Grab some gold because the Fed can’t figure out Trump, a growing chorus says

(January 6, 2016 - by Victor Reklaitis)

If you’re trying to make sense of the new world order or of the latest Fed minutes, here’s some good news: A few gold watchers have it all sorted out.

The precious metal is jumping to a four-week high today because yesterday’s minutes are beating up the almighty dollar, says Naeem Aslam at Think Markets. Janet Yellen and her sidekicks are feeling really uncertain about the “timing, size, and composition” of any infrastructure spending or other U.S. fiscal stimulus, the account of the Fed’s December meeting revealed.

“The Fed is surely betting that Donald Trump will be able to deliver when it comes to fiscal spending and tax reforms. But the reality may be far off what the market is positioned for,” Aslam writes.

Our chart of the day sings a similar tune. It shows how gold GCG7, -0.54% has gained about 4% since mid-December, as the safety play bounces back from its smackdown in last year’s second half.

“I guess gold got tired of bitcoin having all the gains,” writes Slope of Hope’s Tim Knight, who provides this chart. Today he expects to end a bet against an ETF holding small-cap gold miners GDXJ, -6.44%  that has soared 21% in the past two weeks.

Below is a bonus chart created by Market Anthropology’s Erik Swarts. It suggests gold GLD, -0.64%  now could rally like it did in 2002 and 2003.

Protectionist policies from the Trump administration could “more than offset the potential benefits of tax breaks and looser regulations,” Swarts argues.

“As such — and despite the considerable retracement declines in precious metals in the back half of last year — we continue to like their long-term prospects in what we believe will be a lower real yield market environment.” The low rates could persist longer than most expect, he adds.

Key market gauges

Futures for the Dow YMH7, +0.47%  , S&P 500 ESH7, +0.50%  and Nasdaq-100 NQH7, +0.98%  are trading flat to slightly lower, after the Dow DJIA, +0.44%  , S&P SPX, +0.52% and Nasdaq Composite COMP, +0.79%  closed higher yesterday and back near record levels.

The dollar index DXY, +0.65%  is extending its drop from the prior session. See the Market Snapshot column for the latest action.

The call

Russian stocks are likely to score big gains this year, predicts Jeff D. Opdyke of the Total Wealth Insider newsletter.

“Welcome to what I am calling the Year of Russia,” writes Opdyke, who previously penned a Love & Money column for The Wall Street Journal.

“My bet: Donald Trump calls for an end to sanctions on Russia before his first 100 days in office are over,” he says. That move by the new U.S. president then sets the stage for stocks in Moscow RSX, -0.35%  having “a blockbuster 2017.”

Opdyke says there was a time in the ’70s and ’80s when he was supposed to hate Russia, but now he believes the West cast the Crimea crisis “in the wrong light for its own needs.” He argues that Europeans largely want sanctions gone, as they need the Putin-led nation as a trading partner.

The buzz

Department store stocks look set for big drops after Kohl’s KSS, -1.18%  cut its outlook late yesterday and Macy’s M, +0.36%  announced plans to close 68 stores and lay off 6,200 employees.

In White House news, intelligence agencies are due to brief President Obama today on Russia’s alleged role in election-related hacking, while President-elect Trump is planning a big overhaul for the CIA.

Constellation Brands STZ, +1.63%  , Walgreens Boots WBA, +0.31%  and Monsanto MON, +1.32%  are among the companies that posted earnings ahead of the open.

China’s yuan surged today against the dollar in offshore trade.

A $2.6 billion deal: CEB’s stock CEB, +0.60%  is leaping as researcher Gartner IT, +4.17%  plans to buy the company, which offers research and advisory services in fields such as HR.

On the CES 2017 front, Nvidia NVDA, +2.12%  and VW’s VOW3, +0.44% VLKAY, -0.23%  Audi unit unveiled plans for a self-driving car.

Nvidia also made waves at the tech trade show by extending its GeForce Now video game streaming service to PCs and Macs. It played “Rise of the Tomb Raider” on an iMac — a graphically intensive game that the Apple computer typically wouldn’t be able to handle.

The quote

“$3.17 is a bacon, egg and cheese biscuit. The market’s down this morning, so I think I’ll pass up the $3.17 and go for the $2.95.” — The Oracle of Omaha talks about cutting back his spending at McDonald’s in the new trailer for “Becoming Warren Buffett.”

The documentary is due to premiere Jan. 30 on Time Warner’s TWX, -0.24%  HBO.

The stat

More than $150 billion — That is how much money went into U.S. stock ETFs last year, according to Credit Suisse, which provides the chart below.

“The flows into U.S. equity ETFs have been spectacular,” says The Daily Shot newsletter, which highlighted the chart.

The economy

A couple of employment reports arrived before the open (ADP’s monthly release missed forecasts, while weekly jobless claims weren’t as high as expected), an appetizer ahead of the important nonfarm payrolls data Friday.

After the start of trading, we’ll get a Markit reading on the service sector and ISM’s report on nonmanufacturing activity.