Markets are trading off a bit here, as Dow 20,000 proves to be wonderfully elusive. Since everyone expected we’d reach 20k by New Year’s, we’ll probably never reach it at all.
Heading into 2017, it’s important to formulate a gameplan and prepare for any headwinds that might pose a problem for the stability of markets — else you’re just shooting in the dark — like morons.
Here are some things to pay attention to in 2017.
Trump’s anti-China rhetoric may start yielding some poisonous berries. Pay close attention to the USD/CNH and USD/CNY crosses. The FX markets will tell you all you need to know about China. Should you see their FX reserves shrink at the same time their currency drops, you know there is a flight of capital from China — which is bound to dry up liquidity and cause market dislocations. Remember, unlike our markets, the Chinese market is still traded and owned by ordinary people, traditionally weak hands. Plus, they’re so overleveraged, the slightest hiccup will literally destroy them.
The yuan is a constant downtick, which helps their exporters and pisses off Trump.
The US dollar index is at 14 year highs and continues to surge. Bad, bad, bad for US exporters.