Mirror, mirror on the wall say whats the best trade of them all
Zero risk volatility
The main risk free rate of return is the US government treasury bill and that is one of the oldest bull markets we have today. With rates so close to zero, some argue the market have already peaked.
Weaponized "exorbitant privilege"
The US monopoly over the global payments infrastructure has been challenged by Germany’s foreign minister, Heiko Maas, after European businesses have been caught between the European Union and the US over trade with Iran amid US sanctions. If both Russia, China and now Europe create their own payment systems, the world can route around the weapon that is now the dollar and the world dependence on the dollar will subside. By weaponizing their currency USA risk loosing the dollar as world reserve currency.
The zero lower bound
When interest rates are super low, central banks can not lower them that much more. This creates a liquidity trap and the phenomena is well known. This becomes a big problem when the economy is imploding and needs stimulating. Since central bank can not lower the rates, the government will instead have to spend. Hopefully they will print money and spend on building (instead of going to war) out infrastructure. The Chinese "One Belt One Road" is a good example. If the Chinese succeeds, this will also contribute to shifting financial power away from the dollar.
Loose cannons on a ship
If the world starts to route around the dollar and the T-bills as zero risk might comes into question, the big question is what can replace it. It has to be something that is deep and liquid enough. Can you think of something obvious? Me neither. So if there is nothing obvious, a whole lot of money will start looking for something that at least won't go to zero. If government starts spending on infrastructure commodities might become a money magnet.
Commodities
The US stock market have already had a huge record breaking bull market and subsequently one of the sharpest dops. Commodities on the other hand has been more or less ignored for a very long while. Even though the world is eating more food and building more stuff and there is talk "peak in this and that", the narratives have failed to compete with that of IPOs on Nasdaq. If commodities starts going up in price, this will also add fuel to inflation which is a boon in a deflationary economy and will help to inflate the huge debt burden of the world (which is a reason why I believe those in power won't try to prevent it).
Current
I've been a dollar bull since it started to trade upwards some time ago and as the world stock markets started to go down. I think the dollar will strengthen as more problems in the economies of the world starts to surface. Then after that.... then I think commodities will start to trend upwards.
The main risk free rate of return is the US government treasury bill and that is one of the oldest bull markets we have today. With rates so close to zero, some argue the market have already peaked.
Weaponized "exorbitant privilege"
The US monopoly over the global payments infrastructure has been challenged by Germany’s foreign minister, Heiko Maas, after European businesses have been caught between the European Union and the US over trade with Iran amid US sanctions. If both Russia, China and now Europe create their own payment systems, the world can route around the weapon that is now the dollar and the world dependence on the dollar will subside. By weaponizing their currency USA risk loosing the dollar as world reserve currency.
The zero lower bound
When interest rates are super low, central banks can not lower them that much more. This creates a liquidity trap and the phenomena is well known. This becomes a big problem when the economy is imploding and needs stimulating. Since central bank can not lower the rates, the government will instead have to spend. Hopefully they will print money and spend on building (instead of going to war) out infrastructure. The Chinese "One Belt One Road" is a good example. If the Chinese succeeds, this will also contribute to shifting financial power away from the dollar.
Loose cannons on a ship
If the world starts to route around the dollar and the T-bills as zero risk might comes into question, the big question is what can replace it. It has to be something that is deep and liquid enough. Can you think of something obvious? Me neither. So if there is nothing obvious, a whole lot of money will start looking for something that at least won't go to zero. If government starts spending on infrastructure commodities might become a money magnet.
Commodities
The US stock market have already had a huge record breaking bull market and subsequently one of the sharpest dops. Commodities on the other hand has been more or less ignored for a very long while. Even though the world is eating more food and building more stuff and there is talk "peak in this and that", the narratives have failed to compete with that of IPOs on Nasdaq. If commodities starts going up in price, this will also add fuel to inflation which is a boon in a deflationary economy and will help to inflate the huge debt burden of the world (which is a reason why I believe those in power won't try to prevent it).
Current
I've been a dollar bull since it started to trade upwards some time ago and as the world stock markets started to go down. I think the dollar will strengthen as more problems in the economies of the world starts to surface. Then after that.... then I think commodities will start to trend upwards.