Housekeeping: Goldfix recently added some excellent ( we think ) premium content, and needs to keep it to 1 daily email.
The plan is: Every weekday we will send one email, The Market | Rundown. Embedded in that post will be links to the one or two posts we’ve put up; both Premium and Free posts. You click on what you wish. One email.
Thank you for the feedback and ideas as always.- Goldfix
Market Rundown:
Good Morning: The dollar is up 20. Everything else is down except Bonds. This is all on the back of FaceBook/ Meta Earnings last night. This morning the whole market is going flight to safety as defined in liquidity terms. The day is young, and data is coming out. It’s not horrible yet. It’s just volatility as we expected.
In past years Gold would crater on this type info. But post LBMA it has less speculative longs in it, so it has less panicked people to sell. That’s not a license to speculate long. There will be buying coming in from stock longs if the problem gets chronic. When a tide goes out all boats drop. The fear of losing Fed money is the tide right now. Gold suffers in acute stock drops. It excels in chronic ones.
Guidance
FaceBook announced earnings and it cratered as much as 20% after hours. Bottom line is they are making less money from advertising, and their audience age and shrinkage is catching up to them. Forgetting that the drop is also likely too big given the time it happened for a moment: If a company is trading at All Time Highs and one bad earnings report can eliminate 20% of its valuation in a night, what does that say about the mindset of the marketplace? In a previous report we noted this concern and called it “Naked Santa Claus” mixing metaphors.
EITHER EXXON IS CHEAP, THE 5% DIVIDEND IS IN JEOPARDY, OR INFLATION IS WORSE THAN WE KNOW
That was not a buy recommendation. Just an observation. We handicap, you decide. Apparently the market thought Exxon was cheap. Here’s where it is now:
Why the run up? Partly because of what has been stated here about stock rebalancing and rotation. Partly the oil price resiliency.. And partly Bank analysts sounding the alarm to buy more.
Yesterday Goldman reiterated their buy recommendation of Exxon:
Where to from here? No idea. But now with ESG backing off and XOM announcing they will buy ESG type businesses, it seems the company is in a Goldilocks phase of investment: Benefiting from higher prices and in a position to turn green when they want to.
OIL Research: Producers and Politicians
Paying close attention to oil now at these prices. A couple things:
Stocks do not seem not care about Oil prices getting in the way yet
The Ukraine issue does not seem to be affecting Oil yet based on our own observations and Brynne Kelly’s last week. Natural Gas is different
The SPR can’t be tapped again we think
How the Saudi’s react to our next request for Oil pumping will speak alot to US influence globally.. oil for guns stuff
Looking for signs that the Drill baby Drill mantra resurfaces and shale makes a comeback
It all translates into oil going even higher… We’re not betting on it, but until stocks crater on higher oil, or oil weakens on small “good” Ukraine news (invalidating our own opinion), then we’re scared to be bearish.
*** Oil Market Analysis Continues Beneath the Fold***
