E Markets: Volatile And Mixed

Today markets are volatile and mixed. That's because the US dollar has hugely lost value against gold, which at one point was trading at $1935 per ounce. This is because holding bucks pays less interest than last week, so foreign holders are looking elsewhere to park their money. This is a matter of currencies and not of valuation. Goldman Sachs today predicted that gold will rise even more against the Greenback, to $2300/ oz.

The initial reaction of foreign markets to effective devaluation of the dollar has been fear, so apart from the Hang Seng in Hong Kong, which is propped up by Chinese authorities, and Ireland, a winner because British exit from the European Union is stalled, foreign market averages are all down. The fear is that US firms will undercut the locals because they can make money at lower prices. All that is true for the short-term, but longer term the risk is a rebound in US inflation.

Food

*Grupo Bimbo, the Mexican bakery MNC, gained 8.75% today. GRBMF

*I finally bought more Alimentation Couche-Tard, ANCUF on the pink sheets at $34.49 (US) per share. The problem is that my brokerage, BofA Merrill, will not let self-managed accounts like mine trade on this market and it will not trade across the border in Canada either. Nobody warned me although they knew the name of my employer which should have rung a bell. I dread another ACAT!

Banks and Finance

*Banco Latino-Americano de Comercio Exterior of Panama (BLX) which uses the dollar, today reported on its Q2 and the results were good, Its profit came in at $14.1 mn or 36 cents/share which beat consensus but was, of course, below prior Q2. Its revenue for H1 (reported more prominently than Q2) at $48.7 mn also beat but was well below last year's $65/7 mn. Operating expenses were cut 10%. In addition to trade finance, it was able to offer highly competitive debt services to emerging market borrowers (because of the sinking buck.)

Return on average equity was 6.4% in the quarter and 7.2% YTD. Return on average assets was 0.97% for the quarter and 1.12% for the half. Its efficiency ratio was 38.7% in Q2 and 41.5% for H1.

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Comments

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Vivian Lewis 1 month ago Author's comment

I suspect that like me you can remember the earlier inflationary years. so buy physical gold as a hedge. vivian

William K. 1 month ago Member's comment

Did like this article! And I certainly agree that the long term result of the fed's policies and actions will be inflation. That was obvious to me from the first announcements, why wasn't it obvious to the Feds? Or perhaps it is far more on their agenda to protect the interests of their "friends"? At the expense of great damage to others?

And one nasty question is what will happen when it is time to repay all of those trillions of debt?? I predict that the debt will interfere with economic growth.