Housekeeping: Good Morning.
“The Gold reset is a process, not an event”
Today:
Discussion:
In banking terms, a tier one asset is considered the highest quality and most liquid, meaning it can be readily converted to cash without significant loss in value. According to the Basel III regulatory framework, which outlines asset classifications for banks to ensure stability, the following assets are typically considered tier one:
1. Cash and Cash Equivalents: This includes physical cash held by banks as well as cash reserves held with central banks.
2. Sovereign Bonds: These are government-issued bonds from countries considered highly creditworthy. U.S. Treasuries and other similar bonds from AAA-rated governments are included here.
3. Central Bank Reserves: Reserves held by commercial banks at central banks are treated as tier one since they are secure and instantly accessible.
4. Gold: As noted, under Basel III, gold was elevated to a tier one asset, meaning it is viewed as a high-quality liquid asset on par with cash and government bonds.
These assets are viewed as highly liquid and stable, serving as the cornerstone of financial stability within banks. Tier one assets act as a buffer against crises, ensuring banks can meet short-term obligations even during economic downturns.
What it means to be Tier 1 Practically Speaking
Gold goes from Tier 1 to Tier 3
Silver as Tier 1 Asset
***Market Structure Manipulation continues at bottom****
News/Analysis:
![Goldman: "Central Bank Demand Has Reset Gold's [Price] Levels"](https://substackcdn.com/image/fetch/w_140,h_140,c_fill,f_webp,q_auto:good,fl_progressive:steep,g_auto/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F44cdfcaa-5f05-4a6b-92b3-8059a51eb6e3_325x267.png)
Equity Recap:
US equities sold off sharply on Thursday after disappointing Big Tech earnings reports. Large caps and small caps declined: S&P 500 (-1.86%) vs. Russell 2000 (-1.63%). MSCI Emerging Markets (EEM) and MSCI EAFE (EFA) fell 0.65% and 0.61% respectively.
Market News:
"OpenAI on Thursday launched ChatGPT search, positioning the company to better compete with search engines like Google, Microsoft’s Bing and PerplexityCNBC
"Apple, the world’s most valuable company, reported weaker sales in China than anticipated last quarter, raising fresh concerns about one of its most important regions. Bloomberg
"Intel announced a massive $18.7bn set of restructuring and asset impairment charges on Thursday in an attempt to clear the decks and accelerate its effort to rebuild its competitiveness. FT
"Inflation increased slightly in September and moved closer to the Federal Reserve’s target... CNBC
"Comcast said it is exploring the creation of a separate company for its cable networks and will consider partnerships in streaming as it posted a jump in third-quarter revenue fueled by its media businesses WSJ
"Uber Technologies reported weaker-than-expected ride bookings and issued a middling forecast for the holiday quarter, even as it delivered record operating profit." Source: Bloomberg
"Eurozone inflation rose to 2 per cent in October, meeting the European Central Bank’s target and bolstering the case for a smaller quarter-point rate cut in December. FT
"Elon Musk is in talks with some of the largest investors in the Middle East about a fundraising for his artificial intelligence start-up that could roughly double the one-year-old company’s valuation to $45bn FT
Politics/Geopolitics:
Lebanese Prime Minister Mikati says "the continuation of Israeli attacks is an indication of Tel Aviv's rejection of all efforts to cease fire", via Asharq News
Iran’s supreme leader Khamenei instructed the Supreme National Security Council on Monday to prepare for attacking Israel, according to NYT citing three Iranian officials familiar with the war planning. Khamenei was said to have made the decision after he reviewed a detailed report from senior military commanders on the extent of damage to Iran’s missile production capabilities and air defence systems around Tehran, critical energy infrastructure and a main port in the south.
Israel conducted strikes on Beirut suburbs for the first time in days, while a Lebanese news agency reported that dozens of buildings in the southern suburbs of Beirut were flattened by Israeli raids, according to Sky News Arabia.
Islamic Resistance in Iraq said it attacked with marches a vital target in the south of the occupied territories several times since dawn today, according to Al Jazeera.
US Defence Secretary Austin spoke to Israeli Defence Minister Gallant and reaffirmed the US remains fully prepared to defend US personnel and partners across the region against threats from Iran, according to the Pentagon.
US State Department issued a response to Israel's cabinet decision on extending indemnification for correspondent banking between Israel and West Bank in which it stated the short-term extension creates another looming crisis by November 30th and called for Israel to swiftly extend indemnification for essential banking relationships for at least a year.
North Korea's Standing Committee Chairman Choe says we need to strengthen nuclear weapons and improve readiness for a retaliatory nuclear strike.
Data on Deck: PCE and NFP/Unemployment
MONDAY, OCT. 28 None scheduled
TUESDAY, OCT. 29 S&P Case-Shiller home price index
WEDNESDAY, OCT.30 Retail and Trade
THURSDAY, OCT. 31 PCE , Core PCE index Oct.
FRIDAY, NOV. 18:30 am U.S. employment report
***FINAL MARKET CHECK**
