Currency Corner by Kotak Securities

🇺🇸 TRUMP SAYS: “I WILL KEEP STOCKS AT RECORD HIGHS” 💥 And markets instantly understood what that means. 📌 Election year logic: Republicans face polls in 12 months. Trump’s formula to secure a win? Pump-prime the economy. 💸 Fiscal Fireworks Incoming: • Bigger govt spending • Freebies & tax cuts • Aggressive rate cuts • Liquidity flooding 👉 In short: Kinetic Dollar Debasement. 🌙 Market Reaction (Last Night): ⭐ Gold — jumped ⭐ Silver — spiked ⭐ Copper — rallied Exactly the 3 metals we highlighted in our morning note. ⏳ Next Week: Volatility. Liquidity. Big moves. Stay tuned — the macro theatre is heating up.

https://www.reuters.com/world/india/indian-regulators-talks-review-curbs-currency-derivatives-sources-say-2025-11-27/

🔥 2026: THE GREAT AMERICAN SPLIT K-Shaped Economy • Political Fed • Dollar Debasement • Hard-Metal Supercycle 🇺🇸 THE K-SHAPED REALITY Two Americas. One nation. 🔻 Bottom 70–80%: Disillusion. Distress. Delinquency. Wages stagnant, debt rising, cost of living crushing. 🔺 Top 10–15%: AI boom → asset bubbles → wealth concentration. The prosperity is literally K-shaped. ⚠️ POLITICS VS FED: THE 2026 SHOWDOWN Midterms → Nov 2026. Trump knows the economy could cost him. He blames Powell’s slow cuts. 🎯 Powell retires next summer. Trump wants a Fed he can control. 💬 Betting favourite: Kevin Hassett → Pro-Trump → Anti-slow cuts → Pro-fast liquidity Implication? 💣 A politically pressured Fed + forced rate cuts + liquidity wave. But the USD is no longer “God’s currency.” More printing = faster debasement. 🔥 FISCAL WILDFIRE The math looks like this: 💸 Govt debt → $38T+ 💸 Deficits → $2–2.5T / year 💸 Household debt → Record high 💸 Defaults → Rising And now: ➕ More tax cuts ➕ More freebies ➕ More spending This isn't stimulus. This is fiscal ignition in a slowing economy. 🌍 FINAL PHASE OF DE-DOLLARISATION (2025–2030) Started in 2008 when central banks flipped to buying gold. Now entering the endgame: 🔸 BRICS+ payments outside USD 🔸 Non-USD trade surging 🔸 Weak trust in US Treasuries 🔸 Sharp geopolitical fragmentation 🔸 Shrinking US share in global GDP A slow, grinding reset for the West is almost inevitable. 🪙 THE UNDENIABLE WINNERS Hard metals become the macro anchors: 🥇 Gold → The monetary compass 🥈 Silver → Monetary + industrial monster 🥉 Copper → Structural deficit + energy transition A diluted USD + political Fed + supply tightness = Hard-Metal Supercycle of the decade. 💡 BOTTOM LINE The next 12 months could see the fastest dollar debasement wave since 2008. Hard metals are the only assets aligned with global reality. 🌟 GOLD. SILVER. COPPER. The hard money of a soft-currency world.

🇯🇵 Japan Macro Alert — Big Stimulus, Bigger Risks The new administration under PM Sanae Takaichi is gearing up for a massive fiscal expansion — packages well above ¥17–20 trillion (≈ $110–133B) to support households, exporters hit by U.S. tariffs, and national security priorities. 💸📦⚙️ But this comes at a time when Japan’s public finances are already stretched: Government debt ≈ US$9 trillion Debt-to-GDP: ~240–260% — the highest among major economies 📊📉 🥇 The BOJ’s Impossible Dilemma Japan’s inflation is near 2% on paper, but actual living costs are much higher due to years of ultra-easy policy, high commodity prices, and the chronically weak yen. 👵📈💡 This puts the Bank of Japan in a tight spot: ⬆️ Raise rates → stronger yen, lower inflation… but crushes growth & raises govt debt-servicing costs ⬇️ Stay easy → weaker yen, higher inflation… but supports exporters & fiscal expansion Meanwhile, long-term JGB yields have surged to 17–20-year highs, increasing the government’s interest burden and hurting banks, insurers, and pension funds. 📈🔥🏦 🌏 The Global Shock Scenario High domestic yields are now tempting Japanese investors to bring money home, which can drain liquidity from global bond and equity markets. 💹🔄🌍 If yields rise further, the BoJ may be forced to step in with large JGB purchases (QE). But QE → weaker yen → more inflation → even higher yields. A policy trap. 🌀⚠️ One potential escape route: 🇯🇵 BOJ sells part of its U.S. Treasury holdings → converts USD to JPY → buys JGBs ✔️ Yen strengthens ✔️ Yields cool ✔️ Inflation risk eases But… ❗️This could hit global liquidity hard ❗️Trigger pressure on U.S. Treasuries ❗️Force the Federal Reserve to consider balance-sheet expansion again (QE) If the Fed steps in → weaker USD + capital flows into Asia, EM, BRICS+, gold, and silver 🌏💵➡️🏅🥈 📉 Japan’s Economy Is Already Slowing Q3 2025 GDP: -1.8% (first contraction in 6 quarters) Prior quarter: +2.3% Housing investment: -9.4% (worst since 2009) Exports under pressure from U.S. tariffs 🏚📉🚢 With the economy losing steam right when yields are spiking, risks to banks and financial institutions rise sharply. 🏦⚠️ 🧭 Bottom Line Japan is entering a phase of: Big stimulus High debt Ageing population costs Surging yields A policy tug-of-war between govt and BoJ The spillover to global markets could be significant — especially if Japanese investors repatriate funds or if BoJ/Fed actions disrupt global liquidity. 🌐⚡️ Stay alert to movements in: USDJPY JGB yields U.S. Treasuries Gold & Silver 📊💴📈🏅🥈 Disclaimer: https://www.kotaksecurities.com/disclaimer/commodities/

🌗🇺🇸 America’s Two Economies: The Great Divergence of 2024–26 📉📈 The latest charts out of the US paint a picture of two completely different realities living under one flag — a true K-shaped economy. Here’s the story 👇 --- 🔵 1) Consumers vs Stock Market — The Big Break For the first time in 25+ years, US consumer sentiment (😟) has collapsed while the S&P 500 (📈) keeps making new highs. Households: “Life is expensive, jobs feel shaky.” Markets: “AI will save everything!” This isn’t a broad bull market. It’s a narrow, financialised rally. --- 🧩 2) Job Openings ↓ but SPX ↑ — Until You Price It in Gold JOLTS job openings have been falling since 2022. SPX keeps rising… only in dollars. When you reprice SPX in gold (🪙), it moves almost perfectly with job openings. ➡️ In real terms, the market is already weakening. ➡️ In nominal terms, liquidity + AI enthusiasm are holding it up. Classic K-shaped economy. --- 🚛 3) Cass Freight Index: The Real Economy Is Slowing The freight index has fallen to levels last seen during the: 2008 crisis 2020 crash And now 2024–25 freight recession Shipments are dropping because demand is weakening across: Consumer goods Housing Industrials What you see on the ground ≠ what you see in the S&P 500. --- 💳 4) Rising Delinquencies & Job-Loss Fears Delinquencies 90+ days are spiking in: Credit cards 💳 Auto loans 🚗 Student loans 🎓 At the same time, more Americans expect higher unemployment ahead — levels usually seen before recessions. Households are stressed. Balance sheets are bleeding. --- 🤖 5) Market is Mega-Cap + AI Driven The top 10 US stocks now make up almost 80% of the market cap — near dot-com bubble levels. GDP, SPX returns, private markets… All being “AI-lifted”. If AI capex slows even a little, the entire structure shakes. --- ⏳ How long can this divergence last? As long as: AI spending keeps exploding Credit markets stay friendly Policymakers keep injecting liquidity But the freight recession + delinquencies + falling job openings suggest we’re in the later innings. One side must eventually give: Either the real economy suddenly improves (unlikely without massive stimulus) Or the stock market catches down to reality --- 🪙 The Policy Trap → Long-Term Gold Positive With debt so high, governments have no choice except: More fiscal expansion 💸 More monetary easing 🏦 Keeping real rates negative Which is just a polite way of saying… 👉 slow, continuous currency debasement Long term: mega bullish for gold Short term: flows & dollar liquidity will dominate Disclaimer: https://www.kotaksecurities.com/disclaimer/commodities/