Good morning. Happy Tuesday.
The Asian/Pacific markets posted relatively big losses. China did well, but Japan, South Korea, India, Australia, New Zealand, Singapore and Thailand were weak. Europe, Africa and the Middle East are currently mostly down big. The UK, Denmark, Poland, Greece, South Africa, Finland, Switzerland, Spain, Italy, Portugal, Israel, Austria and Sweden are down. Index futures in the States point to a moderate down open for the cash market.
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The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Up and up
Spot gold (XAUUSD:CUR) is getting shinier by the day. The price of the precious metal touched another record, maintaining its streak of successive all-time highs. Since the start of 2024, gold’s value has risen by a third, hovering over the $2,700 per ounce mark in October. The simmering tensions in the Middle East and the uncertainty over the upcoming presidential elections in the U.S. have increased the demand for the safe haven asset.
Golden opportunity: 2024 gains have come to fruition after years of lackluster performance over the past decade. The price of the bullion touched about $1,900 in 2011 and had been trading at around the same price for much of 2023. After being subdued for so long, gold prices shot up, delivering a 70% jump in the past two years. What’s more is that big banks see this rally continuing into 2025. Analysts at Citi raised their three-month forecast for gold prices to $2,800/oz and set a $3,000 forecast for the next 6–12 months. J.P. Morgan, too, has noted that gold’s fundamental price drivers still appear to have upside.
Uncertainty fueling the rally? While the current geopolitical situation and U.S. elections are influencing gold prices, Citi’s latest estimates note a possible further U.S. labor market deterioration and interest rate cuts by the Federal Reserve raising bullion prices. On the demand side, central banks in emerging Asian economies have stepped up their purchases in recent years. Investors are also investing in gold, eyeing the growing government debt level in Western countries, as well as sanctions making nations wary of the U.S. dollar.
Boost to miners: Investor fervor into gold has also spilled into equities, with precious metal stocks hitting 52-week highs. This included Agnico Eagle Mines (AEM), Alamos Gold (AGI), ASA Gold (ASA), Barrick Gold (GOLD), DRDGold (DRD), Eldorado Gold (EGO), Endeavour Silver (EXK), among others. “Mining stocks typically outperform gold during bull markets, providing additional leverage and profit potential for investors in precious metals,” said SA analyst Jon Wolfenbarger. “Rising costs for mining companies have been a key driver of why mining stocks have underperformed,” commented SA analyst Jason Hamlin.
What else is happening…
Short interest shifts point to a post-earnings rally for General Motors (GM).
Cheesecake Factory (CAKE) gains after report activist pushing for breakup.
Biden, Harris propose free OTC contraception under Affordable Care Act.
Kansas City Fed’s Schmid says he opposes aggressive rate cuts.
Disney (DIS) names Morgan Stanley’s James Gorman as next chairman.
Top small-cap stock picks following the group’s upgrade to neutral.
BHP, Vale (VALE) near $30B settlement in Brazil tailings dam disaster.
Nike (NKE) signs long-term extension with the NBA and WNBA.
US Steel (X) gains as local union voices support for Nippon Steel deal.
FOMO is making investors not take market risk into account.
Today’s Economic Calendar
10:00 AM Fed’s Harker Speech
10:00 AM Richmond Fed Mfg. Index
11:00 AM Treasury Buyback Announcement (Preliminary)
01:00 PM Money Supply
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets leaned to the upside. China, South Korea, Australia and New Zealand did the best; Hong Kong, India and Singapore were weak. Europe, Africa and the Middle East are currently mostly down. Norway and Saudi Arabia are up; Poland, France, Germany, Greece, Switzerland, Spain, Italy, Portugal, Austria and Sweden are down. Index futures in the States point to a moderate down open for the cash market.
————— Free Online Course: Mini Masterclass in Trading —————
The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Dodging turbulence
“If it ain’t Boeing, I ain’t going.” This phrase came up in the ’70s or ’80s, popularizing the engineering prowess of plane maker Boeing (BA), which played a pivotal role in bringing the world into the jet age of commercial aviation. However, come 2024, no one has the same opinion about the Arlington, Virginia-based company. Certainly not the investors; since the start of the year, Boeing’s shares have dropped about 40.5% as the company faces quality issues, FAA scrutiny, curbed production, cash woes, and more recently, worker strikes.
New hope: Over the weekend, Boeing (BA) and a union representing about 30,000 striking West Coast workers announced a tentative agreement that includes a 35% pay hike over four years, among others, that could end more than a month-long strike that has disrupted production at the aircraft maker. Additionally, in a bid to raise cash, Boeing on Sunday said it has sold off its surveillance equipment subsidiary. The company has also filed with the SEC to raise $25B over the next three years and has signed a new $10B credit line.
Q3 expectations: Earlier this month, Boeing said it would recognize a $5B charge on earnings and reported preliminary Q3 revenues of $17.8B that missed the Wall Street consensus of $18.5B. CEO Kelly Ortberg said the company will delay the launch of its 777X, whose test fleet is already grounded, to 2026 instead of 2025. The company also decided to discontinue its 767 cargo plane. On top of this, Boeing also slashed its global workforce by about 17,000 jobs. The 108-year-old plane-maker will release its third quarter report on Wednesday. On the same day, the members of the striking union are expected to vote on Boeing’s latest proposal.
SA commentary: “Despite the long-term potential, Boeing’s near-term struggles with production stability and cash flow due to prolonged strikes lead to a hold rating,” said Investing Group Leader Dhierin Bechai in Boeing In Crisis Mode: Year-Over-Year Decline In Orders, Deliveries. “Boeing is trading at a significant discount, presenting a unique investment opportunity with potential for substantial upside as operational issues are resolved,” countered Curonian Research in Boeing: The Brand Strength Is Unrivalled.
What else is happening…
Which Magnificent 7 stocks could react negatively to earnings?
A 100% recession call that never came to be.
Texas Instruments (TXN) is set to kick off chip earnings season.
Southwest Airlines (LUV), Elliott in talks to avoid proxy fight.
AI search startup Perplexity aims for $8B valuation in new round.
Sudan prepares to resume oil exports after key pipeline repairs.
Goldman predicts paltry 3% annual return for S&P over next decade.
Three events that shook health insurers last week.
TGI Friday’s in talks for financing as it prepares for bankruptcy.
UBS sees these 29 companies as industry leaders for 2030.
Today’s Economic Calendar
6:40 AM Fed’s Daly Speech
8:55 AM Fed’s Logan Speech
10:00 AM Leading Indicators
1:00 PM Fed’s Kashkari Speech
5:05 PM Fed’s Schmid: U.S. Economic and Monetary Policy
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