Banks are telling clients to reduce Oil exposure and Add Bullion
Goldman’s Monday Post close trader market commentary**
Market Rundown
Good morning.
The dollar is down 30. Bonds are slightly offered. Stocks are mixed with Tech up and cyclical down. Gold is up $13 as the December contract rolls into February. Silver is up 27 cents as its contract rolls into March. Crypto is stronger, with ETH up 4%. Crude is up another $1.30 as the market starts to again price China opening (Chinese stocks are very strong), OPEC+ cutting, and/or war ending. Grains are mixed with only Soy being slightly firmer.
Here’s today’s data
9 am S&P Case-Shiller U.S. home price index (SAAR) Sept. -- -9.8%
9 am FHFA U.S. home price index (SAAR) Sept. -- -7.6%
10 am Consumer confidence index Nov. 100.0 102.5
JPM Says Sell Oil, Buy Gold for 2023
This time of year, one must look at bank sellside research as one big report across asset classes. Yesterday and last week we noted that JPM and other banks are now advising their clients to Buy Gold (more at bottom,write up here) Today, their research is telling those same clients to Sell Oil. The shuffling of client money is now in full swing.
From that report:
We now forecast a $8 lower 2023 average price, on the grounds that Russian production will fully normalize to pre-war levels by mid-2023.
Despite more pessimistic balances over the next few months, we expect Brent to average $90/bbl in 2023 and $98/bbl in 2024. Unlike this March, when our forecast for both 2022 and 2023 was below consensus because we expected more Russian supply and less demand, our current 2023 and 2024 forecasts are well above the forward curve
More at bottom…
Does that means Gold will be higher and Oil will be lower a month from now? If nothing else happens, yes. But something else always happens. There is also always the chance they mean what they say macro economically, but the client base does not rotate as recommended1. What does it all mean? Bank clients will be selling Oil on their advisors say so and buying Gold with a portion of those proceeds. Call it an inflation rotation play. And given they made a good amount of money for clients who bought in 2020 post covid, who is to say they are wrong? But as always, be careful. And welcome to Buy Season
