Brave new world: US Budget deficit almost $1 trillion; BGMI to gold ratio lowest in 78 years

Ritesh Jain, a Dalal Street veteran, trend watcher and Global Macro Investor, captures global macro investment opportunities and economic, business and financial trends with charts and commentaries in this space.

Dollar Index could be putting a top of some significance here: FED increases O/N repo to $120 billion from $75 billion, apart from $60 billion QE.

US Budget deficit almost $1 trillion: At $984 billion, or 4.6 per cent of GDP, the US reported its largest late-cycle of an economic expansion, non-war, deficit to GDP in American history.

BGMI/GOLD ratio: The extent of underperformance of gold mining stocks compared to bullion gold becomes particularly clear when we make a longer-term comparison.

• The oldest available gold mining index, the Barron’s Gold Mining Index (BGMI), is currently at its lowest level relative to gold in 78 years.
• In addition, the current value is miles below the long term median of 1.5.

Cyclicals & Financials catching some love of late. Still a LONG way to go to reverse the trend.

Canada running hot: Despite an all-time high household debt-service ratio and a near-record ratio of debt to personal disposable incomes, Canadians are still responding to lower market interest rates and strong labor markets by borrowing more.