MAD Macro - O Canada
Ok, So You Might Be High IQ
Obviously Gold Is Better Than the Dollar
Trump made friends with Mark Carney yesterday in the Oval Office. Apparently Trump can actually tell who has a high IQ. I guess Trump doesn’t know that Mark went to Harvard before Oxford. Mark Carney has a high IQ. He was Governor of the Bank of Canada from 2008 to 20013 and the Bank of England from 2013 to 2020. I am not sure why no one ever made a bigger deal about Mark Carney running the Bank of England. Think about it, a Canadian running the Bank of England, a colony running the Bank of England. I guess the good news is that Trump might respect Mark Carney. We all have the same problem, too much debt, and Mark Carney understands the risks better than anyone. He has seen the books.
Speaking of debt, whenever Ray Dalio speaks it seems like the world is ending. He spoke again yesterday and he likes gold over the dollar. Why not? It’s $4,000. Ray did his cycle talk, you know the one. The History of the World 101. Western economies have unsustainable debt levels and some day it will end in tears of inflation as we print dollars, yen, pounds and euros to pay the interest on the debt. Ray’s world has always been a little dark. But maybe Ray is on to something and maybe that’s why gold finally made the WSJ front page today. The article is linked here. It’s titled, “Gold Prices top $4,000 for First Time”. It’s a good article that explains this year’s gold rally. I think Ken Griffin is on to something, the gold rally is foreshadowing some bad things to come, like the ghost of Christmas future. Trump started a global trade war that is actually getting worse, but no one seems to notice. We are not winning this trade war, the world economy is losing. We might be in the final stages of an AI bubble. Judging from the price action in Strategy yesterday, down 9%, the DAT bubble may have already burst. Sorry, Kool-Aid Mike Saylor, but Strategy’s strategy is not working.
Markets are a little higher this morning after a down day yesterday. Spot gold has broken out above the $$4,000 level. So again, gold- a safety asset- is higher along with risk assets- bitcoin and the NASDAQ. With the government shutdown we have not been getting most economic numbers but today we should get the minutes from the last Fed meeting, which could be very interesting. Remember it was Miran’s first meeting and he dissented, wanting a 50 basis point cut.
I updated the U.S. Dollar Index, U.S. 10yr yield, U.S. 10yr-2yr yield spread, WTI crude oil, NY copper, spot gold, NYSE Arca Gold Miners Index, bitcoin, Strategy, S&P futures, NASDAQ99 futures and DOW futures charts below.
The dollar is a little higher. I am a long-term dollar bear and I think it’s testing resistance today and will turn down from here. Interest rates are slightly lower.
Crude oil and copper are both higher. Spot gold is up over 1%, trading above $4,000. The NYSE Arca Gold Miners Index should open higher with gold prices. Bitcoin is higher after pulling back yesterday. Strategy is due to open higher after falling sharply yesterday.
The S&P, NASDAQ 99 and DOW futures are all slightly higher.
IMPORTANT DISCLOSURES AND DEFINITIONS
Unless otherwise stated, Bloomberg is the source of all data and charts.
S&P 500 futures are a type of derivative contract that provides a buyer with an investment priced based on the expectation of the S&P 500 Index’s future value. Nasdaq 100 futures are commodities futures products traded within the equity futures sector. West Texas Intermediate (WTI) oil is a benchmark used by oil markets, representing oil produced in the U.S. Brent Crude Oil is a blend of crude oil recovered from the North Sea in the early 1960s, whose price is used as a benchmark for the commodity’s prices. The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to the value of a basket of currencies of the majority of the U.S.’s most significant trading partners. UBS Bloomberg Constant Maturity Commodity Index is a total return rules-based composite benchmark index diversified across commodity components from within specific sectors. Index performance is not illustrative of fund performance. It is not possible to invest directly in an index.
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