Market Advances & Declines

[A “BEV” Chart shows the last high as 0% with pullbacks, corrections, and bear mrkets as percntages below the most recent high. -Bob]
By Mark J Lundeen – Re-Blogged From Gold Eagle

This week the Dow Jones saw above average volatility, especially early in the week, but on Friday closed only 3.92% from its last all-time high.

The Dow Jones in the table below (#10) was down 6% at Monday’s close, but recovered as the week progressed to Friday’s close, and that was the story for the rest of the indexes in the table too.

Continue reading

Advertisements

Falling Yields And Currency Turmoil

By Mike Gleason – Re-Blogged From Gold Eagle

What a wild week it’s been for investors.

The threat of global trade wars and currency wars sparked big swings across all major asset classes. Bond yields dove toward historic lows. Stocks plunged earlier in the week before rebounding sharply by Thursday. And precious metals rode a huge safe-haven wave higher.

Gold prices eclipsed the $1,500 level on Wednesday for the first time in over six years. Meanwhile, silver price pushed above $17 an ounce to record a one-year high. Both metals are up over 4% for the week.

The money metals are becoming increasingly attractive as President Donald Trump ramps up his battles against China abroad and the Federal Reserve at home.

Continue reading

After Fed Disappoints, Will Trump Initiate Currency Intervention?

[Views may differ, but why would any sane person want to keep rates around 2% or lower, well below market clearing levels? -Bob]

Following months of cajoling by the White House, the Federal Reserve finally cut its benchmark interest rate. However, the reaction in equity and currency markets was not the one President Donald Trump wanted – or many traders anticipated.

The Trump administration wants the Fed to help drive the fiat U.S. dollar lower versus foreign currencies, especially those of major exporting countries.

Instead, the U.S. Dollar Index rallied throughout July ahead of the expected rate cut and continued rallying after Fed chairman Jerome Powell made it official on Wednesday.

Continue reading

Tariffs, Rate Cuts And Devaluation Whispers

Mike GleasonBy  – Re-Blogged From Gold Eagle

Well, after months of presidential complaining, tweeting, and pressuring, Donald Trump finally got a rate cut from the Fed.

A lower interest rate was supposed to stimulate the stock market and make the dollar cheaper versus the currencies of exporting countries — thereby making U.S. products more competitive according to Trumponomics.

Instead, stocks fell, and the U.S. Dollar Index broke out to a two-year high following the Federal Reserve’s policy move on Wednesday.

Continue reading

Broken Markets And Fragile Currencies

By Alasdair Macleod – Re-Blogged From Gold Eagle

There are growing signs that the global economic slowdown is for real. As was the case in 1929, the combination of the peak of the credit cycle coupled with trade protectionism in the Smoot-Hawley Tariff Act are similar conditions to those of today and potentially pose a serious economic challenge to the post-Bretton Woods fiat currency system. Therefore, we must consider the consequences if monetary policy fails to contain the developing recession and it turns into a full-blown slump. Complacency over broken markets is no longer an option, with rising prices for gold and bitcoin signalling the prospect of a new round of currency debasement to avoid market distortions unwinding. This article shows why this outcome could undermine fiat currencies entirely and looks at the alternatives of bitcoin and gold in this context.

Continue reading

Dancing Closer to the Exits

By Rick Mills – Re-Blogged From Ahead of the Heard

When Americans elect or re-elect a president in the fall of 2020, there is a very good chance the closest thing to their hearts – their wallets – will be top of mind.

 

That’s because many are predicting the longest-running economic expansion in US history is about to slam on the brakes. It’s been over a decade since The Great Recession of 2007-09 plunged the world into monetary despair. That downturn was particularly bad because it combined an economic slowdown with problems in the financial system, rudely exposed by the sub-prime mortgage crisis.

 

In this article we are asking, what is the best indicator for predicting the next recession? What does the current data say about a recession?

Continue reading

Irredeemable Currency Is A Roach Motel

By Keith Weiner  – Re-Blogged From Gold Eagle

In what has become a four-part series, we are looking at the monetary science of China’s potential strategy to nuke the Treasury bond market. In Part I, we gave a list of reasons why selling dollars would hurt China. In Part II we showed that interest rates, being that the dollar is irredeemable, are not subject to bond vigilantes. In Part III, we took on the Quantity Theory of Money head-on, and showed the counterintuitive property that, the more dollars are out there, the greater the demand.

Now in this essay, we will tie this all together.

You could say it in one sentence: the regime of irredeemable currency has unintended consequences. We often say that we do not prefer the term “unintended consequences” because it puts the emphasis on the alleged intentions of those who perpetrated it. As we discussed in another recent article, John Maynard Keynes’ intentions really were evil.

Continue reading