Friday Recap - 7/12/2024

AU: $2410 ($2387 - Last Week Spot)
AG: $30.74 (31.06)
HUI: 300 (284)
DXY: 104 (104.5)
S&P: 5613 (5567)
10-Yr: 4.18% (4.27%)
Oil: $82 ($83)

We had two big stories this week. First, the S&P closed above 5600 for the first time, hitting an ATH today of 5655. The stock market has been on a tear. What's insane is that there is nothing to support this move other than the expectation of rate cuts, with the first one in September. Wall Street has lost its mind. I would not be surprised if 5655 is the high for the year, and we finish the year around 3500. The macro data has been trending lower, signaling a coming recession. Other than government and healthcare, all other sectors are praying for a turnaround and hoping the bottom is in. Guess what? It's not.

Once the stock market tops out, the unemployment rate will begin to rise, signaling the onset of the recession. I expect it before November. Wall Street has no idea how bad it is. The recession that is coming will last 2-3 years. This will not be a normal business cycle, where you have a couple of Qtr's of negative GDP and then growth resumes. This time, we are going to get a paradigm change, and end of era change. In fact, we are going to get a new financial system. The old US financial system based on debt expansion is no longer going to work. I think this will be apparent by January 1st, as the US government bond market begins to signal that it is in deep doo-doo.

The other big story this week was gold and the HUI. We closed above $2400 in gold, and above 300 in the HUI. These are breakout levels, however, we now need to see $2500 gold and 325 HUI for confirmation that the miners are breaking out. That could happen if gold is leading and has sniffed out the massive problems that I see coming. Conversely, these levels could fail to hold once the selling begins on Wall Street. I expect the latter to occur, but the former would not be a surprise. These are crazy times.

I thought July would be the calm before the storm, but it is stirring up a lot of drama. Who had a 5600 S&P in July on their bingo card other than David Hunter? Everyone on Wall Street thinks this is great news. Well, it's not. The stock market is way over its skis. Gold closing in on an ATH is a flashing red light that something is wrong. Consumer confidence at 65 is flashing red light number two. The consumer is broke unless they are in the top 10% income category. A CPI print of 3% is not going to fix that problem. Instead, consumers are taking on more debt and juggling their budgets. The economy is a mess, and Wall Street is in denial. Get ready for their wake-up call because the music is about to stop.