A big driver behind the recent dollar move, a sharp recent short squeeze, may now be behind us as market positioning has adjusted to broadly neutral levels. So what will propel the greenback to new highs? Here are some ideas.
"War for the USA these days is a weird, inconclusive enterprise... Our objectives are poorly discerned, hardly even articulated anymore, just a pattern of going through the motions as destructively as possible with no end in sight."
Despite it being a holiday shortened week, with both the US and UK off on Monday, it's still a busy one for data with the latest payrolls report and PCE data in the US, and European politics the main highlights.
"The most worrying points are: toxic “coup” narrative developing; in the next days, if the crisis worsens, calls for a show of force will grow louder. Plus, Savona’s appointment means Lega is dead serious to face off the EU."
"I do think we're all feeling like where we were back in 2007. There was sort of a smell in the air; there were some crazy deals getting done. You just knew it was a matter of time."
With the "smart" money exiting the stock market in droves, yield curves collapsing, extreme speculative positioning in bonds, and a dramatically diverging economic reality from market narratives; what's the cheapest way to hedge against dramatic downside?
"When this thing breaks loose, it won’t matter who is in the White House, who is in Congress or who is running the Federal Reserve...When this bubble bursts there is nothing that anyone will be able to do to stop it."
"Sometimes it takes a little uproar to reveal the reality behind the curtain...Both countries, Italy perhaps some more than Spain, would long since have seen collapse if not for the ECB."
These geopolitical events and economic data points will provide the near term direction for stocks, bonds, and most importantly the next direction in gold and silver.
Saudi Crown Prince Mohammed has ordered that all government contracts cease being awarded to German companies as an aggressive punitive measure for Germany's plan to stick by the Iran nuclear deal.
"If we somehow get through the Great Reset, the 2030s should be pretty good... No one in 2039 will want to go back to the good old days of 2019. Our kids will think it was the Stone Age. But we have to get there first."
"Far from offering the prospect of further fiscal consolidation, the 'contract' for government signed by the two parties includes potentially costly tax and spending measures, without any clear proposals on how to fund those."
"This extended period of benign credit conditions has helped many weak, highly leveraged companies to avoid default. These companies are poised to default when credit conditions eventually become more difficult."
