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Commentary,

Commodities and Precious Metals Update (Week ending March 20, 2020)

Another very volatile week for U.S and global stock and bond markets. Despite the U.S. Federal Reserve Bank’s emergency 100bp rate cut on Sunday evening, U.S. and global stock markets fell sharply on Monday with the S&P 500 Index falling 12%. Extremely weak Chinese economic numbers combined with California’s shelter-in-place order on Monday, greatly increased concerns of the effect of the coronavirus on the U.S. and global economy, pushing U.S and global stock markets significantly lower while also causing the 10-year Treasury rate to drop 23bps to 0.73%. Tuesday’s U.S. Federal Reserve announcement of its lending program to support the short-term commercial paper markets to relieve corporate funding stress, helped push the S&P 500 Index up 6% and the U.S. 10-year Treasury Rate to over 1% only to see the S&P 500 Index gains reversed and U.S 10-year Treasury rates move even higher on Wednesday as increased coronavirus concerns resurfaced and investors sold into strength. Thursday’s action by the ECB along with announcements of global fiscal stimulus programs, pushed U.S stock markets off their intraday lows and helped them finish slightly higher for the day. Market sentiment reversed on Friday, however, perhaps spooked by another sharp selloff in crude oil prices with the S&P 500 Index dropping over 5% but this time with 10-year U.S. Treasury rates falling over 30bps to 0.85%. At week’s end the S&P 500 Index was 15% lower at 2,304.92, the 10-year U.S. Treasury rate fell 11bps to 0.85% and the U.S. dollar surged 4.1%.

Commentary,

Commodities and Precious Metals Update (Week ending March 13, 2020)

Rapidly growing fears regarding the strength of global economic growth resulting from government measures to counteract the spread of the coronavirus as well Saudi Arabia’s desire to greatly increase oil output, moved U.S stock markets sharply lower and 10- and 30-year interest rates sharply higher while greatly increasing the volatility of both markets. WTI crude oil prices plunged over 30% intraday on Monday driving U.S. and global stock markets significantly lower (the S&P 500 Index closed down 7.6%) and triggering a trading halt on U.S. exchanges. Though 10-year U.S interest rates fell sharply Monday, they moved higher the rest of the week increasing 26bps on Tuesday alone. U.S. stock markets rallied on Tuesday after Monday’s sharp drop but lost a combined 13% Wednesday and Thursday (falling close to 9% on Thursday) after the WHO officially declared the spread of the coronavirus a pandemic and despite the BOE lowering interest rates 50bps and adopting stimulus measures with the UK government and despite the U.S. Federal Reserve injecting $1.5 trillion into the U.S. funding markets. President Trump’s declaration of a national emergency late Friday afternoon reversed U.S. stock market losses on the day with the S&P 500 Index closing 8.5% higher on Friday. At week’s end the U.S. dollar strengthened 2.9%, 10-year interest rates increased 20bps to just under 1% and the S&P 500 Index lost 8.8% to close at 2,711.02. The VIX Index closed at 57.83, increasing almost 15 percentage points, but well of its recent high of 75.47 on Thursday.

Commentary,

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).

Commentary,

See Ya Dimon, Hello Fink: Top 10 XOUT’s for Q1 2020

The latest XOUT rebalance gives fresh insight into the pulse of disruption, and significantly, the players who are falling behind in the race to innovate effectively. Here we examine the 10 largest companies XOUT eliminates this quarter—the roughly $3 trillion in market cap vulnerable to secular decline. When yesterday’s titans can rapidly become today’s bankruptcies, the XOUT Index continually looks to identify potential market laggards, aiming to leave them out of the portfolio.

Commentary,

Commodities and Precious Metals Update (Week ending February 7, 2020)

Despite continued concerns and uncertainties surrounding the economic impact of the coronavirus outbreak and as the Shanghai Composite Index tumbled 7.7% on Monday, U.S. stock markets moved sharply higher through Thursday supported, by among other things, reports of the Chinese developing an effective drug against the coronavirus, improved U.S. trade deficit numbers, a very strong ADP payroll report, the Senate’s acquittal of President Trump and the Chinese announcing they would halve tariffs on $75 billion of U.S. imports. Coronavirus fears, however, resurfaced on Friday pushing U.S. stock markets lower for the first time last week despite a much-stronger-than-expected U.S. employment situation report. At week’s end the S&P 500 Index increased 3.2% closing at 3327.71, the 10-year U.S Treasury rate increased 7bps to 1.58% and the U.S. dollar st