Not only is our Fed hiking rates into a suspect economy, they’re also doing it while our European partners in crime are easing via QE. This divergence has resulted in a 66 basis point spread between the Fed and ECB.
Deutsche Bank analyst, George Saravelos, thinks the dollar supremacy will continue, well into next year, punishing the euro to fall well below parity.
Australia and New Zealand are the only other G-10 countries with higher rates, and both of them are literally retarded kangaroo punchers.
“Historically, it is not only the direction of U.S. yields that matters for the dollar but also the absolute level,” Saravelos wrote in a note to clients on Friday. “When the USD joins the ranks of the high-yielders – defined as having at least the third highest central bank yield in the G-10 – it typically rallies very strongly.”
“The last time this happened for more than a few months was in 1979 and 1997; the dollar rallied by 30 percent and 20 percent respectively,” he added.
I’m in agreement with this analysis and believe a much stronger dollar will have a profound impact on the investing landscape. For one, look for the $RUSL to outperform all indices, since just 20% of business comes from overseas.
I don’t believe this will hurt $TLT, as much of the hawkish Fed policy is already baked into the long end of the curve. The main pressure and risks lies in shorter durations.
Gold and silver will get bludgeoned.
Oil and other major commodities will come under pressure.
Foreign investors will flock to our shores, in order to gain access to our markets and currency.
The last time the dollar ran like this was in the late 90s, a period that is considered one of the best eras in investment history — noted for its dot com bubble.
If you enjoy the content at iBankCoin, please follow us on Twitter
Useless drivel
Gold destroyed? Based on the fact that the Fed will hike 3x in 2017?
I call BS.
China-money and Euro collapse coupled with inevitable capital flight will keep a bid in both Gold and Treasuries.
“But what of the zebra? What of the poor zebra? Well, the zebra’s eaten, as the zebra should be. Make no mistake, blood will be spilled, lives will be lost, fortunes will be made, men will be ruined.”
have you punted your gold positions?
Exactly the same question here
not yet
Me either..
Seeing as you may be taking a more active approach next year, does exodus have a chat room type feature? I’d like to bounce ideas off you and other professionals.
i bot tlt, pm stks and sold EE (knowing) yesterday
1980’s Latin American debt defaults. Late 1990’s Asian currency crisis, Russian debt defaults, failure of Long Term Capital Management. Something bad gonna happen if $US gets stronger and stronger like DB suggesting. They should really suggest some hedges in the same breath, history suggests it will be needed.
hysterical — WashPo, i.e. Pentagon mouthpiece, wants CIA director John Brennan fired … in other words – the dude supports Trump and didn’t want to go along with this Russian fake news currently being promoted by liar-in-chief Obama
https://www.washingtonpost.com/blogs/post-partisan/wp/2014/07/31/obama-should-fire-john-brennan/?utm_term=.196d05ac1afd
At least one of the multiple organisations should get knocked in the head. Then severe budget cuts on some others.
At least that is what your fake news channel or fake news Internet site says, isn’t it Juice? Your fake news that forgot to tell you that Trump lied in over 70% of the statements checked by politifact during his campaign. So if you want a liar, the PEOTUS is it. But your fake news doesn’t like facts, so you won’t hear it there.
I wonder if Rick Ross has enough wealth to retire now, at a “reasonable” lifestyle?
I’ve heard Ross is a smart guy and business conscious.
I’m glad you don’t believe it’ll hurt tlt. Pathetic
I am sure that Deutsche Bank – and numerous EUR countries – would very much favor the projected outcome. Therefore, I think the inevitable dollar rally is a ways off yet. Acting Man had some data recently that indicated an unusual increase in the USD money supply.