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Strategies & Market Trends : John Pitera's Market Laboratory
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To: robert b furman who wrote (18740)2/24/2017 3:22:49 PM
From: John Pitera2 Recommendations

Recommended By
robert b furman
roguedolphin

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The USD index is currently dead in the water as it has huge crosscurrents... the same came be said for the EUR/USD and it's by far the largest weighting in the USD index.

The USD has a positive tailwind with positive interest rate differentials (higher short term interest rates in the US compared with the ECB, Japan, several of the Scandinavian currencies etc.

The USD broke above it's 2 year highs of 100.71 and 100.60 and made it up to 103.82 area before falling 400 basis points and then having a lackluster corrective rally that is currently stalling at it's 50% retracement.



One might have expected a stronger USD performance when it broke out above the 2 year resistance zone..

However, in the bigger picture the USD Index hit it's major .618 retracement at as it got to the 103 level from the entire bear move down from the 120.22 high in 2001 to it's bear market low of

.

The Euro which started the year at 1.04 has also had a 400 basis point move up to the 1.08 are and has fallen back to the midpoint at the 1.06 level.



Gold and silver continue to rally and wouldn't you know it GOLD is at it's 50% level of it's decline since July of 2016.



and the 10 year note and 30 year bond have been rallying in price and declining in yield, at the same time



It will be interesting to see if the Japanese Nikkei breaks down out of it's symmetrical triangle.....



POTUS's address to the full session of Congress.... shall it be a binary outcome.... which provides additional animal spirits for the stock market and risk assets generally or be short on specifics and disappoint the voters and investors.

The administration should do the brilliant move and put tax restructuring both corporate and personal as the #1 priority and put together a package that can generate 3+ % GDP growth... 4 % would be excellent and would enable other possible things to be done later this year.

Special priority should be made to enable US companies to repatriate the Trillions of Dollars of Currency reserves held overseas. I believe the number is probably more like 4 plus trillion dollars.

If I were talking with Trump, Bannon , Wilbur Ross or Steven Mnuchin I would emphasize that congress repeat what they did in 1986. Which was a 1 time offer for US corporations to repatriate USD from overseas at a .0625% tax rate which is what they did with Reagan as President and Tip O'Neil heading Congress.

It can even be promoted as the coming together of both parties in the same way that those 2 political titans of the 1980's did in 1986. Possibly put a few stipulations that the money can not go for stock buy backs and instead be used for capital asset expansion projects.

The administration should shift priorities and make tax restructuring #1 and get it done and then move on to adjusting the ACA, which is a quagmire and the numbers are not going to add up with the added benefits of pre existing conditions and kids able to stay on parents insurance until the age of 26.

John
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