Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

US Dollar Strength Implications for Global Economies

Economics / Global Economy Nov 06, 2022 - 10:08 PM GMT

By: Nadeem_Walayat

Economics

US Dollar Big Picture

Ultimately the fate of the dollar bull market is to spike in a blow off top and then collapse in spectacular style, probably at a faster pace then it is currently going higher.

Now don't take this chart as a literal trend forecast as I don't have the time to undertake such a study right now but it is a rough picture of what I have in mind of how the dollar trend could play out. There will be plenty of time to define a forecast trend pattern over the coming years.


What does this suggest for US stocks ?

1. A falling dollar is bullish for stocks

2. A rising dollar is bullish for stocks

3. A rapidly changing dollar is bearish for stocks.

Currently we have a rapidly changing dollar, the stock market prefers the dollar to trade within a range which implies the next few years are going to be tough for the indices. So definitely seek to avoid index ETF's and such like. The less volatile the dollar the better for stocks, Which given the fact I expect the dollar to be volatile then that suggests it's going to be tough to see the indices soaring higher. It does look very similar to the dot com bust, of course it's not going to repeat but rhyme in some manner. It all depends on how orderly the decent of the dollar will be, history suggests it is going to be disorderly.

The dollar therefore suggests that the next few years are going to be tough for the general stock market indices to some degree, subdued, it's not going to be business as usual. we are in for something different, maybe somewhere in between that of the 2000's sideways trend and the raging bull market of the 2010's.

US Dollar Strength Implications for Global Economies

A strong dollar is bad for the global economy because for the USD to rise then demand for dollars exceeds supply, and the USD is the lifeblood of the global economy, probably the best measure is reserves as a percentage of GDP. The higher the percentage the more robust the nation is.

Reverses as a percent of GDP of Major Nations, US

  1. United States: $20.89 trillion - Does not matter because the US can PRINT DOLLARS!
  2. China: $14.72 trillion - 22.8%
  3. Japan: $5.06 trillion - 27%
  4. Germany: $3.85 trillion - 5.6%
  5. United Kingdom: $2.67 trillion - 7%
  6. India: $2.66 trillion - 17.5%
  7. France: $2.63 trillion - 6%
  8. Italy: $1.89 trillion - 7.9%
  9. Canada: $1.64 trillion - 5%
  10. South Korea: $1.63 trillion - 25%
  11. Russia: $1.48 trillion - 34% - US froze a large chunk of Russia's reserves
  12. Brazil: $1.44 trillion - 19%
  13. Australia: $1.32 trillion - 3.3%
  14. Spain: $1.28 trillion - 5.2%
  15. Indonesia: $1.05 trillion - 12.6%

Notable mention - Switzerland and Hong Kong 120%, Saudi Arabia 64%.

The lower the reserves the more financial power the US wields over a nation, for instance before Sri Lanka went bankrupt their reserves were 8.5% of GDP, which implies the US holds most western nations literally by the balls with only Switzerland able to chart it's own financial course. And then there is the EURODOLLAR market, which is the beyond the scope of this article to cover.

This article is an excerpt form my extensive analysis that concludes in detailed stock market trend forecast into the end of 2023 Stocks Bear Market Max PAIN - Trend Forecast Analysis to Dec 2023 - Part1 was was first made available to patrons who support my work.So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $4 per month. https://www.patreon.com/Nadeem_Walayat.

Recent analysis includes -

So for immediate first access to to all of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $4 per month. https://www.patreon.com/Nadeem_Walayat.

My Main Analysis Schedule:

  • UK House Prices Trend Forecast - Complete
  • Stock Market Trend Forecast to December 2023 - Complete
  • US House Prices Trend Forecast - 80%
  • Global Housing / Investing Markets - 50%
  • US Dollar / British Pound Trend Forecasts - 0%
  • High Risk Stocks Update - Health / Biotech Focus - 0%
  • State of the Crypto Markets
  • Gold and Silver Analysis - 0%
  • How to Get Rich - 85%

Again for immediate access to all my work do consider becoming a Patron by supporting my work for just $4 per month. https://www.patreon.com/Nadeem_Walayat.

And ensure you are subscribed to my ALWAYS FREE newsletter for my next in-depth analysis.

Your watching the British pound burn at the official rate of 10.1% per annum analyst.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2022 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in