Silver Roach Motel
Big Data and Powell Speaks
Today:
Big Data, Powell, and Rollover is almost done.
Bank afternoon briefing
Market Rundown
Good morning. The dollar is down 52. Bonds are mixed and net flat. Stocks are up between 10 and 40 bps. Gold is up $12. Silver is up 39c. Oil is up $2.33. Nat Gas is flat. Crypto is stronger by 2.5- 4.5%. Grains are up between 40 and 110 bps. Payrolls and GDP just came out. Payrolls are very recessionary, GDP is not surprising. “If it wasn't for 224K fast food workers, payrolls are now negative”- Source
ADP private payrolls 127K, Exp. 200K, Last 239KGDP Q3 second estimate 2.9%, Exp. 2.8%, Last 2.6%
Here’s today’s data
8:15 am ADP employment report Nov. 200,000 239,000
8:30 am Real GDP (SAAR) revision Q3 2.7% 2.6%
8:30 am Real gross domestic income (SAAR) Q3 -- 0.1%
8:30 am Real domestic final sales (SAAR) revision Q3 -- 3.3%
8:30 am Trade in goods deficit (advance) Oct. -- -$92.2 billion
9:45 am Chicago PMI Nov 47.3 45.2 10 am Job openings Oct. -- 10.7 million
10 am Quits Oct. -- 4.1 million 10 am Pending home sales index Oct. -- -10.2%
1:30 pm Fed Chair Jerome Powell speaks at the Brookings Institution
2 pm Beige Book
Commodity Reallocations and Silver Motels
Big data day with many focused on Powell’s speech at the Brookings Institute. But none of the info due today is trivial. Behavior the last few days has been telegraphing fear of more hawkishness in stocks. Gold has fared well as has Silver. Lots of narratives as to why things are doing what they are doing. The most important thing remains end of year portfolio (re)allocations, which act as headwind/ tailwinds to whatever markets focus on. We call it “Buy season”. It has become so obvious even banks like Citi are putting out research (at bottom) on that very concept. Which his like a magician telling you how they do tricks.
Of particular note is the Silver open interest below 2015 levels. That is in part a big sign the combination of poor price correlation, a market structure that lends itself to price suppression, and the Basel 3 changes (which make futures markets less attractive) are taking their toll in Silver and Gold. To sum up, the Comex Silver futures market is slowly but surely breaking.
Traders used to say “Silver longs check in, but they don’t check out” when watching Silver swan dive. Recently however, CTA shorts are seeing it works both ways. This market is truly becoming a roach motel like Palladium became before it years ago. Plenty of liquidity going in, none getting out…. in both directions now.
