Market Plus: Mark Gold

Mar 20, 2020  | 13 min  | Ep4531 | Podcast

Podcast

Yeager:

This is the Friday, March, 2020 20 version of the market plus segment. Joining us now via the power of the internet. Mark Gold. Hello Mark.

Gold:

Hello, Paul. How are you?

Yeager:

I'm all right. This has been some interesting times. You and I have chatted a couple of times this week as we worked our way through this. You are in your apartment, your building. Normally your building's on Wacker, isn't it? On South Wacker, there.?

Gold:

My building is on Wacker, but I'm currently broadcasting to you from my condominium, which overlooks Lincoln Park and Lake Michigan.

Yeager:

Yeah. So we wanted the lake, but we just, we just, we couldn't just technically, and you just going to make us feel bad. Uh, but your building is closed. And I think I got an email that said, uh, you don't have anybody there or what's life like in downtown Chicago right now?

Gold:

You know, you could, uh, run a combine through the streets and not hit anybody. Uh, it's desolate. You know, it kind of looks like it did after, uh, 9/11. It looks like it did after we had the, uh, economic scare in 2008 and '09. Uh, it's, it's not pretty out here. Uh, there's no traffic. I mean, that's the good news, but it's not not what we want to see.

Yeager:

So you, um, are not alone in those buildings. We've already, even before we recorded last Friday, we knew that the Chicago Board of Trade was going to go electronic only, no pits. There's hardly anybody in the pits anyway, so life's changed there.New York Stock Exchange, all electronic now, nobody in the pits there. Uh, again, this is very similar in some cases to 9/11, but it just is, it's so different. Uh, Ernie Goss was on our, uh, on Iowa PBS earlier today and he said that, "life is, this is like any, this is unlike any other economic thing we've seen before because it just stopped like that. Other things had warning signs." Was there any warning signs that we missed for this?

Gold:

Well, you know, if you go back to a Bill Gates Ted Talk about four years ago in 2015, this is exactly what he warned about and said we needed to be ramping up. He said it was going to be a virus was going to be the big problem and not missiles but molecules. And he was absolutely right. So there, there were people out there saying that this was on the horizon ready to hit in any minute. Uh, so you know, where people unprepared. Um, they were, I guess they didn't take the warning seriously.

Yeager:

All right. Let's, uh, we're going to talk about two things before we get back into the serious side of things. Uh, you were telling a story at the end of the on-air segment about your grandparents. We were talking to the hog market. We started talking about grilling and then I had to cut you off in the middle of this story about your family. Let's pick that back up.

Gold:

Yeah. You know, my grandparents went through The Depression and the effects of that depression stayed with my grandmother her entire life into her 80's. I remember that we gave her coupons for cab rides so she wouldn't have to take the bus. When she passed, we found those taxi coupons in her little lockbox. She wasn't going to use them because it was too frivolous. And every generation has gone through this. You know, one generation went through the Civil War, one generation went through World War II, one generation went through the Depression, another generation went through World War II. And this, for my generation, besides Vietnam, is the thing, the crisis that's going to affect us all. And you know, 20 or 30 years from now, will there'll be another crisis like this? It certainly wouldn't surprise me, but the fact of the matter is, it's a generational thing and now it's, you know, we've been pretty lucky overall, but now we're, we're taking our turn here.

Yeager:

All right, let's get into cotton here. Uh, there's always a market or a, uh, an acre battle for that. Uh, as we see corn tank and soybeans did improve this week. Is cotton one of those commodities? The chart says it's awful. Is it still exports or are we looking at something else here?

Gold:

The exports have been phenomenal. Nobody can really understand what's happened to this cotton market. It sounded at 53 and change. Um, I think it's a huge mistake. The exports I think are 95 percent within the USDA estimates and people want cotton. Uh, the fact of the matter is there is good demand for it and why it's falling out of bed, I don't know whether it's just people in the fund positions blowing out or speculators trying to pound this market. I really don't know the reason, but I think it's well over sold here.

Yeager:

All right. Something to watch as we move forward. Um, the dollar too. I want to get into that. Oh, I was going to ask you in the, the the show we just kind of ran out of time. Have we hit the peak on the dollar? The U S dollar?

Gold:

I'd like to think so. The chart looks like if you looked at the bond chart for the last 10 days, the bonds peaked at 191 on the long bond and then went back down to, I think it was 66 or 166 or 167. It was just a sharp explosion up and then a quick retraction right back again. That's what the dollar looks like. It started to do it today came back. Uh, what? I think it's way, way over bought here.

Yeager:

All right. We have a question that came via Twitter. John in Ohio was asking, he says, "do you think the markets will recover from this virus? Do you also think that there will be another MFP due to this virus?" Let's start with the first one. Do you think the markets recover from this? You were talking about the dollar. Let's keep going on the markets there.

Gold:

Well, if he's talking about the grain markets and the commodity markets, yes, it's going to come back and it's going to come back in a big way. As we talked about the show, people are pent up in their homes or their farms. They want to get out, they want to grill, they want to go to a ballpark and have hot dogs and hamburgers. People want to grill steaks. People want to grill ribs and pork chops. So once this thing simmers down, which will be in the next hopefully four to five weeks, and we did in the spring time, demand is going to go through the rough prices are going to react, in my opinion, very favorably. And you know what goes down can come right back up again. We've seen it many times. So I am very encouraged that once this is over and hopefully in the next two to three to four weeks, that we can see things turn around in a big way.

Yeager:

You've been on the show a number of years, Mark. People know some of the things you talk about - calls/puts is one thing, but Ben in Jesup is asking, you always say there's an opportunity to make money at least once in a marketing year to make a profit. So he's asking: When is our one chance this year going to be to sell at a profit? What is a good target price when the opportunity presents itself? Pick any commodity.

Gold:

Well, you know, let's look at corn, wheat and beans. Um, maybe we've had the opportunity in January and February, uh, prices weren't bad then. We had, you know, December corn up around 4.20, 4.30 Uh, we had new crop beans at 9.30, 9.40. That may have been the opportunity. Generally you don't get the opportunity that early in the year without getting another opportunity. And we still have a whole growing year ahead of us. We still have this... If the Chinese really fulfill their pledges and we get out of this coronavirus scare and people get out and everything comes back to normal quickly, I think these markets are going to give us a great opportunity at some point to do another...to have another chance to sell at profitable levels. So I'm hopeful, uh, and I think it's just a matter of time. But if you look at some of these markets like the wheat bounce, the beans bounce the meal, I mean, why are these markets doing so well and higher this week when we'd had the worst news that we've ever had in this country, uh, in the last 20 years, since 9/11. Why are they acting so strong? Because the market knows that the demand is out there.

Yeager:

Well, and it's hard to say that there's so much demand out there. When we talked about the grocery stores and you have a hard time finding product in some places. Uh, so I guess another question. This one comes from Paul in Minnesota. He's asking: What will be the long lasting effects of COVID-19 on the grain and livestock markets?

Gold:

Well, I think the lasting effect will be that farmers have to do a better job at risk management. Um, you've had opportunities to buy puts. We had puts on early in the year for these grains, uh, they were very successful for the guys that put them on. And you just cannot sit there and hope for higher prices, whether it's winter time, when you guys are sitting in the... In the shop hoping to get out and plant, you've got to look for these opportunities when they're there. And if we've learned nothing else from these markets that these put options, they always say nobody makes any money buying puts or buying calls. Well, this is a perfect example of using the markets and using puts and calls to manage this risk where they've paid off tremendously in one fashion or another.

Yeager:

Tomm Pfitzenmaier has been saying that we have a glut of corn, we're planting too much corn. So I guess my final question, and this one comes from Brian and Valerie in Wisconsin and they're askin, Mark: Should we plant anything? Would that help in any of this?

Gold:

Well, sure. You know, in the real, in the real...

Yeager:

In the real world. Yes.

Gold:

In a virtual world...Uh, yeah, that'd be great. Everybody don't plant and buy calls and you know, hold on for the ride. But somebody tried something like this, I don't know, 25 years ago and said, don't plant and buy calls and uh, you couldn't get two farmers to do it, let alone every farmer. And you know, one farmer says, I'm not going to plant. And he sees us as a neighbor out there with the, uh, tractorgoing, he's not going to sit around. He's going to plant and it'd just fall apart like it always does. But should you attempt to look at other things? Hemp, uh, other crops that may be viable in your area to plant? That may be. Uh, you've got to think cotton acres. Some of that's going to go into beans. Uh, we, we don't want to see 95/96 million acres of corn planted and 85 million acres of beans planted. Uh, you're just shooting yourself in the foot, in my opinion. And if we see those kinds of numbers and you haven't protected this thing on any kind of a rally, I think it'll be a big marketing mistake.

Yeager:

Hardest question is the last one. Tell me about the painting over your left shoulder.

Gold:

The painting over my left shoulder. Yeah. That was a gift to me by my partner. He had his office manager come in to me one day and said, we're going to redo their website. Want to make it a little more personal. I want to know who are your five biggest influences in the business world. And I said, my first influence has been my mentor and close friend Lee Stern. He's 93 years old - been a member of the board of trade over 60 years. Uh, he's one. My partner, Andy Daniels. Certainly the American farmer. General Eisenhower has always been a personal hero of mine. And of course the American soldier. So we have the American soldier, the American farmer, Lee Stern, General Eisenhower and Andy Daniels, all in that painting along with the farmer and the John Deere tractor. So he gave that to me as a gift and I proudly have it on my wall. It was commissioned from an artist, I think he's out on the East coast. His name is Penly, P-E-N-L-E-Y. That's one of the most famous conservative artists. He paints a lot of like Lincoln Memorial, Ronald Reagan portraits and those kinds of things. And my good friend and partner Andy Daniels had that commissioned for me.

Yeager:

Well I appreciate the story. I appreciate uh, the look inside your home and your time. So Mark, thank you so much.

Gold:

Well it's always a pleasure to be here. Call me anytime.

Yeager:

All right, will do.

Gold:

Thanks.

Yeager:

That is Mark Gold via the power of technology. We will talk about how this show all came together and how all of this week on Tuesdays M-TO-M podcast, the producers of the show will tell you what went in to bring you this show. It's going to be kind of an interesting look around from the producers as not all of us are here in studio tonight, but next week we will be back and we will explore how the next generation is learning the art of the hedge, and Dan Huber might be via technology as well. He'll join us for his market analysis. Until then, thanks for watching, listening or reading. I'm Paul Yeager. Have a great week.

 

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