Effect of the Pending "Sovereign Debt Crisis" on the U.S. Dollar and Private U.S. Assets

I continue to be a bull on the U.S. dollar. Why? Well, it is based on the pending “Sovereign Debt Crisis” that will cause a flight to safety in the form of dollar purchases of U.S Treasury securities and, then, into private U.S. assets. Now, a brief explanation of this looming “Sovereign Debt Crisis.” China was consuming almost 50% of all the world commodities. So, the economic contraction occurring currently in China is causing the emerging markets into recessions. These countries have taken on $9 trillion worth of new debt since 2007 in dollars. These emerging market countries assumed the upward growth trend of China would never end and then borrowed $9 trillion since the U.S. rates were kept artificially low through the Fed’s ZIRP.  Now, as the dollar continues to gain strength, which will intensify as the crisis unfolds, these countries will have to repay their dollar debts in more dollars (exchange rate risk) or default, which is the likely scenario. Sensing that likely scenario, investors will liquidate those positions and seek safety first in U.S. Treasury Securities and second in U.S. private assets. And, that is what I have been referring to as the “Sovereign Debt Crisis of 2016.” Therefore, I would definitely not be investing at this time in emerging markets, or, if I had investment positions in those markets, I would be liquidating them immediately.