OTW #43: Peak rates -> gold rallies, End of the bull market, Orange juice soars, and more
Important financial stories to check out over the weekend
Hi Antagonist readers,
It’s time for another edition of “Over the Weekend.” If you enjoy these brief posts, please invite others to subscribe. When your referrals sign up, you’ll receive credits that reward you with a free premium membership!
1. Peak rates lead to gold rallies.
Ole Hansen, head of commodity strategy at Saxo, provided an insightful chart to accompany his interview on Macro Voices.
Hansen examined the relationship between peaks in the Fed funds rate and the price of gold. He found that when interest rates peak (blue line), gold (orange line) tends to rally.
Antagonist’s take
This data is compelling, but it also leads to one big question: Have interest rates peaked?
If so, gold could be set to soar.
If, however, the Fed hike rates again (as it has said it would), it could take a few months (or more) for gold to jump.
Tavi Costa, however, believes that the rally isn’t far off.
He noted that triple tops like we see in this gold chart almost never hold:
Costa also added this commentary:
Gold is now only 2.5% from a historical triple-top breakout.
Keep in mind:
The metal has already reached all-time highs in 6 major currencies:
Euro
British Pound
Chinese Yuan
Australian Dollars
Japanese Yen
Korean Won
The US dollar is the next one in line.
2. Signs of the end of the bull market?
James Mackintosh of the Wall Street Journal analyzed historical patterns in bull and bear markets. He concluded that our current market looks more like the end of a bull run, not the start.
Among many datapoints, Mackintosh noted that when stocks diverge, it’s typically a bearish signal.
Before Silicon Valley Bank collapsed in Oct. 2022, nearly every stock index rose together. But look what happened after that:
As Mackintosh explained in his article, “…large numbers of stocks went down, even as the S&P 500 went up. Banks did badly, and smaller companies worse, while earnings expectations have dropped. This isn’t normal.”
Check out his full article here. It’s well worth the read, and it’s loaded with additional meaningful data observations.
Antagonist’s take
For several months, I’ve been uncomfortable with how much of the stock market’s gains are due to just a handful of stocks.
That’s why I’ve been steadily adding positions to our Blend Portfolio that will not only protect us if the S&P 500 and Nasdaq crash, but will also allow us to reap large profits. The results have been outstanding.
Our average Blend Portfolio return has nearly tripled the performance of the S&P 500 over the same time period.
I’ll be adding another position to our Blend Portfolio early next week. If you’re not yet a premium member, join today to receive that position and to gain access to the full portfolio.
3. Orange juice and other agricultural commodities are soaring.
Forget AI stocks. The price of orange juice is up well over 100% on the year!
The breakfast favorite isn’t the only commodity that’s soaring either. Check out the price changes of these agricultural products (credit: Ole Hansen):
Antagonist’s take
Much of these price movements can be explained by concerns over weather (check out page 14 of this slide deck).
Demand for agricultural products stays relatively stable—people and animals always need to eat.
But when there’s a supply shortage, that’s when prices rise dramatically. Weather certainly plays a role in this but so can changing demographics.
In the August 1st issue of our Blend Portfolio, I wrote a full report about rising food prices and which industries you should monitor to profit off the trend.
All subscribers can read the first part of the report here. If you’re a premium member, you have access to the full article including two stocks that I recommend researching.
Last thing...
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Thank you for reading, and have a great weekend!
Jason Milton
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