I came across this article from CNBC this morning titled, [t]he dollar is doing something it hasn’t done since 1987. It states that the US dollar is having its worst January since 1987. We know what happened in 1987.
When the crash happened I was in my senior year burying my nose in Econometrics, Game Theory, and Corporate Finance textbooks; but vividly recall listening to WINS news in NYC as they detailed the carnage.
Notice how the CNBC article ends;
A bullish catalyst coming?
This week, we kick off the first Federal Reserve meeting of the year. While the odds of an interest rate hike are low, most analysts see three rate hikes this year, with the first expected in March. As rising rates tend to strengthen the dollar’s relative value, we may be about to see some strength return.
If you listened to my podcasts and read my notes from the past week, you would know that I think this is the worst course of action the Fed can undertake. It will lead to the opposite result.
It specifically mentions US Treasury Secretary and Skull & Bonesmen, Steve Mnuchin’s comments about the weakening dollar. It conflates the Trump regime with the weak dollar.
This is why I say we are being set up.
It is important to keep in mind that it won’t be the weak dollar that causes any catastrophe; rather, the weak dollar will be the result of the flawed policies that caused the dollar to weaken. Moreover, the Trump regime will get the blame. When the catastrophe occurs, the controlled press will comb the wreckage and blame the “America First” policies of the Trump regime. They will say we need to think globally.
Recall from what I have stated in the past. The US dollar rises in anticipation of any rate increases. The three rate increases proposed by members of the USFed are already baked in the cake. I bet that if the USFed said they were done raising rates the USD would rally.
Is today’s price action a dry run?
I am looking at my trading screen this morning and all I see is a sea of red ink. Nothing is being spared – not even the cryptos. The only thing trading up is the 10-year US Treasury yield.
At least gold and silver are flat. Stocks are down across the board, but the GDX is down.
The private equity firms that invest in single-family real estate will be OK. Obama made sure that their debt was insured by Fannie-Mae.