Currency War to Bring Anti-USD ‘Inflation Trade’?

Gold is the leader. The playbook calls for it to bottom amid deflationary pressure and lead everything else up into the next inflation. Gold>Silver>Miners>Commodities>Stocks… or something along those lines.

The difference this time is that US stocks are already nose bleeding. So gold is not leading them upward, obviously. It is however, leading the globe out of a deflationary situation (Goldilocks in the US). Now it could be a different story as Trump tries to will a weaker US dollar in response to trade pressures. His jingoism about making America great again is after all, largely about making the currency not great anymore.

So he’s now not only micro managing his own Central Bank chief, but the chief of Europe’s CB as well.

Translated: “Whaa whaa… I want a cheap currency too! Whaa…”

Well, thanks to the bond market Trump’s got his compliant Fed chief and the currency wars, which one could argue are an intimate part of trade wars, are on.

Here is this morning’s near across the board bullish response to this week’s events. Just look at those bedfellows; gold +2.73%, silver +2.79%… oil, copper, DJIA, SPX, DAX and on it goes.

Who’s the foil to all of this? Why, dear old Uncle Buck. USD is making a lower short-term low and though not shown here, another hard test of the SMA 200. If it takes out the March low, say goodnight Unc and hello global anti-USD inflation trade.

usd

This is the will of the US president. In pressuring Jerome Powell he is simply playing the same game that the ECB, BOJ and China Central Planning play routinely. But America has stood apart with its massive consumer economy and strong dollar. If Trump is successful in achieving a weak dollar (where does Larry “King Dollar” Kudlow stand in all of this?) the macro is going to change and you and I are going to capitalize. That is because while stock markets may under perform, they should be supported (for a while at least) while traditional receivers of the inflationary bid could haul ass.

Gold>Silver>Commodities/Resources>EM and certain other global areas>US stocks… If US and global policy has its way the only losers would be the bears; gold bears, US bears, global bears… you name it bears. That is what an inflation trade could mean. It also brings the words “Crack” “Up” & “Boom” back into the discussion. Let’s see if Trump and the Fed are able to devalue effectively in service to Trump’s goals.

Subscribe to NFTRH Premium (monthly at USD $33.50 or a 14% discounted yearly at USD $345.00) for an in-depth weekly market report, interim market updates and NFTRH+ chart and trade setup ideas.

You can also keep up to date with actionable public content at NFTRH.com by using the email form on the right sidebar and get even more by joining our free eLetter. Follow via Twitter @BiiwiiNFTRH or StockTwits.