MarketWatch/Myra P. Saefong/09-08-17
Gold is trading at its highest price in a year, and the yellow metal might already have the fuel to test levels last seen in 2013.
…“All of the ingredients to break $1,400 are there—our debt is out of control and our deficit could skyrocket, especially with infrastructure plus military spending” on the back of a possible confrontation with North Korea, said Jeb Handwerger, editor of GoldStockTrades.com, which offers a newsletter focusing on mining exploration companies.
“We could be maybe weeks away from that $1,400 breakout, which could signal a new uptrend in gold not seen in many years,” he said. Gold prices haven’t traded above $1,400 since 2013. They also hit a high of about $1,687 that year.
Handwerger pointed out that a “major breakout” at $1,400 for gold could “lead to a reversal of the outperformance of stocks over gold into a market that favors precious metals and commodities over stocks.”
PG View: Gold is already outperforming the S&P500 and DJIA year to date . . .
European markets might just be the epicenter for the “bubbly elements” that have left Lloyd Blankfein “unnerved.”
The Goldman Sachs Group chief executive alluded Wednesday to the risk of the protracted era of low interest rates fueling bubbles as investors turn to stocks from corporate bonds for income. Taking a closer look shows that the difference between European stock dividends and yields on low-grade debt, which inverted in 2013, recently widened in favor of stock dividends to the most since at least 2005.
…It’s all adding up to growing angst over excess exuberance for risky assets, even for Blankfein.
MarketWatch/William Watts & Myra P. Saefong/08-28-17
Gasoline futures soared Monday as Tropical Storm Harvey continued to wreak havoc on Texas, knocking major Gulf Coast refineries out of action.
And while the storm is also expected to curtail offshore crude oil production in the Gulf of Mexico, crude futures are under pressure. That’s because the supply impact is more than offset by the hit to demand for crude by the refinery shutdowns.
…“West Texas oil futures fell as the market expects that refineries will demand less oil as they take weeks, maybe longer, to come back on line,” said Phil Flynn, senior market analyst at Price Futures Group, in a note. “Brent crude on the other hand stayed stronger as the U.S. will demand product from Europe as well as some shut down of Libyan oil production over the weekend.”
Investors are fleeing U.S. stocks in a way they haven’t since 2004.
For 10 straight weeks a total of $30 billion has left U.S. stocks, marking the longest streak of outflows since 2004, Bank of America Merrill Lynch said in a Thursday report, citing EPFR Global data.
Investors turned instead to emerging markets and European and Japanese stocks, which saw $36 billion in inflows over the last 10 weeks, the report said.
PG View: Has the rush to the exit begun? Some of the money coming out of stocks is going into gold as well.
FT/Pan Kwan Yuk/08-23-17
US stocks are set to break their two day winning streak on Wednesday, with futures pointing to a lower opening after President Trump injected fresh uncertainty into the markets by threatening to shut down the government and pull out of the North American Free Trade Agreement.
…The moves come after President Trump lashed out at the media and his critics at a rally in Phoenix, Arizona last night, saying he would shut down the government if Congress did not pay for his proposed border wall. He also revived threats to end Nafta just days after officials from the US, Canada and Mexico began the laborious process of renegotiating the deal.
The comments quickly dashed hopes that Washington will return to business as normal following a couple of tumultuous weeks that were marked by escalating US and North Korea tensions, outrage over Mr Trump’s response to the violence in Charlottesville, the departure of top US CEOs from the president’s advisory groups and the ousting of chief White House strategist Stephen Bannon.
CNBC/Berkeley Lovelace Jr./08-17-17
The markets would crash if top White House economic adviser Gary Cohn resigns, Yale School of Management’s Jeffrey Sonnenfeld told CNBC on Thursday.
“I don’t want to be an alarmist, but there is a lot of faith that he is going to help carry through the tax reform that people are looking for,” Sonnenfeld said on “Squawk Box.”
“I think if he steps away, it would crash the markets,” he said.
PG View: Risk appetite has been diminished on yet another layer of political uncertainty, which is weighing on stocks and providing a tailwind for gold.
“Anglo-Saxon political angst” is spurring a shift in investment from U.S. and British equities to Europe, according to the latest survey of fund managers by Bank of America Merrill Lynch.
The most important market news of the day.
Money managers of $587 billion polled from Aug. 4 to 10 cut allocations to the two nations to a post-financial crisis low, while boosting positions in European shares. They cite the risk of policy blunders by major central banks as their foremost concerns, followed by a bond crash and escalating tensions with North Korea.
The biggest selloff in U.S. equities since May sparked an unprecedented rush for protection in the options market.
About 2.6 million puts and calls tied to the CBOE Volatility Index changed hands on Thursday, the most on record, as the VIX spiked 44 percent to close at the highest level since Nov. 8. About 3.4 call volatility options – a bearish equities trade – have changed hands for every put contract.
The scramble to hedge against further losses came as President Donald Trump ratcheted up his saber rattling against North Korea, warning that his threat to deliver “fire and fury” might not have been tough enough.
The S&P 500 Index sank 1.5 percent, shattering an unprecedented calm in equity markets, while Treasuries rallied with gold and the yen as investors sought haven assets.
PG View: When it comes to real protection, consider some gold rather than an option on an index that measures market volatility.