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Comments of the Day

19 February 2020

Video commentary for February 18th 2020

Eoin Treacy’s view

A link to today’s video commentary is posted in the Subscriber’s Area.

Some of the topics discussed include: Asia weak following Apple earnings but Wall Streets recovers on Wal-Mart guidance, gold breaks out, palladium breakouts, coronavirus priced for perfection amid increasing evidence of a peak in new cases.

BHP Sees Next Six Weeks as Key For Virus Hit to Commodities

This article by David Stringer for Bloomberg may be of interest to subscribers. Here is a section:

If the impact of the outbreak can’t be contained this quarter, annual growth forecasts will need to be revised down, Huw McKay, BHP’s vice president of market analysis and economics, said Tuesday in a blog post. “This would then flow directly through to lower commodity demand and price expectations.”

BHP forecasts China’s growth to slow to about 6% this year and as low as 5.75% in 2021 based on a swift recovery from the virus outbreak. In a worst-case scenario that combined a lingering impact from the virus and a re-escalation of trade war tensions, the nation’s economic expansion this year could slip to 5.5%, the miner said.

Goldman Sachs Group Inc. and Macquarie Group Ltd. are among banks who’ve cut China growth forecasts for both the first quarter and the full year as a result of the outbreak. China’s gross domestic product will grow 4% in the first quarter, according to the median of 18 forecasts since Jan. 31, which would be the lowest level since 1990.

Eoin Treacy’s view

The working assumption most investment models are relying on is the trajectory of the coronavirus outbreak and recovery is going to follow that of SARS. Even though the number of cases and deaths is larger and the coronavirus is more contagious, the measures taken to contain it have been much more aggressive. Therefore, the majority of investors have concluded that a V-shaped recovery is the most likely scenario.

Email of the day on palladium’s acceleration

I hope you are well. What on earth is going on with Palladium? It goes higher every day but yet surely it is correlated to industrial activity which should be going down with the CV? Please could you elaborate. Many thanks,

Eoin Treacy’s view

Thank you for this question which I think is puzzling a number of investors. There is a brisk trade right now in stolen catalytic converters with thieves cutting them out of cars. The logical conclusion is there is just not enough of the metal around but there are some additional factors which are worthy of consideration.

Eoin’s personal portfolio: commodity long initiated February 18th 2020

Eoin Treacy’s view

One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I’ll change the title to the date of publication of new details so you will know when the information was provided.

Not Random: The Gold-Silver Ratio

Thanks to a subscriber for this report from Wheaton Precious Metals. Here is a section:

Eoin Treacy’s view

A lnk to the full report is posted in the Subscriber’s Area.

The gold/silver ratio traded above 90 for a brief time in the summer before dropping to break its sequence of higher reaction lows. That prompted breathless speculation that a major reversal was underway, only for the ratio to pop back up and test the high. The big question now is whether than move can be sustained.

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