Healthcare Bill Goes Down & Takes the Dollar With It
March 27, 2017
Dennis Gartman is editor and publisher of The Gartman Letter, and strategic advisor of the AdvisorShares Gartman Currency Hedged Gold ETFs (GEUR & GYEN). He regularly contributes to AlphaBaskets and lends his institutional insight to educate advisors and investors about commodities and the forex markets, including about trading gold in different currency terms.
The US dollar is materially weaker this morning and no one anywhere should be or is surprised by that fact in light of the failure of the House… with its Republican majority… and the Trump Administration to push through the repeal and replacement of the Affordable Care Act, known universally as Obamacare. By now everyone and everywhere knows of this “failure” and this has indeed cast a sense of gloom into the global capital markets as this failure suggests that the Republicans may fail too on tax reform and infrastructure spending.
We think it is a bit premature to suggest that tax reform is now doomed and we think too that is even more premature to think that infrastructure and defense spending programs shall be thwarted. Indeed, we are not at all certain that the repeal and replacement of the ACA is now finished, for the fact of the matter is that the 30-35 Republicans in the Freedom Caucus upon whose shoulders this initial failure shall fall will begin soon to feel pressure from not only the President and from the Speaker and from the House Whips, but from their own constituents who will understand that their Representative allowed his/her demand for “perfect” to trump the need for “good” legislation.
Nonetheless, the hard fact at hand shall also fall upon Mr. Trump, for he has sold himself to the American voting public as a first class “negotiator” and it is time for his supposed negotiation skills to rise to this occasion and bring order out of the legislative chaos that has evolved. Can he do this? Time only shall tell, but if he is the negotiator he says he is and which his core supporters believe him to be, then now is the time.
The dollar then has tumbled… hard… and well it should in light of what has transpired. But what we find most interesting of all is that despite the EUR’s strength relative to the US dollar, it is weak relative to the Swiss Franc. This tells us that even as capital is fleeing the dollar it is not making its way to the EUR, but is instead, at the margin, making its way out of the “Continent” and seeking refuge elsewhere. This cannot be seen as anything other than a vote of “no-confidence” in the European Union.