MIEX Offical

Two events took place on August 13. One was a speech from Lael Brainard at the Federal Reserve Bank of San Francisco's Innovation Office Hours. The other was the publication of a paper in the FEDS notes series on “Comparing Means of Payment: What Role for a Central Bank Digital Currency?”. It is no coincidence that both events happened on the same day. The Federal Reserve Bank (FRB) wants to communicate that it takes CBDCs seriously and is engaged in efforts to research a path toward implementation. The Fed’s primary purpose is to ensure the financial stability of the US in the service of its citizens. It has been an open secret that the FED had been working on researching CBDC. They were in stealth mode. Some indications came up during the House Finance Committee hearings on June 17. Federal Reserve chairman Jerome Powell made it clear that as CBDC is an extremely important part of the national infrastructure and under the purview of the Fed, the Fed would be in charge of the co...

Shares in China electric vehicle maker XPeng, whose investors include Internet heavyweight Alibaba Group and Beijing smartphone supplier Xiaomi, soared by 41% from their IPO price on their debut at the New York Stock Exchange today.  That big gain made the company’s CEO one of the richest men in the global auto industry.   He Xiaopeng, 42, who earlier in his career made a fortune by co-founding a mobile browser business in China, holds Xpeng shares worth$4.2 billion, based on figures in the company’s prospectus.   Xpeng’s IPO follows the June 30 Nasdaq listing of another China EV maker, Li Auto, which raised $1.1 billion and whose shares have risen since. They plunged 17% to $19.38 today, but are still far above their $11.50 IPO price. Xpeng’s offering – at $15 per American Depositary Share—and successful listing follows U.S. stock gains by Tesla and China-based Nio amid investor optimism about the market for EVs, smart cars and autonomous driving vehicles. ...

Citigroup, which held one of the most bearish outlooks for stocks among Wall Street firms, has raised its year-end price target for the S&P 500 to a modest loss from current levels thanks to “unbridled” support from the Federal Reserve, which the bank says will do “whatever it takes” to prevent another market crash. Citi analysts, led by chief U.S. equity strategist Tobias Levkovich, on Tuesday raised their price target for the S&P 500 index to 3,300 from 2,900, their second upgrade in as many months.   The bank’s strategists said that their earlier bearish prediction for the stock market, which was one of the lowest on Wall Street, now appears increasingly “unlikely” as the Federal Reserve continues to aggressively ease monetary policy.   “ Unbridled Fed easing, negative real [interest] rates and technical indicators show resistance breakouts” in the market, the analysts said in a note, adding that investors firmly believe that Fed Chairman Jerome Powell “has ...

Apple hit a new milestone on Wednesday, becoming the first publicly traded U.S. company to reach a market capitalization of over $2 trillion and doubling in valuation over the last two years.   The iPhone maker’s stock is up almost 55% so far in 2020, and shares have rallied more than 106% since the market hit a low point amid the coronavirus recession on March 23 (compared to the benchmark S&P 500’s gain of 51% over that period).   Now trading at nearly $470 per share, Apple’s stock is at an all-time high, and Wall Street analysts are still quite bullish that it can continue to rally: 61% give it a “buy” rating and 27% a “hold” rating, according to Bloomberg data.   Apple’s market cap now eclipses that of other U.S. tech giants, including Microsoft ($1.7 trillion), Amazon ($1.6 trillion), Google parent Alphabet ($1.1 trillion) and Facebook ($761 billion).   Apple was also the first U.S. company to reach a $1 trillion market cap, which it did just...

 Bitcoin, along with the wider cryptocurrency market, has come to life over the last few months.   The bitcoin price, after crashing to under $4,000 per bitcoin in the broad March coronavirus crash, has bounced to around $12,000—boosted by some high-profile investors betting on bitcoin.   Now, bitcoin and cryptocurrency asset manager Grayscale has said "the current bitcoin market structure parallels that of early 2016 before [bitcoin] began its historic bull run,"—meaning the bitcoin price could be headed sharply higher.   "Amidst unprecedented monetary and fiscal stimulus, investors are searching for ways to protect against an ever-expanding monetary supply," Grayscale research director Phil Bonello wrote in a report titled Making Sense of Bitcoin’s Value, outlining different ways of valuing bitcoin.   "Because of bitcoin’s unique qualities—such as its verifiable scarcity and a supply that can’t be controlled by a central authority—we believe i...

 The S&P 500 rose to a new record-closing high on Tuesday, finishing above its previous all-time high in February and fully recovering its losses from the selloff caused by the coronavirus pandemic. The S&P 500 was up 0.2% on Tuesday, while the Dow Jones Industrial Average fell 0.3% and the tech-heavy Nasdaq Composite gained 0.7%. The S&P finished above its old record-closing-high of 3,386 set back in February, while also surpassing its previous intraday high of 3,393 earlier on Tuesday. Earlier this year, the index tumbled over 30% from its February record as the coronavirus pandemic sent the economy into a recession. “It’s hard to believe, but the 2020 bear market is officially over,” wrote Solita Marcelli, chief investment officer Americas for UBS Global Wealth Management, in a recent note. The Nasdaq also hit a new record high on Tuesday, while the Dow lagged as shares of Home Depot and Walmart both fell, despite reporting second-quarter earnings that beat expectati...

 It seems highly likely that the U.S. recession is over. However, it’s not all great news and the markets are looking past it. The U.S. markets have rallied for various reasons. A potentially short recession is part of it. However, the $3 trillion of stimulus applied to the U.S. economy has been important too, as has the tailwinds for many mega-cap stocks within the index such as Microsoft MSFT +0.1%, Alphabet (Google), Apple AAPL -0.1%, Facebook and Amazon AMZN -0.4% . These companies have seen trends within the pandemic that have helped their businesses as tech becomes more important in a socially distanced world. Yes, many more firms in sectors from travel to bricks and mortal retail have hit real problems, but their index weight is a lot smaller. Since the index is driven more by the tech names with large weightings, they have more of a say in driving the stock market than they do in impacting the U.S. economy.   It is good news that the economy is likely now on a po...

 Gold prices have shaken many investors this week as the precious metal fell from its record high of $2,075 to $1,863 per ounce. The sell-off in the gold price has made many investors reconsider their stance towards gold.   The gold price is on track to record its first weekly decline since June, and investors are asking themselves, do they need to worry about this?     Is Gold Price Trading Up Or Down? Gold price is trading at $1,935 today, and it made a high of $2,075 on August 7th. The gold price made a low of $1,863 on August 12th, and ever since, the price has been unable to break above the critical level of $2,000. This week, we have seen the most significant sell-off for the gold price, since 2013.   The gold price is set to record its first weekly decline since June of this year, as shown in the chart below.   The gold price must break above the $2,000 price level and remain above this critical level for the bull rally to continu...

 A perfect storm of reduced supply and rising demand which has driven the price of iron ore to more than $110 a ton is forecast to keep blowing into next year.   Despite repeated forecasts that the price of the steel-making material is overdue for a correction the latest reading of the iron ore market is for the price to be higher for longer thanks largely to supply and demand effects of the Covid-19 pandemic.   Brazil, one of the world’s biggest iron ore producers, has seen its mining industry buffeted by the public health crisis which has crimped exports while China, the biggest consumer, has lifted imports to meet high demand caused by government economic stimulus to counter the effects of Covid-19.   Investors will get a close look at the effects of the iron ore price on two big exporters next week, firstly in the annual profit report of the world’s biggest diversified miner, BHP Group, followed by world’s leading pure-play iron ore stock, Fortescue M...

The price of gold has always had a significant correlation (80%) with the Fed’s balance sheet (i.e., the “money supply”), especially during periods of significant balance sheet expansion (money printing).   The U.S., clearly the largest western economy, has increased its money supply at a much faster pace than any of the other majors. Note that the EU, the only western economy that approaches the size of the U.S., is growing its money stock at less than 40% of the pace of the U.S. Federal Reserve (Fed).   Noteworthy is the fact that the value of all of these countries’ currencies have risen since the virus’ outbreak as the U.S. money supply has exploded and the U.S. Congress has sent helicopter money to the U.S. populous. In fact, at the time of this writing, the U.S. Congress is in the time honored process of having the two major political parties posture on how the opposition party doesn’t care about the American people etc. etc. This, of course, is a prelude to what...

The Hill reported that White House Chief of Staff Mark Meadows has said that President Trump is preparing “aggressive” executive action if lawmakers are unable to reach a deal on the next stimulus package in the next few days.   Treasury Secretary Steven Mnuchin and Meadows have been meeting with Congressional Democrats to hammer out an agreement on the next stimulus package. Senate Leader Mitch McConnell (R-KY) has been conspicuously absent from those negotiations because many Senate Republicans are against additional stimulus. The process has been that Mnuchin and Meadows will negotiate with House Speaker Nancy pelosi (D-CA) and Senator Chuck Schumer (D-NY) and then update Senator McConnell.   The two sides have made progress but still remain far apart on several key areas.   Today, Meadows reiterated the idea that President Trump could take executive action to try to implement additional stimulus.   It’s not clear how this would be done but his tea...

The market finished higher on Tuesday, building on its strong start to the month, as investors watched for updates on the next round of coronavirus stimulus from U.S. lawmakers.   The Dow Jones Industrial Average was up 0.6%, over 150 points, on Tuesday, while the S&P 500 rose 0.4% and the tech-heavy Nasdaq Composite gained 0.4%.   Market sentiment initially took a hit as lawmakers remained deadlocked over a new coronavirus stimulus package: House Speaker Nancy Pelosi cited “productive” discussions on Monday, but added that both sides still have differences.   Democrats and Republicans have reportedly agreed on an additional $1,200 stimulus check, while they are yet to reach a solution on additional federal unemployment insurance, which expired last week.   Shares of Microsoft fell nearly 2% after rallying more than 5.5% on Monday: The company recently confirmed that it is holding talks to acquire Chinese-owned social media app TikTok, which Presi...

As debate over further economic stimulus drags on, one theme for reigning in stimulus spending is the high level of government debt. For example, many lawmakers would like to cap the proposed next stimulus package at a trillion dollars to manage concerns about excessive national debt. The credit-rating agency Fitch last Friday  warned  that the U.S. could lose its triple A credit rating if the U.S. government debt is not managed effectively over the coming years. The Historical Perspective One way to examine government debt is relative to a countries Gross Domestic Product (GDP) this compares a country’s debt to the total value of what it produces in a year. On this score, U.S. debt was rising sharply even before the Covid-19 crisis. Debt to GDP rose to 50% by the start of the 1990s, hit 90% coming out of the 2008 recession and hasn’t stopped rising since. Before Covid-19 hit, U.S. debt was estimated at  109% of GDP . It’s much higher now, GDP has declined and stimulu...