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Gavekal's Tan Kai Xian: 'Winners And Losers From A Widening US Trade Deficit'
Hello, Founding Members:
We had considered running a prediction piece on tomorrow’s POTUS Debate, and might even run something of a recap early next week (depending on how much substance comes from the, ahem, conversation). In lieu of that, here’s a detail-packed piece from Gavekal’s Tan Kai Xian (KX) on a topic we’re hoping the moderators will think to bring up tomorrow: the U.S. trade deficit.
It continues to amaze me how strong the U.S. dollar trades with this overhang plus the need for massive foreign funding of our budget deficits.
The main prop for the dollar right now, in my view, is a 5⅜% fed funds rate. Eventually, that’s going to come down and the dollar is likely to follow suit.
The Haymaker Team