Last week ended with no major weekly moves except for an some intra week volatility after Fed Chair referred to below target inflation being “transitory” following the latest FOMC meeting. This led to some knee jerk reaction on Wednesday and Thursday and some abrupt moves (in relation to this year’s market action at least) down for US stocks, bonds, precious metals and up for the dollar. Most of these moves were corrected on Friday after a much better than expected US job report which reinjected a dose of Goldilocks to the economic picture for the week. 263’000 jobs (vs. 190k expected) were created in April. The unemployment rate fell to 3.6% (from 3.8%) with the usual caveat of this number accounted for people who have stopped looking for a job. Earlier, US consumer spending had increased by 0.9% in March (+0.1% in February), the most in 9 years. Also reported last week was US manufacturing activity dropping to a 2 and a half year low amidst a sharp drop in new orders and a fall in construction spending. US productivity surprised on the upside gaining 3.6% annualized last quarter, the strongest increase in five years. Over the past week, the S&P500 gained 0,2% (17,6% YTD) while the Nasdaq100 gained 0,2% (23,9% YTD). The US small cap index stood out, gaining 1,4% (19,9% YTD, Z-score 2,6). XHB (SPDR S&P HOMEBUILDERS ETF) was the top performing sector last week, rallying 2,6% (27,7%, Z-score 2,3) while XLE (ENERGY SELECT SECTOR SPDR) fared the worst, dropping -3,0% (12,0%, Z-score -2,0). CBOE Volatility Index gained 1,1% (-49,4% YTD) to 12.83. The Eurostoxx50 gained 0,8% (17,0%), outperforming the S&P500 by 0,6%. Diversified EM equities (VWO) gained 0,8% (14,9%), also slightly outperforming the S&P500 by 0,5%. CSI300 Chinese equity index (ASHR) was closed for most of the week but the US ADR gained 0,5% (33,2%). Russian shares (RSX) gained 0,7% (15,0%). The Dollar DXY Index (UUP) measuring the USD performance vs. other G7 currencies dropped -0,6% (2,8%) while the MSCI EM currency index (measuring the performance of EM currencies vs. the USD) ended literally unchanged (1,4%). USDINR dropped -1,1% (-0,8%). FX was mostly a non-event last week although EURGBP dropped -1,5% (-5,4%, Z-score -3,2), supported by a late week GBP rally after BoE said (to whoever was ready to listen) that the BoE might tighten policy more than market expectations. 10Y US Treasuries dropped 3bps (-16bps) to 2,53% whilst 10Y Bunds climbed 5bps (-22bps) to 0,03%. Last Tuesday, as reported by the WSJ, Democrats in Congress visited the White House emerging to say that they and President Trump had agreed to spend USD2trn on public works. The question is who is going to pay for this and MMT will be the answer (also see comment on Gold below). Europe might have to follow on this with some serious rethinking of EU Treaties (see friendly debate in French between B. Colmant and E. de Callatay last week) a prerequisite to make this possible. On the credit markets’ side, US Aggregate Corporate Average Spread over Treasuries climbed 2bps (-41bps) to 1,12%. 10Y Italian BTPs rallied -2bps (-18bps) to 2,56%. EUR 5Y Senior Financial Spread dropped -2bps (-40bps) to 0,70% whilst EUR 5Y Subordinated Financial Spread dropped -4bps (-83bps) to 1,42%, both reflecting a continuing improvement in investors’ sentiment towards European banks since April. US High Yield (HY) Average Spread over Treasuries dropped -5bps (-172bps) to 3,54%. Commodities and precious metals had a rough week despite some recovery on Friday. WTI Crude sold off by -2,1% (36,4%). CPER sold off by -2,6% (7,3%). Goldman Sachs Commodity Index dropped -1,0% (15,5%). SPROTT PHYSICAL GOLD TRUST dropped -0,9% (-1,5%), now trading at a 2.5% discount to NAV and hence at a discount to the price of physical gold due to unabated selling pressure last week which was punctuated by a COT report showing that speculative net short positioning on Gold reached levels last seen when gold traded between USD1100 and USD1200. This is a fairly positive technical posture for the bulls as (mostly non-Western) Central Banks keep accumulating more Gold (the momentum increased in Q1) at the same time as the debt situation and the monetary environment are expected be supportive of alternative non-fiat money (see R. Dalio post from last week deeming MMT and more QE inevitable). In this context the now 50% backing of RUB with Gold is worth mentioning. Barron’s this week evoked the possibility for Gold to rally 20% later this year. 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