Housekeeping: Good Morning.
“The Gold reset is a process, not an event”
Today
Discussion: CPI Prep
Premium: Gold’s 2025 Outlook: Secular Strength And Potential Choppiness
Discussion:
Normalizing Higher Inflation
Goldman Sachs CPI Preview
We expect a 0.25% increase in December core CPI (vs. 0.2% consensus),corresponding to a year-over-year rate of 3.27% (vs. 3.3% consensus). There are three key component-level trends we expect to see in this month’s report.…[among those] we expect a slight acceleration in the car insurance category (+0.3%) based on continued, albeit decelerating, increases in premiums in our online dataset.
More at Bottom…
Gold’s Outlook: Secular Strength And Potential Corrections
Gold’s multi-year rally still has legs, driven by structural inflation risks and the likelihood of renewed monetary expansion as governments lean on fiscal stimulus. Central banks, the cornerstone of gold’s recent rise, have increased their holdings amid persistent inflation (a byproduct of fiscal profligacy) and the dollar's weaponization against geopolitical adversaries.
Some thoughts on key drivers of Gold’s behavior as related to a Bloomberg piece read yesterday.
Topics Discussed in video and at bottom
Central Banks and Dollar Diversification
Fiscal Dominance: The Neokeynesian Trap
Potential Near-Term Correction
Crypto and Competition
Long-Term Outlook
Continues at bottom…
News/Analysis:
Markets Recap:
US equities were mixed on Monday ahead of reports on the producer price index on Tuesday and the consumer price index on Wednesday. Large caps and small caps advanced: S&P 500 (+0.16%) vs. Russell 2000 (+0.24%). MSCI Emerging Markets (EEM) and MSCI EAFE (EFA) lost 0.68% and 0.28% respectively.
Market News:
"Asset managers overseeing trillions of dollars are cautioning clients to take a defensive position heavy on bonds in the face of rising equity prices and the expectation that the Federal Reserve is increasingly unlikely to cut interest rates much further. FT
"Big-name retailers posted largely better-than-expected early holiday results on Monday, but their shares fell as Wall Street came away CNBC
"Goldman Sachs has ambitions to be one of the biggest players in the increasingly competitive world of financing. WSJ
"The US is imposing expansive export controls on chips used for artificial intelligence in an effort to make it harder for China and other adversaries to get access to advanced technology with military applications. FT
"Venture Global, one of the biggest US liquefied natural gas exporters, is seeking to go public at a valuation of $110bn, as the industry readies for a potential boom in fuel shipments under the Donald Trump administration... FT
"Honeywell International is poised to proceed with a breakup following pressure from activist Elliott Investment Management to split... Bloomberg
"Johnson & Johnson agreed to acquire mental-illness drug developer Intra-Cellular Therapies for about $15 billion, evidence of the pharmaceutical industry’s renewed interest in neuroscience bets with vast but unrealized promise." Source: WSJ
"Pershing Square Capital Management proposed a deal to merge a newly formed subsidiary with Howard Hughes Holdings in an effort to build the real estate developer into a “modern-day” version of Warren Buffett’s conglomerate." Source: Bloomberg
Geopolitics/ Politics
Israeli army announced sirens were activated in central Israel after a rocket launch from Yemen and Israeli media reported the suspension of flights from Ben Gurion Airport due to rocket fire from Yemen, while the Houthi group said it targeted Israel's Ministry of Defence with a ballistic missile, according to Asharq News. In relevant news, an Al Jazeera correspondent reported more than 20 strikes in two hours on Gaza City and the central and southern Gaza Strip.
Israel and Hamas are close to a possible hostage and ceasefire deal that will likely be announced on Monday night or Tuesday morning in which 33 hostages will be released during the first phase, with a staged withdrawal of IDF forces from Gaza other than an undefined security perimeter. However, in terms of when the ceasefire deal would be signed and if it would be signed, there was still uncertainty if it was hours away, days away, or could still unravel, according to sources cited by Jerusalem Post.
A deal to end Gaza war is closer than its ever been and a round of talks is planned in Doha on Tuesday morning to finalise remaining details, according to Reuters citing an official briefed on the matter.
Turkish intelligence chief discussed Gaza ceasefire efforts with Hamas officials and agreed to continue efforts to achieve a ceasefire, according to a Turkish security source.
US President-elect Trump said they are getting very close to an Israeli hostage deal and could have a deal done by the end of the week, while it was also reported that Trump's envoy conveyed to Israeli PM Netanyahu a strongly worded message from Trump calling on him to conclude a deal, according to Channel 14 citing an Israeli government official.
US Secretary of State Blinken is to present a post-war plan for Gaza on Tuesday.
Russia downed more than 200 Ukrainian drones overnight, according to Shot Telegram channel. It was also reported that an industrial enterprise was damaged in the Russian city of Engels after a drone attack.
NATO wants to bring forward an agreement on new weapons and troop goals to summer, while it was also reported that Germany’s Defence Minister said they need to implement NATO's new capability targets as quickly as possible.- North Korea fired an unknown projectile towards the East Sea, while the South Korean military later announced that North Korea fired multiple short-range missiles off its east coast. Furthermore, South Korean acting President Choi said North Korea's missile launch is a violation of UN Security Council Resolutions and they will sternly respond to North Korean provocations.
Philippines National Security Council spokesperson said they were surprised about the increasing aggression being shown by China in deploying a 'monster ship' in the Philippines' exclusive economic zone and that it is an alarming and clear effort on the part of China to intimidate Filipino fishermen. The spokesperson added that the intention of the Chinese government is to normalise presence in South China Sea waters with the presence of the 'monster ship' and they will not stop challenging Chinese presence in Philippine waters.
via Newssquawk
Data on Deck: PPI, CPI
MONDAY, JAN. 13 2:00 pm Monthly U.S. federal budget
TUESDAY, JAN. 14 8:30 am Producer price index
WEDNESDAY, JAN. 158:30 am Consumer price index
THURSDAY, JAN. 16 8:30 am Retail sales
FRIDAY, JAN. 178:30 am Housing starts1
Final Market Check
Premium:
Gold’s 2025 Outlook: Secular Strength Amidst Potential Choppiness
( With slides. Does not include extempraneous comments in video)
