Loading ...My $USD Price Range Target: 104 – 107
Derived partly from the charts below:
If this hypothesis is correct, it would take place whilst global equity markets fall somewhere in the region of 20%.
I think that fall has just begun and I’ve been warning about it for a few months now:
Thanks JL for the heads up…Bears Watching ( pun)
Its interesting that during the “Trade War Panic” this morning (if I can call it that) the YEN showed strength right along with the USD, so GOLD didn’t fair as poorly as it might have. YEN also as a safe haven? Its the most indebted currency in the G20 !
The world has gone mad IMO.
BTW, JL – there are still those of us at the tent who are interested in your GOLD bearish musings. (The silent minority?) Don’t give up on us.
Thanks Silver Fox. The Yen is a mystery wrapped in an enigma covered in a riddle most of the time IMHO.
On the gold/silver/miners front, I think they will either bottom when $USD peaks or they might start rallying if
there is a heavy SM sell-off, which triggers the expectation that the Fed will pause monetary tightening.
I don’t understand why the vast majority believe a much higher dollar is the death knell to the conventional markets.
Gallo, the view from here…
The US small caps (Russell) should fare the best with a rising dollar. They have no direct exposure to EMs. S&P 500 has exposure to Emerging Markets (20%, I think) and since the EMs are carrying dollar debt that must be repaid with more expensive dollars – well you can take it from there. Also commodities are priced in the world reserve currency, i.e. dollars, and if the dollar rises too fast the dollar price of commodities falls. Commodity deflation ensues.
In a sense, US wealth stands on the backs of the rest of the world, and if the EMs crumble the US house of cards economy will fold too. Contagion spreads from the periphery to the core. Eventually, inevitably.
Hope that helps.
Thank you SF. As memory serves, the USD soared in the 90’s and the US markets did extremely well. I know this time is different but can’t we always say that? There’s always something different. I just question the conventional wisdom that there is a close inverse relationship between the USD and how the rest of the world will do which inevitably leads to the argument that as the rest of the world crumbles especially the EMs so eventually will the USA. I’m open but I just think maybe too many see it that way that they may miss a huge bull market here in the US that may last longer and go higher than most expect. I remember an advisor friend once said to me ‘Do you want to be right or do you want to make money’. That comes to mind here. Best and thanks sincerely.