Just a few weeks ago, most pundits were in agreement – the dollar was doomed to fall into the basement. The Fed was openly pushing the idea of negative interest rates along with Biden’s plan for a whopping $2 Trillion ‘stimmie’ package for the pandemic-hit economy. On paper, the dollar appeared doomed as the world was preparing for a tsunami of dollars to be unleashed into the global economy.
But as I wrote in early January, traders had built up a record short interest in the dollar and I believed it unlikely it had a lot more to go on the downside. In fact, I was looking for a selling climax that could pave the way for a ‘surprise’ advance that would force many shorts to cover in a classic short squeeze. And that forecast has been entirely correct – here is the latest chart
My first major target is the 94 region with higher potential.
I believe large profits will be made in the US Dollar this year – and VIP Traders Club members are already with long positions. We are short EUR/USD, long USD/JPY and others.
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Further thoughts on the ‘climate crisis’
Last week, I mentioned almost in passing that the ‘climate crisis’ scare is an entirely man-made phenomenon. Perhaps not surprisingly, I received no hate mail afterwards. I can only assume all of my readers are with me on that. It is most definitely not supported by the evidence, so far. And just the other day I came across this instructive chart showing a plot of CO2 emissions and a measure of the earth’s temperature over a 2,000 year period. The CO2 data is from ice core measurements up to very recent times and after that, instrument data is from the top of a (dormant) volcano in Hawaii.
In the early years of the first century, the temperature dropped from the warn Roman (in UK) period to the lows around 500 AD from where it warmed up again into the ‘Medieval Warm Period’around 1,000 AD. It then plunged into the ‘Little Ice Age’ to the 16th Century lows when Ice Fairs were held on the frozen River Thames. It has been rising ever since but at a very moderate pace.
But note the performance of the global CO2 concentrations – it remained highly stable until the dawn of the Industrial Revolution around 1750 – 1800. So how can you explain this if it is the rising CO2 concentrations and CO2 alone that is responsible for the earth’s temperature swings, as held as a Golden Rule by all climate ‘scientists’? Since the Year 1 AD, the earth has gone through two very cold periods and one very warm period spanning a median temperature swing of 1.1 degrees. Yet CO2 levels did not budge one iota in this period. I have not found one climate ‘scientist’ who can explain this. That is some greenhouse gas if it has no effect on temperature!
Any open-minded person – and proper scientist – would of course conclude that CO2 had no influence on the earth’s fluctuating temperature for 1800 years. Now that CO2 levels are rising sharply, temperature is rising but that is likely to be the natural variation that has been present since at least the Year 1.
The alarmists have convinced the world that a rise of 1.5 degrees will wreak havoc around the globe and every effort must be made to try to prevent that. Where is King Canute when you need him? Trillions of dollars are necessary, they say. I mentioned last time one major roadblock is there in the form of lack of charging points for EVs for flat-dwellers.
The earth’s climate is a highly complex system with many forces at play – some of which we do not understand at all, such as the formation and impact of clouds on weather events and climate in general. It is the perfect means of scaring the susceptible population because every extreme weather event can be due to the ‘climate crisis’ with no means to refute this claim!
But until someone can rationally explain the conundrum above, I will maintain my sceptical stance and suggest that the next major economic contraction will likely go hand-in-hand with the general realisation that the ‘climate crisis’ is not real after all and the gigantic costs of the conversion away from cheap and very effective fossil fuels will bankrupt the global economy – and all for nought.
Stocks still in bullish mode – for now
Yesterday, the week closed out on a strong note. There has been a major divergence between the Dow and Nasdaq for some weeks with a general rotation out of tech into ‘value’ (if you can call it that when P/E ratio of the S&P remains highly elevated). Here is the Nasdaq
which shows the dilemma I am in on the short term – is this another three down correction to the on-going bull market, or has the sharp break of the trendline signaled a trend change? This chart demonstrates the reason I have not been trading this index of late, except for the scalp short trade off the Feb ATH.
But other data shows that the appetite for rampant speculation is now faltering. Yesterday, shares in Viacom – a US challenger to the streaming giants such as Netflix – fell out of bed with a thump
They had been pushed up from the $20 area to $100 during the lockdown- enforced TV watching binge phase. But reality suddenly dawned that perhaps they had little chance against the streaming giants. As is well said, speculative shares climb the stairs slowly and fall out of the window rapidly.
Also, call option buying is dropping from the exuberance of last month. And Tesla shares – that poster child for the doomed EV revolution – were off by 40% on March 5 and have managed a small counter-trend bounce in a fourth wave that should lead to fresh lows soon.
I shall be looking at any near-term rallies as reason to look for short trades.