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Commodities and Precious Metals Update (Week ending March 6, 2020)

Volatile week for U.S. stock markets. Increasing 4.6% on Monday following Chairman Powell’s Friday statement reassuring the markets that the Fed will act to maintain the expansion, the S&P 500 Index fell 2.8% on Tuesday on increasing coronavirus concerns despite the U.S. Federal reserve bank unexpectedly cutting the Fed Funds target rate by 50bps that same day. Wednesday’s news of an $8 billion emergency spending bill moving through Congress and increased expectations of further rate cuts combined with global central bank accommodation and global fiscal stimulus pushed the S&P 500 Index up 4.2% only to see those gains and more reversed on Thursday and Friday after reports of increased coronavirus cases in California, Seattle and New York. Down almost 10bps through Wednesday, 10-year U.S. Treasury rates fell close to another 30bps through Friday with increasing expectations of more U.S. Federal Reserve rate cuts. At weeks end the 10-year U.S. Treasury rate was 39bps lower at a record low of 0.76%, the S&P 500 Index increased 0.6% to 2,972.37 and the U.S. dollar weakened over 2.2% (as measured by the DXY Index).

Commentary,

Hey Hey, Powell Jay, How Many Rates Did You Cut Today?

The hurricane cone of market uncertainty radically expanded from where it had stood only moments early at Tuesday 9:59 am, with the emergency cuts raising previous obscure possibilities to the forefront. Examining the fallout provides an empirical illustration of gold’s role in the portfolio during market stress, illuminating not only surprises but outright oddities emanating from the market tumult.

Commentary,

Commodities and Precious Metals Update (Week ending February 28, 2020)

U.S. and global stock markets sold off strongly last week on worsening coronavirus concerns. Fears of spreading contagion beyond China, brought to light by increased cases in Italy, Korea and Iran, “community spread” cases in the U.S. and a warning from the CDC about a possible pandemic pushed U.S. stock markets sharply lower and forced the 10-year U.S. Treasury rate to record lows. The S&P 500 Index fell over 3% on Monday and Tuesday and lost almost 4.5% on Thursday. And it was only Fed Chairman Powell’s statement on Friday that the Fed was monitoring the coronavirus’ effect on the economy and would act to maintain the expansion that prevented another 3%-or-more down day on Friday. At week’s end the S&P 500 Index dcreased 11.5% to close at 2,954.22, the 10-year U.S. Treasury rate fell just over 32bps to 1.15% and the U.S. dollar weakened 1.14% (as measured by the DXY index).

Commentary,

Commodities and Precious Metals Update (Week ending February 21, 2020)

Vacillating on coronavirus concerns, U.S. stock markets moved slightly lower through Thursday. A combination of Chinese stimulus measures and statements from China touting a reduced rate in coronavirus infections mostly offset Apple’s lower revenue warning on Tuesday. However, Friday’s much-weaker-than-expected IHS Markit composite output index along with China reporting 800 new coronavirus infections pushed U.S stock markets and the 10-year U.S. Treasury rates to the lows of the week. At week’s end the S&P 500 Index fell 1.3% to 3337.75, the 10-year U.S Treasury rate dropped 11bps to 1.47% and the U.S. dollar strengthened .2% (as measured by the DXY Index).

Commentary,

Your 60/40 May Be Broken: But Not for the Reasons You May Think…

The mathematical reality is that the venerable 60/40 was a sub-optimal investment in 2019—simply adding gold, and in any quantity, would have immediately improved portfolio efficiency. Even during a historic year for bonds, substituting gold for fixed income exposure in 2019, in any amount, automatically constructed a superior 60/40 portfolio. While sacrilegious to the extreme, these insights merely combine the 70 year old lessons of Modern Portfolio Theory with gold’s ability to buffet market volatility.

Commentary,

Commodities and Precious Metals Update (Week ending February 14, 2020)

Amid reduced concern surrounding the coronavirus and supportive statements by Fed Chairman Jerome Powell regarding the strength of the U.S. economy and that the Fed was monitoring the possible effects of the coronavirus, U.S. stock markets moved higher once again last week. Reports on Tuesday the FTC would be investigating tech companies and China’s restatement higher of the number of coronavirus cases on Thursday, only momentarily moved U.S. stock markets lower with the FTC clarifying it was not investigating but only opening a study and as the WHO made clear China’s restatement did not represent a surge in the growth of new coronavirus cases. And despite weaker-than-expected industrial production numbers and so-so retails sales numbers on Friday, U.S. stock markets closed at all time highs on Friday. At week’s end the S&P 500 Index increased 1.6% closing at 3380.16, the 10-year U.S Treasury rate was unchanged at 1.58% and the U.S. dollar strengthened .5% (as measured by the DXY Index).