1. The Golden Hedge
That’s right, it’s time to hedge with our dear friend gold. Billionaire trader, Sam Zell, highlighted a fundamental issue within the gold industry that has commodity traders worried about an upcoming supply shortage. And we all know that too little supply sends prices through the roof!
Zell, founder of Equity Group Investments, argued that the gold industry had tied its own hands in terms of supply since 2011 when the gold price plummeted and funding for new mines all but dried up.
Capital meant for opening mines was, instead, used to buy out rival companies as part of a plan to strengthen output pipelines, rather than exploration and resource bases.
The combined reserves still buried in operational mines dropped a whopping 40% from 2017, making the prospect of a serious supply shortage all too real.
Gold has been on a serious hot streak since October, rising more that 8% with investors flooding in to avoid high levels of volatility and sliding equity prices. With the spot gold price still more than 30% below its peak, investors are starting to eye-up our shiny friend as the ultimate 2019 hedge.
Who knows? All that glitters in your portfolio may in fact be gold!
2. US Shutdown Gets Personal
The gloves are definitely off in the showdown between President Trump and Nancy Pelosi which is starting to get personal. The little playground spat has now snowballed into a serious game of brinkmanship while 800,000 federal workers’ paychecks are held to ransom.
Trump’s most recent stunt was to deny Pelosi a military plane to visit Afghanistan and pull the entire US delegation for the World Economic Forum (WEF) to be held next week in Davos.
The decision came after some incisive comments from Pelosi about top US officials rubbing shoulders with financial elites while government employees remain unpaid.
Tit-for-tat comments aside, the stalemate is becoming extremely costly on a number of fronts. Federal workers are struggling to pay their bills, important data cannot reach markets, investor uncertainty is ticking up and one of the most influential players in world trade is symbolically isolating itself from the rest of the world.
Unless these two can put their political agendas aside and come to the negotiation table, the crisis will spiral further out of control. The longer data is kept from the markets, the greater the likelihood of increased volatility. Not to mention the level of public restlessness which is building every day. The clock is ticking.
Today we are watching…
1. State Street (#statest)
State street has had an incredible run-up to its earnings announcement today, rising 12.31% since Christmas. While analysts are expecting a decline in earnings, State Street, has an impressive track record of pulling some surprises out of the bag. The earnings per share estimate is $1.67 and revenue is $2.98bn. Keep an eye out for any surprises!
2. Citizens Financial Group (#citznfin)
Similarly, Citizens, has benefited from the rally in banking stocks, rising 12.56% in the last month. However, with some big name banks lowering the stock’s price target ahead of today’s announcement, analysts are mixed in their views of whether an earnings beat is on the cards. The EPS estimate is $0.94 and revenue is $1.60bn. Let’s see how it unfolds.