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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.

USD

EUR

JPY

 


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Tue, 11/02/2010 - 08:56 | Link to Comment HarryWanger
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.

Tue, 11/02/2010 - 08:59 | Link to Comment HelluvaEngineer
HelluvaEngineer's picture

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

Tue, 11/02/2010 - 09:00 | Link to Comment TumblingDice
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.

Tue, 11/02/2010 - 09:14 | Link to Comment Bill Lumbergh
Bill Lumbergh's picture

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

Tue, 11/02/2010 - 16:33 | Link to Comment Mentaliusanything
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.

Tue, 11/02/2010 - 18:37 | Link to Comment bob resurrected
Tue, 11/02/2010 - 08:54 | Link to Comment tmosley
tmosley's picture

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

Tue, 11/02/2010 - 08:56 | Link to Comment the not so migh...
the not so mighty maximiza's picture

Thats the question of the year.

Tue, 11/02/2010 - 19:42 | Link to Comment Minion
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?

Tue, 11/02/2010 - 08:57 | Link to Comment Walter_Sobchak
Walter_Sobchak's picture

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

Tue, 11/02/2010 - 09:01 | Link to Comment tmosley
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.

Tue, 11/02/2010 - 09:26 | Link to Comment Walter_Sobchak
Walter_Sobchak's picture

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

Tue, 11/02/2010 - 09:29 | Link to Comment tmosley
tmosley's picture

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

Tue, 11/02/2010 - 09:37 | Link to Comment Walter_Sobchak
Walter_Sobchak's picture

Well thats his funeral

Tue, 11/02/2010 - 08:58 | Link to Comment HarryWanger
HarryWanger's picture

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

Tue, 11/02/2010 - 09:42 | Link to Comment UninterestedObserver
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.

Tue, 11/02/2010 - 08:58 | Link to Comment TheGreatPonzi
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.

 

Tue, 11/02/2010 - 08:56 | Link to Comment mt paul
mt paul's picture

long silver 

oil 100 $ 

by x-mas

Tue, 11/02/2010 - 08:58 | Link to Comment Praetor
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.

Tue, 11/02/2010 - 08:58 | Link to Comment Sudden Debt
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 :)

NO RISK!!

 

Tue, 11/02/2010 - 09:02 | Link to Comment spartan117
spartan117's picture

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

Tue, 11/02/2010 - 09:09 | Link to Comment Sudden Debt
Sudden Debt's picture

coininvestdirect.com

 

Tue, 11/02/2010 - 09:46 | Link to Comment spartan117
spartan117's picture

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

Tue, 11/02/2010 - 09:10 | Link to Comment EscapeKey
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.

Tue, 11/02/2010 - 10:33 | Link to Comment DosZap
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?.

Tue, 11/02/2010 - 09:28 | Link to Comment eigenvalue
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?

Tue, 11/02/2010 - 09:37 | Link to Comment Sudden Debt
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.

Tue, 11/02/2010 - 10:24 | Link to Comment Clark_Griswold ...
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.

Tue, 11/02/2010 - 10:34 | Link to Comment DosZap
DosZap's picture

Just keep damn good records, cause the IRS is.

Tue, 11/02/2010 - 10:54 | Link to Comment Clark_Griswold ...
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....

Tue, 11/02/2010 - 11:20 | Link to Comment Mike7.62
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. 

Tue, 11/02/2010 - 11:26 | Link to Comment Clark_Griswold ...
Clark_Griswold Hedge Mnger's picture

Thanks for the reply,

is it only business or personal as well?

Tue, 11/02/2010 - 11:40 | Link to Comment Mike7.62
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.

Tue, 11/02/2010 - 13:44 | Link to Comment SilverIsKing
SilverIsKing's picture

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

Tue, 11/02/2010 - 09:14 | Link to Comment TumblingDice
TumblingDice's picture

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

Tue, 11/02/2010 - 09:16 | Link to Comment doolittlegeorge
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."

Tue, 11/02/2010 - 09:38 | Link to Comment tmosley
tmosley's picture

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

 

Tue, 11/02/2010 - 09:17 | Link to Comment BW
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.

Tue, 11/02/2010 - 09:18 | Link to Comment doolittlegeorge
doolittlegeorge's picture

?)

Tue, 11/02/2010 - 09:25 | Link to Comment BW
BW's picture

When yields go down, bonds prices go up. 

Tue, 11/02/2010 - 10:37 | Link to Comment DosZap
DosZap's picture

Well guess what, they are talking abiut buying something besides Bonds and Euities with this batch.......no law saying they have to buy Bonds.

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

Tue, 11/02/2010 - 09:43 | Link to Comment tmosley
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.

Tue, 11/02/2010 - 10:03 | Link to Comment jdrose1985
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...

Tue, 11/02/2010 - 09:19 | Link to Comment eigenvalue
eigenvalue's picture

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

Tue, 11/02/2010 - 09:23 | Link to Comment TheGreatPonzi
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.

Tue, 11/02/2010 - 09:29 | Link to Comment qussl3
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.

Tue, 11/02/2010 - 09:33 | Link to Comment unum mountaineer
unum mountaineer's picture

supression fire

Tue, 11/02/2010 - 09:22 | Link to Comment unum mountaineer
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!

Tue, 11/02/2010 - 09:40 | Link to Comment Sudden Debt
Sudden Debt's picture

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

Tue, 11/02/2010 - 09:55 | Link to Comment Pez
Pez's picture

Picked a bad time to stop sniffing glue!

Tue, 11/02/2010 - 10:15 | Link to Comment quasimodo
quasimodo's picture

Just don't unplug the runway lights

Tue, 11/02/2010 - 09:34 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Let's look at Bill Gross's comments as :

1) Agit Prop for the Treasury / FED

2) Front Running

Why Agit Prop ? Global imbalances have been led over the last 10 year stretch by overconsumption in the US and underconsumption in the exporting mercantilists. Capital flowed into USTs from emerging markets, keeping rates low in the US and globally, feeding a massive bubble in real estate when the bankers did their Lord of the Flies impression. 

In a "free" market, capital would ideally flow to where there are higher rates of return. To reverse global imbalances, Gross is suggesting that Americans, and by extension the rest of the world, put their money in EM. This may be even better than QE2 at bringing the USD further down. It puts the ball back into the mercantilists lap. Export less, import more and allow the citizens of those countries greater economic and by extension political participation.

Front running ? Well, we all know that Mr. Gross is no fool when it comes to having an edge.

Tue, 11/02/2010 - 10:53 | Link to Comment robertocarlos
robertocarlos's picture

I'm shocked. The Aussie is worth more than the Loonie? No wonder they are trying to buy Saskatchewan.

Tue, 11/02/2010 - 13:53 | Link to Comment Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

No doubt Mish sees all this as deflationary.

Tue, 11/02/2010 - 13:53 | Link to Comment Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

No doubt Mish sees all this as deflationary.

Tue, 11/02/2010 - 14:06 | Link to Comment Biggvs
Biggvs's picture

I'm guessing he'd say money printing (QE2) is inflationary - no doubt - but that it won't keep pace with credit losses, so net deflationary.

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