A POOR GDP AND A SLEW OF BAD DATA BUT THE MARKET CHOSE TO IGNORE THESE

The GDP for 2016 came in weaker than expected at 1.6% for the whole year. In fact it was lower than 2015 (see chart, source: Wolfstreet). So it goes to show that the euphoria was emotionally driven rather than fundamentally driven. The sad thing is that the market ignores this important data, rather deciding on the Consumer Confidence report which notched in higher than expected. As a result, the indices were little changed

Gold and silver recovered on Friday with silver ticking up more than 1.8%, a move which surprised many. Is there a fundamental issue behind the rise? As I have said many times, silver production is falling while demand is rising. On top of that, many of the silver used are never ever recycled and there are news circulating in the internet China and India will be providing solar power to 600M homes and both Germany and China are bidding to start a solar farm in the Chernobyl wastelands. Silver is one of the most important material used in solar farming due to its conductivity properties.

As if there is not enough bad news, Existing Home Sales fell 2.8% MoM, while new Home Sales was 536K vs expectations of 593K, Durable Goods Sales came at -0.4% vs expectations of 2.5% on top of a November figure which was revised lower. The high expectations were driven by the PMI and ISM survey data which exceeded expectations. This goes to show the disconnect between survey data and hard data (see chart, source; Zerohedge). These is an important lesson to focus on hard data vs survey data. The same with the Consumer Confidence. If the confidence level is so high, why is Retail Sales collapsing?

I believe the market is straining to achieve higher and with a slew of data that indicated a deteriorating economy, investors will focus on fundamentals and this could result in a hard crash.

Therefore, I continue to accumulate small quantities on inverse ETFs and gold and silver miners whenever the opportunity prevails.