The world’s markets are mostly following the USA’s lead lower from yesterday, though this morning’s action is looking mixed across the asset classes. Even crypto is little changed in the grand scheme of things.
We would note that gold surged yesterday and hit a new cycle high again before pulling back somewhat this morning. Gold has been rising despite a flat US dollar, which we would usually expect to decline amidst a commodities rally. This tells us to look elsewhere for the reason for the rally.
Michael Batnick seeks to debunk some of the conventional wisdom in finance
. We think this is a pretty simplistic view of the rules of thumb, but reminds us to always question them. The one we agree with most in this list is that your house is an investment. While land/homes tend to be an appreciating asset, while you live there, they are a negative cash-flowing necessity. Comparing un-levered real estate investments to un-levered equity or fixed income investments also provides a starkly different view… we are all used to using serious leverage on real estate.
With close to $13 trillion in negative yielding debt floating around the globe, it may be only a matter of time before the negative yield quicksand risks trapping even the U.S. bond market. This, according to JPM’s Jan Loeys. It wouldn’t happen overnight but will likely be triggered by the next recession. The Fed has only so many arrows in its quiver, and under any pronounced economic downturn will be at the zero bound before we know it. Here’s the Bloomberg link
on the looming sand trap.
Trump has been talking about wanting a weaker US dollar, and it seems the IMF agrees with him. According to the International Monetary Fund yesterday, the USD is at least 6% stronger than warranted
by economic fundamentals. Citi economists said “conditions seem increasingly favorable for the US administration to intervene against perceived overvaluation.” Rate cuts will naturally weaken the currency, but a currency intervention could jeopardize the dollar’s status as the world’s reserve currency. One option to weaken the dollar could include the US Treasury selling the greenback to buy foreign currency, but they only have $126 billion in reserves (drop in the pan for the $5 trillion in currency traded every day). If the US were to raise the debt ceiling (again), they could easily borrow to purchase foreign currencies and have a meaningful impact. Most other currency devaluation strategies would require cooperation from the fed, who act independently from the government, and have promised not to interfere in foreign exchange markets. Many analysts see the USD weakening even without intervention, assuming the dovish monetary policy continues.
Maybe you missed it (we doubt it), but Amazon is saying that their Prime Day (2 days really) was the largest shopping event in its history.
Sales surpassed last year’s Black Friday and Cyber Monday combined. Prime members globally bought 175 million items. Can you guess the top selling items? Instant Pots and DNA kits. Funny, people are up in arms against Facebook on Privacy concerns, but they are more than willing to hand over their DNA to private companies. DNA companies have acknowledged that DNA data is sometimes shared with third parties.
It’s probably only a matter of time before we hear about DNA leaks and unauthorized clones. Talk about identity theft.
This is pretty meta – Activist investor Bill Ackman runs the London listed
closed-end hedge fund Pershing Square Holdings, which now has an activist investor of its own
after losses mount up and the fund continuously trading at a significant discount to its net asset value.
Uber is making a comeback after their disappointing IPO, taking their service to the next level in 10 lucky U.S. cities, catering to Millennials’ on-the-go habits and dire need for convenience. Cargo struck a deal to become the ride-sharing service’s exclusive, in-car commerce provider globally
. Initially, this service was initiated with selling snacks in the cars, however, with technology on their side they are now rolling out a Cargo app with the goal of becoming an on-the-go convenience store to sell items like the Amazon Echo, Apple Airpods, Away Luggage. Looks like this fancy new tactic is proving to be valuable as Uber’s shares are up by 4.9%. Diversion
: It’s happening faster than you think. More classic-body, electric guts car conversions
. This time with 1970’s model Porsches. Yummy.