Rumors Are Flying But Here Is What Is Actually Happening

Rumors are flying but here is what is actually happening. Take a look…

May 15 (King World News) – Peter Boockvar:  That Bloomberg News story yesterday saying that the US wants to integrate a lower dollar in the talks with South Korea was informally denied late yesterday. Bloomberg followed its original story by saying “US officials seeking to negotiate trade deals around the world are not working to include currency policy pledges in the agreements, according to a person familiar with the matter.”

“After taking part in trade talks with China last weekend, Bessent said ‘there was no discussion on currency’ with the Beijing delegation. What’s happening behind closed doors in various trade negotiations is in line with these positions, according to the person, who spoke on anonymity to discuss sensitive matters. The administration wants partners to abstain from unfairly manipulating their currencies lower, but there’s no plan to mention such policy in any upcoming deals that could lower some of Trump’s initial tariffs, the person said.”

I wonder who this ‘person’ is but the direction of the US dollar is going to be more driven by foreign flows and they are seemingly exiting stage left to some degree and why I believe the dollar has been weaker and is again today notwithstanding the denial. And by the way, the Federal Reserve over the past few decades via QE, zero rates, etc… Is a grand manipulator too of the US dollar.

I’m sure it’s clear that from my writings I’m not a fan of tariffs so I’m going to continue to point out the unintended consequences of them. In case you didn’t see this article in yesterday’s FT, “Scrapping of Texas power plant projects places $5bn scheme at risk.” It said, “Companies have abandoned almost half the projects in a $5bn Texas program to fund gas power plant construction and prevent more electricity blackouts, as they struggle with ballooning expenses and supply chain delays.”

To quantify, “Eight projects, including those backed by Constellation Energy and France’s Engie, have been canceled or withdrawn from the state backed scheme to beef up energy supplies in Texas, which was hit by a brutal blackout in 2021. The companies blamed rising expenses, delays getting parts and uncertain revenue for their exits.”

We can count all the dollars that flow into the US via ‘deals’ and any reshoring but we’re also creating a higher cost structure in doing business in the US and should start counting what doesn’t get done because of that, what business is lost because of that, and what businesses are getting hurt because of that. Lower taxes, deregulation, the easing of permitting, etc…would have been a much more effective way of lowering the cost base of US companies to encourage more production domestically and better position US companies for exporting rather than raising the cost of imports. https://ft.pressreader.com/v99e/20250514/281638196101385

Bulls & Bears
Bullish sentiment continues to creep back into the markets with the pretty violent rally over the past month. Investors Intelligence yesterday said Bulls rose back above the level of Bears at 35.8 vs 32.1 last week. Bears fell to 30.2 from 33.9. The CNN Fear/Greed index closed at 70 vs 3 at the bottom. In the very volatile and fickle AAII survey, Bears still dominate but less so. They fell by 7.1 pts to 44.4 which is the least since early February while Bulls rose by 6.5 pts to 35.9, the most since late January.

Bottom line, nothing extreme here but note the typical human nature behavior as AGAIN, people get most afraid at the lows and most excited at the highs.

We now have the initial reaction to the US/China trade fight detente in terms of shipping costs and the rush to get stuff. The World Container Index for a 40 ft container saw the Shanghai to LA price rise by 16% w/o/w, by $423 in absolute dollars, to $3,136.

That’s the highest since early March. The trip from Shanghai to NY jumped 19%, by $704 to $4,350, the highest since late February. Expect further increases in the coming weeks.

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