The Daily Close
* US stocks witnessed another day of gains with the S&P adding +0.4%, ignoring Washington score settling and some of the severely controversial geopolitical issues lit up by D.Trump in his latest batch of tweets. S.Bannon’ revelations in Michael Wolf latest book “Fire and Fury” doubting D.Trump’s intellect (inter alia) https://www.theguardian.com/us-news/2018/jan/03/donald-trump-russia-steve-bannon-michael-wolff is forcing him into high gear to create a political counter fire. Let’s hope we can continue to ignore them. In any case, French President E. Macron was sufficiently worried yesterday to say that “the official line pursued by the United States, Israel and Saudi Arabia, who are our allies in many ways, is almost one that would lead us to war." Not everybody agrees that D.Trump’s call for the “great people of Iran” to stand up are not akin to US intervention in Iran’s domestic affairs...neither his tweet promising more help...that he just denied to Pakistan for some reasons https://www.reuters.com/article/us-iran-rallies-russia-usa/russia-urges-u-s-not-to-interfere-in-irans-domestic-affairs-tass-idUSKBN1ET13T?il=0 * If that was not enough controversy, those in Europe and elsewhere facing a fairly rotten postChristmas weatherwise with uninterrupted “rain” seen even in mountainous areas will find more reason to fume with https://www.cnbc.com/2018/01/04/trump-aims-to-open-arctic-pacific-and-atlantic-to-offshore-drilling-in-ambitious-new-plan.html D.Trump’s intention to open most arctic, pacific and Atlantic areas to offshore drilling. * Beyond politics, US data continued to come out strong with ADP saying U.S. firms added 250k jobs in December comfortably beating estimates of 190k. Hopefully not all in the shale oil sector... * That did not help the dollar which could not keep the previous day’s mild recovery, relapsing into weakness yesterday, against the euro and mostly against EM currencies. * Gold and silver which had fallen on Wednesday on the Fed's FOMC Meeting Minutes suggesting that some Fed members want a faster tightening path, recovered yesterday to its highest level this year despite a stronger ADP job report, adding both +0.8%. Precious metals will hedge against several (potential) risks this year; mounting geopolitics risks, inflation ebbing higher, the crypto risk and stocks topping out. * Famed Jeremy Grantham of GMO became the latest respected voice to call the bitcoin mania what it is. “Historical analogy suggests this junior bubble, by size, may well crash and burn even before the broad market peaks," he said. Grantham cited the bitcoin craze as one of the early signs that the stock market may be nearing the end of its yearslong rally, and predicts equities will see their final leg higher in the next six to 24 months, CNBC reported. Bitcoin had another failed rally yesterday and closed flat but what we may be missing is that most cryptos have been fairly strong since bitcoins fell of bed. The market value of all cryptocurrencies has multiplied roughly 38 times last year to more than $770 billion. This suggests to us that speculation in the space remains dangerously and naively rampant. * European stocks exploded higher yesterday with the eurostoxx adding +1.7%, supported by strong data, recovering their underperformance vs. US stocks despite the dollar relapse. Japan’s rally was even more powerful.
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