The Russian ruble dropped 10 percent last week to 108 rubles per dollar. In other words, a ruble is worth less than a penny. Crossing that 100-to-one ratio was reportedly a blow for Russians. As a result, the country’s central bank had to act aggressively to defend its currency, which has since “recovered” to 105 rubles per dollar. War-time economy or not, the Russian’s are also facing inflation that is in the 25 percent range.
In Brazil, their currency, the real, dropped to an all-time low of about 16 cents, or 6 real per USD. The B in BRICS stands for Brazil while the R stands for Russia. The Indian Rupee—which is what the I stands for—has also dropped, compared to the dollar, with much of the recent drop coming the week after the election. It currently takes about 84.5 rupees to buy a dollar. India’s GDP has also slowed.
This kind of reaction in the currency markets is why we say Joe Biden was perceived as weak. Trump is already seen as a strong president who will strengthen the United States economy and make the U.S. stronger on the international stage.
On the domestic front, the stock market had its best month of the year in November, spurred by a rally immediately following the election results.
Gold and Silver Drop
Since Election Day, Gold has dropped from $2,743 to $2,655 per ounce, or just 3.2 percent. Silver dropped from $32.66 to $30.80, a decline of 4.4 percent. (Silver dipped to almost $30 on the Nov 27 and has climbed since.) Normally, precious metals drop when the dollar rises. This time gold and silver held up well, a sign of strength.7
If you buy precious metals, this may be a chance to buy on the dip.
War and Peace
Late last week, a ceasefire was signed between Hezbollah and Israel, allowing many Lebanese to return to South Lebanon and many Israelis to return to their homes in the north. Netanyahu said he would make peace with Hezbollah as a “gift” to Donald Trump.
Some are arguing that the recent fighting in Aleppo will benefit the U.S. and Israel while hurting Iran, Russia and China. Time will tell, but it does not appear to be a coincidence that it started after the ceasefire was signed.
Also last week, Ukrainian President Zelensky said he was willing to end the “hot phase of the war.” He had conditions, of course, including being made a member of NATO, but his willingness to acknowledge the war could end with Ukraine ceding territory to Russia is a big leap.
You will note that Iran’s expected attack on Israel has not yet occurred. They, too, may be worried about what Trump will do if they attack an American ally.
Likewise, the fearmongering related to nuclear war we reported last week died down as quickly as it popped up. Russia continues to hit Ukraine with hundreds of drones and missiles in response to attacks deep into Russia, but none of them have been nuclear and none have been launched at NATO member countries. Seems like Putin is also waiting for Trump’s inauguration.
Trump’s bluster and threats are already having an impact on the world stage. However, when it comes to talking loudly and carrying a big stick, Putin and Trump have much in common.
Tariffs and Incentives
In the past, I have urged people to buy certain goods before inflation strikes. In this case, I recommend you buy any solar power equipment before tariffs are implemented on goods imported from China and before tax credits and other incentives to invest in green energy are eliminated. The tariffs will not only affect solar panels for whole-house power systems, but so-called solar generators. Right now, there is a great deal of competition in that market and prices are falling as size and capabilities are rising. This might be a good time to invest in solar.
Likewise, if you want an electric vehicle, act soon because those incentives might also disappear under a Trump administration. As a guy who just experienced a three-week power outage, I will not recommend an electric vehicle, but if you feel the need to have one, don’t wait too long. I would recommend a plug-in hybrid instead. You can still consider yourself green, if that is important to you, but fill up at the nearest gas station.
Corporations and large retailers are front-loading their purchases from China, hoping to stock up before the Trump Tariffs hit. You should do the same. Tariffs may make a $10 difference on a pair of shoes or pants, but if you are buying furniture, appliances, electronics, or other expensive goods, it could add hundreds to the cost. Part of being prepared is planning and acting ahead of time. Don’t miss your chance to do so.
