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Devaluation of the dollar continues, with a new low of the 10year yield for U.S. treasuries. This will cause gold to rally as seen in the last few weeks. My bias for gold remains solid, with another few months of buying to reflect multi-year allocations to both miners and minerals in general. The U.S. dollar continues to devalue the purchasing power for us americans. Never in history has a country been able to do this, while the economy is slowing, while raising debt into triple digits of % GDP raising deficits as a % of GDP.
13:08:33 ( UTC )
Mon Jul 27, 2020
13:08:33 ( UTC )
Mon Jul 27, 2020
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First of all, love your ideas. In terms of devaluation through them losing PPP, normally this is a lagging indicator (like this can be years behind). Another thing we have to think about the stock market. If the stock market collapses again due to defaults, underperformance, and the lack of FED tools to stop it, value will surge back to the dollar as people's demand for American stocks return as prices gets lower.
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@TogamiTrader, I appreciate the comment and am happy to help! You have some good points. However, after the last 2 quarters of trading I've learned to humble my bias when trying to make calls for the SPX, as it and the Daq are proxies for a small number of companies that have extremely high and overpriced valuations (tech, health).
One thing you hit on was mortgages. We await the new bill to be passed, which will happen after market's close at 4pmm. I wonder why?
One thing you hit on was mortgages. We await the new bill to be passed, which will happen after market's close at 4pmm. I wonder why?
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When the next GDP number confirms stagflation (nominal) we can take a much more direct approach to how trading can be allocated and targeted. But I will say this, interest rates are tied into stock valuations across the board, but not in the same way that we were taught in school, bc now we have Minunchin doing is thing, and pumping the market. @TogamiTrader,
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@TayFx, True. Another thing that is in favor of a dollar devaluation is the possibility of negative interest rates which were priced in all the way back in May. This may be very problematic for my bull case for the dollar as other countries recover fast and get more inflation. However, there is still large stagnation on the global stage so this likely won't be a huge factor for the medium term. As for Mnuchin's pumping, it is definitely pumping the market, but it is not going to the right places. Consumers drive the economy, the less money in their pocket the less they spend on products. So instead of gaining equity, these companies accumulate more debt, encouraged by the already lower interest rates. So I suspect companies (even in tech), will largely underperform. I can see a sell off coming this year to reflect this. As for the bill being passed at 4 pm, these politicians aren't very bright as the futures market will still be listening with wide eyes haha.
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The dollar will continue to devalue, as inflation for commodities runs rampant. I am long every commodities and have been buying various ones such as corn at each higiher-low. I suspect much more inflation to come, and onces the backward (lagging) indicator of GDP is printed we can confirm if the U.S. is in fact in a stagflationary transition. @TogamiTrader, thanks for the comment and I would love to hear your opinion!!!! Thanks man, happy to help; let;'s make some money.
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@TayFx, commodities are a safe bet. One reason being that it acts as a relatively safe market as other markets (i.e debt market, equities) become home to chaos. Another reason being is due to the food hoard reducing supply on the global market. You would think inflation would show up with trillions of dollars being dumped into the market, but where is it going? The money causes inflation if it is being circulated (the reason why we have to change interest rates in a cyclic manner). If inflation shows its ugly head, I feel it will hit the stock market first because companies will no longer have means of raising funds. After that, I believe the dollar will be worth scraps as the trillions of dollars stored away in the economy will start to make its way around the country.
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