Weekly Part 2: Institutions Watching Gold Closely Again, and an AntiGoldilocks Update
Fiscal Overpowering Monetary Policy Confirmed
HouseKeeping: This report is in the spirit of the old Barron’s papers we used to read. Enjoy
SECTIONS
Market Summary— Retail is buying everything again
Research Excerpts— Gold, AntiGoldilocks, MS, GS
Week’s Analysis/Podcasts— BRICS
Calendar— FOMC, PCE
Technicals— GC, CL, BTC, S&P
Zen Moment— A reminder
Full Analysis— Gold, Fiscal spending, JPM, GS and BR
1. Market Summary
The combination of earnings and mechanical rebalancing conspired this week to keep longer duration, and tech in general, lower while supporting Dow stocks. This was The Dow's best week in 4 months and the Nasdaq's 3rd weekly loss in last 5. The Dow was up 10 days in a row.
Bank earnings dominated the early week with MS outperforming and Citi not
Retail investor sentiment is diverging from institutional opinion currently, with retail being more optimistic
In addition to portfolio rebalancing and earnings, there is an increasing divergence between retail and institutional investors now. The last few times retail was this bullish, we were in stimulus territory with seemingly endless money flowing into retail hands and getting plowed into their favorite stocks. Institutional bullishness tracked it at lower levels back then. This time it’s in the other direction altogether
And we are not getting “stimulated”. Therefore, for the retail to continue on this path, the Fed must turn dovish at this week’s meeting.
All of this translates to the weaker (though not necessarily wrong) hands being retail this time around. They need news to bail them out. If they get it, the institutional tsunami will push everything higher again. If they do not, it is all about where the institutions step in to cover their shorts.
The most important part of all this is, in an indifferent situation, retail does not have the staying power in the form of weekly Federal check they had last year.
Finally, despite short squeezes in their favorite stocks happening once again just like back then, those “squeezes” are increasingly shorter-lived. It’s about the Fed now.
Sectors/Technicals
Semiconductors took it on the chin from TSMC guidance slash
Healthcare spiked on JNJ earnings upside surprise
Tesla dove post Musk’s earnings call comments
Commodities:
The dollar bounced back to its best weekly gain since Feb '23
Metals were weak given the DX strength, but not horrible.
We note that even Platinum was weaker, indicating less small buyside interest.
There are still no natural sellers in Silver and Platinum, although Gold has at least one (Russia) sniffing around now.
The FOMC will be like an earnings event for these commodities. Dovish will be met with panicked buying. Hawkish with panicked selling.
Energy did well in general
Crack spreads were bought all week in an orderly fashion
Nat Gas is off the mat once again and back in a range
Grains were wild again on Ukraine/ Russian wheat deal problems
Wheat has been the strongest on the bounce last week with the EU fireworks, but it is Soy that has been slowly and steadily rising
Bonds:
Treasuries were mixed this week with the short-end underperforming
The yield curve steepened its inversion
Crypto:
BTC and ETH were flat on the week
XRP remains bid possibly on perception that FedNow is using it as a backbone.
Link also is catching a bid.
2. Research:
“Gold: This one seems clear... folks want to buy a breakout, which is a sentiment I share: - Tony P.
Goldman’s Head of Sales Trading
Below:
GoldFix on Goldman’s gold comment
***GoldFix Anti-Goldilocks Update. Inflation ain’t going anywhere
Blackrock weekly
***GSTrader Road show.. MACRO STOCK MKT MUST READ
BOA Flow Model: Like TD’s but visually easier
JPM: Marko
MS: Excellent readable update on macro
MORE AT BOTTOM…
3. Week’s Analysis/Podcasts:
This week GoldFix wrote and curated over 20 articles and podcasts on Precious Metals, Geopolitics, and monetary economic matters. They can be found here. Below are some of week’s more popular ones:
