Summary:

My recent trip to Las Vegas for The Freedom Fest provided some interesting lessons.  My observations that we are paying more for less were illustrated by the theft of my luggage,  as there are no more luggage security checkers in baggage claim exits.  Also, for the first time, major Las Vegas hotels are charging from $15 - $18 for parking.  This is causing hotel valet workers to lose money, as customers are less likely to leave a generous tip (or any tip) if they are already paying quite a bit to park. So the Las Vegas experience is changing; we're getting less for more money.  Prices are going up and wages are going down.

Taking Credit for Phony Statistics

This is the real U.S. economy. Forget about all these phony U.S. statistics. The real world reflects the truth about the economy and why Donald Trump is President.  I wish candidate Trump would come back; I would rather see the President questioning phony government statistics instead of embracing them. I'd like to see the President talking about the stock market being a bubble rather than a bull market and claiming credit for the increase.

Weakness in U.S. Dollar

The big story is the continued weakness in the U.S. dollar, in fact this morning the dollar index hit a new low for the year. It's now back in positive territory as I am recording this podcast, but the low this morning was 93.64 on the dollar index.  Remember, the dollar index rose about 6% between the election of Donald Trump and the Inauguration, and the reason for the rally was the optimism for economic growth as a result of tax cuts, de-regulation, fiscal stimulus and a tighter Fed.

Senate Backing Away From Repeal

At the time, I argued that that was nonsense, and so far I am being vindicated.  We're six months into the Trump Presidency and nothing has happened. They haven't even been able to repeal Obamacare, nor are they going to.  The Senate already backed away from the version that I said would not work.  Trump did a press conference yesterday talking about Obamacare, assuring everybody that pre-existing ban is going to stay. The very essence of Obamacare is that insurance companies can't charge sick people more for insurance than they charge healthy people. That's the essence of Obamacare that doesn't work and that's what Donald Trump and many Republicans want to preserve.

Preserving the Essence of Obamacare

Of course, in order to achieve that goal, they had to have employer mandates and penalties.  These are the only things the Republicans want to get rid of. But they want to preserve the very essence of Obamacare and that's the mandates and penalties were designed to deliver. So now they have to come up with another way to deliver the promise of Obamacare.

Currency Markets Get the Message

The point is, the currency markets have figured this out.  The dollar has dumped better than 10% since the Inauguration, but the stock market has made new highs. The Dow Jones is at a new high today; the NASDAQ hit a new high yesterday, so it's a disconnect.  The initial rally in the stock market happened for the same reason the dollar rallied.  The currency traders have connected the dots. What's the problem with the stock traders?  Why are they oblivious?

Dollar Weakness Spark Commodities

The weakness in the dollar is also sparking a rally in multinationals, in commodities.  Look at the move today in Freeport-McMoRan a major copper producer; that stock is up better than 13%.  Oil prices are coming back up; oil is up better than a dollar today. Emerging markets are strong.

Bullish Conditions for Emerging Markets

I have been saying that a weak dollar is extremely bullish for commodities. Why?