It’s pretty safe to say that we haven’t seen the end of this period of increased volatility. All markets seem poised to overreact to whatever the outcome of next week’s Brexit vote might be. I’ve seen that if the referendum passes, the target for the exit is actually sometime in 2019. Nevertheless, there will be an oversized collapse in common sense in our immediate future that seems unavoidable.
How about gold, gang? The precious metal has skyrocketed to levels well above $1,300 an ounce. The VIX is trading above 22. Treasurys are very strong, as we see the 10-year approach yields of about 1.5%. The utility sector is way ahead of the pack … again, and trading volumes are poor again. We really haven’t had sizable trading this week except for Wednesday afternoon. Technically, the S&P 500 (^GSPC) has held the 2050 level today. I thought that we might squeeze a couple extra points out of that sell-off, but the tape is the judge, and the tape is never wrong.
Let’s check on today’s victims, shall we?
1) The Swiss 30-year moved into negative territory today. The global debt supercycle will feed off itself forever … until it doesn’t. (Who’s that guy who doesn’t sell gold, but has been telling folks to buy it for a while now?)
2) The US dollar is strong today against a basket of global currencies, despite yen strength. This is putting a further hurt on crude and energy stocks and really puts an exclamation point on gold’s move.
3) After the energy sector, the “Ugly Stick” also paid a visit to the transports, the techs, and of course … the financials.
4) Are markets absurd right now? Of course. You’re not wrong. Do we even need to have a central bank? I don’t think so, but that’s a fight for another day. One that I will never win.
5) Yes, health food.