Weekly Memorandum 7/20/2020
The big-mover on Monday was Silver, which is now close to exceeding its 2016 high. This is one of the biggest breakouts on the cusp of occurring right now in the market, and we are monitoring it carefully. Gold was up too, but it didn't make a new cyclical high. This is totally fine because it is actually Silver that needs to play catch up to Gold right now. Several precious metal stocks were highlighted in June's edition of the Mercator Letter, and these are performing very nicely now.
Equity markets were also up, with the Nasdaq futures securing a new all-time closing high. All-time highs are not bearish. T-Notes were up slightly, and so was Crude Oil. Basically everything was up in the U.S. except the dollar, which closed lower yet again. We also outlined a new macroeconomic outlook for the next few months in the recent publication of the Mercator Letter, which came out on Sunday.
In other words, the market continues to posture itself now for the election results in November. In 2016, long-term interest rates made a significant low in July, and then rose higher for over 2 years until October 2018. Since then, rates have declined dramatically and even down to all-time lows. Perhaps we are due for one last blow-off top in T-Notes, which could mark the end of the secular bear market in interest rates.
It seems like the economy and society are moving to a crescendo. It's been crazy, but the craziness isn't over. Use the lull in the storm to consolidate gains or recover losses. The law of nature is cycles. Organization of markets, the economy, and even society overall, is but a spectrum between tolerance and standards.