The Fed Will Raise Rates Again in June

Following Friday's slightly better than expected non-farm payroll report the probability of a June interest rate hike is now near one hundred percent. The markets are now certain that a quarter point hike is coming in June and in fact if the Federal Reserve does raise interest rates by a quarter point that will bring the floor of the official rate finally up to 1 percent. (SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ), iShares Russell 2000 Index ETF (IWM))

Currencies: U.S. Dollar Index May Drop To 60

The U.S. Dollar can fall rather substantially from here. The last time the Dollar Index fell, it bottomed out around 70. So, I think this time it might fall as low as 60 before anybody really gets nervous. 

The Bullish Case For The Euro Currency

I think the European Central Bank (ECB) is going to move to a tightening rhetoric, to a tightening bias and they may even start to raise interest rates given how quickly the inflation rate is accelarating in Europe!

Monetary Policy: Fed Will Ease, ECB May Tighten!

The U.S. Economy (GDP) is breaking down as European inflation is breaking out. The Federal Reserve easing monetary policy and European Central Bank tightening monetary policy is not the policy divergence markets expect! (EuroStoxx 50 Index, Dax Index, CAC 40 Index, SPDR S&P 500 Index ETF (SPY), SPDR Dow Jones Industrial Average ETF (DIA))

Weakest Economic Growth in 3 Years!

First quarter GDP growth was the the weakest in 3 years for the first quarter. Why is GDP growth so weak? Well, one reason is because the Federal Reserve raised interest rates even though they barely raised them. Imagine how deep of a recession we would have if the Federal Reserve had delivered the 3 or 4 interest rate hikes in 2016!

Bearish On The U.S. Bond Market

This time as the U.S. Dollar goes down, it is eventually going to take the bond market down with it. But right now, we have another rally in the bond market, interest rates are falling because people are starting to worry about the weakening U.S. Economy. (iShares Barclays 20+ Year Treasury Bond ETF (TLT), ProShares UltraShort Lehman 20+ Year ETF (TBT), 10- year U.S. Treasuries)