Stocks are set to start the week slightly higher, but risks remain high in the short-term, as prices closed out near their weekly lows last week. We also saw the erasure of nearly one month of gains in a single week, which normally isn't bullish. Nonetheless, this probably isn't the end of the bull market, but rather, a normal, cyclical, and healthy pullback that is needed since so many people have made so much money so easily. Unfortunately, that's just not how behavioral economics works.
The big mover this morning is silver, which is now trading at a 7-year high and into the low-30s. The historical gold-silver ratio is in the 12-15 range. Currently, it's around 68. In other words, silver is tremendously undervalued relative to gold. A game of catch-up is to be expected.
The 'Big 3' cryptocurrencies also continued to pullback from their highs last week. We could see some further consolidation in this space, and probably even lower prices, as the crypto-sentiment has turned beyond ridiculous in the past few weeks.
Commodities took a breather last week too, while the dollar staged a relief rally. Interest rates were slightly lower, as a flight-to-safety trade appears to continue. The degree of this trade isn't that strong yet, but that's susceptible to change. It's imperative to let price guide our actions instead of opinions.
A new Mercator Letter and Mercator Crypto report was just sent out to subscribers yesterday. We updated our macro outlook and our crypto outlook as well.