Founders: Don't Forget November 17th
The tug of war between geopolitical risks and Fedspeak
Good Morning. The tug of war between geopolitical risks and Fedspeak should continue with the FOMC’s Michele Bowman, Christopher Waller, Rafael Bostic and Susan Collins all set to speak. The Fed’s speakers are definitely dovish now, almost talking bond yields back down a little FX markets, and stocks are taking the war in stride thus far.
The dovish stance could be to maintain stability in the face of the ME problems. Lets be fair, a spike in Oil from ME unrest would be a nightmare for the Fed; simultaneously seeing stocks drop and oil rise with bonds getting slaughtered would be the opposite of ideal for them.
We remain small long Gold, and long bonds having covered the USD short for a small loss post the Israel news.
Only Oil and Gold have popped so far. Oil, however rallied right after a steep decline. Gold was also oversold, and we now suspect in the hallway leading to Buy Season.
Regarding Gold specifically, we are biased this time of year to not be crazy-bullish until at least November. But there are 2 things making us worried we may miss the train if we don’t act more aggressively.
Israel- this event is bumping up against our beloved “buy season” and there is risk of early entry now, though we do nto see it yet.
Gov’t Shutdown- we know about this one, and some folks are forgetting about it given the Israel headlines. But this is keeping a bid under Gold for sure, and was at least part of the reason bonds got hammered. It will grow in effect as the Nov 17th deadline hits.
Very nice piece by TS Lombard on the failure of Neo-liberalism’s policies, and how they have wrecked things to writeup today. Neo-Liberalism/ Keynesianism overplayed its hand is the summary.
Also insights on Oil worth writing up for everyone
Markets:
Data:
WEDNESDAY, OCT 11
8:30 am Producer price index Sept. 0.3% 0.7%
8:30 am Core PPI Sept. 0.2% 0.3%
8:30 am PPI year over year 1.6%
8:30 am Core PPI year over year 3.0%
10:15 am Fed Gov. Waller speaks
12:15 pm Atlanta Fed President Bostic speaks
2:00 pm Minutes of Fed's September FOMC meeting
4:30 pm Boston Fed President Collins speaks
Attached:
JPM Early Look- Heavy on China this morning
Citi Trading Desk
GS Trader 1 Email- Corporate Debt refi is coming
GS Trader 2 Email- Fed Speakers and FX comment