1. Still No Data From The U.S.
The shutdown continues, and with that not much economic data out of the U.S. We were supposed to get inflation data this week. Are we still going to get it? How long will this shutdown last?
Look, anecdotal evidence with some data as well continues to suggest that the U.S. economy is rolling over. Federal Reserve is on track to cut later this month as well.
So, let’s see how it all plays out. U.S. economy isn’t in a collapse like situation, but it’s worth watching closely because it is the center of attention, and I think in a situation like how China was post 2009/GFC… Drag the world out of a slowdown.
2. Precious Metals Becoming Precarious?
It is certainly great to see silver crossing the $50.00 an ounce mark, and gold price shooting above $4,000. Once again, I am probably one of the few out there who called these prices, when everyone and their grandparents ignored the precious metals.
But, I must say: I continue to see the precious metal trade becoming very crowded. And, by this I mean its becoming crowds one of favorite trades. It’s very important to be mindful about it. When crowd is there, moves can be amplified in both direction.
Beyond all of this: I do not like how silver prices turned overnight (early this morning), and there’s selling. Watching $50.00 closely.
3. Stock Market Keeps Getting Frothier
It is important to understand that there’s a lot of froth in the stock market. Valuations are going whack, and watching social media very closely: SO MANY gurus are popping up… and they all had called the the bull market.
Also, am I the only one seeing how bad is the concentration? You can essentially see how the big bet is on OpenAI, and then OpenAI is betting on everything else.
So, if OpenAI gets a flu (disappoints), will everything else underneath gets the pneumonia (hurt badly)?
4. Private Equity/Debt Fiasco…
Not too long ago, I talked about how it’s important to keep track on private equity and debt related headlines. Well, they are getting louder. At the moment, its all about First Brands bankruptcy, and I am even seeing some comparisons to 2008 (in headlines a the moment).
This is still developing.
Watching business development companies (BDCs), and regional banks along with private equity and debt noise. Low rates and tons of capital essentially forced these places to act like fancy investors too. In BDCs, we are seeing increase of in-kind payments.
Oh and do not forget the yields on top of everything else.
5. Crypto, Dollar, & More
On Friday, bitcoin had a flash crash as President Trump “truthed.” There was some recovery after he toned down a little, but I see bitcoin coming down again. It had a very hard time around its 50-day moving average.
Do not ignore dollar index going up, and yields coming down. It’s a sign that there’s some rotation, and flight to safety.
Don’t forget: earnings season for Q3 has begun. This means that your stock specific risk is going be higher. Know what you own, and why you own it. And, playing earnings can be super dangerous game… A trend usually follows after earnings, you are much better off playing that trend vs the earnings announcement.