Weekly Note – Dollar Deliberations

Dollar Deliberations

Good Morning,

I am hurtling across the Italian countryside worried about the dollar. Why is the dollar on my mind here in Italy? Well because the Italian bond market – being a “risk on” trade — is highly correlated to the dollar. So when the dollar is rising because the world is worried about risk or is changing its view on US fundamentals, Italian fixed income does badly. And given that this is a significant debtor country, any wobble in Italy — two weeks ahead of a crucial referendum, no less — is not good for the already battered EU project.

Let’s talk focus in on the dollar, because what Mr. Trump is going to preside over is a late cycle Keynesian expansion — the type of policy we expect to get eight months before a recovery, not eight years into a recovery!

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GM360 Note – 18th November 2016


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Categories: Daily Note