Global Gold News – November 18, 2019
REUTERS/ Karthika Suresh Namboothiri
Gold pares losses as U.S.-China trade hopes ebb
November 18, 2019
“Gold firmed on Monday, erasing losses from earlier in the session as fresh doubts over a U.S.-China trade deal pushed Wall Street into the red. Spot gold was up 0.2% at $1,470.12 per ounce as of 10:41 a.m. ET, reversing course from earlier when prices fell to as low as $1,455.82 on optimism that constructive trade talks had taken place between the world’s two largest economies over the weekend. U.S. gold futures were up 0.2% to $1,470.60 per ounce.
However, a report that Beijing was not as optimistic, owing to President Trump’s reluctance to roll back tariffs, threw cold water over market cheer and on world shares that were near record levels. ‘I am surprised how robustly the market reacts (to news on the trade talks). This isn’t the first time we have had this news, but the market keeps responding,’ said Bart Melek, head of commodity strategies at TD Securities, adding that the report on pessimism from Beijing has triggered a rebound in gold prices. ‘It looks like gold is seeking a move towards $1,480, which is the 100-day moving average.’ The 16-month long Sino-U.S. tariff war has fanned recessionary fears, but recent optimism over a phase one deal has driven a rally in equity markets.”
Mood in Beijing about trade deal is pessimistic, government source says
November 18, 2019
“The mood in Beijing about a trade deal is pessimistic due to President Trump’s reluctance to roll back tariffs, which China believed the U.S. had agreed to, a government source told CNBC Stock futures pared gains rapidly following the trade headlines. The U.S. and China agreed to work on a limited ‘phase one’ trade deal in early October. China has pushed for a removal of the additional duties imposed on each other’s products in different phases, as part of the deal. Chinese Commerce Ministry spokesperson Gao Feng said earlier the two sides have reached an agreement on the tariff rollback.
However, Trump said a week ago he has not agreed to scrap tariffs on Chinese goods, conflicting the signal from China and dampening hopes about a coming resolution to a jarring trade conflict.
The Chinese are looking carefully at the political situation in the U.S. including the impeachment hearings and the presidential election, the source said, adding the officials are wondering if it is more rational to wait things out since it is unclear what Trump’s standing will be even in a few months.
There is disagreement over issues such as agricultural purchases, the source said. The Chinese are resisting because, in part, they could risk alienating other trading partners, the source told CNBC.”
MARKET WATCH/Shawn Langlois
Why Dow 28,000 could mark that ‘blowoff top’ bears have been predicting
November 18, 2019
“Last month, the Fed began snatching up short-term Treasury debt to the tune of $60 billion per month in response to the repo mess that sent a chill through Wall Street back. While it might sound like another round of quantitative easing, Fed Chair Jerome Powell wanted to make it clear: It’s not. ‘In no sense is this QE,’ he said. Charles Hugh Smith, the author behind the ‘Of Two Minds’ blog, isn’t buying it. In a recent post, he recounted a riddle Abraham Lincoln apparently once told: ‘If I should call a sheep’s tail a leg, how many legs would it have?’ — Five! — ‘No, only four; for my calling the tail a leg would not make it so.’
‘Calling QE not-QE doesn’t make it different than QE,’ Smith wrote. ‘The Fed’s level of panic is noteworthy, as is the absurd transparency of its laughable attempt to conceal its panic.’ And with that panic, Smith believes the pop to new highs in the market could finally mark that elusive blowoff top. ‘The financial media is loudly declaring the current blowoff top in stocks is not a blowoff top,’ he said. ‘The delicious irony here is these denials are reliable markers of blowoff tops: the louder the denials, the greater the odds that this is in fact the blowoff top that many pundits have been expecting.’”
THE STREET/James Deporre
4 Most-Dangerous Words on Wall Street: A Correction Is Due
November 18, 2019
“The S&P 500 has been up for six straight weeks and is sitting at an all-time high. This bull market has been running for over 10 years and the various arguments for why it can’t continue have been growing louder and more intense. The easy thing to do at this point is to embrace some of the skepticism, raise cash levels and wait for the corrective action that so many folks think is inevitable at this point. The only problem is that the price action refuses to cooperate with this negative view. Early indications on Monday morning are for a positive open. However, the strategists that study market data tell us that contrary indicators are reaching extreme levels. Esoteric indicators like the Hindenburg Omen are flashing warning signs and economic growth has been slowing worldwide.
Setting forth a bearish thesis is not only easy but sounds logical and compelling. The problem is that there are only two things that really matter to the market right now. The first is the potential for some sort of Phase One trade deal with China and the second is that the Fed is very supportive of the market, even though it is not cutting interest rates. These two positives are creating a psychological dynamic that feeds on itself. A big part of it is fear of missing out (FOMO). Many bulls are not only underinvested but they are struggling to keep pace with very big gains in the indices. The indices have outperformed the average stock and that makes it extremely difficult for money managers to produce relative strength.”
THE WALL STREET JOURNAL/Mike Bird
India’s Economic Malaise May Be Far Worse Than It Looks
November 18, 2019
“India’s economy is growing at the slowest pace in six years, according to official figures. That data is likely to be disguising an even sharper slowdown. The country has been gripped by a credit crisis this year as lenders outside traditional banking have defaulted and retrenched under government pressure. Investors are used to hearing about suspicious economic data from India’s larger neighbor to the northeast. But last month, economists at the Center for Global Development, a Washington-based think tank, drew attention to the growing inconsistency between several already-recessionary Indian economic indicators and its headline growth rate.
Updates for several economic indicators have only worsened since its publication. Non-oil imports were 12.3% lower in September than a year earlier. Industrial production and sales tax revenue fell 4.3% and 2.7% respectively over the same period. According to an article by India’s Business Standard newspaper last week, an unreleased government report showed that the country’s per capita consumption levels fell between the 2011-12 and 2017-18 fiscal years, the first such decline in four decades, driven by a decline in rural demand.”
Unequal and Irate, Latin America Is Coming Apart at the Seams
November 18, 2019
“In Chile, it was sparked by a minor increase in the capital’s subway fare. In Ecuador, it was the end of fuel subsidies, and in Bolivia, a stolen election. Latin America, which a decade ago harnessed a commodities boom to pull millions out of poverty and offer what many saw as a model of modernization, is in revolt. It’s not another pink tide, nor is it a lurch to the right; the movement is more a non-specific, down-with-the-system rage. Furious commuters are looting cities, governments are on the run, and investors are unloading assets as fast as they can.”
“In that sense, there are parallels with the Arab Spring, which began in 2010, and the collapse of the Soviet Union two decades earlier. Both were unforeseen and moved in surprising directions, yet they offer lessons in retrospect. ‘There were a lot of cracks, but no one saw it coming,’ says Javier Corrales, a professor of political science at Amherst College, of events in Bolivia and across the region … The region is caught between competing models of government: leftist populism and market-oriented liberalism. Governments of each type have been plagued by incompetence, corruption, and a failure to meet social demands. The result has been a growing fury toward the ruling classes, leading people to the streets. In Chile, almost a month of violent protests over the suspended fare rise have caused deaths and extensive property damage, challenging its image as South America’s stablest and richest nation.”
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