Well… it looks like the loss of the US dollar is the gain of investors and traders.
“The ICE US Dollar Index, a measure of the unit against a basket of six major rivals, was down 6.7% for the year, according to FactSet, its first annual drop since a 9.9% decline in 2017. Moreover, the index on Thursday edged to a low of 89.52, its lowest since April 2018. A drop below 88.25 would take out the 2018 low.
The index’s fall came after the financial panic created by the COVID-19 pandemic in February and March prompted a rush for dollars that propelled DXY to a more-than-three-year high. Action by the Fed, injecting liquidity into financial markets and expanding or establishing swap lines with foreign central banks, was credited with helping the dollar turn south.”
Surprisingly, a lot of people are seeing this as good news. Since the US dollar is no longer the strongest major currency in the world, investors see the loss as a projection of better global financial conditions and positive gains for commodities.
But again: The COVID-19 vaccines could change all of this and perhaps give the US dollar a much-needed boost.
What are YOUR predictions for the US dollar in 2021? Will it close the year higher or lower than it is now? Reply to the newsletter and tell us where you think it’s headed!
Bitcoin Gets Drunk Over the Weekend, Wakes Up, Goes From $34,000 to $30,000
If the weekend was Bitcoin attending the party of a lifetime and getting drunk as a sailor on spirits and fine wine, Monday morning was the ensuing hangover headache when Bitcoin had to put on some clothes at the last minute to make it on time for its 9-5 job.
CNBC reports on how crypto investors woke up to find all of their gains made between Friday and Sunday mysteriously missing…
“Bitcoin is pulling back from its record highs. The cryptocurrency briefly dipped below $30,000 Monday [down by 10%], just two days after breaching that level for the first time.
…Bitcoin slumped as low as $29,316 at around 5:40 a.m. ET Monday, falling 12% in the last 24 hours. It later went back above the $30,000 level, paring losses to trade at around $31,420, but was still down more than 6%.”
Fortunately, there is a very simple explanation for this sudden downward movement…
A lot of people who day trade very heavy volumes of Bitcoin decided now would be a good time to take their profits and run with their earnings. Not the long-term investors, mind you, who are perfectly happy with dollar-cost averaging into Bitcoin for the next few years unless it all goes to zero.
This is not an endorsement from me to start buying or selling Bitcoin. But it is a teaching lesson for people who fail to follow the timeless principles of investing over several years. On the way to the top, you’re inevitably going to have some bumps along the road…
Universal Basic Income Is Coming… or Is It?
For those of you who don’t know what universal basic income (UBI) is, let me quickly bring you up to speed:
“Universal basic income (UBI) is a government program in which every adult citizen receives a set amount of money on a regular basis. The goals of a basic income system are to alleviate poverty and replace other need-based social programs that potentially require greater bureaucratic involvement.” (Source: Investopedia)
Bloomberg reports on the rising interest in this economic proposal, noting that several cities will be “testing it out” this year:
“At least 11 direct-cash experiments will be in effect this year, from Pittsburgh to Compton. Another 20 mayors have said they may launch such pilots in the future, with several cities taking initial legislative steps to implement them.
In the short term, the goal of the nearly 30 mayors in the coalition is to run guaranteed income experiments. The ultimate aim of the mayors coalition is to pass a federal guaranteed income program.”
I don’t know if I’m quite for or against UBI yet, but we DEFINITELY needed something like this in place during the COVID-19 pandemic.
Canada was able to pay its affected citizens $2,000 per month for at least 6 months – why couldn’t America do the same!?