New job, new firm but the same Free Whelan. Thank you for your continued support and keep unlocking valuable insights into the global market every week with me!
What a weekend it was. Dance concerts and the beginnings of a greatly cut-down Thanksgiving event next week.
Anyone who’s followed me for a while knows that I’ve done a November event at my place celebrating all things US. Turkey, College Football, a few bottles of Coors, and pumpkin pie, before finishing off with a sketchy version of the Star Spangled Banner on the Stratocaster.
There’s no real reason why we do it but it started as a bet with the guys that my little Webber BBQ could handle a turkey. After cramming it in and leaving it there for 4 hours the result was a technical “cooked” turkey and I claimed victory.
My mates’ opinion of the result differs.
So, five years later it became a 20-person event at my house which was just too much to handle. With the current workload, I’m toning it right down and keeping it simple.
Speaking of the current workload it’s been thumping along with a few capital raises on the boil right now. As usual, if there’s any interest in participating in these types of deals please let me know.
Gold
No way around it, gold is not doing the thing that everyone said it would do following Trump’s election. It is weird that the “bullish gold” thesis gained so much traction early on with treasury yields popping, USD rallying and generally inflationary outlooks for 2025 needing to be reset and tail-winded by a freshly dovish Fed who seem to want to plough on with their cutting schedule regardless of the administration change presented to them.
Gold needs to have a place in portfolios (and I had to double-check the preferred SMA we allocate to that they have an allocation- they do) but the question is when?
I’ll use the GOLD ETF from Global X as the basis of the analysis.
On a chart going back just over a year, we can see that Gold is sitting on some decent support at above $36.
Source: TradingView
Dropping through that we bring $34 into play.
The RSI (middle of the chart) shows an oversold indication but you need that moving average (yellow line) to move back in an upward direction.
Going right back out on a weekly chart to 2019 we see something a touch more grim.
Source: TradingView
Long-term gold potentially could come right back to where it was a few months ago. There are a few things that need to happen for that to be the case though.
Not all heroes wear CAPEs (I apologise for nothing).
Source: Yale University; Professor Robert Shiller; Tavi
This was posted by perennial gold bug Tavi Costa. It’s a cyclically adjusted P/E ratio (hence the acronym) and takes a long-term view of company price/earnings ratios adjusted for inflation.
Noting that it’s backwards-looking and historically bad at picking short-term market moves, it’s still pretty high.
“An important observation: The CAPE ratio currently is at 38.1x, just below the 38.3 peak reached during the 2021 market high. At that time, the 10-year yield was 1.5%. Today, it has risen to 4.4%. It's worth noting that we are now significantly above the 1929 peak levels as well. Valuations don't grow to the sky.” Otavio Costa, November 17.
What to do with this data? Nothing. But if you wanted to increase your cash position that wouldn’t be the worst thing to do right now, were you that way inclined.
Note that a big part of the thing driving the above is AI expectations. Remember what was driving the market when the AI revolution started was “tell me” and now the market has moved into the phase of “show me”. The world is watching these mega tech companies and their clients to see if they can enhance/protect margins and meet growth expectations with the help of this great new technology.
Read on
AI
We hosted a seminar on AI last week with guest speaker (and good mate) Max Kaye, Head of Data, Analytics & Artificial Intelligence Australia/NZ at Google.
It was a phenomenal presentation with the only catch being we didn’t want to record it.
Here’s our research note on AI we created last week and this gives a solid overview of the space. Link Here please read it’s worthwhile.
Interesting bit…
On Copper
Loved this quote from the recent UBS Australasia Conference, posted in Livewire today.
“According to Friedland, copper, in particular, has become crucial. He notes that 700 million metric tonnes have been mined throughout history, and we need to mine 700 million metric tonnes in the next 22 years to keep up with demand.
At this stage, Bloomberg estimates we will need six new large copper mines every year – and this doesn’t factor military demand but, rather, the needs for the green transition.”
SIX NEW MINES EVERY YEAR!!! SIX!! IN THIS ECONOMY!!!
We remain bullish on Copper
Finally
There’s an expression that if the US population simply ate better and exercised the S&P 500 would lose 70% value overnight.
RFK Jr (who has run on the MAHA (Make America Healthy Again) campaign was named by Trump to head up the Dept of Health and Human Services. Here is a randomly chosen pharma index I found and their last few days of candles:
You don’t need to see prices to know the sentiment…..
Image: Donal Trump & Elon Musk having plane food on Air Trump.
Here is RFK Jr looking less than jazzed about the plane food on Air Trump.
All the best and stay safe, happy thanksgiving too,
James
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