1. Inflation Subdued
U.S. inflation comes in somewhat subdued.
Headline inflation was 3.4%, and if you take out food and energy (who needs them anyways), inflation was 2.5%.
Next up tomorrow: PPI. This could give us more insight into what’s happening at the producers’ level.
U.S. bond yields dropped a little bit on this report but remain elevated and continue to trend higher.
2. Another Intervention Coming Soon? Yen Close to 160 Again
The yen is closing in on 160 against the U.S. dollar. Remember: we’ve seen a bunch of interventions around this level.
Will more interventions follow, and will the yen be able to sustain?
Again, very little attention is being paid to this story, but it could have severe consequences.
Japan funded a massive carry trade, and that’s at risk here.
3. Nothing Can Go Wrong… Right?
The hottest names in town are catching a bid again.
The feeling that nothing can go wrong is becoming contagious.
We are also being told that Americans are retiring early because their stock portfolios have done well.
This is all happening at a time when concentration in the stock market is at eye-popping levels. Valuations are extremely high relative to historical averages. And the market is likely in late-stage optimism and early-stage euphoria.
Just don’t be shocked in case “punch in the face” sort of scenario plays out.
4. Gold Is Back to the Technicals
It all started with gold NOT dropping below $4,000. There was a sort of double bottom. This was very technical.
Then, all of a sudden, we started to hear about how President Trump has been continuously calling Fed Chair Warsh. As this happened, rate hike odds came down.
As all of this was happening, we also heard about central banks buying more. Specifically, there was noise about how China could be accumulating and buying more gold than it’s reporting.
Now, gold is back to the technicals. It’s awfully close to the 200-day moving average. The reaction at this moving average has to be watched closely. If there’s a break, that’s encouraging. If it doesn’t break, $4,000 could get tested again.
Our call for gold and silver as good tactical longs has worked well, but now tight stops are needed. Why? Because the technicals and noise are favoring the yellow precious metal. (Not a recommendation, just how we are looking at it.)
5. Bitcoin, Oil & Cottage Cheese?
Bitcoin still can’t find buyers — retesting its 50-day moving average.
War is back on again? Blockade is still happening? Is the Strait of Hormuz still closed/open? There are so many questions. But, Oil could potentially be setting up for a move to the upside (looking at the charts only).
The Canadian dollar is strengthening against the U.S. dollar. But it remains weak overall.
In case you were losing sleep over it, don’t worry now: The Canadian cottage cheese shortage is being addressed. Gay Lea Foods is committing $200 million to expand its cottage cheese facility.