Is The US Dollar Too Strong?

Posted by on January 17, 2017 10:30 pm
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1/17/2017 – A negative day with the Dow Jones down 59 points (-0.30%) and the Nasdaq down 35 points (-0.63%). 

According to at least one market pro, President-elect Trump, it is.

Trump sends shiver through stock market with shot across dollar’s bow

In a Friday interview with The Wall Street Journal, Trump said the U.S. currency, which touched a more-than 14-year high about two weeks ago, has gotten “too strong,” especially considering the China’s yuan USDCNY, +0.0000%  is “dropping like a rock.” “Our companies can’t compete with them now because our currency is too strong. And it’s killing us,” he told WSJ.

The US Dollar proceeded to sell-off, but it might have nothing to do with the Trump remarks and everything to do with the dollars long-term technical setup. It has been declining since the beginning of the year.

There is a bigger problem here.

What about the stock market Mr. Trump…..is that too strong too?

The stock market is selling at Shiller’s Adjusted S&P ratio of 28.10. Arguably the second highest valuation level in history (if we account for 2000 earnings distortion).

Don’t bet on it. A few weeks ago President-elect Trump was quick to take credit for this most recent post election rally. Confusing cause and effect, and claiming that his pro business policies are behind the rise. Perhaps.

The biggest issue is not the Dollar or the market, but the fact that our future leader is meddling in all of this at the micro level.

It would be interesting to see if he takes credit when the market swings the other way. Just as it always does.

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