Q: Is US equity markets imploding or crashing to emphasize the paranoia?
I think it is very unclear and uncertain as to 'where we go from here' on a number of fronts.
We have a lot of fanfare and hoopla over a Trade Deal.
This could juice up the 'animal spirits' in the markets in the short term.
Trump is trumpeting about corporate profits and how everyone should thank him.
This is politics.
But what is the substantive outcome of this Deal going to be?
The substance and the meaningful outcomes are what we should be concerned with over the political theatrics around signing a deal.
Will China keep it's commitments to buy vast quantities of US goods? Or will they renege, and conclude that Trump won't call them out on it, aware that the optics will look bad after he told everyone he had secured a tremendous deal.
And the back-drop to it all is the 'greatest economy ever'.....an economy based on huge government spending on the deficit tab, more QE, and more rock-bottom interest rates eroding moral hazard and promoting malinvestment.
Take away the theatrics, the touting, the propaganda, and the huge stimulus - and the underlying US economy is in a very much weaker state than it's dubious title of 'the GOAT'.
Q: What are the triggers for continue gold rally now that US-Iran has dialed down their respective responses and rhetoric?
We have some dialing down on US - Iran. But will it 'dial back up' before long? No-one knows.
It is disingenuous to link the Gold rally solely to the 'US - Iran' spat in any case. Gold was rallying before that latest flare up.
USD strength - or lack thereof - is always important.
Confidence in economic growth needs to remain firm. Once the hard numbers start to come in in 2020, that confidence can easily be shaken. It is on a fairly flakey foundation as it is.
