You can dismiss any notion that today’s rolling and tumbling equities were in any way affected by the brouhaha over the execution of a Shiite cleric by Saudi Arabia. It probably was an inordinately stupid thing to do by the Saudis, but Iran did react swiftly on the official level to muffle the crazy protests that “the man in the street” conducted.
Regardless, West Texas Intermediate crude oil is down in mid-afternoon trading by about 0.80%. Brent North Sea is about even. Oil had been up earlier in the day by as much as 4.00%.
A big question remains today concerning why China’s stock markets fell off the cliff. It seems that there was some contradictory data about the world’s second-largest economy.
Small and medium-sized manufacturers reported out some contraction but non-manufacturing businesses reported a fairly robust expansion. But, since China runs more on industrial products rather than “services,” the manufacturing shrinkage is meaningful.
The Shanghai index was down 6.85%. It dragged down both the Nikkei (off 3.00%) and the Hang Sen (off 2.70%). The China worries cascaded over into the European trading arenas.
The DAX was off 4.25%, with the FTSE and CAC off about 2.40% each.
New York exchanges seemed as if they were going to follow suit in lockstep with other indexes but the DOW industrials and the S&P 500 are holding at slightly less than 2.50% losses. The NASDAQ is down about 2.90%.
.png)
Gold remained strong despite a U.S. dollar recovery in late morning. The yellow precious is up about $14.00 at mid-afternoon. Gold is reacting to safe-haven needs created by the Saudi-Iranian dust up.
Silver is eking out a small gain but platinum and especially palladium have been hit hard with losses. Palladium is off around 4.00%.
The dollar is mostly higher – against the euro and the British pound, but it remains weaker against the yen.
As the New Year progresses, we will begin to bring in focus once more the meaning of the first Federal Reserve rate hike and discuss the probability (high OR low) of a second rise when the next FOMC meeting concludes in 23 days. (Yes, the new statement will be issued on January 27.)
Meanwhile, we await the release on Wednesday of the FOMC meeting held in mid December.
We also will get the ADP private jobs report on Wednesday and Non-Farm Payroll numbers from the U.S Department of Labor this coming Friday.
Hang on. It’s 2016.
For those who would like a deeper analysis with detailed buy and sell recommendations, I invite you to try our daily video newsletter. Simply use the link at the bottom of this report to sign up for a free trial.
Wishing you, as always, good trading,
Gary Wagner
thegoldforecast.com
