1. Economic Data…
Canadian PPI – inflation at producer level comes in hotter than expected. But, nothing insane on the surface to say the least.
Raw material prices up 0.8% year-over-year, and industrial prices were up 2.6% year-over-year.
U.S. existing home sales come in better than expected. But, overall trend continues to point downwards for now. Plus, lots of evidence that U.S. housing is rolling over, or at least going through a hiccup.
2. What’s Hurting The AI Trade?
Yesterday, even though there was big recovery, the S&P 500 still closed red. That was fourth red day in a row.
Even with those four down days, there isn’t a lot of damage. There’s still some optimism out there that stocks are going to go higher.
Though, one thing to keep in mind here is that this selling has happened on relatively not much catalyst. AI names got a high five in the face with a chair, but can you pinpoint why? Was it due to the new Z ai? Was it because Meta is slowing down on its AI hiring?
Just being careful on quiet days. I am starting to get the feeling that positioning/readjusting is happening on quiet days.
3. Head Scratching Correlation
Oil bouncing off the recent lows, but nothing significant. Overall trend remains downwards.
Gold: Here’s a correlation that should make you scratch your head… gold is almost perfectly correlated to M2 money supply since late 2024. This has happened 4-5 times over the past 25 years. Crazy part, and contrary to what one would think: this tells some sort of top in gold, and eventually a period of selling eventually in gold. Yes, it is mind boggling.
Uranium stocks are essentially in correction territory. Widespread selling, but why?
4. Noise VS Returns
In the midst of trade war, there are few things also been thrown around… things like “rare earth minerals,” or “critical metals,” etc. But, that noise gets mixed with chip manufacturers, and then eventually becomes a story about $NVDA or some other big names.
But, know that the returns are somewhere else, and not in the headline stories.
Take a look at this “random” company traded on TSX named Almonty Industries Inc. Its up like 330% since January…. And produces tungsten concentrate. It’s a story about critical metals, defense and everything else around it. (not a recommendation to buy or sell).
Lesson: look beyond the headlines, and don’t just get fixated on top names.
5. Currencies
U.S. dollar index continues to build a base imo. Worth watching. Since early July, we have had two higher lows, and two higher highs.
Canadian dollar against the USD turning bearish a bit here. So, that’s worth watching.
Keeping a watch on British pound.
Bitcoin: third day below 50-day moving average today. $112k for now seems like a decent support level.