Overall, the tone is bullish for today, with stocks positioned for gains amid earnings focus and rotational strength. There is a noticeable move out of the tech sector, something we would expect as the S&P is near the top. First the decline in crypto and in particular Bitcoin was a warning to the stock market. Second, the gold panic, a massive sell-off in precious metals, silver has collapsed roughly 37% and gold is down 18% since last Thursday. The stock market is next. When stocks turn down it is highly likely gold and silver will have another leg down below the recent lows. This is common behaviour, when risk is off people sell everything.
Markets are still adjusting to President Trump’s nomination of Kevin Warsh as the next Fed Chair. Investors generally view him as a stabilizing force, though his appointment signals a more cautious approach to further interest rate cuts. That’s the problem, investors have been betting on further rate cuts. However, trump wants lower interest rates, this creates a lack of visibility and uncertainty, in this situation investors sell stocks. Bond yield are about break out to the upside, inflation is coming.