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Miller Tabak's Maley Cautions on Gold as Silver Drops (Audio) · Bloomberg Intelligence

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  Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Handquarters.
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  Speaker 1: I'm Charlie Pellett. We have got thirteen minutes to go
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  Speaker 1: Jones Industrial Average also trading close to a record. Right now,
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  Speaker 1: we have got the SMP five hundred index advancing four
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  Speaker 1: points to seven, up two tenths of one percent down.
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  Speaker 1: Industrials hired by twenty three points up one tenth of
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  Speaker 1: one percent. Has stack up three tenths of one percent
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  Speaker 1: at fifty two sixty one Gold down a dollar and
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  Speaker 1: a half now thirteen thirty seven ounce down one tenth
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  Speaker 1: of one percent. Crude oil West Texas Intermediate at one
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  Speaker 1: point three percent of sixty cents of arrol oh one
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  Speaker 1: right now on West Texas Intermediate Crude. I'm Charlie Pellett,
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  Speaker 1: And that's a Bloomberg Business Flash. You're listening to taking
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  Speaker 1: stock with Bim Box and Kathleen Hayes on Bloomberg Radio.
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  Speaker 1: What does the FED think of increasing stock prices. Well,
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  Speaker 1: here to tell us more is Matt Mayley. He is
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  Speaker 1: managing director and equity strategist at Miller, tay Back and Company.
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  Speaker 1: Matt Mayley, welcome to taking Stock. Great to be here.
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  Speaker 1: Thank you for for having so tell us about your On
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  Speaker 1: the one hand, and on the other hand, the Federal
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  Speaker 1: Reserve is concerned that markets are too complacent, and yet
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  Speaker 1: they don't necessarily want people to go out and spend
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  Speaker 1: all their money on stocks. Is that correct? Well, the
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  Speaker 1: one thing that we I do think that that is
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  Speaker 1: correct to a degree. I mean everybody talks about how
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  Speaker 1: the fan and rightfully so that the Fed doesn't what
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  Speaker 1: the stock market to uh get hit hard. I mean
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  Speaker 1: it is. It is important part of the of the
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  Speaker 1: economy nowadays. Off the stock markets at hard, it's going
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  Speaker 1: to have an impact on the economy. And you've seen
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  Speaker 1: it when it has been hit fairly hard, you know,
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  Speaker 1: and oh down over temper Center more there's a day
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  Speaker 1: another central manks have stepped in and provided the kind
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  Speaker 1: of liquidity that would buoy the markets. However, I mean
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  Speaker 1: you can't not that, you know, they don't necessarily want
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  Speaker 1: the markets to to go to the moon on a
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  Speaker 1: straight shot, just like we saw what happened in late
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  Speaker 1: nineteen nineties. Because obviously that that creates a bubble that
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  Speaker 1: they can't control if it does roll over. So I
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  Speaker 1: kind of think now it's like they want more money
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  Speaker 1: going into the economy rather than the stock market. Uh.
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  Speaker 1: And that's kind of why I think that you're gonna
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  Speaker 1: hear a little bit more hawkish tone out of a
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  Speaker 1: chair fed chair yelling this week. Well, one area of
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  Speaker 1: the stock market that has seemingly gone to the moon
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  Speaker 1: is the technology sector. I mean, if you take a
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  Speaker 1: look at x l K, which is the Spider Technology
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  Speaker 1: Select et F, I think it's up more than ten
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  Speaker 1: and a half percent since the beginning of the year. Yes,
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  Speaker 1: it's had a great move. And you know, it's funny.
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  Speaker 1: On the one hand, that's you talked about one hand.
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  Speaker 1: On the other hand, on the one hand, that's very
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  Speaker 1: positive because it shows that we're in a little better
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  Speaker 1: leadership out of this UH market instead of some of
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  Speaker 1: the defensive names like utilities and the consumer staples. But
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  Speaker 1: on the other hand, it has gone up quite a bit,
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  Speaker 1: and and a lot of that outperformance we've seen has
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  Speaker 1: been in the last really since the Brexit vote, and
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  Speaker 1: you said that the XLK it is now ten percent
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  Speaker 1: above it's uh tun a day moving average, and also
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  Speaker 1: a subset of the technology set of the Semiconductor index,
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  Speaker 1: the socks that's above it's moving average, and you go
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  Speaker 1: back the last ten years or so those in both
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  Speaker 1: cases is of basically where the market or those groups
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  Speaker 1: have topped out. So we could be due for a
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  Speaker 1: little bit of a pullback. Having said that, um, the
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  Speaker 1: group has had a nice run on on the chart,
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  Speaker 1: it's broken out, so not necessarily thing. It's a group
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  Speaker 1: we should where you should take profits, and so much
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  Speaker 1: is that the buyers might want to step back a
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  Speaker 1: little bit. And if we do get the usual September
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  Speaker 1: October scare, that's when you want to come back in
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  Speaker 1: and maybe buy on weakness because it is getting extended
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  Speaker 1: on a technical basis. Well, it is okay to sell
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  Speaker 1: every now and again. I mean, after all, as they
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  Speaker 1: you don't go pro taking a profit. And looking at
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  Speaker 1: your description of the x l K, as you said
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  Speaker 1: just after that Brexit vote, that particular exchange traded fund
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  Speaker 1: the technology XLK it's up nearly fourteen percent from those
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  Speaker 1: Brexit loaves, do you believe that the Federal Reserve, and
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  Speaker 1: particularly the head of the New York Federal Reserve, Bill Dudley,
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  Speaker 1: do you think that his comments are meant to maybe
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  Speaker 1: make people a little bit more worried about what the
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  Speaker 1: Federal Reserve will do or is there's something deeper, a
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  Speaker 1: deeper meaning to his on the one hand, and on
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  Speaker 1: the other hand comments well, you know again, when you
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  Speaker 1: use that when when when somebody is influential, as as
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  Speaker 1: a New York Federal Federals are president makes it says
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  Speaker 1: that the comments, I'm sorry that the markets are getting
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  Speaker 1: you know, the investors are getting way too complacent. I
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  Speaker 1: think that's a substantial statement, And of course it was
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  Speaker 1: followed right up by the uh, you know, the next
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  Speaker 1: most important person in the sad the vice chair Fisher,
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  Speaker 1: kind of saying the same thing. Uh. So, I think
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  Speaker 1: that the they are trying to warn people that we
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  Speaker 1: don't want things get to get out of control. We
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  Speaker 1: don't want the market because they keep talking about normalizing rates,
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  Speaker 1: whether they raise them now or in December or even later,
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  Speaker 1: they're acknowledging that rates are too low given the underlying strength.
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  Speaker 1: Now they don't want, you know, so, so they're they're
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  Speaker 1: they're too low for the where the market isn't where
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  Speaker 1: the economy is. Uh. They don't want those things to
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  Speaker 1: get further ahead of them before things get out of control,
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  Speaker 1: because again that creates bubbles, and whatever bubbles unwind, we
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  Speaker 1: know what happens then and they can't control them. So
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  Speaker 1: I definitely think that they're sending a warning signal. Um.
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  Speaker 1: There is some people who think that you know, we
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  Speaker 1: can they'll still keep uh, you know, a net safety
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  Speaker 1: that under the market with QUI programs. But they just
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  Speaker 1: don't think that the interest rate things has worked in
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  Speaker 1: the last a few years, and it's something they want
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  Speaker 1: to rectify. You use the word bubble, and I want
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  Speaker 1: you to see if you can tell me about bubbles
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  Speaker 1: imprecious metals like silver. If you look at silver up
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  Speaker 1: thirty six percent since January, that is you know, and
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  Speaker 1: and and the thing is that it's it's it's rolled
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  Speaker 1: over just in the last couple of days, which has
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  Speaker 1: definitely know, it has been had a real nice ninety
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  Speaker 1: seven cents per ounce right now right and it got
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  Speaker 1: up to twenty and it's it was in that you know,
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  Speaker 1: it had that big rally. Then it was sideways for
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  Speaker 1: two months and it has now broken below that sideways trend.
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  Speaker 1: That's a big concern for me, especially because if you
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  Speaker 1: look at the c OT, this commitment of traders data
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  Speaker 1: had showed that the long positions in oil had gotten
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  Speaker 1: to huge records. In fact, they were much higher than
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  Speaker 1: they were back in two thousand eleven when oil was
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  Speaker 1: at almost fifty dollars. So your less than half the level,
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  Speaker 1: and yet everybody's on one side of the boat. So
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  Speaker 1: this thing starts to roll over. Uh, you have a
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  Speaker 1: lot of people on wine some of those positions. So
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  Speaker 1: it's still a little early. We've only broken it for
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  Speaker 1: a couple of days. But unless it anounces that quickly,
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  Speaker 1: that's going to be a big problem. And when silver,
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  Speaker 1: you silver is usually at turning points anyway, is usually
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  Speaker 1: a line indicator for gold. You know, we've heard a
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  Speaker 1: lot of bullish comments about gold lately, especially for some
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  Speaker 1: very smart and successful people billionaires and things. But they're
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  Speaker 1: long term thinkers. But that doesn't mean we can't have
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  Speaker 1: a significant sell off over in the near term. Uh
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  Speaker 1: if if silver continues to break down, So that's something
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  Speaker 1: to watch very very closely. Too many people on one
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  Speaker 1: side of the boat in the precious medals, especially silver
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  Speaker 1: right now, Well, gold, as you said, now up about
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  Speaker 1: two tents of a percent higher by nearly three dollars,
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  Speaker 1: announced thirteen hundred forty dollars for an ounce of a gold.
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  Speaker 1: Gold started the year at around uh well, one thousand
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  Speaker 1: sixty two announced. Now we're at thirteen hundred forty announce.
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  Speaker 1: You mentioned energy. Tell us about your thoughts investing in
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  Speaker 1: the energy complex. Crude oil today up one and a
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  Speaker 1: quarter percent, forty seven dollars for a barrel of crude oil,
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  Speaker 1: and also natural gas higher by nearly three percent today
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  Speaker 1: at two dollars seventy five cents per million BTU. Well,
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  Speaker 1: it's it's funny because the oil thing, I've had a
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  Speaker 1: couple of decent calls recently. When it got up to fifty,
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  Speaker 1: I was getting overloved and over owned. Uh that was
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  Speaker 1: worked off. When to pull back to the you know,
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  Speaker 1: forty dollar range, actually dip alow that for a second,
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  Speaker 1: and I kind of said it was oversold or now
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  Speaker 1: we're kind of a no man's land. We bounced back
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  Speaker 1: a little bit. I'm not a big believer in what's
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  Speaker 1: going on right now. I mean, we have a lot
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  Speaker 1: of people who are not at their desks at the
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  Speaker 1: end of the summer, a lot of people still on vacation.
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  Speaker 1: So uh, some of these rumors that are going around
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  Speaker 1: that have you know, it was one of the reasons today,
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  Speaker 1: of course, is more rumors about Iraq uh and and
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  Speaker 1: supplying the man from them and others been increasing their
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  Speaker 1: output and no real agreement on capping the output from
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  Speaker 1: OPEC nations. Right, So we got the thing is we
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  Speaker 1: get we keep getting these rumors or chatter or whatever
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  Speaker 1: out of out of OPEC, mostly coming from OPEC, and
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  Speaker 1: they all seem to be empty. They don't seem to
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  Speaker 1: come to fruition. So I'm a little nervous up here.
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  Speaker 1: Then when you're pushing them towards fifty dollars, I know,
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  Speaker 1: you know, Goldman Sachs was talking it was today or yesterday,
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  Speaker 1: late yesterday about looking for the fifty dollar range uh
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  Speaker 1: as being where it was going to settle in for
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  Speaker 1: the time I'm being I tend to agree with that. However,
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  Speaker 1: the one thing, of course, on the technical basis is
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  Speaker 1: what's going to happen. Uh, that kind of forty fifty
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  Speaker 1: dollar band is going to be key because you know,
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  Speaker 1: let's face a commodities traders are the ones who invented
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  Speaker 1: technical analysis, and those are key support and re listen stuff.
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  Speaker 1: I know, what's a wide range, but if you break
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  Speaker 1: below forty, that's going to cause some people to bail.
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  Speaker 1: A break above fifty that's going to attract a lot
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  Speaker 1: of momentum money. So right now we're kind of in
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  Speaker 1: the middle of it. But at some point we break
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  Speaker 1: above above ba below that range, but it's going to
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  Speaker 1: be something that's gonna really affect what the trading I've
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  Speaker 1: started with the commodity traders do. When you speak of momentum,
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  Speaker 1: I keep thinking of stocks such as Facebook. The shares
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  Speaker 1: are up nearly twenty so far this year, you're trading
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  Speaker 1: in a hundred and twenty four dollars. Is that the
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  Speaker 1: kind of company that you want people to own or
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  Speaker 1: is that a play that is over? Now you're gonna
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  Speaker 1: look for value? Well, I you know, I am a
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  Speaker 1: little bit more cautious on the market these levels of
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  Speaker 1: number one, because I do think that the Fed let's
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  Speaker 1: looking to raise rates, which well will I think full
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  Speaker 1: the market down because I think that will happen in
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  Speaker 1: September or in December. I think the chances are higher,
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  Speaker 1: are higher. I think it's going to happen in December.
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  Speaker 1: But I do think the chances of a December rate
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  Speaker 1: hip are more than people expecting. I'm in the more
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  Speaker 1: of the chance that have been happening, or a lot
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  Speaker 1: more people are in sit fund futures. Of course, so
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  Speaker 1: much below that, but I just think that we'll know
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  Speaker 1: more on Friday, that's for sure. When when when FED
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  Speaker 1: chairs Yelling speaks. You know, if everybody talks about who's
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  Speaker 1: the most important voice, well, I think we all we
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  Speaker 1: can all agree about who's second or third or fifth
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  Speaker 1: and most important. We all know whos number one, and
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  Speaker 1: that's uh so we'll get that feeling on on on money,
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  Speaker 1: and those set fund futures may see a big change
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  Speaker 1: on Friday. Thanks very much, Matt Mayleie. He's a managing
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  Speaker 1: director and equity strategist for Miller, tay Back and Company.
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  Speaker 1: He's talking about FED chair Janet Yelling. She will be
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  Speaker 1: speaking at the Kansas City Federal Reserves Annual Symposium in
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  Speaker 1: Jackson Hall, Wyoming, this Friday, ten am, Wall Street Time
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  Speaker 1: right here on Bloomberg. Also, we've got reports from my
• 11:01
  Speaker 1: co host Kathleen Hayes live from Jackson Hole, Wyoming, and
• 11:06
  Speaker 1: the all important speech by Janet Yellin, Chair of the
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  Speaker 1: Federal Reserve. We take you through to the close on
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  Speaker 1: Wall Street next