If the fate of the currencies depends on the war, everyone is stymied

Outlook

After the war, the big data issue is Friday’s payrolls, and so far what we have in the Jolts and ADP is okay.

Then there’s the election in the UK—do the voters really dislike Starmer all that much? Trump goes to China to meet with Xi next week. And oh, yes, Norway raised rates.

Forecast

If the fate of the currencies depends on the war, everyone is stymied. The only news is Japan intervention and how much and what exactly did this or that official say. One analyst tries to connect the yen to the war, deducing that strengthening the yen will fail because the war will rain down catastrophe on the economy. Well, no.

We are pessimistic about Iran agreeing to all the 14 points on the Trumpian one-page memo. The idea of the global economy in the hands of a guy who thinks a one-page memo is good enough is ridiculous. Trump won’t read more than one page do let’s fix the mess I just made with a one-pager.

Iran will want to drag it out. The US maybe not so much, because of the midterms. Trump would like to say “See, we just won a war.” Or maybe not. It’s pretty clear the midterms will not be going well for the Trumpies unless there is a big change. Victory at war or at least peace is just not on the table.

We continue to think Trump will be goaded into re-starting the war, with justification (perhaps a false flag attack by the US, as the conspiracy nutcases embrace). All this good cheer and hope and wishful thinking can fly out the window in ten minutes. The dollar will come roaring back. We just can’t buy into a happy ending here, not given the character and history of the top actors.