Equities, Bonds and Crypto Stabilize After Yesterday's Drubbing

December opens with risk aversion, crypto unravels, silver spikes, and bonds wobble as risk sentiment sours.

Key Takeaways

• Industrial Sector Bright Spots in the Gloomy Beige Book: While the most recent Fed Beige Book was rather downbeat on the labor market and consumer spending backdrop, there were bullish narratives on the industrial sector worth noting. This helps explain why the S&P 500 Industrials (+15%) has outperformed Consumer Discretionary (+5%) this year by more than +1,000 basis points.

• Silver Roars Back to Close the Gold Gap: Silver is enjoying its best year since 1979 and its best five-day stretch since August 2020. It now takes around 73 ounces of silver to buy an ounce of gold, down sharply from 87 ounces at the end of August and 105 ounces in mid-April. The historically wide silver-gold discount has just about completed its mean-reversion process these past six months.

• The Myth of the Pristine Household Balance Sheet: Apparently, U.S. household balance sheets are deemed to be squeaky clean by the pundits. But that flies in the face of the fact that in the third quarter, the new serious delinquency rate for autos rose to 3.0% from 2.9% a year ago and 2.5% two years ago, the highest level since the first quarter of 2010, when the unemployment rate was sitting at 9.8%.