Boockvar – What Is Happening In The Gold Market Is Remarkable
Boockvar – What Is Happening In The Gold Market Is Remarkable from King World News
Today one of the greats in the business noted that what is happening in the gold market is remarkable.
July 19 (King World News) – Here is what Peter Boockvar wrote as the world awaits the next round of monetary madness: The National Association for Business Economics released their Q2 Business Conditions survey and things did improve from Q1 but what was most noteworthy were the comments on the labor market. They said “Materials cost pressures appear to be easing, but more firms are facing higher labor costs and difficulty in hiring, especially skilled labor…Pricing power, or lack of it, and labor costs are generating some headwinds for a significant number of firms.” Their Net Rising Index (NRI) on wages was the best since January 2016. Passing these costs on to the rest of us was mixed as current plans for “prices charged continued its recent upward trend” but “respondents’ expectations for prices over the next three months suggest price increases will become less widespread.” Lastly of note, “As in the April 2017 survey, a large majority of respondents (76%) reports that their firms have made no changes in hiring or investment decisions in anticipation of potential changes in US policies.”…
Bottom line, it is this set up for the possibility of a broader rise in wages because of the difficulty in finding qualified workers that will have the Fed more likely than not wanting to raise rates. Yes, they’ve acknowledged the recent moderation in the rising rate of change in inflation but their belief in the “transitory” nature of it is predicated on what they see on the wage side. I’ll repeat again the belief that QT starts in September and is another form of tightening just as QE was one of easing.
The Chinese economy grew 6.9% y/o/y in Q2 just as it did in Q1 and that was one tenth more than forecasted. The manufacturing, construction, mining, utility (so called tertiary industries clocked 6.4% growth )and service (7.7% growth) sides of the economy grew at the same pace as in Q1 while the ag/forestry/fishing sectors saw an improvement vs Q1. China continues to balance the desire for fast growth but at the same time trying to control the rampant credit expansion that is fueling it. Also of note, in the last month of Q2, retail sales, industrial production and fixed asset investment all beat estimates. Bottom line, via mostly thru government initiatives, we’ve been seeing all quarter a stabilization in the Chinese data that was reflected in today’s GDP report but it’s almost impossible to parse what is organic and what is from government dictate.