le beaucoup
market vibes
April 14…)
“Whatever you do, don’t sell that cow.”
In the news
Very little data this week. Retail sales and industrial production on Wednesday. GS reports this morning. Expectations are that GS, like JPM, did well in Q1 trading the stock bust. Citi and BAC on Tuesday. Both say they made "le beaucoup" in Q1 (not exactly recessionary).
Over the weekend GS raised its target for gold to $3700 and forecast large surpluses this year and next in oil: “a surplus of 800,000 barrels a day in 2025 and 1.4 million barrels a day in 2026." To put that into perspective, GS anticipates global crude inventories to rise 192 million barrels this year and 511 million barrels in 2026, roughly equal to a 100% increase in all oil in storage in America today, or 2 X the SPR.
In tariff news (the obsession of the hour) Trump tweeted on Truth yesterday "Nobody is getting off the hook." We are taking a look at semiconductors and the whole electronics supply chain. However, the stock market reads this as a retreat.
McIlroy …in da house.
In the markets
OI is falling on light volume in WTI, indicating short covering.
The CFTC reported spec length at a 5-year low on Friday. Under normal circumstances this would be a bullish reading. But not now. Every barrel of spec oil returning to the auction adds weight to the surpluses coming. And every new short sale does the same. We are not counting cards with data now, so much as pricing forward storage. Therefore spreads are weakening and Dec Red Dec is already about $.35 in contango.
The barrels aren’t here yet but the market thinks they will be and inventories are rising. Seasonal WTI inventory trends are random since Covid. For the time being refiners continue to run crude as usual so the front 3 spreads are in mild backwardation.
May Gasoline settled $2.00 on Friday. The spot crack is down a nickel on the crude rally last week. Gunvor said "$60/barrel is priced into demand" (BBG).
Despite record highs, Americans continue to shun gold. OI fell a few lots cob Friday and volumes are chronically light.
I suppose after liquidating everything except the cow that milks scotch whiskey, hedgies and CTAs are licking their wounds which is ironic since gold is the only player on the field batting > .333 (except Jung Hoo Lee). As for American wealth management, who knows why they refuse to buy the Comex… but they do.
On the other hand, total holdings of gold ETFs are rising a wee dram.
Up next, silver, copper, stocks, and bitcoin… I like bonds, and a great clip of Hendrix… here we go!
