If USD devalues, wouldn’t that put upward price pressure on oil/gas prices in the us?
When you get to 2nd and 3rd order effects…it just becomes impossible to prognosticate. There are just too many players and variables.
I think the US is now the largest oil exporter in the world (due to shale) so if USD FX tanks, that could possibly affect prices as demand for oil might go up abroad.
But then you also have OPEC, who can also respond to this by modifying its own output.
You can get all sorts of off-setting impacts which is why its better to stick to easier to follow strategies.
For a lot of the stuff they’d like to substitute internally, the timeline to do it is likely 2-3 presidential terms. Seems quite implausible to me.
This is precisely why its bonkers. Moving supply lines and re-skilling lower skill domestic workers (I am being generous here) would take decades.
And its also why they are very likely to damage the US economy for very little gain.
My personal view of this is…is that this is all a smokescreen for massive economic grifting.
Disaster capitalists love this sort of extreme volatility. They can make a lot of money if they are told the direction of travel.
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I’m 20% gold now, channeling my inner Rickson, plus 5% silver and lots of SGOV less than 10% equities
Not to be a whatever, but are we sure it’s settled there or is it just pausing?
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It could get much worse but that is going to depend on the next set of tariffs. I did posit about 5k or so if Trump kept on going.
Given Trump’s personality, I can definitely see this lasting quite a few more rounds.
There will be lags of course (because of inventories), so we could potentially be looking at this behavior extending all the way to the midterms.
The only thing that might make him stop is if inflation gets too high. The Congresscritters would face a much higher probability of losing their seats because of the damage that inflation was causing their constituents.
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I like the line of reasoning but it is difficult to tell because Trump is such a weirdo. For example, hawking Teslas in front of the White House is basically Trump’s dream job.
If we extrapolate that line out I think you’ll have been shown to be optimistic
Big time oof
At this point I wouldn’t be shocked to see another 10% drop by the end of the year
We always have next year! Or the year after that or maybe 2029
It’s known as the Real Broad Effective Exchange Rate (REER) and will get an update on Mar 20.
Putting this here in case I forget, but if the almighty dollar needs to come down doesn’t that mean a whole lot more upside for gold?
Since 1/1 the USD GBP went from 0.80 to 0.77 and USD EUR went from 0.97 to 0.92 so our dollar may have softened 4%-5% during that time, meanwhile gold is up 13%.
We’ll all be taking it up the REER
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Gold is normally a tried and tested defensive asset, but it looks like Trump wants to tariff gold imports.
If he goes through with that, the price will nosedive.
Might be time to deploy some dry powder. My taxable account is fairly conservative in part as this is flex money I might spend down for a few reasons in the next few years, including college, and in part as the market was looking frothy the past year.
It’s about 30% TBIL right now and have some cash I need to move over on top of that. I should try to get down to about 10% TBIL. Might be a good time to lock in some longer term bond yield. I tend to keep this in ETFs that pay a decent dividend and keep vol low, but need to keep in mind marginal tax rates on DIV vs INT. SCHD/SPHD is looking a lot better now from that perspective. LVHI has remained high as the dollar dropping has offset some of the market declines, and I think I have enough there already. XLE (Energy) could be a decent sector to target as well.
I can shift some of the new money more into growth as well as the pot has grown beyond any flex money needs of the next 3 years, but I think I would like the markets to settle a bit before going there.
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I am completely out of US Equities.
Cash/Bonds + European stocks
From FT:
1% knocked off US real GDP is massive. Thats about 40% of US economic growth in 2025.
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Here’s the chatgpt summary of the full article, but I think the last (8), conclusion, bullet point says it all:
1-7
How the US Economy Lost Its Aura of Invincibility
-
Shifting Market Sentiment
• Initial optimism under Trump’s second term, driven by deregulation and tax cuts, has faded.
• Investor confidence has been shaken by policy unpredictability, particularly in trade and government restructuring.
• The S&P 500 has fallen 4% since the start of 2025. -
Trade Policy Disruptions
• Trump’s aggressive trade policies have targeted key partners:
• Canada, Mexico, and China face severe tariffs.
• New tariffs impact $1 trillion in imports, possibly rising to $1.4 trillion.
• Corporations are unsure of the policy’s objectives—revenue generation, reshoring, or geopolitical leverage.
• Policy uncertainty is delaying investments and stalling growth.
• Retaliatory tariffs from Canada, the EU, and China further hurt US businesses and households. -
Business and Consumer Reactions
• Companies relying on imports face rising costs, while exporters suffer from retaliatory tariffs.
• Leading firms, such as Mattel, are not shifting production to the US, citing cost concerns.
• Consumers are feeling the impact:
• University of Michigan’s consumer sentiment index dropped 11% in March.
• Inflation fears are growing due to tariff-driven price increases. -
Government Workforce Cuts and Disruptions
• Elon Musk’s “Department of Government Efficiency” has overseen mass layoffs and grant cancellations.
• Republican Party divisions and federal court rulings have complicated these efforts.
• Workforce uncertainty and reduced public spending contribute to economic instability. -
Market and Economic Growth Concerns
• Some investors see long-term benefits in reducing government spending.
• Others worry about economic slowdown:
• The IMF has revised US growth forecasts downward.
• The Federal Reserve Bank of Atlanta’s tracker suggests a first-quarter contraction.
• Treasury Secretary Scott Bessent argues slower growth is a necessary “detox period.” -
Global Competitive Landscape
• Europe is attracting renewed investor interest:
• EU countries are increasing investments in defense and infrastructure.
• European stock indices are outperforming US markets in 2025.
• China is emerging as a tech competitor:
• AI advancements challenge US dominance.
• Planned satellite constellations threaten Musk’s Starlink. -
Dollar and Market Performance
• The US dollar has weakened in early 2025.
• The MSCI USA index is down 4.4%, while MSCI Europe has risen 7.7%.
• Investors are reconsidering US exceptionalism.
- Conclusion: A Wake-Up Call
• The combination of trade wars, government upheaval, and global competition is eroding confidence in US economic dominance.
• As one investor put it: “People are realizing that US exceptionalism might not be that exceptional.”
Yet another data point for growth prospects in Latin America. Ya’ll are missing out by investing only in the USA. Particularly, note the market/GDP ratios for Brazil and Mexico.