Commentary: Paul Ebeling on Wall Street

Commentary: Paul Ebeling on Wall Street

$DIA, $SPY, $QQQ, $RUTX, $VXX

Risk is on, sidelined money coming back in and the market is posting record highs almost on a daily basis.

The earnings news is providing its share of trading catalysts, but the macro news is mattering more as a market driver because the macro connection with the employment report, earnings news has been better than expected.

Gold prices rose Monday, after taping a 3-month low in the prior session, on lingering concerns over the US-China trade deal and the prospect of a slowing global economy.

Gold prices are pretty low now and investors are taking this opportunity to take positions in the safe-haven metal as there is still an upside to it, considering the concerns over the trade dispute and global economy.

Gold buying by central banks, especially in China, is also boosting prices.

SPDR Gold Trust, the world’s largest gold-backed ETF (Exchange-traded fund), said its holdings fell 1.44% to 901.19 tonnes Friday.

Trade talks with China were moving along “very nicely,” President Trump said Saturday, but the United States will only make a deal with Beijing if it was the right deal for America.

Now, only a trade deal falling through can have the momentum to push prices back to the $1,500 mark short term.

Physical gold buying picked up in India, the world’s 2nd biggest consumer, as a price correction revived demand in narrowing discounts to the lowest mark in 5 months, while buying interest was light in other parts of Asia.

The trade dispute has roiled financial markets and spurred fears of a global economic slowdown, pushing the precious Yellow metal up 14% YTD.

Washington and Beijing had agreed to roll back tariffs as part of the first phase of a trade deal, but President Trump later denied any such agreement.

Fanning concerns over global growth, the Chinese producer price index (PPI), seen as a Key indicator of corporate profitability, fell 1.6% in October from a year earlier, its steepest decline since July 2016, data showed, outstripping analysts’ expectation for a contraction of 1.5%.

Asian shares sank Monday as uncertainty still remained over whether the United States and China could end their trade dispute.

Meanwhile, chaos erupted across Hong Kong a day after police opened fire to break up demonstrations that are entering their 6th month.

The S&P 500 trades at 17.3X forward 12-month earnings. That is a small premium to the 5-year average of 16.6X according to FactSet. It is an acceptable premium in light of where interest rates are. And it is not as rich as where things were at the start of Y 2018, or March Y 2000, when interest rates were much higher.

That means that the US stock market has space to get richer. My work show that there is a good chance it will considering Fed Chairman Powell gave it the license to do so.

The US stock market is entering the home stretch to Y 2019. All things considered it is in the best spot it can be, record highs.

Remember, tune out the noise, always take what the market gives, and since it is your money, it is your responsibility.

Have a terrific week

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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