DXY daily
I spoke with Dale Pinkert of Forex Analytix earlier today about the Fed’s monetary policy, inflation and market outlook.
We first talked about the economic and social climate in South Africa because I was there last week and delved into the challenges the country faces, such as the scarcity of electricity, high crime rates, corruption and unemployment. It also highlighted the potential represented by the nation’s young workforce and abundant natural resources.
Then we moved on to the position of the US dollar and its potential impact on global markets. I think a crack in the dollar could stimulate the gold and stock markets, but I don’t think it will happen until late in the year or early 2024.
We’ve touched on the potential priorities for the Fed – fighting inflation or preventing a recession – along with Powell’s legacy. It indicates that a decision that triggers a severe recession could negatively affect the legacy of the central bank. The role of AI in the economy was also discussed, as AI is considered a deflator, which may mitigate inflationary pressures in the long run. Finally, the dialogue explores investment strategies amid these uncertainties. The speaker suggests buying from oil and copper producers, betting on a stronger US dollar, and taking advantage of the market panic related to the US debt ceiling.
European markets: Europe is showing signs of economic stress, citing job losses in the UK and weak business sentiment in Germany. They also point to ongoing energy problems, possibly related to shortages or high prices.
Copper and oil: I am bullish on copper for the long term, and think its value will be higher by 2025 or 2026. They suggest that while it may be possible to wait out a potential recession to buy at lower prices, they tend to buy more if prices fall significantly in the near term . They also discuss the oil market, which suggests that the risk-reward ratio is good at current levels, especially given the bear market situation.
Cryptocurrency: In South Africa and elsewhere, there is a lack of enthusiasm around bitcoin and cryptocurrencies compared to a few years ago.
U.S. dollar: I think the dollar has room to run over the next quarter, in part due to the strength of the US consumer market, which I think will prove more resilient than other global markets, perhaps due to higher savings rates and the strength of a 30-year fixed mortgage.
I hope you enjoy the video:
