Craig Hemke – Odd Market Reactions To The Fed’s Hawkish Pause – Is A Crack Up Boom Coming Later This Year?
Craig Hemke, Founder and Editor of TF Metals Report, joins us to discuss the strange market reactions in the US dollar, interest rates, general US equities, and the precious metals sector after the Fed’s supposed “hawkish pause” at yesterday’s meeting. We note how many times this year we’ve seen constantly shifting rate hike, rate pause, and rate cut expectations from the forward-looking markets and Fed funds futures.
General markets rallied on the news, but to see the greenback sell off, while bonds got a bid and interest rates fell, the day after Powell and many Fed heads still signaled a rate hike for July’s meeting, is quite unusual. We saw gold go down initially on Wednesday after the FOMC meeting and into overseas trading, only to rally back higher again on Thursday, above the $1950 support up to around the $1970 level. We discussed how overall, the gold mining stock moves have remained weak to muted overall, and Craig highlights again, that really the GDX and GDXJ have a tighter correlation with silver than with the price movement in gold, and that until we see it starting to move higher that trend will likely persist.
We wrap up with a general conversation about what it will take to bring generalists back into the PM sector, if it necessarily requires a correction to overbought tech stocks and general US equities. Craig points out that once there is a clear Powell pivot back to cutting rates, that we may just see a “crack-up boom” type of move taking all markets higher as the monetary cycle of further easing to is destined to repeat itself once again. With so much government and corporate debt getting ready to roll over at much higher interest rates, there could still be some economic dislocations as this year unfolds that may force the Fed to act quicker than the markets are currently anticipating.
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Click here to visit Craig’s site- TF Metals Report.
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Peter Krauth: “Silver Asymmetric Opportunity”
Metals Investor Forum – May 26-27, 2023
(LIO) (LOMLF) Lion One Reports High-Grade Gold Results at Tuvatu
14 Jun 2023
Highlights of new grade control drilling:
– 7.14 g/t Au over 21.6 m (including 18.61 g/t Au over 5.1 m) (TGC-0042, from 73.6 m depth)
– 52.05 g/t Au over 2.1 m (including 345.3 g/t Au over 0.3m) (TGC-0042, from 118.0 m depth)
– 23.11 g/t Au over 3.6 m (including 125.31 g/t Au over 0.3 m) (TGC-0040, from 65.4 m depth)
– 19.43 g/t Au over 3.3 m (including 80.87 g/t Au over 0.6 m) (TGC-0051, from 49.5 m depth)
– 21.15 g/t Au over 2.7 m (including 67.59 g/t Au over 0.6 m) (TGC-0047, from 123.3 m depth)
– 9.39 g/t Au over 4.2 m (including 67.30 g/t Au over 0.3 m) (TGC-0050, from 26.7 m depth)
– 10.13 g/t Au over 3.9 m (including 38.58 g/t Au over 0.6 m) (TGC-0043, from 66.3 m depth)
https://ceo.ca/@newsfile/lion-one-reports-high-grade-gold-results-at-tuvatu
YUPPERS, I saw those drill hits this morning, and the market did a big YAWN! It really is stupid out there. When this stock starts to catch fire, I wonder how ridiculous that too will seem. DT
Yep, the markets have been ignoring most of the good work companies have been doing the last few months now (just like last summer and fall), which most of the company management teams, fund managers and newsletter writers we talk to are quite frustrated by. Even if investors got positioned in the companies with good projects/teams/work programs, and they were successful in their objectives, then it is still getting shrugged off at present. It’s just the sentiment period we are moving through at present…
With Lion One, they’ve finally transitioned into early-stage production, but with plans to continue ramping that up over the next year, so these drill intercepts are more valuable than on some remote patch of moose pasture that may or may not ever become a mine. In that sense, drill hits like the 7.14 g/t gold over 21.6 meters (including 18.61 g/t gold over 5.1 meters) should have had a more positive reception by the market, but over time, it will become more obvious what a monster alkaline deposit LIO could be sitting on, as it continues to grow. Unlike many companies, they’ll now be able to earn while they learn…
Craig answered the opening question with, “I don’t know!” And from that point he just made stuff up….but I listened anyway, thank you.
I appreciate that he says “I don’t know” because to a certain degree none of us do. I have been following him for years and he has a strong background going back to college. He believes, as do I, that there is intervention in markets but he tries to see if the computers have correlations between the paper metal prices and other economic indicators like a particular currency so that the algos are “unthinking” on a day to day basis. It could be direct or inverse relationship like pick the worst performing currency and tie metals to it or the worst and have an inverse daily relationship. He assumes that what ever the relationship is, is established to keep the metals in a weakened status until they swap to the other side. I might be be getting that all wrong, but he appears to be a strong technician who tries to find day to day market projections that includes intervention (if that makes sense). His insight is worthwhile when taken along with all the others making contributions here.
Lakedweller2 – Thanks for those comments on Craig. He cuts up a lot, and is one of the funnier people we talk to regularly, but he is a very sharp guy; with an economics background in school as you note, the experience of working professionally in the financial markets, and then over a dozen years of sharing insights at his site – TF Metals. He’s also spent the last few years really bringing TA into his wheelhouse and realizing the value of it as another tool in the thought arsenal. We’re sure glad to chat with him each week and have him as a regular guest on our show.
Anyone that assumes they know exactly how things are going to play out is delusional, so saying “I don’t know” is quite fair with so many mixed signals and data coming in. It’s the people that act like they have 100% certainty on how things are going to unfold that should be more concerning.
Everyone has been dead wrong the for the last 2-3 years on how things would play out overall, even if they got certain macro aspects or certain small windows of time correct for pricing direction or correlations along the way. There have been no analysts or financial media pundits or technicians or anybody that I’ve seen that have just nailed it for some time now; with most only achieving a few small victories along the way peppered with calls that also completely backfired.
It has definitely not been easy for any investors or even the supposed experts or gurus or thought leaders to make sense of things for a while now. The minute one thesis starts looking like it’s on target, it gets turned on it’s head and something different starts playing out, befuddling almost everyone on Wall Street, Bay Street, or Main Street.
Before recording this interview, when chatting with Craig, we mentioned we’d already done a lot of interviews with reactions from the FOMC meeting, lower inflation figures, prior jobs reports, lack of response in the PMs, general equities trending higher on the backs of the mega-cap tech stocks, etc.. We debated what we could even discuss at this point to keep things fresh and interesting for listeners. We almost decided not to record anything, but opted to power through regardless, and record a conversation that at least may be thought-provoking and interesting based on the different market forces at work.
We decided to go more off-the-cuff and just have Craig provide a few potential paths he could see things playing out, based on his analysis incorporating fundamental and technical analysis and inter-market analysis involving the general equities, currencies, interest rates, and central bank policies. I don’t see that as “making things up”, and it is nice that he decides to invest his time with us each week sharing his insights with the KE Report listeners. We’ve already had hundreds of people listen to the interview, so there must be an audience of discerning individuals that also see value in the work we do here.
Another guy Dr. Steve Hanke in a recent Kitco interview also answered some questions..I don’t know. However, many do seem to agree on a melt up blow off top in the S&P later this year followed by a nasty recession, which they say is good for gold and gold miners.
Yeah, sometimes “I don’t know” is a valid answer, if one doesn’t have a strong conviction as to a particular action or outcome over a given timeframe.
Additionally, when the herd all starts thinking one outcome or market trend is a sure bet, Mr Market has a way of dashing those best laid plans and serving up something more unexpected.
If you want to have a tradeable short of /ES eg spy…Do it Sunday night or next week when /ES hits weekly ABCD up target at 4545…The pros will be doing that, imho…I will, although not pro, yet….Also, this hit corresponds w a retrace level of .786 fib number since the 4 year cycle top in 2022……The question remains, will that top hold or will subsequent rally’s negate that top…and as Martin Armstrong whopper computer has determined….. the final crack up boom cycle top is delayed to near year 2032……https://tos.mx/tlBSmJa
I posted these target right here months ago…glta
day chart of same /ES showing this final blowoff top pattern completion…the final expansion of this C to D leg looks to be a 261.8% at 4539…close enough confluence w the weekly target of 4545…That is the pro way of looking at time and price…it does not always work…glta
Santacruz has dropped 20% so far, not outside of expectations. Stockcharts wont pick up the symbol.
Dan:
US trying to keep it down. On my “halt” purchases I am in the green but I still think they are letting the shorts out first. I am encouraged by the price holding above the take-down level in US so far. (Got to remember this is silver which is abnormal to start…abnormal being a nice word for intervention)
I have a sell Bid of about 20% of my “halt” purchases above the Ask. If the Ask moves up, I will try to move it up also.
Volume is over a million shares so far…
While I wasn’t paying attention, I sold the 20% of SCZ at a profit and quickly bought back into Vizla. Now let’s see if it keeps working up. Haven’t put any more shares up yet.
Kootenay, KTN, trading at 3 year lows.
Correction, KTN is at an all time low, I sold out a few weeks back thankfully, I guess a caldera full of silver is almost worthless, haha!;-)
Judas has cornered the silver market.
if i purchased Kootney it would go bankrupt…that is why i stick to sector index etf’s…glta
Can’t say for sure but I think this is the result of giving out too many warrants during the last financing, it came back to bite them in the ass and they may deserve it but such is life on a flakey index like the TSX.v, an embarrassment for Calgary IMHO.
I bought Kootenay in 3 accounts today along with CDE and others. KTN is as oversold now as it was overbought in December.
https://stockcharts.com/h-sc/ui?s=KTN.V&p=D&yr=1&mn=3&dy=0&id=p10492737555
Looks like a washout at the end of today, interesting to see where Monday goes.
https://stockcharts.com/h-sc/ui?s=KTN.V&p=D&yr=0&mn=9&dy=0&id=p02694773452&a=1435866908
The drop has certainly been helped by the promotion KTN has been doing. I know it has had a banner at GoldSeek for quite awhile (and who knows where else) and I’ve seen the effect on volume. As a result there’s now plenty of scared retail/dumb money hitting the bid.
I’d already be back in but I rapped my knuckles with my ruler so I wouldn’t buy back in too soon, haha. I like that $.06 for getting back in though.
I bought it in USD today (KOOYF) and got filled at .045 which is slightly less than .06 cdn. At least for today I feel lucky. 😉
Over 90% of my total position was purchased in Canada, fwiw.
be careful…imho…sure looks like dollar is trying to form a daily swing low at .618 retracement area….if so, it will bounce…could it become the C point of a weekly ABCD up…yes, that is possible…..http://tos.mx/2s53Wbe
weekly shown
That’s Marc Chandler’s take on the dollar as well Larry. We should have his interview up later today, where we get into that a bit regarding a bounce in the greenback after dropping so much already… but ultimately it will keep heading lower in the longer-term.
A Pause And A Warning
Powell & Co. pause as expected, but threaten to hike in July. Whether the markets believe them remains to be seen.
Brien Lundin – Golden Opportunities – June 14, 2023
“Intentions aside, while Powell and his cronies paused on rate hikes as expected, they did manage to surprise investors a bit with their hawkish rhetoric. Call it walking the dovish walk at the same time they’re talking the hawkish talk.”
“The dot plots showed 16 out of 18 officials expect between one and two quarter-point rate hikes still this year, with only two expecting rates to hold steady. In his post-meeting news conference, Chairman Jerome Powell seemed to echo this more-hawkish stance.”
“Considering how the Fed likes to manage expectations, it will take some significant data points to avoid a quarter-point hike next month.”
http://enews.jeffersoncompanies.com/q/vLxTH3_sq_JZFOYQ_HcF1ROmGtIL7VEXJhzEYGME-AhtamkQ8M3S7-c-J