CNBC/Tyler Clifford
Cramer says the market won’t bottom until it sees another ‘crescendo’ moment

CNBC’s Jim Cramer on Tuesday said the stock market won’t reach a bottom until sentiment finds a low point, akin to how stocks rebounded from the historic coronavirus-fueled plunge last year.

 “A year ago, we caught a weird bottom as the market experienced a changing of the guard, with the Covid winners taking over as the new leaders,” the “Mad Money” host said.

Exactly one year ago, stocks sold off at an unprecedented pace, pulling the benchmark S&P 500 index down 35% from its peak in February in a matter of weeks.

One year on, and the S&P 500 has bounced 82% from its lowest point on March 23, 2020. But sentiment has shifted, Cramer said, with many of the pandemic’s biggest gainers lagging the market year to date.

“Now we’re being dragged down by a similar leadership change, and while I know we’ll bottom eventually, it might take a while before we get a crescendo this time, too,” he said.

The major averages all pulled back about 1% in Tuesday’s session.

The Nasdaq Composite is down 6.7% from its February highs as stocks on the index pull back amid the reopening trade. The Dow Jones Industrial Average is 2.4% off its March highs, while the S&P 500 is within 2% of its all-time highs.

Cramer likened a market “crescendo” moment, when stock selling reaches a climax, to “a discordant synonym, and the instruments crash to a beautiful conclusion.”

He suggested we’re headed for another, though less severe than last year’s meltdown.

“That’s when a tsunami of selling wiped out the weak hands and the market bottomed, except unlike a symphony, many of us didn’t realize it was happening,” he said. “Since last year, we’ve had a huge run, but now the market’s selling off again.”

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Reuters/Herbert Lash
Stocks slide as stimulus, infrastructure costs spook investors

U.S. stocks tumbled on Tuesday as concerns about the cost of infrastructure spending and potential tax hikes to pay for President Joe Biden’s $1.9 trillion relief bill weighed on investors who also fear further downside in the market.

Remarks by Treasury Secretary Janet Yellen that the U.S. economy remains in crisis from the pandemic as she defended developing plans for future tax increases to pay for the new public investments put investors on alert.

Yellen spoke at a hearing of the House Financial Services Committee where Federal Reserve Chair Jerome Powell also addressed the committee.

Talk of the government’s infrastructure plans unnerved investors who are concerned the stock market is trading at elevated valuations, said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

“There’s a little bit of concern of getting out ahead of a potential selloff that could be on the horizon,” Meckler said. “Any feeling that it could be on the horizon is causing people to pull the trigger pretty quick on these down moves.”

Stocks had been trading near break-even in seesaw trade before turning sharply lower about 45 minutes before the close.

Powell told U.S. lawmakers that a coming round of post-pandemic price hikes will not fuel a destructive breakout of persistent inflation – fears that had sparked a recent rise in yields and caused technology shares to sell off.

Oil prices that slumped more than 3% on worries that new pandemic curbs and slow vaccine rollouts in Europe will slow a recovery in demand helped push the energy sector lower.

Falling yields on 10-year U.S. Treasury notes from a 14-month highs last week have deflated this year’s outperformance in the financial and energy sectors.

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Kitco/Anna Golubova
The pandemic ‘changed the world’ and gold price will reap the benefits – CPM Group

After a record year, gold is bound to see more gains in the medium and long-term, according to the CPM’s Gold Yearbook.

The pandemic has changed the world, making some of the existing problems even worse and setting gold up to benefit, the CPM Group said.

“While the pandemic will eventually pass, it has left the world changed and has in fact compounded and worsened some of the factors that are supportive of gold prices,” the CPM Group said.

The biggest drivers that will support gold as the world reopens include sovereign and private sector debts, deficits, and ultra-loose monetary policies.

Governments around the world will struggle to reverse the fiscal policies introduced as a response to the pandemic, said the CPM Group, citing lackluster economic growth in coming years.

“This scenario positions gold well for further gains in the medium to long term,” the Yearbook stated. “The pandemic has deepened these problems and will make it harder to reverse some of these issues, which will help to keep investors interested in the metal.”

During the Prospectors & Developers Association of Canada (PDAC) 2021 virtual conference, CPM Group’s vice president of research Rohit Savant said that gold could rally back to $1,995 an ounce this year, which is a 5% gain from last year’s closing price.

This outlook comes as gold struggles to make new gains after a period of consolidation. At the time of writing, June Comex gold futures were trading at $1,727.70, down 0.73% on the day.

The CPM Group attributes gold’s most recent weakness to a surge in the 10-year U.S. Treasury yields and a higher U.S. dollar.

“Trends in U.S. interest rates seem likely to be the key factors that will move gold prices higher and lower over the course of 2021. Low nominal rates and negative inflation-adjusted rates will keep longer-term and fundamentally driven investors interested in gold, while any sign of upward movements in interest rates will serve as a brake against rising prices due to shorter-term investors working off of valuation models based on U.S. Treasuries, as was the case during the first quarter of 2021,” the Yearbook said.

It is important to keep in mind that parts of the world could struggle with the pandemic well into 2022 and even 2023.

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