The economic headlines are ugly this morning, with durable goods off 0.4% versus the 3-4% gain expected. The chief culprit, of course: trade. Funny how no one wants to buy US goods and services when the dollar is higher than it’s been since 2002 — oh, and we’re launching a trade war against the rest of the world.
The last time exports stumbled this badly was the second quarter of 2010, which was also in the wake of a rapid run up in the USD.
This certainly reinforces our stagflation case, as both higher oil prices and higher USD, which have been used so effectively to prop up stocks, have painted the Fed into an ever tighter corner.
Let’s see… That leaves body-slamming VIX as the sole means of averting a strong sell-off today. Prepare for it to reach new lows in 3-2-1…
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