Why this is the go-to asset when ‘monetary policy lunacy’ starts hitting markets,

Article From MarketWatch.com

By Barbara Kollmeyer

Published: Aug 16, 2019 9:34 a.m. ET

Critical information for the U.S. trading day

Bloomberg News / The only asset in town?

Another rough week has equity losses piling up for August, with the S&P 500 already down around 4.5% just two weeks into the month.

Some may not be ready to throw in the towel here. We’ve consistently heard throughout this lengthy bull market that bang for your buck can be tough to find outside of stocks. And despite some bumpy days, keep the tin hat close by as calls to buy equities trickle in.

The “Great Panic of 2019” is a big buying opportunity for stocks, Thomas Lee, head of Fundstrat Global Advisors, told clients in a recent note. And Mark Mobius, co-founder of Mobius Capital Partners, told MarketWatch that he’s got his eye on dividend-paying stocks, which he expects will benefit as central banks race to stave off a recession with interest rate cuts.

Some investors do seem to be playing it safer lately, which brings us to our call of the day from Otavio Costa, global macro analyst at hedge fund Crescat Capital, who is advising they buy gold. “We are entering a period of monetary policy lunacy, and in our view, there has never been a better time to own gold,” said Costa, in emailed comments.

Central bank easing and perception that interest rates will keep falling, along with jitters over the global economy and trade, have driven gold up nearly 20% this year. “Precious metals are “one of the few pockets of this market offering tremendous value to hedge against extreme monetary policies, bursting asset bubbles, and record global leverage,” says Costa.

Read: Central banks haven’t shifted direction this abruptly in a decade

He’s in good company. Euro Pacific Capital’s Peter Schiff has been telling clients the metal will “go ballistic” as the dollar tanks when markets realize the trade war is lost. The dollar tends to move inversely to gold. The metal closed at just over $1,531 an ounce on Thursday, the best settlement for an active contract since 2013, but some are saying $2,000 may not be far away.

The market

The Dow DJIA, +1.05%  , S&P SPX, +1.38%   and Nasdaq COMP, +1.68%    are climbing, as U.S. Treasury yields are backing off multi-year lows a bit.

Oil CLU19, +0.83%  is higher, but the price of gold GCQ19, -0.72%  is retreating, while the dollar DXY, -0.01% is up.

A technical glitch delayed the start of trading in London in the worst outage for the exchange in eight years. Europe stocks SXXP, +1.24% are up, while Asia ADOW, +0.27% saw mixed session.

Read: Junk bonds are getting worse, and investors are starting to take notice

The chart

Bank of Merrill Lynch’s “Darlings Index”, which tracks the performance of some growth superstars that have helped lead the bull market, has seen better days. Our chart of the day from the bank shows how that group has dropped a collective 8% since July 26.

The group includes: Microsoft MSFT, +1.66%  , Japanese conglomerate SoftBank 9984, -1.11%  , South African tech and internet group Naspers NPN, +0.57%  , American Express AXP, +1.66%, Visa V, +1.02%  , airline giant Airbus AIR, +0.51%, ASML ASML, +1.40%  , ASML, +1.79%  , luxury goods group LVMH MC, +0.80%   and retailers Home Depot HD, +0.57%  and Walmart WMT, +0.02%.

The buzz

Global trade blues ding results from tractor-maker Deere DE, +3.88%  and shares are down. Shares of Nvidia NVDA, +7.10%  are climbing after the tech group’s results beat Wall Street forecasts, though some aren’t sure the hard times are over. Shares of Applied Materials AMAT, -0.81%  got a lift after beating earnings expectations, but also gave a downbeat outlook.

At a rally in New Hampshire, President Trump warned Americans should vote for him in 2020, or watch the market crash, and reiterated that China wants to make a trade deal.

Read: NASA scientists track Greenland’s melting ice, and the findings are not good

Data for the number of new homes on which construction has begun came in below forecasts, but building permits were higher. A consumer sentiment reading is still to come.

The tweet