Image Source: What a wild and volatile afternoon it was on Wednesday after the Fed meeting. There was a massive rally followed by a huge decline, as you can see below. It seems that my previous comment about buying weakness and selling strength was a valid one.(Click on image to enlarge)On Thursday, markets were strongly higher and I heard pundits crying about today’s employment report being leaked. Those kinds of theorists never cease to amaze me. When the president and Fed chair get caught off guard by an economic report two days hence, you know that any talk about leaks is nonsense. Are there leaks in the market? 100%. But it’s a lot less pervasive than folks think.Do you  know why the markets rallied? Look no further than the two securities I have been discussing. The 10-Year Note and the U.S. dollar both fell. So stocks rallied. That’s the market we are in right now. Just a week ago, with the S&P 500 below 5000, a popular commentator bemoaned that he “hated being so bearish.” Stocks bottomed within 20 minutes, and they have only screamed higher.Apple blew out earnings last night and announced the largest share buyback in the history of the universe. As you know, I have been concerned about the company for a while, and I still am. While we own it in ‘Unloved Gems,’ we lightened up a few months ago. Until proven otherwise, I think rallies should be sold.Several months ago, I was also critical of Super Micro Computer. It […]

EUR/JPY extends its losses for the third consecutive session, trading around 164.60 during the European session on Friday. The Japanese Yen (JPY) strengthened on Friday following a rally on Thursday attributed to potential Japanese government intervention, marking the second such incident this week, according to a Reuters report. It is worth noting that Japanese banks will be closed due to Greenery Day on Friday.Reuters reported that the Bank of Japan (BoJ) data showed on Thursday that Japanese authorities possibly expended approximately ¥3.66 trillion on Wednesday to bolster the JPY. Earlier in the week, on Monday, Japan’s Ministry of Finance intervened in the market, potentially investing around ¥6.0 trillion to support the Japanese Yen. Masato Kanda, Japan’s top currency diplomat, refrained from directly confirming the intervention but mentioned that the Ministry of Finance intends to disclose related data by the end of the month.On Thursday, the Bank of Japan (BoJ) released Minutes from the March meeting with insights into the monetary policy . One member noted that the economy’s reaction to a short-term rate increase to approximately 0.1% is expected to be minimal. Additionally, several members believed that market forces should primarily determine long-term rates.In the European Union, the , as reported by Eurostat, remained unchanged at 6.5% in March, aligning with market forecasts and consistent with the preceding three months. The figure reflects a decline of 94,000 unemployed individuals compared to the previous month, bringing the total to 11.08 million.During a virtual guest lecture at Stanford University on Thursday, European Central Bank […]

The USD/CAD outlook sharply turned toward bearish territory, stirred by the hawkish sentiments of Bank of Canada Governor Tiff Macklem. At the same time, the Canadian dollar, which usually tracks US equities, strengthened amid a rebound on Wall Street. Meanwhile, investors awaited the US nonfarm payrolls report for more clues on Fed policy.On Thursday, BoC governor Macklem said there is a limit to how much US and Canadian interest rates can diverge. Although he added that the limit was still far, it confirmed the view that the BoC will wait to see what the Fed does on interest rates to avoid a big divergence. Investors remain confident that the Bank of Canada will cut rates before the Fed. Moreover, this could happen in June. Canada’s economy is slowly declining, while inflation is easing faster than expected. Therefore, conditions are aligning for the Bank of Canada to cut rates. Notably, data from Canada revealed a surprise trade deficit of C$ 2.28 billion as exports in the country fell faster than imports in March. At the same time, US equities rallied a day after the Fed held rates and sounded less hawkish than expected. Investors cheered the fact that Powell maintained the outlook for rate cuts, eliminating fears of possible hikes to control inflation. However, the timing for the first cut remains unclear. Investors will likely wait for more guidance from the upcoming US employment figures. USD/CAD key events today US nonfarm payrolls report US ISM Services PMI  USD/CAD technical outlook: Bears to pounce 1.3650 support(Click […]

In the past few months, my focus has been on whether jobs gains are most consistent with a “soft landing,” i.e., no further deterioration, or whether deceleration is ongoing; and more specifically:  Whether there is further deceleration in jobs gains compared with the last 6 month average, vs. a “soft landing” stabilization – and even whether the recent increase in monthly jobs numbers signifies a re-strengthening. Based on the leading relationship of initial and continuing jobless claims, whether the unemployment rate is neutral or decreasing; or whether there is further weakness. Based on the leading relationship of the quits rate to average hourly earnings, whether YoY wage growth would continue to decline slightly. It did continue to decline to a new post-pandemic low – but still at 4%. All three of these metrics came in negative, in the sense of the lowest gain in jobs since last October, and the 4th lowest in over 3 years. The unemployment rate increased. And average hourly wage growth decreased to its lowest rate in almost 3 years as well.Here’s my in depth synopsis.  HEADLINES: 175,000 jobs added. Private sector jobs increased 167,000. Government jobs increased by 8,000.   February was revised downward by -34,000, while March was revised upward by 12,000, for a net decline of -22,000. This continues the pattern from nearly every month in the 16 months of a steady drumbeat of downward net revisions. The alternate, and more volatile measure in the household report, showed a paltry 25,000 increase. On a YoY basis, in […]

 price (XAG/USD) reverses gains and falls sharply to $26.00 despite the United States Nonfarm Payrolls (NFP) data for April turned out weaker than expected. The  report showed that employers hired 175K job-seekers, weaker than the consensus of 243K and the prior reading of 315K, upwardly revised from 303K. The  rises to 3.9% while investors forecasted it to remain steady at 3.8%.The Average Hourly Earnings, which feeds the consumer spending and eventually reflects the inflation , softened to 3.9%. Investors forecasted the wage growth to decelerate to 4.0% from March’s reading of 4.1%. Monthly wage growth data grew at a slower pace of 0.2%, against the estimates and the prior reading of 0.3%.Weak labor demand and soft wage growth would force the Federal Reserve (Fed) to unwind its restrictive policy framework earlier, which it has been maintaining for almost two years. Currently, investors expect that the  will start reducing interest rates from the September meeting. The situation is unfavorable for the US Dollar and Treasury yields. The  (DXY), which tracks the Greenback’s value against six major currencies, prints a fresh three-week low around 104.50. 10-year US Treasury Yields weaken to 4.49%.Generally, lower yields on interest-bearing assets weigh on non-yielding assets such as Silver as they reduce the opportunity cost of holding investment in them. Therefore, the Silver price could reverse losses ahead. Silver technical analysisSilver price declines to near the horizontal support plotted from 14 April 2023 high around $26.09 on a daily timeframe. The above-mentioned support was earlier a major resistance for the Silver price bulls. […]

I was shocked to hear there was gambling going on at Ricks Café and equally shocked to hear that Biden’s price caps on Russian oil have failed. In 2022 the administration of Joe Biden tried to impose a price cap to cut oil revenues for Russia, a major source of funding for its war against Ukraine. Now as my buddy Anas Alhajji points out, the Russian Urals crude price is about $15 above the price cap and is very concerned about who is going to tell Treasury Secretary Yellen or Biden.Of course if Ms. Yellen or Biden read my report back then, I could have saved them the trouble of putting on the ill-fated price cap in the beginning. I predicted that the price caps would fail and if they asked me, who knows, it could have been the start of a beautiful friendship.I’m no good at being noble, but it doesn’t take much to see that the problems with price caps are that they never work, and never have worked. People will either find a way around them or if they are truly enforced, it will lead to shortages. You show me a price cap, then I will show you a shortage. Yet the shortage did not happen because the price caps were never enforced.This week Reuters reported that a group of Western insurers said a Russian oil price cap has become unenforceable and only pushed more ships into joining a shadow fleet, delivering one of the harshest rebukes to […]