Trade Wars and Market Bubbles Take Their Toll

Written By Outsider Club

Posted January 23, 2018

The dollar and Bitcoin continue to slide as global stocks teeter at record highs. Fears of a crash are growing among the global elite. Gold, however, continues to shine.

Dollar Drops… Again: The government shutdown further damaged an already-weak dollar. Prior to that, the Trump tax cut, which added $1.5 trillion to the national debt, and stronger global alternatives had taken a toll.

Bitcoin Bears Down: Bitcoin dropped another 7% Tuesday. It’s fallen more than 25% this year, and is now trading below $10,000.

Trade War: President Donald Trump has imposed tariffs on imported solar panels and washing machines, angering the domestic solar industry. The tariffs imposed on solar panels will start at 30% in the first year, and gradually fall to 15% in four years. Domestic solar installers expect the decision will ultimately hurt the U.S. solar industry, increasing solar panel prices, damaging demand, and eliminating 23,000 jobs. China, India, and South Korea will likely retaliate.

Global EquitiesDavos Elite Fears Bubble: With the World Economic Forum underway in Davos, Switzerland, leaders of Barclays Plc, Citigroup Inc., and the Carlyle Group are voicing concern about growing market bubbles and big-bank complacency — the same circumstances that led to the last financial crisis. Equities worldwide are already up more than $3 trillion this year.

“There is a numbness out there, there is an ambivalence out there that’s concerning,” said Citigroup Chief Executive Officer Michael Corbat. “When the next turn comes — and it will come — it’s likely to be more violent than it would otherwise be if we let some pressure off along the way.”

Anne Richards, chief executive of M&G Investments, agreed, saying: “If interest rates go up meaningfully over the next 12 months, there will be a bunch of people who have borrowed money who will not be able to pay it back. Those people are out there, and the markets are not, in aggregate, pricing that.”

Gold Gains Momentum: Gold prices strengthened throughout the government shutdown and continue to gain steam as the dollar weakens. They’ve moved higher for six straight weeks.