Housekeeping: Subscribers may have noted the lack of GoldFix Gold/Bitcoin morning broadcasts recently. That is because we are migrating to Youtube/Substack videos while preparing for teaching this semester. It’s a little challenging for old folks like us. We now have 3 writers part time and expect to be doing more with Micheal Moor in the coming months.
Founders are reminded to follow @VBLGoldfix private feed on twitter for a follow-back and occasional insights- Happy Friday
Market Rundown:
Good morning. The Dollar is up 27 bps against western currencies. Bonds are stronger. Stocks are mixed. Gold and Silver are higher by $14 and 8 cents respectively, likely on some short covering by funds and CTAs ( see below)/ Crude oil is down $1.00. Crypto is up again and grains are down
Data:
9:45 am S&P Global U.S. manufacturing PMI (flash) July 53.0 52.7
9:45 am S&P Global U.S. services PMI (flash) July 53.0 52.7
It seems the retail shorts have started covering in Silver, Gold, and Copper.
The more enthusiastic among us think this is a sign of rallies to come, and it sometimes is. When it is, they are very powerful rallies. The retail shorts are always the gasoline on the fire when things get going.
But there is no fire right now. How do we know? Because the shorts are covering and the market is net-net nowhere. The buyers are getting filled in a narrow range so far.
Explanation at bottom
What does this mean? It means the shorts are very profitable, especially in Silver; Also patient, and there are no major signs of panic coming from them yet…
Final note: The market is still in backwardation from spot to futures, which means the physical demand is still around. If we get going higher, look for that backwardation to usually go away (believe it or not) as funds start to chase price above the physical buying (which does not chase yet)
Continues at bottom
JPMorgan Earnings Outlook/ Survey:
Earnings outlook – nearing the point when bad data start to be seen as good? This year, consensus earnings for 2022 have been revised higher in the US, UK and Eurozone ytd, by 2%, 25% and 9%, respectively. Could an earnings reset be taken as a positive, then?
After all, stocks tended to peak at/ahead of the earnings peak, and would trough at/ahead of the earnings trough. Unlike in the 1970s, when inflation, interest rates and wage growth were double digits, driving profit margins relentlessly lower, this time wage growth is up, but still much less than corporate pricing indicators. These suggest profit margins might not decline much.
