The crash continues
Dollar down against foreign currencies and gold. Up against just about everything else.
Stocks down against just about everything.
Open discussion in comments.
The crash continues
Dollar down against foreign currencies and gold. Up against just about everything else.
Stocks down against just about everything.
Open discussion in comments.
From 35,000 feet, there are two major fundamentals driving the markets.
One is the pre-existing financial environment, marked by one of the longest and deepest yield curve inversions in decades having ended just last fall, a stock market bubble, and excessive, out-of-control federal debt. This is deflationary and recessionary.
The other is the political drama surrounding President Trump’s trade policy and monetary policy.
It’s hard to say where one picks up and the other leaves off. Trump gets the headlines, but the former is at least as big an issue. I could have forecast a bear market last year before any of the Trump related news surfaced. Oh … wait … I did.
Not that Trump hasn’t been a big disappointment to his base. It supported tariffs, but not full on trade war. US international trade policy needed an overhaul, not a wrecking ball.
His public attacks on Fed Chair Jerome Powell are throwing salt into the wound. Anyone who’s been following Financology knows I am no fan of Powell. Despite his protestations, Fed policy has been patently political. The same Fed that couldn’t wait to ease policy last year before the election, when consumer inflation was stalled well above its own inflated targets, employment was robust, and financial markets floating on a sea of liquidity, can’t find a reason to ease just a few months later, when recessionary omens loom, CPI and PPI data have just shown outright month-month deflation, and financial markets are crashing. This is no apolitical, independent Fed. It speaks with forked tongue.
Yet Trump is hardly helping. If he has an opinion on interest rates, there’s no reason he shouldn’t express it. But public and personal attacks on the Fed Chair by the President look bad. And aside from Trump himself, few would want the president making monetary policy. Threats to fire Powell could progress into a lengthy and messy court battle ending in the Supreme Court, hardly supportive of economic morale.
I get Trump. He says whatever’s on his mind, which is refreshing, even if it’s different the next day. But he risks undermining his own agenda. His successes on other fronts like immigration and deregulation are at risk from reckless expenditures of political capital on such disruptive long shot battles with questionable benefits. Trump should move back towards a modest, across-the-board tariff, possibly with modest surcharges where specific trading partner policies warrant.
And his attentions to the Fed would be much more productively focused on using his leadership to advocate for fundamental reforms. Invite Ron Paul into his inner circle. There should be no need for debate … interest rates should be set by billions of people interacting in a free market, not a committee of bureaucrats. Either end the Fed’s interest rate targeting or end the Fed.
China threatens countries that ‘appease’ Trump in tariff war
Beijing’s warning tests Britain’s loyalty to the US as Washington trade deal looms
“& she have Fun, Fun, Fun till her daddy takes the T Bird way”
JPM added to their Gold stock……………….they now hold 887 tons!
Stocks recovered somewhat in the last couple hours of trading. This is considered a positive in that professional and institutional money tends to dominate trading later in the session.
On the day:
Stocks (VT): -1.55%
Treasuries (GOVT) -0.42%
Gold (IAU) +3.13%
Gold just hit $3453.46 …
$3500 looking increasingly likely. This is happening while S&P futures are solidly up on the session, continuing the recovery from this afternoon.
$3463.11 … the blowoff top thesis looks increasingly plausible. This move has a too far too fast air to it … beginning to look bubbly. Yet even if it is, there’s no reliable way to predict exactly where. A risk is that an equity recovery draws buying interest away from gold … watch whether gold holds through the next stock rally.
Meanwhile the bear market in stocks likely has quite a bit to go. The length and depth of the preceding yield curve inversion, along with the extreme bubble valuations reached, makes it a stretch that we’d see lows in this vicinity. And along with unsustainable debt levels, the pressure to inflate and debase the dollar can only intensify. So despite near term risk the longer term gold prospects remain bullish.
Gold going vertical.
$3486.15
European institutions, pensions insurers etc, have been about 70% in the us. Bonds and stocks, and winning twice over on the s&p with the index up and the dollar up at the same time. Now they have a lot of spending to do at home, and trust in the u.s. Is broken. The European markets are too small to easily absorb the flows, and it will take years to move even part of the many trillions involved
Aye … consider how it got that way. The US has been producing dollars much faster than it has been producing goods and services to buy with them. The excess goes overseas to buy goods.
But overseas recipients of all these dollars don’t just dump them in the ocean. They use them to buy US assets. This drives up US asset prices. Net out the dollars flowing both ways, and the trade boils down to swapping capital for goods.
Capital goes out, goods come in.
If you reduce the flow of dollars going out to buy goods, there’s only one possible effect it can have on dollars coming back in to buy capital. Less of them.
So years of easy money and trade deficits resulted in bubble prices of US stocks, bonds and real estate. Stock market bubble, low interest rates, unaffordable housing. Reducing the trade deficit is deflating the stock market bubble and overpriced real estate. As bad as that may be for sellers, for buyers, stocks and housing are on their way to becoming more affordable.
No loss of trust is necessary, it’s mechanical. But we’re probably getting loss of trust along with it, due to unnecessarily volatile, unpredictable and confrontational trade policy. Any substantial rebalancing will indeed take years; attempting to do it in weeks or months can only cause a train wreck.
We almost hit $3500………………..NOT getting killed, the $ is!
Trump wanted a cheaper $
$3497.25 overnight … then it eased backed as stocks rallied. Latest:
https://www.gold-eagle.com/
Little man, big ideas
https://x.com/Megatron_ron/status/1914439974105079943?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
Gold has pulled back as equities rallied. They’re trading in counterpoint. Though both tend to rise long term, their frequent tendency to take turns along the way makes them excellent portfolio companions.
Couldn’t hold $3400
The stock rally sucked the oxygen out of the room. DJIA +1016.57 points. Let’s see how it does the rest of the week…
Bloomberg reports that Apple is concerned about what effect a 20% price increase might have on iPhone sales. One mitigation strategy under consideration is financing.
This kind of thinking is rapidly becoming dated. The era of financialization has reached its limits. Consumers are already over their heads in debt, as payday loans are being resorted to even for buying groceries.
If Apple wants to make a higher price point more palatable, the place to start is a longer service life. It artificially obsoletes its own products by issuing system updates incompatible with otherwise perfectly serviceable models more than a few years old, strong-arming its customers into buying a new model whether they’re ready or not.
This is reminiscent of the American auto industry’s planned obsolescence strategy decades ago, before foreign competition devastated Detroit. US Tech has grown complacent and arrogant if it thinks the same thing can’t happen to Silicon Valley.
Gold falling away, Trump “blinked”…..the art of the deal is not trying to “blag” China. Both China & Russia know the truth, by playing this weak hand so badly EVERYONE now knows as well.
Even that little turd in France
just an observation. gold last peaked at $850 in 1980. just ran that through the bls inflation calculator [bogus numbers i know] and the current value of that $850 is…….[want to guess?],,,,$3494. so we’re ALMOST back to the 1980 high.
Oh bogus numbers for sure … compounded over 45 years. A more market based way to look at it would be to compare it with other assets. This analyst uses both the S&P 500 and a 60:40 portfolio as a basis for comparison:
https://www.gold-eagle.com/article/impending-gold-correction-could-be-final-buying-window
This has its weaknesses too … for one, the S&P is only part of the world stock market. Gold is a global asset. Like versus like.
Another one is to compare it with other elementary commodities. Copper is excellent for this purpose. I don’t have the numbers handy at the moment, but it’s safe to say that after this moonshot, in which copper didn’t participate, gold is quite richly priced in comparison. Another popular metric is gold in terms of silver, which also shows gold as being richly priced. IMO such peer-to-peer comparisons are the most realistic guides to valuation.
You could say that in terms of other commodities, gold is elevated and has significant downside potential. In dollar terms though, there is no upside limit for gold, because there is no limit to how far the dollar can fall. As the denominator approaches zero, the quotient approaches infinity.
Ultimately none of these is likely to provide a final answer to what happens to gold prices in the near term. Longer term is dicey too. 1980 was a bubble top, and preceded a two decade secular bear market. Given the state of US debt and the increasing role of gold as a reserve asset, that seems a highly unlikely scenario.
The extreme overbought levels reached in just the past 24 hours are IMO the best tip to the near term, suggesting a sharp correction is possible at any time. My crude rule of thumb: Slow moves are sustainable; fast moves are reversible.
We looked at the gold situation in more depth in How Much Gas Is Left In Gold?. This piece probably best sums up the technical outlook:
Gold Price Forecast: Blowoff Top Nearing Completion, 20% Correction Expected
In the spirit of a picture is worth a thousand words, here’s a chart of gold in terms of copper:
Hmmmm……….
https://www.zerohedge.com/markets/tesla-misses-sales-eps-slams-uncertainty-automotive-market-affirms-affordable-model-remains
What do you think guys?
TSLA is too rich for me. Trailing PE is 111.69, and even on forward estimates is 95.49.
However much pessimism the article may have for the company, there’s a heck of a lot of optimism priced into the stock.
This is an incredible chart … rather than stocks as priced in dollars, it’s stocks as priced in gold.
It’s total returns too, including dividends, so over the five year period, stocks have had negative returns in terms of real money, as this StockCharts plot of VT:IAU shows.
I’ve used VT to represent stocks because it’s virtually the entire world stock market in one ticker. Using IAU to represent gold makes it like versus like … both are large, liquid ETFs, have expenses (though VT’s is a bit lower than IAU’s, actually giving it a slight advantage), and trade on the same exchanges the same days and hours.
Five years ago was in the aftermath of the Covid Crash. Five years and trillions of QE dollars later, stocks are right back where they started. A simple change of units can be revealing.
Good Chart, always FUN to see…………
however, am going to say it
GOLD GETTING KILLED!
Shocking!
MEGA needs help- Tesla sales figs?
Am i write in thinking they made a $400 million profit this year?
Cheers
Mike
There should be something in here:
https://ir.tesla.com/
The Ukraine has given trump the finger, over to you Europe
The Green Goblin is getting one himself. Maybe not even enough. A big part of Trump’s sales pitch to voters was ending that war, or at least US involvement in it. He has allowed himself to get distracted with deal making. Screw cutting mineral deals; it pales in importance next to the threat of world war and possibly even nuclear war. Put me in the Ron Paul camp; end the war, end the Fed.
dead-er than a tin of spam
Just a couple days ago ZH was crowing about how bitcoin was becoming more like a haven asset than a tech stock. Oh the perils of drawing sweeping conclusions based on a day or two of trading! Its editors must be in deep. Even once-solid Barron’s is plugging bitcoin, referring to in in a recent headline as “digital gold”.
Bitcoin sat out the recent gold moonshot, and continues to trade much more like stocks, more often down when stocks are down and up when stocks are up. May as well just own the Nasdaq. However overpriced it may be, at least there are some assets and earnings in there.
Bitcoin is not digital gold.
Well, Well you Limey Scum
The governor of the Bank of England has urged the US to implement the latest international banking reforms, even after the UK delayed its roll out by a year three months ago.
He said that so-called Basel regulations were “the playing field on which international banks operate”.
He told a conference in Washington: “It’s not for me to say what the US should do but I would strongly encourage that there is a Basel implementation – a Basel implementation. It’s for the US to decide what it is.
“The Basel standard is set. I think it’s important that we give the US time to decide what it wants to do but I would say that I hope the US will do it.”
The Basel rules attempt to safeguard against bank runs and collapses.
Trump told the Limey cow to p1ss off
UK won’t rush to reach trade deal with US, Reeves says
The government is not in a rush to secure a trade deal with Donald Trump’s administration, Rachel Reeves has said as she ruled out making concessions on food standards.
“We’re not going to rush a deal. We want to get the right deal that’s in our national interest and those talks are ongoing,” Ms Reeves told reporters in Washington.
Reeves, like many of her global peers, hopes to make progress towards reducing Trump’s import tariffs while attending the International Monetary Fund and World Bank spring meetings in the US capital this week.
The Wall Street Journal reported on Tuesday that the US wanted Britain to reduce its levies and other non-tariff barriers on a variety of goods including a relaxation of rules on US agricultural imports, such as beef.
“We’re not going to be relaxing our food standards. We’ve been clear with the US about that and they respect that and understand that,” Ms Reeves said. “So that is not something that’s on the table in these discussions.”
Do you happen to know what these food standards are about? I’ve read that some countries don’t allow certain products like GMOs or meats from drugged animals.
If that’s the case, the problem is on this side of the pond. If you want somebody to buy your products, you make what they want. You don’t make something they don’t and try to shove it down their throats!
My understanding is that the UK and EU approach hygiene in food production (meat in particular) as something by design, such as clean abattoirs and processes whereas the USA approach is to rely on remedial measures such as chlorination to clean carcasses. This article from the grocer magazine, a UK food retail trade publication, provides a long list of different treatments that are not allowed in the UK/EU but practiced in many food exporting countries (including the USA).
https://www.thegrocer.co.uk/analysis-and-features/how-do-uk-food-standards-differ-from-the-rest-of-the-world/645635.article
Thanks sunpearl. That would also fall into the category of a self-imposed (US) “barrier”. Quite a few US consumers don’t like these practices either, and pay premium prices for special categories like “organic” just in order to get something that used to be the norm. Not to mention premium expenses for health care.
In some cases the cost of poor production practices is even being passed on the final consumer in the form of being told eggs have to be hard cooked and hamburgers have to be cooked to a crisp. There is no acknowledgment that these consumer “food safety” recommendations are a consequence of declining production quality.
There is also no indication that the CPI data is reverse hedonically adjusted higher to reflect lower quality. Every example I’ve ever heard of is associated with adjusting for supposed higher quality to lower reported cost of living increases.
Ah
“The governor of the Bank of England has urged the US to implement the latest international banking reforms, even after the UK delayed its roll out by a year three months ago.”
Let me see, what was happening 3 months ago?
Oh Yes, the Pound was under pressure & the Gilt market getting crushed!
Dollar at ‘beginning’ of major downtrend
The dollar is at the beginning of a “long-winded downcycle”, an economist has said.
George Saravelos of Deutsche Bank said the dollar had been a casualty of the reassessment of US geopolitical leadership driven by the largest trade policy overhaul in a century and the biggest pivot in German fiscal policy since unification.
He said: “Our view on all these factors is that the pre-conditions are now in place for the beginning of a major dollar downtrend.”
Mr Saravelos foresees an end to the “higher for longer” dollar with the euro climbing to $1.30 by the end of 2027, a level last seen in 2014.
He added that the decline had been driven by reduced foreign appetite to fund growing twin deficits in the US, the gradual unwind in elevated US asset holdings and greater willingness of countries outside of the US to ramp up fiscal spending to support domestic growth.
The euro stands to benefit from “safe haven flows” and reserve managers looking to invest more in Europe, the strategist said
The dollar has been in a major downtrend for 112 years. The only difference is whether other currencies go down slower or faster.
This economist seems to be saying the dollar will now go down faster than others. No insight there … the US administration has been telling us that’s what it wants. But it often doesn’t work out that way, because other countries then try to devalue their currencies faster to maintain export competitiveness. In other words, competitive devaluation.
A race like that has only losers. Depreciating currency is inflation.
The only real alternative is real money. Gold prices have been reflecting this spectacularly.
PM
British factories slashing investment as trade war hits exports
Britain’s factories are slashing investment and cutting staff as the trade war sends orders from domestic and export customers slumping, according to a survey from the Confederation of British Industry.
Spending on buildings, plant and machinery, innovation, and staff training is all set to be cut, manufacturers said, amid higher taxes in the UK and tariffs imposed by Donald Trump on exports to America.
“Firms are already feeling the cumulative burden of rises in NICs [National Insurance contributions] and the National Living Wage – and tariffs represent another headwind for the business sector,” said Ben Jones, economist at the business group.
“The Government needs to view every decision through the lens of kickstarting growth and incentivising investment.”
Optimism for the future is ebbing across swathes of businesses beyond manufacturing, according to surveys from the Office for National Statistics.
The share of companies anticipating higher turnover is shrinking, as inflation expectations rise.
One-fifth of exporters said customs duties or levies are a challenge to sales abroad, the highest share in three years, according to the survey carried out in March, before Mr Trump’s “liberation day” announcement of tariffs on goods from almost the entire globe.
https://x.com/Megatron_ron/status/1915490855172943914?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
India V Pakistan
Shipping news:-
https://www.youtube.com/watch?v=33kfpNiiAmo
https://x.com/Megatron_ron/status/1915734543421603940?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
Hmm ?
https://www.youtube.com/watch?v=Jl1Tz8_WeQ8
Oh My!