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Broken Cable: GBP Pounded On Rush To Unwind Global Carry Trade
The cable is plunging: after flirting with 1.50 as recently as yesterday, GBPUSD is taking major stops out and just dropped below 1.47. Next stop 1.44 as the physical gold and silver shortage is sure to take the UK by storm. The GBP heatmap shows just how profound the morale improving beating in the pound looks like. This is not at all surprising, as the pound has just realized it needs to hit parity with the euro asap if Cameron's deficit reduction plan is to be even remotely viable... and the dollar as soon thereafter as possible.
And speaking of the euro, not much difference there:
And the winner is... the Yen, as global carry gets unwound.
Of course, if the market was even remotely normal and fund flows still mattered, futures right now would be a good percent down following the massive carry trade unwind. Instead, as there is no more real money determining equities, look for futures to explode to the upside, as bonds, gold, oil and stocks are all bought in the latest example of what bubble "diversification" for the Bernanke generation truly is.
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Add in capital control as the UK "subjects" are now forbidden to buy 500 euro notes.....
But why would anybody want to buy the euro anyway?
I think the proposed EU members budget pre-screen by EU bureaucrats is meant to sift meaningful information out of member countries background papers and slide it to EU friendly financial institutions for public disemination or financial market use.
With Brussels doing everything to bribe everyone with euros, an inside peek and advantage could well cause pause with some financial institutions to look to maintain the euro.
Souvenir?
Think 100 Trillion Dollar notes from Zimbabwe.
Nassim Taleb said "David Cameron gets it" in relation to deficits and debt earlier on Bloomberg, unlike the US adminstration. Whether Cameron can do anything about it remains to be seen, but it's a start.
No he does not get it... very few do.
Eliminate spending at the country level right now and the system instantly collapses. The governments are all that is left.
It's going to happen anyway but to say that's a solution is kind of laughable.
There is no out, there is no solution you are going to happy with, the solution is collapse, just like it always does. The UK can do anything you want them to do and they will still collapse, this book was written before you were even born.
There is no out in this system, there is no long-term in this system. The US system is $52.5T, what is interesting is it was $52.8T. Now this quarter interest is owed, how do you pay interest on $52.5T when the amount of new debt is negative? Yep, you don't service the amount, what happens... system starts to collapse.
No, he doesn't get it because if he thinks there is an out by cutting spending he is dreaming.
There is no paying abck $52.5T of the system, you are either generating enough new credit like in 2007 at a rate of $4.7T annualized or the system starts to collapse... you remove the federal government right now... the system would be short $2T just for this year alone.
Of course you know best. lol!
Well from what I understand about the functioning of the monetary system, he is right. Maybe you care to explain why your find his comment so funny?
sBrilliantly put. Yeah its amusing how many people worry about having to "pay back" the cumulative debts. Its never going to get paid back. In fact it can only grow - or the ststem collapses from defaults. I guess if you want to invent a truly diabolical criminal scheme the ultimate scheme would be one that has an internal logic to it , that is inevitable and coopts the population to playing their respective roles in it - once you put the scheme in place it runs itself!
As we've been discussing for a month. The currency crisis is about to hit high gear.
GBP first, Gilts carnage to follow. UNLESS they crash equities.
+1.
GBP is the trade for now.
Gilts are tough to time, but there will be a time...
FTSE is a joke, the banks still hold US mortgages, the miners take commodities out of the ground in Australia and selling to China. It has nothing to do with the UK.
this is great way of visualising this, good stuff.
tehe.."bubble "diversification"". Nice phrase coining TD.
Buy up 10 currencies. Go to a store and start paying for things using all 10 currencies. It's the perfect mind screw. No responsibility, all the currencies are trash but there's so many of them they just sit around bickering and complaining about each other. This is the SDR. This is what they want to put in your wallet. Paper. papering over paper, papering over promises with a gooey crap filling.
What's in your wallet.
Can't wait to go screw with my local merchants head (not small-mid size business). " Hi, one pack of Trojan extra girthy, please. Do you take peso-euro-chinchilla-indian head nickle denominated bills? You might - OK, did I mention that they have a gooey center? Yeah, watch out for those peanuts, er, corn."
is that true that euro 500 notes are now "verbotten" in the UK?
Yes, can be sold but not bought, a measure introduced in secret last month, to combat money laundering.
Legal to sell, illegal to buy, from the people who brought you "illegal to short sale".
Coming soon, "illegal to trade CDOs"!
I have been pushing for this for a while, there is no restriction on using smaller notes just the 500 note which is mostly used by the black economy. The largest note in the UK is GBP 50 or about EUR 60. In general these large notes are only used to avoid tax, e.g. pay builders in cash so they can avoid income tax. The largest note issued by ATMs is GBP 20.
FYI it is very easy to change GBP to EUR, most banks and post offices hold EUR and USD in sufficient amounts for normal holidays.
here is the link, apperantly its because of money laudering, great can we close th 100 bill too, in fact close all bills and sell bread in exchange for a line of credit
http://news.sky.com/skynews/Home/Business/500-Euro-Notes-Pulled-By-Banks...
Vince Cable appointed to cabinet. But I will miss Darling and Balls.
Yes Vince Cable (Liberal Democrat) who is pissed off with the banks, has been appointed Secretary of State for Business.
Good name for the job!
Remember saint Vince used to be Labour (socialist) so no love lost for banks. Anyway he refused to be in charge of cutting government expense so gets business, he's got no balls and still wants to be "loved".
EUR/GBP Parity
UK enters EMU
EUR/USD Parity
SDR steps on the scene
Not sure about EUR/GBP parity. Charts don't support it, in fact they suggest the opposite, with a euro implode more likely. David Cameron gets the problem, debt and deficits, but it's whether he can do anything about it fast enough. EURUSD parity seems likely to me.
david cameron doesn't get it, at all.
Not saying that's not in their minds, but there would be rioting on the streets in the UK if they tried to enter EMU without a referendum. Especially as everyone can see what a crock the Euro is.
CB,
I agree, I expect to see most currencys move to a parity with each other, with a common SDR based one once they dont trade in the ranges they do today.
perceptive as usual CB. Ever since its inception more than a half century ago, and through its successive evolutions through the significant economic disruptions which were the expected and intended results of its own policies, the IMF has played a pivotal if not generally acknowledged role in the inexorable progression to the institution of a world economic order with the SDR "supplementary reserve asset" as the fulcrum of a new world reserve currency
One preferred method of implementing the good bank/bad bank process to the debt restructuring process by TPTB ..
These are just the early moments of the next "crisis".
Give it about a week. The PIIGS will be long since forgotten.
Only use words you can spell. Es ist "verboten" (looks even better when followed by "!!").
this is why i trade fx rather than stocks, commodities, etc
because it is such a huge market it is not that easily to manipulate and u can enjoy placing your bearish bets :)
Isn't this really a not-so-dumb strategy on the part of the euro and the pound to devalue as quickly as possible? Aren't we really witnessing the intensification of the "race to the bottom?" Forget bothering with trade tariffs and duties, just devalue like mad to raise the price of all imports and make export pricing more globally competitive. I 'm not sure what I see here that is so dumb on the part of the Europeans. If the Euro and pound are at parity with the USD, what of those "exports" our Janitorial President says we need to achieve to once again prosper in the US. Doesn't that alone spell trouble for equities, since part of the MSM-CNBC mind phuck propaganda we've been hearing for months is that the reason many exchange listed stocks are doing well is because their businesses are multi-national?
Absolutely a race to the bottom.
Smoot-Hawley takes place in the currency markets this time. It seems much more polite when it happens that way.
Someone claims Germans are switching to DM on the night of Sat 16th of May
according to Russian papers
Have a source? Sounds like my kind of fun.
http://www.dni.ru/economy/2010/5/13/191553.html
but i translated it and it does not say it :(( sorry
Just curious...where does the currency heatmap come from? I really like the visualization of currency strength and weakness across the globe.
It would seem that now he is out from under El Gordo's scorn the man feel free to speak freely, and interesting it is too
http://blogs.telegraph.co.uk/finance/edmundconway/100005657/us-faces-sam...
Be gentle with me, noob first post
Currentsea pulls out...is it just the tide? No. It is a Tsunami. Do not wait for it. Head for the hills.