Fed Pulls USD Strings – Puppet Show Goes On

How long have I been going on about “tapering impossible”, U.S recovery a sham, QE to continue, Fed to destroy the Dollar, blah, blah, blah, you’ve heard it all before, a thousand times again, over n’ over n’ over, yes Kong we get it , by all means why not tell us how you “really feel” – right?

Ok.

So we’ve seen Bernanke make his exit, and now we’ve got Yellen at the helm.

Keep in mind, the position of “Chairman of the U.S Federal Reserve” is likely one of the most, if not “the most” economically and financially influential positions on planet Earth, akin to “god” – or at least to you humans so……changes in U.S Monetary Policy effect each and every country on this planet – in some way or another.

With two straight months of “-10 billion dollars” in supposed “tapering” – why aren’t stocks falling? Why aren´t bond yields ripping higher? Why hasn’t the US Dollar shot to the moon on safe haven flows?

Because it’s never gonna happen that’s why! And to my absolute shock and surprise…the market already knows it!

Taking the bait, and again “trading what’s in front of me” sure…I’ve spent a good 3 or 4 days looking at “long dollar strategies” ( as much as it’s pained me ) then BAM!

We pretty much saw the USD fall out of bed over the past two days, crossing significant areas of support and signalling / suggesting “considerable downside” ahead. Can you believe it? Already?

It looks pretty plain to me that markets have absolutely “no faith or belief” that the Fed will stick to its guns and continue with tapering, and that if anything “yes indeed” more QE and money printing await – just around the bend.

That being said, it’s quite likely the U.S Dollar will take a bounce here sure, but – I will now “reframe” this as a “bounce” and NOT a fundamental change – reflecting “any change” in my long-term views being that the U.S Dollar is toast, and that the Federal Reserve will continue to print / devalue until the absolute end.

I’ll likely use any strength in USD next week to “gracefully exit” a couple of positions, so if it gets another “zig before the zag” I see the good ol 200 Day Moving Average up around 80.80 as good a place as any.

We’ll need to take another day or two to see what it means for stocks and “risk in general” but as it stands…and as hard as it is to believe well…..ya you know.

The Dollar’s Death Spiral: Why This Time Is Different

Let me be crystal clear about what we’re witnessing here. The market’s reaction to Fed tapering isn’t some temporary hiccup or confusion – it’s the beginning of a fundamental shift that’s been brewing for years. When you see bond markets shrugging off $20 billion in supposed quantitative tightening like it’s pocket change, you’re looking at a system that knows the game is rigged from the start.

The Fed painted themselves into a corner the moment they started this whole charade back in 2008. Every time they’ve tried to normalize policy, every time they’ve attempted to step back from the printing press, the markets have called their bluff. And guess what? The markets have been right every single time.

Why Yellen’s Fed Will Fold Like a House of Cards

Yellen inherited a mess that makes the 2008 financial crisis look like a minor accounting error. The U.S. economy isn’t recovering – it’s on life support, and that life support is called quantitative easing. Remove it, and the whole thing collapses faster than a dot-com stock in 2000.

Here’s the reality that nobody wants to admit: the Fed has lost control. They’re not driving this bus anymore, they’re just along for the ride. Every piece of economic data that comes out reinforces the same basic truth – without massive monetary stimulus, the U.S. economy grinds to a halt. Jobs numbers? Manipulated. GDP growth? Artificial. Consumer confidence? Built on a foundation of cheap credit that’s about to get a whole lot more expensive.

The Technical Picture Tells the Real Story

Look at the charts and you’ll see what I’m talking about. The Dollar Index has broken through key support levels like they were made of tissue paper. We’re not talking about minor technical violations here – we’re looking at decisive breaks that suggest months, if not years, of downside ahead.

That 200-day moving average at 80.80 I mentioned? That’s not just a random number – it’s the line in the sand. If the dollar can’t hold above that level on any bounce, we’re looking at a scenario where USD weakness becomes the dominant theme for the next cycle.

Global Implications: When America Sneezes, The World Catches Pneumonia

The dollar’s decline isn’t happening in a vacuum. When the world’s reserve currency starts to crumble, every other market gets dragged into the chaos. Commodities will explode higher as dollar-denominated assets become cheaper for foreign buyers. Emerging market currencies will see massive inflows as investors flee dollar-based assets.

But here’s the kicker – stocks might actually benefit in the short term. A weaker dollar means U.S. exports become more competitive, multinational corporations see their overseas earnings inflated when converted back to dollars, and asset prices get inflated by the very money printing that’s destroying the currency.

The Endgame: Positioning for What Comes Next

This isn’t about being right or wrong anymore – it’s about survival. The Fed has shown their hand, and that hand is weaker than a pair of deuces in a high-stakes poker game. They’ll continue printing until the very end because they have no other choice.

Smart money is already positioning for this reality. Golden reckoning is coming whether the mainstream media wants to acknowledge it or not. Physical assets, foreign currencies, anything that isn’t denominated in dollars – that’s where the real value lies.

The dollar’s reserve currency status isn’t some God-given right. It’s a privilege that can be revoked, and the rest of the world is getting tired of subsidizing America’s spending addiction. When that privilege gets pulled, the dollar doesn’t just decline – it collapses. And based on what I’m seeing in these markets right now, that collapse might be closer than anyone realizes.