Q: Hello Peter & Co
I’m paraphrasing here a synopsis of a couple of articles presented by Christine Hughes of Otterwood Capital. In 2007, Christine had forewarned her clients about the impending onset of the last financial crisis; and right she was.
“Since the 2nd half of 2014, coincidental with the collapse of oil prices, the US$ index started to breakout; and after a multi-week sideways consolidation, it has resumed its seemingly vertical ascent thanks to the release of the Eurozone QE plan.
Furthermore, the Bank of International Settlements had reported earlier that US denominated cross-border debt had reached $9 trillion ($7 trillion of which was non-US resident); many of these countries, who do not have a steady revenue stream denominated in US$, will now have to buy more US$ to make interest payments and pay back their debt. This demand drives the US$ further up.
What would add fuel to the fire would be a consistently strong US job market indicating a good economy. If and when the US raises interest rates, it will breathe fresh air into the already long-dollar trade.
It is impossible to tell ahead of time when the inevitable bust begins but begin it will; we are keeping our eyes open for any signs of stress in the system. For now, things are calm”.
What could a retail investor do to preserve the gains made so far in this 6-year old bull market?
Do you agree with this analysis? If you agree, what would you do?
Thanks as always
Antoine
I’m paraphrasing here a synopsis of a couple of articles presented by Christine Hughes of Otterwood Capital. In 2007, Christine had forewarned her clients about the impending onset of the last financial crisis; and right she was.
“Since the 2nd half of 2014, coincidental with the collapse of oil prices, the US$ index started to breakout; and after a multi-week sideways consolidation, it has resumed its seemingly vertical ascent thanks to the release of the Eurozone QE plan.
Furthermore, the Bank of International Settlements had reported earlier that US denominated cross-border debt had reached $9 trillion ($7 trillion of which was non-US resident); many of these countries, who do not have a steady revenue stream denominated in US$, will now have to buy more US$ to make interest payments and pay back their debt. This demand drives the US$ further up.
What would add fuel to the fire would be a consistently strong US job market indicating a good economy. If and when the US raises interest rates, it will breathe fresh air into the already long-dollar trade.
It is impossible to tell ahead of time when the inevitable bust begins but begin it will; we are keeping our eyes open for any signs of stress in the system. For now, things are calm”.
What could a retail investor do to preserve the gains made so far in this 6-year old bull market?
Do you agree with this analysis? If you agree, what would you do?
Thanks as always
Antoine
