James Brodie
Head of Learning & Development, Flux
Industrial Commodities Up, Euro Drops 1% vs Dollar, Retail Mania
Commodity rally broadens as retail mania builds; USD stabilises on strong US data, risking metal pause. Margin debt surges, UPS jobs cut
The rally continues with industrial commodities back at the party.
Uranium +8.1% today (32% supply deficit expected by 2045) and copper +6.4% today (10 million tonne deficit expected by 2040) and both back at new all-time highs. Crude has also broken higher +>5% in 3 days, gold +11% in 3 days (the equivalent value of one Nvidia!) and silver up a mere 68% this month. However, the dollar has stabilised over the last 2 days, on Powell’s comments stating - economic activity has “once again surprised us with its strength,” citing strong consumption and job demand as reasons the economy is on “firm footing.” If the dollar can consolidate here (most over sold since 2020) it will stall the precious metals rally, though retail mania doesn’t care for facts.
Euro drops 1% against the dollar, most since July.
Fed Chair Jerome Powell says US $38.5 trillion national debt is "not sustainable."
EURUSD vs trade weighted EUR exchange rate (rate cuts coming to ECB meetings in the months ahead) (Chart 1, Bloomberg, @jsblokland)
US margin debt reached a record $1.23 TRILLION in December, surging +$326 billion over the last year. This is the 8th straight month of increases. Over the last 8 months, margin debt has surged +45%, the most since the 2021 meme stock frenzy. (Chart 2, Haver analytics, Goldman Sachs Global Investment Research)
UPS to eliminate 30,000 high paying delivery driver jobs. Between Amazon and UPS, 46,000 high paying American jobs have been eliminated - within 24 hours.
Microsoft stock down 8% after hours on higher capex, despite beat on revenue
BlackRock says bonds no longer offer reliable portfolio protection amid rising volatility. Spikes in long-term yields are fuelling debt concerns, driven largely by U.S. tariff risks, with impacts strongest in Japan. The firm remains underweight long-term U.S. and Japanese government bonds.
Indonesian equity market falls hard again and moves into a correction, -16.3% from its peak.
Swiss government bonds out to 4 years are now yielding negative returns!
Retail mania - remember crypto laser eyes or NFT bored apes! … well China only has one silver fund, and the demand is so rampant it had to shut off subscriptions so it's now at 42% premium. (Chart 3, Bloomberg)
Data today: US jobless claims
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