Commodities and the TSX Venture got hammered Wednesday as investors awaited comments from the Fed expected later this week in Jackson Hole, Wyoming. The Venture fell 3.5% as gold tumbled below $1,325 an ounce.
Fed controls markets and gold
At this point, it’s almost comical as the market waits like a dog for Janet Yellen to open her mouth about will they or won’t they raise rates. The answer is that they will not. There has been 1 symbolic rate hike in the past 9 years. Does anyone really believe the Fed would start aggressively raising rates?
What the dramatic sell-off on the TSX Venture tells us is that investors are jittery. After months of incredible gains, some investors are remembering how bad things were last year and were quick to pull bids, duck tailing and running from many of the Venture’s darlings over the past 6 months.
Back to the Fed…
All the Fed has said is that a rate hike is still “possible” this year, but dependent on incoming economic data… So, they’ve really said nothing. If anything, they have said more of late that would suggest a course of easing rather than tightening. Despite some hawkish comments from New York Fed boss Dudley, Yellen has given no indication of a rate hike this year.
Check out the below excerpt from an article titled The Fed Contemplates $4 Trillion Stimulus.
“Zero Hedge broke a must-read story last night, which highlights a Fed Staff working paper released over the weekend titled “Gauging the Ability of the FOMC to Respond to Future Recessions”. It was written by the deputy director of the division of research and statistics at the Fed and highlights a scenario that would see the Federal Reserve print an additional $4 trillion to ward off a severe recession.”
Click here to read the entire report.
The U.S. Dollar Index was up 0.3% at 94.7670 in after market trading as traders positioned themselves for continued dollar strength. Gold sold off as investors bailed on the metal ahead of the Fed’s meeting. The chart of the day being sent around was that of gold, as traders pondered whether or not gold was actually back in a super cycle.
Silver was also hit hard, falling over 2% to $18.53 an ounce.
TSX Venture dips in August Stock Challenge
Long-time Pinnacle member ‘funtime‘ had to be feeling good Wednesday as his selection of Republic Airways Holdings continued to rebound, soaring 68.52% on the day to capture the Daily Stock Challenge Breakout award in August’s Stock Challenge. The company is putting together an epic rally this month, since bottoming at $0.20 on August 17th.
Pinnacle member ‘wtanchak’ is holding the lead with a 83.43% return, despite the Venture falling 28 points to below 800 Wednesday.
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