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Senior Advisor

strong dollar

DX busting out to the upside, which isn't helpful.

Europe has problems (which the US has aided and abetted), Brexit still looms. World growth slow.

The US is limping along with the triple fiscal stimulus- The Cleanest Dirty Shirt, I guess.

But actually is The Fed, sort of, I think. With super low to negative yields around the globe, US interest rates are the most attractive.

Can't help but find some dark humor in the fact that Yellen (a very good economist) probably would have been more dovish but they brought in Powell (a lawyer) because he looks more like an important person on TV. Really just a very conventional guy.

Stepping back, not a pretty picture. I assume that the US will also head toward 0 but more than likely a step behind the curve all the way down.

But I fail to be entirely enthusiastic about a world where growth and inflation are paltry even with zero interest forever.

This is the endgame of the financialized neoliberalism that has dominated thinking since the 80s. Haven't a clue how it plays out.

Inflated assets must stay inflated, or else.


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Senior Advisor

Re: strong dollar

BTW, in my opinion, which is worth what you're paying, the USD isn't going into a trending move higher on a larger degree.

It is just a range bound chop with an upward bias.

When currencies trend they really do, but mostly they just chop.


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Honored Advisor

Re: strong dollar

Dave, history is filled with an enormous number of examples of how this has to play out, sooner or later. Zimbabwe, Argentina twice, Italy numerous times since WW2, Venezuala most recently. The poor suffer terribly, the rich flee, the middle class become the poor and suffer horribly. Then we reset and start all over again. Anyone with a 401K invested in stocks at this juncture really needs to consider the potential outcomes over the next decade.

Throughout history, preservation of capital has been far more important than maximizing earnings on it. There are some really stubborn economic rules behind why that has to be soo....but regardless, until the system resets the wealth will continue to aggregate to those holding hard assets or those with technology driven monopolies. The mass appeal of Sanders/Warren proves the point. The masses, who live with less, are easily fed the politics of envy, until at some point, they win, and this charade of unlimited currency printing we are doing, ("MMT") comes crashing down around them.

Senior Advisor

Re: Something to keep in mind.

Something to keep in mind with regards to the Dollar, among all the other factors that influence the strength of the dollar is imports & exports.  When we buy imports, we pay in dollars which are exchanged for local currencies.  The imports, the more dollars are available so the demand for them declines and the dollar gets weaker. 

  Conversely, when we export, the buyers pay in dollars and so need dollars.  If the supply of dollars is lower the price of dollars goes up and it makes things we sell more expensive.

  So in a perverse way, the more imports are curtailed by government policy, tariffs, etc. the stronger the dollar will become and making selling grain harder. 

  So yes, the dollar will eventually return to an equilibrium but a equilibrium with both lower imports and exports.