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we've been saying for some time we think it's a v-shaped recovery and uh uh we will when we get to economic indicators uh go through some of the the uh indicators that are starting to bear this v-shape out just one other comment i'd like to make the dollar is something we're watching very carefully um it has settled down it it hit new lows uh at least in recent terms uh if you in historical perspective it's hardly moved out of its recent trading range but it was starting to break down uh from levels over the past year or so uh we are on dollar watch the dollar is a a good gauge on confidence in the u.s economy and it is also a gauge of whether or not our monetary policy is more inflationary than the monetary policies abroad so happy to see some stabilization um gold prices went out to a new high again that's a a question mark about is this uh is this an indication that inflation is about to take off or is it simply a commentary on how low yields are and how how low the opportunity cost of investing in gold is uh so and uh the other uh inflation hedge we uh pay a lot of attention to as you probably know is uh bitcoin and bitcoin has had a bit of a breakout in the last few weeks it looks like it's in the 10 to 13 000 range i think we got up to 12 000 and that 13 000 is important because if we were to ever get through that then in technical terms there would be very little resistance and we would probably be on our way back to the peaks we saw in late 2017 so around twenty thousand dollars now we're not sure if that's going to happen we could stay in a a new trading range just at a little bit of a higher level than the recent uh six to ten maybe we're in the ten to thirteen thousand dollar range nonetheless a breakout and uh is this another inflation hedge uh starting to speak volumes about the risks out there uh we do think that um that investors in both gold and digital gold bitcoin are uh are taking out an insurance policy uh and it makes sense because we are somewhat in uncharted waters uh after 0.809 we were saying we're on uncharted waters when uh the us central bank reserves went up to or the monetary base went up to four and a half trillion dollars from 850 billion dollars now that did not lead to inflation as we all know ten years later uh now we're going up to nine trillion dollars will that cause inflation or are we in a spiral like uh japan has seen in the last 20 to 30 years very hard to say as i've mentioned before we don't think we have an inflation problem in the near term but the more complacent investors become about this the more i will start to worry right now we have too much productivity growth coming from a v-shaped recovery coming from technologically enabled innovation to see inflation taking off we also have oil prices still down 30 percent from where they were roughly uh this time last year so that's another uh deflationary undercurrent uh tugging at the inflation indicators there was a very interesting announcement this week by a company called microstrategy uh i think it's mstr uh and it announced that it was going to use half of its roughly 500 million dollars in cash and put it into alternative investments including bitcoin and so i looked through uh to see who was making this decision and what i found was uh at least from the cfo's vantage point he has seen uh the ravages of hyperinflation and uh and um destructive monetary policies he was at nextel wireless in uh in brazil i think during the european sovereign debt crisis when emerging market currencies were selling off uh and he probably understands the risks associated with monetary policies gone rogue he may think that monetary policies around the world have gone rogue and that it's an important moment in time to at least put in place some insurance policies to guard against uh a destruction in purchasing power uh so just thought that was interesting i wanted to share it with you as far as the economic indicators well the biggest report of the week was the unemployment report today and the unemployment rate continued to fall it was a better than expected report the unemployment rate going from 11.1 percent to 10.2 percent and we saw average hourly earnings turn up after some very serious declines uh so that was good to see when last month was minus 1.3 percent that's month to month this this month meaning july was up 0.2 so so that was very good and uh hours worked are telling us something very important about third quarter gdp if hours worked just stayed where they ended july what we would find is uh that average hourly average hours worked would increase from the second quarter to the third quarter at a 22 annualized rate now i think hours worked are going to continue to rise and we believe that output per man hour which is productivity is also rising perhaps very strongly so it is possible that the third quarter's gdp could be 30 could even be 35 percent uh at an annualized rate uh and i think most economists are expecting something within uh the 10 to 25 range i have seen uh one out there i think in the 30 to 40 percent range so this certainly would be at the high end of expectations and again would uh would speak volumes about a v-shaped recovery we also this week got a very interesting uh number out of the purchasing managers index the pmi and uh it was higher than expected it is above 50.
that means uh the industrial world is expanding again but if you looked through the guts of the report you would have found that orders in the pmi were up to well above 60 and you had to go back to 2018 to see higher numbers now what this tells us is that inventories have been declining have probably hit too low a level and perhaps much too low a level and that businesses are beginning to scramble in order to catch up with demand so that uh that was very interesting we also saw manufacturing hours worked in july up 1.8 percent uh very strong and overtime jumped dramatically from 2.5 hours to 2.8 hours again this is another sign i rarely see a three well .3 hours jump uh in this metric it is another indicator that there's a scramble underway and that businesses are trying to keep up with with demand
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