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Today, I'll be talking about the U.S. dollar.
I think this is very important...
So, please listen up.
The U.S. dollar's ongoing rally is creating new problems across the globe. Sri Lanka might not mean much to you, but it's currently struggling to pay its debts - denominated in dollars.
There's not JUST one...
The nations with the high default risks now include El Salvador, Ghana, Tunisia, Pakistan, Egypt, Kenta, Argentina, Ukraine, Bahrain, Namibia, Brazil, Angola, Senegal, Rwanda, South Africa, Costa Rica, Gabon, Morocco, Ecuador, Turkey, Dominican Republic, Ethiopia, Colombia, Nigeria... and Mexico.
That's... a lot.
I'll break down what is happening during my show. This is one of the biggest trends of the next 18 months, and you need to learn how to protect YOUR money.
Now then, let's look at momentum today.
Momentum remains Red thanks to low volume and weak optimism.
That doesn't mean the markets can't keep ticking higher - Bull Trap?
The banks rallied on Friday, but I think it will be difficult to maintain that momentum. While it's possible that a recession is "priced in," I don't think that momentum can continue.
My watchlist includes GO, COGT, LLY, MGPI, MUSA, TAP, WBT, and TH.
My focus today is the banking, healthcare, and real estate sectors. So join me live at 12:30 p.m. today on Midday Momentum.
Chart of the Day: Raise Rates to Cut Rates
Forecasts for the Fed Funds rate have increased to 3.65 in January. The Fed reportedly has inflation under control as the economy faces pressure. Then...
The market expects that the Fed will start to slash interest rates to provide support to the economy. And this is the type of madness that makes my head hurt.
As I've said, inflation remains hot because of supply problems. And if the Fed crushes aggregate demand in the months ahead, we will have a combination of low supply and lower demand thanks to higher borrowing costs.
What happens when the Fed cuts rates - and we haven't solved our supply problems? Inflation returns. You can't lift aggregate demand if it outpaces an increase in supply.
That will push rates higher again as the Fed struggles to reach its 2% target. This will create some volatility in 2023, frustrated business owners, and extend stagflation.
This chart feels like a delusion to me.
Monday's Schedule
- Options volume has exploded around this Canoo (GOEV) stock thanks to its deal with Walmart Stores (WMT). If you ever see me driving one of these cars around, please contact my parents, because my dreams did not come true.
- Jeffries (JEF) hosts a semi-annual report on consumer finance and spending. There will likely be some chatter around Affirm (AFRM) and Sofi Technologies (SOFI). These companies are getting crushed this year.
- The National Association of Home Builders/Wells Fargo reports the July Housing Market Index. Economists think it will fall by a percentage point in July.
- Look for earnings from Goldman Sachs (GS), International Business Machines (IBM), Bank of America (BA), and Charles Schwab (SCHW).
During this negative momentum environment, we are looking for every opportunity to go short and capture some wins to the downside. If you want a hand finding targets or need to learn how to short, the World's Biggest Trade has you covered.
You can click here to get started today!
I'll see you for Midday Momentum at 12:30 p.m. ET, and if you couldn't catch our morning show, click here to watch a REPLAY.
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.