⏳ Final hours! Save up to 60% OFF InvestingProCLAIM SALE

The USD Needs To Roll Over NOW Or We’re In Trouble

Published 06/19/2018, 12:52 AM
Updated 07/09/2023, 06:31 AM
US500
-
EEM
-
EWZ
-
DX
-
UUP
-

Last week the Fed announced it intends to hike rates another two times this year, with three more hikes next year. The Fed also announced that it will continue to increase its QT program with the goal of eventually withdrawing $50 billion in liquidity per month, or some $600 billion per year.

The market didn’t like this announcement, with stocks in a sea of red. This has raised the question: Is the Fed going to trigger a market meltdown?

How you answer that depends on who you ask. If you ask an investor in many of the emerging markets, the answer is, “The Fed already has.” The Emerging Market ETF is down 15% from its recent peak, while other specific emerging markets such as Brazil are down 20% year to date.

EWZ Daily Chart

That Makes NINE Straight Double Digit Winners!

Our options trading system is on a HOT streak, having locked in NINE double digit winners in the last four weeks.

Don’t believe me?

All of this can be squarely set on the Fed’s shoulders. Both the ECB and the BoJ are tapering their QE programs. The former will end its QE program in December, the latter… who knows? The point is, both are easing, while the Fed is hiking rates 3-4 times per year AND withdrawing liquidity to the tune of $30 billion per month.

My point is that while most Central Banks are easing, the Fed is TIGHTENING as if it’s dealing with runaway inflation. This is forcing the US dollar higher which in turn is putting the highly USD leveraged system under duress.

PowerShares DB US Dollar Bullish (NYSE:UUP)

UUP Daily Chart

If the Fed doesn’t figure this out soon, we could very well see the carnage of the Emerging Markets space spread into the S&P 500. I remain VERY bullish in the intermediate term, but the Fed could make things NASTY in the short-term if it doesn’t fix this,

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.