Housekeeping: Good Morning. The Free version is significantly shorter than usual today.
Today:
Premium Analysis: Silver Bullet
News: China Bazooka
Premium Analysis: Silver Bullet
In a report Goldman Sachs published for institutional clients yesterday they said:
Prior to the September Federal Reserve meeting, speculative positioning in Silver futures surged. Managed Money dominated.
With Producers reiterating a tighter physical balance, lower US real rates and the Dollar served as incremental catalysts. After the Fed delivered a 50bps cut, Silver price extended higher.
Key points and multiple charts from that trading desk report summarized at bottom
News Analysis: China Bazooka
China’s Policy Bazooka is Back
China will set up a swap facility allowing securities firms, funds and insurance companies to tap liquidity from PBOC to buy stocks.
“PBOC… will set up a swap facility allowing securities firms, funds and insurance companies to tap liquidity from PBOC to buy stocks. Brokers, funds and insurers will be allowed to pledge assets in exchange for liquidity for funds and buy stocks; the PBOC will also set up a separate specialized refinancing facility for listed companies and major shareholders to buy back shares, raise holdings. “Beijing is greenlighting direct intervention in the stock market to prop up stocks.” - Zerohedge
India reported record gold imports in August after the country slashed its import duty the month before. India ranks as the world's second-largest gold consumer behind China.
Two additional important points: China stopped buying when India started. India’s demand has been the same tonnage for years, regardless of price.
The rally in gold seems unstoppable at this point and resets on the all-time-high are becoming a frequent occurrence. This perhaps comes as no surprise given that the Fed wrong-footed many economists to start the easing cycle with a supersized rate cut even as growth has remained strong, inflation above target and the Federal deficit at eyewatering levels.
US equities rallied on Monday with the S&P 500 and Dow Jones Industrial Average closing at record highs. Large caps bested small caps: S&P 500 (+0.28%) vs. Russell 2000 (-0.34%). MSCI Emerging Markets (EEM) and MSCI EAFE (EFA) rose 0.78% and 0.38% respectively.
Market News:
"A handful of Federal Reserve officials on Monday left open the door to additional large interest-rate cuts, noting that current rates still weigh heavily on the US economy.Bloomberg
"Minneapolis Federal Reserve President Neel Kashkari said Monday that he expects policymakers to dial down the pace of interest rate cuts Source: CNBC
"The US Commerce Department on Monday proposed banning Chinese software and hardware for vehicles with a built-in internet connection, in a move that would in effect ban Chinese vehicles from the US market. FT
"Boeing on Monday sweetened its contract offer and said it was its “best and final” proposal for its more than 30,000 machinists as their strike, which has halted most of the aerospace giant’s aircraft production, entered its second week. CNBC
"Southwest Airlines’ COO told staff that the company will have to make “difficult decisions” to boost the carrier’s profits. : CNBC
Politics/Geopolitics:
"Senior Israeli official says a ground operation in Lebanon could be considered if political track does not lead to the return of the Israeli residents to the north", according journalist Soylu.
"The response to the new air force airstrikes in Lebanon would not only come from Lebanon, but from other resistance axes such as Yemen", according to Houthi sources cited by Lebanese newspaper Al-Akhbar.
Ukrainian President Zelensky said Ukraine's war with Russia is 'closer to the end' and separately commented that US decisive action now could hasten an end to Russian aggression next year,
EU's Borrell said it is clear that Russia has been receiving new weapons in particular, missiles from Iran
Venezuela's highest court approved an arrest warrant for Argentine President Milei who is a vocal critic and ideological rival of Venezuelan President Maduro
Data on Deck: Refocus on Inflation Risks
Now that the cuts are in and the recession debate will become academic as stocks have their restored liquidity, focus will again return to inflation risks
MONDAY, SEPT. 23 PMI Sept
TUESDAY, SEPT. 24 Case-Shiller home price index (20 cities)
