Housekeeping: Good Morning.
China isn’t Cornering Gold and Silver, The West is too over leveraged and is cornering itself.
Today:
Premium: The JPM View
Commentary: JPM on Commodities, Gold Seasonality, Yen Financial Repression
Session Recap:
US equities advanced on Wednesday, led higher by Big Tech stocks.
Premium / Markets:
JPM on Commodities
We believe the recent pullback in commodities is just that—a pullback—and we continue to see a 10% appreciation in the broader BCOM Commodities index by year-end.
Given the latest sell-off, agricultural commodities like sugar and wheat move to the top of our list of preferred longs.
Sugar and wheat move to the top of our list of preferred longs, with a projected 30% and 25% return, respectively, by year-end.
We still see Brent oil at $90 by September. We remain structurally bullish on gold and silver and see the ongoing consolidation as a buying opportunity with a target of $2,600/oz and $34/oz, respectively, in 2025.
Continues in Premium
The Yen Financially Represses
Overnight in Asia, the main story has been the weakness in the Japanese Yen, which closed beneath the 160 mark yesterday at 160.81 per US dollar. That is its weakest closing level since 1986 and means it’s now weaker than its levels earlier in the year that saw the authorities intervene. Yesterday saw Finance Minister Kanda say that “I have serious concern about the recent rapid weakening of the yen and we are closely monitoring market trends with a high sense of urgency”. He also said that “We will take necessary actions against any excessive movements”. This morning trading, the yen has slightly strengthened again to 160.39 per US dollar. Source: DB’s Morning Report
Gold Seasonality Returns?
Israel, Africa, Japan, and Bolivia.. new instability and no reaction
After mid year, between July and September historically Gold has had some nice summer time moves higher.
But after September, Gold and Silver almost always put a top in and begin to selloff for a bit.
The buying is still in this market, but the urgency, for whatever reason, is a little muted now.
Its quite possible the correlations will return and lull people into a sleep that everything is ok, when it clearly is not.
There will be an election in November, and it will most likely be contested and not be over until the new year.
The BRICS summit will occur before that in October, and there will be announcements regarding the use of Gold and likely Silver in a BRICS trading platform.
These things are not changing.
Watch for Gold and Silver to drop from a lack of activity right now and a sense the Fed may not ease pre-election.
But reality comes in October and November this year.
Market News:
"A grim reality is setting in for Japanese authorities as the yen plunges through milestone levels in rapid succession: The slide won’t stop until the Federal Reserve relents on its higher-for-longer policy path. And they have no control over that." Source: Bloomberg
"Nvidia CEO Jensen Huang said on Wednesday that the company’s advantage in artificial intelligence chips was due to a bet it made more than 10 years ago, centering on billions of dollars in AI investment and a team of thousands of engineers. Source: CNBC
"Amazon hosted a closed-door event for sellers in China, where it presented plans for a new budget storefront that features low-cost apparel, home goods and other items. Source: CNBC
"All 31 of the largest US banks passed the Federal Reserve’s yearly so-called stress tests, satisfying regulators that they could withstand a theoretical scenario in which unemployment rose to 10 per cent during a severe recession. Source: FT
"Morgan Stanley is pushing further into its adoption of artificial intelligence with a new assistant that is expected to take over thousands of hours of labor for the bank’s financial advisors. Source: CNBC
Geopolitics:
Israeli Cabinet member Dichter says "We are preparing for all possibilities in the north and we will go to war when the time comes", via AJA Breaking
Israeli Defence Minister Gallant said Israel does not want a war in Lebanon and prefers a diplomatic solution, but cannot accept Hezbollah ‘military formations’ on its border.
Russian Deputy Foreign Minister says western politicians will not be able to shelter in bunkers if it comes to a nuclear conflict, via Tass.
Some headlines via NewSquawk or DataTrek
Data on Deck:
MONDAY, JUNE 24speechesTUESDAY, JUNE 25speeches, S&P Case-Shiller home price index (20 cities)WEDNESDAY, JUNE 2610:00 am New home sales MayTHURSDAY, JUNE 27 Pending home sales May 1.0% -7.7%
FRIDAY, JUNE 28 8:30 am PCE (year-over-year) 2.6% 2.7% 8:30 am 1
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