Boockvar on Gold, Bank of Japan Rate Hike Possibility
From Peter Boockvar:
Gold rising in stature/BoJ hike coming?/Trucking prices/Company comments
Gold continues to gain as the preferred choice when it comes to the holdings of central banks. The Financial Times is reporting that “Gold replaces US Treasuries as world’s top reserve asset, ECB says.” The piece says “Bullion accounted for 27% of all global central bank reserve assets at the end of 2025, up from 20% a year earlier, according to a report published on Tuesday by the ECB. US Treasuries fell to 22% from 25% over the same period. The share of euro-denominated reserve assets was unchanged at 15%.” This said, “Dollar-denominated assets as a whole still make up the biggest chunk of reserves at 42%, the ECB data showed.” That though compares to about 60% 25 years ago and 50% just a few years ago.
Bottom line, there is a clear diversification of capital flows going on, which is coinciding with a major diversification taking place with regards to trade flows as countries and foreign companies expand the breadth of their trading partners globally. https://www.ft.com
The Bank of Japan might end up raising rates in a few weeks after all. Governor Ueda speaking today for the last time before that meeting said “I think the Bank will continue to raise the policy interest rate at an appropriate pace” and “Based on the data and anecdotal information available thus far, the upside risks to prices appear to be greater overall and are likely to emerge sooner.”
JGB yields are higher in response but the yen is little changed, likely sending the message that they will believe it when they see it.
Along with the rising cost of container shipping, along with dry bulk ship, I’ve highlighted multiple times the rising cost of truck transportation. In the May Logistics Managers Index released yesterday, they said this:
“Transportation Prices are up 1 pt to 96, which is the fastest rate of expansion ever recorded for any metric in the nearly ten year history of the index. Transportation Capacity continues to contract quickly at 31.7, and Transportation Utilization expansion remains elevated at 69.5. The transportation market has been tight, with prices growing at an unprecedented rate since the closure of the Strait of Hormuz. The spike in fuel has led to increases for all three of our price and cost metrics, with aggregate logistics costs reading in at 250.9, which is the highest reading since March of 2022.”
Also, and including a point I keep hearing on stock piling, “US supply chains have largely continued operating despite the disruption of 20% of the globe’s oil exports. Upstream firms have pulled inventories forward to curtail future shortages and consolidate shipments, while Downstream firms have kept things leaner in an attempt to mitigate tariffs.”
To some company comments.
Shake Shack lowered guidance right before they spoke at the TD Cowen consumer confidence, its stock fell 8.4% and they said this of note:
“We are seeing some challenges in short to mid term on the cost side. Obviously, I think everyone is aware of the beef prices that we’re battling. They’ve continued to escalate. And we are also seeing fuel surcharge prices on some of our distribution and some of the other input costs in the middle of the P&L.”
“there’s going to be some headwinds in the macro and we acknowledge that. And that’s part of what you see in the update and guidance today reflecting our views on the current cost structure and what our views are just given the competitive landscape and all the things that we know today.”
From Dollar General and whose stock traded down by 3.3% yesterday:
“We grew market share in both dollars and units in highly consumable product sales once again during the quarter, in addition to growing market share in non-consumable product sales.”
Comps grew by 2% “primarily driven by customer traffic growth of 1.4%, and supported by average basket growth of .5 point. Notably, this marks the fourth consecutive quarter of growth in customer traffic as our combination of value and convenience continues to resonate with customers.”
“While there are a variety of puts and takes on customer budgets during Q1, our core customer continues to be financially constrained, as any benefit from tax benefits was largely offset by higher fuel prices and reductions in SNAP benefit payments. Importantly, while there has been a significant reduction in overall SNAP dollars distributed in 2026, we grew share of wallet with SNAP customers during Q1, further demonstrating the strength and relevance of our value proposition.”
“Notably, during the quarter many of our core customers reported cutting back on other household expenses, including food purchases, due to rising gas prices. This pressure has been more pronounced on customers in rural communities as they work to minimize trip distance and make trade-offs in their search for everyday affordability and value.”
And in the search for value by everyone, “we are seeing customer penetration growth across low, middle and high-income segments, as customers across all income cohorts seek value at increasing rates. Notably, across these cohorts, the largest increase in customer count came from the highest income segment, which earns more than $100,000 annually, contributing to a significant increase in trade-in customer households during the quarter.”
From Signet Jewelers, up almost 4% yesterday but after falling by 3% Monday:
“We delivered comp sales growth across every category and most brands this quarter…we continue to see strength in higher end consumer with some of our best performance at higher price points.”
“By category, growth was low single digit for bridal and fashion with stronger growth in watches and services.”
To a question on whether their business has been impacted by higher tax refunds but also higher gas costs and general inflation, the answer was basically no as “We’re much more tied to milestone, whether that’s engagement, gift, holiday, etc…Also tied to a big chunk of our business to a purchase that relies on credit or some form of financing for our customer. And so, bottom line is those kind of short term moves don’t have as big of an impact in our business.”
Victoria’s Secret rallied like a semiconductor stock yesterday, skyrocketing by 47% as while they modestly beat sales estimates, they blew away the operating income forecasts. From them:
“We achieved our 4th consecutive quarter of positive comps with total comp sales increasing 13% and driving total sales growth of 15%. We also saw strength across channels and geographies. We were particularly encouraged by double digit gains in new customer acquisition and continued file growth across all age and income cohorts. In fact, we saw the strongest growth from customers and households earning under $50,000 annually and over $200,000, underscoring the broad resonance of our brands across the consumer landscape.”
“During the quarter, we continued to gain share in intimates, particularly amongst 18 year olds to 24 year olds. Traffic also accelerated from the 4th quarter, reinforcing the momentum we are seeing across the business.”
Ulta Beauty is down a touch pre-market and they said this last night on their call of note:
“growth in the beauty category remains healthy, even as consumers are increasingly value focused…And while we are continuing to monitor how the macro landscape could evolve, we remain execution focused and are confident we will deliver our fiscal 2026 expectations.”
Fragrance was their best selling category in the quarter and “growth was primarily driven by newness from core luxury brands” like YSL, Carolina Herrera and Valentino.
Notwithstanding a good Q1, “we believe it is prudent to take a measured approach to our guidance given the uncertain macro landscape.”
With the average 30 yr mortgage rate staying above 6.50%, at 6.57%, though down from 6.65% in the week before, purchase applications fell for the 4th week in the past 5, down another 2.9%. Refi’s were down by 2.3% w/o/w after dropping by 18% in the week before. We know affordability remains the big problem in the housing market.
Overseas, China’s private sector weighted May services index rose to 54.4 from 52.6 and 2 pts above the estimate. RatingDog said “The faster increase in activity was accompanied by a further acceleration in the rate of growth in new business moving through the second quarter. The rate of expansion in demand for services accelerated for the fourth time in five months and was broadly in line with the long run survey averages. Increased client demand, business innovation and expansion, new client acquisitions, improved market conditions and the development of new projects were all mentioned as sources of new work.”
The revised service PMI’s for Germany, France, Italy and the UK all remained below 50 while Spain just got there at 50.1. The UK was close at 49.3. Not surprisingly, “Cost pressures in the service sector continued to increase, as they now have done in every month since the start of the war in the Middle East. Output charge inflation saw only a fractional uplift from April, however.”
Nothing market moving here but still highlighting the sluggish growth in the region on the service side.
Positions: None.
BY Doug Kass · Jun 3, 2026, 9:45 AM EDT
