Group 1 - The investing group Reading the Markets, led by Michael Kramer, provides daily commentary and videos to help members understand market drivers and trends [1] - The group offers education on macro trends, interest rates, and currency movements to assist members in making informed investment decisions [1] - Subscribers benefit from unprecedented access to expertise at a low subscription price compared to similar services [1] Group 2 - Michael Kramer is affiliated with Mott Capital Management but operates independently, providing his own analyses and opinions [3] - The report emphasizes that opinions and analyses are based on reliable information but do not guarantee completeness or accuracy [3] - Readers are advised to make independent investment decisions and consider their own financial situations before acting on the information provided [3]

Worawith Ounpeng/iStock via Getty Images Listen below or on the go on Apple Podcasts and Spotify The CPI hits on Thursday with eyes on prices amid recession concerns. (0:17) Kroger earnings could benefit from a switch to value. (2:23) OpenAI boosts spending outlook to $115B. (3:18) The following is an abridged transcript: The pendulum swings from one part of the Federal Reserve’s dual mandate to the other this week, moving from full employment to price stability. Last week saw the weak August payroll ...

Company Performance - Lululemon shares are down 20% following a weak quarterly earnings report and a lowered outlook, citing difficulties due to tariffs impacting overseas manufacturing [5][7] - Broadcom shares are up 7% after reporting a 63% growth in AI sales and signing a $10 billion deal to supply AI chips to an unnamed customer, with shares up 109% from their closing low this year [5][7] Employment and Economic Indicators - The August jobs report revealed only 22,000 new jobs created, with the unemployment rate remaining at 4.3%, indicating a weakening jobs market [3][4] - Manufacturing jobs declined by 12,000 for the month and 78,000 for the year, despite companies planning significant investments in U.S. facilities [8] Market Trends - The upcoming Producer Price Index and Consumer Price Index reports are anticipated to provide insights into inflation trends, which are crucial given the current economic conditions [4][6] - The volatility in bond yields is noteworthy, with the 30-year yield recently nearing 5% before retreating to 4.78%, indicating market uncertainty [9]

Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: Global Macro Strategy with a specific emphasis on gold and Polish equities (WIG20) Core Insights and Arguments 1. **Gold Market Outlook**: - The macro conditions are bullish for gold due to rising stagflation risks in the US, with leading indicators suggesting further labor market weakness and increasing CPI components [2][10] - Strong global gold ETF inflows were observed post-Jackson Hole, indicating a shift towards gold as a hedge against economic uncertainty [2][10] - Spot gold has broken out of a four-month range, supported by strong ETF flows and performance during Asian trading hours, suggesting continued upward momentum [3][15] 2. **Investment Strategy**: - A new trade was initiated to buy gold spot at $3476.89 with a target of $3750 and a stop at $3330, risking $500k [8] - The strategy includes an overweight position in precious metals within the Global Asset Allocation portfolio, reflecting a bullish macro setup for gold [10][18] 3. **Polish Equity Market**: - The decision to close out the long WIG20 position was made due to negative domestic factors, including a rise in corporate tax on banks and the dismissal of Orlen's CFO, which undermined market sentiment [4][25] - The initial bullish outlook on WIG20 was based on strong corporate fundamentals and positive geopolitical developments, which have since deteriorated [25] Additional Important Content 1. **Technical Analysis**: - The correlation between gold returns and 10-year UST yields has shifted, indicating that gold may receive a flight-to-safety bid as inflation risks persist [12][16] - Historical backtesting shows that buying gold when gold mining stocks outperform has yielded better returns, reinforcing the current bullish stance on gold [18][21] 2. **Market Dynamics**: - The Fed's dovish stance and the potential for stickier inflation could lead to increased demand for gold as a hedge, especially as financial conditions remain loose [10][12] - The labor market's ongoing deterioration is expected to influence the Fed's policy decisions, further supporting gold prices [10] 3. **Risk Considerations**: - Risks to the gold trade include potential improvements in US labor data, which could impact gold's attractiveness as a hedge [8][10] - The Polish equity market faces significant headwinds from political and economic developments, necessitating a cautious approach [4][25]

Summary of Key Points from the Conference Call Industry Overview - The report discusses the **Commodity Control Cycle** and its implications in a less integrated world, focusing on the strategic role of commodities as globalization stalls and geopolitical tensions rise [4][17][22]. Core Insights and Arguments 1. **Stagflationary Regimes**: Equity-bond portfolios lack diversification during stagflation, particularly when US institutional credibility erodes, leading to inflation and a sell-off in equities and bonds. Gold serves as a hedge in such scenarios [4][7][9]. 2. **Supply Chain Dynamics**: The report outlines a **4-step commodity control cycle**: - Governments insulate supply chains through tariffs and subsidies [19]. - Domestic supply is expanded and secured, leading to surplus production being exported [19]. - Falling global commodity prices cause higher-cost producers to exit, concentrating supply [19]. - Dominant producers leverage their position, increasing disruption risk and price volatility [19][51]. 3. **Geopolitical Concentration**: Commodity supply is increasingly concentrated in geopolitical hotspots. The US is projected to provide over a third of global LNG by 2030, while China controls over 90% of global rare earth refining, critical for advanced technologies [22][24]. 4. **Inflation and Commodities**: Commodities may provide a hedge against inflation, especially when supply disruptions occur. Energy commodities are particularly significant due to their direct impact on inflation [24][30]. 5. **Historical Context**: The report references historical instances where commodity supply was used as leverage, such as the 1973 oil embargo and recent actions by Russia and China regarding energy and rare earth exports [52][54]. Additional Important Insights 1. **Investment in Gold**: Central banks have increased gold purchases significantly, rising more than fivefold since the freezing of Russian assets in 2022, highlighting gold's role as a financial insulation asset [30]. 2. **China's Energy Strategy**: China is expanding coal production and building renewable energy sources, indicating a shift towards energy security rather than purely environmental concerns [26]. 3. **Market Dynamics**: The report notes that while supply expansion can lead to short-term price drops, it ultimately results in greater control over the market by fewer producers [39]. 4. **Diplomatic Leverage**: The US has linked energy exports to diplomatic negotiations, increasing reliance on US supplies among allies [45]. 5. **Chokepoints in Trade**: The report emphasizes the importance of maritime chokepoints in global trade, which are becoming increasingly vulnerable due to reduced naval defense spending by allied nations [46]. This summary encapsulates the critical insights and arguments presented in the conference call, focusing on the evolving dynamics of the commodities market and its implications for investors.

Welcome back. Economic activity seeing quote little to no growth in recent weeks. That according to the Fed's latest Facebook survey.Investors now looking ahead to this Friday's jobs report for more clarity on where this economy is going. Joining me now to Slack. He is Apollo partner and chief economist.And I mispronounced your last name and you I hope will accept my sincere apologies for that. >> Of course. All good.I've heard many variants of my name over the last many many years. So >> the the correct on ...

Core Insights - The article discusses the increasing demand for precious metals, particularly gold and silver, driven by changes in investment regulations in countries like India and Saudi Arabia, as well as the ongoing economic conditions in the U.S. [2][30] - It highlights the potential for stagflation in the U.S. economy, suggesting that commodities and defensive stocks may be favorable investments, while bonds and growth stocks could face pressure [2][30]. CFTC Data Analysis - As of August 26, 2023, the net long positions for COMEX gold increased by 4.5% to 461 tons, while silver saw a significant rise of 18.8% to 5,319 tons [3][6]. - The total long positions for COMEX gold rose by 2.2%, and for silver, it increased by 10.3%, indicating a bullish sentiment in the market [3][6]. - The article notes that the net long positions for platinum and palladium have shown mixed results, with palladium remaining in a net short position for 137 weeks [7][18]. Global Investment Trends - Indian pension fund managers are advocating for increased investment limits in gold, real estate trusts, and infrastructure trusts, which could lead to a significant increase in gold demand [2][27]. - The Saudi Arabian central bank's recent purchases of silver ETFs signal a growing interest from sovereign wealth funds in precious metals [2][29]. Economic Indicators - The article suggests that the U.S. economy may be entering a stagflation phase, which historically leads to increased investment in commodities and physical assets [2][30]. - The correlation between gold prices and North American gold mining stocks has weakened, with the gold price to mining stock ratio dropping to its lowest in three years [19][21]. Market Sentiment - The gold-silver ratio, an indicator of market sentiment, was reported at 86.885, reflecting a slight increase but a cumulative decline of 4.4% for the year [23][24]. - The market anticipates potential interest rate cuts by the Federal Reserve, with expectations of two rate cuts by the end of the year [26][30].

Economic Outlook - Rising U.S. debt levels and geopolitical instability are contributing to market uncertainties, leading investors to reconsider their reliance on the "Magnificent 7" stocks due to fears of an AI bubble [2] - Inflation expectations are increasing, with consumers' 12-month inflation expectations rising to 4.9% in August from 4.5% in July, and long-term expectations increasing to 3.9% from 3.4% [3] - The Consumer Sentiment Index fell to 58.6 in August from 61.7 in July, indicating slipping consumer confidence [6] - The Conference Board's Expectations Index dropped to 74.8, remaining below the 80 threshold, which is a common warning sign of recession [7] - Real GDP is projected to grow by 1.6% year over year this year, moderating to 1.3% next year, as the economy is expected to slow down in the second half of 2025 [8] Investment Strategy - Increasing exposure to consumer staple funds is recommended as a defensive strategy to preserve capital and cushion volatility during potential market downturns [9] - Consumer staples stocks, which manufacture everyday necessities, may benefit from an economic slowdown, with the S&P 500 Consumer Staples Index gaining 3.28% year to date [11] - Consumer staple funds may not outperform growth-oriented funds in a bullish market, but they provide protection during downturns and potential gains when the market trends upward [10] Investment Options - Recommended ETFs for consumer staples include Consumer Staples Select Sector SPDR Fund (XLP), Vanguard Consumer Staples ETF (VDC), iShares U.S. Consumer Staples ETF (IYK), Fidelity MSCI Consumer Staples Index ETF (FSTA), and Invesco S&P 500 Equal Weight Consumer Staples ETF (RSPS) [12] - XLP is noted for its liquidity with a one-month average trading volume of 16.08 million shares and an asset base of $15.79 billion, making it the largest among the options [13] - FSTA and XLP are the cheapest options regarding annual fees, charging 0.08%, making them suitable for long-term investing [14]

Market Overview - The market is perceived as "toppy" with all-time highs reached multiple times this year, reflecting a 40% increase since April [3][4]. - There is a high level of retail investment in the market, indicating a potential peak in valuations [8]. Risk Management Strategies - The company has been taking profits on growth stocks, including NVIDIA and Micron, which have seen gains of 40-50% [6][15]. - A risk management strategy involves reducing the number of securities held, concentrating on high-conviction ideas, and reallocating profits into income-generating assets [16][17]. Economic Indicators and Fed Actions - Anticipation of a 25% rate cut at the upcoming Fed meeting is seen as already priced into the market, with concerns about potential inflation data affecting this decision [21][25]. - There is uncertainty regarding the economic outlook, with discussions around stagflation as employment indicators show signs of decline [27]. Bond Market Insights - Short-term bonds are viewed positively, with a recent investment in a high-yield bond fund yielding 10% [28][29]. - The bond market is expected to hold up, but there is caution regarding long-term bonds in the event of economic trouble [30]. High Yield Investment Strategy - The company recommends limiting high-yield investments to about 20% of the portfolio, focusing on high-conviction positions rather than spreading investments too thinly across many high-yield stocks [33][34]. - Recent selections in high yield include specific funds and stocks that are considered top performers in the sector [34].

Market Overview - Investor confidence showed slight improvement following Powell's comments, leading to a minor increase in the S&P 500 index. However, concerns remain due to record U.S. debt levels and ongoing inflation risks [1][2] - The broad market index initially gained 3.7% in August but lost momentum, declining approximately 1.5% by August 21, before rebounding by about 1.7% as of August 27 [2] Inflation Concerns - Powell's remarks indicated a potential interest rate cut in September, but he also raised concerns about inflation, leading to investor anxiety regarding stagflation risks [3] - Consumer inflation expectations rose to 4.9% for the next 12 months in August, up from 4.5% the previous month, while long-term expectations increased to 3.9% from 3.4% [4] Market Volatility Factors - Rising U.S. debt levels and geopolitical instability contribute to market volatility, prompting a cautious investment approach [5] - The AI sector has driven recent market rallies, but concerns about an AI bubble have led investors to rotate out of major tech stocks [5][6] Investment Strategies - Increasing exposure to volatility ETFs may be beneficial for investors, especially during periods of market chaos, as these funds have historically provided short-term gains [7][8] - Investors with a long-term perspective may overlook short-term uncertainties, while those with a shorter horizon should be more cautious [7] ETFs for Volatility Exposure - iPath Series B S&P 500 VIX Short-Term Futures ETN has an asset base of $806.1 million and charges an annual fee of 0.89%. It has lost 11.48% over the past month and 8.47% over the past year [11][12] - ProShares VIX Short-Term Futures ETF has an asset base of $331.9 million, charges an annual fee of 0.85%, and has lost 11.56% over the past month and 9.82% over the past year [13][14] - ProShares VIX Mid-Term Futures ETF has an asset base of $39.1 million, charges an annual fee of 0.85%, and has lost 6.82% over the past three months but gained 16.40% over the past year [15][16]