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Posted by on Jan 26, 2016 in Market Insight, Treesdale

Correlation to Oil

Correlation to Oil

By Dennis Rhee, Managing Partner of Treesdale Partners and Portfolio Manager of the AdvisorShares Gartman Gold/Euro ETF (NYSE Arca: GEUR) and AdvisorShares Gartman Gold/Yen ETF (NYSE Arca: GYEN)   Mario Draghi in his statement on January 21st signaled for more quantitative easing. Excerpts including “no limits on how far to deploy measures” and “ready for extended measures” was the impetus on Thursday for a global equity relief rally. Oil rallied as well. Draghi also stated that “Europe’s correlation to oil prices has increased.” No kidding.  Draghi will not stop the oil debacle by “extended measures.” Oil has fundamental problems with oversupply and lower demand. This will take time to work itself out as will the issues plaguing Europe. What is clear is that oil is currently the main driver of investor sentiment. As oil continues to test new lows, equity markets are vulnerable to a major correction in Europe as well as the rest of the world. Given Draghi’s inclinations, rates in Euroland will remain low for the foreseeable future. All conditions...

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Posted by on Dec 1, 2015 in Market Insight, Treesdale

The Euro Is a Short

The Euro Is a Short

By Dennis Rhee, Managing Partner of Treesdale Partners and Portfolio Manager of the AdvisorShares Gartman Gold/Euro ETF (NYSE Arca: GEUR) and AdvisorShares Gartman Gold/Yen ETF (NYSE Arca: GYEN)   The ECB will meet on Thursday and it is broadly predicted that they will increase their stimulus by cutting the ECB deposit rate by 20 basis points and/or make changes by increasing the size and lengthening the duration of the existing asset purchase program.  The current deposit rate is already negative 0.20%.  They want to make it more negative in hope that banks, corporations and individuals will borrow money and do something economically productive with it.  This act of desperation is unprecedented in recent memory.  Even Japan’s overnight deposit rate never went negative during their decades of recession. The Paris terrorist attacks are certainly not helping.  Do you know anyone excited about planning a trip to France or Belgium these days?  Chinese tourists are not. Chinese in fact have cut down consumption domestically and abroad in a significant way.  Travel...

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Posted by on Aug 24, 2015 in Market Insight, Treesdale

Now Gold is a Safe Haven Asset?

Now Gold is a Safe Haven Asset?

By Dennis Rhee, Managing Partner of Treesdale Partners and Portfolio Manager of the AdvisorShares Gartman Gold/Euro ETF (NYSE Arca: GEUR) and AdvisorShares Gartman Gold/Yen ETF (NYSE Arca: GYEN)   What a difference two weeks makes. With extreme market volatility and a potential global meltdown, gold has gotten a safe haven bid again. China’s problems have triggered global equity markets to go into panic mode and assets across the board are being liquidated to raise cash. Stanley Druckenmiller, a famous hedge fund manager, has publicly declared that gold is his largest long position. Gold is up over 7.5% from the August lows. On the FX front, the flight to quality to U.S. Treasuries has happened as well with 10-year rates below 2% again. Then why is the US dollar being sold off? Perhaps the market is re-pricing the timing of the Fed liftoff. Another plausible reason is the unwinding of carry trades that were originated in Yen and Euro. Whatever the reason is, the long term forecast for the U.S....

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Posted by on Aug 6, 2015 in Market Insight, Treesdale

Is Dodd–Frank Good for GOLD?

Is Dodd–Frank Good for GOLD?

By Dennis Rhee, Managing Partner of Treesdale Partners and Portfolio Manager of the AdvisorShares Gartman Gold/Euro ETF (NYSE Arca: GEUR) and AdvisorShares Gartman Gold/Yen ETF (NYSE Arca: GYEN)   Dodd-Frank, and more specifically the Volcker Rule within that reform bill, has re-vamped the way Wall Street dealers operate. Since the rule has been implemented, the bond markets and other OTC markets have experienced significantly less liquidity. The Volcker Rule’s intent was to eliminate the ability of market makers to lever up their portfolio hence reducing the systematic risk we experienced in 2008. The fallout of this endeavor has brought another systematic risk to the markets. Since dealers are discouraged from holding inventory, market trading can be very thin in volatile times. Another goal is for OTC products to go on exchanges to reduce this risk, however, we are years perhaps decades away from exchange type of liquidity. So today the big risk is if investors head for the exits because of a rise in interest rates, the market makers...

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Posted by on Jul 22, 2015 in Market Insight, Treesdale

Is Gold Dead?

Is Gold Dead?

By Treesdale Partners, Portfolio Manager of the AdvisorShares Gartman Gold/Euro ETF (NYSE Arca: GEUR) and AdvisorShares Gartman Gold/Yen ETF (NYSE Arca: GYEN)   Gold hit $1080 per ounce Sunday night which was the lowest price level since February 2010. Gold in U.S. dollar (USD) terms has a three-year annualized return of -11.1%. It is no wonder that money managers currently carry the smallest net long positions in gold. A Bloomberg headline on Sunday read, “Gold Speculators Least Bullish on Record as Rate Rise Approaches.” The reason why gold is failing in its role as a safe haven asset class is because the USD is the main safe haven trade. Furthermore, macroeconomic factors favoring a stronger dollar due to rising rates is exacerbating the disdain for gold funded in USD. Is Gold “out of favor?” I can’t think of another asset that is more “out of favor,” except maybe Greek bonds. But aren’t investors supposed to be contrarian and invest in “out of favor” assets? This type of value investing...

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Posted by on Jul 6, 2015 in Market Insight, Treesdale

Europe After The Greek “NO” Vote…

Europe After The Greek “NO” Vote…

By Dennis Rhee, managing member of Treesdale Partners, and portfolio manager of the AdvisorShares Gartman Gold/Euro ETF (GEUR) and AdvisorShares Gartman Gold/Yen ETF (GYEN)   In an unanticipated result, the Greeks showed a strong rejection of the bailout plan primarily due to the pension cuts that were on the table. The Greek Prime Minister Alexis Tsipras gained a huge vote of confidence by his constituency and will be expected to negotiate a better bailout package. The initial capital markets response has been global stocks down, Euro lower, Yen and US dollar stronger. European bond yields are wider and this will be the impetus for the ECB to act expediently as this is counter to the master plan of lowering rates with quantitative easing. Ultimately Germany needs Greece and other weak EU countries to keep the Euro weaker.   Imagine if the Deutschmark was trading.   Germany would be in a similar situation as Switzerland with an inflated currency and all the problems that come along with it.   Along with the fear...

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