Here’s the news of the week – and how we see it here at McAlvany Wealth Management:

Waiting on Impact

MWM is holding client conferences tonight and tomorrow, so these comments are offered a day early.

At last glance, stocks were stricken with more uncertainty ahead of Irma’s collision course with Florida’s coast. Most of the major indices are off about a half percent, ex the Dow – which was down about a percent leading into the close on Thursday. I assume that without Irma we would still be in short-term rally mode of some sort in the aftermath of Harvey and the fact that the Trump administration, in a deal with Democrats, managed to suspend the debt ceiling issue until December 8th. It’s my guess that we won’t see what the markets are made of until Irma runs its course (through Monday) and/or we get an idea of what the Fed has to say about policy on September 20th. In the meantime, the economic data and any corporate news may play second fiddle.

Other than that, gold jumped again, scratching the near-term threshold level of $1,350 and finishing Thursday around 1,348. As to what caused the approximate 15-point gain, I am not exactly sure. It could have been Irma or the 62,000-strong spike in US weekly jobless claims attributable to Harvey. At this point, though, I believe those themes are overused. Instead, I believe the underlying impetus for the move we’ve seen in gold is more closely related to the now eight-month decline in the dollar. As I suggested last week, a trend that long in the tooth could be due for a modest and healthy reversal – especially after Mario Draghi expressed concern over the somewhat meteoric ascent of the euro against the dollar and its negative impact on that region’s exports.

Best Regards,

David Burgess
VP Investment Management