The value of the American currency against a basket of several currencies from around the world, according to the DXY index, is finishing its worst first half of the year. A drop of 10.38% — such a decline hasn't been seen in 40 years.
The dollar is weakening, although US authorities boast about some of their achievements in foreign policy. But the rate of the 'American' currency tells a different story. Social spending in the US budget is being cut at a frantic pace: in May, the index of relevant state expenditures set a historical record for decline. The US population has begun to spend less (a record low since September 2021) and is also saving less.
Trump wants a reduction in the US Federal Reserve's rate and intends to replace the head of the agency with a more controllable person next year, or even earlier. But if in Russia, even after the ruble strengthened by 40% since the beginning of the year, the Central Bank of Russia reluctantly lowered the rate by a symbolic one percent, what should the US Federal Reserve do? After all, the American currency is collapsing, and cutting the rate will only push it down further.
The world increasingly needs not only dollars but also American goods: in May, exports from the US collapsed by 5.2%, while the negative balance of foreign trade grew by 11%. Against this backdrop, the approach of the S&P 500 stock index to a new historical maximum looks like a pyre during a plague.
And yet, US GDP is going down! Against this backdrop, Buffett's indicator (the ratio of the value of all American stocks to GDP) has jumped above 200%. More than it was at the beginning of the dot-com boom (2000) and on the eve of the global financial crisis (2007). The market is extremely overheated and will fall painfully.
