Here is the video from my BNN Bloomberg interview this week. We talk about the implications of a weaker US Dollar, including what that would do to stocks, emerging markets, metals and others. I've been waiting for it all year. But think about it. We've already seen some of the things we would expect to see in a weaker Dollar environment. Gold strong, for example, and an inability for the Euro to go lower. So for me, I think this Dollar fall is just getting started.
The US Dollar has frustrated the majority of market participants this year, particularly if they're only looking at the US Dollar Index.
With that said, we've been focused on other US Dollar pairs that aren't getting much attention but are trending well and providing us with plenty of opportunities.
Paul Ciana and I go way back to 2006 when him and I were studying for the CMT exams together. Today, Paul is the Chief FICC Technical Strategist at Bank of America Merrill Lynch Global Research. In English, that means everything outside of equities. It's nice to see your friends succeed and watching him crush it is definitely one for the good guys.
A big theme for me this year has been the US Dollar and how it will impact stocks as an asset class. The thought process coming into 2019 was simple. The Dollar had rallied throughout 2018 to reach some pretty critical levels. The idea was that if the Dollar was going to rip right through there, it was more than likely happening in an environment where investors would be fleeing to safety. That's the type of market where stocks are selling off. The opposite of that argument was that if the Dollar was not breaking out, that stocks would likely be doing well, both in the U.S. and more importantly globally.
Most of the Commodities and Currencies we track continue to lack a long-term trend, but I want to outline a few charts in the space that are notable right now.
If the US Dollar is falling, International Equities trading via US listed ETFs should outperform US Stocks. When the US Dollar is rising, International Equities should underperform US Stocks.
Sounds like a logical relationship, but as usual, it's not that simple.