May 2022

In this week’s Live from the Vault, iconic financial commentator and life-long stockbroker, Bill Holter, joins Andrew Maguire to share his eye-opening examination of the West’s insurmountable debt. As the Fed’s money-printing tactics start to closely resemble a Ponzi scheme, the precious metals expert explains, with mathematical certainty, why the current system is destined for bankruptcy. Timestamps 00:00 – Start. 01:30 – Bill Holter – the introduction. 02:45 – Jim Sinclair’s “QE to infinity and beyond” going since 2008. 06:05 – 80% of all the dollars have been printed in the last 2 years! 09:05 – About Central Bank Digital Currency (CNBC). 10:50 – Bailing is already in place! How to get out of the system! 16:15 – Silver as the fuse to break the financial system! 20:00 – Silver short positions, nickel blowing up and the Rubicon line. 24:35 – What would Bill do if he came from Mars? 28:20 – Could silver and gold be confiscated? 32:00 – Silver’s Backwardation described. 35:40 – About Exchange of Futures for Physical (EFP). 38:30 – Final parting message From Bill Holter.

US non-farm payrolls (May) – 03/06 – there’s a great deal of uncertainty about how resilient the US economy is when it comes to some of the underlying numbers. A sharp contraction in economic output in Q1 doesn’t appear to be altering the dynamics around the labour market, which is struggling with weak participation levels. This weakness in the participation rate contrasts to over 11m job vacancies, although we are expecting to see this pick up in May to 62.3%. 428k new jobs were added in April, while the March figure was revised lower to 428k, so a nice bit of symmetry there. Average hourly earnings remained steady at 5.5% which again seems counterintuitive with so many unfilled vacancies, while unemployment remained steady at 3.6%. This trend isn’t expected to improve significantly in the May payrolls numbers, with job creation set to slow to 329k, while unemployment is expected to fall to 3.5%. Neither of these numbers is expected to move the dial that much, however wages growth might well offer clues to central banks tightening pace. If wages growth continues to remain lacklustre, with an expectation of a fall to 5.2%, then we could see more urgency go out… Read More »The Week Ahead: US non-farm payrolls, Bank of Canada, EU CPI, Dr Martens and Broadcom earnings

Equities continue to move higher as the week draws to a close, with hopes that this rally might last longer than some of the recent failed bounces. Stocks make fresh gains “Investors have been more comfortable about buying into this rally thanks to the lack of any hints of 75 bps rate hikes in this week’s minutes. This has been enough to move the sentiment dial out of its trough, providing some space for at least a short-term bounce. Worries about inflation have been the big driver of declines of late, so the slowdown in the PCE price index on both the headline and core measures helped to shore up sentiment as well.” Recession not fully priced in “Stocks on both sides of the Atlantic seem content to push higher for the time being, but this isn’t a return to the old ways of steady gains. A gain of even 10% from here might look like an all-clear signal for investors, but growth and earnings forecasts probably need to come down a bit more, which in turn points towards fresh lows for the market in the months to come.”

Summary United States: Signs of a Slowdown Begin to Emerge April brought a steep 16.6% decline in new home sales and a 3.9% drop in pending home sales, the latest signs the housing market is cooling down amid sharply higher mortgage rates. Personal income rose 0.4% during April, while personal spending increased 0.9%. Inflation continues to run hot. The headline PCE deflator was up 6.3% year-to-year, while the core measure rose 4.9%. Next week: Consumer Confidence (Tue), ISM Manu. & Services (Wed/Fri), Nonfarm Payrolls (Fri) International: Mixed Fortunes for Europe's Economies This week's May PMI surveys offered the latest insight into how some of Europe's key economies are faring, and indicated varying fortunes across the region. The Eurozone PMIs reported a mild decline, suggesting a modest loss of momentum, though to levels that remain well within growth territory. For the United Kingdom however, the PMI surveys suggested the economy could suffer a sharper slowdown. Next week: China PMIs (Tue), Eurozone CPI (Tue), Canada GDP (Tue) Interest Rate Watch: FOMC Minutes Show Another 50 bps Rate Hike Is Probable The minutes from the May FOMC meeting were released this week and offered additional evidence that a second consecutive 50 bps rate… Read More »Weekly economic and financial commentary

The latest US employment report will be in the spotlight next week for any signs that recession worries have started to impact hiring. The dollar has lost some of its power lately and this dataset could determine whether we are in the early stages of a trend reversal. Inflation numbers from Europe will be another crucial variable for that equation. Elsewhere, the Bank of Canada is set to raise interest rates. 

EUR/USD – 1.0737 Euro's strong rebound from 1.0663 to 1.0731 in New York on broad-based usd's weakness due to rally in U.S. stocks suggests pullback form Tue's 1-month 1.0748 peak has possibly ended and above would extend upmove from May's 5-year bottom at 1.0350 to 1.0780/90, however, loss of momentum should cap price below 1.0807 and yield decline later. On the downside, only a daily close below 1.0690/95 would indicate a temporary top possibly made and yield weakness towards 1.0663, then 1.0643 Monday. Data to be released on Friday Japan Tokyo CPI, Australia retail sales, Italy trade balance. U.S. personal income, personal spending, PCE price index, goods trade balance, wholesale inventories, University of Michigan sentiment and Canada budget balance.

Equities are rallying again today as speculation around peak Fed hawkishness from Wednesday's FOMC minutes and the potential for China's zero-Covid policies easing keep sentiment afloat. But one must wonder whether we are back to 'bad news is good news” for the equity markets. Despite the disappointing US pending home sales number, Wall Street was hugely bid from the New York get-go.  The run of negative US economic news seems to be taking the sting out of fears the Federal Reserve will be forced to hike aggressively. Cleaner positioning, a return of “buy the dip” mentality from Retail and a reduction in bond market volatility with USD strength showing signs of peaking has investors tentatively back on the rally wagon, indicative that there was more at play than simply a “cover bid.” And the icing on the cake was a surprisingly strong showing from US retailers Macy's and Dollar Tree, which helped calm recessionary fears last week as investors hit the reset button for the setup in consumer names. Peak Fed hawkishness and China reopening with a possible reset in consumer names make the short thesis more challenging now. OIL Momentum is flat-out bullish, with many factors pointing to a… Read More »Peak Fed hawkishness, windfall taxes push oil higher, USD running out of steam

EUR/USD witnessed heavy intraday selling on Wednesday amid resurgent USD demand. The recent hawkish comments by the ECB policymakers helped limit any further losses. A move beyond the 1.0770 confluence is needed to support prospects for any further gains. The EUR/USD pair faced rejection near the 50-day SMA on Wednesday and retreated nearly 100 pips from its highest level since April 25 touched the previous day. The US dollar made a solid comeback and snapped a two-day losing streak to a nearly one-month low amid concerns about softening global economic growth. Investors remain worried that a more aggressive move by major central banks to constrain inflation and the Russia-Ukraine war could pose challenges to the global economy. The European Central Bank's (ECB) Financial Stability Review reinforced market fears and warned that further corrections in financial markets could be triggered by escalation of war, even weaker global growth or if the monetary policy needs to adjust faster than expected. This, in turn, was seen as a key factor that prompted fresh selling around the major. On the economic data front, the US Durable Goods Orders fell short of market expectations, though they did little to dent the intraday bullish sentiment surrounding… Read More »EUR/USD Forecast: Bulls need to wait for move beyond 50% Fibo./50-DMA confluence

Minutes from the FOMC meeting on May 3-4 show concern about what the average person already knows. Image courtesy of Fed Board of Governors, Text by Mish from Latest Minutes Minutes of the Federal open market committee Please consider the Minutes of the FOMC May 2-3 Meeting.  Notably, the Fed is sticking with an over-optimistic economic outlook. The staff anticipates “GDP growth would rebound in the second quarter and advance at a solid pace over the remainder of the year.” On retail sales, “participants indicated that they expected robust growth in consumption spending. They pointed to several elements supporting this outlook, including strong household balance sheets, wide availability of jobs, and the U.S. economy's resilience in the face of new waves of the virus.” “All participants concurred that the U.S. economy was very strong, the labor market was extremely tight, and inflation was very high and well above the Committee's 2 percent inflation objective.” The Fed is drinking Kool-Aid. A recession is baked in the cake, and obviously so.  But the Fed cannot admit that. Given the stated nonsense on a “strong economy” perhaps a clueless Fed does not even see a recession. At best, the Fed masks its outlook with… Read More »Fed minutes show inflation risks are skewed to the upside