Yet again, the CPI has missed expectations. This is the fifth month in a row now.

Clearly the trend is in decline. And I don’t see any catalysts that will change this.

The US dollar is down over 12% since 2017 began…

According to the laws of economics, a weaker currency will cause import prices to increase. The question is, will the dollar’s 12% decline (and counting) be enough to bring back some inflation?

My bet – it won’t be enough. And the Fed will end up reversing their tightening.

In mid-February, I wrote an article detailing my bearishness on the USD and the market’s overwhelming faith in the Fed’s inflation targets and Trump’s Reflation policies. My investment thesis was to purchase CALL options in order to be “short” the USD. I offered three broad ways that I wanted to play it – that was to go long call options (or shares) on the Japanese Yen Trust (FXY) and the Euro Trust ETF(FXE) and gold (GLD).

Respective gains of the trusts, in order, are +5%, +11%, and +5% since publish.

I want it on the record – I am not bullish the yen or the euro

In fact, I find they should all be collapsing over-time. There are deep structural problems in the developed world economies, but central banks, at best, can only aid with cyclical problems. Therefore, while they can mask the small ups-and-downs, they can’t fix core problems. For instance, with regards to Japan, the country is having a shrinking populace. And as we learn in elementary school, the arithmetic doesn’t add up. Too many dependents i.e. retirees, old, sick, etc., with too few new workers to subsidize them.

Sadly, the Bank of Japan can’t print youth…

Thus, my thesis wasn’t to be long the yen or euro for their fundamentals. But rather, I was bearish the USD and the U.S. economy’s fundamentals.

Why? Because we are in the middle of a global debt bubble and currency war and it is the dollars turn to weaken substantially.

Dusting off my copy of Jim Rickards 2011 masterpiece, Currency Wars, we can understand what probably lies ahead…

-> Read the rest here on my SeekingAlpha Exclusive page…