S&P 500 and real assets benefited from underwhelming non-farm payrolls, but the positive moves, including in bonds, were erased in strong selling before the closing bell. The greatest issue for buyers this late into the topping process is that long-dated Treasuries haven‘t moved that much to facilitate such a steep decline in e.g. tech and communications.

That means the buyers wouldn‘t have it really easy Monday, because the move was a bit more than pre-weekend hedging – yet real assets not following to the downside balances that out.

Where does that though leave us macroeconomically and in terms of the bear market rally vs. new bull market debate?

Apart from already summed-up late Q3 recession arguments, and swipes at new bull market thesis, let me add that if manufacturing recession is quite here, expansion in services ISM wouldn‘t be enough to prevent rise in unemployment to around 5% claims and layoffs say, and that still robust job market together with strengthening oil prices later this year would work to bring up inflation to the 4.4 – 5% range in Dec 2023 – hardly a constellation that would allow the Fed to take its foot off the pedal (besides July, we have 1-2 rate hikes coming by Jan 2024 FOMC).

And that means continued pressure on Treasury yields to rise in order to reflect return of inflation, loose fiscal policy and tight Fed underpinning the short end of the curve. Translates into obvious pressure on Nasdaq, still no catch up rally in financials or smallcaps, and disappointing equal weighted index characteristics that make the rally off Oct lows pale badly to true bull markets being born as measured by appreciation after these many months (no, the arbitrary 20% line doesn‘t count for me). That has earnings, P/E and profit margins consequences as of Q3 2023.

Let‘s move right into the charts (all courtesy of www.stockcharts.com).

Gold, Silver and Miners

Friday‘s reprieve in gold and silver is to give way to renewed selling – still, the daily showing in the face of rising yields had been remarkable – owing to the USD weakness. Big picture, metals are still basing, and the upcoming move likely points down.

Crude Oil

Crude oil cleared with ease $71, and didn‘t lag behind precious metals (function of USD decline?). While I consider it basing, over the weeks and short months ahead, it would embark on an uptrend again – $76 area is key.

Long-term bullish factors remain at play – underinvestment in exploration and extraction, aging giant oil fields, limited spare capacity, stubbornly resilient world demand regardless of green policies in the West, shale plays (Bakken or Permian) approaching their own peak etc.

Copper

Copper's upswing has been more muted, and I would say correctly so – $3.72 should to hold still, probably much of the way into Jul FOMC.

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