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Daily Close

Could it be the classic case of a gorilla in the room inviting to join a party at the exact same time as he himself tries a graceful exit? In Davos, on Tuesday, Bridgewater’s Founder Ray Dalio called for the stock market to enter its most profitable albeit final “melt up” stage, saying that people in cash must be feeling stupid by now... He might be right on how these people feel but did he build an  USD80bn hedge fund not being able to see that we were ‘already’ in melt up mode, well before he spoke?

US Treasury Secretary Mnuchin threw another bombshell, saying that a weak dollar “was good” for the US economy. This was read as confirmation of D. Trump’s electoral stance and as a formal endorsement of more dollar weakness. The nearly humorous clarification that ensued from White House press secretary Sanders did little to allay these concerns. (“Currently we have a very stable dollar because of how well the U.S. is doung...”). Yesterday’s dollar SALE and equity market returning the previous day’s Dalio’s “melt up rally”, lent further support to the precious metals’ complex with Gold and silver gaining respectively 1.5% and 3% and the entire metals’ complex now in bullish trend and break out conditions. 

Some considered the crypto space as a safe haven yesterday. Answering a question on bitcoins, UBS Chairman A.Weber delivered a serious warning. He waved bitcoin’s claim to be a currency saying “There’s very little elasticity in the supply of Bitcoin, so every increase in demand directly results in an increase in price”, which negates by itself its currency status. He also called for regulators to “zoom in" on Bitcoin for investor protection reasons. So far, the phenomenon was marginal, he said, not worth the regulators’ attention but that has now changed with so much retail investors involved.

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