The five-week slump in the Dollar Index is the longest since late 2017/early 2018. When you consider just how destabilizing currency swings can be it is easy to see how a strong dollar could obliterate the global economy. Although we were early dollar bears, the downside momentum appears stronger than the momentum indicators suggested last week. The US dollar slid to 22-month lows which would normally be accompanied by a rise in the inversely-priced crude oil. Of course, many U.S. based companies are multinational enterprises, have exposure to international economies, and are priced in US dollar on the American exchanges. During the last several years, the question of how to exit the Euro-zone monetary union and the euro has become an important economic issue. Looking at the cost of the euro in sterling over the past five years, one can see that there has already been a significant depreciation of sterling. The strongest major currency has been the Swedish krona, which often acts as a high-beta euro.It has risen nearly 6% against the US dollar.
The Euro and growth-linked Australian Dollar soared, with the latter trimming some of its gains later on. Only 26% of the portfolio is in US dollar terms, which is what you’d like to see in an international fund (or even less). This is as the haven-linked US Dollar experienced its worst week against its major counterparts on average since early June. The yen climbed last week, although this was a case of broad dollar weakness, rather than strength on the part of the yen.
Gold is the obvious hedge against this development, and thus my bullish case for (NEM) – the world’s largest gold producer. In mid-2019 this correlation broke down, with the yen trading sideways and gold moving higher despite the fact that Japanese real yields actually rose over this period. Higher rates are usually linked with falling gold prices. For now, we see that the gold trade is the right trade, until proven otherwise. In prior years gold and the yen have been closely correlated as both acted as a store of value amid easing U.S. monetary policy. With all currencies losing value relative to gold and silver, we believe the Japanese yen remains the least bad fiat currency option. He writes a bi-weekly in-depth analysis for one of Germany´s largest gold and silver retailer the “pro aurum group”. In prior years gold and the yen have been closely correlated with each other as both acted as a store of value amid easing U.S. monetary policy.
Because gold trades near (at) all time highs, stocks are right below all time highs and Treasuries (risk off trade) are right below all time highs. Gold and silver prices soared with the latter seeing the best week since 1998. As well he is publishing his bi-weekly comprehensive for his numerous international readers focusing on Gold, Silver, Mining, commodities and cryptocurrencies. As said in Gold Price Ready To ‘Blast’ Through All-Time Highs (which we published earlier today) the gold price is moving higher, strongly higher. He is well known for combining technical, fundamental and sentiment analysis into one accurate conclusion about the gold market.
While that was enough to trigger a sharp sell-off in equities, oil prices remained stable. Additionally, the oil and gas sector made up 3%, the entertainment industry made up 2%, and healthcare made up 1% of total loans. Crude oil price action has staged a monumental recovery since the commodity traded in negative territory this past April. Oil prices were firm and held above $41/bbl and the U.S. oil rig count increased for the first time since March. Fortunately, these two companies are integrated oil & gas companies with investment grade credit ratings. The automotive industry is moving towards electrification, with countries such as India, China, Great Britain, and France planning to ban production of gasoline vehicles within the next twenty years. Looking forward, however, the cartel of major oil producers have optimistic projections for world oil demand to recover during the second half of 2020 and into 2021. Energy Information Administration data showed weakening gasoline demand after a surge in the number of coronavirus cases.
Therefore, we think it could take longer for the global oil inventory to return to the pre-crisis level. Oil prices moved with considerable momentum at the start of the week, touching four-month highs. The number of long positions on the NYMEX WTI futures exchange fell by 6,205 contracts, compared with the previous week.
US Election 2020 Close Donald Trump continues to have the confidence of Americans on the economy, virtually the only area where he outshines Joe Biden. So after 11 years on Wall Street I walked out and left. In fact, Chevron (CVX), which represents 20.9% of VDE’s portfolio, announced a deal to acquire Noble Energy (NASDAQ:NBL) several days ago. The NASDAQ 100 finds itself sitting on a crucial uptrend, and a break of that uptrend would trigger a sell-off to around 9,760. The problems today are bigger than in 2008, and as the economy worsens, the Fed will attempt to print more, which can only be bullish for metals. Despite Trump’s rhetoric about American carnage, his arrival comes at a time of growing income inequality and general prosperity. Technology and Apple (NASDAQ:AAPL) have seen price rise these past weeks, even as the oscillators are trending down. The NASDAQ, which had rallied to record highs this summer, ended lower for a second week, falling 0.9%, finishing trade on Friday at 10,363.
All eyes turn to what is expected to be more stimulus from the US at the end of the week. His body will also lie in state in Washington DC at the US Capitol. The week saw the listing of 4 biopharma companies on the Nasdaq, which raised a combined $772.9 million. This is typically when everyone gets caught holding the bag, and while the Fed may try, they probably can’t maintain this level of market momentum.