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The Dollar plunged from 93.95 to 93.25, which is 7.5% and the S&P 500 went up from 2,713 to 2,733, which is 7.5% – that is not a rally, that is the repricing of mechandise against a falling currency! If you don't keep an eye on the Dollar, you are missing half the story on any market and also missing valuable trading signals that can make you lots of money!
In last Thursday's Report, we noted that the 5% Line™ on the Dollar was at 93.45 and you can see that line acting like a magnet, pulling the index back down for consolidation before going any higher. While day to day news may pop the Dollar up or down, over the longer-term, it pretty reliably reacts to longer-term macros as the Dollar is the blood that flows through the global economy – it generally stays in a temperate and reliable band as the Global Economy breathes in and out over time.
Meanwhile, WTF is with Donald Trump? Oh wait, I guess I should specify – WTF is with Donald Trump and this completely crap deal he made with China? The trade deal he's walking away with is SO TERRIBLE for the US that even the Wall Street Journal has titled their front-page article: "Beijing Outplays the U.S. in Trade War". That's right, we got played as China gets everything they wanted in exchange for…. wait for it… Cutting Import Tariffs on Cars from 25% to 15%. Ta f'ing da!
Aside from the fact that this "negotiating point" is one President Xi already said he was cutting way back in April, when it was noted in the WSJ: "Even so, people in the industry said the reshaping of China’s auto industry wouldn’t necessarily hand an advantage to entrenched foreign players that have come to rely on their Chinese partners, many of which are influential state-owned enterprises. Although overseas car companies entered the joint ventures reluctantly, some say they have come to accept them as a fact of life in a country where foreign businesses can struggle without local allies."