Matein Kalid
Only the poetic genius of an Irishman can do justice to the epic Big Boy sumo wrestling match in history – between Shogun Trump and Sensei Powell-san as panic spreads at the speed of light across the digital arteries of the global banking village. W.B. Yeats’s immortal versus echo in my brain – things fall apart, the center cannot hold, mere anarchy is loosed upon the world…
Trump mania has already cost the GCC at least $3 trillion from the meltdown in the global financial markets and this does not include the untold billions that will vapourize as the global recession and an OPEC price wreck havoc on government balance sheets at a time when fiscal budget breakeven levels of all states except Abu Dhabi is well above $105 a barrel, $40 above current spot Brent.
The GCC, with its open economies and role as a sovereign creditor to the Euro markets, is at the nodal point of trade/capital flows and has globalization in its DNA from the time when camel caravans crisscrossed the Hijaz to transport Yemeni incense and Indian silk to the wholesale markets of Sassanid Persia and Byzantine Syria, two millennia before Chevron geologists struck a gusher in a Dammam salt dome and transformed Saudi Arabia into a kingdom of black gold. Yet the prosperity of the GCC has one umbilical cord, the greenback and the greenback is no longer King of Planet Forex.
The US Dollar Index was 110 in January and has sunk to a shocking 98 now. This means every man, woman and child in the GCC has lost 12% of their purchasing power since the local currencies are all pegged to the US dollar. The plunge in the US dollar has accelerated as gold’s frenzied bull run from 1800 an ounce to 3400 now attests. I was warning my friends and followers to protect their dollar assets by buying Auric assets. This was the reason I was a chest-beating bull on gold since its late 2022 $1800 breakout level.
I was also table pounding bull on sterling at 1.22 and this was not out of any real love for the admittedly considerable aesthetic charms of Chancellor Rachel Reeves, who is a lot brainier and sexier than Cameron’s Boy George the karma chameleon of 11 Downing. I love to see the smiles on my Emirati friends at our nocturnal shisha sessions now that cable has clawed back its post Brexit losses and trades at almost 1.34. This is a cool 12 point rise since I first flagged the coming rise in the British pound in my posts/media columns. Even though it will cost more to hang around the kingdom by the silver sea this summer, I expect profits from long British pound positions will continue to mint money as long as Trump mud wrestles Powell to the Dojo Matt.
The Euro, yen and sterling are all headed to the stratosphere and those handcuffed to the buckeroo are doomed by destiny if they do nothing. Welcome to the great dollar bear market of 2025-27. The US Treasury note yield curve has steepened, a de facto verdict that Wall Street believes that Trump will fire Powell and replace him with a MAGA aparatchick, who will dutifully slash interest rates to 1%. So dollar bulls will be gored both in the front office via FX and in the back office by zero bank deposit rates.
The US dollar collapse, America’s Weimar Republic scale chaos and the end of the Fed’s political independence (adios loco looser, you are fired!) has seismic implications for my investment strategy. Four rate cuts will be a steroid shot for a land with the world’s highest real interest rates and an agribusiness empire that is laughing all the way to the bank as China disses the farm belt.
Singapore is the new haven for the Asian trading ecosystem and the right S-REITs will sizzle on the red dot steak. Rheinmetall AG was a double bagger in Frankfurt but who is investing in its Polish defense stocks, who all bewitched me with their promise of a 3-5X paydirt if only I fly to Warsaw and evoke Chopin/Conrad.
Agflation is the macro wolf that no state can avoid and the soft commodities souk of Chicago is white hot with the promise of a tsunami of leverage profits to be made in the futures and options pits by the right gladiators. Hail Caesar, you fiddle/golf, while Rome burns but Jack the lad here just wants to print dinari and go clubbing with the vestal virgins.
Bonds are leprosy if JayPo is fired, so expect the plumbing in the global debt markets to explode in a frenzy of credit contagion, a la 2008. The US dollar, GCC/MENA bond and sukuk market is at the epicenter of three savage bearish trends, a plunge in the US dollar, oil price crash amid a price war and credit downgrades in the Gulf’s corporate/bank constellation. Prefer local currency sov debt in South Asia as central banks ease policy and goose domestic consumption. Net-net, the storm clouds are darkening, lady luck has forsaken the human race, thanks to the 81 million MAGA rappers who changed history on Election Day. So now it must be Strength & Honour. Buona fortuna carissimi.
Also published on Medium.
