S&P 500 got ahead of itself early in the session, and corrected somewhat. Credit markets though didn‘t paint a picture of caution – it‘s risk on there. VIX didn‘t make much progress rising or falling, but today‘s NFPs day would bring a more eventful trajectory. I‘m not looking for any meaningful derailment of the reflation trades – yesterday‘s outperformance of value vs. tech, was encouraging just as much as CRB getting back within spitting distance of prior highs.
The market sentiment appears to be up, and yesterday‘s moves telegraph no disappointment expected, just as I tweeted prior to the data release. The real economy recovery still has reasonable traction, and while slowing down, the financial stress is abating – and the steady return of risk appetite in smallcaps, emerging markets, oil or copper, highlight that just as much as the dollar getting under pressure again.
Carlson Capital's Double Black Diamond Fund posted a return of 3.3% net of fees in August, according to a copy of the fund's letter, which ValueWalk has been able to review. Q3 2021 hedge fund letters, conferences and more Following this performance, for the year to the end of August, the fund has produced a Read More
But the figure came at 235k vs. 720k expectated – that‘s a serious undershoot. Off the bat, gold and silver would benefit tremendously, while the dollar not so much. Let‘s see how well the corresponding rise in Treasury yields would help to underpin the world reserve currency and value stocks…
In short, forget about tapering into a weakening economy that doesn‘t see labor participation or hours worked rising. The Fed won‘t take that gamble soon, and we know what that means for real assets (and stocks too as inflation and yields aren‘t yet breaking the bull) – fresh money finding its way into financial markets, lifting prices. Time to reap the rewards as I did overnight in the oil arena, or keep doing in both Bitcoin and Ethereum.
Let‘s move right into the charts (all courtesy of www.stockcharts.com).
S&P 500 and Nasdaq Outlook
Credit markets strongly turned up. And the HYG-LQD-TLT dynamics is conducive to further gains in value stocks especially. Simply put, the quality instruments upturn has been encouraging.
Gold, Silver and Miners
Precious metals are approaching decision time, and I‘ve been for many days looking for an upside surprise – the bulls are likely to attend to it really soon.
Crude oil bulls took the opportunity, and ran with it – the oil sector reasonably confirms the upswing.
CRB Index continues its strong recovery, and copper won‘t remain below the 50-day moving average for too long – look for the red metal to shake off the August blues.
Bitcoin and Ethereum
Cryptos are springing higher again, and Bitcoin is joining in while I look for Ethereum to lead.
Even though NFPs disappointed, risk-on trades should welcome the Fed‘s inability to taper, which would help Treasury yields rise. Precious metals, cryptos and real assets will likely be today‘s clear winners while stocks consolidate. As I wrote yesterday, no fresh Fed speculations were invited by today‘s data.
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All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.