GS Gives Stocks 5 Reasons to Worry, and We like Gold Above $1333

Markets

Summary

  • Brainard Props Stocks
  • IEA Kicks Oil when it's up
  • The Gold Trade is still there
  • In Focus- Goldman weighs in on Stocks

 by Soren k.

Stocks- Yesterday, Lael Brainard, called for prudence in accommodation removal. She also cited China's failure to succeed in transforming itself into a consumer economy as reason to not raise rates. Stocks took this as cue that a rate raise was not happening. But more importantly, it deferred the reality that the Fed cannot do anything either way except talk. Wall street which had released uber bearish stats on Friday after the sell off happily used the punch bowl money to buy shares. The S&P closed up  30 handles. But today, the Dow is called ot open 130 lower and the SPX is trading down 15 handles. The Fed's effectiveness in jawboning is diminishing or markets are now focusing on the inevitability of a December hike.

Gold is a buy on a trade we outlined yesterday.

Agnostically: Long Above $1333 ($1380 target)and short below $1325 ($1290 target)

 

Oil- Lost all of yesterday's gains as an IEA report stated that the current surplus would last far into 2017, exceeding current expectations. We would start looking at how the term structure of Oil reacts more than the spot price. Unhedged production will show its hand there after the selloff.

WatchList

PRICECHANGE% CHG GC=F1,329.70+4.10+0.31% SI=F19.17+0.17+0.92% PL=F1,061.90+15.50+1.48% HG=F2.11+0.01+0.38% NG=F2.99+0.00+0.03% CL=F45.81-1.03-2.20% GLD126.59-0.16-0.13% USO10.64+0.05+0.47% 

Global Market News

In Focus

Goldman's 5 Reasons Why the Market is Doomed- from Friday

Quite possibly subtitled- "Keep Rates Low and Nobody Gets Hurt"

1- Our Sentiment Indicator shows an extreme bullish reading of 95, which suggests the S&P 500 index will fall by 2% during the next month

 2- We anticipate a rise in political uncertainty, which will translate into a lower P/E multiple.

3-  Recent US economic data has been disappointing

4- The weak macro data means downside risk to EPS forecasts.

5- Equity valuation remains extended. The S&P 500 index trades at the 84th percentile of historical valuation while the median stock is at the 98th

Today, they don't look so right. But we bet their wallets are fatter.

Global Equities

Shanghai 3,023.51+1.53 (0.05%)Nikkei 225 16,729.04+56.12 (0.34%)Hang Seng Index 23,215.76-74.84 (-0.32%)TSEC 8,940.83-6.23 (-0.07%)FTSE 100 6,711.46+10.56 (0.16%)EURO STOXX 50 3,014.72+1.84 (0.06%)CAC 40 4,443.60+3.80 (0.09%

Currencies

EUR/USD1.1248+0.0008 (0.07%)USD/JPY102.2695+0.5245 (0.52%)GBP/USD1.3252-0.0084 (-0.63%)USD/CAD1.3120+0.0088 (0.68%)USD/HKD7.7583+0.0006 (0.01%)USD/CNY6.6810+0.0017 (0.03%)AUD/USD0.7527-0.0039 (-0.51%)

Economic Calendar

DateTime (ET)StatisticForActualBriefing ForecastMarket ExpectsPriorRevised FromSep 132:00 PMTreasury BudgetAug-NANA-$64.4B-Sep 147:00 AMMBA Mortgage Index09/10-NANA0.9%-Sep 148:30 AMExport Prices ex-ag.Aug-NANA0.3%-Sep 148:30 AMImport Prices ex-oilAug-NANA0.3%-Sep 1410:30 AMCrude Inventories09/10-NANA-14.513M-Sep 158:30 AMInitial Claims09/10-262K263K259K-Sep 158:30 AMContinuing Claims09/03-NANA2144K-Sep 158:30 AMRetail SalesAug--0.1%-0.1%0.0%-Sep 158:30 AMRetail Sales ex-autoAug-0.3%0.3%-0.3%-Sep 158:30 AMPPIAug-0.1%0.1%-0.4%-Sep 158:30 AMCore PPIAug-0.1%0.1%-0.3%-Sep 158:30 AMPhiladelphia FedSep-1.50.02.0-Sep 158:30 AMCurrent Account BalanceQ2--$123.1B-$122.8B-$124.7B-Sep 158:30 AMEmpire ManufacturingSep--1.00.0-4.2-Sep 159:15 AMIndustrial ProductionAug--0.2%-0.3%0.7%-Sep 159:15 AMCapacity UtilizationAug-75.6%75.7%75.9%-Sep 1510:00 AMBusiness InventoriesJul-0.1%0.1%0.2%-Sep 1510:30 AMNatural Gas Inventories09/10-NANA36 bcf-Sep 168:30 AMCPIAug-0.1%0.1%0.0%-Sep 168:30 AMCore CPIAug-0.2%0.2%0.1%-Sep 1610:00 AMMich SentimentSep-91.091.589.8- 

Good Luck

 

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