Juggling Dynamite

Danielle was a guest with Jim Goddard on Talk Digital Network talking about recent developments in the world economy and markets.  You can listen to an audio clip of the segment here.

Here are two charts that help illuminate my comments on orders and inflation expectations now moderating.

The spread between the 5 and 30 year US Treasury yields since April 2020, shows the peak in inflation expectations last winter.

This one shows the mean reversion in unfilled orders over the past six months as supply has caught up with demand.

Today, Revolving Door Project Executive Director Jeff Hauser called on Federal Reserve Board of Governors Chair Jerome Powell to place Boston and Dallas bank presidents Eric Rosengren and Robert Kaplan on administrative leave while the Federal Reserve investigates possible insider trading. Read Hauser’s letter to Powell here.  Hauser also issued this statement about Fed Chair Powell:

“It really shouldn’t surprise anyone that a former Carlyle Group executive — a firm whose whole profit strategy is based on exploiting insider connections in the federal government — hasn’t prioritized ethics and oversight in running the nation’s largest stockpile of potentially market-moving information. The Fed’s outdated ethics policy of course precedes Powell, but failing to monitor for unethical activity during its massive COVID-19 response must fall on his shoulders.”

As the global economy continues to decelerate, the US dollar is rising and key commodities (priced in dollars) are tumbling.  Iron ore, silver and lumber are all back to where they were before COVID-19 vaccines spurred reopening euphoria in November 2020.

As shown below in my partner Cory Venable’s chart, the commodity-centric Canadian dollar (FXC) is also swooning along for the ride, returning to the $77 area it broke out from in late 2020, with more weakness likely to come.

The following video clip explains the global impacts of a rising US dollar (with a very dramatic soundtrack!).

The US Dollar is the bedrock of the world’s financial system. The availability, cost, and level of the dollar can have an outsized impact on economies and investment opportunities. But, more important, is the rate of change in the level of the dollar. If the level of the dollar moves too quickly and particularly if it rises too fast, then problems start popping up all over the place. And that is why everyone should have a plan for a rapidly rising dollar.Here is a direct video link.