You're welcome!
That's right, if you read our pre-market post yesterday (and Members never miss them) and you followed our oil play, you made a nice $1,500 for each long contract you played – a great holiday bonus, courtesy of Philstockworld! In our Live Member Chat Room at 10:18, I updated the play after my Reuters interview, saying:
Reuters just called me after reading my post to go long at $50, I told them I expect $51 by tomorrow but at $51.50 I'd be comfortable flipping short.
Now the tricky thing about seeing your marks hit so perfectly after a national interview is you can't be sure you didn't CAUSE the move you predicted so we lost interest in playing oil overnight and that turned out to be a good thing because, early this morning, Donald Trump's Government Sachs (GS) and Donald Trump's Russians (RSX) teamed up to boost the oil market into the weekend. Early this morning, GS announced:
- “We are raising our Q217 WTI price forecast to $ 57.5/bbl ($ 55/bbl), $ 59/bbl Brent beyond H117
- “We expect that the global market will remain balanced, with Brent prices between $ 55/bbl and $ 60/bbl
- “We are smoothing out our medium-term price forecast, with our H217 and 2018 Brent forecast now $ 58/bbl (prev $ 63/bbl) & $ 55/bbl for WTI (prev $ 51.5/bbl)”
No they weren't tweeting the report but you'd think they were the way they write it, right? Of course, when you want to manipulate the markets, you do need to break your content up into tweetable sections – especially ones that can then be clipped out of context (like GS predicts $57.50 oil) to goose the market reaction. It's even better when you coordinate with foreign Governments who stand to make Billions by boosting crude prices into the holidays, so these headlines quickly followed:
- Russia's Novak says all oil firms to cut output under OPEC deal
- All Russia oil firms to cut output under OPEC deal: minister
Yes, of course it's all an outrageous scam but how to you think Putin became a multi-Billionaire and why do you think Donald Trump's cabinet is full of oil people and Banksters? That connected cartel made hundreds of Billions of Dollars running oil up from $20 to $140 a barrel during the Bush administration so, if they can do it again, why wouldn't they?
Meanwhile, we also called a long on Silver (/SI) as well as SLW in yesterday's Report and already the Silver Futures paid off with nice $1,000 per contract gains as they ran from $16 to $16.20, briefly hitting $16.33 before calming down, so congrats on that one too!
This morning it's pulling back a bit but not as interesting as a short-term play (we're still long SLW) until we see $16.25 break, then we can play that long with tight stops under. Silver went from $8 to $22.50 during the Bush years but it really went nuts and hit $50 in the early stages of the bailout, peaking in 2011. Since we expect to repeat all those mistakes and more in the new administration – we look forward to a wonderful run in metals over the next few years!
Meanwhile, China continues to melt down, with the Shanghai down 5.5% for the month as the Yuan trades at 7 to the Dollar, up 16.66% from the beginning of the year (weaker Yuan) so, effectively, Chinese savers have lost 16% of their buying power this year. No wonder capital is flying out of the country.
In fact, the Chinese Government are beginning to take steps to stop capital outflows and that is likely to include the purchase of foreign companies by Chinese companies – one of the things driving the markets higher in 2016.
“The Chinese government has long been encouraging more active participation by Chinese companies in global markets, and the central bank has been liberalizing investment rules. This is a setback,” says Fred Hu, chairman and founder of Primavera Capital Group, a Beijing-based investment firm. “This is going to create tremendous uncertainty and slow down outbound investment by all Chinese companies. The credibility of China Inc. will be badly damaged.”
These are big, macro changes that will send shock waves through the markets in 2017 but, with only a week to go before Christmas – who cares, right? Yesterday, China had to halt trading on 5-year and 10-year Government Bond Futures as the fell by the most ever in an intraday move (2% and 1.2%) and the PBOC had to inject $22Bn into short-term money markets to stabilize the trading. Also yesterday, US 10-year notes hit 2.639%, the most since Sept, 2014. Needless to say, we'll be looking for more hedges into the weekend!
We took advantage of yesterday's bounce to finish trimming our portfolio longs. Our Long-Term Portfolio has gained a ridiculous 14% since the election so we made a year-high 13 changes this month, trimming about a quarter of our long positions and leaving us net bearish with our hedges.
As I pointed out to our Members (and as we discussed in Wednesday Live Trading Webinar) the S&P alone has gained $2Tn in market cap since the election and it's simply not physically possible for more than $10Bn a day to net flow into the markets (daily flows are measured in millions, not Billions and days over $1Bn are rare) but even assuming a month's worth of exceptionally strong days – all positive – you still can't get to 10% of the change the market is pricing in.
That's because the entire market is repriced at whatever price the last sucker paid. If Apple (AAPL) for example has 5Bn shares outstanding (they do) and they are at $116 per share (they are), then the company has a market cap of $580Bn. On any given day, AAPL stock is traded back and forth an average of 35M times so $4Bn per day is traded on AAPL but those transaction involve buyers and sellers and generally nets out about even.
However, all it takes is for the last million (3%) trades ($115M) to go off at $120 per share ($120M) for a net inflow of $5M and AAPL's entire market cap gets bumped up by $5 x 5Bn shares = $25Bn and THAT is how you manipulate a market and make people think stocks are worth much, much more than they actually are – it's a massive scam! That's why we sold (not AAPL!) – if you are dumb enough to pay these ridiculous prices – we are THRILLED to sell to you!
Good luck finding buyers if you wait for the market to turn and you try to ask for these idiotic prices when cashing out – that's the time when you will find out what your portfolio is REALLY worth. For PSW Members, if you tell us we made 14% in a month on paper – we're smart enough to say "Then I'd like that in CASH!!! please!"
Have a great weekend,
– Phil
