Markets
(New York)
With the huge CPI number hitting the tape yesterday, gold had a predictable reaction: it rose. Since bottoming out a few months ago in the $1,600 range, it has since risen to over $1,900 as inflation fears have picked up. However, inflation is not the only thing driving the metal, as the Fed is playing a big role too. If the Fed stays dovish, and therefore the path of rates looks to stay low, then gold is in a great position—higher inflation with little rate risk from the Fed.
FINSUM: Gold is in a good spot. The Fed will only start hiking if inflation really jumps, which would push gold higher anyway. If inflation is more mild, then at least their won’t be rate pressure.
(New York)
Many investors want gold exposure without holding any of the precious metals directly. Some have gone the route…see the full story on our partner Magnifi’s site
(New York)
The market was in a frenzy over the latest CPI report which had the highest rise in inflation…see the full story on our partner Magnifi’s site
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(Beijing)
The United State’s trade war with China shifted lots of manufacturing…see the full story on our partner Magnifi’s site
One of China’s Titans is Primed to Rally
Alibaba is one of the largest technology companies in China and its stock has been off nearly 35%…see the full story on our partner Magnifi’s site
(New York)
Inflation worries may have surged this Spring, but that has not helped real yields. When you compare the yields of stocks and bonds versus inflation, the truth is that real yields have turned negative. It is unusual for the S&P 500 to have a negative yield, which is currently at -0.81%. That is slightly better than 10-year Treasuries’ real yield of -0.87%. This has usually spelled trouble historically. Going back to 1970, there has only been one instance when the market did not decline at least 32% in the two years following the point at which yields went negative.
FINSUM: This is a pretty scary statistic, but then again, most historical contexts don’t involve a pandemic-induced country-wide shutdown and unprecedented government stimulus.