Journalist: We come from a dizzying rally. After the Jackson Hole meeting, when Jay Powell winked at us about lowering rates, which he then carried out in September, the advance was accentuated. “Everything” went up, and quite a bit. Is it necessary to skim the foam? Are we on the verge of a correction? First, two weeks ago, cryptocurrencies took a beating. Today (Monday) it was gold and precious metals’ turn. Should the Stock Market put beards into soaking?
Gordon Gekko: Two Fridays ago the head-on collision was widespread. Trump revived the confrontation with China, without warning, and the markets stopped dead. we had a black fridaybut Trump made sure there was no bloody monday. The president lowered the decibels of the confrontation, and the stock market and precious metals recovered with gusto. But, the damage in the crypto universe was not fixed. And cryptocurrencies did not participate in the rebound.
Q.: Today it is gold’s turn, with an abrupt drop of more than 5% (like platinum and palladium). And silver falls more than 7%. Gold futures have climbed more than 56% since the start of the year. Silver, which had just surpassed its record level since 1980, remains up more than 60%. Nobody can claim a change in trend and an end to the party, can they?
GG: With the FED still embarked on lowering rates, there are no moors on the coast. But there are too many people on the same bet. Which, by the way, paid very well. But what is overloaded.
Q: Including, in the case of gold, central banks.
GG: Central banks are not going to back down. But they can pause. They can expect the late or more leveraged speculation retire. And resume your purchases at more moderate prices.
Q: The rise in precious metals seemed bulletproof. The theory of the liquefaction of the dollar and fiat currencies. The deliberate search for alternatives to the dollar as an international currency. The overvaluation of purely financial assets. The public debt that grows without brakes. The geopolitical risk. The use of financial sanctions – such as the freezing of Russian accounts after the invasion of Ukraine – as a mechanism of political pressure between nations, all of this gives rise to the sustained boom in gold. Do you think that any of those arguments have been affected enough to think that the correction will become a more lasting phenomenon?
GG: No. They have not been so important to cement the recent rise either. They are mentioned, yes, in abundance. If you make a living from the buying and selling of precious metals, this is what you should recite. But Nothing has been more powerful to fuel the rise than the acceleration of prices itself. And I understand that now it’s time to correct that vertigo. No more than that.
Q: Are the lights of the kermesse going out? Cryptocurrencies, precious metals correct. Shouldn’t the stock market calm down its enthusiasm?
GG: We already saw a strong skid of regional banks in the middle of last week.
Q: That dragged down the big banks, but was able to recover later. Is it a warning or not?
GG: We are in full balance sheet season. That’s the difference. An ounce of gold is always that and nothing more than that. It is easier to examine a stock, delve into its numbers and projections, compare it with what was promised, and analyze the lights and shadows of its businesses. The big banks brought excellent balance sheets. But the regional ones came with dents. Small. And this is a market that suddenly became fussyyou want to check the prices you pay.
Q: He went up quickly without paying much attention to the details, and now it turns out that what matters to him are the minutiae.
GG: Zions Bank lost $50 million in a pair of transactions. And it has another 5 million that are difficult to recover. No more than that. At most it will be 60 million dollars of loss, which he already forecast. When he announced, even before showing the balance sheet, the value of the company fell by a billion dollars. Zions Bank made money in the quarter – more than last year – but was left in the cold.
Q: Jamie Dimon, the CEO of JPMorgan, made a big deal of it. He said that when you see one cockroach, you should think that there are surely more.
GG: If they had found more, and believe me, the market has been dedicated to searching for them all these days, the Stock Market would be mired in the same situation. correction that you observe in the other markets.
Q: There was no more.
GG: No more were found, which is not exactly the same, but for practical purposes it is equivalent.
Q: The Dow Jones has just set a new record, just below 47 thousand points. Can the Stock Market separate its destiny and make a separate ranch?
GG: Due to good balances, yes. In this case, Coca Cola and 3M led the way. GM rose almost 15% after improving its interpretation of the negative impact of tariffs on its annual results projection. Wall Street is perhaps more sensitive than usual, but it is not closed to the idea that the rally could continue and gain new momentum towards the end of the year. He just asks to be shown the evidence.
Q: Haven’t we seen the best?
GG: The economy would seem to be growing more than we imaginedsaid Neel Kashkari of the Minneapolis Fed before entering radio silence, prior to each meeting. The ten-year rate is slightly below 4%, which we have not recorded for more than a year. And next week We discount that the Fed will reduce its rate another quarter of a point. If the balance sheets do not clash, as they do until now; If the cockroaches that took the volatility index to a peak of 28 on Thursday do not appear (it has since returned to the corral of tranquility below 20), we can, then, expect something even better.
Q: What can go wrong? A prolonged government shutdown, China, or the Fed changing its mind?
GG: September inflation reading It’s not going to turn out well. And if so, the rate reduction that is discounted for December will enter the area of discussion.
Q: It will be published on Friday, right? Nine days after the originally scheduled date, due to the “shutdown”. But it still falls before the next meeting. What is a bad number? And if it turns out like this, why should the rate reduction only be suspended in December?
GG: The same thing is expected that we saw in August: +0.4% (+0.3% the core version). And it will not be an obstacle to lowering rates because the Fed has a relatively worse view of the state of employment. He fears net destruction and prefers prevention rather than cure. After attending the exchange of ideas within the Fed, which was made public, and listening to Powell, I understand that there is consensus to make that decision. Of course, December will merit a new discussion.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
