MAD Macro - White Flags
Time to Wave the White Flag?
Synchronized Markets Are Scary!
We have been told by our President that his team is speaking to the Iranians who are still alive and in charge. Apparently, they are ready to surrender and make Trump the new Supreme Leader. Last night after the close there were rumors that little Ayatollah Jr. was ready to wave the white flag. One problem, he only has one arm. So, is he ready to raise the one-armed white flag? This morning it looks like we think they will waive the white flag, and they think we will waive the white flag. We delivered a 15-point plan for Iran to surrender through a Pakistan intermediary. Then Iran, through possibly other representatives, made their own demands for our surrender. An Iranian military spokesman said that Trump is negotiating with himself. It wouldn’t be the first time. Anyway, it does not look like an agreement is likely. Markets rallied shortly after yesterday’s close and have remained higher overnight.
I have always found synchronized swimming a little strange. But even stranger than synchronized swimming is synchronized markets. This week if you are following markets on short-term charts, markets are swimming in perfect synchronization. They would win the gold medal. It started slowly when the excursion started, then this week the markets moved in lockstep. Strangely, gold has become correlated with risk assets, moving in sync with the market. I don’t think that will last long. One possible reason for the change is that Middle Eastern countries might have sold gold, raising revenue to replace the loss of oil revenue. That seems possible but if that is what happened it is a one-time event. You know, transitory. I remain bullish on gold and gold miners, and I bought more this week. Even if Iran surrenders, we still need safety assets. The U.S. deficit is exploding like an Iranian missile. There is a run on private credit funds, inflation, recession, stagflation have all become greater risks, and AI might be a bubble. The volatile correction in gold and silver looks to be over. If we resume the bull market trend higher, I have new long-term price projections. Gold to $7,700 and silver to $140.
Markets are sharply higher but off of the overnight highs. Crude oil continues to be the lead swimmer in the synchronized market event. This morning crude oil is down 5% so risk assets are up 1%, bond yields and the dollar are down, gold, silver and bitcoin are up 2%. The event judges give that a perfect 10 for synchronized markets.
I updated the U.S. Dollar Index, U.S. 10yr yield, U.S. 10yr-2yr yield spread, WTI crude oil, NY copper, spot gold, spot silver, NYSE Arca Gold Miners Index, bitcoin, Strategy, S&P futures, NASDAQ 99 futures, and DOW futures charts below.
The dollar and interest rates are slightly lower.
Crude oil is down; copper is higher. Gold and silver are higher. The NYSE Arca Gold Miners Index should open higher with gold prices. Bitcoin is higher and Strategy is due to open higher.
S&P, NASDAQ 99 and DOW futures are all higher but off of the overnight highs.
