The US dollar breakdown has gold surging $60. Plus a look at bulls and bears and more “transitory inflation.”
Gold Surges As US Dollar Breaks Down
June 12 (King World News) – Peter Boockvar: The US dollar is breaking down today as measured by DXY to the weakest level since March 2022. I’ll argue again, the world is rethinking their allocations to US assets from the extreme levels they held as we entered 2025 and they want less exposure. In kind, gold is up by $60 above $3,400 and hovering around its record high. We remain bullish and long, along with silver and platinum and many international stocks and bonds (local currency) that are too benefiting from the dollar weakness.
KING WORLD NEWS NOTE: US Dollar Index Breakdown (97.84) Has Gold Futures Surging Above $3,400
More “Transitory Inflation”
Container prices for a 6th straight week were higher and have more than doubled over this time frame but the pace slowed. The Shanghai to LA route saw the price of a 40 foot container up by $38, or by .7%, w/o/w to $5,914.
KING WORLD NEWS NOTE: Shipping Rates Soaring
The trip to NY rose $121 w/o/w or 1.7% to $7,285 vs $3,500 on May 1st. Assume all of these increased costs are being absorbed by US importers.
KING WORLD NEWS NOTE: Shipping Rates Soaring
Bulls & Bears
Checking stock market sentiment, Bulls now total more than Bears in the AAII survey for the first time since late January with the S&P 500 back near the highs. Bulls rose by 4 pts to 36.7 while Bears were down by 7.8 pts to 33.6. The Investors Intelligence survey saw Bulls up 1.5 pts w/o/w to 39.2 while Bears slipped to 25.5 from 26.4. The CNN Fear/Greed index was 62 yesterday, in the ‘Greed’ category. The Citi Panic/Euphoria index is around neutral.
Bottom line, there has been a shift to more bullishness with less bears but not to any extreme highlighting still some skepticism with the rally which is a good thing from a contrarian perspective. On the other hand, we are a ways away from the fear seen in April.
Wage Growth Cooling Off
Wage growth might falter with the slowing pace of hiring but at least for now it’s still hanging in there. We continue to see that in the ADP data and the Atlanta Fed said so yesterday through May with wages up 4.3% y/o/y for a 4th straight month.
For ‘job stayers’, wages grew by 4.3% y/o/y, down slightly from the 4.4% growth seen in the prior three months. For ‘job changers’, wages were higher by 4.1% y/o/y vs 4.3% in the month before. I’m guessing less labor supply in some particular areas of the economy due to the tighter immigration situation could be a factor, especially in construction and leisure/hospitality. And the pace of wage growth is still running well above pre Covid trends.
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