Charts & TA, page-62

Interesting back drop for gold currently

This is the week MOODY’S credit rating agencydowngraded the US credit rating to AA from AA1, citing: “Successive U.S. administrations and Congresshave failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interestcosts. The U.S.'s fiscal performance is likely to deteriorate relative to its own past and compared to otherhighly-rated sovereigns.” Let’s remember we are starting with a US budget deficit of 6.5% of GDP and anet debt /GDP position of 122%. This at a time after 4 years of solid US economic growth and fullemployment. Go figure. Trump is pushing his Big Beautiful Bill (BBB) tax relief bill which will extend the2017 US tax cuts. The passage of this bill could see the US fiscal situation deteriorate towards a deficit of9% of GDP or worse, which is unsustainable. The interest cost on the debt is forecast to rise towards 30%of the Budget in a few years! Imagine if we have 2 years of negative GDP growth, i.e. a rolling recession?We may have already heard the starting gun of a slow-motion US debt crisis, a race to the bottom whichnobody wants (unless you are SHORT the US$, SHORT US Bonds and SHORT US stocks]. By the time themarket recognizes what is happening it will be far too late to act and a smoldering Bear market will havelikely become a toxic nasty and destructive price decline across the board as the dance floor, soeloquently described by retired CEO of Citigroup Charles Owen ("Chuck") Prince III, is closed for anextended period of repair. Closed until further notice.Direct evidence of the negative effect of Trump’s tariff war came out in Japan’s export figures for Aprilshowing a clear slowing -1.8% YOY (imports also fell YOY). On a company specific level we have seenWalmart raise prices & plan to fire 1,500 staff, and Nvidia CEO Jenson Huang saying that the impact ofthe US governments latest move to limit H20 chip exports to China will cost the company $15bn in lostrevenues. Further profit results from US retailers showed a poor result from Target and Home Depot re-affirm guidance. Aggressive insider buying in United Health (UNH) by the CEO and multiple Directors - astock featured last week (please refer) - was interesting but is not enough to clear up all the earningsuncertainty with this company.Meanwhile, the US has obtained new intelligence suggesting that Israel is making preparations to strikeIranian nuclear facilities, even as the Trump administration has been pursuing a diplomatic deal withTehran, multiple US officials familiar with the latest intelligence told CNN. Such a strike could also risktipping off a broader regional conflict in the Middle East — something the US has sought to avoid sincethe war in Gaza inflamed tensions beginning in 2023.