29-04-2025
King Dollar's freefall will be vindicated by the awful payrolls data!
Matein Khalid
My idea of nirvana Xanadu and Lotus Land is an emerging markets strategy bull session in the Waldorf cigar lounge with two bros who can dissect the best money making ideas in EM FX, EM sov debt and EM equities in the dozen odd countries where we see macro fairytales and masala shorts in sectors/countries on the precipice of emerging nightmares from Brazil to Hong Kong, the macro stars are aligned for 3X payoffs in the right puppies!
The don't worry be happy mood on Wall Street will end with a traumatic impact for both King Dollar and the US stock market indices in the next week. Why?
One, corporate toplines have mostly missed their whisper/whimper numbers and revenues cannot be fudged. So the US economy was the HMS Titanic after it hit the iceberg even though Trump compounded its woes on April 2nd or Liberation Day.
Two, the end game of this decelerating economic cycle is a financial cardiac arrest, the reason the Vol Index is still at 25.
Three, I am stunned by the sheer scale of household bankruptcies, 90 day credit card delinquencies, disaster in new construction leasing ratios (below 50%), Joe Sixpack inflation distress and outright deflation in Shelter Cost, the largest component of the CPI. So JayPo is a monetary ostrich who is so mesmerized by tariff price shocks and his own ego cat fight with the MAGA muppets in the White House that he is at serious risk of fiddling while Rome burns, a de facto monetary policy Nero.
See also Financial panic sweeps at the speed of light
Four, Powell has forgotten that he should act as the lender of last resort during times of economic distress, the liquidity Mommy or Big Daddy if you prefer of Wall Street when the plumbing breaks down and asset markets face the big Chill. The Fed funds rate should be zero and not 4.25%. Rest assured it will get there once the market digests the scary implications of shockingly weak April payrolls (thank you DOGE) and a slump in Q2 GDP. Then ex King Dollar will truly begin its fatal kamikaze dive to my eventual target of DXY 70, which I share with the intellectual clowns, economists of the MAGA brigade.
Five, America is on the verge of a historic plunge in housing prices that will be no less traumatic than the events of 2008 even as office towers from San Fran to Chicago can be snapped up for 60 cents on the dollar. Those who missed my warnings to establish non-dollar hedges last autumn have now lost 10% of their wealth as the US dollar index suffered its first 10% fall in the first 4-months of a year since 1973. The human brain is genetically programmed by evolution to seek patterns and I would seriously use my brain to heed the distress signal it is sending me from the embattled ex-King Dollar.
Six, Trotsky said 'revolution is unthinkable until it becomes inevitable'. His words hold as true to the international monetary regime of 2025 as they did for the fate of imperial Russia that fateful October in Petrograd 1917.
See also The anatomy of Tariff Man's global financial crash!
Seven, Xi Dada is not responding to Trump's come-hither overtures on a trade deal and the orange man may well have to jet to Tiananmen Square to turn cartwheels and kowtow before the Politburo.
Eight, Trump's tariffs constitute the biggest tax hike in American history at a time when the economy was sputtering and corporate America and the consumer was bleeding to death with the thousand sword cuts after the Biden/Covid inflation. This is beyond dumb and dumber. I evoke the ghost of Prince Metternich after Napoleon murdered the Duc d'Enghien in 1804 – 'it was worse than a tragedy, it was a blunder'.
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