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Cool Video: CNBC Squawk Box

I was part of the “Trading Block” on CNBC earlier today. The sharp fall in stocks and oil would have led many, like Joe, to anticipate dollar weakness. Instead, the dollar rallied. Perhaps, I suggested, the dollar was acting like a safe haven. Bill yields are high enough to make cash a reasonable alternative to park one’s savings. Even though the US economy is slowing from the fiscal goose of more than 4% in Q2 and more than 3% in Q3, it remains above trend. This puts the US in an enviable position of being able to absorb the shocks. Admittedly, some of which are of its own making.

Cool Video: CNBC Squawk Box

Marc Chandler

The oil discussion was also fascinating. How much of the decline is due to supply and how much is due to weakening demand? There is also a short discussion of the equity market and the role of trade tensions vs. fear of a slowing economy. I would tend to emphasize supply drivers for oil, and, in particular, the six-month exemption for Iran’s largest customers.

I see the US economy continuing to expand above trend, and with the fed funds target below the rate of inflation, nearly any other qualified person who was going to head the Federal Reserve would see higher rates as appropriate. There is still some fiscal stimulus in the pipeline and an agreement to make permanent US middle-class tax cuts may be hard to resist, and there is an outside chance of an infrastructure bill. The divergence and US policy mix have more room to run, I think, and this continues to underpin my constructive outlook for the US dollar.


Equity market has crude oil completely wrong, says Scott Nations from CNBC.
Full story here
Marc Chandler
He is Global Head of Currency Strategy of Brown Brothers Harriman (BBH). He has been covering the global capital markets in one fashion or another for 25 years, working at economic consulting firms and global investment banks. He regularly appears on CNBC and has spoken for the Foreign Policy Association. In addition to being quoted in the financial press daily, Chandler has been published in the Financial Times, Foreign Affairs, and the Washington Post. BBH provides specialist services and innovative solutions to many Swiss asset managers that include a global custody network of close to 100 markets, accounting, administration, securities lending, foreign exchange, cash management and brokerage services. Feel free to contact the Zurich office of BBH
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