1. Does Data Matter Anymore?
If you are a data watcher, you know past two months have been mixed when it comes to data. The U.S.-Iran war impact never really showed up.
But, know that the next couple of months we are going to see impact in the data.
Inflation is the big theme as an outcome of this, but very few people are talking about the demand destruction that’s happening.
Consumer sentiment figures are looking scary.
But hey, don’t you worry. SanDisk is going up – that’s going to solve everything.
2. Oil Knocking on $100 Again
WTI crude is up over 2% this morning to $98, with Brent already above $103. Iran peace talks have been on again, off again, and the Middle East risk premium hasn’t gone anywhere.
$100 crude is looking like the equilibrium price at the moment. But, we also know the hands of the market – in case of any good news in U.S.-Iran dreadlock, you get lots of selling.
For Canada this is a double-edged sword. Higher oil is good for the energy sector, good for the TSX, good for Alberta. But it’s inflationary everywhere else, and Canadian consumers are already stretched. If WTI breaks through $100 and holds, that changes the inflation conversation fast — and it puts the Bank of Canada in a very awkward spot.
3. Gold Pulls Back A Little— But Silver Doesn’t
Gold is off about $50 this morning. Normal. Gold seems to be resting a bit – this is good. If you are long-term bull on this, you don’t want only move up. We don’t like seeing vertical moves – slow and gradual increase is good. Taking rest is good.
What we are actually watching more closely: silver and copper.
Silver has broken above $80 in a big way. Though, the big range remains $72-$90. If silver can break above $90, expect wild things. Also, don’t ignore the gold-to-silver-ratio.
Copper is entering a wild territory. If it can cross $6.50 a pound, expecting a very wild/headline making move to the upside. Keep in mind, copper is a pure industrial metal and can hurt several sectors.
Something is happening in industrial metals.
4. Hottest Stocks In Town…Intel and Micron Are Ripping
Intel is up over 4.5% this morning – up 229% over the past 6 month. Micron is up over 5.5% this morning. But, these are just two names. There are now 11-12 names in total that everyone and their grandparents are talking about.
While one could argue why its happening but know this: there are a lot of signs of bubble here. There is rapid price escalation, euphoric sentiment, and very high valuations. The moves we are seeing are not normal. Watch allocations.
Could the hottest names in town keep going higher? Yes, but know that the faster the vertical move, the downside could be very painful. There are a lot of people who have lost sight of risk and reward.
5. The Consumer Confidence Number Should Bother Everyone
Last Friday, while everyone was talking about job numbers, we also learned about how U.S. consumers are feeling… through the University of Michigan Consumer Sentiment Index.
The index reading came in at 48.2 for May. This was one of the lowest readings in 50-years! Let that sink in.
Readings below 50 are historically associated with recession conditions — we saw numbers like this briefly during COVID and in the worst of the 2022 inflation shock.
That gap — between what markets are pricing and what people on the ground are feeling — is widening. We have inflation data and retail sales coming this week for the U.S. Will be watching it closely.