As we near the end of the second week of trading in August, it’s all about stocks, QT, and gold.
Stocks, QT And Gold
August 9 (King World News) – Here is what Peter Boockvar noted as the world awaits the next round of monetary madness: Death, taxes and 3pm stock market rallies. But, investors are becoming more selective and nothing reflects that better than this chart comparing the market cap weighted S&P 500 (in orange) and the Value Line Geometric equal weighted index of 1700 stocks (in white). My friend Helene Meisler yesterday also pointed out that 120 stocks in the NASDAQ made 52 week lows on the close, the most since the week before the US election when there were 225 stocks making 52 week lows.
In terms of sentiment with this backdrop, yesterday Investors Intelligence said Bulls fell 2.5 pts to 57.5 after two weeks at 60+ while Bears were up by .8 pts to 17. As seen after the 30 yr high in Bulls on March 1st, when bullishness gets extreme as it did again 3 weeks ago (when Bulls got back to 60), the market tends to stall out, consolidate and chop around until the optimism cools a bit. The AAII measure of individual investor sentiment is about as neutral as can be. Bulls fell 2.4 pts to 33.7, Bears were about unchanged at 32.3, while those that are Neutral rose 2.2 pts to 34. ‘I don’t know’ basically explains that survey…
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Not that new but lock in Fed voting Charlie Evans as a yes vote for QT initiation in September.
“I personally think that it would be quite reasonable to do that in September, on the basis of the data I’ve seen so far.”
It drives me absolutely nuts but he still remains obsessed with reaching 2% inflation which is his implicit way of saying:
“I root for your cost of living going higher.”
I wish I can ask him exactly what prices would he like to see rise. Right now it’s your cell phone bill. He does though have his eye on the labor market and its possible feed thru to inflation.
“As the unemployment rate continues to improve, and businesses tell you that they are having trouble hiring workers, I think eventually that translates into higher wages, and then the question is whether or not they are able to pass along those cost increases in the form of higher prices.”
Bill Dudley will speak at 10am on ‘Regional Wage Inequality’ which will be followed by a Q&A. He also seems to be on board with QT’s start next month.
I believe that if equity markets handle QT relatively smoothly after its beginning next month, the Fed will hike rates again in December. If we have a market hissy fit instead, they will not. Thus, we will either rally ourselves right into another increase in interest rates or sell itself off away from one. Pick your poison I think.
Gold And The Chinese Yuan Surging
Gold continues to be (at 2 month high) but as a bull on gold I don’t like to see it considered a ‘safe haven’ because that never lasts. It’s just a currency that has been around for 5000 years and is really tough to get out of the ground. That’s it. Thus trade it off what you think fiat currencies will do dependent on central bank action and credibility. Don’t buy it because of North Korea worries.
I didn’t see any particular news but the Chinese yuan continues to rip higher vs the US dollar and sits at the best level in almost one year (onshore yuan) with the offshore yuan at the highest since September. Is the yuan a North Korea flight to safety too?
Silver Also Surging
King World News note: It is also worth noting that silver has eclipsed the key $17 level noted by MSA. Let’s see if silver can get a weekly close above $17 that Oliver noted would indicate an important breakout.
***KWN has just released Dr. Stephen Leeb’s remarkable KWN audio interview and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Legendary Short Seller Says People Have Given Up On Gold & Silver Space…Sector May See Explosive Gains CLICK HERE.
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