Looking
at present global macro, our thesis from the beginning of last year (dollar risk to the downside) is, for now, continuing to play itself out (better opportunities abroad forcing the
dollar lower). This year’s thesis (higher dollar), nonetheless, remains very much intact, but
looking at the immediate weight of the evidence it could be (if
it plays out at all) a later in the year story.

What
makes our opinion this year even more compelling is that it’s very much in the
minority (as was last year’s, which turned out to be correct). I.e.,
when/if the tide turns on the dollar, it’ll get ugly (to the upside) as the
masses move from the crowded side of the boat (gold bears would
make out hugely in that scenario — and, among U.S. sectors, tech will
take the biggest hit).

Today’s
weak jobs number (145k) surprised me. I thought we’d see 200k+. This supports
the dollar bears, and smacks of a goldilocks scenario for stocks (good economy,
low inflation, low interest rates). I’m guessing what it really speaks to (if
anything) is a lack of available, qualified, labor (i.e., there are plenty of
job openings). If that’s the case inflation will surprise to the upside
(particularly when the stimulus from the tax-cut, etc., takes hold), turning the
consensus on its head. 

Of course, the ‘weaker’ jobs number could be a one-off
and/or we’ll see it revised much higher when next month’s number is reported.
Wednesday’s ADP (private sector report) was +250k!

Ironically,
if our currency thesis proves wrong in 2018, our clients’ portfolios probably
do better. So let’s hope we’re wrong!

Have a nice weekend!
Marty