The jobs report was disappointing. The prices of gold, and even more so silver, took off. In three hours, they gained $18 and 39 cents. Before we try to read into the connection, it is worth pausing to consider how another market responded. We don’t often discuss the stock market (and we have not been calling for an imminent stock market collapse as many others have).
Citigroup Chief Economist Willem Buiter says Australia is experiencing “a spectacular housing bubble” that needs to be addressed with tougher regulatory measures – something we’ve noted time and time again.
A shortage of housing, coupled with record-low interest rates, has made Sydney the world’s most second-most expensive property market. The city’s home prices jumped 16% in the 12 months through April, stoking record household debt and putting home ownership out of the reach of many.
America's biggest as of 2016 generation, the Millennials, has a heavy burden on its collective 150 million shoulders: its task is to not only step in as a buyer of stocks once the baby boomers begin selling in bulk, but to also provide the much needed support pillar for the recovery of the US housing market. In fact, there have been countless "bullish" housing market theories built upon the premise that sooner or later tens of millions of young American adults will emerge from their parents' basements, start a household, and buy a house.
The sharp rally from last week feels like a final “gasp” in a bull market move. Stocks are now right at the tip of a bearish rising wedge pattern.
It would be easy to look at that move chart and believe that this is the start of the next major leg up. The only problem is that the “smart” money in the bond market is not buying this move even for a second.
The long-Treasury Bond ETF (TLT) has erupted higher, breaking out of a six-month consolidation range. This is a major development for perhaps the single most important asset class.