Pick up the Bear Traps Report here:
Don’t miss our next trade idea. Get on the Bear Traps Report Today, click hereThis chart below is representative of what US economist got all wrong about Federal Reserve rate hikes in 2016. So many sell side firms start with the view of the chief economist and work down from there in terms of their view on interest rates, forex, credit and equity views for the year. So misguided.
What Did They Miss?
The dollar and all the global leverage tied to it, blew up the street’s view in 2016. Over the last 14 months, nearly every meaningful surge in the dollar has been followed by a substantial surge in equity market volatility, cutting the Fed off at the past in terms of their “lift off” plans.
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As you can see here, every major spike in equity market volatility over the last year was led by a surge in the U.S. dollar. Economists have been blind to credit risk (thanks to the easy money gravy train since 2008, there’s over $10T globally) tied to the dollar. In a consumed state, economist have been focused on lagging indicators like U.S. economic data. Credit risk vetoed the Fed’s policy path in 2016, economist never saw it coming. They were too busy lecturing us on U.S. jobless claims and the coming 4 rate hike of 2016. One sorry and confused bunch.
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