Reminder: Devaluing The Dollar Is A Feature Not A Bug
Trump Tariff Terrors - Europe Addition Round 2
Reminder: Devaluing The Dollar Is A Feature Not A Bug
Japan Caused A VAR SHOCK Not Greenland
6700 Line In Sand
Trump Tariff Terrors - Europe Addition Round 2
Trump wants Greenland. Greenland is not for sale & they told him so.
Trump threatens Europe with higher tariffs. Some silly European leaders threaten the ‘nuclear option’.
No, not nuclear war... selling US treasuries!
Don’t bite. It would be a self-detonation if Europe central banks did that.
Cue Kathleen Tyson who helped build this treasury/payment system for Europe:
“US could take the hit much better than Europe could withstand retaliatory selling of gilts, bunds, and tresors! The potential for blowback in European rates and volatility is massive, systemically disruptive.”
However, that doesn’t stop individual banks/pensions/funds from selling US Treasuries. And we saw news of that today.
I also talked about these recent events premarket today with Jason of volland-dealer-positioning:
From these Trump tape bombs each weekend, to this expected Tuesday weakness post Friday’s OpEx to our expectation markets retrace back up after the Supreme Court decision is released Wednesday and with it VIX expiration/stabilization potential.
Then I jumped into my live trading room & gave reminded clients $SPX $6807 for target short today. Jason was closer; he gave $6795 as overshoot level & we closed at 6796.86!!
Reminder: Devaluing The Dollar Is A Feature Not A Bug
Europe will likely retaliate by increasing tariffs and aligning closer with China in response to this “America First/America Alone” agenda.
Both should drive the continued trend of US dollar de-dollarization.
Say what you want about Carney, but he summed it up extremely well in a speech at Davos today:
“American hegemony in particular helped provide public goods, open sea lanes, a stable financial system, collective security ... this bargain no longer works. Let me be direct. We are in the midst of a rupture, not a transition ... recently, great powers have begun using economic integration as a weapon. Tariffs as leverage ... “
I’ve been on this theme for awhile now:
March 7, 2025: BALANCE OF TRADE IS THE END GAME
“Central to that agenda is for the overvalued USD to fall - by a lot - if US exporters are to have a real fighting chance at competing abroad and incentive to invest in US production to support a major policy agenda of forcing US consumers to spend locally not globally. Tariffs are part-and-parcel to this investment & spending regime change.”
July 8, 2025: A CURRENCY IS ONLY AS GOOD AS THE ASSETS IT BACKS
“DB is out saying the dollar needs to weaken 30-35% to correct Net International Investment Position (NIIP) and Current Account imbalances.”
Because the US runs a trade deficit of size with foreign trading partners, financed by debt, foreign liabilities greatly exceed foreign assets held.
Changes in asset prices (like stocks and real estate) and exchange rates can significantly impact NIIP, but the largest affect to NIIP comes from currency valuation.
When Trump talks of balancing our trade deficit through tariffs - - like he did again today - he is trying to drive the value of the US dollar lower.
As Geoffrey and I have discussed and posted for many months, Trump’s plan of devaluing the dollar is a feature, not a bug, of his plain to maintain US exceptionalism through isolationism.
The end game is to avoid a US dollar & sovereign debt collapse.
