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Where To Now For King Dollar?
This week's most important market story was doubtlessly the dollar, which fell the most in eight months to the lowest since April of last year.
The greenback's decline was, of course, a function of this week's most important macro story -- namely, favorable inflation updates out of the US, where the pace of consumer price growth slowed more than expected and producer prices slipped to the brink of deflation.
A weaker dollar is conducive to buoyant risk assets and easier financial conditions. S
Strengthening Dollar was exporting some inflation, so…
Ok, so producer prices are near deflationary. Ooooh. My friend the finger snapper is thrilled. In case you forgot, or missed it, this is the guy standing around his living room snapping his fingers like crazy. When asked why he claimed it was to keep away the elephants. When I pointed out that there were no elephants around he said, “See it’s working.” This is called “co-relation/delusion therapy. It took ten years and 18% Fed interest to rid us of inflation 40 years ago. If it only takes two or three years this time and only 5.25% interest then it seems to me Volcker over-did his medicine or Powell under-did his. If either thinks interest rate jacking is the inflation cure then it is highly probable then both of these guys are delusional elephant-chasing finger-snappers.