Weekly Digest: Investors Bet Against U.S. Dollar, Gold Firms


5 minutes read

Apr 28, 2023

A hand holding disappearing U.S. dollar

Gold goes up amid economic and banking uncertainty, billionaire investor Stanley Druckenmiller is shorting the U.S. dollar, the U.K. considers reforms of uninsured bank deposits after the SVB collapse. And more.

💡Quote of the week

“People need to be prepared for the potential for higher rates for longer. It will undress problems in the economy.” - JPMorgan Chase CEO Jamie Dimon

Investment news

A pile of gold bars with the gold price going up

Gold firms amid economic and banking uncertainty. Gold prices rose on Thursday as economic worries returned and traders waited for U.S. data to see if the Fed would change its interest rates policy.

Spot gold rose 0.4% at $1,996.43 an ounce and U.S. gold futures went up 0.5% to $2,006.10. According to StoneX analyst Rhona O'Connell, "all the current elements of uncertainty are supportive for gold. If they are resolved then a record high for gold is not in sight. But bank stresses do tend to linger and that points to fresh highs.”

💵 Druckenmiller takes aim at the U.S. dollar. A multibillionaire investor, Stanley Druckenmiller, is shorting the U.S. dollar after missing last year's rally. Druckenmiller believes the greenback will keep falling, mainly due to rate cuts and an increase in non-dollar trade deals. (FT)

Druckenmiller, the renowned billionaire investor who played a significant role in the "breaking of the Bank of England" by wagering against the pound in 1992, resulting in a profit of $1.5 billion for him and his partners. He currently holds a strong belief that betting against the dollar is the only trade that he is confident in.

As we know, a weak dollar is one of the major driving factors for the gold price. 😉

🇪🇺 The Eurozone economy avoided recession “by a whisker”. After a warm winter blunted the impact of higher energy prices, the eurozone defied predictions that the Ukraine war would plunge it into recession. (The Guardian)

According to Eurostat, growth in the 20 countries using the euro stood at 0.1% in the first three months of 2023.

While the overall increase was small, there was a lot of variation between states. After contracting by 0.5% in the last three months of 2022, Germany's economy stagnated in the first quarter of 2023.

Spain and Italy, the third and fourth biggest economies in the eurozone, did better than expected, each recording quarterly growth of 0.5%. France grew by 0.2%.

🇺🇸 U.S. growth slows. As interest rates increased and inflation took hold, U.S. growth slowed considerably during the first three months of the year. (CNBC)

The first quarter's gross domestic product rose by 1.1% annually, below estimates of 2%.

“The U.S. economy is likely at an inflection point as consumer spending has softened in recent months. The backward nature of the GDP report is possibly misleading for markets as we know consumers were still spending in January but since March, have pulled back as consumers are getting more pessimistic about the future,” said Jeffrey Roach, chief economist at LPL Financial.

🇬🇧 U.K. mulls uninsured bank deposit reforms. U.K. Treasury and Bank of England are considering reforms that would let uninsured depositors get their money immediately if a bank fails, which could cost taxpayers money. (Bloomberg)

The people, asking not to be identified, said discussions on deposit insurance reform are at an early stage. Representatives for the Treasury and BOE declined to comment.

🏦 Bank troubles. U.S. regional lender First Republic saw deposits fall by 40% in the first quarter, more than analysts expected. (CNBC)

“Deposit activity began to stabilize beginning the week of March 27, 2023, and has remained stable through Friday, April 21, 2023. Total deposits were $102.7 billion as of April 21, 2023, down only 1.7% from March 31, 2023, primarily reflecting seasonal client tax payments that occur each April,” the bank’s press release said.

💲 Google parent announces stock buyback. Alphabet, the parent company of Google, said on Tuesday that its board of directors has approved the buyback of shares amounting to $70 billion and posted better-than-expected profit and revenue in the first quarter due to rising demand for cloud services and ad sales. (Reuters)

The buyback plan boosted Google's shares by 4% after-hours before they pared gains to trade up 1.6%.

📸 Image of the week

A meme mocking family members arguing over bad economy


A white robot with emotional intelligence

🤖 Emotional intelligence is AI’s secret weapon. “The race to plug chatbots into search engines makes little sense when they are better at mimicking empathy than recalling facts.” (Bloomberg Opinion)

Bloomberg Businessweek reported that some people are using ChatGPT as a robo-therapist. One user said it helped them avoid being a burden to others, including their own therapist.

“Subtle aspects of the human connection like the touch of a hand or knowing when to speak and when to listen, could be lost in a world that sees AI chatbots as a solution for human loneliness,” Thomas Ward, a clinical psychologist with Kings College London, says.

What else is happening

Joe Biden announcing his re-election campaign
Source: Getty Images.

🇺🇸 Let’s finish the job. Joe Biden announced his re-election campaign in 2024, asking Americans for four years to "finish this job", potentially setting up an extraordinary rematch with Donald Trump. (CNBC)

“When I ran for president four years ago, I said we were in a battle for the soul of America – and we still are,” Biden said.

🇬🇧 👑 I spy with my little eye. According to an email released in a lawsuit filed by her grandson Prince Harry on Thursday, Queen Elizabeth knew that Rupert Murdoch's newspapers were spying on her family and friends. (Reuters)

Prince Harry says he didn't file a lawsuit earlier because of a "secret agreement" between Buckingham Palace and Murdoch executives to protect the royal family. News Group denies any such agreement, while the palace has not commented on the matter.

And finally…

A new picture of a black hole, based on the historic first images, shows violent events unfolding around it.
Source: Reuters

Supermassive black hole. A new picture of a black hole, based on the historic first images, shows violent events unfolding around one of these ravenous cosmic behemoths, including a huge jet of particles shooting into space. (Reuters)

In order to get the new image, 16 telescopes were set up around the world, creating an observation dish the size of a planet.


See you next week!


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