Syz the moment

They added 77 tonnes to their gold reserves in August. Net buying is closing in on recent "highs". Gold is trading without much trend, but we are at very big levels. Source: Variant perception, TME

Heads will roll...

The SP500 just made a near 100 point reversal in 2 hours, adding +$660 billion in market cap... After jobs report numbers nearly doubled expectations, we saw a sharp move lower Friday morning. Expectations of a more hawkish Fed grew which pressured equities. But later in teh session, markets started buying the news on hopes of downward revisions and adjustments in the numbers... Source: Barchart, The Kobeissi Letter Activate to view larger image,

The aim is to "increase the accessibility and availability of Board news and educational content." Let see if the young generation finds this picture inspiring...

Still, this stopgap bill is only a temporary solution. They are just kicking the can down he road another time. Indeed, the House and Senate are both struggling to approve yearlong spending bills, and the gulf between the two parties remains vast. And as highlighted by the Kobeissi letter, there is still NO LONG-TERM PLAN. For nearly 20 years, it was effectively free for the US to issue debt as debt service costs were ~1.5%. Now, debt service costs have doubled to 3% and will rise toward 5% as rates skyrocket. To put this in perspective, 5% on $33 trillion is ~$1.7 trillion PER YEAR on interest expense. As deficit spending rises, rates are also rising as the US issues trillions in bonds to cover the deficit. It's a never ending cycle of borrowing to spend which is driving rates higher and leading to interest expense being 20% of US revenue... How are they going to fix this? Source: CBO, The Kobeissi Letter

So it's not so much the peak or pause in rate hikes that matters, but rather what happens to the Fed balance sheet & reverse repo operations. Source: HolgerZ, Bloomberg

FACTS: The overall tone of Chair Powell’s Jackson Hole speech was relatively hawkish but not as hawkish as some feared on the back of recent strong data. It was also less hawkish than last year. The main message is that The Fed is definitely on hold but leaning on a more hawkish stance should data don’t show more progress in inflation / growth cooling down. OUR TAKE: The big event is now behind us, and we didn’t learn anything new. Powell believes that monetary policy is tight, but he opens the door to an even tighter one. With regards to macro data, they are going into the right direction but there is a risk of further upside, i.e interest rates path remains very data dependent which means that markets will now turn its attention to PCE inflation and US jobs data (next week). The Fed is likely to stay nervous as long as they see evidence of a serious break in job growth below the 200K pace. We are not there yet, which means that in the coming weeks, we will likely see macro volatility leading to market volatility. Our view remains that central bankers want first and foremost to avoid the big mistake (rather than targeting a pre-defined target). In the previous decade, central bankers wanted to avoid the deflation trap, hence the over-printing. This time, they want to avoid the risk of another round of inflation. Hence the temptation of over-tightening. MARKET REACTION: Rate-hike expectations initially moved lower but then reverted higher after investors actually read and listened to his speech. 2Y yields are back to July highs and equity markets are whipsawing.

Source: Fund Strat thru Carl Quintanilla