Gold steadies near two-week low as focus remains on U.S.-China talks
November 26, 2019
“Gold was steady on Tuesday as traders awaited further developments in the trade negotiations between the United States and China while a firm equities market kept bullion near a two-week low hit earlier in the day. Spot gold was steady at $1,454.67 an ounce at 1340 GMT. U.S. gold futures edged down 0.2% to $1,454.50. ‘Markets are on standby,’ said FXTM analyst Lukman Otunuga, adding that everyone is waiting for further developments after news of a phone call between the two sides in an effort to secure a so-called Phase 1 deal.
China’s Vice Premier Liu He, U.S. Trade representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin held a phone call on issues related to Phase 1 agreement on
Tuesday. Global equities edged off their highest in almost two years but kept record levels in sight after the latest signs of a potential end to the U.S.-China trade war. More trade optimism should be enough to send gold towards $1,430, but if there’s more time wasting or investors are left empty handed, that should elevate gold prices towards $1,465-$1,475, Otunuga added.”
KITCO NEWS/Neils Christensen
Goldman Sachs sees gold at $1,600, silver at $18 in 2020
November 25, 2019
“Goldman Sachs is maintaining its bullish outlook on gold, looking for prices to push to $1,600 an ounce next year, but its big trade for 2020 is oil. In a report published Sunday, the investment bank said that it continues to like the precious metal as investors look for alternative investment assets. ‘Investment deficit creates excess savings, supporting gold. In theory, savings should equal investment, but due to this decline in capex and a rise in precautionary cash balances, a savings surplus is beginning to develop that is supporting gold prices,’ the analysts noted.
‘When combined with 750 tonnes of central bank gold purchases related to de-dollarization and defensive portfolio rotations, the savings glut means we maintain our bullish gold stance in 2020 with a target of $1600/toz.,’ they added. Goldman Sach’s gold forecast would represent a nearly 10% gain from current prices … Heightened global uncertainty coupled with modest global economic growth should continue to support gold prices through next year, the analysts said. Although investor sentiment on the global economy has improved recently, Goldman Sachs noted that recession concerns remain elevated.”
MARKET WATCH/Jeffry Bartash
Consumer confidence falls for the fourth month in a row on labor-market worries
November 26, 2019
“Consumer confidence fell in November for the fourth month in a row as Americans expressed more worries about the U.S. labor market, but remained generally upbeat about the economy heading into the holiday season. The consumer confidence index slipped to 125.5 this month from a revised 126.1 in October, the Conference Board said Tuesday. That’s the lowest level since the early spring. Economists polled by MarketWatch had forecast a reading of 128.2. The index of consumer confidence touched an 18-year peak just over a year ago, but it’s fallen in the wake of persistent trade tensions with China.
American were a bit less optimistic about the state of the economy right now, but they expect it to improve a bit in the months ahead. The so-called present situation index dipped to 166.9 from 173. Yet a gauge that looks at expectations six months from now rose to 97.9 from 94.5 ‘Overall, confidence levels are still high and should support solid spending during this holiday season,’ said Lynn Franco, director of economic indicators at the Conference Board. The consumer confidence survey measures how Americans view their own financial well-being, job prospects and overall business conditions. A healthy economy requires confident consumers and Americans are still fairly confident in the economy. Although hiring has tapered off and jobs aren’t quite as easy to find, unemployment is near a 50-year low, layoffs are scarce and wages are rising steadily. Businesses are less confident, largely because of a trade war with China that’s dented exports, raised costs and cut into profits. The U.S. and China are striving to strike a ‘phase-one’ agreement, but companies are unlikely to boost spending and investment until trade tensions ease.”
Dallas Fed President Robert Kaplan says the fourth-quarter economy is ‘weak’
November 26, 2019
“Dallas Federal Reserve President Robert Kaplan expects U.S. economic growth to slow substantially in the fourth quarter because businesses worried about the trade war are cutting their inventories. ‘We think the fourth quarter is going to be weak,’ Kaplan told CNBC during a live interview. The central bank official attributed the anemic growth level to ‘deglobalization’ in the form of tariffs the U.S. and China have levied against each other. While Kaplan did not put a specific level where he thinks GDP gains will fall, gauges from the New York and Atlanta Fed are estimating rises of 0.7% and 0.4% respectively. CNBC’s Rapid Update measure of economist expectations puts the number closer to 1.5%. Kaplan said inventory reduction is probably cutting half a point off GDP.
Uncertainty over future conditions is at the center of the low expectations. ‘This means people have been destocking and probably the reason they were destocking is there was a lot of pessimism over the last number of months over future growth prospects,’ Kaplan said. ‘We think things will stabilize. We’ve got a good chance to grow at 2% next year.’ Over the long run, he sees the U.S. growing at a 1.75%-2% range, though he said even that slowed pace could come under pressure.”
THE MOTLEY FOOL/ Nearly 40% of Older Workers Are Putting Their Retirement Savings at Risk, New Research Reveals
“You’ve likely heard that you shouldn’t put all your eggs in one basket, and the same concept is true when it comes to retirement planning. When you’re stashing money in your retirement account, you’ll want to spread your money across various investments to limit your risk while still reaping the rewards. This is the main principle of asset allocation. There’s no one right way to invest your money, but it’s a good idea to build a balanced portfolio filled with higher-risk, higher-reward investments (like stocks) as well as lower-risk, lower-reward investments (like bonds). If you play it safe and only invest in funds that carry less risk, you likely won’t see the types of returns you need in order to build a robust retirement fund. But on the other hand, if you’re too aggressive with your investments, you run the risk of watching your savings crumble if the stock market takes a hit.
New research reveals that many older Americans might inadvertently be putting themselves in that situation. Approximately 38% of baby boomers are investing too heavily in stocks, a recent report from Fidelity Investments found. When you’re younger, you can invest more heavily in stocks and other higher-risk investments, because if your savings take a nosedive during a recession, you still have plenty of time left for your retirement fund to recover. But if you’re just a few short years from retirement and your savings take a hit, you might be in trouble.”
FOX BUSINESS/Jonathan Garber
Stock market action after 2020 election sweep might surprise you
November 26, 2019
“The outcome of the 2020 election will have major implications for the stock market, but not in the way you may think. If either Republicans or Democrats win total control of White House, Senate and House of Representatives, for instance, that can limit gridlock in Washington and allow the government to accomplish more — but it’s not necessarily good for traders. The stock market generally performs better under a divided government, according to the investment bank Goldman Sachs. Stock-market returns during periods of a divided federal government have ‘typically exceeded returns achieved when one political party controls the White House, Senate, and House of Representatives,’ David Kostin, chief U.S. equity strategist at Goldman Sachs, wrote in his 2020 outlook.
Since 1928, the S&P 500 has averaged a 12-month return of 11 percent when the election resulted in a divided government and 8 percent when a unified government was voted in. The returns of both were up one percentage point excluding recessions. At the time of Goldman’s report, PredictIt, which forecasts market and political events, assigned a 74 percent probability to Democrats retaining control of the House in 2020, a 54 percent chance to the party winning the White House and just a 35 percent to its capturing the Senate. Kostin expects the S&P 500 will climb more than 8 percent from current levels to 3,400 by the end of next year, but says that a unified government could lead the benchmark index to fall almost 17 percent to 2,600. While Goldman cites several risks to its forecast, including rising corporate leverage, reduced company buybacks, and low CEO confidence, the firm said political uncertainty and trade tension with China ‘remains the most salient risk to the path of U.S. equities in 2020.’”