Let's kick things off with our good friend Hardika Singh.
She's an economic strategist at Fundstrat.
Thank you for being here.
Nice to see you.
OK, so you and I were just talking about gold.
Is the so-called safe haven trade broken down?
Are we viewing gold's performance differently in light of the conflict in Iran?
It's complicated.
Gold has and always will have the reputation of being a haven asset, but what that haven means depends on the time frame you're looking at.
If we go back to historical data, This type of performance where gold has actually declined during a wartime, it's pretty common.
Since 1979, there's been at least 13 instances of geopolitical turmoil, sell-offs, and gold has only rallied through the course of one week, one month, 3 months, 6 months, and 12 months later.
So through that time span, only 3 times, and that was during the global financial crisis in 8.
Then we had COVID-19 crash in 2020 and then also the Israel-Hamas war in 2023, so it was.
Only across those time periods that gold was up.
I think what it takes for gold to maintain its status as a haven asset in this scenario is that investors have to believe that this geopolitical turmoil is here to stay.
And with the president sort of coming in saying, hey, we're potentially looking at an exit plan, that puts that into question.
And I think that's the big reason for gold's selloff recently.
Is the status of gold and silver as safe havens further called into question because of how remarkable they were as.
Performers before the conflict, these were basically just trading in a parabolic way, and it brought this up and then somewhat range bound since the start of the year.
And then we've got the conflict in Iran, but they were already at such elevated levels.
What does that do for the conversation?
The rally last year was just mind boggling to put into words.
It was crazy.
Gold went to $5000 a toy ounce.
It was parabolic like you said.
But then at the end of the day when we do have a conflict like this, just about everything in the market.
Is getting thrown into the red, so investors will naturally take some profit out of gold that they've made over the past year and a half and silver also and put that towards, you know, the other assets that are declining in value just to stop them from falling down even more.
It could be that there's a short squeeze going on.
If you look at the flows data into GLD, which is SPDR Gold Shares Fund, the biggest physically large back gold ETF, you can see investors are pulling some of the most biggest amounts that they have in history.
That was during the week ending on March 6th, so I think people are taking the gains they've made in gold and putting it elsewhere to work right now.
Let's talk about the broader market here.
Obviously, I was on the West Coast last week, but I was still doing my best to catch up.
But we basically have the Dow, you've got the small caps, the Nasdaq all at or near correction territory defined by a 10% pullback off their recent highs.
The big storyline for Liberation Day last year, at least one of the narratives, was.
Retail investors held firm.
They bought that dip when maybe institutional dollars got a little more, a bit more frightened on the sidelines.
Who is buying the dip, if anyone, right now?
Is it a lot of wait and see on the retail versus the institutional side?
I think it's the smart retail investors, and I know that sounds kind of ironical considering their reputation is dumb money, but I really think they've been so smart in the past year where they have come in systematically and bought the dips.
And this year too, I think that's one of the biggest reasons why.
We haven't seen the S&P 500 and some of the major indexes fall down as much as they could have.
I mean, at the end of the day, the effective closure of the Strait of Hormuz, this is an Armageddon scenario.
This is a black swan event of sorts, right?
We had never foreseen oil prices going up this much.
I think it's somewhat nothing short of a miracle, I would say that the indexes haven't fallen down more, but yeah, it, it is still kind of concerning that some of these major indexes have entered correction territory, the NASDAQ especially, um.
What I how I look at that is basically tech stocks have fallen down enough now to the point where the evaluations look super attractive.
In fact, the premium that they had built over the past 10 years has been completely wiped out.
So for me and how the team, our team is looking at this, this basically means that the entire AI revolution never happened, and that makes no sense, right? from a PE ratio, pardon me if I interrupt, from a PE perspective, yes, price to earnings next 12 months, it makes no sense.
Why would that happen?
AI is still one of the biggest drivers and is expected to be the biggest drivers of the economy going forward.
So for me, I think there's only a matter of time before investors start rotating rotating back into tech stocks and maybe this calms down some of the sellout that we've seen because the index today, a lot of the sectors were rallying, but tech and energy were down, and I think that was weighing heavy on the index.
Hartika, through the lens of the broader markets, what will you be looking for to give you some sense on long running?
Sort of interpretations of the conflict in Iran.
We've heard the White House repeatedly say it will be 4 to 6 weeks.
We're already on week 5.
There's no end in sight.
There's plenty of miscommunication and wires that are getting crossed, but what through the lens of the markets will you be paying attention to?
Is it something on the Treasury side?
Is some of these these previously very high valuations that have come down a bit?
Yeah, I would say there's two things that we're already starting to notice.
Number one is memory stocks.
You know, they were the top performers last year and this year the Micron, for example, has entered into bear market territory.
That's crazy.
Just, just a couple in just a couple of weeks this happened makes no sense, right?
So I think that's one of the signs that investors are starting.
To rotate out of these high flying names, and the second thing I'd be looking at is sentiment.
We're still seeing bolts hang out in the market.
They haven't completely given up.
They haven't thrown the towel yet.
I think we still need to see sentiment deteriorate furthermore from here because, like I said, this is one of those black swan events.
The third thing I would say is that.
As hard as it may be, I think the best thing to do for investors right now is to do nothing, because if the president is coming in saying, Hey, we're looking for an exit strategy, you need to believe the White House on that.
Don't fight the White House because you're you're going to lose money doing that this year and last year too, to some extent.
Absolutely.
All right, Hardika Singh, good friend of ours here on the show, economic strategist at Fundstra, thanks for being here.
Nice to have you to kick off the week.
Thank you.
