Phil Streible: Market Insights – Small Caps Surge, Fed Rate Cuts, and Silver’s Potential

Transcript:

Let’s bring in Phil Streible. Joining us this morning, Chief Market Strategist at Blue Line futures to help us break it down take a deeper dive into some of the headlines. Phil, good to have you with us this Tuesday. Let’s begin with markets. You got the Russell, you got small caps and the survival still in the show. As I said, total breakout to the upside. I mean four straight, relentless days up. I think traders are still caught offsides on it, but the Russell looks like it has a lot more room to go if you back the chart up on it. I mean, we could hit this 2200 2300 2400. Who knows? You know, I mean, markets could continue to move higher. On that type of news after Jerome Powell speech, you know, the first thing I always do is I look at that CMEs fed watch tool. And if you look at, there’s not even an expectation for him to keep rates on change. So 87.6% chance to cut 25 basis point, you got a 12.1% chance to cut 50 basis points and a 0.4% chance 75 basis points. So I think a lot hinges on, you know, these numbers like retail sales, initial claims coming out, we’re gonna really want to monitor the consumer. And if that consumer continues to break down at a faster pace, you could see those those higher expectations for the bigger cuts come in. Phil, you’re talking about the September meeting, right in terms of the CME FedWatch tool, as far as no real expectations, they’re not going to cut September. But talk to me because I’m starting to hear calls for why wait till September? Why not go ahead at the end of July? I know, I know, I think Goldman Sachs put out some note on that as well. But, you know, the expectations for it only about an 8.8% chance that you know that they’ll make that cut in July. And a lot of the things that, you know, people got to ask themselves a traders I think is that if they do only cut what time how does it how does it affect the markets? You know, how many interest rate cuts are priced in a lot of assets? The something like the gold market, for instance? You know, I mean, we looked at last December was six interest rate cuts were expected now it’s like realistically, I think maybe we get to this year, September and December. But I don’t know about a 50 basis point. I think it’s a bit optimistic. That was my next question. I’m kind of wondering, in order to see this trajectory to the upside in terms of small caps continue to we need to see yields continue lower right. This has been a big part of it, obviously, the tenure as I look to 4.168 in the overnight session. I mean, if yields start to reverse, and we could see maybe the Russell kind of get back into that pattern warrants been lagging. Yeah, I mean, it would be you would start to see like a 4050 point drop most likely on the Russell so if someone believe that they can look at, you know, there’s no month Russell puts there’s also a micro opportunity, potentially, right. So yeah, they there’s a lot a lot of different ways to play it here. So I mean, these markets have been a lot, it seems like the volatility is nonexistence, and then it comes all in at once. So you get these just massive moves. I mean, looking even Bitcoin $5,000, yesterday, 6000, whatever it was, you know, gold’s getting these big moves to, we think there’s a great opportunity and silver and some of the other foreign currencies and also oil selling off today that could present itself. Yeah, watching oil come off. Interestingly enough, well, it’s come off a bit with the dollar, maybe tied to some of that weaker than expected China that I saw to begin the week, we’re gonna talk about that a little bit later on kind of tied into copper in just a few minutes. But let’s continue to focus here on the indices, but get a little bit more to the, you know, individual stocks that make up these names that we watched, the s&p is the NASDAQ, the Dow, the Russell and right now it seems the focus continues to be on the banks without getting into the two names specifically, that we’ve heard from this morning. How do you feel in terms of the tone being set from financial so far? Well, the financials look really good. I mean, they’re starting to push up to the upside we saw like Bank of America, Morgan Stanley, those had, you know, done quite well. So I mean, this this in this rally really seems to be broadening out. And that’s where you get, you get the strength behind it. And you get all the indices moving up, I would say the NASDAQ is still by far the most volatile here and the Dow Jones, I think it’s getting a little bit of a head itself. So we’ll see if that has any kind of breakdown as well. But s&p and the Russell look really good BAC to your point $43 And your high for the year. Talk to me about as we look beyond the bank, some of the other names you’re going to be watching, obviously, the in videos, the big tech names that start to report over the next week or so. Oh, yeah, we always watch those. I mean, that’s where you, that’s where you got it, that’s where you’ve had to have been in order to, you know, create that alpha and try it out, you know, form your peers. So, you know, we’ll want to continue to monitor those at all times. If we get any kind of substantial pullback on tech stocks, I would expect them to continue to be bought until we get some kind of serious breakdown that something that dramatically changes in the market or market structure or even tactically, but it’s just not it’s just not happening yet. So you mentioned some of the other products you’re looking at in terms of silver you did mention Bitcoin, which is speaking of had a bit of a revival in
itself. We just take a look at this chart recently down to that $53,000 level. What was that low that we saw? It was 53 635. Back on the fifth of July. I think it was we talked about how if the bulls are still in charge this scenario where they’re going to step up, it looks like they did. What do you tie this to? Is it I’m hearing possibly tied to some of the recent political developments? Also, again,
technical revival. JD Vance is, you know, it’s been noted that his portfolio has, you know, a sizable stake in Bitcoin you know, he’s also got gold the stock indices, as well, I was the only holding that’d be sad. That was interesting was Walmart as far as his was concerned, but you know, Bitcoin breaking breaking back out to the upside. It was it was a bit oversold the negativity was there. Pessimism you know, Germany was liquidating, you get a lot of people with a mount Gox story, right? Yeah, you get you get, you know, when when that was a hack, if bitcoin was only a few $100 Now, all of a sudden, you get your coins back? And it’s, you know, $60,000? Of course, that’s my load some? Yeah, yeah. 100%. So but you know, we should consolidate in this, you know, 62, five to 65,000 range. And then we can see from here, if we can continue to move up. I think silver, I think it’s got one of the best opportunities out there. The ETF investors haven’t been there. If you look at you know, q2 2022, it was 950 million ounces and ETF holdings. Now we’re only about 800 million. So you know, wherever those people gone, and will it take that breakout in gold, all time highs to bring those people back into the market. The other thing to watch is, you know, solar demand, we were only having about 60 to 100 million ounces in demand for since 2015 to 2020. And then it seems like the dynamics changed Green Energy Initiative in this this year, we expect to earn 32 million ounces in solar demand. So really outstripping the supply side demand is increasing, which makes setup for a great perfect storm to the upside. I like the copper silver chart, this is setting up potentially for a nice rip higher here and retest that $33 level, we can just pull it up real quick, a very similar pattern in many ways. In terms of what we just looked at with Bitcoin, right? The recent tests the lower extreme that failed down below that $29 level and through this middle of the range that we’ve been in, basically since the beginning of May, as you build momentum, we open up the door for retest to 3233. That high that we saw back in looks like on the 20th of May. Alright, lastly data here today, Phil, we’ve got retail sales again, some other numbers looks like a housing data point. Where’s your focus, their retail sales, that’s the biggest one and the expectations couple days ago were four negative 0.2%. Now I saw one of the latest ones negative 0.3. So they’re getting more, more and more pessimistic on the consumer. So I don’t know I’ve had this shirt since last year so I’m not buying any retail sales. You know, you and me both. And it’s too hot to go out shopping right now. So Phil, appreciate you joining us here and sharing part of your Tuesday morning was on with us on the Schwab network. Phil Streible. Ladies and gentlemen, Chief Chief Market Strategist at Blue Line futures coming up a quick break.

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