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Raoul Pal @RaoulGMI Founder/CEO - Global Macro Investor and Real Vision Group, Business Cycle Economist, Investment Strategist, Economic Historian, Traveller and Rum Drinker.. Feb. 20, 2020 1 min read

The Global Wrecking Ball - A thread.

The dollar, against every forecast for 2020, is exploding higher. If it doesn't stop soon (which I don't think it will) it will severely crimp global growth when it is already battered by a cyclical slowdown, tariffs and the Coronavirus.

The focus looks like it has shifted to Asia and the ADXY has started breaking down...

But the really big line lies below... this chart, as I have pointed out for a year or more, is very ominous...

The JPM EM Currency Index has broken south too...

The Aussie has gone...

$/Yen has probably broken out...

The RMB is about to break too...

Ditto the Korean Won...

In Europe, the Euro is at the biggest level of its life...

And the global slowdown in trade, especially with China, is even hitting Brazil. The big level is gone...

I honestly don't think anything can stop this. Even the central banks around the world have been flagging the issues with the dollar, based on technical and fundamentals.

The Fed will have cut cut rates as a first step, but it won't be enough.

Its going to take a regime shift to change this structural and dangerous dynamic. The dollar is going into a reflexive loop where new highs lower global growth, make the US more attractive and lower growth leads to the need for more dollars.

Ugly.

Bonds. Dollars. Gold. Bitcoin.


You can follow @RaoulGMI.



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