WHERE FUNDAMENTALS CEASE TO EXIST

The markets have become places where fundamentals and logic cease to exist.

We have Japan's exports and imports falling 14% and 25% respectively in the month of July and yet the Nikkei hardly fell in tandem, once again boosted by the BOJ's buying spree in support of the index. It comes as no surprise that the BOJ has become the top shareholder in 55 companies and the top ten shareholder in 90% of the listed companies on the Nikkei.

Yet, the more the BOJ reacts, the higher the Yen goes. which signals a complete failure in the actions of the BOJ to improve Japan's exports.

And once again despite increase in production, rigs count, and Saudi Arabia production reaching its highest, we have crude oil trending higher. But the autumn months are just around the corner when most refiners will go into maintenance mode. It will be interesting to see if crude oil can continue its upward momentum.

Global stock markets are still lofty in value even as the earnings expectations continue to fall. So who have been buying up the stocks? The chart below may explain.

Source: Washington Post



You can that the ECB, SNB and BOJ  have been actively buying up stocks. The SNB especially, has been actively buying up US companies.

Meanwhile, Lord Rothchild has allocated 8% of his funds into buying gold, stressing on the experimental money printing by the central banks as an unknown risk. Among others who have been bearish on stocks and bonds and bullish on gold are Stan Druckenmiller, Bill Gross, Kyle Bass, Paul Singer, George Soros and Jeff Gunlach - the A-Class hedge fund managers. So do you follow the smart money or the panicky central banks who seem to have lost all credibility?

And in the midst of all these, gold and silver were hammered again on Friday and early Monday morning. One can only surmise that the central and bullion banks are getting ever the more desperate to suppress the price of precious metals.

As momentum becomes bearish on precious metals in the short term, it may be worthwhile to take some profit off the table in the case of miners and related ETFs and await an opportune time re-enter again.

The above is just my opinion. You are encouraged to do your own research and analysis.