1. It was another volatile week for stocks as negotiations got underway between the Democrat controlled House of Representatives, the President and the Republican controlled Senate over the spending bills that will allow the continued funding of the U.S. government.
2. The seasonally adjusted number of Americans filing initial claims for state unemployment plunged by 19,000 claims to a new level of 234,000 for the week ending February 2. The previous week’s level was unrevised. This is the highest level for initial claims since September of 2017. The four-week moving average of claims jumped by 4,500 to a new level of 224,750. The previous week’s moving average was also unrevised. Volatility in unemployment data should be expected to continue and if negotiations over spending bills do not progress, we may see another surge in claims in the coming weeks.
3. U.S. stocks plunged this week as reports surfaced that the U.S. and China did not even have a rough draft of anything that comes close to specifying what they agree and disagree on with regards to trade yet. White House economic advisor Larry Kudlow, a former CNBC personality, said that the U.S. and China had “a pretty sizable distance to go” before they could begin a draft of an actual trade agreement. Concerns flared further when President Trump announced that he would not be holding any meetings with Chinese President Xi Jinping before a crucial March 2 deadline after which the U.S. has said it will increase tariffs even further on a range of goods being imported from China.
4. Stocks continued their plunge on Friday as fears increased over slowing global growth. The European Union forecast dramatically slower growth for the euro zone for 2019, slashing its overall outlook to 1.3 percent from 1.9 percent. The bloc said it was cutting its forecasts because it expects the largest economies within the bloc, like Germany, to be hampered by ongoing global trade tensions.
5. In Venezuela, tensions escalated this weekend as armed governmental forces blocked a bridge on its western border with Colombia in order to prevent delivery of inbound humanitarian aid. The forces are apparently all loyal to Nicolas Maduro, who declared himself the victor and claimed the presidency once again in recent elections despite clear evidence of mass fraud and manipulation. The opposition leader, Juan Guaido, who has been recognized as the true winner of the election, gaining the backing and support of the U.S. and more than 40 other countries, intends to deliver the aid in what is likely an attempt to undermine the authority of Maduro, who has a long history of using food and medical handouts and subsidies as a tool for gaining and maintaining the loyalty of those who support him.
6. The Bank of England opted to hold interest rates steady at the conclusion of its latest monetary policy meeting on Thursday, as was widely expected. During the press conference following the meeting, BoE governor Mark Carney said “The fog of Brexit is creating tension in financial markets. Now, how these tensions are reconciled once the fog lifts will have consequences for the path of monetary policy in ways that cannot be predicted in advance.” The BoE also cut its growth forecast for the U.K. economy to its weakest levels since 2009, based on the growing uncertainty surrounding its exit from the bloc.
7. United Kingdom Prime Minister Theresa May is traveling to Brussels once again in a last-ditch effort to try to reopen negotiations on the Brexit package that was negotiated with the EU and subsequently voted down by the U.K. parliament. The EU has been steadfast in its refusal to grant more concessions to the U.K., particularly in regards to its border between Northern Ireland and the Republic of Ireland. Ms. May will return to parliament on February 14 for a debate on the negotiations. There are now just 50 days left before the U.K. is slated to exit the EU.
8. President Trump announced on Tuesday that he is scheduled to meet North Korean leader Kim Jong Un in Vietnam later this month. The meeting, Trump’s second with Kim, is due to take place on February 27 – 28 and follows a meeting between the lead U.S. negotiator with North Korea, Mr. Stephen Biegun, and his North Korean counterpart, Kim Hyok Chol. Reuters reported that Mr. Biegun hoped his preliminary meeting would establish “a set of concrete deliverables” but information about what those deliverables might be is as yet unconfirmed by the White House and the Department of State.
9. U.S. Crude oil headed for a weekly loss this week, driven lower by fears that the global economy was slowing further. The slide comes in spite of factors that should have sent oil higher, such as further production cuts by “OPEC+” and expected losses of Venezuelan oil supply as new U.S. sanctions take hold on that embattled country’s oil industry. Crude will likely remain volatile while the situation in Venezuela plays out to its conclusion.
10. The euro drifted steadily lower against the U.S. dollar this week, reaching its lows by Friday as the uncertainty surrounding Brexit took hold. Growth forecast cuts by the European Union weighed on the currency and the euro will close out the week lower against the U.S. dollar. The Japanese yen began the week dropping lower against the U.S. dollar as well, hitting its lows early Monday morning. The yen attempted to stage a recovery, but mostly moved sideways for the rest of the week in a series of spikes and subsequent drops. The yen will close the week out slightly to the downside against the U.S. dollar.
Brexit will likely remain the primary focus for the coming weeks as the deadline for the U.K. to exit from the EU fast approaches. Theresa May is apparently once again on the way to Brussels in a last-ditch effort to modify the draft agreement so that it is more to the U.K. parliament’s liking. Parliament voted down an earlier draft of the agreement by a large margin, leaving little time to craft a new one before the day of exit. Splits have appeared among all of Britain’s political parties and each side, pro-Brexit and no-Brexit, is beginning to sling mud at the other. In the wake of the confusion surrounding the U.K.’s exit, the EU has slashed its growth forecasts for the economy in 2019.
Italy too may return to the spotlight amid the furor, having seen its growth forecasts slashed even further than that of the EU. The European Commission announced this week that its forecast for Italy’s growth in 2019 has come down to just 0.2 percent. Valdis Dombrovski, a vice president at the European Commission, told CNBC “Fragility in Italy’s economy needs to be addressed. Given the high level of Italy’s public debt, and Italy has the highest debt-to-GDP ratio in the EU after Greece, it’s important that Italy puts its debt-to-GDP ratio on a downwards trajectory.” The latest GDP data from Italy appears to show that it’s economy, the third-largest in the euro zone, has entered its third recession in just 10 years.
Stronger economies across Europe, such as Germany and France, are also showing signs of slowing down. German growth is forecast at just 1.1 percent for 2019 and France is at 1.3 percent. Dombrovski noted that the risks affecting EU economies were ongoing trade conflicts and a slowdown in emerging economies, particularly in China.
The trade dispute between the U.S. and China appears no closer to resolution, despite ongoing negotiations. Reports emerged this week saying that the two countries did not even have a rough draft on what they do and do not agree upon with regards to their trade differences, much less a draft trade agreement document for serious consideration. The U.S. agreed to extend the deadline on when it was going to raise tariffs further as long as progress was being made in the talks with China, but the March 2 extension deadline is fast approaching without much apparent progress in those talks.
Treasury Secretary Steven Mnuchin disputes those reports, saying trade talks with China have been ‘very productive’ thus far and announcing that he was traveling to Beijing with a delegation next week to conduct further talks.
Lastly, talks between Democrats and Republicans in an attempt to stave off another government shutdown over the funding for Trump’s proposed wall are underway and they also appear to be less than productive. The Democrat controlled House of Representatives is refusing to pass any spending bill that includes funding for the barrier and Trump remains committed to vetoing any spending legislation that comes across his desk that does not include funding for it.
Amid apparent slowing global growth and ongoing macroeconomic and geopolitical uncertainty, keeping an investment portfolio diversified appears to have become more important than ever. Savvy investors have sought out asset classes that have been beaten down as stocks have surged over the last few years in hopes that those asset classes will do better if a stock market turndown occurs. Precious metals have once again caught the attention of many of these investors looking to acquire diversification assets at a discount. These investors have continued their acquisitions of physical precious metals for diversification purposes as prices have remained suppressed over the last few years.
Remember that precious metals should always be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually acquire and own the physical products and to hold them for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long term.
Precious Metals International, Ltd.
Friday to Friday Close (New York Closing Prices)
|Feb. 1st2019||Feb. 8th2019||Net Change|
|Gold||$1317.60||$1314.85||(2.75) – 0.21%|
|Silver||$15.93||$15.82||(0.11) – 0.69%|
|Platinum||$824.40||$800.65||(23.75) – 2.88%|
|Palladium||$1352.10||$1401.20||49.10 + 3.63%|
|Dow Jones||25063.89||25106.33||42.44 + 0.17%|
Month End to Month
|Dec. 31st2018||Jan. 31st2018||Net Change|
|Gold||$1279.00||$1320.00||41.00 + 3.21%|
|Silver||$15.43||$16.05||0.62 + 4.02%|
|Platinum||$794.50||$821.00||26.50 + 3.34%|
|Palladium||$1262.00||$1337.50||75.50 + 5.98%|
|Dow Jones||23327.46||24999.67||1672.21 + 7.17%|
Previous Year Comparisons
|Feb 9th2018||Feb. 8th2019||Net Change|
|Gold||$1315.50||$1314.85||(0.65) – 0.05%|
|Silver||$16.22||$15.82||(0.40) – 2.47%|
|Platinum||$960.00||$800.65||(159.35) – 16.60%|
|Palladium||$968.50||$1401.20||432.70 + 44.68%|
|Dow Jones||24190.90||25106.33||915.43 + 3.78%|
Here are your Short Term Support and Resistance Levels for the upcoming week.
This is not a solicitation to purchase or sell.
© 2019, Precious Metals International, Ltd.