USD vs Foreign Currency Sets Up Black Swan/Credit Event 2028-29
USD vs Foreign Currency Sets Up Black Swan/Credit Event – Pay Attention
This video will show why the US stock market continues to rally and the US Dollar continues to strengthen. It is all related to what is happening in China/Asia and much of the world.
The cheap US interest rates over the past 4+ years have allowed foreign borrowers to take advantage of localized demand for capital and the “Dollar Carry Trade.” When you can borrow USD for 2.5%, convert the USD capital into localized currencies, and use that capital to earn 20% or more – it’s easy to borrow as much as you can to make the extra 18% - right?
As long as there is no disruption in currency valuation levels and/or economic activities, it seems like a simple process for profits.
But when localized currencies collapse against the US Dollar, this sets up a very dangerous waterfall event. Now, the profitable USD carry trade is upside down from the start. It takes 25~35% more localized currency to repay the USD debt.
Additionally, consider that the performance of these borrowed funds may also be upside down related to profits. If the localized economy collapses and consumers are not buying, now you have additional downside pressure related to economic performance.
This is why the rush into USD-based assets and equities continues. The rally we see in the US indexes/stocks is almost “in the face” of the US Fed raising interest rates while trying to weaken inflation. It is almost as if the US Fed has acted in a predatory manner by raising interest rates – yet failed to understand the dynamics of the global markets.
The result will be a Black Swan type of credit event. Buckle up and prepare for it.
Follow my research and prepare for the biggest opportunity of your lifetime.
This video will show why the US stock market continues to rally and the US Dollar continues to strengthen. It is all related to what is happening in China/Asia and much of the world.
The cheap US interest rates over the past 4+ years have allowed foreign borrowers to take advantage of localized demand for capital and the “Dollar Carry Trade.” When you can borrow USD for 2.5%, convert the USD capital into localized currencies, and use that capital to earn 20% or more – it’s easy to borrow as much as you can to make the extra 18% - right?
As long as there is no disruption in currency valuation levels and/or economic activities, it seems like a simple process for profits.
But when localized currencies collapse against the US Dollar, this sets up a very dangerous waterfall event. Now, the profitable USD carry trade is upside down from the start. It takes 25~35% more localized currency to repay the USD debt.
Additionally, consider that the performance of these borrowed funds may also be upside down related to profits. If the localized economy collapses and consumers are not buying, now you have additional downside pressure related to economic performance.
This is why the rush into USD-based assets and equities continues. The rally we see in the US indexes/stocks is almost “in the face” of the US Fed raising interest rates while trying to weaken inflation. It is almost as if the US Fed has acted in a predatory manner by raising interest rates – yet failed to understand the dynamics of the global markets.
The result will be a Black Swan type of credit event. Buckle up and prepare for it.
Follow my research and prepare for the biggest opportunity of your lifetime.
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