US Equities Hovering Around Record Highs

As another storm threatens the Philippines after the destruction of Super Typhoon Haiyan, President Benigno Aquino has declared a state of calamity and announced that over $400 million has been set aside for reconstruction and aid. Local news broadcasts have shown images of bodies floating in the streets and the ocean and buildings reduced to rubble. According to the United Nations humanitarian affairs office, over 650,000 people have been displaced by the storm. Estimates of damage range up to $14 billion with only $2 billion insured.

As better than expected U.S. economic data spurs speculation that the Federal Reserve may now move sooner to taper stimulus, hedge funds have cut their bullish bets on precious metals with their holdings across commodities falling the most since April. Short bets on gold using futures and options contracts, according to the U.S. Commodity Futures Trading Commission , increased 37% last week while holdings across 18 commodities fell 20%. Goldman Sachs have forecast a decline to $1,050 in gold by the end of 2014 while we maintain our bullish outlook for the metal.

U.S. equity markets are hovering around record highs as investors continue to ponder the likelihood of Fed tapering and monitor retailer earnings reports. The S&P 500 closed within 1 point of a new record high with markets quiet as bond markets were closed for the Veterans Day holi-day. The index closed 0.07% higher at 1,771.87. 75% of the companies that released third quarter profits so far have beaten analysts' forecasts. Earlier in Europe, bourses were higher with both the DAX and FTSE rising 0.3%.

Commodities have edged higher with the major indexes gaining more than 0.3%. WTI crude gained 0.5% to $95.00 as a summit in Geneva between Iran and six world powers failed to reach an agreement on that nation's nuclear programme. Precious metals were largely unmoved with gold trading at $1,283 while silver traded slightly higher by 0.2% to $21.40. Copper was flat. Agricultural commodities were mixed.