In today’s briefing:
- 2025 High Conviction Idea: Gold
- Fed to Face Accusations of Political Bias as Baseline Policy Outlook Shifts
- Can Trump Make Equities Great Again?
- Kerala Smallholders Turn The Heat On Tire Makers; To Cut Supply
2025 High Conviction Idea: Gold
- Gold prices have staged multi-year breakouts in multiple currencies, indicating a long-term bullish outlook.
- In addition, gold is on the verge of staging relative breakouts against global equity markets that point to multi-year outperformance ahead.
- The U.S. macro outlook calls for a re-acceleration of inflation, which is also positive for gold.
Fed to Face Accusations of Political Bias as Baseline Policy Outlook Shifts
- Declining political approval ratings were sending a clear message to the Democrats that all was not well during the current post-pandemic economic recovery, notably tight household finances for many.
- Markets are discounting only 50 basis points of Fed easing in 2025, raising the spectre of criticism about political bias against the incoming Trump administration’s fiscal policy agenda.
- Chairman Powell will argue that policy is data-dependent. The magnitude of recent easing cannot be justified by incoming information over this period, thereby exposing the Fed to potential flak.
Can Trump Make Equities Great Again?
- U.S. equities have surged in the wake of Trump’s electoral victory while stock markets in the rest of the world have been flat to down.
- While the combination of narrowing global leadership and elevated U.S. valuation are concerns, we remain cautious but not bearish on the U.S. and global equity markets.
- Fundamental and macro momentum are strong, and there are no signs of reversal in funding costs.
Kerala Smallholders Turn The Heat On Tire Makers; To Cut Supply
- Consortium appeals to farmers not to sell below INR 200/kg
- Supply to market expected to fall by 30% in coming days
- Compound rubber imports go up by 47.5% YoY until Sept
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