Markets are trading off a bit here, as Dow 20,000 proves to be wonderfully elusive. Since everyone expected we’d reach 20k by New Year’s, we’ll probably never reach it at all.
Heading into 2017, it’s important to formulate a gameplan and prepare for any headwinds that might pose a problem for the stability of markets — else you’re just shooting in the dark — like morons.
Here are some things to pay attention to in 2017.
Trump’s anti-China rhetoric may start yielding some poisonous berries. Pay close attention to the USD/CNH and USD/CNY crosses. The FX markets will tell you all you need to know about China. Should you see their FX reserves shrink at the same time their currency drops, you know there is a flight of capital from China — which is bound to dry up liquidity and cause market dislocations. Remember, unlike our markets, the Chinese market is still traded and owned by ordinary people, traditionally weak hands. Plus, they’re so overleveraged, the slightest hiccup will literally destroy them.
The yuan is a constant downtick, which helps their exporters and pisses off Trump.
The US dollar index is at 14 year highs and continues to surge. Bad, bad, bad for US exporters.
American borrowing costs are surging at the same time that optimism for Trump fiscal stimulus projects buoy markets. This is counter-intuitive. Higher borrowing costs places a strain on our balance sheet and also makes it harder for Trump to enact stimulus, the whole basis of the recent 10% rally.
Crazy Grandma Yellen wants to hike 3 times in 2017, while the dollar is at 14 year highs, inflation is non-existent and has openly stated she’d hedge any fiscal stimulus by Trump with monetary tightening in order to stave off inflation — since we’re at ‘full employment.’
Last but not least, French elections will be held on April 23rd, 2017. If Le Pen gets elected, she will remove France from both the EU and NATO — something that only a deranged lunatic would liken to being bullish for stocks. This is a major event in a major EU nation, which might and quite literally lead the way towards the total collapse of the union.
Le Pew won’t win – She doesn’t have Trump’s skill set.
Latest polls say otherwise.
Figesmalls, your calling her Le Pew does not make her wrong, nor will it make her lose the election.
hahahahaha
It will take a while, probably longer than expected, for everything to go off the rails. It always happens when you least expect it doesn’t it?
True.
I wonder how the White House transition comradery is going? Must be stifling in there eh. In any case all we have is known unknowns. What we are looking for is a unknown unknown (Rumsfeld?). A long time ago Kerry was recipient of an “anthrax envelope”, assuming that to be true suggests he is incapable of skilled negotiation. Good riddens.
What? If someone mailed an anthrax envelope to the most skilled negotiator in the world, this would make that person unskilled as a negotiator? You are talking nonsense.
Bitcoin also an escape hatch for the Yuan. BTCCNY is more instructive for BTC moves than BTCUSD pair.
How do we fire Yellen