Market Risk:

*New Home Sales fell -18% yy on Monday

*Report:  OPEC talks are difficult and close to reaching impasse – a further delay is possible/policy rollover is possible. 

*ECBs Nagel:  rate hikes are not necessarily over.  We would have to hike again if inflation worsened.  – Euro continues to gain on the USD on suspected divergence in Central Bank policy. 

*Consumer Confidence due up at 9am

Volatility/Narratives/Etc. – unnatural low volatility continues to feed equities.  The current narrative on Wall Street is that the Fed is done, the next move will be a rate CUT, and equities will glide path higher the entire way.  I think what many fail to understand and underestimate is the conditions that would necessitate a rate cut in the first place.  For example, a slowing economy, falling equity prices, credit tightening.  With the right catalyst, sure I could see the Fed cutting rates in 2024 – however absent any catalyst …. No, I don’t see it happening and it would be “higher for longer” on rates.  However, we continue to maintain evidence that suggests economic conditions will be demonstrably tighter in Q1/Q2 of 2024.

The Consumer:  We continue to hear “the consumer is strong” narrative.  And by looking at “Black Friday” sales data you’d surmise that that were true.  Record sales of $9.8B was spent over the weekend.  However, “buy now pay later” was up an astonishing +47% YY.  Let’s check on the health of consumer credit (listed in the charts below).

Credit card balances are at 30yr + highs….

Credit Card delinquency rates are at 30+ yr highs (higher than the previous 3 recessions)…..

Interest payments are going parabolic ….

Saving’s rates are at multi-decade LOWS!  …..

And Finally (posted on Game of Trades Macro research site) – M2 Money Supply contraction YY is the steepest decline EVER.  Ever I remind you is a LONG TIME.

Top Long Macro positions – Gold, UST 2yr, Silver

Top Short Macro positions – Russell 2000 (small cap index)

Stocks: divergence, now signaling OS. 

Gold: taking out a key resistance area into expiration of December contract.  Remains Bullish trend, Positive momentum, and

Bonds: We added 2yr Notes yesterday – may be a relatively subdued trade for a while, however yields could fall into January from here – need to continue to watch inflation data going forward. 

Dollar: negative divergence continues to suggest SELL the USD vs Foreign’s and……GOLD.

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John Caruso

Senior Market Strategist

Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.

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