Weekly Digest: All Eyes on Jackson Hole, Tesla Bot

Investment

Gold prices held steady on Tuesday above $1,800 per ounce, supported by speculation that an increase in coronavirus cases may prompt the Fed to defer its tapering of monetary stimulus. Silver was up 0.2% to $23.70 per ounce, while platinum gained 0.5% to $1,017.79. Palladium rose 2.8% at $2,465.95 per ounce.

The spread of the Delta variant has raised concerns and uncertainty about economic growth, with investors expecting the Federal Reserve to delay tapering.

Given that uncertainty, “there’s a degree of caution creeping in, and that’s been clearly supportive of gold”, independent analyst Ross Norman said.

“The fact that gold again breached the $1,800 level says the market is still quite concerned about the Delta variant,” said OCBC Bank economist Howie Lee.

Focus for global investors this week is on the Fed’s Jackson Hole symposium, which will take place virtually on Thursday. Will it give any insights about the Fed’s taper talks?

“We’re not expecting a big policy reveal at this meeting. I don’t think Powell wants to front run the [September] meeting, given the myriad of voices that are out there. I don’t think this is the time when Powell really wants to make a splash,” said Mark Cabana, head of U.S. short strategy at Bank of America.

As for Fed chair Jerome Powell, “he’s not going to announce taper. What we anticipate is that he’s going to give a live speech that talks about a lot of the progress that has been made since the start of Covid, and there’s a lot of it,” Cabana added.

Another market-moving event this week was the approval of Pfizer’s two-shot vaccine by the U.S. drug regulator.

The move marks a milestone expected to help boost the immunization drive amid a renewed surge in COVID cases.

U.S. stocks were boosted by FDA’s vaccine approval, with Nasdaq Composite advancing 1.5% on Monday, and the S&P 500 ticking up 0.9%. Meanwhile, the Dow Jones Industrial Average rose 215.63 points, or 0.61%. Pfizer rose 2.5%, to $49.93, and BioNTech climbed 9.6%, to $382.10.

Back on track: Bitcoin topped $50,000 on Sunday, reaching a more than 3-month high, as crypto continues to rebound.

Bitcoin hit an all-time high over $64,000 in April but sold off heavily in June and July, falling below $30,000. Meanwhile, other digital currencies also went up, with Ether trading higher by about 2% at $3,330 Monday morning.

Opinion

Wild swings in cryptocurrencies might eventually push bitcoin investors to return to gold, says the executive chairman of gold mining firm Evolution Mining. According to him, bitcoin still has a “long way to go” before it can demonstrate the kind of “longevity and security” that gold can offer.

Digital currencies are “running a massive amount of speculative money … I think that the volatility in the crypto space is going to ultimately lead to people coming back to gold,” Jake Klein told CNBC’s “Squawk Box Asia”.

As hedge fund manager Ray Dalio (who owns an undisclosed amount of bitcoin), said earlier this month: “If you put a gun to my head, and you said, I can only have one, I would choose gold.”

“Stop giving so much money to rich people”. One of the topics on the Fed’s Jackson Hole symposium agenda is wealth inequality and what to do about it. But the problem is, the longer the Fed continues its ultra-easy monetary policy, the bigger is the gap between rich and poor, analysts note.

A recent study shows that the U.S. and lower-income families are becoming more indebted, rich people have more money parked in debt funds, and less money goes toward boosting prosperity and innovation.

Climate change is an SOS signal: The outbreak of COVID has caused unprecedented supply-chain disruptions, but that might be a drop in the bucket compared with the disruptions that climate change will bring. Experts say the best way for businesses to prepare is to start reducing their own carbon footprint.

“What you want to do as a company is find ways to cut your emissions that also improve your resilience and generate other benefits for you, so that the risks that you face are lower,” John Sterman, professor of management at MIT’s Sloan School of Management, said.

For example, Apple has pledged to cut emissions from its supply chain to net zero by 2030.

“This means they are taking a hard look at all their supply-chain partners, trying to find ways to cut the emissions that they generate, but in doing so they are also dramatically lowering their risk for disruptions in the energy supply,” Sterman added.

Flooding in China and Europe, wildfires in Canada, and drought in South America are already disrupting supplies of everything from chocolate to lumber to sushi rice.

Workplace disruptions caused by climate change could lead to more than $2 trillion in productivity losses by 2030, according to a fresh report from the United Nations Development Program.

What else is happening

It seems like Elon Musk has just flagged a move into a new realm of science fiction: he said Tesla would build a humanoid robot designed to deal with “dangerous, repetitive and boring tasks,” like grocery shopping.

“Essentially, in the future, physical work will be a choice … Can you talk to it and say, ‘please pick up that bolt and attach it to a car with that wrench,' and it should be able to do that. 'Please go to the store and get me the following groceries.' That kind of thing. I think we can do that,” Musk said at Tesla’s AI day.

The Tesla Bot, a prototype of which should be available next year, will stand 5 feet 8 inches high, weigh 125 pounds, and will be able to move as fast as 5 miles per hour.

Musk said the robot would be an extension of Tesla's work to build self-driving vehicles. The humanoid robot will use the same computer chip, and navigate with eight cameras, just like Tesla's vehicles.

Update on Afghanistan: the country’s new Taliban rulers are facing a new challenge: an economic collapse that could further fuel renewed challenges to their rule. Since President Ghani’s escape on August 15, the banks and money exchanges have remained closed and prices for basic commodities have increased.

“People have money, but it’s in the bank, which means they no longer have money now. It’s hard to find cash. That’s why the whole business in Kabul has stopped,” said Bahir, a Kabul resident who worked as a financial officer for a construction company.

Meanwhile, Biden confirmed the U.S. is on pace to finish its evacuation of Afghanistan by August 31.

And finally…

Justin Sun, CEO of the crypto platform TRON, has just paid half a million dollars for a digital picture of a rock … or $3.1 million in 1975 money. And he can’t even take it home and pet it!

What is this rock picture good for? According to the EtherRock website, “These virtual rocks serve NO PURPOSE beyond being able to be brought and sold, and giving you a strong sense of pride in being an owner of 1 of the only 100 rocks in the game :)”.

See you next week!