Chris Whalen, Chairman of Whalen Global Advisers and a very well-known financial analyst (he was one of the original forecasters of Lehman’s inevitable demise) appeared on MacroVoices podcast this week to discuss the equity valuations, the path of the US dollar and DoubleLine Capital founder Jeff Gundlach’s declaration that the 35-year bull market in bonds is dead. Some of the key highlights:
“Erik: I want to start with the US dollar because, you know, we’ve had quite a few guests talking up a secular bullish argument on the dollar and, boy, it really all sounds very compelling, but look at the chart. The dollar bulls – the chart is telling us dollar bulls that we’re wrong. So how do you see this playing out? What do you think is driving the weakness that we’re seeing in the US dollar? And does it represent a secular change in direction, or is this just a natural pullback in an ongoing bull market?
Chris: Well, you know, it’s hard for analysts to get their hands around the dollar because the old relationships, particularly interest rates and trade balances, which used to give you a good idea of where a currency was going to go don’t seem to matter anymore. So the dollar was rising against major currencies after the financial crisis, and particularly over the last four or five years, in large part because people were fleeing whatever country they were in and going to the perceived safety of the United States. So Russian oligarchs, members of China’s communist party, they sent trillions of dollars to the United States over the past five years. Much of it went into American real estate. They also like Canada by the way, because both the US and Canada protect property rights, and they have a reasonable degree of confidentiality when it comes to investment flows. So if you’re a communist party cadre in China and you’ve stolen millions of dollars, you want a safe place to hide it.
This post was published at Zero Hedge on Jul 30, 2017.