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sdholloway56
Senior Advisor

the dollar

the dollar

Postscript Document (mrci.com)

In what I regard as the actual commodity supercycle (2004ish-2014) the entire commodity complex was levitated off of short dollar/long commodity carry trades and index funds. Many $Bs of fairly passive money in there but in the scheme of things a drop in the bucket compared to the financial economy. A bunch of mega pension and hedge funds throwing a percent or two in to chase a theme cand diversification can move the sector a lot.

Even after the excitement passed a lot of money hung around. It wasn't until a tiny bit of Fed tightening and tapering finally broke the 20+ year downtrend in the dollar in 2014 and all that got flushed. For about 6 months you could make money selling just about any commodity. I was hollering about that when it happened- I tend to make a great call here once every decade or so. The problem is being aptient enough to have that level of confidence.

You can use charts on any time scale but I think for the really big matters, the longer timeframe the better. Currently I don't see anything to get excited about on that chart currently. I remain skeptical that the DX will spend a lot more time under 90 and thus am skeptical of a commodity supercycle. Mini-cycle yes, super, no.

Low confidence as to the actual path but I'm calling this as most likely a wave 4 correction in a motive up wave- may spend several years between 90 and 100? Nothing terrible there, but nothing to get super amped up about either.

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7 Replies
sdholloway56
Senior Advisor

Re: the dollar

The yield on the US 10 yr. currently 1.67% on the way to what I think is a likely 2 handle.

Yield on 10 yr. German Bund -.33%, France -.086%, Swiss -.27%, Japan .093%.

Doesn't exactly say tanking dollar.

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swmnfarmer2878522
Frequent Contributor

Re: the dollar

The actual supercycle is 17 years, as which the lead switches from Commodites to stocks and then back.  The previous supercycle started in 1999 and lasted until 2016.  It isn’t grains per say that take the leads but commodity as a whole.  Using that theory we have until 2033 before Commodites turn back into the hot money earning entity.

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nitefarm
Advisor

Re: the dollar

Maybe if you assume everything stays NORMAL 

BA Deere
Honored Advisor

Re: the dollar

"stays Normal" is right Nitefarm, cycles look differently than in the past.  Improving diets, growing populations, changes from "just in time" to a reserve commodity inventory all kind of trumps the lines on a chart.  

Look at the currency trades, as the Dollar gets close to 92 the Dollar bulls come out of the closet.  The Bitcoin is trading above $60,000, 10 years ago "what`s a Bitcoin?" now bitcoin is the new gold.  How much of the gold trade has moved to crypto-currency?   In the past rising precious metals prices made the dollar look bad.  Now gold is flat, the Dollar isn`t 70 where it probably belongs and bitcoin is $60,000.  Gray haired investors like Warren Buffet say "I don`t understand it, so I`m not trading it".  

Look at the lean hog trade with vertical integration maybe 5% are traded on the open market, the CME price doesn`t matter to most pork producers, until their integrator goes broke.   Look at the cattle trade, cash is usually way higher than the board price, because "lowest cow numbers since the 1950s" I`ve been hearing that 20 years now.  But "dairy liquidation"  "Mexican feeder cattle"  ect.

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sdholloway56
Senior Advisor

Re: the dollar

The super cycle has been an extremely regular 30 years for a century although the expected peak in ‘10 split between ‘08 and ‘11 on account of “some stuff” that happened if you recall.

Theres a weak internal cycle of around 6 years. I think we’re just heading into one of those minor peaks.

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sdholloway56
Senior Advisor

Re: the dollar

But yes, the 30s should be spunky, with a peak around 2040.

Although that’s been a very regular cycle, nothing says it is carved in stone.

If you listen to the bois over at Forum the world will have long since come to an end by then.

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sdholloway56
Senior Advisor

Re: the dollar

Long rates are on fire again this morning but the dollar staying relatively tame by comparison.

Probably more important. The Fed is the central banker to the world and a rising dollar puts the hurt on everybody who has dollar denominated debt.

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