I Held My Nose and Bought the United States Dollar Fiat Currency

Fiat money.

Monetary and fiscal policies in America are now both aligned with an inflation-be-darned mindset, both implied and outright stated at times. 

And, yet, the U.S. Dollar is bouncing today after President-Elect Biden unveiled a monstrosity of a stimulus proposal on the back of Fed Chair Powell notifying us from his kitchen yesterday that The Fed would not give in to any initial inflation and tighten. This type of market reaction is noteworthy, and likely signified that the now heavily-shorted Dollar is ripe for a surprise squeeze higher to catch the majority off-guard. 

The ramifications of a Dollar relief rally/squeeze will likely spread across asset classes, as we have previously noted the inverse correlation since the March lows between Dollar weakness and strength in most growth stocks and sectors, not to mention crypto. 

As a result, a keep-them-honest squeeze seems more likely than not, especially headed into a seasonally rough patch of the year for stocks next week after MLK Day, and especially since the crypto and stock bulls alike have become dogmatic in their view that the "worthless" Dollar means nonstop nominal gains for all in stocks and crypto alike. 

Of course, a gentle reminder is in order: The Dollar remains the world's reserve currency backed by the epitome of a superpower military. For all of America's flaws, she still remains the force to be reckoned with even if, say, China prevails by the end of this century--This century, of course, is barely 20% in the books. 

I am therefore long the Dollar and betting on markets serving a less gentle reminder about its place in the world.

UUP is the Dollar ETF and, below on its daily chart, is flashing a highlighted inverse head and shoulders bottom looking to trigger today.