Weekly: Gold Likes QT, Tesla May Have Just Lied
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SECTIONS
Market Summary
Technicals
Podcasts
Calendar
Charts
Premium divider
Precious
Research Recap
1. Market Summary
The was the last week before Fed speakers enter their blackout period before a policy meeting. They cannot discuss things publicly between now and then. So they made sure they went out on a low note influentially. All week Ultra-hawkish FedSpeak sent rate-hike expectations up with 50bps fully priced-in for May, and a 35% chance of a 75bps hike in June now.
Stocks finally got a message the Fed is seriously going to sacrifice asset prices for inflation risk. The result: This is the 3rd week in a row that a 'balanced' (60/40 mix) portfolio of stocks and bonds was damaged.
Different Rate Hike Expectations End With Quick Easing
Friday was a bloodbath for stocks broadly with no divergence as all the majors tumbled over 2.5%. Despite this and bloodbath in bonds, Treasuries are at their cheapest relative to stocks since 2011.
The Dow fell over 1000 points from high to low
Nasdaq was the week's biggest loser
Sectors:
Energy was worst on the week
Staples were the only sector to close green
Healthcare stocks hammered
Airline industry rebounded
Commodities:
Commodities were broadly lower on the week
Silver and crude suffered most
Gold ended the week lower after tagging $2000. It remains well above the price before Putin’s invasion of Ukraine
The Chinese Yuan started to play cahtch up with the Yen weakening these past few weeks.
The Yen, lower graph, was weakend in 2014 and the Yuan had to follow suit to stay competitive in the region. It is too early to tell, but that could be happening again.
Bonds:
Bonds were dumped on this week from top to bottom of the yield curve
Short term rates spiked the most in a bear flattening
The Dollar continued to surge higher this week (3rd weekly gain in a row)
Crypto:
Cryptos (risk on Gold) were all lower on the week as they tracked risk assets
Bitcoin $43k only to tumble back below $40k.
GoldFix Friday WatchList:
Complete Watchlist Here
2. Technical Analysis
Report Excerpts Courtesy MoorAnalytics.com
GoldFix Note: Do not attempt to use price levels without symbol explanations or context. Moor sends 2 reports daily on each commodity they cover. The attached are non-actionable summaries.
Gold
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Energy
Bitcoin
Go to MoorAnalytics.com for 2 weeks Gold, Oil, and Bitcoin reports free
3. GoldFix and Bitcoin Podcasts
Fed Effect, Y2K flashback, Walkthrough of Moor Charts
GoldFix Broadcasts HERE
The New Push to make Bitcoin Illegal in Europe
Bitcoin Podcasts HERE
4. Calendar
Some upcoming key data releases and market events
MONDAY, APRIL 25 None scheduled
TUESDAY, APRIL 26
8:30 am Durable goods orders March -- -2.1%
8:30 am Core capital equipment orders March -- -0.2%
9 am S&P Case-Shiller U.S. home price index (year-over-year) Feb. -- 19.2%
9 am FHFA U.S. home price index (year-over-year) Feb. -- 18.2%
10 am Consumer confidence index April -- 107.2
10 am New home sales (SAAR) March -- 772,000
WEDNESDAY, APRIL 27
8:30 am Advance report on international trade in goods March $106.6 BB
10 am Pending home sales index March -- -4.1%
10 am Home ownership rate (NSA) Q1 -- 65.5%
THURSDAY, APRIL 28
8:30 am Initial jobless claims April 23 -- N/A
8:30 am Continuing jobless claims April 16 -- N/A
8:30 am Real gross domestic product (SAAR) (first estimate) Q1 -- 6.9%
FRIDAY, APRIL 29
8:30 am Employment cost index Q1 -- 1.0%
8:30 am PCE price index March -- 0.6%
8:30 am Core PCE price index March -- 0.4%
8:30 am PCE price index (year-over-year) March -- 6.4%
8:30 am Core PCE price index (year-over-year) March -- 5.4%
8:30 am Nominal personal income March -- 0.5%
8:30 am Nominal consumer spending March -- 0.2%
8:30 am Real disposable incomes March -- -0.2%
8:30 am Real consumer spending March -- -0.4%
9:45 am Chicago PMI April -- 62.9
10 am UMich consumer sentiment index (final) April -- 65.7
10 am UMich 5-year inflation expectations April -- 3.0%
Main Source: MarketWatch
5. Charts
Dollar Index
Gold
Silver
Oil
Nat Gas
Charts by GoldFix using TradingView.com
6. Analysis:
For the last few months, we’ve all been trying to process the fallout of life changing events that have come one on top of the other the last two years. Crisis after global crisis.
Markets have had to constantly digest secular events and massive disruptive trends like: the Covid Pandemic and government’s knee-jerk reaction to it; the resultant supply-chain inflation and more knee-jerk reactions1.
The thing is, none of these events has resolved yet. All are still ongoing. Now it is time to finally see how policy reactions to those events are going to effect the markets for the next few month or so.
That is the pattern we’re seeing in the financial media now anyway. Let’s hope the upcoming policy reactions aren’t as bad as the knee-jerk reactions before.
7. Research:
Gold: Goldman Sachs just says to keep buying it.
Moreover, underling bullish drivers of each of the three categories are set to remain for the rest of the year, meaning that the bullish gold price trend is set to continue. We therefore reiterate our year-end price target of $2500"
Gold: Fear Trade Is Losing Momentum- TD Bank
How sustainable is the flood of capital finding its way into gold? Thus far, the yellow metal's prices have remained extremely resilient against an aggressively hawkish Fed, as a protracted war in Ukraine simultaneously raised both geopolitical uncertainty and inflation risks, thereby fueling demand for the yellowmetal as a safe haven.
While the Fed is signaling its intent to combat inflation by reaching policy neutrality by year-end, and to start an aggressive QT regime, outflows from gold markets have been scarce as participants are happy to retain some optionality against the Fed's stated plan amid growth concerns.
After all, some also believe the US central bank is still behind the curve, effectively pricing in the Fed's inability to tame inflation with its currentplan, and highlighting the large gap between the current policy setting and the neutral rate.
The risk: safe-haven flows are likely to subside as the fear trade dissipates, leaving fewer participants left to buy gold.
GoldFix: Which is all fine as long as producer selling does not return. Look for open interest to decline with a selloff. If they canget new Comex shorts back into the market, new fuel will be there for another run.
Tesla Just Went Ex-Growth; the Difference, in our Opinion, is They Lied About It- GLJ
In short, we believe E. Musk saw the move in Netflix's stock ex-growth in yesterday's trading session, and wanted to paint a picture that, no matter what, TSLA will not go exgrowth, on a unit sales basis, in 2Q22 (we believe his forecast here will prove [very] wrong)
Commodity Inflation: Raising rates will definitely not be enough in LATAM- Soc Gen
Recession: Seems to be a given by many, including us, but some are now making the case a soft landing isn’t impossible- Goldman Sachs
Commodity Inflation: Raising rates will be enough if they get real rates positive unless they stop lending money during QT….. TS Lombard
More at bottom…