Housekeeping: There is far too much good material to describe today. The most important thing (to us in handicapping the monetary path forward) is the CBDC piece which lays out the rationale being implemented to push CBDC adoption right now. The Gold piece reposted by GS is next.
After that there is Hartnett, of course, with his prognostication of 160 bps cut in Q2 and casual recommendation to be long Gold. Rabobank’s Daily lists a veritable horror story of Dollar demise events...and more
SECTIONS
Market Summary— End of Quarter
Week’s Analysis/Podcasts— Financial Repression is back
Research— See above and below
Charts— Metals, Energy, FX, Bonds
Calendar— Unemployment
Technicals— GC, CL, BTC, S&P
Zen Moment— Power Tail
Full Analysis— BBG, GS, BOA, and more
1. Market Summary
Dow surged to its best week since November, but Small Caps outperformed, up over 3%
Nasdaq's best quarterly performance since Q2 2020 (and before that to Q1 2012)
The S&P 500's performance in Q1 was dominated by 15 stocks
According to Bianco Research, META, AAPL, AMZN, NFLX, GOOGL, MSFT, NVDA, TSLA account for all of the S&P's YTD return. They are up +4.6%. The other 492 stocks collectively are down for the year (-.99%).
For the month, the Nasdaq is up over 8%, its biggest March advance since 2010.
The Dow surged to its best week since November, but Small Caps outperformed, up over 3%
March was a wake-up call for commercial real estate, as Office REITs crashed hard
US growth stocks have dominated Q1, crushing value stocks
The market's expectations of The Fed's actions has swung violently in Q1 from a post-payrolls-beat, post-hawkish-Powell surge (expecting rates to be over 100bps higher by year-end) to a post-SVB failure collapse (expecting rates to be almost 100bps lower by year-end). The quarter ends with coin-flip odds of one more rate-hike before The Fed is done and then cuts starting by September.
Sectors/Technicals
Big Tech did great, except for Google
Banks recovered according to size, bigger was better. Regionals will die slowly now
Healthcare seems to not be a hedge for anything, health included
The S&P rallied all the way back up to the key 4100 level today
Commodities:
The dollar is set to end the quarter 1.4% lower, its first consecutive quarterly loss since 2020
Gold is up for the second quarter in a row (up over 19% in the last 6 months - its best such gain since 2016), with its highest quarterly close in history. March saw gold rally almost 9% -its best month since July 2020 (topping $2000) once again...
Silver marched relentlessly again despite Gold’s mild movement
Grains were strong and Soy spiked Friday
Nat Gas bobbed and weaved, very volatile
Bonds:
Yields were mostly higher on the week with no discernible trend except some rotation out of safety into stocks, but mitigated due to growing expectations of a rate top
Crypto:
Bitcoin and Ethereum had positive but choppy weeks in a departure from recent trending behavior
All the major cryptos had a good Q1, with Solana outperforming and Bitcoin gaining more than Ethereum
Given the material upward revision in investment and CB demand assumptions, we now upgrade our 3/6/12m gold targets from $1950/2050/2150/toz to $2300/2500/2500/toz.
We now expect all three major components of gold demand to increase strongly in 2022. The last time that we saw all major demand drivers accelerate simultaneously was in 2010-2011 when gold rallied by almost 70%.
Central banks are studying the possibility of issuing digital money — known as retail central bank digital currencies, or CBDCs — to the general public.
In a new paper we highlight the potential macroeconomic and financial stability gains that CBDCs could deliver. This note summarizes the main findings…
Fed cutting 160bps after May so long Big Tech, recession a slamdunk so short small cap & banks, and long gold as US dollar in bear market;
pain trade is recession once again delayed by stimulus, labor market doesn’t crack, inflation stays high, market reprices lower but cyclicals outperform.
