Priced For Perfection – Why This Burrito Market Is Heading For A Fall

During the 150 days since August 4th, Chipotle’s share price has plunged by 45%. Nearly $11 billion of market cap has been obliterated——including $4 billion in the last three weeks.

Accordingly, its market value has now retraced back to March 2012 levels. The hyperventilating CMG bulls who rampaged for 1250 days in the interim have now been taken out back and summarily shot.

Stated differently, what had been $12 million per copy burrito shacks are now on sale for just $6.5 million each and are heading far lower, very fast. But the culprit in this stunning markdown is not the alleged once-in-a-blue-moon outbreak of E. coli, as CMG’s apologists claim.

To the contrary, CMG’s shares have been irrationally priced for perfection and beyond all along. CMG Chart

CMG data by YCharts

Chipotle’s recent $24 billion market cap, in fact, is the bubble in extremis which explains the entire financial bubble at large. It is surely the poster boy for the manner in which the Fed-sponsored Wall Street casino has hyped the mundane into the miraculous; and substituted paint-by-the-numbers hockey sticks for substantive analysis and judgment. Continue reading

How Big is the Bust in Commodities Really?

Submitted by Pater Tenebrarum  –  The Acting Man Blog

Have all the “Supercycle” Gains been Wiped Out?

We have frequently come across articles lately that are purporting to show that commodity prices have in the meantime declined below the lows that obtained at the start of the last bull market. Yesterday Zerohedge e.g. posted a chart from Sean Corrigan’s True Sinews Report, which depicts the GSCI Excess Return Index. The following remark accompanied the chart:


“Returns from being long the commodity super-cycle have evaporated in the last 18 months – to42 year lows.”


So are commodities as a group really at 42 year lows? Here is a little test: can you name even a single listed commodity that currently trades at a lower price than at any time since January 1974?


commgreschImage credit: Ian Berry / CNN


There is actually no need to check, because there isn’t one. So how can an entire commodity index, which presumably includes a whole range of commodities, have fallen to a 42 year low? Below is a chart that provides us with a hint. It shows the performance of the crude oil ETF USO since its introduction and compares it to the performance of WTIC crude. Continue reading

Even GDP Objects

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

US oil prices (WTI) ended 2014 at $53.45 spot. Since the decline to that point was thought be a temporary deviation, the fact that WTI ended 2015 at $37.07 is inconceivable to that perspective. The reasons for that were the unemployment rate and GDP. Payroll expansion had just fired up into the “best jobs market in decades” while GDP was shooting up into the 5% range (since revised lower). The final reading on Q3 2014 GDP was released on December 23, 2014, and it presented the possibility of not just the highest growth rate dating back to 2003, but also in back-to-back quarters.

The U.S. economy grew at its quickest pace in 11 years in the third quarter, the strongest sign yet that growth has decisively shifted into higher gear…
The economy expanded at a 4.6 percent rate in the second quarter. It has now experienced the two strongest back-to-back quarters of growth since 2003…
While the pace of growth likely slowed in the fourth quarter, a rapidly strengthening labor market and lower gasoline prices should provide the economy with sufficient momentum in 2015 and keep the Federal Reserve on course to start raising interest rates by the middle of next year.

Under those circumstances, or really an interpretation of circumstances, there was no possible way that oil prices would remain around $50 per barrel. With the US economy poised to take off, “demand” would drive everything upward as orthodox theory had long predicted. “Inflation” would no doubt start moving up, finally, to the Fed’s 2% inflation target even if oil prices dragged for a little bit. It was believed an economy very close to overheating.


It was a peculiar arrangement of analytical priorities, given that it is markets that predict and statistics that often follow. Further, it wasn’t just oil crashing contradictorily; by a long shot. What we could reasonably take away from GDP, unlike the Establishment Survey basis for payrolls, was that perhaps the economy found some growth in the middle of 2014 but that there was no reason to expect it continue. A fuller read of even GDP in recent history left little doubt of highs and lows, but a curiously deficient distribution of estimates skewed uncomfortably low. Continue reading

Gold Higher In Most Currencies in 2015 – Up 4% This Week

Submitted by Mark O’Byrne  –  GoldCore

– Gold acts as safe haven in 2015 … for those who need safe haven
– Gold gains in CAD, AUD, NZD, ZAR, RUB & most emerging market currencies
– Gold essentially flat in EUR (-0.3%) as ECB QE supports gold
– Gold lower in USD, GBP, CNY, INR, JPY, CHF
– Of 18 major currencies, gold was higher in 11 currencies and lower in 7
– Hallmarks of market bottoming and bodes well for 2016
– Gold over 4% higher in USD, EUR and GBP so far in January 

Gold Price Performance in Global Currencies in 2015 (

Gold performed its traditional role as hedge against currency depreciation again in 2015. Many currencies saw sharp losses and concurrent gold price gains. This trend has continued in the first week of 2016, with gold up by more than 4% in most currencies. 

In 2015, gold fell in dollars (USD), sterling (GBP), Chinese yuan (CNY) , Indian rupee (INR), Japanese yen (JPY) and Swiss francs (CHF).

However, gold was higher in Canadian dollars (CAD), Australian dollars (AUD), New Zealand dollars (NZD), South African rand (ZAR) and of course the Russian rouble (RUB). Indeed, gold was higher against nearly all emerging market currencies.

It is important to note that more than 90% of global demand for gold comes from outside the U.S.

Gold was essentially flat in euro terms (EUR), down 0.3%) as ECB money printing supported gold in “single currency” terms.


It is important to again emphasise that gold bullion buyers buy gold in local currencies and have exposure in and to local currencies. UK investors buy gold in sterling, Australians in Australian dollars, Swiss investors buy in Swiss francs, Germans in euros and so on. Therefore, it is important for non-U.S. investors to focus on gold in local currency terms. Indeed, it can be of value for U.S. investors to consider gold in non dollar terms as periods of gains in other currencies often presage gains in U.S. dollar terms. Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

• Slowing Productivity Fast Becoming A Global Problem (Lebowitz)
• Dow, S&P Off To Worst Four-Day Jan Start Ever As China Fears Grow (Reuters)
• US Stock Markets Continue Plunge (Guardian)
• China Has Not One Insolvable Problem, But Many Of Them (Mish)
• Capital Flight Pushes China To The Brink Of Devaluation (AEP)
• China Stocks Rebound as State Funds Said to Buy Equities (BBG)
• China’s Yuan Fixing Calms Markets as Asian Stocks Rally With Oil (BBG)
• The Decline Of The Yuan Destroys Belief In Central Banking (Napier)
• One Big Market Casualty: China Regulators’ Reputation (CNBC)
• China Orders Banks To Limit Dollar Buying This Month To Stem Outflows (CNBC)
• Yuan Depreciation Risks Competitive Devaluation Cycle (Reuters)
• China’s Forex Reserves Post Biggest Monthly Drop On Record (Xinhua)
• China’s Stock Market Is Hardly Free With Circuit Breakers Gone (BBG)
• Iran Severs All Commercial Ties With Saudi Arabia (Reuters)
• Saudi Arabia Considers IPO For World’s Biggest Energy Company Aramco (Guardian)
• VW Weighs Buyback of Tens of Thousands of Cars in Talks With US (BBG)
• Human Impact Has Pushed Earth Into The Anthropocene (Guardian)
• Europe’s Economy Faces Confidence Test as Borderless Ideal Fades (BBG)
• Turkey Does Nothing To Halt Refugee Flows, Says Greece (Kath.)