The trade of “selling America” ​​is receiving a lot of attention these days, but it seems that enough is enough.
Tariffs except EU were delayed one month (precisely: at least July 9), and it seems that we are obtaining the same type of history we have seen recently. First, a threat, then, the climb, followed by the delay, pressing the other side.
Where does everything carry? It is likely that trade agreements that have finally increased the level of tariffs. I already wrote about the implications for world trade (it will decrease), for stock markets (as they are likely to decrease according to commercial obstacles), and wrote about the fundamental implications for the US dollar (they are bullish, with a lower demand for foreign currencies given the increase in their purchase prices due to rates).
Tariffs willing to shrink world trade
Today, I would like to discuss another aspect that is not clear. This is the coordinated response of world economies to US tariff walks against independent reactions.
In conversations 1 to 1, the United States has the advantage: it is the largest economy in the world, after all.
But, if the rest of the world joined (or at least several important economies) and negotiated on the same front (like a union), the power would no longer be on the side of the United States. After all, despite the fact that the United States is the largest economy, it is not as large as several of the other great economies taken together.
The most harmful situation for the United States would be to have to negotiate with multiple economies at the same time that they are already making deals between them.
Trump knows this, so he is isolating the discussion. China was isolated first, and the entire focus load / rate was in it. With the arrangements instead, EU’s time has come. Maybe Japan comes next (with implications for Japanese Yen)?
Until now, it seems that this policy is working, at least as far as we know based on official communication. It is also possible that discussions are established in which the United States is not invited, but at this time the successful and direct interpretation seems more likely.
If this continues, the terms for the US will be more favorable, but it is likely that all world trade, world economies and world stock markets are successful due to “operating rates.”
This is how markets perceive the situation? At all.
It is “Sell America” ​​throughout the board. World actions work better than US stocks. Uu. And it was beaten since the rates were announced.
Does it make sense?
Did the United States cease to be the most powerful economy in the world after April? With the most powerful army? With the largest technological center in the world, ready to capitalize on the growth of AI (yes, the price of AI shares is probably too much, but the AI ​​revolution has only begun).
No, what happened was that the goods produced by the United States would be more expensive for US consumers. This will make them more expensive for US companies and US buyers. At the same time, the decrease in the demand for non -American products would also decrease the demand for foreign currencies. A lower demand for them means their lower values ​​(compared to the value of the US dollar). Therefore, the US dollar should move higher given the general increases in the rate.
But no, the emotional reaction had precedents.
Can the emotional reaction last to events? For some time, yes, but time is against this type of reaction, since the market is likely to reach its senses.
When? Perhaps when statistics can begin to arrive and we will see the first signs of deceleration. This could affect the actions and prices of the basic products, and by “affection”, I mean they could begin to decrease and then immerse themselves.
Doesn’t the USD worrying statistics affect? In 2008 and 2020, the worrying statistics benefited the USD: it was only after the impression of massive money that the USD decreased in 2020 was announced.
– Will the USD index not continue to decrease depending on what is happening with the markets emotionally?
No, at some point, enough is enough, and we have the technical analysis to tell us how far it is too far and where are the levels that are probably maintained.
The USD index approached its recent minimum, but does not seem to import, since this year’s fund was formed in a super strong support area. Only one of the following support levels would be sufficient to trigger an important investment and change the feeling, and we have no one but three of them. Here are:
– The ascending support line based on the 2011 and mid -2011 funds
– The 38.2% fibonacci recoil level based on the 2008-2022 rally
– The 61.8% fibonacci setback level based on the 2018-2022 rally
All this, while we are relatively close to the year, which is when the USD index tends to form main funds. I marked it in the previous table.
The USD index did not meet during the second consecutive month, which may seem bassist, but it is not. If you observe how the USD index performed before launching its greatest manifestations in the previous years, you will see that what we see is now in perfect melody with those patterns.
In each case, when we saw those main funds in the USDX, the precious metal sector and decreased deeply.
There is a case that is a bit different from the others: the 2021 background was a double background pattern, so what background should we take into account? In my opinion, the second, since it is seasonally aligned, that second fund was formed in May 2021.
We have been a long net, remember?
Before summarizing, I would like to emphasize something that many people seem to be wrong about my analysis. Namely, people sometimes say that I have been cutting, which is not completely true. There were some short local exchanges in gold and there were some long local operations in gold, but almost all the time in recent months and years, I have not changed gold at all. In fact, we have been long long for years through the portfolio insurance part.
Although I do not tell anyone how much they should invest, the previous report provides three sample portfolios (beginner, merchant and long -term investor), and have the following sample pesos:
– Beginner: 44.1% as insurance (with long gold), max. Loss by trade 0.1% of capital (therefore, even if the size of the operation was put to 300% of the above, it would still be a maximum loss of 0.3% of the capital)
– Trader: 17.6% as insurance (with long gold), max. 2% operation loss
– Long -term investor: 33.6% (being long gold), max. 1% trade loss
Yes, I am writing in my analysis about gold and mining stocks, and I usually write about gold, since that is the easiest way to discuss the perspective in the short or medium term. However, it does not mean that I think that being out of the gold market is completely a good idea! Or that if I am being bassist with gold, that I am cutting the gold, and not something else in the market of precious metals (such as miners or silver, which is the case at this time).
The conclusion is that, if someone followed by gold trade alerts, they are almost always net of long gold with periodic hedges through mining and sometimes other assets.
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