This morning: The Rotation Continues. Bond Fraud. DOGE Does DoD. Gold soars.
Looking at today’s
GS Basics - Global Demand. Negative Revisions. More Capex Less Buybacks (2/10/25):
Some selected parts for discussion -
“Last week showed there was quite substantial demand for equities across the franchise.”
Deepfake was shaken off!
“HFs net bought US equities every day this week and at the fastest pace since early November...US Info Tech saw the largest net buying since December 2021” (PB) 2.) a fever pitch of demand for everything Europe”
I bought EUFN 0.00%↑ and EUSC 0.00%↑ recently
“My 10k foot view is the market is redistributing and diversifying market cap away from the US mega caps into other relative pockets. Part of that is going into ROW: SX5E/DAX/HSI (“HFs net bought Chinese equities at the fastest pace in over 4 months, driven almost entirely by long buys.” - PB) Part of it is going into equal weight spx/US financials. On Europe specifically, I think we saw a bit of a stop in last week. We’ve been out of consensus bulls on the geography since post US election and now finally seeing the client base move their feet. CTA is max long EU equities and there are German election only a few weeks away...I think there is decent risk (GIR had it at 40%) of a blocking minority led by AFD (I think risk it’s higher).”
Rotation continues!
“Locally think the big focus this week is going to be the CPI. Bond supply will be relatively heavy throughout the week including 10y and 30y auctions. NFP was mixed but I think the takeaway is the labor market is strong with underlying pace of job growth somewhere in the mid to low 200s. U of Michigan is probably more a function of partisan divides (see Republican vs Democrat consumer sentiment ) but in some level an acknowledgment that tariffs bring inflation tails. Of the view we remains choppy and risk struggles into the CPI. Watching NY Fed 1y inflation expectations.”
On bonds….
“Trump says US may have less debt than thought because of fraud”
https://finance.yahoo.com/news/trump-says-u-might-less-221932449.html
"We're even looking at Treasuries," Trump said. "There could be a problem - you've been reading about that, with Treasuries and that could be an interesting problem."
He added: "It could be that a lot of those things don't count. In other words, that some of that stuff that we're finding is very fraudulent, therefore maybe we have less debt than we thought."
It was not clear whether Trump was referring to debt service or other government payments made by the Treasury Department.
Sounds like a mess
I sold my SGOV 0.00%↑ and will give up the yield for now
DOGE Does DoD
In other news, I sold all my defense stocks this morning. PPA 0.00%↑ SHLD 0.00%↑
because
https://www.foxnews.com/media/hegseth-welcomes-elon-musks-doge-long-overdue-dod-spending-overhaul
"We know in a world where America's $37 trillion in debt, resources will not be unlimited, so every dollar we can find that isn't being spent wisely is one we can put toward a warfighter, so we welcome DOGE at DOD," he told "Sunday Morning Futures" anchor Maria Bartiromo.
"We will partner with them, and it's long overdue. The Defense Department's got a huge budget, but it needs to be responsible."
GOLD!
$3000 is in sight. My 2025 EoY target prediction is $3600.
I own - IAUM 0.00%↑ and SIVR 0.00%↑ (low fees!) plus GDX 0.00%↑ (miners) and WPM 0.00%↑ (silver streamers). Also GLD 0.00%↑ calls. (most liquid options)