukraine to the Ebola scare were imagined to be sound drivers of the gold price. This stuff proved, as expected, to be wrong when the whole complex made new lows in November of 2014 (prior to this year’s ultimate lows).

What is driving gold and the gold sector this year? The things that we have been saying for years now would be needed.

  • Gold rising vs. commodities: Indicates a counter-cyclical global economic atmosphere (engaged)
  • Gold rising vs. stock markets: Indicates an environment in which mainstream investors would be motivated to consider the sector (constructive, not yet engaged)
  • Gold rising vs. global currencies: A self-explanatory indicator of waning confidence (constructive+)
  • Declining junk/quality bond spreads: Indicates waning confidence in the financial system and those who have propped it up (engaged)
  • Economic contraction as presented in mainstream economic data releases (constructive, not yet engaged)
  • Treasury yield spreads rise: Indicates risk aversion to systemic stress, whether inflationary or deflationary and waning confidence (10yr-2yr inconclusive as of yet, 30yr-5yr engaging)

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S&P 500: Is it This Simple?

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Excerpted from this week’s edition of Notes From the Rabbit Hole, NFTRH 364…

In an age of Algorithms, High Frequency Trading, Quant-injected performance engines and every Casino Patron with an e-Trade account hyper-stimulating the market after each bit of news that is fed (no pun intended) to us by the financial media and Policy Central, the lowly individual can be forgiven for feeling small and vulnerable; for feeling as if the answers are beyond her, or that long-term success is out of his reach.

Indeed, this very publication has ground its gears pondering the fact that August-September market sentiment became historically over bearish in ratio to the relatively minor downside experienced thus far. That was a bullish, not a bearish thing. With sentiment now being repaired it is time to ask if we are giving the bulls too much latitude.

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Post-FOMC Minutes Clown Show

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By Biiwii

Almost as entertaining as the market’s reaction to the event itself is Thursday’s reaction to what a bunch of clowns pretending to be in control of the economy had to say about the economy and by extension their policy supposedly governing same.

Market participants, black boxes and substance abusers alike might want to keep a couple of things in mind; 1) inflammatory news events are fleeting in their effects (and look at how quickly the gold sector, one standing to gain from a weak economic backdrop and its implications for policy, head faked up and reversed down) and 2) after the FOMC Minutes release in September the market cheered and zoomed higher after the Fed punted. It then immediately reversed into a downside leg that became the bottom re-test.

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Macrocosm Revisited

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Excerpted from the October 4 edition of Notes From the Rabbit Hole, NFTRH 363. Reference previous articles on this theme, Macrocosm, Microcosm & Microcosm Expanding…

Here again is our representation of what a positive macro environment would look like for a bullish gold and gold mining stance. We created this theme in July for NFTRH 353.

macrocosm, nftrh 363

This view comes off as repugnant to much of the gold “community”, but I cannot stress strongly enough how important it is to tune out the fairy stories about missing COMEX gold (and silver), love-inspired demand from China and India, ‘rising US employment drives interest rates, incentivizes banks to lend and creates inflation, driving people into gold and gold stocks’ or any other angle out there that does not focus on declining confidence in policy making and its ability to control economies and financial markets. Every single one of these supposed fundamentals have already been proven wrong.

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