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Jackson Hole revives hawks and bears so equities turn lower. Bitcoin also suffers as risk appetites turn sour. The week ahead is set for more volatility as bond markets reprice and the curve flattens again. The week finally got its finale with a hawkish Jackson Hole on Friday culminating in a bad week of data on nearly all front bar perhaps inflation. Global PMIs turned south as economies look to be heading straight down the recession route. The PMI debacle spread like a virus with Australia spreading to the UK, Europe, and then the US. Europe started to reprice rate hikes as more and more ECB members came out all hawkish and now 75 basis points may be the tonic for the next ECB meeting. Despite this, the Euro was still unloved due to the energy situation in Europe. The price of European electricity and gas prices continued to soar on the back of the ongoing ramifications of the Russian invasion of Ukraine. This has put added pressure on inflation projections from the EU and so caused the hawkish tilt from ECB members. Sovereign bond yield spreads continued to widen in Europe between the core (Germany, France) and the periphery (Italy, Greece). Not yet… Read More »Week Ahead on Wall Street (SPY) (QQQ): Powell pivots again and markets look set for more losses

Review and Preview  Federal Reserve Chairman Jerome Powell delivered a stern commitment Friday to halting inflation, warning that he expects the central bank to continue raising interest rates in a way that will cause “some pain” to the U.S. economy. – Jeff Cox, “Powell Warns of ‘Some Pain’ Ahead as the Fed Fights to Bring Down Inflation,”  www.cnbc.com , August 26, 2022.  The Fed spoke and the markets broke. After forming a half-primary cycle crest the prior week as the Sun made a T-square with Saturn and Uranus, followed by the Venus/Jupiter trine, stocks sold off into the Uranus retrograde of Wednesday, August 24.They then staged a 2-day rally into Friday August 26, as Venus moved into its T-square with Saturn and Uranus (August 26-29). And then the Fed spoke. Uranus awoke. And then stock markets broke. By the end of the day (August 26), the DJIA closed down over 1000 points, and its lowest level this month. Just two weeks ago it was at its highest level since April. This is the volatility and sudden reversals to be expected from the unexpected nature of multiple Uranus signatures in effect at once. This is the lightning bolt and pain that… Read More »Weekly Column: The Fed spoke and the markets broke

Europe European markets were looking at a fairly quiet session up until Fed chair Jay Powell’s speech at Jackson Hole where he gave little indication that the Fed was in a mood to execute a pivot when it comes to monetary policy. Powell’s message of higher rates for longer, along with a report that the European Central Bank was looking to discuss a 75bps rate hike in less than two weeks’ time has seen the DAX slide to its lowest levels this week and has led the rest of Europe’s markets lower, with the FTSE100 also heading back towards the lows of the week. A tentative ruling by a district judge in Florida that time limits the ability to file a claim on Zantac against the likes of Haleon, GSK and Sanofi could mean that any damages are likely to be much lower than originally feared by markets. This has helped push up the respective share prices of all three, having seen some big losses in the past few weeks. Another UK tech company has fallen prey to an overseas takeover after Canada’s OpenText announced they had agreed a deal to buy Micro Focus for 532p per share, a 99%… Read More »No pivot from Powell, as ECB suggests a 75bps rate rise might be coming

US Dollar: Sep '22 USD is Down at 108.280. Energies: Sept '22 Crude is Up at 93.47. Financials: The Sep '22 30 Year bond is Down 27 ticks and trading at 136.31. Indices: The Sep '22 S&P 500 Emini ES contract is 53 ticks Lower and trading at 4187.75. Gold: The Dec'22 Gold contract is trading Down at 1762.60. Gold is 88 ticks Lower than its close. Initial conclusion This is not a correlated market. The dollar is Down, and Crude is Up which is normal, and the 30-year Bond is trading Lower. The Financials should always correlate with the US dollar such that if the dollar is lower, then the bonds should follow and vice-versa. The S&P is Lower, and Crude is trading Higher which is correlated. Gold is trading Lower which is not correlated with the US dollar trading Down. I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don't… Read More »Finally continued [Video]

In this week’s Live from the Vault, Andrew Maguire highlights the possible implications of Russia’s plan to create its own international standard for the precious metals market by establishing a local LBMA-competing brand. With global investors growing frustrated over the unnatural capping of the gold and silver prices, the London wholesaler provides further evidence of the COMEX’s broken pricing mechanism. Timestamps 00:00 – Start 01:25 Picking last episode’s threads. 09:50 – What’s going to happen in the silver market? 11:40 – Russia is creating its own LBMA-competing brand! 24:42 – Where is the short-term imbalance likely to play out? 35:10 – About the new Russian gold and silver benchmark. 43:15 – Andrew’s predictions on the Russia-China alliance.

The Moving Average Indicator shows negative signals. The momentum oscillators hold onto the neutral zone. Any downtick could drop the price. The descending trendline still prevents a change in the price attitude. The precious metal erased all of yesterday's gains due to the slide following the challenge of the descending trendline. At 10:30 am GMT, the XAU/USD exchange rate was 1,759.80, representing a daily loss of -11.60, or 0.65%. This analysis is based on a daily time frame. The precious metal could not alter its negative temper. As soon as gold encountered its first challenge by touching the declining trendline. The rejection caused the yellow metal to lose almost all its yesterday's worth of gains. In addition, the Moving Average Indicator 100-MA crosses below the 200-MA and the 50-MA crosses below the 100-MA, sending a daily bearish signal. In contrast, the Relative Strength Index maintains its position in the natural zone with a decline in momentum, recording 44.20 on the value line. Any additional decline in momentum would weaken the yellow metal. However, on the daily time frame, the XAU/USD encounters the first hurdle on the downside at 1748.39. If the price of gold falls below the aforementioned level, that… Read More »XAU/USD outlook: Gold edges lower after hitting the descending trendline

US non-farm payrolls (Aug) – 02/09 – the resilience of the US labour market has been a standout when it comes to US economic data this year. The last three payrolls’ reports have seen the numbers beat expectations; even as weekly jobless claims hit an eight month high earlier this month. Wage growth has also proved to be resilient even as vacancy rates are still close to record levels. The July payrolls report was doubly impressive given that consensus expectations were for the lowest number this year, and what we got was over double forecasts, at 528k. Wage growth also remained solid rising to 5.2%, while the unemployment rate fell to 3.5%. We should also see the return of the ADP payrolls after this survey took a break as ADP adapted the methodology behind the numbers. Another positive payroll number this week is likely to rubber stamp the possibility of a 75bps rate hike when the US Federal Reserve next meets in September. Expectations are for 290k jobs to be added, however given how much forecasts missed in July one has to question how reliable these estimates are likely to be.        EU flash CPI (Aug) – 31/08… Read More »The Week Ahead – US non-farm payrolls, EU CPI, UK consumer credit, Broadcom and HP results

The FOMC hiked rates by 75 basis points in July. However, the recession drums are getting louder, and gold likes such music. Another large interest rate hike! The Fed raised the federal funds rate by 75 basis points to 2.25-2.50%. It was the second such big move in a row, making the current tightening cycle the steepest in modern history. So, the Fed must be hawkish now, right? Well, not necessarily. The Fed is tightening its monetary policy – and it’s doing it relatively fast. That’s true. However, the Fed hasn’t turned hawkish or restrictive yet. You see, the Fed raised rates to a merely neutral level – and to “neutral” only in the very specific meaning of “the projected appropriate target range for the federal funds rate over the longer run” (according to the latest dot-plot). However, according to the Taylor rule, the federal funds rate should be around 7% (the median) or at least 4.7%. Hence, despite all the hawkish rhetoric, so far, the Fed has lifted interest rates from extremely accommodating rates to moderately accommodative levels. There is still much to go to reach restrictive levels. This is bad news for gold, which generally doesn’t like rising… Read More »Gold sees light at the end of the Fed’s tightening tunnel

The US nonfarm payrolls report will take centre stage next week as speculation about the size of the Fed’s next rate hike goes into overdrive. Investors will also be keeping a close eye on the latest inflation readings in the euro area ahead of the September rate decision amid growing gloom about the bloc’s economic outlook. PMI indicators out of China and as well as quarterly data from Australia and Canada will be important too in helping to gauge the health of the big economies.

EUR/USD – 0.9968 Euro's break of July's 0.9953 low Monday to a fresh 20-year trough of 0.9901 Tuesday confirms long term downtrend has resumed, however, subsequent bounce to 1.0018, then erratic rise to 1.0033 yesterday signals a temporary low is made, intra-day fall to 0.9950 would yield 0.9901, break, 0.9883. On the upside, only a daily close above 1.0000 would risk stronger retracement of said decline towards 1.0033, 1.0071. Data to be released on Friday Japan Tokyo CPI. Germany Gfk consumer confidence, France consumer confidence, Italy business confidence, consumer confidence. U.S. personal spending, personal income, PCE prices index, goods trade balance wholesale inventories, University of Michigan sentiment and Canada budget balance.