The Only Move For The Fed = Talking Down The Dollar

The Only Move For The Fed = Talking Down The Dollar

The Only Move For The Fed = Talking Down The Dollar by Dominique Dassault,

Their Final Bullet

The Fed has no more maneuvers other than to jawbone the dollar lower. Because for a variety of reasons a strong dollar, in the current market environment, is akin to tighter monetary policy. And right now, in the wake of Brexit, tighter monetary policy = clearly not an option. Plus, a stronger dollar [by virtue of of “the peg”] strengthens the Chinese Yuan + Saudi Riyal…something neither country will tolerate.

According To Jim Chanos, This Is The Biggest Story No One Is Talking About

Jim ChanosWhen a liquidity crisis struck China's Evergrande Group in the summer of 2021, it shook the global markets. Debt payments by China's second-largest property developer by sales were estimated in the hundreds of billions of dollars, and the company missed several payments. Those missed payments led to downgrades by international ratings agencies, but the Chinese Read More

And the dollar’s whip-saw in ’16 has The Fed’s fingerprints all over it. The Sequence = Flawed Forward Guidance of 4 Rate Hikes [$ Ramp]…Followed By A Slowing US Economy [$ Softens]…And now The Brexit/Global Economic Fears [$ Rally = Flight to Quality]. Of course = The Fed will try to manage the $US lower…with both an absolute intent and, naturally, uncertain outcome.. Their serial monetary policy impotence will certainly never be acknowledged.

It may not be immediate but it will likely occur soon enough as negative rates are not a realistic option in the United States…as they have already proven to be ineffective in both Japan [surging yen] + Europe [still weakening economy]…and QE4 is not necessary as rates are plunging without The Fed’s meaningful assistance [notwithstanding balance sheet asset maintenance].

The only real question = who will be the messenger? I suppose the obvious answer would be the Fed member with the most credibility…but that assumes that there is still ANY credibility remaining at The Fed [which there is NOT]. And actually…it really does not matter. But, leave no doubt, the message will ultimately be delivered. Because as articulated long ago [Oct ’14] on this blog…

The Race To The Bottom


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