Marc Chandler – Are We Nearing The End Of An Economic Business Cycle?
Marc Chandler, Managing Partner at Bannockburn Global ForEx and editor of the Marc to Market website, joins us for a special weekend Editorial. First off, we dive into his take on the trends and forward expectations for the bonds and interest rates markets, and how that may play into the future contraction of economic conditions.
Next we dove into the data of the last 2 years GDP trends, and if we are going to see as robust of a 3rd Quarter as the Fedwatch GDP Now site is projecting. It brings up the whole debate of are we going to see a recession later this year or earlier next year; or has there been the proverbial “soft landing” where we’ve avoided any more market and economic dislocations? This wide-ranging conversation get’s at the question of if and when we are reaching the end of business cycle? Marc points out that much of thinking about a recession and even it’s precise definition is more nebulous, and stems from a post Great Depression and WWII mindset. Moving forward he believes the metrics around GDP may be less about nominal overall growth or shrinkage, and more about GDP per capita and the impact and quality of life of each individual citizen in a given country.
The conversation then shifts over to the inflation data, and the base-effects we’ve seen affecting the trends, in tandem with the Fed’s tightening cycle and rate hikes. It’s a nuanced topic that delves into when we may see rate cuts next year, if the Fed’s 2% target be achieved, and what cost-push affect on pricing we may see as a result of higher commodities prices. Marc points out that the way CPI is calculated now is really less about goods and more focused on services, which are not as hamstrung to commodity prices, but that rising energy prices will affect both businesses and consumers. One of the key metrics on tap that he’ll be watching is the retail sales report, and other metrics around the strength of the consumer.
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Michael Oliver – The Gold Market Is About To Make History
KWN – August 12, 2023
M. Oliver used to be one of my favorites. However, he’s on King News too often and his forecasts are
beginning to resemble all the other mouthpieces for PMs. The only person I find worth listening to anymore is Gareth Soloway. Even C. Hemke seems to have nothing new to say anymore. JMO
To each their own of course…. What I like about Michael Oliver, is that he comes to his conclusions not based on being a PM mounthpiece, but rather, through technical momentum data on the charts he follows for various sectors. Any overlap between he an other speakers is merely a result of his technical views lining up with other thought leaders macro views, which may indicate there are multiple factors stacking up for those outlooks.
I also, like you and many others, value Gareth Soloway, which ironically just last week someone was leveraging the same complaint about him… that he was sounding like the other talking heads in the media. Again, Gareth is using charts to come to his conclusions, just like Michael is, and so they are not going out to parrot what others are says. If their technical outlooks are aligning with other people’s macro views, then maybe that is something to lean forward and pay attention to.
If Oliver used to be one of your favorites he still should be because nothing has changed about his approach. His “momentum structural analysis” legitimate to say the least.
I just took a look at his piece at KWN and the headline above the last chart is extremely likely to be proven correct:
Historic Multi-Year Consolidation Not A Top, It’s A Prelude To Gold Blasting Off On The Upside!
From what I’ve seen from multiple observers lately that bullish view is unlike most forecasts at the moment.
Where Did Secretary Yellen’s Customers Go?
More Bear Steepening, Disinflation Trend Persists, Chinese Clogged Channels, Joe Six Pack in Focus
Barry C. Knapp – Ironsides Macro – August 12, 2023
https://ironsidesmacro.substack.com/p/where-did-secretary-yellens-customers
Recession Watch: October Surprise? [Not really a surprise because we can see it coming]
John Rubino – Substack – August 12, 2023
“One of the things that kept many Americans financially afloat these past few years is the fact that student loan payments were suspended. That bought some time but apparently didn’t solve the underlying problem of low wages in an increasingly expensive world.”
“Because it’s now becoming common to use credit cards to cover day-to-day expenses. Total credit card debt just surpassed $1 trillion for the first time ever and the average credit card interest rate has risen to 20%. The result: A growing number of people are paying 20%+ interest on balances they can’t afford to pay off.”
“So a lot of people with student loans — who, remember, haven’t paid anything on those loans since 2020 — are nevertheless having increasing trouble paying their non-student-loan debts:”
“And the number of people making “hardship” or emergency withdrawals from their 401(k) plans is soaring despite low unemployment and (supposedly) rising real wages…”
https://rubino.substack.com/p/recession-watch-october-surprise
weekly /SI…21ish is sticking out like sore thumb as test/reject target…before the run up…glta
i have no idea if that potential target gets hit…just putting it out there…
uup day…looks like that low vol. test of previous top…came in today…picture for miners improving…glta
I thought of a new cost saving program for miners: Wall Street Executives convicted of intervening in markets could be given “work release” from their local prisons to work in local mines or be transferred to somewhere like Yuma and work from that area. It’s a Win Win.
Gold and silver easily took out last week’s lows today but the miners, for the most part, did not. Out of GDX, GDXJ, GOEX, SIL and SILJ only GDXJ slightly took out last week’s low.
SLV:
https://stockcharts.com/h-sc/ui?s=SLV&p=D&yr=1&mn=0&dy=0&id=p55497566648&a=1474959084
Just me or others feel the same way? We won’t see any major leg up until fall months (Octoberish) in metals and minors. Even then I doubt it will be anything sustainable. I’m almost inclined to go with Glenfiddich’s view on upcoming 2024 as a 8 yr cycle low.
If the miners don’t get going by next week at the latest I will consider it a setback but not necessarily a big one. It could be for nothing that the miners are now acting better than the metals but I don’t think so based on multiple considerations.
-The stock market has topped
-Since March, gold is up a lot more than the USD is down
-Gold is still up roughly 20% since last September despite numerous meaningful interest rate hikes
-Silver is up 30% since last September and finally reached uptrend support today
https://stockcharts.com/h-sc/ui?s=%24SILVER&p=D&yr=1&mn=6&dy=0&id=p60730595061&a=1480270499
-Silver also reached its 200 week MA today as it backtests its recent (bullish) weekly golden cross
-(Risky) SILJ bottomed 2 months ago vs (safe) GDX and is up 7% vs GDX despite pulling back
-There are still other positive factors
As for gold, Glen didn’t say it would bottom next year. He said “we better and I mean better get her going quick or we are dropping into that nasty 8 year cycle!” Such drama. I already stated my piece about the significance of that false downside breakout late last year to the low 1600s so I won’t rehash it here. Suffice it to say that it would be extremely bearish if gold were to take out last year’s low and would even be a terrible setback if it got anywhere near that low. If the bears were to regain control of the big picture after losing it so soundly it would be extra bearish. However I have seen no good technical evidence from anyone that suggests we should expect a new low next year and I’m confident that Glen also lacks such evidence.
The USD pierced important resistance today before pulling back to close on it:
https://stockcharts.com/h-sc/ui?s=%24USD&p=D&yr=1&mn=3&dy=0&id=p13017890852&a=1294481280
Week Ahead: Anniversary of the End of Bretton Woods Sees Resilient Dollar and Firmer US Rates: Can it Persist?
Marc Chandler – Marc-to-Market – August 12, 2023
“Tuesday marks the 52nd anniversary of the end of Bretton Woods currency arrangement, which pegged the dollar to gold and other currencies to the dollar. Some economists have tried framing their views in terms of Bretton Woods II and there have even been proponents of Bretton Woods III, but these are informal arrangements at best, no reciprocity, or mutual obligations. The point of the matter is that the end of Bretton Woods ushered in the modern era of floating currencies, which in practice has meant volatile exchange rates.”
“One of the big picture ideas from international relations is hegemonic stability theory. It sees capitalism working best when there is one country that can set and enforce international rules of engagement. The attempts to resurrect Bretton Woods miss the insight captured by Ian Bremmer’s “G-Zero” concept. Bretton Woods was made possible by the unsustainable asymmetry of power that existed in 1944. That asymmetry of power has not existed for decades, and even with the collapse of the Soviet Union, the US moved away ideologically from fixed exchange rates and embraced market fundamentalism. Letting markets determine exchange rates has resulted in the current low double digit actual (historic) three-month volatility of the Antipodean currencies and Scandis. The volatility of the other G10 currencies vary between about 6% (Canadian dollar) and 9% (Japanese yen).”
“The volatility requires businesses and investors to take currency swings into account and manage the risk. Explanations for short-term movements tend to emphasis the flow of economic news, surprises, and technical factors. In the week ahead, there are a few concentrations of data points. The US, for example, reports July retail sales, and so does China, the UK, and Mexico. The US, China, and the eurozone report their latest industrial production figures. Japan, the UK, and Canada report July CPI, and the UK and Australia provide new labor market readings. Technically, the dollar has proven more resilient than we expected. We had anticipated that the recovery since mid-July would end around the time of the US CPI report. Momentum indicators are stretched, and some have begun turning lower for the dollar, but the price action itself has yet to confirm our suspicions…”
http://www.marctomarket.com/2023/08/week-ahead-anniversary-of-end-of.html