Markets

Following are my personal comments on specific markets and issues. I chart markets for a hobby and my comments are the result. They are not recommendations to buy or sell anything and should not be thought of as such. They are for entertainment purposes only so enjoy.

Please remember, the following is pure speculation based only on my experience and chart patterns. "Every sunken ship has a room full of charts."

Note - I got a new wider screen monitor and when I look at this web site with the screen size in full, the site spacing does not come out properly. By making the window less wide all of the text and graphics slide into place. Perhaps you are having the same experience. DBE.

As usual, I will show pictures and graphs found on Zerohedge.com, Sentimentrader.com, which include the Seasonality charts and charts made on Barchart.com. I will also mention "cycle low timing bands" suggested by another market website to which I subscribe, Cyclesman.com.

Trump Presidency expectations and worries over war continued to dwarf economic data in the last two weeks. Traders are more concerned about what the economy will do under the new administration than what is going on now. They are still paying some attention to last month's data. Indicators of inflation and employment are the most watched.

The left side graph shows last month's Consumer Price Index reading that came in with an annual gain of 2.6%, slightly above the Fed's 2% target. The right side picture is the "Core" number that strips out food and energy. It was "hotter" than anticipated at 3.3%. October's sell off in gasoline and heating oil kept the headline number down.

The shelter component (left) fell a bit but it is still at a 4.9% annual increase. There are reports of rent decreases in some markets such as Austin, TX due to the completion of many multi family rental units. Hopefully this will become more common in other parts of the country. Goods and Services inflation (right) caught traders' attention because the red line for Goods turned up. It looks bad on the chart but it is still minus 1%. Services came in with an annual gain of 4.8%. Analysts continued to ask why the Fed cut another 0.25% at their last meeting.

New claims for unemployment benefits came in at 213,000 on a seasonally adjusted basis and 229,000 on a non-adjusted basis (left). These numbers were below expectations and are evidence of a strong labor market. On the right are the four week moving average of initial claims (green) and continuing claims (red). Continuing claims are people who remain on unemployment. The question is: If the labor market is so good, why can't the unemployed find new jobs? If the data is to be believed, employers are hanging on to employees for now and not hiring new workers.

The upper left chart shows last month's manufacturing data which was down a bit. On the upper right is the same for industrial production. The lower right graph shows revisions to the previous month's industrial production numbers. For the last 7 months, industrial production was revised downward a month later from the headline number. This is the kind of thing that makes skeptics, What kind of economy will the new administration be handed? The lower left graph is the Cit-Ecoomic Surprise Index. It tracks the difference between economists' predictions and the reported data. Over the last couple of weeks it turned down.

On the left is the latest reading on housing starts and building permits. Both were down a bit. Multi-family in particular fell from its recent pace. Sales of Existing homes (right) ticked up a bit from very depressed levels. The mid-west where homes are less expensive saw the greatest gains. Inventory was up slightly. First time buyers made up 24% of the sales so it is still difficult for non-owners to get into this expensive market. I see more For Sale signs around my area than in past years so things are slowly loosening up.

Two weeks ago I was skeptical of an exact repeat of 2016's stock market post election rally into December. I also thought that gold was due for a sell off. Stocks gave back a good chunk of the Trump surge over the next week and are trying to get back to previous highs. In the month following the 2016 Trump victory there were some sideways periods but no real down moves. This year was supposed to be even better. Analysts pointed out that November is one of the best months to own stocks so the "seasonals" pointed to higher prices. On top of that, corporate buy backs were projected to be in the range of 6 billion Dollars per day! How could the market go down with all that good karma?

On the left is a close up of the trading pattern in the Dow Jones Industrial Average. It regained a lot of ground last week but has the look of a market that needs more down side before resuming its surge. The S&P 500 retraced less than the Dow.

Above are two of the best performing ETFs that are made up of stocks considered to be beneficiaries of the Trump push to bring industry back to the U.S. and reward domestic producers with lower taxes. My guess is that this will be harder and take longer to do than the market projects. Many of these NYSE listed companies have major manufacturing plants in China and their products will be hit with tariffs. While money flowed into Trump winners, it left other sectors. Breadth (number of issues up versus down) are lagging the movement in the major market measurements. In past markets this was not a good sign but don't forget, the same thing was said about tech stocks and they led the market higher for years.

The rebound in the NASDAQ 100 is disjointed and looks more like an upward correction than the beginning of a push to new highs. The Russell 2000 recovering most of its decline like the Dow Jones, . The Russell 2000 contains a lot of zombie companies that don't make a profit and are heavily leveraged. With interest rates higher their balance sheets look poor and they are targets of short sellers. Most of the time, when you see the Russell 2000 have a good day it is because of short covering by traders that are giving up on their bearish positions.

This morning I heard an interview with Amy Wu Silverman, an analyst at Royal Bank of Canada. She is one of the few people that have a good grasp on market flows. She said that despite all the talk about the Trump trade, for the market to do well, the Magnificent 7 still have to perform. This is because of the mega-tech weighting in the major averages and the amount of the world's wealth that is parked in their shares. The MAGS ETF that concentrates on the Magnificent 7 is looking weaker than the major averages. SMH, the computer chip ETF didn't even make new highs after the election and it is supposed to be in one of its strongest seasonal periods of the year

Helping the Mag 7 story were Nvidia and Tesla. Nvidia's earnings and guidance were great but not as good as the "whisper" numbers floated in the market. Some are wondering if they reached peak capacity. There are also rumors about overheating in servers using their newest Blackwell design. Tesla jumped on, well, Elon Musk. Their last quarter surprised The Street positively but this company has always been about Elon Musk and we are at peak Elon and perhaps peak Tesla too.

Holding MAGS back are Apple and Google's parent, AlphaBet (GOOGL). The Justice Department is floating the idea of breaking up Google because of their monopoly on SEARCH. Google is a big part of the censorship industrial complex that did their best to keep conservatives away from elected offices over the last decade. It's founders were frequent visitors to the White House during the Obama administration. How well will they do during the next administration? Apple's I Phone 16 is not selling as well as expected. We just had Singles Week in China, the world's biggest market for cell phones and Apple's sales lagged expectations with consumers buying more domestic brands. Apple is around 7% of the S&P 500. It has 15, 287,521,000 shares outstanding so a $1 drop in its price causes that many dollars to evaporate.

Microsoft isn't doing that well. It is a bit over 6% of the S&P 500 with 7.433 billion shares outstanding so like Apple, a one Dollar drop dissapears a lot of wealth. META isn't following the Trump trade either. These four laggards might be "yesterday's play" but because of their weighting in the major averages, a rotation to other sectors will cause the S&P 500 and NASDAQ to stall.

Two weeks ago the RSI reading on gold's weekly closing price was too high for me to buy. The metal plunged $250 from peak prices and like major stock measurements is doing its best to recover. Until it can make new highs I will be a skeptic. In some past years, it hit highs in the first two weeks of January then fell so I will be watching for that pattern.

To the right is a chart showing the gold price and the number of ounces of gold it takes to buy one unit of the Dow Jones Industrials. It is a simple measurement to show if you are better off in gold or an index fund based on the Dow Jones Industrial Average. It does not include dividends paid on Dow stocks so it understates the stock market's total returns. Both markets are near all time highs. Lately there was a slight advantage for gold but not much.

So, why all the selling in gold? Here is my reason. The Dollar is on a tear higher. There are billions and billions of Dollar denominated loans issued from private and public entities all over the world. No one will lend them money if they have to hedge 3rd world illiquid currencies so they borrow in Dollars and have to pay interest and principal in Dollars. When the Dollar goes up, they have to tax or earn more money in their domestic currency to pay the same amount of Dollars. There are a lot of currency market transactions that are calendar based so moves in the Dollar often peak or hit lows around the end of the year. My guess is that we are seeing a Dollar buying frenzy from fear of the Dollar going even higher into year end. The up move is putting the finishing touches on an almost perfect a,b,c, "flat" upward correction in a down market. That warns me to watch for a major high. On the right is a graph of the daily closing price of gold in NY and the same data with the percent gain or loss in the Dollar Index added. Non-Dollar gold owners are looking at bigger gains in terms of their own currencies than those of us who are Dollar based. Those gains increased as the Dollar rose. The yellow box to the left shows the spread a couple of years ago. I copied the box to the right and you can see the difference. At some price point every market is a sell and with a need for Dollars it is likely that some large entity cashed out of their gold holdings very quickly to take advantage of its extraordinary rise. Unfortunately for the metal, once someone sells the high it encourages others who were thinking about the same transaction to follow. The last bout of selling happened in the middle of the night from Asia so watch the overnight sessions.

My, "sell red oval, buy green oval" play book kept me away from silver too. Going into week's end, the attempted rebound in the metal is less energetic than gold.

The same currency dynamic applies to silver. In May you could get 16.5 Mexican Pesos for one Dollar. As of Friday you got 20.43. Mexico produces 24.8% of the world's silver. If your costs are in Pesos, it looks like a good time to cash in on Silver's gains and hedge future production.

An interesting thing is happening in the energy sector. Crude Oil is range bound. There are lots of reasons to think it will do better under a Trump administration. Our economy could perk up and more importantly for oil, a new trade deal with China could restore confidence in their economy, increasing demand. President Trump is in favor of tightening the screws on Iran and limiting their exports of Crude Oil. That would remove the projected surplus of oil from the markets in 2025. At times it seems we are one long range missile strike away from WW III and all commodities rally during war as supply chains come under attack. A few weeks ago, analysts were focused on projections for a worldwide surplus and the new President's promise to cut energy prices. This week they are talking about bullish factors. The price is up $5 from recent lows but when looked at on the longer term chart it is still a trading range market. In the meantime, big oil companies are near their highs for the year! The XLE, big energy ETF chart includes Crude Oil in blue so that you can see the consistent correlation between the energy sector and crude prices. Recently these diverged with traders bidding up oil company shares despite oil not doing much. If oil fails to go much higher there should be a day of reckoning for the shares and a return to earth. XLE rallied into Dec. 2016 before the last Trump administration, hitting $78.45. Three years later, right before COVID it traded at $62.44.

The bond market is afraid of "Trumpflation." It is showing up in the market with this week's yield curve above the last 6 weeks and very much above the lows after the Fed's initial 50 basis point cut in September. Last week the Treasury sold 20 year Treasury Bonds and the auction went poorly. Foreign participation was good but domestic buyers stayed away from the auction, afraid that rates will be higher (bonds lower) and that buying now will guarantee a loss in the future. The right side graph shows rates on 10 and 30 year paper going back to the fall of 2016 before Trump's first term. Rates initially rose in response to a big recovery in the economy but going into December of 2019 (right before the COVID effect) they were lower than when he took office. You can see under whose administration rates rose. The guys at Real Investment Advice posted an article on why fears of inflation might be overblown. It is worth reading. You can paste the URL to your browser.

https://realinvestmentadvice.com/resources/blog/trumpflation-risks-likely-overstated/?utm_medium=email&utm_campaign=Macroview%20Trumpflation%20Risks%20Likely%20Overstated&utm_content=Macroview%20Trumpflation%20Risks%20Likely%20Overstated+CID_4ce9435b025166861e63cb562f79e85f&utm_source=RIA%20Email%20Marketing%20Software&utm_term=READ%20MORE

Above are ten year charts of soybean and wheat prices and a 30 year graph of live cattle prices. In the history books I have read recently a measurement of inflation and well being is the price of wheat in terms of silver. This might encourage some to buy silver but the real message is to buy food now while it is cheap, except for beef. The other lesson is that periods of warm weather have always been good for civilization and human health. Colder times brought famine, disease, an up-tick in war and social unrest. After reading about this stuff I will take every warm day I can get. The lower right graph is from an article that appeared in the Washington Post. It was supposed to support the arguments behind global warming. When they looked at the world's temperature over a very long time they found that we are at the lower end of historical temperatures. So what is the "right" temperature for the planet and why do we think we can control it by raising taxes and costs?

Stock Market and Gold- So far we have a high, a nasty sell off and a good rebound. Failure to take out the recent highs within the next couple of sessions will probably lead to another decline. To the left is a screen shot of a chart pattern from 2011. The trading from "Wed" into "Fri" formed a classic contracting triangle in an up market. It had five legs with each less in length, culminating in a final enthusiastic burst to new highs before a reversal. I will be watching for a similar pattern in stocks and gold with Friday or possibly early Monday's trading forming the secondary high that you see at the "Thu" point on this graph.

Bonds - Despite all the bearish sentiment around the new administration, rates are in the same range they have traded in over the last few months. The appointment of Scott Bessent as Treasury Secretary could give bonds a boost early next week.

Dollar - War drums in Europe and signs that their economy is slumping helped the Dollar last week. We could be near the end of a panic buying.

Other commodities - Oil is the most important thing to watch. If war talk winds down I expect another sell off. I like grains. How many years in a row does the weather cooperate like it has over the last couple of years?

General - Expectations for gains in stocks, gold, silver and Bitcoin are sky high. Investors are loaded up with bets. I am going to be cautious.

Regular readers know that I am no fan of the climate change lobby who funnel tax payer money into uneconomic foreign made, intermittent energy that relies on fossil fuel to make, transport, install and maintain. I like conserving resources, saving money and finding things that have a real payoff and are good for the environment. I am proud to announce that my employer, Sabin Metal is doing just that with a project at our Scottsdale, NY plant. Here are the details -

"Because of the scale of global sulfuric acid use, our process has economical gigaton-scale carbon dioxide removal (CDR) potential while simultaneously eliminating industrial sulfate waste." — Laura Lammers, PhD, founder and CEO of Travertine

The Travertine Process demo plant combines three major unit operations — salt-splitting electrolysis, caustic direct air capture, and mineralization — to convert gypsum previously mined at the site and carbon dioxide from the air into sulfuric acid, green hydrogen, and calcium carbonate. The carbon-negative process will supply sustainable, fossil-free sulfuric acid for Sabin Metal's recycling and refining business. Future expansion could supply green hydrogen to replace natural gas for high-temperature industrial heat at the site.

Engineering for the demo plant is already under way, with anticipated commissioning in mid-2025. Once operational, the plant will be capable of upcycling hundreds of tons per year of waste gypsum and removing tens of tons of carbon dioxide per year from the atmosphere — all while producing sulfuric acid, green hydrogen, and the mineral calcium carbonate (a permanent store of carbon).

"This demo plant is an exciting next step as we scale up the Travertine Process, which can decouple critical element extraction and refining from fossil-derived sulfur. Because of the scale of global sulfuric acid use, our process has economical gigaton-scale carbon dioxide removal (CDR) potential while simultaneously eliminating industrial sulfate waste," said Laura Lammers, PhD, founder and CEO of Travertine. "We're thrilled to partner with a mission-aligned and innovative company like Sabin Metal."

For nearly eight decades, Sabin Metal has focused on recovering, recycling, and refining precious metals from byproducts of the petroleum, chemical, pharmaceutical, electronics, and hydrogen industries, with environmental responsibility as a core tenet of the company. Integrating the Travertine Process into its main facility in Scottsville, New York, will enable Sabin Metal to bring even greater circularity to its operations. The demo plant is sized to satisfy 50% of Sabin Metal's annual sulfuric acid needs.

"Our commitment to the planet extends beyond recycling precious metals from industrial feedstocks," said Sam Sabin, strategic advisor at Sabin Metal. "We are proud to host Travertine's demo plant at our New York site, not only to increase circularity and sustainability in our operations, but also to show the world the tremendous potential of their core process."

This project is supported by New York State Energy Research & Development Authority (NYSERDA) with $3.2M in funding for the demo plant buildout. On March 15, 2024, NYSERDA announced more than $16M to accelerate innovative solutions in clean hydrogen and to promote the use of clean hydrogen in industrial processes, clean transportation, energy storage, and for grid support.

The demo plant is also supported with $7.5M in venture debt from impact platform Builders Vision. Builders Vision invested in Travertine through Builders Bridge, which fuels an investment portfolio at Builders Vision focused on catalyzing capital and scaling market solutions into essential, underserved opportunities across the platform's three focus areas, including oceans, food & agriculture, and energy.

The combined funding follows $8.5M in financing Travertine announced earlier this year to commercialize its core process. Holcim MAQER Ventures co-led that financing, with participation from the Grantham Foundation for the Protection of the Environment and venture capital firms Clean Energy Ventures and Bidra Innovation Ventures.

"Supporting FOAK pilots in hard-to-abate sectors is essential for scaling critical climate solutions, and we see massive potential for the Travertine Process to address difficult decarbonization challenges, including producing fossil-free sulfuric acid, green hydrogen, green cement, and cost-effective, large-scale carbon removal," said James Lindsay, investment director at Builders Vision. "Travertine's platform technology uses a true systems approach that can significantly contribute to a healthier and more sustainable planet. We are excited to champion this groundbreaking process."

In addition to metals recovery and refining, the Travertine Process is applicable across a range of critical element production processes central to the energy transition and other industries, including lithium, nickel, and phosphorus, as well as cement.

About Travertine Technologies, Inc.

Travertine enables carbon-negative, zero-waste critical element production for mining, fertilizer, and metals operations around the world. The Travertine Process was inspired by natural rock weathering and mineralization, which is the way the Earth naturally regulates CO2 in the atmosphere. Travertine is leveraging this natural process along with the scale, speed, and economics of heavy industry to eliminate chemical waste and permanently store CO2. Travertine is based in the climate tech and outdoor hub of Boulder, Colorado, USA with a team of engineers and scientists dedicated to building practical solutions to climate change. To learn more, visit travertinetech.com.

About Sabin Metal Corporation

Sabin Metal Corporation started as a one-man scrap metal operation in New York City. Founded in 1945, Sabin Metal Corporation is now North America's largest independently owned precious metal refiner. Over our history, we have honed our sampling, analysis, recovery, and refining techniques to deliver the highest returns in the industry through efficient and sustainable practices. But for all of our success, we've treated customers and employees like family—creating multi-decade partnerships founded on honesty and integrity. Sabin Metal Corporation recovers and refines precious metals from petroleum/petrochemical, chemical, pharmaceutical, nitric acid, electronics, hydrogen, and other industries. We recover platinum, palladium, ruthenium, rhodium, rhenium, gold, and silver from secondary sources to make pure metal and metal compounds. To learn more, visit sabinmetal.com.