Are Recession Fears Still Looming?
Gold is Flying
Gold has enjoyed an impressive rally over the last 5 weeks - up 6% in the month of October. Historically, gold has always been the quintessential “flight-to-quality” asset. Whenever there are geopolitical or macroeconomic fears permeating financial markets, gold has outperformed. As it stands, December gold is on the brink of retesting the psychologically significant $2,000/oz level. So is the recent price strength evidence of investors’ fears of a looming recession? What other evidence would support this?
https://www.tradingview.com/chart/TQRCxS8L/
Crude Oil is Crying
Crude oil has fallen as sharply as gold has rallied. Since the swing high to 89.85 on October 29th, crude oil prices have fallen more than 13/barrel - settling at $72.90 on Thursday. Price contractions of this magnitude are typically demand driven, which would be another feather in the cap of demand growth fears on behalf of market participants. But, how could you explain the recent performance of the S&P 500, Nasdaq, and Russell 2000? In short - interest rates. As we near what is expected to be the end of the Fed’s rate hike cycle, equities have performed very well in anticipation of rates eventually coming down. The primary reason that the Fed would halt rate hikes, or begin lowering rates would come as a result of economic slowdowns.
Stocks Are Strong
All in all, the American economy has proven resilient. The rally underway in the equity markets has been substantiated by strong economic data, and disinflationary CPI readings. The proverbial “canary in the coal mine” could be consumer credit and lower-than-normal personal savings rates. However, there are very few signs of a robust economic breakdown coming in the immediate future in the United States.
Check out CME Group real-time data plans available on TradingView here: tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Gold has enjoyed an impressive rally over the last 5 weeks - up 6% in the month of October. Historically, gold has always been the quintessential “flight-to-quality” asset. Whenever there are geopolitical or macroeconomic fears permeating financial markets, gold has outperformed. As it stands, December gold is on the brink of retesting the psychologically significant $2,000/oz level. So is the recent price strength evidence of investors’ fears of a looming recession? What other evidence would support this?
https://www.tradingview.com/chart/TQRCxS8L/
Crude Oil is Crying
Crude oil has fallen as sharply as gold has rallied. Since the swing high to 89.85 on October 29th, crude oil prices have fallen more than 13/barrel - settling at $72.90 on Thursday. Price contractions of this magnitude are typically demand driven, which would be another feather in the cap of demand growth fears on behalf of market participants. But, how could you explain the recent performance of the S&P 500, Nasdaq, and Russell 2000? In short - interest rates. As we near what is expected to be the end of the Fed’s rate hike cycle, equities have performed very well in anticipation of rates eventually coming down. The primary reason that the Fed would halt rate hikes, or begin lowering rates would come as a result of economic slowdowns.
Stocks Are Strong
All in all, the American economy has proven resilient. The rally underway in the equity markets has been substantiated by strong economic data, and disinflationary CPI readings. The proverbial “canary in the coal mine” could be consumer credit and lower-than-normal personal savings rates. However, there are very few signs of a robust economic breakdown coming in the immediate future in the United States.
Check out CME Group real-time data plans available on TradingView here: tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.