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Weekly Memorandum 7/27/2020

Equities are up nicely to start the week, with the Nasdaq leading the way. Usually, when the Nasdaq leads, it's a "risk-on" signal. But this rally is maturing, so we are somewhat cautious in the short-term. Structurally, the case for equities remains bullish, so we would anticipate any pullbacks to be corrective in nature versus an actual reversal in trend.

The big story again this week, however, is precious metals and cryptocurrencies. Silver just tagged its highest level since August 2013, and gold just closed out at its highest weekly level in history on Friday. Such developments are characteristics of uptrends, not downtrends. Cryptocurrencies are also making moves, with Ethereum leading the way. Ethereum is now at its highest level since January 2019, while Bitcoin is at its highest level since August 2019. Once again, multi-month highs usually are not bearish.

In other markets, Crude Oil is up slightly, while T-Notes are down slightly. The U.S. Dollar continues to trade lower, and this has provided a buoy for commodity prices. In the last edition of the Mercator Letter, which was published last week, we outlined our new macroeconomic scenario centered around a declining dollar. Eventually, this will translate to inflationary pressures, which will put pressure on the Federal Reserve with respect to interest rates.

Eventually, the 40-year secular bear market in interest rates will end, as nothing lasts forever. The law of nature is cycles, and all things on Earth are beholden to this.

A new Mercator Crypto Report will be published this Friday. Trades that were outlined in this report have started to trigger, and given what may be coming from the crypto market, this isn't something you can afford to miss. Pick up a copy of the latest report for just $10. We'll even throw in Friday's edition as well.

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