My very best wishes to my friends and readers for a wonderful Christmas break and may the New Year bring the world the peace the human race so richly deserves. I will be in Alex/Cairo to revisit and pay my homage to the genius of Pharonic antiquity supplemented by the Ptolemaic, Roman, Byzantine, Umayyad, Fatimid, Seljuk, Mamluk, Ottoman, French, British and even Soviet brutalist influences on Umm Duniya’s inevitable skyline. I may even return to DXB with some fresh insights on the EGP Treasury bill carry trade for 2026 LOL!
The Q3 GDP data is yet another argument to load up on Dr. Copper, so that is exactly what I did since it is pure loco to buy silver at 3.4 sigma above its 50 day moving average or gold at a 14 day RSI of 81. I remember the shock and horror of my goldbug friends at a Wharton reunion meeting on October 20 and know that the next landmine explosion in Jan ‘26 will be ultra ugly. 3Q GDP growth was red hot at 4.3%, accelerating from 3.8% growth in Q2. The GDP deflator has accelerated to a horrific 2.8%, way above the usual zombie Street consensus at 2.7%. This scenario makes it 100% certain that the bond vigilantes will make mincemeat out of Sidi Matt if I dare to lock horns with the US Treasury 10-year bond, whose yield is now 4.19% and could easily grind higher above 4.50% in the next 3-months. So the obvious trade du jour to pay for the next Easter luxury trip to Holy Russia is to remain short TLT until after the Orthodox Christmas at Kochevelski. Spasiba bolshoi, tovarich Mr. Market.
Time to go shopping? Dr. Copper is up on his tracker from 72 to 74 in the two trading sessions since I last added to my position in COPX. The January FOMC rate cut odds will now move from a slam dunk to a merde show any you better be selling when the conclave begins yelling. I just hope the FOMC boardroom table dissentniks, does not emulate a Yemeni cabinet meeting when ministerial policy disagreements inevitably ended with a shootout and a President with a bullet hole in his forehead.
There is no longer any rational macro logic for a Jan FOMC rate cut in 2026 if the Fed was really data dependent and not MAGA dependent. In fact, Q3 GDP data screams for a rate hike and a Fed pivot to hard money even if Caligula has now anointed his horse as a senator and beaten his Mom to death in his imperial fury. The most brilliant utterance from POTUS 47 on monetary policy all year? “Quiet piggy”!
Pre-tariff emergency inventory accumulation contributed to the 4.3% GDP growth in Q3, but high end consumer spending, so heavily correlated with the AI trade on Nasdaq, has also gone gangbusters. This suggests a trillion dollar hot air balloon pops in early ‘26 and triggers a shock weight loss in the market of MAG-7. Please revisit the sequence of macro events that triggered Black Monday and you will discover that Mark Twain was dead right. History does not repeat but it definitely rhymes.
The Fed’s concern about a slowing economy is misplaced and the FOMC should be twirling their worry beads about inflation risk. The 2% price stability mandate is a farce as proven by the 71% rise in gold. The acolytes of Dr. Auric are laughing all the way to the bank or at least the goodies that keep popping out of their IBKR account. I had a wonderful 8% monthly return in December on my prop book with only minimal leverage and sporadic gold/silver trades.
Forget the geopolitics of Venezuela, Ukraine, Gaza and Syria for a moment. Focus on the internal politics of the Fed and the mood swings of POTUS 47 as he huffs and puffs and brings the house down in the post Uncle Jay Federal Reserve. Then and only then will we understand what gold at $4500 was desperately trying to message to us.
Also published on Medium.
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