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0202 2023


The U.S. debt crisis and the whereabouts of a solid investment

DHF Capital S.A.

The U.S. debt crisis takes shape. Looming for years, stimulated by the Federal Reserve Bank, it's starting to feel like credit card debt is only rising, without any sign of a ceiling. With its ever-growing national debt threatening the welfare of both citizens and businesses alike, it's essential to look for ways to protect your wealth and therefore make sound investments. But how to do that? What is an interesting strategy to follow? Where can you turn for a stable investment in a world where the future of the economy is uncertain? In this blog post, we will discuss credit card debt, the national debt, how to drive your equities around it and how DHF Capital S.A. navigates.

U.S. credit card balances fire up to records

Credit card debt is the second largest debt source behind mortgage debt. At the latest calculations from the Federal Reserve Bank, the total amount of credit card debt is an astonishing $ 986 billion dollars. That can mean a lot of things. It can mean people's spending habits change, it can mean there is less asset in general than to be spend, but it can also mean that inflation still takes its share.

Rowan Rozemond, Head of Global Investor Relations and board member at DHF Capital, recently discussed the Dollar Milkshake Theory. In this theory the strength of the USD keeps rising as the FED sucks up existing capital and keeps an eye on U.S.' national debt. "The average credit card interest rate in America today is 23.77%, the highest on record," says Rozemond. "It will affect the buying power of Americans. It suggest that Americans will start to spend less in order to pay off their credit card debt. Their wage may have grown with 7,86%, still comparing to the overall costs that is no contributive factor."

Last years the economy has been doing well and people are confident about their future prospects, although the consumers trust globally decreased. People tend to spend more money when they feel good about the future. After all, why should you buy something you don't need right now, as with credit card purchases is often the case, when you would know you cannot pay it back?

Rozemond: "Second, interest rates on credit cards have been rising, thanks again to the FED. This means that people are paying more in interest and fees, which makes it harder to pay off the balance. Finally, there has been an increase in the number of people who are using credit cards to finance their lifestyle. This includes things like travel, entertainment, and dining out."

Sky high interest rates will stop the spending: stocks get a beating

While an average American family is paying $3,856 in interest every year, eventually when the interest rates keep peaking, there will be a turning point among consumers and therefor companies.

"The spending will stop. With that bank earning will suffer and stocks will take a beating," Rozemond explains. "The U.S. is the largest debtor in the world, but it also provides a lot of loans to other countries. While the dollar is rising in value, countries paying back their debt have to bring more money to the table. That puts pressure on investors. The volatility in the markets and has led to a lot of stock prices falling, say, crashing last year. Thinking of a passive investment portfolio? That might not be that much of a good idea."

DHF Capital's active trading strategy works in every environment

Your assets are well taken care off to let it grow, even in more volatile and turbulent times. DHF Capital's active trading strategy is based on the belief that markets are constantly changing and that there is always opportunity for profit. We use a variety of technical indicators and models to identify potential trades, combined with seasoned experts steering on the data.

Rozemond: "The strategy DHF Capital S.A. uses, is based on a spreader model. To explain this, we dive a bit deeper. Therefor we divide a total asset in three investment parts: Active Trading, Cash and Money market and psychical commodities. The biggest part of an asset is invested in active trading where the lines are short and dynamic. Included products can be forex, stocks, bonds, equities, etc. A lot can happen, a lot can be won. Another 20% of the asset is put in the cash and money market where it finds its way trough for example cash in a bank account, a money market product, certificate deposit, different currencies and more. Last but not least a small 10% part of this strategy contains the psychical investment. Think about gold, silver or other precious metals. That's the secure part of the deal."

DHF Capital S.A. has a team of experienced traders who are able to adapt their strategy to any market environment. This flexibility has allowed us to consistently generate profits regardless of what the overall market is doing.

Have you already noticed our guaranteed return policy? It means the we take the risk, you take the profit. Find contact with us any time. We are happy to advise.

DHF Capital S.A.

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