Housekeeping: Good Morning.
“The Gold reset is a process, not an event”
Today
Discussion: Stocks, Silver, Gold, Fed
Premium: ING on Mining, MS on Fed Policy
Discussion:
Metals – Indonesia’s mining cuts
Indonesia is considering implementing deep cuts to the nickel mining quota primarily to support the falling prices of the battery metal.
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Hartnett: Market Breadth is Dire
There is a widening gap between S&P 500 market cap ($50tn) & S&P 500 ex-Magnificent 7 market cap ($32tn ) SPX up 23% YTD versus 8% for SPX ex. 12 largest stocks; both US & global equity breadth remain dire…winners must keep winning to keep stealth correction ‘under the hood.’
For Founders this AM
MSA Excerpt: Secular Trends of Stocks and Commodities
Excerpted from MSA Technicals December 18th:
1972 to 1980: A stock market bear, and then came the wasteland for price, while gold soared in net price. The spread exploded.
1980 to 2000: The stock market advanced in net price to the Dot-com peak, while gold declined. The spread collapsed.
2000 to 2011: The stock bear began and then came the wasteland. Gold gained massively in net price. The spread advanced five-fold from yearly close to close.
2011-2015: Gold’s net bear trend occurred, as did a collapse in the spread. The spread then basically went lateral soon after gold’s bear trend lows in December 2015 (meaning gold was actually on par with the S&P in its net performance trend in recent years, though very few investors realize that).
Now: Break the S&P 500’s major net trends now (beginning with our long-term quarterly momentum metrics) while gold merely holds or advances a bit, and this spread will start a new upturn out of a multi year steady range, favoring gold vastly again. (A key factor in timing that is defining the breakage of the U.S. stock market.) Courtesy MSA Technicals
MS Changes Their Rate Cut Outlook
Following the outcome of the December FOMC meeting, which was decidedly more hawkish than we anticipated, we change our outlook for Federal Reserve policy to include two-25bp rate cuts in 2025, in March and June. Previously we looked for three-25bp rate cuts in January, March, and May.
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News/Analysis:
Equity Recap:
US equities closed mostly flat on Thursday as the 10-year Treasury yield rose, one day after the Fed signaled fewer rate cuts next year than expected. Large caps bested small caps: S&P 500 (-0.09%) vs. Russell 2000 (-0.45%). MSCI Emerging Markets (EEM) added 0.33% and MSCI EAFE (EFA) fell 0.32%.
Market News: China Dedollarization in Action
Apple is in talks with Tencent and TikTok owner ByteDance about integrating their artificial intelligence models into iPhones sold in China... which is forcing Apple to seek local partners for its AI features at a time when its market share in the country is declining." Source: Reuters
"The Biden administration has cemented a deal to give SK Hynix as much as $458 million in grants and $500 million in loans to support an advanced chip packaging facility in Indiana Bloomberg
"The Bank of England has warned that stubborn inflation will prevent it from cutting interest rates quickly, as it kept monetary policy on hold despite downgrading growth prospects." Source: FT Stagflation
"Dealmakers are betting that a pick-up in megamergers will gather pace under Donald Trump’s presidency, after a rebound in larger deals helped push the value of takeovers back over the $3tn mark this year FT -
"Sales of existing homes rose in November, notching the biggest year-over-year gain in more than three years after a higher supply of homes for sale gave buyers more opportunities. WSJ
"Chime Financial, a financial technology company focused on no-fee banking services, has submitted a confidential filing with the US government for its initial public offering..Bloomberg
"FedEx has decided to spin off its freight trucking division, moving to streamline its structure and unlock value that some shareholders argue has been lost inside the delivery giant.: WSJ
"Nike beat Wall Street’s expectations on the top and bottom lines under new CEO Elliott Hill. CNBC
Politics/Geopolitics: Missiles at Dawn?
"7 strong explosions are heard in the Ukrainian capital Kiev", according to Sky News Arabia; Ukraine air defence repelling an attack on Kyiv, according to official cited by Reuters.
Russia fired a series of Kinjal hypersonic missiles on the capital Kiev, according to Sky News Arabia.
"Israel's Channel 14 on security officials: Israel is preparing for a new attack against the Houthis in Yemen", according to Sky News Arabia.
Israeli official said that there is progress in the negotiations on the hostage deal taking place in Doha, but there are still issues of contention and gaps that need to be closed, via Axios' Ravid.
"Israel's Channel 13 on officials: optimism remains high that a deal with Hamas is imminent.", according to Sky News Arabia
Data on Deck: FOMC/ PCE
MONDAY, DEC. 16 S&P flash U.S. services PMI
TUESDAY, DEC. 17 U.S. retail sales
WEDNESDAY, DEC. 18 Housing starts 2:00 pm FOMC rate decision/presser
THURSDAY, DEC. 19 Existing home sales
FRIDAY, DEC. 20 PCE index Nov1
Final Market Check
