ECONOMIES ON CHEAP-MONEY LIFE SUPPORT

Weekly Market Review

Global equities were basically flat last week and this week. 

As they have for years, the mainstream media simplify complex economic factors by attributing their ups and downs to ongoing Brexit and Trade War dramas. 

Oil prices remain basically unchanged.

Gold is losing some shine among money managers, who dropped their speculative gross long positions in Comex gold futures. Gold’s net-long positioning is down more than 12 percent from the previous week.

TREND FORECAST: Although bearish bets on gold are at a near two-month high, should the U.S. Federal Reserve again lower interest rates as expected at the end of this month – as will other central banks as the global economy continues to slow – we forecast gold will move above $1,500 per ounce from its current $1,480 range.

Moreover, the lower interest rates fall, the higher gold prices rise. Thus, we maintain our forecast for gold to move toward the $2,000 per ounce mark. 

On the corporate earnings front, more than 78 percent of top S&P 500 companies, such JP Morgan, BlackRock, and United Healthcare, beat analyst expectations. 

U.S. household spending fell 0.3 percent, the first time in seven months, dragging down the market a bit on Wednesday. Department store year-on-year sales fell 6.1 percent. Although some of this relates to weaker consumer spending, online shopping continues to siphon sales from brick-and-mortar establishments. 

Thus, while earnings were relatively strong for the corporate giants, wages remain stagnant. And with over two-thirds of U.S. Gross Domestic Product (GDP) consumer driven and with median household income at 1999 levels, retail sales will continue to soften. 

The week ended with China’s GDP in a slowdown, with blame still misplaced on Brexit and the China-United States trade war.