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Cool Video: A Look Ahead to 2021


Cool Video: A Look Ahead to 2021

I joined Ben Lichtenstein, host of the morning futures program at TDAmeritrade.  It is in the futures market that I began my career, and where I gained respect for local traders, who do not have a large institutional backing such as a bank or hedge fund, and are trading their own capital, and taking the risk often from those institutional participants.  There is truly a David vs. Goliath drama being played out with asymmetries of information and depth of capital resources.  I learned the lesson again in my nearly 15 years at Brown Brothers, the last of the partnership banks, were having skin in the game was a source of pride, confidence, and prudence.

I have found less tunnel vision in the futures market and more willingness to look across the capital and commodity markets than in the banks, where turfs and fiefdoms often dominate the organization.  Ben epitomizes this characteristic and can move easily between financials, commodities, currencies, fundamentals, and technicals.

We began by talking about the new stimulus and appropriations bill that was just signed by President Trump.   The stimulus was a compromise, and the Democratic Party wants more, and this is in part why the Georgia senatorial elections early next month are so important.   Still, I am mortified that our representatives had a few hours to digest the 5000+ page appropriations bill before voting on it.  This is a fairly common practice, and it is both the cause and effect of our dysfunctional political system.

While reiterating my dollar bearish outlook for 2021, I suggest that an upside dollar correction into the first part of next year is possible.  It is oversold technically, and the fiscal stimulus will underscore the growth differentials that favor the US early next year.  I also worry that the virus is out of control in both the US and Europe, but the US has rolled out the vaccine quicker, and Europe may have not ordered sufficient amounts of the Pfizer and Moderna vaccines.

Looking into next year, I highlight two political developments in Europe that are not going to be found on many economic calendars.  The Scottish election is in the spring.  We should expect a strong showing by the Scottish Nationalist Party, which continues to advocate another referendum to secure Scotland’s independence.  This is partly the cost of leaving the EU.  Ironically, some SNP officials use similar arguments as the UK did to support Brexit, while UK officials recycle the arguments of the Remain camp in advocating the benefits of the union. The other political event is the German election in October.  Merkel became German Chancellor in 2005 and will step down at the end of this term.  She has been a master statesperson and seen off many domestic and international rivals.  She was instrumental in the recent compromise with Poland and Hungary that allowed the EU budget and the 750 bln-euro stimulus funded by a common bond offering.  A vacuum opens.

Here is the link to the almost 10-minute video clip.

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Marc Chandler
He has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks. After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.
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