Opinions expressed herein are those of Brett Ewing and S. Lance Mitchell and do not represent those of Centaurus Financial, Inc.
Yellen Keeps Her End of the Shanghai Compact
- Janet Yellen & the FED have finally realized that the only way they can safely start to normalize interest rate policy in the U.S. is if they pay attention to the problems the dollar is creating in the rest of the world
- The continuing accommodative talk only adds fuel to the fire of recent speculation that Central Bankers struck a “Shanghai Compact” to coordinate monetary policy & weaken the dollar at the G20 meeting in February
- The “Shanghai Compact” proves that Yellen & other Central Bankers around the world finally realize that the only thing that matters for monetary global stability is the cooling off of the sizzling dollar
- If Central Banks can continue to walk the tight rope of coordination the dollar sell off should provide a major stimulus throughout Asia
- A reversal in dollar momentum should catch many investors offsides as allocations to emerging markets and commodities have reached more than decade lows and capital outflows from those areas reached 30 year highs at the end of 2015
- As dollar liquidity improves Asian export-based economies should see a major pickup in the short term from trade & in the long term an increase in positive visibility will give companies the confidence to increase capex spending
- We continue to believe there will be no rate hike in April & that Asian Markets should continue to outperform the U.S. markets in any environment that the dollar is moderating
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