Thrilling Thursday – Rally Resumes on Dollar Weakness

Down and down the Dollar goes. 

While Americans may have been thrilled with whatever it was that Trump and his lawyer said in yesterday's press conference (pundits are still trying to figure it out), the rest of the World lost faith in the Dollar and sent it to it's worst 24-hour drop since 2001 from just under $103 to $100.75 (and still falling) is more than a 2% drop in the value of the Dollar and the US indexes, which are priced in Dollars, gained half a point and everyone thinks it's a rally – idiots!  

Oil, also priced in Dollars, jumped up from $51 to $53 (and still climbing) and that's up 4% and boy did we call that one wrong yesterday for our first Futures loss of the year.   Gold was up 2%, etc. etc. – in other words, the Dollar went down and all the things priced in Dollars went up but, notably, not so much the equity markets.  In fact, if you look at the S&P and divided it by the price of oil over the past few months, you get a very disturbing trend:

In fact, since the election, we've lost 17.3% of our buying power and, for the year, 1/3 of our buying power has disappeared while the stocks have "rallied" to record highs.  This is what happens in inflationary times – your portfolio may go up in value but, when you try to convert it to Dollars and then try to buy something useful with those Dollars – you find that you've fallen very short. 

Why the sharp loss of faith in our currency yesterday?  Well, after waiting for two months for Trump to give his first press conference, he said nothing of substance.  No infrastructure program, no jobs program, no agenda at all other than repealing Obamacare and that comes with no particular plan to replace it – which could be a disaster for 20M people who will lose their health care.  

Then there are the economic issues in the US that the market has been ignoring:  Wells Fargo (WFC)'s take on the ICR Retail Conference sums it up nicely as they call the entire Retail
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