Is America great yet?
It is if you get paid in something other than Dollars, or if your assets are not Dollar-backed. Otherwise, it's 3.4% less great than it was in November – as measured by Global confidence in our currency. Cutting taxes, running up Government spending, threatening war (s) and easy money policies are no way to strengthen a currency.
US Household Wealth is roughly $100Tn so a 3.4% cut in the value of those Dollars means $3.4Tn was essentially taken from us – pretty much confiscated by our Government. That's a lot worse than any tax because it's 3.4% of EVERYTHING we have. Fortunately for those of us in the Top 1%, a lot of that $3.4Tn went right back into the market, where we have the bulk of our wealth anyway and, of course, we have enough money that we diversify our assets into other currencies and, of course, Gold, which has flown up from $1,125 to $1,325 (17%) since the election.
So thank you, Bottom 99%, for your contributions to our portfolios. We couldn't have done it without devaluing everything you own! In yesterday's morning Report, we discussed the massive debt bomb we are facing and looked at the Fed's projections and concluded the market may be wrong and the Fed may tighten at this meeting. If they do, the Dollar will shoot higher and shorts will cover so I like Dollar Futures (/DX) long over the 91.50 line – with tight stops below.
If the Fed surprises us and brings rates up 0.25%, expect the /DX to move up to at least 92.5 for $1,000 gains per contract. Don't forget, Japan, Europe and China do not want a weak Dollar – this is the point they are likely to step in and prop it up anyway – so I feel pretty good about that play. If you are Futures-impaired, you can use the Dollar ETF (UUP) as a proxy. It's at 23.80 and the October $23.50 calls are just 0.45 so 0.15 in premium isn't bad for a month's worth of leverage, right?