Hello All:
Nobody thought it was possible but we are about to experience another round of the U.S. DOLLAR AND this time, it will start to break things. What is leading this is the desperate move by the the Chinese to shore up their Yuan. However, every time they intervene, it backfires and the Yuan continues to slide lower to the lowest it has been in almost 16 years:
Chinese numbers over the last several weeks have been showing slower manufacturing, slower retail sales, slowing credit (loan books shrinking), real estate companies defaulting on major payments and mostly it has been negative data. We don't expect that the Chinese yuan will stop sliding at the current levels. It will probably get worse before it gets better.
On the flip side of the coin, we have a surging USD that has failed to break down major support levels and now is on the way higher in the past few weeks, trading for the first time above the 200 MA in over 9 months. It has, of course, helped that European economies (thus the EURO) are falling apart due to higher energy costs and falling manufacturing / consumer numbers:
The reason for the continued strength of the USD is that the debt books keep increasing and the yield curve is still inverted but it has also stopped sliding. This, in my mind, will show us a credit crisis sooner rather than later. We can never predict when these will happen, but many banks in the U.S. are already suffering through the elevated interest rate structure and losing demand (from car loans, mortgages, and consumer credit demand).
With the US dollar ready to blast higher, we will see METALS melt down (as we already see). We will see equities markets come under pressure and we will see commodities in general fall hard. Right now, we love being short Silver and the equities markets. We will add other positions similar to this as the USD surges higher.
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Best Regards
Edgard Cabanillas
President - Alpine Trading LLC
TEL: 949-357-4948
Email: edgard@alpine-trading.net
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COMMODITIES FUTURES AND OPTIONS IS SPECULATIVE, INVOLVES RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS
On the date of publication, Edgard Cabanillas did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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