Well a picture is worth a thousand words. This chart shows the release this morning in the US of Wholesale Inventories and Wholesale Trade Sales for January. It was the worst of all worlds...US Wholesale Inventories went up...ie...businesses sold less product, arguably exports dropped...and Wholesale Trade Sales went down...again arguably exports dropped. Why?
Because of the massively overbought, most-crowded trade every...the strong U$. It has appreciated so much so fast that it has finally strangled the US economy. Heck, the FOMC doesn't need to hike front-end rates at all to tighten monetary policy because the strong U$ has done the tightening for them.
Our last post talked about Global Competitive Currency Devaluation...well, I think we just hit the breaking point where the weakness in every other currency is too weak to buy U$ goods and services. That is the breaking point.
So if the Fed raises interest rates, they would be adding fuel to this currency fire and it appears that the US economy is already weaker because of the rapid strength in the U$.