This month Jason Weaver discusses de-dollarization, narrow focused rally vs broad based rally and the economic clock.
DE-DOLLARIZATION
Process of substituting the USD as the currency used for trading commodities & other Goods & services
Since 1944, USD has held dominance in the global currency market as the world’s reserve currency
Many nations are looking for alternatives to the dollar to reduce their dependence on the US
Brazil & Argentina have discussed the creation of a common currency
UAE & India explore the use of rupees to trade non-oil commodities
Russia & Iran are working together to lauch a cryptocurrency backed by gold
For the first time in 48 years, Saudi Arabia said they are open to trading in currencies besides the U.S. dollar.
Despite these movements, few expect to see the end of the dollar’s global sovereign status anytime soon
NARROW FOCUSED RALLY VS. BROAD BASED RALLY
SPX is up about 7% this year, but the average stock is up barely 1%.
Narrow leadership tends to signify a shakier rally than one with a broader group of stocks participating.
SPX is a market cap weighted index meaning the largest companies’ performance carries more weight
The 20 largest companies in SPX have added nearly $2 trillion in market cap this year, versus $170 billion for the remaining 480 stocks
ECONOMIC CLOCK
The economic clock illustrates the cycle of the market.
Shows what is happening economically (outside of clock);
The emotions we may feel (Around clock in shaded grey);
Investors’ actions (inside the clock)
