the other side
market vibes
One of the more important realities this week is the FOMC’s 2% target has been touched (if not fully achieved), and nothing has changed. Long bonds still yield 5%. Gold still trades heavy at $4000/toz. Silver likes it under $60/toz. The Stock market barely rallied on CPI and sold off; tried again on PPI and sold off again. Hawkish narratives are still hawkish.
Resumption of war… if you care to call it that… ranked at the bottom hawkish news. In its place is the 3/2/1 crack spread, bandied about on X like shine boys explaining how M2 works in an elevator. The ounce of gold is never the same ounce. The barrel of oil is never the same barrel. Two percent is not 2.1 or 1.41, it is 2. We are least close enough to it this week to clearly see the markets have no repect for it!
supercore
I often quote Heraclitus famous observation. “No man ever steps in the same river twice, for it’s not the same river and he’s not the same man.” Of all the graphic expressions of the 2% mandate, Supercore is something I have not seen before.
Supercore inflation is not a single official statistic but a derived measure that analysts and the Fed watch closely. It focuses on consumer prices paid for services like haircuts, doctor visits, legal fees, gym memberships etc., which are heavily influenced by wages.
Common definitions from Fed commentary, Cleveland Fed and St. Louis Fed exclude tangibles like food, energy, housing/shelter, rent OER, and durable goods like apparel and automobiles. According to Mike Zaccardi the gent who posted this chart on X via The Daily Shot, 6-month annualized Supercore inflation is just 2.27% (look carefully) and 1 month annualized supercore inflation is 1.41%.
in the news
Adding to the record high 1.4 billion barrels of oil floating around the oceans, OilPrice says another 135 million barrels of Russian crude oil are stranded at sea as well. More on that straight ahead.
The Canadian smoke has tinted the skies an eerie shade of lavender in Morristown, NJ.
Trump at 9:00 PM eastern. “Really big news.”
in the markets
Gold is still developing horizontally in a narrow range at the lows for the year. It is not going up because there is no inflation per se, especially in energy.
Interest rates are well above CPI, PPI, 1 year, 2 year, and 5 year breakevens and now there is Supercore which … in a nutshell… is the basket of ordinary stuff most Americans can’t afford... including an ounce of gold. This might be supportive for silver if there were such a thing as inflation.
Hecla mines has been significantly outperforming Comex silver futures since early June at .27 ounces of silver per share.
