08/20/24 Afternoon CommStock Report – Tariffs…the Hot Stove is Still Hot

Trade may soon not be as globalized as it once was but the world financial system still is. The US increased interest rates more than other countries which incentivized an inflow of foreign capital to take advantage of our higher returns that firmed the US dollar. As US interest rates begin to decline, the cost of financing the US debt should incrementally be reduced as well. The need for less foreign capital inflow should allow the value of the dollar to ease accordingly. The dollar has been recently showing some anticipatory weakness of the coming interest rate cut next month by the Fed. China has been pulling its money out of US Treasuries to fund its own problems so this capital does have to be replaced. The use of the US dollar as the predominant trade currency and the fluctuation of the value of the dollar being impacted by fiscal issues are two different things. We do not think that the use of the dollar as the world trade currency is at this point seriously threatened. However, diversification of capital investment into the gold or cyber currency are underlying trends. (I will discuss the fiscal impact in a subsequent report)…