#982 - What’s Next For the U.S. Dollar? | with Dale Pinkert

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0:56What's next for the US dollar? Welcome to Real Vision Daily Briefing. It's Tuesday, February 27th, 2024. I'm Ash Bennington. I'm joined today by Dale Pinker, trading coach at TradeGate Hub. Dale, welcome back to the show. Oh, thanks, Ash. I'm looking forward to having a conversation with you on Turnaround Tuesday. Well, it's always a pleasure to have you on. Dale, let's harken back to the last time you were on Real Vision Daily Briefing. You were looking for 105 on DXY dollar index, of course. What do you see happening now? Okay, well, if you put the dollar index chart up, I think we were trading in the 102 level, and 105 was a technical area a little bit above 61.8, and it was achieved.

1:44Unless you really want to be very cryptic about it, the high was 104.98. You know, to me, that's on the button. So anytime you're within 1 % of a target. So 105. And we've had a nice break from 105. At one point last week, we were at 103.30. So viewers who took it seriously got out of their dollar longs. Maybe they went short for just a trade, and you had a profitable trade, still do. And if you can't make money after the market going your way for 130 pips in the Dixie, you should turn off your platform because you have to learn money management and how to take partial profits. So, you know, if you're there, take partial profits because I really think the day of the week, Ash, is the big red number on Thursday, the PCE, which is going to impact yields and the dollar's last chance to put up some type of rally here.

2:48So, Dale, let's talk about the future directionality here that you see for DXY, maybe some price targets if you'd like to go in on that. Trend's been broadly higher over the last three months, call it beginning of the year, year to date. A little bit of a drift down here in the last couple of days. What do you see? Is there a secular trend here? Well, I believe the secular trend is bearish because, I mean, you go back to where we were 20 years ago or five years ago. We've had intermittent rallies. We had a nice rally up towards 120. But I think we're on the precipice of beginning a bear move that's going to be, I think, fairly substantial.

3:28If the Dixie closes, closes under 103.80 after the PCE, to me, that's a sell signal that will be on our way to challenge par. And under par, you could come up with all kinds of targets at 95. uh same type of situation wow did i did i hear that right all kinds of targets around 95 yeah 95 92 uh you know 120 euro so i'm a dollar bear and uh i've been bullish a dollar since par in fact the last time i was on with you we were trading around par and i said buy the dollar so uh i've been waiting for this to complete this bear market rally for a while we had that high at 107. And then we came back down and I thought we would retrace, which is exactly what if viewers see the chart is what we did.

4:25And the retracement at 61.8 was right around 105. We've come off. And now's the moment of truth for the dollar. When I look at the dollar chart compared to the 10 year, the 10 year looks better. We've had yields recover in the 10 year from 420 to over 430. And the Dixie has barely rallied on that. So when I look at the 10-year, maybe we go to halfway back, 440, extreme case, 460. But back under 420, you're going to see rates drop, and they could drop down to 360 to 330. I think that will also be part of the bear case for the dollar. All right, we got a lot of things we want to talk about here, treasury market rates.

5:12I want to talk a little bit about the euro. But first, while we're talking about Dixie USD more generally, I wanted to take a listen to something here on Real Vision. All this week at Real Vision, we're hosting a series called How the Pros Do It. And we're talking about research. Today, we had on two all-stars, Brent Donnelly, president of Spectra Markets, and Peter Buchvar, CIO of Bleakley Financial Group with Maggie Lake. Let's take a look at that clip. FX kind of is two things. One, it obviously has a direct impact on say multinational earnings. It has an impact on oil imports in Japan. Like there's a lot of macro and micro impacts, but then it's also, it also can be a barometer of capital flows.

5:57So like when the U S is the center of innovation, it's the only strong place for growth. Then, you know, that's reflected in a lot of places, not just mag seven, but also in the dollar. So I think a lot of times you can, even if you're not in an FX person, you can use FX as kind of a barometer of where the money's flowing, because a lot of FX flows are real money. So people are buying an asset or buying, you know, buying stocks in Europe, or they're buying a company in Europe, and then they're buying euros in order to facilitate that transaction. So a lot of times I think FX is a good barometer for capital flows overall, including emerging markets and G10.

6:38All right. First, I should say, if you want research from pros like Brent and Peter, head over to realvision.com forward slash RV marketplace. That's realvision.com forward slash RV marketplace to see what RV member discounts are available for you. By the way, let's talk about this notion that FX is a good barometer for capital flows more broadly, particularly emerging markets in G10. Dale, what say you, sir? Definitely, it's the deepest market. It's much larger than the bond market, which it's much larger than the stock market. So I think it's a fulcrum of the wheel. If you get the dollar right, I think you could get the rest of the different asset classes correct.

7:25We've had a market where it's been all one market. And in general, it's been dollar up and markets down. And when it's been dollar down, it's been risk on. So we've seen a little bit of differentiation, but pretty much the dollar is, you know, at times a wrecking ball and at times a jet fuel for a rocket ship. So let's talk about some of the things that we teased before we took a look at that clip, specifically euro USD trading right now on my screen. One dollar eight or thereabouts one point zero eight four five. What's your take on this? What's the call? OK, well, the call was one oh seven. I think we went one oh six eighty five.

8:13So, you know, don't expect this all the time between hitting the dollar on the nose and the euro very close. And we rallied almost to 109. And we've had a pullback here with yields. And I was thinking before this week that the euro could make one more attack at new lows. And I'm shifting that belief. You know, I was thinking we might go to 105.80 after a bounce. but this bounce has been pretty extended and the structure looks a little bit different to me. And I think the possibility of once we get through 109, we'll be at 111 in a heartbeat. Bears will come back in at 111, but back over 111, you're talking about 115 and then 120.

9:05So, you know, if you have a dollar pop on a hot number, I'm a seller. So I'm a seller at, say, 104.20, 104.50. I'm a seller at 105.80 if we take out that 104.98 high. And I'm a seller at 103.80 on a close. So I'm not at all looking to get long the dollar. I'm looking for shorting opportunities in the dollar. Hey, everyone. We're going to take a quick break right now to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing. Join over 5 ,000 attendees for the largest AI event in Asia at Super AI Singapore, June 5th and 6th, 2024.

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11:32Dare I ask, at what point would you be a buyer? Well, I would say if we take out the 78.6 level at 105.80, 105.90, then, of course, the 107 is a layup and things have changed. And maybe guys that are talking about Super Bowl market as the best clean, dirty shirt in the laundry will be right. But if that's the case, we're going to have a crisis going on if the dollar is going to 120. I actually think that there was some type of arrangement made between Xi and Janet Yellen when he came to San Francisco that was set up when Xi went there to China and had dinner with some magic mushrooms in it. that's it i mean that's what was reported that they were magic mushrooms and then he came to uh i know it's you know maybe it's a conspiracy anyway i she liked him uh i've read that so uh well psychedelics are red hot right now are they i go yeah absolutely well i mean you look You listen to the news, and it's a bad trip we're on.

12:54So anyway, you look at what happened is China, everyone's bearish China, but look at what shares have done. They've used some draconian methods. But I believe China was getting exhausted and under pressure to continue to stabilize the yen. They didn't want the yuan. They didn't want the wand to continue to weaken with a strong dollar because they were burning through reserves. And it's costly to defend a currency. That's why Japan only comes in when things are chaotic and they're very nervous about a level. And they've been in, they manage your currency, and it could actually benefit the Fed. And with all the debt coming due, a weaker dollar actually makes it easier for them to sell debt.

13:51And it'll lead eventually to higher rates. But I think that a weaker dollar basically helps. You talked about emerging markets, a weak dollar. And I think that you're going to see the money flow that Brent talked about shifting from the U.S. to other opportunities overseas. You know, you just look around with a dysfunctional Congress. It's broken. They can't get anything done. And you look at what's happening. We have two candidates no one wants to vote for, except people that, you know, consider, you know, have a religion with their politics. And are people going to trust the results of this election?

14:38And if you were looking at America, who is a less reliable partner for Ukraine than Iran and North Korea is for Russia, where is that excellence that people talk about in the U.S.? I don't see it. And a lot of these things, I think, are going to cause people to want to diversify out of the U.S. market into other opportunities, including Europe. Europe can always change alliances from depending upon us when we have candidates talking about, you know, not honoring the NATO PAC and swing towards China. And despite their problems, they're still a juggernaut. And European-China relationship becoming stronger is possible.

15:36Egypt no longer wants to, it's illegal to use a dollar in Egypt. And that's how they plan to support their dollar. Our farmers are suffering with these low grain prices because China bought their grains from Brazil. bill instead of coming to the U.S. to buy grains. So this de-dollarization theme, I think, is going to continue. And the instability in the U.S. of all of our institutions is making people nervous. They're going to be pulling dollars. Let me ask you a question. You mentioned this idea, this notion of a deal between Secretary of Treasury and China. What would that deal look like? Would the idea here be that it would be about acquiring U.S.

16:25debt? What's your sense of what that deal would be? Obviously, we don't know. This is speculative. But if that deal did happen, what, in your view, might that be? A weaker dollar. How they achieve it, you know, through rate reductions, through interventions, to whatever they do behind the curtain, you know, That's probably a question for someone like, what's his name? FedGuy12. Okay, so he was on the desk. Maybe he knows. But I think that the evidence will be the direction of the dollar and that the U.S. dollar won stops depreciating and that takes the pressure off of China. All right, Dale, I've got a chart for you real quick.

17:17Brian, if we could pull up that chart of PSIL. This is PSIL, the psychedelics ETF. How is that for an ugly chart? I wish I could see it. I mean, they're all in small boxes for me today. I really can't see the charts, but I don't know. Let me describe what you're seeing. You're seeing it ride down from about$10 to about$1.50 over a time horizon. And where's it listed? I listed it like$10. On what exchange? I think this is NASDAQ. No, I'm sorry. It's NASDAQ. It's NASDAQ. Oh. Well, you know, I don't know. I have more important things to talk about. But, you know, anyway, I'm starting to have flashbacks since you put that chart up.

18:12And I see, hold on, I see trails. But, you know, something from 10 to 1, you know, sounds Ponzi-ish to me. That's why I thought it might be an OTC, bulletin board, pink sheet, you know, where people can become their own fed. and use their stock as currency to dilute so they get paid. Nope, this one's New York Stock Exchange. Maybe it's a little bit early. Hey, listen, I want to pull up that chart real quick of Euro USD one more time here. And I want to ask you also about what you're seeing. So is this strictly a bearish call on the U.S. dollar, or do you see some reason to be optimistic about the euro?

18:58Or is it just less, is it the less dirty shirt? I'm actually more bullish longer term on the Aussie on commodity currencies because I'm becoming a commodity bull. You know, I've been telling people to avoid. I think an important chart to bring up is the GDX weekly. Let's pull that out. Since we've covered the dollar, let's move on to where people are really underwater. And I was on in January saying avoid them. I was on last year saying avoid them. This is gold miners we're talking about. Yeah, GDX, and they're the blue chip gold miners. Last year, I said avoid them, that the cycle in miners was not due until 2024.

19:42I think we're approaching that time. GDX around 24 and a half. I'll be probing alongside of different miners that I'm following. That we could still take another 80, 90 bucks out of gold. We could still take another buck or so out of silver. And GDX is trading on about 26. There's probably still another 10 % on the downside in GDX in the coming days. So we are at the point, and even looking at GDX at 32, when I was saying avoid them, I guess the thing I could have done better is I could have shorted them. But I had a long bias long term, so I didn't do it. And I just built up, you know, my grub stake for beginning to buy when people start capitulating.

20:42And I think we're getting very close to that. I think we'll be there by the vernal equinox. We'll be there sometime. We're going to take another quick break to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

21:01Bernal Equinox. So we're... Cyclical from literally off sun and moon cycles. Hey, listen, while we're talking about... WDKN. While we're talking about FX, while we're talking about rates, I wanted to take a look at TLT. I know this is a chart you brought. Tell us what we're looking at here. Okay, well, last time I was on, I said I thought there'd be a rally in yields, that yields would head higher. By the way, let me just describe this for folks who may not know. This is the iShares 20-plus-year Treasury bond ETF. This moves proportionally to price, meaning inversely proportional to yield. Exactly.

21:42So I was looking for lower TLT. As you can see, we're making new lows here on the verge of it. And we haven't quite achieved even halfway back. are 61.8 so i'm looking for a low between uh 91 and 89 and then another another bond market rally similar to what i just talked about in 10 years that the 10 year could pop one more time maybe 450 extreme case 460 and then head lower towards uh 380 to 330 lower than 380 that was a most recent 360 to 330. Gosh, Dale, you're a popular man. We got a lot of questions coming in for you. But before we do that, I know you also brought charts on Apple and Microsoft.

22:36Did you want to touch on those real quick or do you want to jump right in? Yeah, let's touch on Apple because there's a lesson in this besides the price target. I like to teach. So as you can see, look at all the tests at 180. And look at in the last few times, the earnings we had a good rally after earnings when it held 180 rally to 191 last time i was on i said i'd use strength in the market and the s &p's railing over 5 000 as a shorting opportunity in apple which i did at those 61.8 level at the 190 level we went to 180 recently bounced to about 84 was pretty pitiful. And even today, we traded under 180, and I believe we're going to close above it.

23:25Now, here's a lesson. Learn to be skeptical when the market gives you multiple opportunities to buy or sell at a major technical point. Because good trades don't give you those opportunities. Maybe there's one retest after a breakout. But normally, if you don't act on the breakout, you end up missing the move. So I think this is about the fifth time that we've tested 180. So Mr. Market is saying, yeah, you know, you're pretty slow. It was a quick move after earnings, but I'm going to give you another chance last week. And you know what? I'm going to give you another chance this week. To me, it's just setting up for a major failure on a close under 180.

24:21I think we could see 160 Apple in a heartbeat. Let me ask you a question while you're teaching on this. I'm really curious to hear your answer. I'm a little bit of a nerd. I follow a lot of the tech news. There's a lot of talk in some quarters. Obviously, there are varying opinions on this. But one of the things that you hear about Apple is that many of the places where they have been making a lot of revenue, those markets are maturing, they're becoming more commoditized, things like the iPhone market, the iPad market, and that they may be positioned well with the Vision Pro, but it may still be a little while into the future before they can make that a regular source of revenue.

25:00When you hear that kind of fundamental analysis, is that something that you take into account? Or do you just kind of tune it out and say, hey, listen, if it's not in the price, I don't care? Well, before China had their government officials stop using iPhones, I predicted that Xi would strike back at an American icon. Okay, because of the trade war. And then that happened. And I guarantee you that their citizenry probably aren't using a lot of iPhones anymore either. If you lived in an authoritarian state and all the government officials were using other than iPhones, would you use an iPhone?

25:43Oh, there's a guy with the iPhone. That'd be you, Ash. You'd have to find somewhere to hide, buddy. Anyway, so yes, I do take it into account. It would be almost like using an Android in media. Yeah, exactly. You're right. You would stand out. So, yes, I do take that into account. And China has no interest in seeing a continuation of Apple's success. And I think that they've had bad earnings reports for a year now. And now they're going to try and save it with some type of AI play. um i at the chart also is ominous to me it looks like a head and shoulders top descending triangle it's a reversal formation so it all ties in i just you know i just don't know just speaking putting on my my tech guy hat for a little bit following this not incredibly closely but moderately closely i don't know for iphone sales what they're going to be able to do on the hardware side that quickly that's going to make the new iPhone 16, 16 pro max, a major AI play at this point, most of the differentiation is on the software side rather than the hardware side.

26:58Maybe that's something that's coming in the future. Maybe there is a major innovation, but boy, I have to say on balance, it would be really tough for Apple to pull a hardware. You're going to make me want to double up tomorrow morning, Ash. All right. So I mean, that's interesting. I appreciate you adding that to the bearish argument. Listen, I could be wrong, but I just don't. Everyone's wrong, Ash. It's how you're wrong. Well, I'd rather, you know, I like looking at some of the fundamentals in this. I just don't see, like, what you can add to the new iPhone 16. I mean, I'll give you an example.

27:32Like, I was one of these guys who just constantly renewed their iPhone. Every year a new one came out. I bit the bullet. I got whacked, whatever it was,$500,$600, and I bought a new one. I'm too out of date now. This never happened before because it's just they look essentially the same. Like, well, the camera is a little bit better. I just don't know what they're going to do to the 16 that's going to make it that compelling from a hardware perspective. I mean, everybody, and you pointed it out perfectly, Dale. The buzzword is, oh, it's AI. It's going to be AI. But what are you going to do from the hardware side that's going to have a real kind of quantum leap effect on a device when it's all happening on the software side right now?

28:07Now, obviously, there's going to be some, maybe some edge versus center processing issue here, but I don't know that we're there just from a tech perspective. You know what? So that's the second largest market cap. And I'm not calling for a crash or anything, but put up the Microsoft chart. I think we closed down today. This is number one in market cap, right? Biggest stock in the universe. NVIDIA hasn't caught it yet. I'm looking at the potential of a right shoulder, of a head and shoulders top. Last week's accelerated advance in the indices did not take Microsoft to new highs. And if it ekes out a new high, it's not going to confirm.

28:50It's been diverging. It diverged at the last high. And I think it's back under about$298. You're going to get at least another$20 break. And then let's wrap it with the Dow chart because this is a classic example. And it's a weak sister. The generals are leaving the front lines. They want to watch its next battle from their encampment, not at the front line. So if you put the Dow up and you look at that rising line, it's a rising wedge. Now look at the bottom on the RSI. So we've been diverging for several weeks now. The Dow is much weaker chart formation. It underperformed on the way up and it's going to lead the correction to the downside.

29:43Probably minimum, I think, 1500 points from here would be the bottom of the wedge. So it kind of all ties together. Maybe one more pop in yields and pop in the dollar and the market correcting sometime into March before it attempts another advance. But that Dow chart does not look bullish to me. By the way, listen, I'm not piling on here with Apple, but I just want to read you this lead the last hour breaking on Bloomberg. quote, Apple is canceling a decade-long effort to build an electric car, according to people familiar with the matter, abandoning one of the most ambitious projects in the history of the company.

30:27This is literally crossing here within the hour on Bloomberg. I wonder if they'll rally the stock because they're finally getting out of a bad train. Anyway, Apple's got problems. It would have to close back over, say,$198 for me to say, it's okay so kind of like tesla needs to close over 208 for it to stabilize as well hey dill while we're talking about while we're talking about round numbers i'd be remiss here if i didn't mention bitcoin i don't know if we have a chart ready trading at 56 ,810 on my screen right now oh there it is there's the chart coming up in just a second here obviously this has been This has been a considerable move up, crossing 50 ,000 within the last couple of days here, I think on, well, anyway, quite recently closing above 50 ,000 or closing out, remaining above 50 ,000 for more than a spike.

31:23A couple of bits of news here for folks who are really following this closely. BlackRock's new spot Bitcoin ETF, over a billion dollars in volume for the second consecutive day today. And by the way, something that folks in the community are talking about, and this is I'm reading from a CoinDesk article here. I'm Kar Godbel. Bitcoin funding rates jump to 100%. This is for the funding of the perpetual futures, which are a big deal within the Bitcoin space. So this is a significant indicator for folks who follow Bitcoin closely. But anyway, the chart speaks for itself. Dale, any thoughts on it? I can't chase it.