From the March 4, 2018 HRA Journal: Issue 283

The markets have calmed down a bit but the White House is injecting plenty of political uncertainty.  I’m surprised Wall St is taking things as well as it is.  Seems like traders think tax cuts (excuse the pun) trump everything else.  We’ll see.  The complacency didn’t work out so well a month ago so I wouldn’t get carried away with it.

I’m finishing this issue at PDAC, having just finished a highly successful inaugural Toronto MIF. I should really be trolling the booths, but the news has been piling up and I wanted to get these updates off to you. Note that the “news cut off” is March 2nd. There were lots more news releases as I was finishing this today, and I expect a bunch more tomorrow. Those will be dealt with in the next issue which I’ll start this weekend. I had planned to add a copper explorer that is already familiar to SD subscribers in this issue but there were so many updates there wasn’t room. I’ll get to it in the next issue. I don’t expect any short-term news from that company, so it shouldn’t make much difference. 

There has been lots of turbulence lately, most of it not the favourable kind for metals.  I’m not too concerned about the medium-term outlook, but we could have more drops short term. Watch for this month’s non-farm payroll report. Many think the surprise jump in wages in the last report kicked off the run-up in yields and correction to the SPX. I think some of that gain will be revised away this month. 

***

Markets have calmed down a little since the last issue, but only a little. We did see a nice recovery from the February lows, with the SPX retracing two third of the full drop before topping out again.

You can chalk up the renewed volatility to a couple of reasons. One is another pick up in shorter-term yields. The chart below shows a one-year trace for the 2-year Treasury yield index, considered a good proxy for bond traders short-term inflation and yield outlook.