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- 💡 Here's our answer why gold is up
💡 Here's our answer why gold is up
It's simple but NO ONE has mentioned it
Tim Vollans
October 19, 2023 • Estimated Reading Time: 6 minutes
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🧠 The Big Brain
Netflix Has No Chill
I’m old enough to remember when Bill Ackman (hedge fund titan & cringe long tweet lover) bought Netflix shares and everyone laughed at him.
The share price was annihilated over the following quarter, falling 60% from the highs, all because Netflix actually lost a few subscribers for the first time ever.
It was ‘so over’ for the company, and the industry as a whole, apparently…
Clampdowns on password-sharing, ad-supported tiers vs the dominant narrative of “Peak Streaming”.
Ackman dropped his stake when Netflix announced those changes to their business model.
It hasn’t all been a smooth success, but yesterday’s earnings announcement was an absolute stonker!
Netflix added nearly 8.8 million subscribers in the quarter, way above estimates of ~5.5 million.
And they’re managing to keep revenue per user pretty consistent while doing so.
Would you buy Netflix stock right here and now?
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⚡ The Spark
Please. Stop. Talking
No, not YOU. Central bankers!
Today we have the joy of 7 (SEVEN) Fed speakers, taking it in turns to tell us that they have no idea if they’ve already done enough or not.
Fed Governor Waller said all that needed to be said yesterday:
"I believe we can wait, watch and see how the economy evolves before making definitive moves on the path of the policy rate,"
"If the real economy continues showing underlying strength and inflation appears to stabilize or reaccelerate, more policy tightening is likely needed despite the recent run-up in longer-term rates."
Throw in this little nugget for good measure:
Waller “points out that core #PCE on a 3 month annualized basis is already effectively down to the Fed's 2% target ..”
- NatAlliance #FOMC
— Carl Quintanilla (@carlquintanilla)
5:03 PM • Oct 18, 2023
Summing up Waller…
‘inflation is still too high, except by the measure we always (used to) prefer, as long as you annualise that based on the past three months.
We can wait and see, but we might still hike again just for the LOLZ.
You can definitely trust every word I’m saying. Definitely.’
And now, we have seven more Fed speakers today.
All voting members. All battering our eardrums to tell us essentially the same thing.
We’re done unless inflation really picks up again.
Blackout period starts this weekend. Over this hump then no more Fed chat until 1st of November…
But first…
Newsquawk
💡 The Lightbulb
Gold and Swiss Franc are the ONLY havens…
I’m gonna be honest with you…
We’re stealing this idea from Brent Donnelly’s Tweet (still won’t call it X) yesterday…
There is a shortage of safe havens. Bonds don't work in this regime (obviously) and neither does yen. The only two decent safe havens appear to be gold and CHF and those are getting gobbled up.
Gold's role as a safe haven is unreliable. Sometimes it's a safe haven, sometimes… twitter.com/i/web/status/1…
— ʎllǝuuop ʇuǝɹq (@donnelly_brent)
4:10 PM • Oct 18, 2023
It’s astounding to me that the only two havens remaining to buy are gold and Swiss franc vs the euro…
What’s the trade though?: well, ‘it depends’ on who is doing the buying and for what reasons…
Is the buying motivated by actual belief that everything is going to go down the toilet or something else?
Who is doing the buying?
Is it funds banking on the ride being a squeeze, or is it larger players repositioning into actual longer term hedges?
That’s sort of what TD Ameritrade asked too…
🪙 TD: Gold Buying Exhaustion in Sight - Short Squeeze Is Over
"Our advanced positioning analytics suggest the ensuing flows have more likely been tied to an epic positioning squeeze, which may now be showing signs of exhaustion"
— 🧠 Fink. (@FinkPro_)
7:51 AM • Oct 19, 2023
War: one of the key aspects to focus on in markets when conflict comes around is severity and speed of escalation — and of course, de-escalation.
The bet that traders have to make in this environment is the odds of which the conflict in the Middle East is going to bring more nations into the fray, or whether it will fizzle out…
If it does indeed fizzle out, you can be sure as hell the move to the downside will be just as brutal, especially if we do have these flimsy buyers in the market…
BIG BUT: what if the current buyers of gold are the BIGGEST buyers available?
Here is central bank gold buying since January 2022…
They have been stepping on the gas in a BIG way, trying to secure a load of the yellow metal.
China: The PBoC has been leading the pack…
And the price of USDCNH has followed the rally in gold too…
Green: USDCNH, White: Gold Futures (COMEX)
Could it be China DOMINATING in the physical market here?
If so, that is a very sticky buyer indeed…
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