FLASH UPDATE: The Dollar Rally Isn’t Over — What It Means For Risk Assets | Joe McCann
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Yeah. Sure. Thanks for having me back. Big fan of the show. So, you know, I think the biggest thing for me was what happened, you know, I would say December 17th, and then the Fed on December 18th. So December 17th, you basically had, from a technical analysis standpoint, this thing called a swing failure pattern in Bitcoin, but also, you saw the S and P 500 indices actually, you know, gap up and then fade down, which is also somewhat of a topping signal. You can kind of assume that makes sense because people are derisking ahead of the Fed because remember December 18th was the day of the Fed.
I agree with a lot of that. Something I've been trying to figure out myself is trying to discern the length of this tactical bearishness that you're describing. And for me, a lot of that has to do with trying to game out, okay, we've seen the Fed go from, you know, outright dovishness to this hawkish tilt last month, and now I'm trying to to contrast that with the tension of what we're seeing in the economy. So if the Fed is pivoting hawkish at a time where, you know, if we're starting to see a growth slowdown, that could be an issue. But if we're seeing resilient growth, them hawkish isn't as
Yeah. I mean, I would just look at the yield curve. Right? Like, historically, in a steepening yield curve environment that the market is instead focused on growth and less less concerned about inflation. I think the difference is, you know, the the Fed is not responsible for the the fixed income market, the the the treasury sector is, right, or the treasury in general. And we've had this bizarre distortion over the past couple of years with Yellen basically stuffing the market with bills and inverting the curve pretty dramatically. That's not normal because historically when you have an inver
I I totally agree with that. Another thing, you know, this this inauguration date just feels like this inflection point for markets where there's a lot of, uncertainty and premium kind of baked into a lot of different asset classes, and then it's gonna be really interesting to see the pivot point. And the 2 big ones, you already talked about the long bond, and also just the US dollar right now. They've both been surging. And I'm curious, like, do you view the inauguration as this this fade for the dollar moment where we we're seeing a lot of baked up uncertainty in terms of tariffs, you know,
Yeah. I mean, it's a great question because, you know, I mentioned this in my Twitter thread. There's a number of folks have been tweeting this, this you the the dollar index, DXY's kind of fractal from when Trump took office in 2016 relative to now and how it just faded, you know, kind of, after the 1st week of of the year. And we still could potentially see that. We are not seeing that at all. And in fact, you know, the dollar index, even as we sit here today, is continuing to rise in value. You're having some issues potential issues. I think they're probably somewhat overblown in the UK gil
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