Morning Macro 25th September
Overnight we saw US equities and gold take a breather as US yields and the US dollar still edge higher from last weeks ‘less dovish’ Fed meeting and stronger housing data with August New Home Sales surging 20.50% to the highest level since Jan 2022, amid lower mortgage rates and builder incentives. The standout price move is copper, jumping 3.8% this morning. Freeport has declared force majeure at its Grasberg mine in Indonesia one of the largest mines on earth, producing ~1.7bn pounds of copper (nearly 3% of global supply)
U.S. AUGUST NEW HOME SALES SOAR 20.5% M/M TO 800,000; EST. 650,000; PREV. 664,000
Even with that There were 35% more home sellers than buyers in the US in August, the second-largest reading on record after 36% in June. The estimated number of sellers reached 1,943,957 in August, one of the largest readings since 2020. (Chart 1, Redfin, MLS)
Gold hits most overbought level on the monthly chart in 45 years. But beware, its simply trending higher, an asset can stay overbought during a long period of times in a bull run, and it’s currently trending higher with retail and trend following algos happily buying. But also note, of course central banks are buying, and they will simply add on pull backs (not stop out) and the market isn’t speculating; it’s rationally repricing the metal for a new era of fiscal dominance, negative real yields, and de-dollarization.
Meanwhile in equity space five U.S. companies now make up 20% of the world’s total stock market value, and recent action has been wild: “non-profitable tech” up 8% in five days, “Most-shorted” stocks up 6.7%, and a quantum-computing theme fund up 30%. And The S&P 500 has gone 107 sessions without a drop of 2% or more, the longest streak in more than a year. Profit less tech has performed particularly well over the last 2 months (Chart 2, Bloomberg, @HayekAndKeynes)
Foreign investors now have a record allocation to U.S. equities (Chart 3, @NDR_research)
German IFO services expectations remain in contraction and trending lower. (Chart 4, Macrobond & Nordea)
Seasonal retail hiring to fall to lowest level since 2009, signaling trouble for holidays, report says – CNBC
BESSENT: POWELL SHOULD HAVE SIGNALLED 100-150 BPS CUT…… shrug!
Data today – weekly jobless claims
