Morning Rundown: Unbalancing Act
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Morning Rundown
Good morning. The dollar is flat. Bonds are firmer, bouncing after a bad few days. Stocks are likely to open strongly today after the last 3 days disappointment. But we do have Jobs data coming at 8:30.
Gold is down $5 giving back tiny after playing catch-up with Silver yesterday. Silver is now flat after being up all night Base and PG Metals are bid. Oil is softer and Crypto is up some.
We have been focused closely on markets the last few days and are convinced large entities are deleveraging in almost every market. Translation: people are closing positions. Whether this is rebalancing or something else, we are quite confident this is based on fears of an earlier Fed hike.
Because if we are wrong, then this is instead a broadening of the selloff as the “safer” stocks are no longer doing well. The tech rally on Friday would then just have been a dead-cat bounce. But it is on our radar. Call it an inflection point for stocks.
This seems to be the case now.
This week started the “rebalancing” chatter for investors. Advisors are meeting with clients post holiday now. Advisors are telling them it is time to sell some of this and buy some of that. It happens every year this time. It is also probably good advice. The timing...not so much.
Text from a family member this week:
Hi Vincent. I don't know what Commodities did but stocks did well. I just spoke to a Vanguard advisor. Wants to set me up in an account that allows him to rebalance quarterly on his own volition. Then simply send a message informing me. Is that usual?
The Nasdaq is basically unchanged from September 2021. The S&P is up some. The Dow is also up. It feels like big tech grabs all the headlines, but it is also grabbing all the selling. Does this performance match your favorite Financial news network’s stories?
Silver
The reason Silver has run up is from positions being closed. Tech stocks down from profit taking and rebalancing. All other stocks behaving either in sympathy or as a flight to safety play.
Another way to look at it is like this: The higher Oil goes, the more likely the Fed has to hike to stop inflation from spreading. Therefore the higher oil goes, the lower stocks go right now. And heaven help us if Gold and Bitcoin start taking headlines from Oil in rallies.
Some are thinking a 50 basis point move is coming. A reminder that this type of rate hike precipitated the 1999-2000 breakdown in stocks.
Have a good day.
GoldFix Podcast
Macro changes in Gold are near. Some technical comments by M Moor
Bitcoin Podcast
Guidance
President Joe Biden warned of “severe economic consequences” for Russia if the country invades Ukraine. He said he feels Russian President Vladimir Putin “has to do something” after amassing 100,000 troops on the border. The comments came in a two-hour press conference marking Biden’s first year in office, in which he also backed the Federal Reserve’s policy shift to fight inflation and pledged to tackle high oil prices. The president, meanwhile, continues to face problems progressing his agenda in Congress with his bid to push voting rights legislation collapsing in the Senate after two Democrats broke with their party to vote against the package. - Bloomberg
Zen Moment
Goldman's chief commodity strategist discusses mega trends
Over the weekend, Goldman's commodity chief Jeff Currie sat down with podcast host Grant Williams to discuss a number of key themes likely to effect commodity prices in the coming decades.
We have the extensive salient points from that interview here beneath the fold