The Dollar Takes the Elevator Down

The U.S. dollar bull market hits a wall... Taking the elevator down... It's all relative... Caveman speak... Thanksgiving turkeys are double last year's price... 'Less bad' news for stocks... Don't miss Marc Chaikin's big prediction for 2023... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] The U.S. dollar bull market hits a wall... Taking the elevator down... It's all relative... Caveman speak... Thanksgiving turkeys are double last year's price... 'Less bad' news for stocks... [Don't miss Marc Chaikin's big prediction for 2023](... --------------------------------------------------------------- One of the biggest trends of the year seems to be over... I (Corey McLaughlin) have been talking about it for most of this year. I mentioned it again yesterday, but I want to make sure to emphasize the point in headline fashion... A stronger U.S. dollar – relatively speaking, compared with other major world currencies – has been a headwind for stocks and other assets priced in dollars for much of 2022. I know this idea might sound foreign or obtuse, but hear me out... You can think of the value of the U.S. dollar as an expression of central-bank policies and abilities (or lack thereof) here and around the world... In simple terms, a rising-interest-rate environment dictated by the Federal Reserve, along with declining (or at least plateauing) money supply, has pushed the value of each existing dollar higher... even though we know its worth keeps falling over the long run. That means all the things tied to those dollars have become less valuable. In fact, as we've mentioned a few times – and we cannot stress it enough – you could argue that an environment with a stronger dollar is one possible definition of a bear market... Since the summer of 2021, the dollar has been in a steady bull market... The U.S. Dollar Index ("DXY"), which measures the dollar against the euro, pound, Swiss franc, Japanese yen, Canadian dollar, and Swedish krona, was up 20% in the past 12 months through its most recent peak on November 3. That's a huge move for the world's reserve currency... and it has led to a cascade of effects, which we'll get into today. There have been some pullbacks during so-called "bear market rallies." But overall, the dollar has marched higher. And over the same period, stocks, bonds, and cryptos have been in a bear market. Even the price of gold has taken a dip, frustrating many. But over the past few weeks, the trend has reversed suddenly... or at least stopped. Going down... There's an old stock market saying – the markets take the stairs up, but the elevator down. Most people think of this in reference to the stock market in general, but you can apply it to anything that trades, even dollars themselves in the $2.5 quadrillion foreign exchange market. (Yes, quadrillion. On average, almost $7 trillion in currencies are traded each day.) The behavior of the U.S. dollar over the past year is a picture-perfect illustration... After a yearlong walk up the stairs, the dollar is currently on an elevator ride down, off 6% in the past two weeks. That's a big, fast move. And while this has been happening, the broader stock market has taken off, continuing the trend of these asset classes having a low correlation throughout this year. When one has gone up, the other has gone down. When stocks rallied in the middle of this year, the dollar took a breather. But it still remained in an uptrend above its 50-day moving average (50-DMA) and well above its 200-day moving average (200-DMA). These are simple technical measures of short-term and long-term trends, respectively. But that's not the case anymore. The DXY has broken through its 50-DMA and is sitting right near its 200-DMA. It's not always as straightforward as caveman speak... "Dollar up, stocks down. Dollar down, stocks up." But that has certainly been the case over the past year. And when a trend or relationship presents itself so clearly, it can be nice to just go with it when making portfolio decisions. It's because inflation – and inflation "fighting" by manipulating currencies – has been the big narrative driving markets all over the world. The U.S. dollar has been a main character in the story, enough to influence the earnings of all kinds of businesses and markets. Our Stansberry NewsWire editor C. Scott Garliss wrote about this [in his daily morning market commentary on Friday](. Scott, who worked for 20 years on Wall Street before joining Stansberry Research, said that hedge-fund managers often look at the dollar as a defensive asset in "times of distress" and that it has had a few more bullish catalysts going for it this year... Uncle Sam has never defaulted on debt. So when the financial world is in a meltdown, one of the safest places to hide is U.S. sovereign debt. That means money managers must cash out of other currencies to swap into the dollar. Then they can take that money and purchase, say, 10- or two-year U.S. Treasuries. In the current environment, there's the added benefit of the Fed raising interest rates. By doing so, it's increasing demand for the dollar. We could get into a bunch of details about the massive foreign exchange market and how dollar trades make up most of the action, but the most important point is that increased demand for dollars has a big influence on stock prices and markets of all kinds. As our colleague and Stansberry Research senior analyst Brett Eversole wrote in [the latest edition of our Portfolio Solutions products]( global energy markets are priced in dollars... and roughly 40% of revenues from the S&P 500 Index companies come from overseas. Brett also noted of similar dollar moves in the past and how stocks performed afterward... The last time we saw a similar dollar rally was 2014 to 2016. The dollar jumped more than 20% and put a major bull market on hold... This was square in the middle of a major, decadelong bull market. And while the dollar's quick ascent didn't squash that, it did press the pause button for nearly two years. The same thing happened from late 2009 to mid-2010. Stocks were soaring. But when the dollar jumped about 17% in six months, stocks cooled off. They fell 4% over the same period. All in all, Brett said the U.S. dollar has become a "wrecking ball for global markets." A stronger dollar means other currencies get weaker compared with the dollar at the same time American exports become more expensive. The British pound is down 11% compared with the dollar in the past year, even after rallying from the gilt crisis lows in September. The Japanese yen is down 18%. It's all relative... Yes, inflation is still at 40-year highs... Thanksgiving turkeys are more than double the price of last year on average, and people's paychecks aren't keeping up with higher prices. But inflation is still even higher in large economies outside the United States. Just today, U.K. inflation checked in just above 11%, up from 10% the month prior. Italy's consumer price index ("CPI") is at almost 12%, and Sweden's is around 10%. In the U.S., at least the headline inflation number is trending down, below 8%. As Brett wrote in last month's Portfolio Solutions... Currency moves are all relative. While the U.S. has plenty of issues, things are much worse overseas... Most European countries are experiencing double-digit inflation. The worst-hit nations are at 15% inflation or higher. Not to mention the war in Ukraine has European energy supply in question. There are similar issues in every major country on the planet. It's a mess. So the value of the dollar isn't increasing because the U.S. is doing great... It's increasing because everyone else is doing worse. And yes, interest rates in the U.S. have risen at an unprecedented pace (3% in eight months). But elsewhere, rates still likely need to go even higher for central banks to tackle their inflation problems. What has changed now... At the same time, over the past few weeks, various Fed officials have started to send signals to the financial media and markets about slowing the pace of interest-rate hikes to "only" a 50-basis-point hike at its next policy meeting in December. Whether that will happen or not, we don't know for sure. Some officials are also out publicly pumping the brakes on the idea. But the market has been reacting to the idea of a clearer ceiling for the Fed's benchmark interest rate around 5% from its current range near 4%. The market can work with that. That expectation might change like it did in September when the Fed released its latest economic projections. The next round is due in early December. But for now, that's what Wall Street is expecting. In reaction, the dollar – relative to other currencies – has broken down below its short-term trend and is trading near its long-term trend for the first time this year. The DXY hasn't been this close to its 200-DMA since way back in June 2021. As Stansberry Research analyst Mike Barrett wrote in [his latest update in Select Value Opportunities]( (available to Alliance members)... Martin Pring, a technical analyst whose work I've been following for decades, recently noted that the dollar's surge higher in 2022 had become overstretched to a degree that has only happened four other times since 1976, the last one occurring in 2015. Each time, the dollar subsequently reversed into a downtrend or moved sideways for several months. Separately, our friends at SentimenTrader.com report that the dollar's steep 4% decline in one week has only occurred seven times since 1971. After the previous six events, the buck continued to push lower every single time. That appears to be happening again... My take is this... I wouldn't be surprised if the dollar rebounds a bit from current levels. But I wouldn't rule out the elevator ride going lower. If you are looking for a short-term trade, you can find better risk-reward setups elsewhere than a bullish bet on the dollar. This is all "less bad" news for stocks and other assets, as our colleague and True Wealth editor Dr. Steve Sjuggerud would say when thinking about whether a new trend is starting or turning around. This aligns with the message our friend Marc Chaikin is now sharing... As [I wrote yesterday]( Marc – the founder of our corporate affiliate Chaikin Analytics – just went live in a brand-new online event with his big prediction for 2023... and his suggestion that we could see a bullish "personality shift" in the markets next year. This isn't to say we still won't have higher-than-usual inflation next year... or that a recession isn't in the cards. But Marc's point is that if you sit around waiting for the precise bottom, you might not ever see it... and you risk leaving potential gains on the table. In his new presentation, Marc described a brand-new strategy for finding stocks that could double, triple, or even quintuple your investment... even if the start of a new bullish trend isn't quite clear to the masses yet. He back-tested this method over the past 20 years to include massive stock sell-offs during the dot-com bust, financial crisis, and COVID-19 panic. And he identified patterns where stocks had the best potential to take off first after the crash. I think you'll be surprised to hear what he found. He's calling it a "new cash vehicle" that he believes could deliver outsized gains for individual investors who follow his guidance over the next 12 months. Just for tuning in to the event, you'll also get Marc's top buy recommendation right now – for free – plus the No. 1 stock to avoid. It's one of the most popular businesses in America, but Marc says its best days are behind it. [Click here to learn more now](. The West Against the Rest "It's the West against the rest of the world now," says Willem Middelkoop, Commodity Discovery Fund founder and best-selling author of The Big Reset: War on Gold and the Financial Endgame. [Click here]( to watch this video right now. For more free video content, [subscribe to our Stansberry Research YouTube channel](... and don't forget to follow us on [Facebook]( [Instagram]( [LinkedIn]( and [Twitter](. --------------------------------------------------------------- Recommended Links: [Here's What You Missed Yesterday]( Wall Street legend Marc Chaikin unveiled a new cash vehicle 50 years in the making... made his biggest new prediction in 50 years... and explained how it could double or triple your money if you move your cash immediately. [Click here to watch (includes free recommendation)](. --------------------------------------------------------------- [33 Times the Performance of the S&P 500!]( Lifetime cumulative returns as high as 3.5 million percent... virtually recession-proof and inflation-proof... everything you could dream of in an investment can be found in one extraordinary sector you've likely never considered. Find out EXACTLY which sector when Dr. David Eifrig, MD, MBA, delivers the most important message of his life. [Click here for details](. --------------------------------------------------------------- New 52-week highs (as of 11/15/22): Aehr Test Systems (AEHR), Biogen (BIIB), Covenant Logistics (CVLG), Chevron (CVX), Enerplus (ERF), Gilead Sciences (GILD), VanEck Oil Services Fund (OIH), Energy Select Sector SPDR Fund (XLE), and ExxonMobil (XOM). In today's mailbag, some kudos for our Ten Stock Trader editor Greg Diamond... and a reader points out a Twitter "fake"... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "Greg, I'm an Alliance member and want to thank you for your hard work. 2022 is the first year I've allocated part of my portfolio to your research and I could not be happier. Your recommendations have allowed me to recoup all of my losses over this past year." – Stansberry Alliance member Justin H. "In [[last Thursday's Digest]( you mentioned Ken Yafitdee's post about being laid off as Lead [Engineer] on Meta Quest. The account is fake and already blocked by twitter. There was never such an employee within Meta. "Would be great if it is corrected in a future Digest. I like reading them, don't want fake info to hurt its credibility." – Paid-up subscriber Tianyu X. Corey McLaughlin comment: Thank you for the note and for reading. You are correct. The post we quoted in our story about Meta Platforms' layoffs was indeed pulled off Twitter after we initially read it, which is a whole other story by itself... Fake accounts have become ubiquitous on the social-media platform, maybe more so since Twitter's new owner Elon Musk decided to give out "Blue Check" status for an $8-per-month subscription fee rather than being linked only to verified accounts of public figures. Since Musk's announcement a week ago, tons of parody accounts imitating real people and companies have been created – the only distinction between the real account and the fake being a small change in spelling – and tricked a lot of Twitter users. For example, pro basketball star LeBron James was one of the first to be imitated. A fake but "verified" account appeared to be [requesting a trade from the Los Angeles Lakers](. It wasn't true, but a lot of people thought it was. The Yafitdee post about being laid off from Meta was similarly drafted, this time without the blue check, and it was published in tech industry publications. So, lesson learned, remembered, and hopefully shared. Be discerning about what you read on Twitter. All the best, Corey McLaughlin Baltimore, Maryland November 16, 2022 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open positions across all Stansberry Research portfolios Stock Buy Date Return Publication Analyst ADP Automatic Data 10/09/08 891.2% Extreme Value Ferris MSFT Microsoft 11/11/10 865.0% Retirement Millionaire Doc MSFT Microsoft 02/10/12 742.2% Stansberry's Investment Advisory Porter HSY Hershey 12/07/07 516.8% Stansberry's Investment Advisory Porter ETH/USD Ethereum 02/21/20 462.1% Stansberry Innovations Report Wade BRK.B Berkshire Hathaway 04/01/09 449.6% Retirement Millionaire Doc AFG American Financial 10/12/12 443.7% Stansberry's Investment Advisory Porter WRB W.R. Berkley 03/16/12 387.7% Stansberry's Investment Advisory Porter ALS-T Altius Minerals 02/16/09 323.8% Extreme Value Ferris FSMEX Fidelity Sel Med 09/03/08 294.8% Retirement Millionaire Doc Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio. --------------------------------------------------------------- Top 10 Totals 4 Stansberry's Investment Advisory Porter 3 Retirement Millionaire Doc 2 Extreme Value Ferris 1 Stansberry Innovations Report Wade --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Stock Buy Date Return Publication Analyst ETH/USD Ethereum 12/07/18 1,113.2% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,098.1% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,060.4% Crypto Capital Wade MATIC/USD Polygon 02/25/21 876.4% Crypto Capital Wade TONE/USD TE-FOOD 12/17/19 420.6% Crypto Capital Wade Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio. --------------------------------------------------------------- Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios Investment Symbol Duration Gain Publication Analyst Nvidia^* NVDA 5.96 years 1,466% Venture Tech. Lashmet Band Protocol crypto 0.32 years 1,169% Crypto Capital Wade Terra crypto 0.41 years 1,164% Crypto Capital Wade Inovio Pharma.^ INO 1.01 years 1,139% Venture Tech. Lashmet Seabridge Gold^ SA 4.20 years 995% Sjug Conf. Sjuggerud Frontier crypto 0.08 years 978% Crypto Capital Wade Binance Coin crypto 1.78 years 963% Crypto Capital Wade Nvidia^* NVDA 4.12 years 777% Venture Tech. Lashmet Intellia Therapeutics NTLA 1.95 years 775% Amer. Moonshots Root Rite Aid 8.5% bond 4.97 years 773% True Income Williams ^ These gains occurred with a partial position in the respective stocks. * The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%. You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You’re receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. For questions about your account or to speak with customer service, call 888-261-2693 (U.S.) or 443-839-0986 (international) Monday-Friday, 9 a.m.-5 p.m. Eastern time. Or e-mail info@stansberrycustomerservice.com. Please note: The law prohibits us from giving personalized investment advice. © 2022 Stansberry Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Stansberry Research, 1125 N Charles St, Baltimore, MD 21201 or [www.stansberryresearch.com](. Any brokers mentioned constitute a partial list of available brokers and is for your information only. Stansberry Research does not recommend or endorse any brokers, dealers, or investment advisors. Stansberry Research forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Stansberry Research (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation. This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.