The currency wars may be about to claim its first casualty.
Russia and China have been talking about replacing the dollar as the standard for world trade for some time. That hasn’t worked out well.
While the Russian economy has hardly been brought to its knees by sanctions, Vladimir Putin has failed as totally in his economic ambitions as he has in his territorial ambitions (so far).
The dollar is stronger than ever.
Yet one country’s gain is another country’s loss. We head into this morning with the pound sterling plummeting.
King Charles III’s reign is already starting with a crisis… as Prime Minister Liz Truss may already be facing a vote of no confidence.
And just because the dollar is strong doesn’t mean that America will be safe from the economic storm engulfing the rest of the world. It’s going to have a major negative impact on the bottom line of many American companies, especially those that rely heavily on international markets.
There’s also a deeper loss of confidence in the Fed.
Remember, currencies and governments are really about confidence and credibility.
Wharton Professor of Finance Jeremy Siegel recently said in an interview that the last two years are “one of the biggest policy mistakes in the 110-year history of the Fed, by staying so easy when everything was booming.”
And Elon Musk said on Saturday morning that “Siegel is obviously correct.”
At a time of crisis, remember, come back to your technical toolkit.
These are the weapons you can use to win regardless of market conditions.
If you missed it, check out how I break down a possible developing trade below.
Even in a declining market, have a winning mindset. Let’s start the week on a high note.
Keep Moving,
Any strategy that makes you money consistently is worthwhile.
Though many new traders believe that trading is primarily about indicators and tools, Chris maintains that it is at least 95% about emotional control.
This is especially relevant in this bearish, choppy market which has made the trading world extremely difficult.
Learn some pro tips to come back from your losses and stay in the game.
WORD ON THE STREET
Italian Right Triumphs, Pound Falls, European Recession Underway
- Not So Sound As A Pound – The pound hit a record low when compared to the American dollar, sparking rumors of an emergency meeting of the Bank of England. Now worth just over a dollar, Bloomberg’s options pricing model reports a greater than 25% chance the pound will hit parity with the dollar in the next six months.
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Italy Turns Right – Italy will have its first female prime minister in Giorgia Meloni, leader of the “Brothers of Italy” party. The party delivered a crushing victory along with its right-wing coalition partners Lega and Forza Italia. The party’s far-right roots has some investors nervous but Meloni has been reassuring international leaders that Italy won’t make any sudden breaks from EU policy on Russian sanctions. However, some in her coalition might disagree.
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A Long Cold Winter For The Continent – Deutsche Bank warned last week that Europe is likely to face a recession because of the lack of energy provided from Russia. Reuters reports that energy prices, as measured by the benchmark Dutch wholesale natural gas prices, have increased about 300% since the beginning of 2022 – and that’s after they declined recently. If Europe gets a cold winter, we could see true desperation.
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An Optimistic Voice At The Fed – All right, that’s enough doomerism for one day. Here’s some old-fashioned American optimism. Raphael Bostic, head of the Federal Reserve Bank of Atlanta, assured the nation that the Fed was “going to do all it can” to avoid “deep pain” for Americans. He also said on Face the Nation that there’s a “really good chance” job losses will be minimal and noted “positive momentum” in the economy, allowing inflation to be brought under control without the country plunging into a deep recession. USA!
HOT SPOTS: What’s Going on in Geopolitics
- Russian Referendums Underway In Occupied Territory – In the Russian-occupied territories of Ukraine, referendums are underway for the areas to formally become part of the Russian Federation. The United States has said it will “never accept” the results of the votes, which many international observers say are fake and staged. The four territories are the Donetsk and Luhansk “people’s republics” as well as occupied Zaporizhzhia and Kherson. We may get the absurd spectacle of Russia warning Ukraine to stop attacking Russian territory very soon.
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Ukraine Vows To Reclaim All Territory – President Volodymer Zelenskyy said that the referendums taking place in eastern Ukraine were illegitimate and that Ukraine would reclaim all its territory, including Crimea. However, he also said that President Vladimir Putin is “not bluffing” when it comes to the Russian leader’s willingness to use nuclear weapons.
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North Korea And China Restore Rail Traffic – The Chinese government has drawn a massive amount of attention, mostly negative, for its “zero-COVID-19” policy. However, in a sign that things are loosening up, freight trains are once again running between the People’s Republic of China and North Korea. This marks the end of a five month suspension that brought trade between the two allies to a complete halt, devastating the already fragile North Korean economy.
CUTTING EDGE: What‘s Happening In Tech
- There’s Always A Catch – Seriously, we’re still doing this NFT thing? If people are going to jump back into that, Apple reportedly will allow Non-Fungible Tokens to be sold on its App store. However, as you might guess, there’s a big catch. Apple will take a 30% commission on in-app purchases. This is precisely the issue that Apple is facing litigation over when it comes to games.
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Musk Will Face Private Deposition – Elon Musk will be personally deposed as part of the proceedings in the legal battle over whether he can back out of his takeover bid of Twitter. It is planned to take place the first three days of this week – and it won’t be public. All this is just the precursor to the trial that will begin October 17 – and is scheduled to take only five days. The Delaware Chancery Court has a reputation for swift decisions.
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Facebook Whistleblower Starts New Nonprofit – Frances Haugen, a former Facebook employee who slammed the company’s practices after becoming a whistleblower, has started a new nonprofit, “Beyond The Screen,” to make social media “healthier.” It will create an open-source database chronicling what the group sees as the failures of Big Tech companies to live up to their “legal and ethnical obligations to society..
FOR YOUR CONSIDERATION
As much as some folks hate when Fed Chair Jerome Powell speaks, I look forward to it.
This isn’t because I’m a fan of his, it’s because I enjoy the volatility…
Turn volatility into an asset. With markets in disarray and traders panicking, this is your opportunity. Corey breaks down how you can use your technical toolkit and the news cycle to manage risk and trade the trend.
Learn how to win this game – regardless of what the market is doing or what the Fed is saying.
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