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Fear Creeps Back Into Stock, Shining A Light On Gold – Market Slant

Fear Creeps Back Into Stock, Shining A Light On Gold – Market Slant

Release Date:  Friday, February 9, 2018

Fear Creeps Back Into Stock, Shining A Light On Gold – Market Slant
Monday’s major stock selloff is the perfect example of why it is frequently recommend to have a 10% weighting in gold.

“What began on Friday after the positive wage growth report extended into Monday, with all major averages dipping into negative territory for the year. The Dow Jones Industrial Average saw its steepest intraday point drop in history, losing nearly 1,600 points at its low, while the CBOE Volatility Index, widely known as the “fear index,” spiked almost 100 percent to hit its highest point ever recorded.

“Gold bullion and a number of gold stocks, however, did precisely as expected, holding up well against the rout and helping savvy investors ward off even more catastrophic losses. Klondex Mines and Harmony Gold Mining, among our favorite small-cap names in the space, ended the day up 4.6 percent and 4.8 percent, respectively. Royalty company Sandstorm Gold added 1.4 percent.

“’We expect gold will provide a good hedge against a likely equity downturn, as the bull market turns into a bear market” in the second half of 2019, BCA analysts write in their February 1 report. The reemergence of volatility and fear raises the question of whether we could find ourselves in a bear market much sooner than that.’” (“Fear Creeps Back Into Stock, Shining A Light On Gold.” Market Slant 02.7.18)

Icahn: The Market Will One Day ‘Implode’ Because Of These Wacky Funds Using So Much Leverage - CNBC
Carl Icahn told CNBC on Tuesday there are too many exotic, leverage products and one day these securities are going to blow up the market.

“Billionaire Carl Icahn told CNBC on Tuesday there are too many exotic, leveraged products for investors to trade, and one day these securities are going to blow up the market.

“The market is a ‘casino on steroids’ with all these exchange-traded funds and exchange-traded notes, he said.

“These funds, especially the leveraged ones, are the ‘fault lines’ that will eventually lead to an earthquake on Wall Street, he said. ‘These are just the beginnings of a rumbling.’

"’The market itself is way over-leveraged,’ Icahn said on ‘Fast Monday Halftime Report,” predicting that ‘one day this thing is just going to implode.’ He described the possible implosion as "maybe eventually worse than 1929," making reference to the stock market crash that contributed to the Great Depression.

"’The market has become a much more dangerous place,’ he said, adding the current volatility is a precursor of potential trouble. ‘It's telling you something, giving you a warning.’

“Investors are piling into index funds thinking they'll never go down, Icahn said. ‘Passive investing is the bubble right now, and that's a great danger.’

“But as much as he was sounding alarm bells, Icahn said, ‘I don't think this is the explosive time.’ The market will ‘probably bounce back,’ he continued. ‘I don't think this is the beginning of the end.’”  (“Icahn: The market will one day ‘implode’ because of these wacky funds using so much leverage.” CNBC 02.06.18)

Look Out Below: More U.S. Dollar Weakness To Come, Says Currency Expert – CNBC
According to currency experts, it’s not just stocks that are falling, the greenback are also taking it on the chin.

“Despite a selloff in the stocks, the U.S. dollar, traditionally a haven in times of turmoil, is hovering near multi-year lows. It could see even more downside this year for two major reasons: Europe and China. The DXU U.S. dollar index ended January with losses of 3 percent, its worst drop in nearly 2 years, and its third straight month in negative territory.

“For all the stimulus from tax cuts, the growth in the U.S. economy is still on par with Europe's. As the global economy continues to grow, it will only put more pressure on the greenback, one respected currency expert explained to CNBC recently.

"’The dollar weakness has a lot to do with the fact that we have strength in the global economy,’ Jens Nordvig, founder of Exante Data, told CNBC's ‘Futures Now’ this week.

“The U.S. is expected to print a growth rate of 2.7 percent in the first quarter as tax cuts begin to work their way through the economy. Yet Europe has already seen GDP of 2.5% ‘without any fiscal stimulus,’Nordvig said.

“The euro has gained ground against the U.S. dollar in the year to date, a trend Nordvig expected to continue. After recent moves, Nordvig sees risks for the euro/dollar exchange rate as skewed to the upside, and believes a move in the currency as high as 1.28 is realistic. Europe's single currency closed on Friday trading near $1.24.

“Nordvig added that ‘dips should be used to add long exposure.’

“Usually, higher interest rates would spark higher demand for dollars, as investors chase meatier U.S. returns. However, this time appears different, with the world's largest economy moving toward a policy that's been already being embraced around the world. In the near term, markets appear to be betting U.S. rates may lag places like Europe and China.

"’Whereas other central banks have been slow to do what the Fed is doing, they are finally starting to catch up,’ said Nordvig.’"There's more hawkish rhetoric around the world and it's really important to the dollar trend here.’" (“Look out below: more U.S. dollar weakness to come, says currency expert.” CNBC 02.3.18)

Inflation IS About To Appear ‘With A Vengeance,’ Paul Tudor Jones Says – Bloomberg
According to Paul Tudor Jones, inflation is about to appear with a vengeance and make the new Federal Reserve chair accelerate interest-rate hikes.

“The hedge fund manager said policy has focused on a ‘low inflation problem’ and years of near-zero rates amid economic expansion will have 'painful' consequences. Policy makers should have been more aggressive in tightening policy and ‘rejecting the fiscal impropriety associated with this most recent tax cut,’ he said.

“’We are replaying an age-old storyline of financial bubbles that has been played many times before,’ Jones, founder of Tudor Investment Corp., wrote in a Feb. 2 letter to clients. ‘This market’s current temperament feels so much like either Japan in 1989 or the U.S. in 1999. And the events that have transpired so far this January make me feel more convinced than ever of this repeating history.’”(“Inflation Is About to Appear ‘With a vengeance,’ Paul Tudor Jones Says.” Bloomberg 02.05.18)