A mixed week with the Dow Jones up 39 points (+0.15%) and the Nasdaq down 5 points (-0.06%)
Despite remaining flat, this was an incredibly important week for the market. If you would like to find out why and what happens next, based on our timing and mathematical work, in both price and time, please Click Here.
As we have discussed over the last few days in Trump Wants The FED To Juice The Stock Market, But No Juice Left and WTF Is Happening To The US Dollar? President Trump has launched an unprecedented attack on the FED and the US Dollar.
The nuts and bolts of this matter are very well summarized in the following article.
“It Was Only A Matter of Time”: Trump Sets His Sights on the Fed’s Tightening and the Strong Dollar
Trump’s comments yesterday towards the Fed and their rate-hikes shouldn’t be taken as a ‘one-off’ statement. For the U.S. to outlast China and Europe – and every country at that – the Fed will have to cheapen the dollar.
It’s like watching a slow-motion train wreck – we can see everything unfolding in due time. And as I’ve always maintained – the Fed is only tightening so that they can cut rates later to stimulate the economy during a recession.
Otherwise said – the Fed’s in a race between time and how much they can tighten before it triggers a recession. . .
Don’t be surprised when Trump eventually calls for a weaker dollar. Because foreign countries – especially China – won’t hesitate to cheapen their currencies so they get a trade advantage.
Trump will eventually realize that the dollar is the key to world trade – and he will weaponize it.
Then it’s a race to the bottom for everyone.
So, can Trump’s attack on “Free Markets” keep this market afloat?
Let us step away from the fundamental analysis for a second, something we have beaten to death here over the last few months, and answer the question from our TIMING and MATHEMATICAL perspective.
The short answer is NO.
A slightly longer answer based on the cyclical composition of various markets suggests the following.
The FED will continue to hike interest rates until the yield curve inverts (nearly there) and causes a recession. The simple truth is, they have no choice as they need to reload for the next recession. The US Dollar will continue to much higher levels. Not immediately, but don’t be surprised to see the DXY at $99 or above within a year.
Further, inflation will vanish into thin air, only to be replaced by deflation. Trump’s ill timed trade war will be disastrous for all involved and the stock market will crater. Once again, the above is based on the cyclical composition of various market.
If you would like to find out exactly when all of the above happens, based on our timing and mathematical work, please Click Here.
