On the heels of the Dow and the Nasdaq tumbling, today Art Cashin discusses Jeff Gundlach’s comments and the real reason for the sudden shift in markets.
A Sudden Shift
May 8 (King World News) – Here is a portion of today’s note from legend Art Cashin: How This Sudden Trade Shift May Have Happened – From traders to media pundit, lots of folks have expressed puzzlement as to how we suddenly went from Friday’s “A China trade deal is only days away” to the weekend tweets promising “tariff wars”.
Some think they may have been misled by Secretary Mnuchin and Larry Kudlow. I have a hypothesis that suggests that may not be the case. Based on input from various sources, the hypothesis goes like this:
Late last week, the talks were going very well, in fact, the deal was 80% to 85% done. The Chinese brought the list of proposals to the Chinese leaders for a semi-final review. The leadership strongly objected to several items.
The Chinese negotiators told Mnuchin and Lighthizer that these several issues would have to be reopened. Since the U.S. trade representatives had assumed these were “done” deals and therefore, they, and more importantly the President, saw this as “reneging” by China and thus the tariff outburst.
If the hypothesis is correct, it tells us a few key things. First – we were very close to a full trade deal. Second – if China insists on the changes, it could reopen most or even all of the negotiations. The thinking here is that we agreed to do item 9 only because of their concession on item 3. With that thought process, several revisits by China could dissemble a large part – or even all of the nearly done deal.
Tough to figure out how to play these possibilities. Stay tuned.
The Bond King Sees Clouds Ahead – Jeff Gundlach of DoubleLine Capital sees a likelihood that tariffs will be imposed and that will likely lead to further pressure on stocks.
Some other points Gundlach made:
- U.S. stocks are in a bear market because they haven’t returned to last year’s highs.
- The U.S. debt and deficit are “out of control” because they’re growing during a strong economy, leaving little room to maneuver.
- Fed’s Powell, during his last press conference, “looked scared.” The U.S economy is “rudderless,” Gundlach said.
Overnight And Overseas – Asian equity markets saw rather broad selling. Tokyo, Hong Kong, Shanghai and India all saw closing losses that ranged the Dow equivalent of 300 to 400 points.
In Europe, London, Paris and Frankfurt are seeing modest losses.
Among other assets, Bitcoin hit a bit of a speed bump, trading just above $6100 amid rumors of new cyber theft. Gold is a shade higher, while oil is a shade lower. The euro is mildly firmer against the dollar and yields are a tick, or two, lower.
Consensus – Trade talks remain center stage so we are subject to random twitter influences.
Iran situation poses some risk of an accidental combat event.
A key could be if we take out yesterday’s lows or remain above.
Stick with the drill – stay wary alert and very, very nimble.
Also of importance…
On A Roll
Bryan Slusarchuk, co-founder: “We just reported all-in sustaining costs of (US) $545 an ounce, which places K92 as one of the world’s lowest cost producers. I believe this performance is top 10 worldwide (all mines) and top 4 worldwide (underground). To achieve this type of performance (US $395/Au cash costs and $545/AuEq AISC) this early in the mine’s development and ramp up is truly amazing and a huge credit to the onsite team.
With multiple drill rigs turning coupled with the news earlier this we reported earlier this week that described multiple wide zones of high grade gold from drilling at Kora and a big exploration success regarding a vertical extension, investors should expect a lot of news flow as K92 continues to progress onsite.
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John Lewins, K92 Chief Executive Officer and Director, states within today’s News Release:
“The first quarter of 2019 was a record for K92 in multiple aspects, just under 20,000 ozs AuEq produced, Cash Costs below US$400/oz AuEq, AISC below US$550/oz AuEq and revenue of almost US$24 million.”
K92, symbol KNT in Canada and KNTNF in the US.
A good ranking (just out in the past week) from Mining Intelligence as to the world’s lowest cost mines; CLICK HERE.
To read today’s exciting news release CLICK HERE
***KWN has now released the powerful audio interview with Adrian Day and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***Also just released: ALERT: We Are Now On The Brink CLICK HERE TO READ.
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