The end of the community bank (continued) – agora financial ideal gas definition chemistry


Under Dodd-Frank, a SIFI is valued at $50 billion or higher. “The rule means that a lot of banks have been swept into this category, putting them in the same league as the giant mega-banks — despite having less money to jump through all the hoops Dodd-Frank requires,” Zach elaborated.

After we went to virtual press yesterday, the president expressed pessimism about the trade talks with China… and suggested his June 12 summit with North Korea’s Kim Jong Un might not take place after all. The Dow has shed about 250 points since.

[We didn’t mention it at the time, but we’ll mention it now: Because the president can no longer tout record highs in the stock market, he’s adjusting his message. Speaking to a crowd in suburban Detroit last month, he said, “The stock market could have been up 60%, but I have to do things. I can’t let other countries take advantage of us. The country is doing much better than the stock market.” ]

• Yesterday JCPenney CEO Marvin Ellison announced he was bolting for Lowe’s. JCP is one of the struggling Big 6 department store chains (whoops, make that Big 5 after Bon-Ton announced last month it’s liquidating), while LOW specializes in one of the few product lines that’s resistant to the “Amazon effect.”

Meanwhile, an annual survey from GasBuddy finds that 58% of respondents say they’ll take a road trip this summer — down from 82% last year. And 39% say their summer travel plans are being affected by high gas prices — up from only 19% last year.

Yes, gas prices have been much higher within the last five years. But as we said last month, people have gotten used to low prices. It’s not high prices that change people’s behavior — certainly they didn’t from 2011 through mid-2014 — but the shock of rising prices can.

“Those head winds consisted of Fed rate hikes, Fed balance sheet reductions, higher real rates and a much stronger dollar. Any one of those factors is negative for gold prices. All four in combination are a recipe for price declines.” Reality finally caught up to the price last week.

In the first scenario, economic growth starts to accelerate: “If that’s true, then the Fed is way behind the curve. Yes, the Fed will raise rates, but tight labor markets and rising inflationary expectations will cause inflation to run ahead of the Fed’s rate hikes. This will turn positive real rates into negative real rates quickly. That’s an ideal environment for much higher gold prices.”

In the second scenario, wage growth remains moribund — keeping a lid on inflation. “Stagnant wages, higher mortgage rates and reduced base money all at once are a recipe for a recession. As the economy tips toward recession, the Fed will have to reverse course. At that point, gold will soar on the perception that the Fed is once again throwing in the towel on tightening.”

If you’re familiar with Jim’s thinking, you know he leans toward the second scenario. But either way, he says it’s good for gold. “The next few months could still be a bumpy ride for gold, but late summer and fall look promising for a push to $1,400 per ounce or higher.”

As we mentioned before, the job of minting these medallions — made of pewter, copper or nickel and made in America, of course — belongs to the White House Military Office. (If you’re interested, coins are sold at The White House Gift Shop; they range from about $6 to $40.)

We did a little snooping at eBay where we plugged in “presidential challenge coins” in the search engine — there were 238 results. Prices range from 16 cents (Trump MAGA coin) all the way up to $495 for a set of six presidential coins (in a handsome box).