Yesterday saw the latest Fed meeting. As expected, the Fed had some nice things to say about how the economy was doing, and why all those rising prices and shrinking portion sizes at the grocery store were temporary. But when it came to, say, pulling back on the billions of dollars per day of bond buying, the central bank once again punted on the issue, saying they were looking into it.
This is a replay of its model from the last crisis. Yes, the Fed will eventually scale back its bond buying, possibly even to zero. And it may, some years after that, even raise interest rates again. But if another crisis hits? It’s back to the money printing. That’s why we’ll never go back to the normalcy of the 1990s-era Fed, where interest rates fluctuate over various concerns, and when you could avoid the risk of stocks by parking your cash in a bank account for 4-5 percent returns.
Now here’s the rest of the news:
The Stagflation Threat Is Real, but Congress Holds the Key –Mike Shedlock,MishTalk
I want higher prices, lower growth, and higher unemployment. Please vote for the Stagflation Guarantee Act of 2021, which is now before you… [Read Here]
July 29, 2020
Is gold or a gold standard really a barbarous relic as Keynes stated or is it gaining relevance?
As you look at the commitment of traders’ report for gold, the complexion of the market is very different than previous runs as the shorts are predominantly bullion banks and the longs are those wanting physical gold. This could mean dramatically higher prices may be in store if the imbalance continues. Bitcoin is similarly moving as the desire for hard assets, even digital, is on the rise.
“If you Want MORE, you have to… REQUIRE More from Yourself!” —Dr Phil
Now here’s the rest of the news:
#1 — Bridgewater Associates Founder Ray Dalio Warns “Capital War” Between The US And China Would Hit Dollar
“There’s a trade war, there’s a technology war, there is a geopolitical war and there could be a capital war,” Dalio told Bartiromo, adding that a potential capital war could erupt if Washington bans invest-ments in China.
He suggested the politicians in Washington have already threatened the dollar’s stability by being “our own worst enemy.”
A steady decline in the dollar has accelerated in recent weeks, as a resurgent coronavirus outbreak in the United States and improving economic prospects abroad sour investors on the currency.
The buck is down 8% from its highs of the year against a basket of currencies <=USD> and stands near its lowest level since 2018. Net bets against the dollar in futures markets are approaching their highest level in more than two years.
“The dollar is hanging by a thread,” said Mazen Issa, senior currency strategist at TD Securities in New York. “At this point, the dollar-weakness mindset has become deeply entrenched.”
Few issues in economics more befuddle and divide the profession than figuring out what determines exchange rates. Back when floating exchange rates clumsily emerged following the collapse of the Bretton Woods System in the early 1970s, a supremely confident economics profession produced a plethora of papers, theories, and empirical models purporting to explain currency movements. Some work focused on relative valuations (such as purchasing power parity), others relative interest rates, and others external balances as the drivers of exchange rates. Others attempted to combine all three factors (fundamental equilibrium exchange rates). Models became increasingly elaborate as econo-mists tried to explain oddities, such as the tendency for exchange rates to overshoot what their model said was “fair value.”
From the sidelines, market “technicians” smirked about the dreadful results economists delivered when explaining historical currency shifts, to say nothing about forecasts. Their smirks became frowns when their own efforts to explain and prognosticate exchange rates by using waves, patterns, support, and resistance levels and much else proved just as hopeless.
Gold is up 25% this year and traded above $1,895 per ounce [last Thursday], not far from the 2011 record high of $1,921. Meanwhile, global stocks, as measured by the by the MSCI World index, have recovered almost all of the losses they suffered as the pandemic ushered the world economy into lockdown, and are within 5% of regaining their February highs.
As precious metals accelerated higher in the last few days, we joked (kinda) on Twitter that the surge in momentum would soon become a magnet fo the new trading gurus manning their desks at home – whether in China or Chinatown – and send it to all time high.
Gold currently at $1.963.55, silver at $24.58
July 29, 2019
Develop the habit of reading something every day, the habit of learning something new every day!
You will start to enjoy it. You’ll look forward to it, your thinking will sharen, your vocabulary will increase, and you’ll become a more interesting person
“Learning furnishes the mind with materials of knowledge; it’s thinking that makes what we learn ours.”
Watch this machine solve a Rubik’s Cube in 0.38 Seconds.
(You need to watch this at 0.03x speed to even get a sense of what this machine is doing.)
It’s really fast! 😉