USD

As headlines bulge with news of mid-term elections, high-tiding politicians trading climate focused soundbites across the sun loungers of Sharm El Sheikh, META layoffs and the blink-and-you-miss-it implosion of another crypto currency, the USD is starting to puff. To start, perhaps, a long overdue list lower. After a near parabolic rise YTD as the Federal Reserve went hard after inflation by unleashing the fastest hiking cycle in recent memory, the lights are starting to flicker. Lots of things matter across financial assets, but few things matter more than where the mighty greenback goes from here. The greenback and maybe QT, the historic slow-slow unwind of gargantuan Central Bank balance sheets that is supposed to pick up into the fast approaching global recession. Many suspect that the Central Banks will never get to lighten the load much, that the hissing will turn to a pop and then a very loud bang will make the mandarins hold an emergency weekend meeting and announce some sort of plan that will basically involve more monetary magic. So far, it is reported, the Fed has pared the ledger by $240-odd billion which is about 3%. So not very much. The rampant dollar meanwhile is hammering overseas earnings for those that have them, and hammering those overseas that are being forced to dump their US Treasuries to save their own backsides. With interest payments on the debt going up, and tax receipts going down as the economy slows, there appears to be a massive hole in Uncle Sam’s books. Who then, is going to fund the knee-knocking trillion+ deficit when once reliable overseas buyers have now all turned sellers as they fight to stave off a currency collapse at home courtesy of a bulled up dollar? Answers on a postcard.