Potentially Rising US Interest

Rates, Gold Basing & Dow

Jones Stalling

with Peter Esho May 4, 2014

The US non-farm payroll numbers came in much higher than expected on

Friday, Asian time. They came in at 288,000 and we think this is really a

turning point for the US dollar and US markets. We think that this is the

first sniff that investors and traders out there will get to reinforce the fact

that US interest rates cannot stay lower forever. We think that the market

will slowly now start to position themselves over the next few years for

rising US interest rates.

The real impact on this is pressure on valuations for all other risk assets.

We think that over the next few months, the Fed will continue to taper,

continue to wind back, but find it very difficult to completely distance

themselves from an eventual increase in US interest rates. This will have a

profound impact regardless of what instrument you are trading.

We initially saw a major rally in the US dollar against the Euro, literally gap

40 to 50 pips and then made up for lost ground. Vito Henjoto has spoken

about that in his technical outlook today. But the key point out there, we

want to make clear, is that the market will now start to reposition for higher

US interest rates. They won�’t happen immediately, but we’ will start to see

more and more commentary around major currency pairs, major interest

rate assumptions and eventually the impact on stock markets.

We maintain our view that the Dow Jones Industrial average on a risk

reward basis is very unattractive at current levels. We maintain our short

position and we’’ve articulated that to you, to clients this week in our Invast

Insights report. We’ve gone through and we’’ve spoken about recent

reports, particularly larger index constituents for the Dow Jones, how

they’ve reported and where we see the Dow Jones going. We’’ve updated

our technical outlook.

We�’ve also updated our portfolio. Our three portfolios are all positive, and

in fact, our best performing portfolio is the most conservative one in Invast

Insights. If you don’’t have Invast Insights, you will receive details of how to

register for a four week free trial.

We also have a very key outlook on gold this week. On our live market

analysis on Wednesday we’ll really be drilling down and updating our view

on gold. We are seeing some very attractive opportunities in the spot gold

market and we’ll be articulating those views in light of the US non-farm

payroll numbers which have come out and what that all means for gold

and other metal prices. We think this is perhaps the most important week

to start to position your portfolio for this data.

There are other bits and pieces coming out on the macro-economic fund,

but we think the key traders, the very smart money, is now starting to

position for an increase in US interest rates over the next few years and

the non-farm payroll number that came out on Friday was really enforcing

that.

Make sure again you register to the live market analysis on Wednesday on

gold and download Invast Insights. Read our report this week if you don’’t

already receive it.

Visit www.invast.com.au/resources/invast-insights.aspx for a free four

week Invast Insights trial.