The New Brazilian Trade Agreement With China Is Undermining The U.S. Dollar

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In his podcast addressing the markets today, Louis Navellier offered the following commentary.

If you wish to listen to this commentary, please click here.

Pretty Portfolios

Tomorrow is going to be a big day. Hopefully, lower home prices will show up tomorrow in the Personal Consumption Expenditure (PCE) report, which is the Fed’s favorite inflation indicator. As soon as the data on home prices and rents start to cool off, inflation will cool off dramatically, and that will send the stock market soaring.

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Q4 2022 hedge fund letters, conferences and more

Right now, we are definitely benefiting from quarter-end window addressing. This is the time of year when professional managers make their portfolios extra pretty because of their client reviews in April. So they are basically selling their losers and adding to the ones that have strong sales and earnings.

The energy outlook is great. The American Petroleum Institute on Tuesday reported that crude oil inventories declined by 6.1 million barrels in the latest week, which is the largest weekly drop since November.

Then on Wednesday, the Energy Information Administration reported an even bigger decline of 7.5 million barrels of crude oil as well as a 2.9 million drop in gasoline inventories in the latest week. The refiners are going to be making a lot of money and energy companies are firming up fast.

Putting upward pressure on crude oil is that Turkey is blocking Iraqi crude oil exports due to a dispute with Kurdish authorities. The bottom line is that worldwide crude oil demand is now in the midst of a seasonal spring surge, so crude oil prices are expected steadily rise until demand peaks in the summer months.

Complicating matters further, Russia said that it is close to fully implementing its March announcement of a 500,000 per barrel per day cut in crude oil production.

Undermining The U.S. Dollar

Meanwhile, China is reasserting its leadership in the world. China is Brazil’s largest trading partner and has vast investments in Brazil. The Brazilian Trade and Investment Promotion Authority announced on Wednesday that it will be transacting directly with China and bypassing the U.S. dollar to “reduce costs” and “promote even greater bilateral trade and facilitate investment.”

This last statement says it all since essentially China told Brazil to make this statement if it wants to continue to benefit from Chinese investments.

The U.S. dollar dominates commodity trading since commodities are priced in U.S. dollars, so this new Brazilian trade agreement with China is essentially meant to undermine the U.S. dollar and boost the credibility of the Chinese yuan.

Since the U.S. has neglected Latin America for decades, China has stepped up its influence and more countries in the region may follow Brazil, like Honduras, which recently broke off its diplomatic relations with Taiwan to appease China.

Ending Cash

The European Central Bank is exploring a digital euro and the Fed is expected to follow. The excuse being used for these digital currencies is to better control the money supply as well as to more effectively compete with China.

However, the truth of the matter is that these digital currencies are designed to better enforce tax collection, since cash transactions are often underreported as income.

As an example, I am installing new pool equipment at my Florida home and I got a better price if I paid cash. Another example is a gentleman I use to install paint protection film and apply a ceramic coating to my vehicles gives me a discount if I pay in cash.

So essentially, the cash economy is alive and well in America, but a digital dollar is designed to put an end to cash transactions and boost tax revenue.

Coffee Beans

Max Woosey, a young British boy who slept in a tent in his family's yard for three years to raise money for charity is headed back inside after raising more than $860,000 for North Devon Hospice, the facility that cared for his neighbor, Rick Abbot, who died of cancer in 2020. Before Rick died, he gave Max a tent and told him to "have an adventure." Source: UPI. See the full story here.