Futures Spread Trading – Guide on How to Trade Spreads in Futures
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The year 2019 saw an impressive list of record breaking figures for the US economy and it looks like this trend could continue in 2020 as well. That being said there are some key factors that may shape it in one way or another. In this article we’ll take a look at three high-impact areas worth keeping an eye on over the course of the year.
Fighting for the position of most influential person in the world is no easy task to begin with and the President Trump proves to be an especially difficult opponent. The Democratic field has been struggling to produce a candidate with enough charisma to rival the incumbent’s larger than life character. This is obvious to Democratic candidates as well, who’ve made opposition to the President their central platform, rather than their own respective policies. Part of that effort is the ongoing impeachment process, which given the strong support of his base as well its relative unpopularity among independents, doesn’t appear likely to remove him from office. While the President’s demeanor and brash style of communication is unconventional in many ways, his actual policies for the most part match up with his party’s broader platform. Althought it’s not accurate to credit his deregulation of industry and tax cuts for all of the economic growth, their positive effects are still undeniable. On the other hand President Trump has also drawn a lot of criticism is his heavy-handed pursuit of US interests on the world stage. Nonetheless his methods of accomplishing them can hardly be considered radical and fit neartly into the same toolkit that previous administrations have used in the past, although possibly with more subtlety. Whether or not this lack of tact will causes any lasting damage to the country’s reputation or credibility among other nations remains to be seen, however, his approach does seem to be paying tangible dividents at least in the short term. In the end what the election will likely come down to is if people can judge him on policy accomplishements alone or if it becomes a question of his character and flaws.
Trade relations between the two countries have become increasingly strained over the past year and a half, but whether it can be fully restored within the same length of time remains an open question. Over the past 7-8 months we’ve heard countless reports about there being an agreement in sight, but so far nothing tangible has materialized. Now there’s news of first and second phase negotiations, with a final deal expected to be signed after the elections. It almost feels like Brexit in Europe: a tight-knit relationship that’s both difficult and painful to untangle. Although it took a lot of courage for the President to try and stand up to them, however, he may have underestimated their perseverance. At the same time 2019 also made it obvious that the trade conflict was harder on China than it was on the US, but that’s still not an indicator of victory. Current agreements seem to be mostly for show for the sake of easing tensions The main goal is maintaining ecomonic growth, especially for Trump in an election year. Avoiding open trade conflicts is one of his interests because it allows him to campaign on a positive message. Simply having any agreement allows him to point to it, should the matter come up in a debate. The contents of an international agreement are unintelligible for the average person so for most people the fact that it exists is reassuring enough. In reality we may be looking at a the first signs of a prolonged, possibly decade long disagreement. We’re looking at a confrontation where the main weapon is currency and the ability to manipulate it is worth more than any missle defense system. The markets at least appear to have already adapted to these circumstances.
This paragraph may as well be titled “The Challenge of Crypto Currency.” There’s been a lot of uproar over the topic following the Lybra’s announcement in 2019. The appearance and spread of additional electronic currencies might cast a shadow on the US dollar’s monopoly in the world. The threat of Facebook’s own currency was significant enough for the US finance sector to fast track an effective ban on it, exposing their own weakness in the process. The Asian Development Bank and The Central Bank of Russia are equally interested in the development of a tpye of virtual clearing currency that’s potentially independant of any government influence. The technology already exists and the US has no interest in creating one of it’s own, since that may undercut the dollar. This opens up a dangerous opportunity for competing forces. The main risk for the US is that if the dollar stops being the world’s clearing- and reserve currency, then the declining demand for it would cause its price to plummet, making it impossible to the national debt. Just for reference, that debt currently makes up 105% of the country’s GDP. This isn’t an issue that any politician or banker can afford to take lightly. Word around the globe is that there’s a growing demand for a unified global crypto-currency backed by central banks. The year 2020 or possibly the entire decade will likely bring major new developments on the reserve currency side. Under these circumstances it becomes increasingly more expensive to maintain the dollar’s supremacy. It could even get completely out of hand if there were an event that tightened the amount of capital in circulation, such as another financial crisis for exaple. The main thing to keep an eye out for are fixed return, long term treasury bonds aimed exclusively at the US population. Once those are on the horizon it may be wise to consider diversifying away from the USD.