DAILY MARKET REPORT
Friday the thirteenth. . . . . .Gold is trading at the $1242 mark this morning (down $4.00) after having gotten as low as $1238 in European markets. Which way it will break from here remains an open question as the annual summer slowdown lingers, commodities continue to track lower, and the dollar, at least for now, reigns supreme in currency markets. In its market report this morning, Investing.com poses an interesting scenario, “Interestingly, Asian and European stocks were mostly higher today as investors yet again attempted to shrug off trade tensions. Could markets be turning increasingly numb to global trade developments? This may be the question of the quarter if stock markets and riskier assets continue to push higher despite trade tensions escalating.” And, by the way, if the one asset that should be flourishing in this environment continues to languish . . . .
With that thought we will leave you for the week and alert you that we will be posting only intermittently for the next couple of weeks as we move to a mid-summer schedule.
Quote of the Day
“Buying gold today is a statement that you believe that global economic events may spiral out of the control of Central Bankers. It is insurance against some sort of massive monetary policy mistake that cannot be fixed without re-conceptualizing the global economic regime – hyperinflation in a developed nation, the collapse of the Euro, something like that – not an expression of a commonly shared belief in some inherent value of gold.. . . . The stronger the Narrative of Central Banker Omnipotence, the more likely it is that the price of gold goes down. The weaker the Narrative – the less established the Common Knowledge that central bank policy determines market outcomes – the more likely it is that the price of gold will go up. In other words, it’s not central bank policy per se that makes the price of gold go up or down, it’s Common Knowledge regarding the ability of central banks to control economic outcomes that makes the price of gold go up or down.” – W. Ben Hunt, Epsilon Theory
Chart of the Day
Chart note: There is much concern about the flattening yield curve, i.e., the convergence of rates in various U.S. sovereign debt instruments and what it might portend for the future. In pulling together the data for these charts, we could not help but take special note of the two previous occasions in which there was a similar convergence – in 2000 just before and during the bursting of the dotcom bubble and in 2007-2008 just before and during the Bear Sterns/Lehman Brothers’ implosions. Both breakdowns, by the way, occurred coincident with an upswing in interest rates.