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January 2018
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Top story, dollar move and hidden correction

                The US dollar continues to make headlines as it falls against nearly every currency on the planet.  Headlines about Chinese officials reveling that they will be purchasing Gold as a hedge to the dollar will only propagate the challenges to the global economy.  It looks like we will be setting up for a commodity grab and emerging market run away bull market rally the next 3 months.  Short term outlook looks positive. 

                But that’s why we at Alphas Edge are the top dogs.  We see and understand what a limited amount of individuals can.  What is really happening is a hidden bear market correction of the US stock market.  The US stock market has been trailing the global market by a significant margin while simultaneously the currency has been taken to the back of the shed and beaten to a bloody pulp (and for good reasons).   This cannot continue indefinitely for the simple reason that the US is still the pillar (or anchor) of the global economy.  As long as commodities are traded (priced) on US dollars and the dollar is the only reserve currency of the world, the rest of the world will be falling into runaway inflation near the end of this year.

                The question is what the reaction of the world will be with the new problems that they will be facing in 3 months.  Will China step up their diversification of the dollar, buy gold at a faster rate and let their currency float?  Will emerging markets increase interest rates and cut government stimulus (investment) to fend off inflation as the US copes with new deflationary forces?  Will Obama fulfill his promise to the people and change the political system that has become so corrupt by lobbyists and special interest that it is no longer for the people but for the corporations?

                What ever happens, we recommend every investor to be hedged 25/25/25/25, betting 25 on US asset inflation, 25 on US bonds, 25 on emerging market inflation and 25 on emerging market high yield government bonds.  This strategy will assure you will make it through the next 6 months which we feel will be very dangerous and unsure times.  The fact is that pressure is building every day as the US markets remain stagnant.  When decisions are made to break this stagnation, the market will move violently in either direction.  The way in which it will move will depend on if the US dollar remains the supreme kind or will talks of a different global banking system materialize.

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