Daily Close | Forex, Metals, Oil, Agriculture September 01, 2020



General Comments: Cotton closed a little higher on follow through buying.


Finally in FX, The dollar’s weakness meant that the euro strengthened above $1.19 for the first time in over 2 years, while sterling rose +2.2% against the dollar. Moreover, US dollar has hit its lowest level in two years against a basket of currencies following the US Fed s inflation policy loosening last week. I believe that the value of the US dollar was going to continue to decline, whether or not the Fed changed its operating strategy. We also have some historical support for the argument that “a weakening dollar has historically “ supported higher stock prices.
The average price increased in most part because the Brazilian Real depreciated against the dollar by 38%, according to the company. In the Financial Times article cited above, quotes Kit Juckes, head of forex strategy at Sociéťé Générale, about the dollar’s recent move: “It feels a bit like capitulation. On March 19, 2020 the Euro cost $1.0680, the British pound cost $1.`530, and the US Dollar Index was 102.82.
The dollar traded sharply higher against most of the major currencies with USD/JPY being one of the few exceptions. One should note that as recently as the end of January 2018, the US Dollar Index was right around 88.75. US dollar hegemony requires a strong military. The US Dollar Index (DXY) dropped to around 91.75. Now we have a picture of a fading dollar. Its dollar-based net expansion rate of 183% is unheard of and proves that customers love Agora. Specific to the company, the installed base of multi-million-dollar machines grows.
SG&A increased by 3% compared to 2Q19 as the depreciation of the Brazilian Real outweighed the reduction in payroll expenses.


Equities such as the NASDAQ and S&P 500 have risen by 61 percent and 50 percent respectively, bitcoin by 81 percent, and gold by 36 percent. Gold rallied through the minor high near $1988 and is now likely to push through $2000 and challenge the minor high at $2025. >> Fabrice Drouin Ristori on Twitter is an independent investment analyst and studies the gold and silver market and their future role in the international monetary system. We note that the index’s recent performance was mainly driven by its allocation to gold and U.S. Treasuries, as its allocation to equities has continued to remain low.
Speaking of inflation… Warren Buffett recently bought into Barrick (GOLD), and now he’s buying key Japanese stocks… in what appears to be another move to benefit from rising inflation. The bank, long obsessed with its gold rush-burnished past, will shut down 11 of its 12 museums about its corporate history, the bank told employees Tuesday. He follows regularly since 1970 the gold, silver and foreign exchange markets.
less While most of the Corona news is “baked” into the gold price, when the dust settles, $2000-$2500 is likely to be the new floor. He follows and analyzes the gold and silver markets since 2008. Fabrice shares his thoughts on the economy, stock markets, geopolitics, gold and silver. The Indian creep state refuses to cut the gold import tax but is always happy to borrow more fiat in the name of the taxpayers. The underlying components that make up the index are equities, U.S. Treasuries, and gold.
Robbers stole historic gold nuggets from the San Francisco museum several years ago.
On average, the index allocated 6.0% to equities, 42.0% to U.S. Treasuries, and 11.1% to gold in Q2 2020. They also include Alaskan native artifacts in Anchorage, Western-themed artwork in Phoenix, and a gold watch in San Diego.


According to the company, coatings, automotive, and oil & gas segments experienced weaker demand, while home & personal care and crop solutions segments experienced an increase in demand. As seen in Figure 2, crude oil prices experienced high volatility during the second quarter due to the adverse effects of the coronavirus. Average sales per m3 estimates are based on current crude and future crude oil prices that can be found at Trading Economics. EBITDA margin decreased from 2.5% in 2Q19 to 1.4% in 2Q20, mainly due to the decrease in gross margins caused by highly volatile crude oil prices.
Oil demand can fall from less international trade, from fewer international air flights, and from fewer trips by commuters. High appetite leads to high oil prices, as occurred back in 2008. In fact, an economy will probably collapse quite quickly if it cannot keep oil and other energy prices up. Weekly average spot oil prices for Brent, based on data of the US Energy Information Administration.
They may cut back on production, as OPEC nations have done in the recent past, in an attempt to get prices back up. It needs to keep its population cool, besides running its large oil operation. The reason is that spectrum is as essential to wireless companies as oil reserves are to shale drillers. The September East-West 380 fuel oil differential lost $0.25 to $12.50/mt, while the October contract gained $0.25 to $14.50/mt. Demand for electricity (made mostly with coal or natural gas) is likely to fall if fewer buildings are occupied.
I’d also note that the company doesn’t really have much exposure to markets I believe may be weaker for longer, including non-resi construction, aerospace, and oil/gas. These are distressing to oil consumers.

United States

Trump is scheduled to arrive in Kenosha prior to surveying property damage as a result of last week’s civil unrest. Next, another reporter asked Trump if he would condemn Kyle Rittenhouse, who was charged with first-degree murder after last week’s shootings. I believe that Mr. Powell, the Fed Chair, would not do something intentionally that would have any kind of an impact on the upcoming presidential election. The September 20 ULSD CIF Med cargoes differential was flat from the previous close at $1.25/mt, while the October 20 differential was flat at $2.00/mt.
The September 20 ULSD CIF NWE cargoes differential was flat from the previous close at $2.25/mt, while the October 20 differential was flat at $2.50/mt. Large Wall Street firms have slowly and carefully unloaded their positions over the last 2 and a half months onto retail investors, who are walking into a trap. Softer labor market growth and a more subdued outlook from the Fed would accelerate EUR/USD’s losses.
The Trump administration says the PPP has saved some 51 million jobs at a time when much of the U.S. economy has been shuttered due to the coronavirus.
I’ll add a 2a: I think as long as the US government is posturing in a cold war, all branches of the military-industrial complex must appear strong. Predictably, Nasdaq breadth continued to sink, with the number of tech companies trading below their 200DMA dropping below 50%, and just over half trading above their 50DMA. From the beginning of this year to June, the total assets of major central banks (the Fed, ECB, BOJ, PBOC) have jumped by a near $6 trillion.
The NASDAQ saw an even larger +9.7% advance over the month in total return terms, while in Europe the DAX also climbed +5.1%. In today’s environment, the political motivation behind the Fed’s move may be questioned. It’s true that wireless carriers in the US have at times willingly underutilized their networks to produce pricing power over consumers data use and extract monopoly/oligopoly profits from them. It’s not just the US creep state (government and central bank) that is recklessly borrowing and printing vast amounts of fiat money.
When the Fed shrank its assets by just around 6 percent between early 2018 and February 2019, the market plummeted by twice that. We note that Wall Street analysts for FY22 (next calendar year) have a revenue target of $2.88 billion. That move cements its existing YTD lead, in a move that outpaces even the NASDAQ. The US stock market is up today. The apparent reason for this move was because investors started to think that the US was not quite the “haven” that they had formerly held it to be.


When the five largest tech firms are 20% of the total market, and have a larger market cap than the whole EU, you have to wonder.