The Market

After a horrible year to date performance, the US dollar bounced off its low, with a weekly return of +.83% and a monthly return of +2.25% as of October 14, 2025 Is this the inflection point, the start of a rally? This is an important question for crypto investors because USDC and USDT dominate the stablecoin market. Whatever happens in US dollar stable will reflect on crypto overall. A strong USD...

A battle is brewing in stable currency. The US is winning with USDC and USDT, and China is gaining ground, making a push for the title. Hard to say who is going to win the stable game, but someone will. To show how active this game is, Europe is talking about getting involved; the European Central Bank (ECB) is seriously considering issuing a stablecoin. Last week, a Bank of France Official Agnes...

The dollar has declined year-to-date by over 9%, and some predict it will decline more. Dollar weakness, and the potential for more weakness, is knocking the dollar off its perch as the global safe-haven investment, the investment investors want to hold when global risk is rising. Many investors are confounded by the disparity between the US dollar and the US stock market. Non-US investors buy US...

Passage of the Genius Act in the US stirred up a lot of excitement towards stablecoins. The IPO of Circle added fuel to the fire, making US dollar stablecoins a household word. Such recognition and regulation have helped the stablecoin market to double in terms of market capitalization to around $280 billion. Growth has not created a healthy situation; 99% of stable coins are USD backed. Put simpl...

There have been some strange developments this week in interest rates and currencies. First, the European union reported inflation above target, leading to the conclusion that interest rates will not be cut in the near term, rather stay where they are. Normally, one would expect the Euro to appreciate against the US dollar based on a higher Euro yield. And, given investors see a 90% chance of a US...

If a normal person owed a lot of money and interest was choking their household budget, they would love to go push for a lower rate, to refinance at much better terms. If market rates were high, there would be no chance of refinancing and lightening their interest payments as a percentage of their household budget. Loan markets just don’t work that way. But the rules may be different for the publi...

Sometimes at a sports event or concert it is a good idea to start moving for the exit before the end of the event, to get your car out before the rush. The same may be said for US dollar exposure, it may be a good idea to start moving slowly towards the exit. Treasury secretary Bessent said in a televised interview “if you look at any model”, for the fed funds rate, it suggests “we should be 1.5%...

For many years Brazil has had a bad reputation among international investors regarding inflation. It has always been high versus the rest of the world, and in the last ten years there was one-point when annual inflation was consistently 11 percent or more. There was a time in the last 30 years that annual inflation was 22%. Inflation in the 1990’s was so bad that people would rush to cash their pa...

If you see a cockroach in your kitchen or bathroom, you can be sure there are more hiding. There is never just one. People may try to convince themselves there is only one, but there never is. We can say the same thing about demand for US treasury bonds at last week’s ten-year auction. The result of the ten-year bond was ok, 4.225%, a little above what was expected. A slightly weaker result than e...

It is possible that the US Fed will lower interest rates in September and follow through with more cuts in later months. The US government will benefit from these moves, because lower rates will help feed the voracious appetite for debt. But just because the discount rate, the rate that applies to primary credit extended to US financial institutions goes down, does not mean bond yields, like the 1...

Since the beginning of 2025, it has been a great time to invest in foreign currency sovereign bonds on a total return basis. In this time period, the US dollar has declined a little under 9% and many foreign interest rates have been higher than US dollar rates. However, if the US dollar were to strengthen, the benefits of the yield pick-up in foreign currencies will deteriorate. A rising dollar re...

Well, President Trump followed through on his highly emotional threat and raised tariffs on Brazil to 50%. He did this citing “an unusual and extraordinary threat” . This extraordinary threat is the domestic trial of ex-President Jair Bolsonaro, an issue that is purely a Brazilian matter, no business of the US. It is hard to see how a trial of an ex-President is “an extraordinary threat”. Brazil d...

A weak US dollar in the first six months of 2025 has been a boon for foreign currency denominated assets. By the end of June, the US dollar had gone down about 9% (as measured by DXY), and yields on many foreign bonds stayed high. Investors avoiding exposure to the US dollar did well. But, as of July the situation may have changed. Since the beginning of July, the currencies of Etherfuse’s stable...

Well, Brazil responded to President Trump’s threat of 50% tariffs, if they do not stop the “Witch Hunt” against Jair Bolsonaro, the ex-President who allegedly initiated a coup against the present government. Both the President and the Supreme Court pushed back. The Supreme Court’s opinion was unanimous. If we look at the situation rationally, pushing back may reflect a Brazilian position of streng...

Sometimes things come along that are too good to be true. Presently, Brazilian tokenized Tesouros for investing in and lending on chain may be one of those opportunities. When US tariffs were announced in April, the Brazilian currency, the real, weakened to its 2025 lowest value versus the US dollar. From this low point, given President Trump’s Taco behavior, the currency strengthened 7% to its pr...

90% of all stable coins being US dollar denominated is scary; 90% is too much concentration in any asset class. It is not safe or efficient. Remember, a high concentration of US dollar stable coins is a risk to both the actual stable coin and the US treasury market that backs it; if there were a run on the US dollar stable, treasuries would be sold, interest rates would go up, and rates could spir...

Let’s get to the point: does the world want to perpetually depend on a reserve currency backed by bonds issued by a government that has chaotic policy, a debt level rising too well over GDP, a commercial system that needs tariffs to compete worldwide, a 30 year long bond that is losing its allure, and a currency that is down over 9% year to date versus other major currencies? These are not the met...

The Genius Act passed the Senate and got a lot of people clapping hands and “high fiving”. Yes, this is a great piece of legislation for crypto and the future of finance. But some of the comments are off the mark, a bit concerning, Secretary Bessent was ecstatic that there will be more demand for US Treasuries. US dollar stable, as per the Genius Act, must be backed 1 to 1 by US treasuries. Thus,...

Complacency causes problems. Not paying attention to warning signs when they are right in front of you can lead to bad outcomes. Regarding stablecoins, one might conclude that this message has been heard, as the US Senate just passed the Genius Act, a policy that provides a regulatory framework for stablecoins. After Circle’s mammoth IPO success, passing such a law was easier. Stablecoins, particu...

There have been policy false starts in President Trump’s short time in office, and some of his policies seem a bit crazy. But when it comes to savings, he got it right. The Trump Account that gives every newborn American a $1000 investment in a tax advantaged index fund, not to be touched before they turn 18 is a great idea; a type of policy that can help make “America Great Again”. Policy makers...

In the early 1990s a well-known global investment strategist, a real smart guy, predicted that “Years from now Europe will be one big open-air museum”. He based his assertion on the idea that Europe was too bureaucratic and stuck in their ways. There was no innovation. There were limited reasons for people to invest in Europe. In his eyes, Europe was doomed. He clung to the idea that Asia would ri...

It has taken years for Mexico to reduce its percentage of US dollar debt to total debt. US dollar debt as a percentage of total debt is 40-45%, lower than in times past. This is a great success, and Mexico should not stop now. In the past 30 years, emerging markets have experienced multiple crises, all of which have revolved around currency weakness that had excessive dollar borrowings at their co...

President Trump’s tariffs have three goals: 1) create an economic situation that encourages investment in US production, allowing for the substitution of imports 2) encourage foreign companies to invest in the US 3) generate tax revenue. The first two have the goal of reducing the US trade deficit the US runs with many countries. The third generates much needed government revenue. Recently, there...

If you buy a house and find out that the foundation needs massive work, or that the roof needs to be replaced, work that is more than a do-it-yourself job, the cost is on you. There is no point in complaining about the seller. It is your problem, and you had better find a way to get the repairs done. Or you can go on with your life and be in denial, pushing the repairs to the future. The US econom...

The argument to diversify out of US dollar stable coin lives on and must be repeated. 99% of anything in an asset class is too much and dangerous. Given this unhealthy concentration, it is time to start thinking about moving away from dollars, or anything backed by dollars, like US dollar stable coins. The chorus of dollar pessimists is growing. Well known investor Peter Schiff said” The US dollar...