Time For a Breather

Stocks, bonds, and crypto took a break in March. May 01, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Time For a Breather SEAN RING April 2024 Monthly Asset Class Report We ended April with a stinker of a day. Everything was down over 1%. That’s made the charts look much worse than they did on Friday. Stocks took a hit, but I’m not ready to call time on this rally… yet. I think we’ve got far more upside to go. Bonds are performing terribly in this inflationary environment, except for junk. That’s because junk bonds have equity characteristics. Crypto got taken out back behind the woodshed this month. Only Monero suffered single-digit losses, while the rest were nursing double-digit drawdowns. Despite the last two weeks of losses, the one bright spot is metals, especially gold, silver, and copper, which performed well in April. Gold closed at another monthly all-time high despite the sell-off, while silver touched the $28 level before retreating. Copper has rallied hard, though I’m not sure that will last. Future price action depends on what the Fed does in the coming months. On CNBC yesterday, noted financial commentator and author James Grant said the Fed has as much of a chance of raising rates as cutting them. I agree with him in principle. But since there are no principles when it comes to politicians bribing the electorate before an election, I’m leaning heavily toward a cut or two despite the fact that it makes zero economic sense to me. We need a bit of pain, but democracies are notably pain-averse, and their politicians are unlikely to dole it out voluntarily. With that said, let’s get to the charts. S&P 500 From two months ago: Looking at this chart, there’s no reason in the world to be short. We may take a breather in the coming weeks, but I’d still participate in this rally. The long-term target remains 6,000. With all the fiscal stimulus coming through and despite the Fed not cutting rates anytime soon, I’m still long here. This is the breather we needed as we head down the election-year homestretch. Nasdaq Composite Same, same, but different, as they say in Asia. I don’t think this rally is done. There are too many goodies to be had by politicians bribing voters this November. Hang in there. Russell 2000 (Small caps) The Russell 2000 has shown remarkable resistance in the face of this wave of selling. This 195 level looks like it went from resistance to support. Whatever you think of Joke Biden’s policies, the end isn’t nigh… yet. The US 10-Year Yield It is still in ascendency. This should put pressure on stocks, metals, and crypto, and it has. Of course, this also strengthens the dollar. Rates up, assets down. But the assets aren’t crashing yet. We’ll get a cut late in the year despite all economic sense, thanks to Jay Powell's goosing of Biden’s failing campaign. Dollar Index Okay, we’re nearing a breakout here. If we get above 107, the next level is 111. Above there, we get to the 114-115 area. Much depends on what the Fed does in the coming months. But this dollar strengthening doesn’t necessarily mean gold will head down. USG Bonds I called 90 last month, and I was too timid. Here we are at 88. Is there anything more hatable right now than bonds? “Yours! In size!” as my old trader friends used to say. Investment Grade Bonds Investment-grade bonds had a rough month as well. After a consolidation, they’ve been dumped like their government brethren. I can see us testing the 100 level from here. High Yield Bonds Junk is only off a point this month, and that’s because they act more like equity than debt. A rangebound month may be in order again. 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Base Metals: Copper We blasted through my 4.30 call to 4.56. But this rally was too much, too fast, and I can see us heading back to 4.30 before taking off again. Precious Metals: Gold ***NEW MONTHLY RECORD CLOSE OF $2,302.90.*** From last month: $2,609 is our new target, but it may take a few months to get there. We needed a crappy two weeks to catch our breath. I’m still eyeing that $3,000 mark long-term. Precious Metals: Silver From last month: Up $2 from last month. When silver awakens, watch out! Above $26, and it’ll start to chase, and then surpass, Gold’s performance. GIDDYUP! I’m still a believer… Cryptos: Bitcoin I was looking for a pullback to $66,700. Only off by a “tad.” We can get down to $52,000 before a rebound starts to happen. Cryptos: Ether Ether is stinking to high heaven right now, as well. 2400-2500 zone is my next target down. Once it composes itself, we’ll see a rally again. Trad Asset Class Summary The dollar won the month, which means everyone else lost. Commodities were pretty flat, though down slightly. The broad market and the long bond were both down around 4%. Crypto Class Summary Crypto, in general, stunk up the joint in May. Monero was the least affected, as it also had a rough March, down only 3% or so. The rest were down double digits, with Dogecoin leading the way at down 35%. Wrap Up Stocks, crypto, and gold. It’s the same simple formula from last month. Long live the rally! Finally, let’s take a moment, courtesy of the Twitterverse: Have a wonderful day! All the best, Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( Rate this email Like Dislike Thanks for rating this content! Looks like something went wrong. Please try to rate again. In Case You Missed It… Sanctions For Thee, But Not For Me… SEAN RING As if we didn’t have enough proof that these sanctions against Russia were a complete disaster. But this takes the cake. What if I told you the Biden Administration, such as it is, has loosened sanctions for some Russian banks because of the adverse effects on Americans’ energy costs? Yes, folks, we have definitive proof that these misguided sanctions are directly impacting your daily lives and hurting Americans where it hurts the most: in their wallets. You might be thinking, “Haven’t you been discussing the negative impact of these sanctions for years?” And my answer is, “Yes, indeed.” I won’t repeat all my objections to sanctions. If you're curious, go to [rudeawakening.info]( and search for “sanctions” in the search bar. There are over fifty articles about them there. But quickly, there are two principal reasons I hate these sanctions: - They hurt Americans and Europeans (especially) more than they hurt Russians. - The weaponization of the USD - and merely the thought of confiscating Russian assets - destroys trust in Western financial institutions, especially the dollar system. Of course, I firmly believe that hurting Russia is not the solution. When one country controls roughly twenty resources the rest of the world needs, the only document other governments should sign with it is a free trade agreement. Admitting the Problem is the First Step The good news is that Biden knows the American people can’t afford to spend any more of their wallets on energy. This move should help the average American. The bad news is that the entire structure of the sanctions is inflationary, which we’ve mentioned in the Rude countless times. The worst news is that he’s only doing this to get re-elected. Am I being cynical? I don’t think so. The easing only lasts until November 1, 2024, right around the election. Therefore, it’s a transparent ploy to bribe Americans to vote for him. But after November 1st, he’ll cease to care about the American people. Win or lose, he won’t need to think about winning your vote again. [Bloomberg: “Elon Musk Will Become a Trillionaire With [This Company]”]( As soon as December, Elon Musk could take yet another company public… One that could instantly become the biggest IPO in U.S. History… AND make Elon the world’s first trillionaire in one single move. But it won’t just be good for Elon… Because technology analyst Ray Blanco discovered another company… One that could be a hidden “backdoor” way to profit thanks to the ‘trillionaire-making’ company Elon is building right now. [Click here for the full story](. [Click Here To Learn More]( Didn’t You Get the Memo? Boy, they kept this one quiet. We wouldn't know about this without a few enterprising X handles. As the announcement is short, I’ve reprinted it in its entirety. You can read the original [here](. (Bolds are mine.) DEPARTMENT OF THE TREASURY WASHINGTON, D.C. OFFICE OF FOREIGN ASSETS CONTROL Russian Harmful Foreign Activities Sanctions Regulations 31 CFR part 587 GENERAL LICENSE NO. 8I Authorizing Transactions Related to Energy (a) Except as provided in paragraph (c) of this general license, all transactions prohibited by Executive Order (E.O.) 14024 involving one or more of the following entities that are related to energy are authorized, through 12:01 a.m. eastern daylight time, November 1, 2024: (1) State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank; (2) Public Joint Stock Company Bank Financial Corporation Otkritie; (3) Sovcombank Open Joint Stock Company; (4) Public Joint Stock Company Sberbank of Russia; (5) VTB Bank Public Joint Stock Company; (6) Joint Stock Company Alfa-Bank; (7) Public Joint Stock Company Rosbank; (8) Bank Zenit Public Joint Stock Company; (9) Bank Saint-Petersburg Public Joint Stock Company; (10) Any entity in which one or more of the above persons own, directly or indirectly, individually or in the aggregate, a 50 percent or greater interest; or (11) the Central Bank of the Russian Federation. (b) For the purposes of this general license, the term “related to energy” means the extraction, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication, transport, or purchase of petroleum, including crude oil, lease condensates, unfinished oils, natural gas liquids, petroleum products, natural gas, or other products capable of producing energy, such as coal, wood, or agricultural products used to manufacture biofuels, or uranium in any form, as well as the development, production, generation, transmission, or exchange of power, through any means, including nuclear, thermal, and renewable energy sources. (c) This general license does not authorize: (1) Any transactions prohibited by Directive 1A under E.O. 14024, Prohibitions Related to Certain Sovereign Debt of the Russian Federation; (2) The opening or maintaining of a correspondent account or payable-through account for or on behalf of any entity subject to Directive 2 under E.O. 14024, Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions; (3) Any debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation; or (4) Any transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR), including transactions involving any person blocked pursuant to the RuHSR other than the blocked persons described in paragraph (a) of this general license, unless separately authorized. (d) Effective April 29, 2024, General License No. 8H, dated October 25, 2023, is replaced and superseded in its entirety by this General License No. 8I. Note to General License No. 8I. This authorization is valid until November 1, 2024, unless renewed. Bradley T. Smith Director Office of Foreign Assets Control Dated: April 29, 2024 First, as I’ve mentioned, this only lasts until November. It’s clearly a political move, to ease Potatohead Biden back into the Oval Office. Biden probably can’t get the Fed to cut before then, as inflation is out of control (his fault, partially because of these sanctions), so he needs to do something else to ease pricing pressure. Second, as paragraph (b) mentions, it is related only to energy. Last, the Biden administration signed this yesterday, giving the easing only five months to work. They must be getting desperate, as Biden’s polling numbers are in the toilet. Wrap Up There are a few things we can gather from this overtly political move. First, as we've mentioned many times, sanctions are hurting the targeters, not the targeted ones. You can’t take out an enormous seller of goods like Russia and expect the market not to be affected. Thanks to this misguided sanctions plan, the market is wrestling with high costs. Second, Biden now knows his strategy is counterproductive but can’t change it because he’ll lose face on the global stage. Third, Biden made this move quietly to bring down energy prices without admitting his error in an election year. To paraphrase Ronald Reagan, “Mr. Biden, tear down these sanctions!” All the best, Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. 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