Good morning. The dollar is up 12 bps. Bonds remain strong. Stocks are down 40-75bps. Gold is up $8 and silver is now up 3 cents. Crude oil turned positive just now and is up 70 cents. Nat Gas is down 20 cents. Crypto is down again. Grains are weak with Wheat the softest.
We are all still here despite Nancy Pelosi’s trip to Taiwan. Bonds are now inverting on the shorter durations implying a nastier recession. Gold continues to show buying by CTAs as hinted at here yesterday. Silver has done its work.
Gold has been an easy read the last few days, but now it gets tricky. According to Michael Moor we need to breach $1804 to ignite a possibly much bigger rally. Meanwhile some technical indicators we follow indicate steam is running out. Ideally a pause here, a consolidation, and then a rally. Ideally because the harder it rallies now, the more it risks getting ahead of itself. We need it to catch it’s breath like silver is currently doing.
Data:
10 am Job openings June 11.0 million 11.3 million
10 am Quits June -- 4.3 million
10 am Rental vacancy rate Q2 -- 5.8%
10 am Homeowner vacancy rate Q2 -- 0.8%
11 am Real household debt Q2 -- 0.0%
6:45 pm St. Louis Fed President James Bullard speaks
Time varies Motor vehicle sales (SAAR) July -- 13.0 million
Gold Lease Rates Have Exploded
One of the most volatile things in metals is the rate of return that can be gotten from leasing physical bullion out for an interest rate.
While gold lease rates, like returns for other assets, often follow a random walk in the short-term, they tend to track a more predictable path under certain conditions.
Spikes in these yields are usually short lived and heavily coincide with backwardation in the EFP as we have discussed in earnest here several times recently in premium posts, Founders classes, and even a twitter spaces session.
Gold Lease rates can be a leading indicator of Gold price behavior
Note in the chart above prior to Gold’s rally in 2011 lease rates had spiked for some time. But during the actual rally, lease rates were subdued. Here’s the facts/logic laid out…
Full Report and analysis/comments at Bottom
Morgan Stanley on Inflation vs Recession
In Morgan Stanley’s Macro report yesterday entitled “ Bad-Is-Good Is Back” they touched on the media’s use of the economic terrible twins inflation and recession; among other things.
News media attention on inflation has declined more recently, and may fall further if headline CPI inflation Y/Y falls into year-end. Indeed, Powell acknowledged this point by saying, "...the public really reads about CPI. And the difference really is because the CPI has higher weights on things like food,gasoline, motor vehicles,and housing than the PCE index does..."
“Recession: use super-spiked in media, which if continues while Biden’s approval stays this low implies that stopping inflation is a duel edged sword for the economy and his popularity.
