Dollar Death Bed: Aussie Beyond Parity For First Time In 28 Years

Tyler Durden's picture

The entire world is preparing to bury the dollar in advance of tomorrow's QE2 currency suicide by the chairman. Exhibit A: the OZ dollar which is now trading north of parity for the first time in 28 years, as Australia decidedly puts its in chips in China's basket, believing that no matter how high the OZ, China will have no problem with importing its exports. A quick look at the FX heatmaps shows that while the dollar is getting shorted across the board and the EUR is surging, and making Merkel livid once again, the Yen, at least so far, is benefiting as it has again become the short currency of choice against the AUD, in the one pair that correlation traders use to determine broad market risk more than anything. Yet with a near record number of dollar shorts in existence, will the be the proverbial cover on the news day? Or, if Bill Gross is right, are we going to see a 20% plunge in the dollar beginning tomorrow? Of course, if Gross is right, he would be buying stocks on margin, not MBS. So take notice.




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HarryWanger's picture

Of course, if Gross is right, he would be buying stocks on margin, not MBS. So take notice.

I've been saying this for a few weeks now. Everyone is expecting a stock sell off on QE2 when just the opposite will happen. Dollar will drop and equities will rally hard. Can't see why most haven't figured this out yet.

HelluvaEngineer's picture

Guess we're just not as smart as you, Harry.

TumblingDice's picture

You are confused. People expect QE2 to bring more money into the system so the expectation is for the dollar to fall and stocks to rise. This is the consensus: QE2=more money=higher stocks. The opposite is stocks dropping due to disappointment in the size and clarity of the program.

Bill Lumbergh's picture

Harry please tell us what will happen if QE 2 is less than much for your theory.

Mentaliusanything's picture

And on what planet is that a "Good thing"

CO2 is rising because they cut down the trees. Which is the one do you need to live and breathe.

tmosley's picture

What if a falling dollar no longer guarantees a rise in stocks?  That correlation has to break down sometime.

the not so mighty maximiza's picture

Thats the question of the year.

Minion's picture

Cotton is on a tear, and even natural gas gave a good pop over the latest dollar weakness.  Equities are not acting so energetic. 

I wonder if Wanger will go the way of Bravo, if his theory of ends up getting smashed?

Walter_Sobchak's picture

zimbabwe has the highest stock market in the world, thats why.

tmosley's picture

Except that it didn't keep up with the inflation rate.  As such, someone with insider information would not invest in it.

Walter_Sobchak's picture

No one said you should invest in it.  Hard assests BIOTCH.

tmosley's picture

I'm pretty sure Harry did.  Good to see you still have use of your brain, unlike some people.

HarryWanger's picture

Can't see any scenario where that would happen unless some major global disaster were to occur.

UninterestedObserver's picture

LOL the disaster ALREADY happened - the pin has already been pulled on the derivative grenade, just because it hasn't blown up yet doesn't mean everything is OK.

TheGreatPonzi's picture

"What if a falling dollar no longer guarantees a rise in stocks?  That correlation has to break down sometime."

That's impossible. Weaker dollar equals inflation. And inflation equals higher nominal values. The Argentinian stock market has performed 'very well' during the hyperinflation.


mt paul's picture

long silver 

oil 100 $ 

by x-mas

Praetor's picture

Yay to interest rate rises...yay to AUD increase...yay to increased mortgage stress and destruction of indebted families...yay to the destruction of Australian exports (except for digging holes in the ground)...yay to social turmoil and the end of the weak Labor government. I see bad things for Australia here.

Sudden Debt's picture

I've just entered gold bullion orders in $. Those a valuable for 7 days.

If the dollar drops 20%, I'll pay the bill and make a easy 20%.

Otherwise, I just let it expire :)



spartan117's picture

And what company would allow you to lock in prices for 7 days without completing the terms of the purchase agreement? 

spartan117's picture

The USA is not listed in the countries they make good delivery to.  Oh well.

EscapeKey's picture

Yeah that sounds fishy to me. The dealer I use charges a fee + the potential loss if you don't pay up.

DosZap's picture

He's in Belgium, he gets deal there on the cheap,prices on coins we only dream about.

Anyone thought of taking a flight overseas and buying gold at the better rates?.

If you buy 40-50+ozs, it may be worth the trip, ideas?.

eigenvalue's picture

At what price do they charge you when they sell you gold? Just at the price Comex shows? Or they add a margin?

Sudden Debt's picture

to sell your gold or silver you use Ebay.

You need to be nuts to sell your gold or silver back to those kind of brokers.

Clark_Griswold Hedge Mnger's picture

anyone notice how the last two days, gold and silver open up and climbs only to be cut in half or less than half for the days gain, makes me wonder how much effort is out there to push down, in anticipation of tomorrow.

DosZap's picture

Just keep damn good records, cause the IRS is.

Clark_Griswold Hedge Mnger's picture

speaking of keeping good records, I heard some noise the other day about somewhere in that insane Health Care Bill that passed there is a provision in there that states, a Federal IRS form is filled out or recorded for every transaction you make (starting next year) that is greater than $600.00.

Anyone else hear or see this?  So if Bennie kills the buck, and bread costs 600 a pop, we'll be spending all our free time in the bread lines filling out forms....

Mike7.62's picture

It's more than a rumor, it's a fact. Embedded in the Ob@m@care legislation is the proviso that ANY business which purchases ANY goods worth more than $600 in a year, cumulative, is required to generate a Form 1099 Misc for that transaction. This begins in January 2012. 

Clark_Griswold Hedge Mnger's picture

Thanks for the reply,

is it only business or personal as well?

Mike7.62's picture

Business; but if you sell anything TO a business, they will generate a 1099 which will have your name and SSN/TIN as the seller.

SilverIsKing's picture

Agreed.  Suckers buy on ebay and who better to sell to than suckers.

TumblingDice's picture

This thing is wound up tighter than Ray Charles circa 1964.

doolittlegeorge's picture

Is QE 2 a threat? If so to what? Not to equities. They "never get any money" as is so well stated here. It's the fixed income that "gets all the free money." Needless to say "the junk" is in surprisingly short supply. Eeeeks. If that doesn't scream "hyperinflation" i don't know what does. Welcome to the "Roman Wilderness of Pain."

tmosley's picture

I guess you never heard of POMO, despite it being covered in detail here damn near every day.


BW's picture

If the FED is buying long term treasuries with QE2 then the FED is betting deflation will win out and they will make a killing on those treasuries.

BW's picture

When yields go down, bonds prices go up. 

DosZap's picture

Well guess what, they are talking abiut buying something besides Bonds and Euities with this law saying they have to buy Bonds.

Besides makes no sense, and does not help the regular folks, or the economy.

tmosley's picture

Wrong wrong wrong wrong wrong.

The Fed isn't "betting" on anything.  They are trying to manipulate the market to produce growth.  BIG difference.  They don't have a rational self interest save to keep the politicians happy.  They don't get to keep the profits they might make, but rather have to turn them over to the Treasury.  That, plus they aren't playing with real money.

jdrose1985's picture

That, plus they aren't playing with real money.


Understatement of the day.

The Fed can run but it can't hide and it damn sure can't indefinitely prevent a Minsky moment from occuring.

I've been saying this for weeks...nay, months...oil market is calling the shots. A 70% consumer driven economy is what's working against Benny and the Jets.

The reality of it is that Benny can't reverse engineer valuable commerce by debasing the real currency. But he sure can wreck the whole gig by driving the PERCEPTION of a weak currency which will be self defeating as the laws of gravity (commerce inputs aka oil) take place again. It's like Peter walking on water. It was all good til he looked down...

eigenvalue's picture

WTF are gold and silver doing? Everything else is roaring but gold and silver barely budge. 

TheGreatPonzi's picture

Some heavy bank shorts playing. The nuisance capacity of banks like JPM will stay intact on the PM markets until they go bankrupt or have no cash flow.

qussl3's picture

The PMs hardly budging today smells damn fishy for the short term.

Considering that the Dollar jus took it up the butt its the perfect cover to make a run the shorts but nothing happened.

Damn weird that there's no spike.

unum mountaineer's picture

how much crack would a crackhead get, if a crackhead wanted more crack?

woulda crackhead starve him/her self to get more crack,

if a crackhead thought s/he could (get more crack that is)? stfu um!

Sudden Debt's picture

are you on crack right now or are you sticking to glue?

Pez's picture

Picked a bad time to stop sniffing glue!