1. Headline Risk Is Driving Markets
You do understand that this “one day we’re at war” and then, a few hours later, “they want a deal” noise isn’t good, right?
When you have major events happening and the outcome is shaky, you’re essentially throwing a dart in the dark. Choppiness alone can hurt.
For now, though, it seems like financial markets aren’t too concerned. Some sort of peace deal follows regardless of the scrimmages, and oil keeps flowing.
But… one bad headline or tweet can change everything.
2. Is Japan Becoming a Bigger Risk?
Japan is the fourth-largest economy in the world.
Its currency is hitting multi-decade lows against the U.S. dollar. This is despite the central bank and government trying to save it from falling.
Yields in the country have soared to their highest levels in 30 years.
…and this poses no risk to the global financial system at all? We think it does, everyone seems to be ignoring it for now.
3. Gold Is Trying. Silver Isn’t.
Gold built a lot of support around $4,000 and is now trying to clear $4,100. Above $4,200, the short-term trend breaks. However, the long-term trend continues to point lower.
Silver: It almost seems like it can’t find many buyers, or that the excitement has left. But let’s see. Technically, the chart continues to look weak. The chart isn’t getting much help from gold either, as of now.
The big catalysts to watch for the metals are the U.S. dollar and yields.
The U.S. Dollar Index (DXY) is in the middle of an interesting re-test of a short-term breakout. Watch out if it breaks above 102. JPY weakness might help.
Yields remain elevated.
4. The S&P 500 Did Exactly What It Was Supposed To
Yesterday was very interesting if you were watching the S&P 500 chart and paying close attention to the 50-day moving average. It was so mechanical that it was impressive—it turned as soon as it touched that moving average.
Near term, the 50-day moving average remains a key support level.
If the index drops below it, sellers may come in.
On the upside, as we’ve been saying for the past few days, 7,550 to 7,600 remains a major level.
A close above it could lead to more buying.
5. Canada Has Good News… But Don’t Ignore the Weakness
Don’t forget: tomorrow we get Canadian job numbers. Current expectations are for an 11,000 job gain.
Meta announced that it will be building a major data center in Alberta.
Mark Carney is in Saudi Arabia.
There’s so much excitement about pipelines.
The housing market is improving too?
Lots of good news in Canada but understand that the short-term weaknesses remain. The economy is in no way out of stagnant mode.