The week of July 15th remains as the highs in Dow and cries of a major crash once again have failed.
We have an oscillating consolidation trend which has held support and even China trade negotiations and Trump impeachment cries from the Democrats could not cause a crash. The general news ignores the liquidity crisis because it is taking place in the financial REPO market and its significance is the confirmation that the world is entirely fueled by political uncertainty.
Draghi leaving the ECB – Christine Lagarde will now head up the ECB – Boris Johnson did not act illegally in suspending Parliament for BREXIT – trade negotiations with China in an oscillating eternity – demands for Trump’s impeachment for asking Ukraine to investigate Joe Biden’s strong-arming Ukraine to put his son in charge of their energy in return for deals when Obama outright ordered the investigation of Trump during the election. This is all just madness.
With all the conspiracies to eliminate cash in Europe and in Australia, it should be a no brainer as to why dollars are being hoarded outside the USA. After all, 70% of all physical paper dollars are circulating outside the USA right now. It becomes the only alternative in a world outside the USA which routinely cancels their physical currencies. This is also creating a liquidity crisis as US debt is being held outside the USA. More importantly, the Fed is trying desperately to prevent rates from rising warning it has lost control and cannot simply lower US short-tern rates on a whim.
Just understand that volatility will rise again in October/November with a number of Directional Changes extending back to back into next April. The major turning point economically on the global level will come January. I do not see a major crash and a Dow month-end closing for September below 26910 will still warn of a retest of support for October.