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GDPhursday – Dollar Dead-Cat Bounce Drops Commodities

Only down 5% (since April).

The Dollar may have found a floor but probably not as it's down 5% in 50 days so up 1% (90.50) would be a weak bounce and 91.50 is the strong bounce line, which we already failed on the way down in early May.  The bouncing Dollar is giving the commodity rally a rest since commodities are priced in Dollars (so they go down when it goes up) but gold is just under $1,900 and it looks like we'll see $2,000 and, if BitCoin goes out of fashion – gold may be the next thing that blasts off as the World's favorite collectable non-currency.  

We added Barrick Gold (GOLD) back to our Money Talk Portfolio in our last review and it's already up $1,500 in two weeks but still only net $4,472 on the $17,500 spread so there's $13,028 (291%) left to gain – even if you did miss out on the first 50% gain.  Remember, I can only tell you what's likely to happen in the markets and how to profit from it – the rest is up to you.  Our Money Talk Portfolio now looks like this:

$195,688 is up $8,415 (4.4%) since our last review and that's fantastic since we're still 2/3 in CASH!!!  The cash is our saftey net in this portfolio – we don't have any hedges and we can only adjust it when we do the Money Talk show, usually once per quarter.  There were $77,978 worth of gains to be had from the above positions and now there's about $69,500 left to gain if all our positions work out.  Since we're only using $61,003 for our positions – that's a very nice 18-month return on cash.

Money Talk Portfolio Update & Show (4-29-20) - Phil Davis

My other comments from that interview are worth a look too.

8:30 Update:  GDP came in at 6.4% in the 2nd estimate of Q1, that's 0.1% lower than expected while the PCE is at 3.7% vs 3.5% expected and flying up from 1.7% in Q4.  Core PCE was also up 0.2% at 2.5% and double 1.3% in Q4.  Domestic Income is up 19.4%, mostly for the Top 0.000001% but yay for them!  "Only" 406,000 people lost their jobs last week so that's getting better but Durable Goods for April were a disaster, going NEGATIVE 1.3% vs 0.7% expected by leading Economorons though, to be fair, it was really the very volatile Transportation numbers that took things down.   

What does this mean?  Nothing, there was $2.1Tn in stimulus in March so how can you draw any conclusions from what happened in Q1 or what happened in April after that distortion.  What we can be sure of is $2.1Tn is more than 10% of our total GDP and the GDP growth for Q1 was 1.6% (6.4% is annualized), so, without the 10% boost, we'd be down about 8.4% for the quarter and that's down 25.6% annualized – how do you think that would play out in the media?  That's why we pass these massive stimulus bills – to make things look good.

Fernando Lamas - It is better to look good than to feel...

The poor Durable Goods number is actually good for the market as it keeps the Fed in play – giving them an excuse to keep the QE going for another quarter.  The US is now $28.3Tn in debt (up $5.6Tn since the end of 2019) and running a $3.2Tn deficit (so far) this year and the Fed's Balance Sheet is at $10.3Tn – up from $4Tn pre-crisis so it's cost us $11.9Bn to buy this beautiful chart (so far):

Might as well enjoy it!  

 


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  1. Good Morning.


  2. Good morning!

    Big spike up back to 4,200 so all is well.  The RUT is up 2.5% in two days so we'll see how that goes at 2,265.

    Oil blasted higher, back at $66.12 and copper also coming back hard and fast.

       

       
        

    Bonds gave it all back:

     


  3. Just another Covid story that sets you back in reality. My sister-in-law in OHio is in the critical care for covid. Her son who is a Naturalist Practitioner went to a seminar with his girlfriend in Florida, not vaccinated, either of them though healthy in their early 50's. Came back to say Hi to his parents who were ill in 4 days. My brother-in-law is a Doc trained in radiology and his wife is a licensed registered nurse & both right wing Trumpers. He used hydrocodone to treat his wife. When the son came back to see his mother who was quite ill and a life long smoker she hadn't eaten, or drank anything and was rasping to catch her breath. Then she went to the hospital. She is unconscious and being ventilated etc. 50/50 chance of survival. Her husbands explanation was "We though it was like a regular flu." One guess of what they watch all day. She is 75 years old.


  4. Pirate……feel sad on hearing that story.  I just can't understand how smart/educated people can fall for Trump and his schtick and whatever Fox News is selling.  Have people lost the capacity to think for themselves nowadays?  It's not just in the US either.  We have our share of crazies here in Canada as well but to a much lesser degree.  The couple that I've had very short conversations with…… one guess what US news channel the like to watch?  


  5. The U.K. has its fair share but the NHS is about as close to a National reglion so getting vaccinated and trusting doctors is not such a leap. Sadly the current political rulers don't understand air bourne novel corona viruses or exponetial growth … hence we are too 3 in highest deaths per million. :-(


  6. Good morning Phil!

    what are your pure plays on copper and lithium, going forward since the electrification of the autos seems to be seriously accelerating over r the next 3-5years.


  7. Pirat If they both medical trained especially being a doc. I would not even submit my neibor’s cat to them  for treatment to them. But well members of the clown clang say it all.



  8. Thanks for the commentary and laughs Yodi. Much appreciated that this country is not alone in sheer, unmitigated  insanity. However, I cannot fathom that it is so easy to not believe in the numbers: we are the worst in the WORLD! In infections and deaths. Does not that say it all? I truly do not comprehend how so many can live in this alternate reality, or are they all just stoned all the time with drugs, alcohol, acid? I am wearing my mask forever and no I have not been vaccinated as I have the antibodies in my blood. This whole thing gets more and more invasive and terrifying. Will we ever be OVER this scourge? 


  9. Amazing Pirate.  I'm sorry they have to go through that.  It's shocking how seemingly rational people refuse to be vaccinated and would rather roll the dice on catching a deadly disease with many terrible KNOWN after-effects.  My own niece is one of them, she lives in Orlando and won't get vaccinated (only one in my family) despite pressure from EVERYONE else in the family.  She thinks it might harm her future baby – though there's no evidence of that at all.  

    According to the CDC, the most common lasting symptoms are fatigue, shortness of breath, cough, joint pain and chest pain. Other issues include cognitive problems, difficulty concentrating, depression, muscle pain, headache, rapid heartbeat and intermittent fever.

    SARS-CoV-2 infection can leave some people with heart problems, including inflammation of the heart muscle. In fact, one study showed that 60% of people who recovered from COVID-19 had signs of ongoing heart inflammation, which could lead to the common symptoms of shortness of breath, palpitations and rapid heartbeat. This inflammation appeared even in those who had had a mild case of COVID-19 and who had no medical issues before they got sick.

    A bad case of COVID-19 can produce scarring and other permanent problems in the lungs, but even mild infections can cause persistent shortness of breath — getting winded easily after even light exertion.

    Lung recovery after COVID-19 is possible, but takes time. Experts say it can take months for a person’s lung function to return to pre-COVID-19 levels. Breathing exercises and respiratory therapy can help.

    Neurologist Arun Venkatesan, M.D., Ph.D., says, “Some individuals develop medium to long-term symptoms following COVID infection, including brain fog, fatigue, headaches and dizziness.  The cause of these symptoms is unclear but is an active area of investigation.”

    Postural orthostatic tachycardia syndrome, or POTS, is a condition that affects blood circulation, and people who have survived COVID-19 may be more vulnerable to it. Tae Chung, M.D., who specializes in physical medicine and rehabilitation, says “POTS can leave survivors with other neurologic symptoms, including continuing headache, fatigue, brain fog, difficulties in thinking or concentrating, and insomnia.

     

    After surviving COVID-19, some people are left with lingering anxiety, depression and other mental health issues. Physical changes such as pain and weakness can be complicated by long periods of isolation, stress from job loss and financial difficulties, and grief from the deaths of loved ones and the loss of good health.

    Patients who were hospitalized have a particularly challenging recovery. Brigham says “Post-intensive care syndrome, or PICS, puts COVID-19 survivors and other people who have spent time in the ICU at a higher risk for problems with mental health, cognition and physical recovery.”

    Megan Hosey, Ph.D., a rehabilitation psychologist, says that prolonged time in the ICU can cause delirium. The strange surroundings, multiple mind-altering medications, isolation and loss of control can leave patients with lasting and recurrent sensations of terror or dread, including post-traumatic stress disorder (PTSD).

    How can this be worth the risk?

    We're doing a poor job of educating people is the main problem but everything is politicized – if they try to tell the people this, Fox will claim it's fake news.  


  10. Copper/Maya – RIO is pure, FCX close to it (25% gold) and Barrick goes the other way at 25% copper.   Lithium we haven't had any luck with so I stay away but ALB and SQM are the ones you want to look at.

    KEY TAKEAWAYS

    • Lithium is a metal, mined from the earth, that trades on commodities markets.
    • Lithium is used in manufacturing batteries, found in personal electronics and electric vehicles.
    • Due to the soaring demand for electric cars, it may be a boon to lithium investors.
    • Still, the market sees an oversupply in lithium that outpaces demand, dragging down the price of lithium producers.

    Morgan Stanley forecasts that new supply from Argentina, Australia, and Chile, could add 500,000 tonnes of lithium to the market per year by 2025. That’s more than twice as much as the current annual supply of approximately 215,000 tonnes. One of the analysts said, “We expect these supply additions to swamp forecast demand growth,” according to the FT.

     

    The sharp drop in prices expected has a lot to do with the sheer abundance of lithium in the Earth’s crust. Thus, as prices have risen on growing demand, new producers can easily jump into the market to get a piece of the action. Most notably, China has begun to develop its own lithium deposits.

     

    Unfortunately for Albemarle and SQM, that’s just the problem with producing a hot commodity in competitive markets—everyone else wants to start producing it too.


  11. Here is the replay of this week's webinar…

    https://youtu.be/AkFV_dibzWw


  12. Pirate

    Sorry to hear about members of your family. People can make some pretty strange decisions when they have differing data. I know some and have family members with some very nonconforming beliefs.

    I had the unenviable of driving a college clunker car back from the east coast this week, glad it made it.

    We gave my son another of our cars that we were not using for easier logistics when he went to school in the fall and had to quarantine for 2 weeks after entering New York state- good times.  I got a chance to listen to the radio stations in the Midwest. I found one of the most off the rail stations in central Wisconsin- WVCX 98.9.  It bills itself as Christian Information Radio, I would call it misinformation. I believe in religious freedoms, but their take on issues was not fact based. They take the Israel/ Gaza/ Hamas/ Iran is novel at best, and they think it is all laid out for them in exacting detail in the bible.

    Here is some of their “research” on Vaccines;

    vaccine – Liberty Counsel Action (lcaction.org)


    • Appearing in a House hearing today, Treasury Secretary Janet Yellen makes her case for the Treasury's share of President Biden's soon-to-be-presented budget proposal.
    • She's asking that lawmakers don't stop now in supporting the U.S. economy as it continues to recover from the pandemic.
    • Yellen also contends that, not accounting for inflation, the U.S. government's annual budget "is still the same enacted level as 2021, and critical policy offices — like Domestic Finance, Economic Policy, and Tax Policy have seen their budget cut by as much as 20% since 2016."
    • She highlights several "critical areas":
    • The Financial Crimes and Enforcement Network — FinCEN —  is charged with building a database that collects and secures beneficial ownership information, but Congress hasn't yet provided funding for it;
    • Congress dramatically expanded funding for Community Development Financial Institutions, which helps underbanked sectors, but hasn't provided additional administrative funding;
    • The Internal Revenue Service needs more funding to increase its auditor ranks, pointing out that the IRS has fewer auditors than at any time during World War II.
    • "Over the next 10 years, the American people could see roughly $7T fall through the cracks of our tax system. Why? Because many of the country's wealthiest taxpayers do not pay their full tax bill, and the IRS is not nearly staffed up enough to ensure compliance," she said.
    • For FY 2022, the budget proposal would provide $13.2B from discretionary appropriations, plus $417M for the first year of a program integrity allocation adjustment as part of the multi-year American Families Plan, she added.
    • Earlier, Biden to propose a $6T budget for FY2022 - THAT'S A $2.5Tn DEFICIT! 
    • There some gentle gains for the cruise line sector today after Royal Caribbean (RCL +2.0%) indicates that it plans to resume  cruises out of Fort Lauderdale in June
    • The Celebrity Edge plans to set sail on June 26 after being approved by the Centers for Disease Control and Prevention for a sailing with all vaccinated customers and crew. Royal is also running a test cruise for its namesake brand.
    • The Royal Caribbean restart date was ahead of some expectations, according to JPMorgan.
    • Carnival (CCL +0.7%) and Norwegian Cruise Line Holdings (NCLH +1.2%) are also planning to resume Florida sailings this year.
    • Carnival has the highest Seeking Alpha Quant Rating of the three cruise line stocks.
    • 3D-printed rocket maker Relativity Space is said in talks to get $600M in a funding round led from Fidelity Management that will value the company at $4.1B.
    • Terms haven't been completed, according to a Bloomberg report.
    • Relativity Space said in October that it closed a Series D  $500M financing round with investment led by Tiger Global and included new investors Fidelity, Baillie Gifford and existing investors including Mark Cuban and Spencer Rascoff.
    • The Long Beach, California-based company told CNBC today that the company is still on schedule to launch its first Terran 1 rocket from Cape Canaveral later this year.
    • Relativity is competing with Elon Musk's Spacex (SPACE) Falcon 9 rocket and announced a plan to build a reusable rocket called Terran R in February, according to CNBC.
    • Other Relativity Space competitors include Richard Branson's Virgin Orbit and Jeff Bezos's Blue Origin (BORGN).
    • See in March Branson's Virgin Orbit said to hire banks to go public through a SPAC.
    • The cost to move goods in a shipping container to Europe from Asia surged above $10,000 for the first time on record, Bloomberg reports, as exporters and importers struggle with stretched supply chains.
    • The report cites the Drewry World Container Index, which shows the rate for a 40-ft. container from Shanghai to Rotterdam rose to $10,174, 3.1% higher than a week ago, 485% above a year ago and the highest in records going back to 2011.
    • Container rates are surging because demand is outstripping the availability of the 20- and 40-ft. steel boxes that carry most of global trade.
    • Shares of A.P. Moller-Maersk (OTCPK:AMKBY), the world's biggest container liner, hit a record high earlier this week.
    • Among relevant shipping and tanker stocks: FRONATINSWDHTNNANMNMMTNKTNPTKDSSIASCSFLEURNGNKSBSBLKSTNG
    • In addition to strong consumer purchases and company restocking, shippers have been hit with higher costs from disruptions ranging from port congestion to the Suez Canal blockage in March.
    • U.S. Steel (X +4.7%) leads a strong rise in steel producers and industrial metal mining stocks after the New York Times reported President Biden is set to propose a $6T budget for FY 2022.
    • The spending plans "would expand the federal fiscal footprint to levels rarely seen in the postwar era, to fund investments [including] roads, water pipes, broadband internet, electric vehicle charging stations and advanced manufacturing research," according to the report.
    • Among other industrial metal stocks: CENX +9.1%CLF +7%ATI +6.7%AA +4.8%MT +4.3%SCHN +4%CMC +3.7%STLD +1.8%.
    • Copper-related names include: TECK +4.7%HBM +3.9%SCCO +3.1%FCX +2.7%.
    • Iron ore miners: RIO +3.1%BHP +2.3%VALE +1.5%.
    • Construction and industrial-exposed stocks also are on the move, such as USCR +3.1%CX +2.2%EXP +2%MLM +1.7%VMC +1.6%.
    • ETFs: SLXCOPXCPER
    • Steel industry groups and the United Steelworkers union are urging President Biden to maintain steel tariffs that were imposed three years ago.
    • Videogame sales declined on a year-over-year basis for the first time in 14 months in April, as the industry lapped its toughest comparison from the April 2020 sales boom spurred by widespread COVID-19 lockdowns.
    • April 2020's sales had jumped 73% from 2019. This April, overall sales dipped 2% year-over-year to $4.6B, according to NPD Group.
    • That breaks a streak of monthly record performances. And the last time sales had declined year-over-year was in February 2020 – when the industry then saw its seventh straight monthly decline as major console manufacturers Sony (NYSE:SONY) and Microsoft (NASDAQ:MSFT) were planning their next-gen machines.
    • Overall sales ticked down to $4.645B. Plunges in hardware sales (down 30% to $296M) and accessory sales (down 23% to $168M) were almost totally mitigated by another rise in content sales (up 2% to $4.18B).
    • The tough comps were apparent especially compared to 2019. While hardware sales were off 30% year-over-year, they were 84% better than April 2019, analyst Mat Piscatella notes.
    • Year-to-date, hardware sales are up 42% over 2020. And despite the new generation of hardware from Sony and Microsoft, Nintendo Switch (OTCPK:NTDOY) was the best-selling platform in unit and dollar terms for April and 2021 year-to-date.
    • And while accessory sales fell 23%, on a year-to-date basis they are up 22% to $885M. Sony's PS5 DualSense Wireless Controller White is again the top-selling accessory.
    • The content story was told by the debut of MLB: The Show 21 (SONY) atop the dollar sales chart, dethroning Call of Duty: Black Ops Cold War (NASDAQ:ATVI). Another new entry, New Pokemon Snap (OTCPK:NTDOY), was third-best. And Square Enix (OTCPK:SQNNY) had the No. 4 and No. 5 games, with Outriders and the new entry NieR Replicant.
    • Rounding out the top 10 on the content dollar sales chart: No. 6, Mortal Kombat 11 (NYSE:T); No. 7, Monster Hunter: Rise (OTCPK:CCOEY); No. 8, Returnal (SONY); No. 9, It Takes Two (NASDAQ:EA); No. 10, Mario Kart 8 (OTCPK:NTDOY)

    • May Kansas City Fed Composite Index+26 vs. prior +31 in April.
    • Manufacturing Index +32 vs. +40 prior.
    • “Regional factory activity increased again in May with strong expectations for future activity,” said Wilkerson. “Supply chain delays and rising materials prices have negatively impacted over 84% of firms. A majority of firms also reported plans to increase wages in 2021, partially in response to difficulties attracting qualified job applicants. ”

  13. Nasdaq turned red, Russell still flying.

       

    And here's the usual jack-up into the weekend for oil and gasoline:

         



  14. Pirate – You may want to consider what 'terror' would look like if you just got the shot (Pfizer) ….


  15. AMC Surges Past $10 Billion Market Value as Rally Hits 1000%






  16. id sure like to know who the after hours only traders are that are causing this market to surge i somehow doubt they exist.

    we must be into some kind of short squeeze by now.


  17. Phil – I am a new member. Are you available now for some questions? Thanks. DanB