Bulletin
Investor Alert

Need to Know Archives | Email alerts

Aug. 16, 2019, 9:35 a.m. EDT

Why this is the go-to asset when ‘monetary policy lunacy’ starts hitting markets,

Critical information for the U.S. trading day

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Dow Jones Industrial Average (DJIA)
  • X
    S&P 500 Index (SPX)
  • X
    NASDAQ Composite Index (COMP)

or Cancel Already have a watchlist? Log In

By Barbara Kollmeyer, MarketWatch


Bloomberg News
The only asset in town?

Another rough week has equity losses piling up for August, with the S&P 500 already down around 4.5% just two weeks into the month.

Some may not be ready to throw in the towel here. We’ve consistently heard throughout this lengthy bull market that bang for your buck can be tough to find outside of stocks. And despite some bumpy days, keep the tin hat close by as calls to buy equities trickle in.

The “Great Panic of 2019” is a big buying opportunity for stocks, Thomas Lee, head of Fundstrat Global Advisors, told clients in a recent note. And Mark Mobius, co-founder of Mobius Capital Partners, told MarketWatch that he’s got his eye on dividend-paying stocks, which he expects will benefit as central banks race to stave off a recession with interest rate cuts.

Some investors do seem to be playing it safer lately, which brings us to our call of the day from Otavio Costa, global macro analyst at hedge fund Crescat Capital, who is advising they buy gold. “We are entering a period of monetary policy lunacy, and in our view, there has never been a better time to own gold,” said Costa, in emailed comments.

Central bank easing and perception that interest rates will keep falling, along with jitters over the global economy and trade, have driven gold up nearly 20% this year. “Precious metals are “one of the few pockets of this market offering tremendous value to hedge against extreme monetary policies, bursting asset bubbles, and record global leverage,” says Costa.

Read: Central banks haven’t shifted direction this abruptly in a decade

He’s in good company. Euro Pacific Capital’s Peter Schiff has been telling clients the metal will “go ballistic” as the dollar tanks when markets realize the trade war is lost. The dollar tends to move inversely to gold. The metal closed at just over $1,531 an ounce on Thursday, the best settlement for an active contract since 2013, but some are saying $2,000 may not be far away.

The market

The Dow /zigman2/quotes/210598065/realtime DJIA -0.88%  , S&P /zigman2/quotes/210599714/realtime SPX -1.12%   and Nasdaq /zigman2/quotes/210598365/realtime COMP -1.07%    are climbing, as U.S. Treasury yields are backing off multi-year lows a bit.

Oil  is higher, but the price of gold  is retreating, while the dollar /zigman2/quotes/210598269/delayed DXY +0.03% is up.

A technical glitch delayed the start of trading in London in the worst outage for the exchange in eight years. Europe stocks /zigman2/quotes/210599654/delayed XX:SXXP -0.66% are up, while Asia /zigman2/quotes/211618636/realtime XX:ADOW +0.33% saw mixed session.

Read: Junk bonds are getting worse, and investors are starting to take notice

The chart

Bank of Merrill Lynch’s “Darlings Index”, which tracks the performance of some growth superstars that have helped lead the bull market, has seen better days. Our chart of the day from the bank shows how that group has dropped a collective 8% since July 26.

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
27,657.42
-244.56 -0.88%
Volume: 703.89M
Sept. 18, 2020 5:15p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,319.47
-37.54 -1.12%
Volume: 4.09B
Sept. 18, 2020 5:15p
loading...
/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
10,793.28
-116.99 -1.07%
Volume: 5.26M
Sept. 18, 2020 5:16p
loading...
/zigman2/quotes/210598269/delayed
US : U.S.: ICE Futures U.S.
93.00
+0.03 +0.03%
Volume: 0.00
Sept. 18, 2020 6:02p
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
368.78
-2.45 -0.66%
Volume: 0.00
Sept. 18, 2020 11:03p
loading...
/zigman2/quotes/211618636/realtime
XX : Dow Jones Indices
3,335.66
+11.08 +0.33%
Volume: 0.00
Sept. 18, 2020 2:00p
loading...
1 2
This Story has 0 Comments
Be the first to comment
More News In
Investing

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.