Americans' confidence in consumption was expected to extend April's modest rebound but instead it soared in May, led by a big surge in consumers' view of the present situation.
Headline Consumer confidence in May rose to 134.1 vs. 129.2 prior month.
Present situation confidence rose to 175.2 vs. 169.0 last month - highest since Dec 2000
Consumer confidence expectations rose to 106.6 vs. 102.7 last month.
Commercial hedgers increased their bullish bets even further in silver this week and they are now on the cusp of being long the silver market (see chart below).
Commercials Incredibly Bullish On Silver
What Are the Odds Copper, Lumber, the $USD and Treasury Yields Are Wrong? https://gainspainscapital.com/2019/05/24/what-are-the-odds-copper-lumber-the-usd-and-treasury-yields-are-wrong/ …
Trade war sparks fears of China weaponising US Treasuries' https://www.ft.com/content/28277e4a-7c08-11e9-81d2-f785092ab560 …
Back in April of 2018, when the trade war with China was still in its early stages, we explained that among the five “nuclear” options Beijing has to retaliate against the US, one was the block of rare-earth exports to the US, potentially crippling countless US supply chains that rely on these rare commodities, and forcing painful and costly delays in US production as alternative supply pathways had to be implemented.
As a result, for many months China watchers expected Beijing to respond to Trump’s tariff hikes by blocking the exports of one or more rare-earths, although fast forwarding one year later this still hasn’t happened. But that doesn’t mean it won’t happen, and overnight President Xi Jinping’s visit to a rare earths facility fueled speculation that the strategic materials will soon be weaponized in China’s tit-for-tat war the US.
As Bloomberg reported overnight, shares in JL MAG Rare-Earth surged by the daily limit on Monday after Xinhua said the Chinese president had stopped by the company in Jiangxi, a scripted move designed to telegraph what China could do next.
The reason for the dramatic market response is that the presidential visit flags policy priorities, and “rare earths have featured in the escalating trade spat between the U.S. and China.” Specifically, as Bloomberg notes, China raised tariffs to 25% from 10% on American imports, while the U.S. excluded rare earths from its own list of prospective tariffs on roughly $300 billion worth of Chinese goods to be targeted in the next wave of measures. And just in case the White House missed the message, Xi was accompanied on the trip to JL MAG by Liu He, the vice premier who has led the Chinese side in the trade negotiations.
Why does China have a clear advantage in this area? Simple: the U.S. relies on China, the dominant global supplier, for about 80% of its rare earths imports.
The visit “sends a warning signal to the U.S. that China may use rare earths as a retaliation measure as the trade war heats up,” saidPacific Securities analyst Yang Kunhe. That could include curbs on rare earth exports to the U.S., he said.
Xi’s visit came just hours after the Trump administration on Friday blacklisted Huawei and threatened to cut it off from the U.S. software and semiconductors it needs to make its products. A spokesman for China’s foreign ministry told reporters Monday to “please wait and see” how the government and companies respond.
Of course, a Chinese export curb, or ban, would also cripple domestic producers, as domestic rare earth miners would be hurt, and likely need state subsidies, similar to US soybean farmers. But curbs could potentially help companies like JL MAG, which makes magnets containing rare earths that are used in products including electric vehicles and wind turbines.
The Argentine Peso has lost 90% of its value since 2012. The Turkish Lira, 70%. Venezuela Bolivar not even pictured in the ranking. Common denominator? "Printing money for the people"
As often, the HY bond market sent an early warning sign for equities, and it hasn’t really rebounded...
Trots rekord låg arbetslöshet och 3% tillväxt klarar färre av sina åtaganden. Något stämmer inte??????????
Here’s what the annual change in mine supply looks like since 1951.
Here’s proof. Mine “capacity,” the amount of new metal expected to come online each year, has fallen off a cliff.
This table shows the current “all-in sustaining costs” for the primary silver producers. The companies highlighted in red are producing at a loss vs. the current silver price; the companies in yellow are on the edge; and the companies in green can produce at a profit.
Here is the chart which shows the PERCENTAGE return of each bull and bear market going back to 1900. (The chart is the S&P 500 Total Return Inflation-Adjusted index.)
Here is the narrative used with this chart.
“The average bear market lasts 1.4 years on average and falls 41% on average.-The average bull market (when the market is rising) lasts 9.1 years on average and rises 476% on average.”
March’s @OECD US Composite Leading Indicator (CLI) dropped 0.2 to 98.8 (weakest since Nov ‘09, suggesting below-trend growth)...most other times historically this level was during recessions (late-60s/mid-90s exceptions)...ann. 6m RoC also weak at -2.5% (sharpest decline in 10y)
The commercial silver futures traders are back down to a fairly low net short position. Last year was the first time ever (sine 1986) that they actually went net long as a group. Most of the time, this is low enough to mark a decent price bottom. (1of2)
Commodities - Bull or Bear? Last chart for this week looks at two competing trend lines and two competing theories for the medium term outlook on Commodities. ht@callumthomas
The silver market has registered a physical deficit in six out of the past ten years, yet this has failed to move silver prices higher. This signals to us that the silver price has fallen victim of to silver “paper” market trading and weakness in investment demand. (The paper silver market most often refers to the silver futures market, which gives exposure to silver’s price without providing ownership of the physical metal.)
Figure 1: Silver Physical Surplus/Deficit
(2009-2018; Million Ounces)
We strongly believe that both gold and silver are valuable hedging tools in times of uncertainty and volatility. When the S&P 500 plummeted 20% in the three months to Christmas Eve of last year, silver gained about 12% from its lows. At ~$15, the silver price is close to levels not seen since 2015 and we see little downside risk at this level. Any future economic hiccups and market sell-offs are likely to encourage investors to look for safe havens and alternatives to traditional financial assets.
Figure 4. Silver Use in 2018
Corporate debt at extreme levels but credit spreads near record lows? This imbalance is unsustainable and party should soon be over. Stocks & corporate credit due to resume what began in Q4.
Central banks bought 145.5t of gold, the largest Q1 increase in global reserves since 2013. Diversification and a desire for safe, liquid assets were the main drivers of buying here. On a rolling four-quarter basis, gold buying reached a record high for our data series of 715.7t.
Q1 jewellery demand up 1%, boosted by India. A lower rupee gold price in late February/early March coincided with the traditional gold-buying wedding season, lifting jewellery demand in India to 125.4t (+5% y-o-y) – the highest Q1 since 2015.
ETFs and similar products added 40.3t in Q1. Funds listed in the US and Europe benefitted from inflows, although the former were relatively erratic, while the latter were underpinned by continued geopolitical instability.
Bar and coin investment softened a touch – 1% down to 257.8t. China and Japan were the main contributors to the decline. Japan saw net disinvestment, driven by profit-taking as the local price surged in February.
Gold used in applications such as electronics, wireless and LED lighting fell 3% to 79.3t. Trade frictions, sluggish sales of consumer electronics and global economic headwinds hit the technology sector.