What will the winning currency trades be in this crash?

What will the winning currency trades be in this crash?

The Chinese dollar is probably getting devalued again. If the crisis happens in their housing sector, they’re screwed. Real Estate makes up 25% of their economy. They basically did the same thing the US did in the last crisis in 08. The developers got too over-leveraged and everyone realized house prices can’t only go up.

Xi knows it and needs to deflate the bubble.

Short term that means they’ll likely be backstopping the banks and injecting liquidity into the Chinese markets, which they’ve already done. This likely means they’re currency is going to get dumped on the FX exchanges.

But what about other currencies?

My belief initially was that commodities would do well after a deflationary crisis making commodity currencies like the Canadian and Australian dollar perform much better compared to the US. But in the initial parts of the crash, commodities are likely to get hammered due to slow downs in production in China. Iron, steel and copper are heavily reliant on Chinese developers and any downturn in development would cause a dip in those metals.

Gold I still think is going to be a great trade this next decade. Same with oil.

This is my dilemma: Is 140+ dollar oil going to be net positive or negative for the world? Will it force governments and the population to decarbonize quickly or will there be energy crises around the world while OPEC doesn’t increase production?

No one knows but it’s interesting to think about.

As economies develop around the world, they need more energy usage to keep up with their population. Right now, oil, coal and natural gas are some of the cheapest and most efficient means of powering countries. If that becomes too expensive, then countries have to turn to alternative sources of energy making those types of renewable energy sources more valuable.

On the other hand, investors will continue to pile into those companies and finance them because they’ll be generating significant returns on the market relative to other places.

So I don’t know. My sense is to just step back at this point. 

Buying oil now and seeing it rise to record highs above $140 would be nuts, but also not that surprising.

It’s happened before and if this crisis is bigger than the last, it could go even higher. Right now it’s probably a decent trade.

So do you buy some Canadian and Australian dollars? Probably some but it would be such a small % of the portfolio.

See this is the cool thing when you get to manage your own money – you get to decide what you want to do with it.

Currencies were such a foreign concept to me before I started learning about the market, but now they’re fun to think about. Need to start changing my news sources to more European and Asian ones to understand how they see the world.

This American centric way the media runs here in North America feels so toxic. It’s getting tiring. I don’t trust them anymore. I don’t trust the establishment to tell me the truth. They’re all lying.

Once you realize how the news actually works, how they focus on specific topics and distract you from the real issues, how can you take them seriously?

That’s why independent voices are winning. Look at Breaking Points. That’s such an incredible show that’s been built by two folks on either side of the aisle who are more interested in the real issues rather than the fluff the mainstream media pushes.

They tell you the truth whether you like it or not. It’s a no nonsense no bullshit kind of show that’s so refreshing in today’s environment of lies and corruption.

That’s what the US Fed feels like these days. It’s unbelievable how the mainstream media glossed over the fact the most powerful people dictating economic policies were buying their own portfolios with NO CONSEQUENCES.

A lot of Fed chairs have ‘surprisingly’ retired because of this scandal. Meanwhile they caused one of the biggest asset bubbles in US history and likely got out of the market at the top.

It’s incredible what a world we live in when you really start to understand how people operate.

There is corruption everywhere. This lie we tell ourselves that corruption only happens in third world countries on the other side of the world is bullshit. It happens every day in America.

Money controls everything.

It’s not about politics, it’s about money flows.

If you pay enough people to get into office and ‘donate’ to the right political candidates, you control how laws work.

Chamath said it best when he mentioned in his GSB speech ‘there are like 200 rich people in the world who control everything. My goal is how do I get into them?’

He’s right.

Of course all of these people are going to set up the world to make sure their families and kids are well taken care of, even if it’s not in the best interest of the people.

The problem these days is credibility.

People want someone trustworthy with a solid reputation that produces results over time.

That’s very hard to find these days.

People love to cut corners. They love to quit. They love to take the easy way out.

They also brag about themselves to hide their own insecurities.

It’s hard to find people that are so driven by results.

But that’s the interesting thing – when you do find them, go all in.

Watch them work their magic.

It will take time and there will be many failures along the way.

But they’ll get there.