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Killing The Dollar Softly
Remember when the dollar bounced back after the "phenomenal" GDP numbers? Neither do we. But at least stocks are up. More of a cushion for after the "even more phenomenal" 30 Year auction results come out today.
Bernanke: "My job here is done"
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When do rolls of $100 Bill toilet paper go on sale in your shirt shop?
Force the dollar lower so equities go up and everyone feels rich again.......Brilliant
and blame $5 gas on greedy oil companies
Brilliant, indeed. My sense is that we are nearing the "last call" phase for companies to go out and issue/capital raise while the going is still good.
My sense is that while the curtain is getting heavier and more diffcult to hold open, there is enough room for the dollar to fall further before things really get dicey.
The Fed likely wants to postpone letting things going until Sept-Oct. The question is, can they maintain the status quo that long?
This is the same playbook - circa 2002-07. How surprising.
Just imagine where the USD would be if they didn't have a "Strong Dollar" policy.
What I'm wondering is why the market isn't up more given the dollar is down almost a point...
Perhaps its because investors are coming to the realization that consumers (still) aren't spending. The retail numbers (after stripping out cash for junk) were not terribly good.
It def a victory for the bulls that we're up marginally in the face of worse than "expected" inventory, foreclosure, personal bankruptcy, retail sales, and initial claims data over the past 2 days. 78 is a key technical level on the DXY, I'm expecting this significant move higher you reference will come if we break down below that level.
cnbc wins, stocks and ratings are up up up
meanwhile CPI?? not worth mentioning
maybe disconnect is finally here
Just another tool to use. Econ data sucks? No problem. Bash the dollar and watch the stock market float higher. Oil goes higher too but that's ok, these are all green shoooots in the new green economy.
Faber is calling bond shorting the trade of the century...that is a long time frame! I agree, it has to be well timed, holding TBT for one century is just too long! LOL
good articles; my newest bookmarked finance site ..http://www.. hat tip: finance news & finance opinions
On a dollar up day I would love to see this site proclaim the DXY is backing that ass up :-P
So there was a huge selloff in the Yen before markets opened on Friday (which was before AIG earnings if I remember correctly). Almost immediately that trade started unwinding and now we're back to where we were before that spike lower on the Yen. 94 has proved a key support/resistance level for the dollar/yen since the October crash. The Yen is now a little above 95. If the Yen breaks out to the upside then look out below on the DXY and look out above in the equity markets.
Critical Thinking - 0
Hopium - +10
I guess my kids won't see Europe for another 10 years... (SIGH)
nothing to see here
Shining Brilliance once again!
THANK YOU CB!
FU, and log on next time you F coward
I dunno what anon's problem is. I scan for your posts (and a couple of other posters) first, and only then do I bother going through the rest of the list.
Maybe Tyler's going to have to make people register to comment soon, esp as traffic keeps increasing.
Why do you need him to log on? Are you gonna track him down and kick his ass? Seriously, you ought to read your own comments.
CB your doing it wrong
WTF happened at 10:02 this morning?
Did the NYSE suddenly release all those backed up buy orders, all at once?
interestingly, every day the dollar weakens is a day closer Latvia, or some other eastern euro pig, breaks their currency peg (which are to the euro, clearly, but they become more and more uncompetitive.).
And the Western European banks go broke when Eastern Europe does due to all those loans (Switzerland is not going to make it out of the next shakeout, imo).
And the Fed entered into a whole bunch of SWAPS wih the European Central Banks.
uh oh...
Does anybody know which countries (other than the ones that have been cut out of the credit markets up until now) can survive a 10%+ spike in interest rates over a couple of months? If so, let me know so that I can put my money there.
GS is out with strong dollar call...
10. On that front, the issue of what the near-term US growth improvement means for the USD is squarely back in focus. Thomas Stolper and team will no doubt have more to say on the issue, but while the USD TWI has managed a small bounce, the case for broad USD strength – even on better US growth news – is a bit less obvious. We think the argument is best for USD/JPY. Jim O’Neill argued that $/JPY might belong closer to 195 (!) than 95 in last week’s FT, citing the deteriorating balance of payments and the need for easing financial conditions, alongside clear overvaluation on our GSDEER measures. We are being more conservative in our new Top Trade to be long USD/JPY last week (but our target of 105 is an initial target, so who knows!), but we are at important levels for JPY TWI here. It is also plausible that a stronger US growth picture might cap EUR/$ and we have been more open to shifting funding for more attractive currencies towards EUR as Themos Fiotakis described last week, and continue to expect EUR weakening against a range of stronger-recovery regional neighbours (SEK, NOK, PLN, TRY). But for commodity currencies and EM FX, USD outperformance on better US growth news is a lot less clear. Our bias remains to think that this group will continue to outperform the G3 as a group and that US growth will help “higher-beta” FX.
As an aside,
The one constant flow that is reliable and allocatable is 401K flows. Wish there were a way to peer into the phone records between treasury and Fido, Wellington, etc..That is a massive untapped (tapped) revenue perpetuity/stream to quietly buy up all that REIT garbage and the rest of the sh%t equity.
"The one constant flow that is reliable and allocatable is 401K flows."
The rules of this game aint gonna change till common folks figure out this debauchery is financed by their contributions to 401k and pensions. Someday if I decide to get off my butt and become an activist instead of an arm chair rebel, that is where I would start - to make people aware of that !
So we have GS and Pretcher on the same side of a trade. Hmmm...who should I trust - a thief or a moron?
Deutsche Bank Chief Economist Norbert Walter seems to be bearish on everything including the world, the United States and the greenback...
http://www.cnbc.com/id/32396144
In fact CNBC seems a little bearish overall today... whats up with that?
Could it be possible that, b/c CNBC's rep has been thoroughly trashed, they want to at least give the appearance of being somewhat out in front of a major downturn? That way they could spare themselves a second wave of public outrage for not having warned anyone of a downturn?
I think you may be onto something there...
Record Foreclosure Activity in July; http://www.calculatedriskblog.com/
So let me get this straight, foreclosures are going up and housing prices are continueing to fall? Isn't this the reason all the banks were "insolvent" last fall? How all of a sudden are they healthy? Why does no one pay any attention to these two major data points? How long can everyone deny reality?
"How all of a sudden are they healthy?"
see Mark to Market, or rather lack thereof
I say until about the same time that you decide to finally go long.
Until the lights turn off and the grocery store shelves are empty.
the shelves are empty in detroit http://cfecon.blogspot.com/2009/08/hunger-hits-detroits-middle-class.html
nothing will happen till american idol goes off air.
Then the lights go off it's safe to assume american idol will go offline. Battery powered TVs don't work after the digital conversion so I stand by my prediction.
"How long can everyone deny reality?"
The answer is: "Until the foreclosures work through the system, and the institutions that own the paper need to account for what it is actually worth (vs the fantasy currently claimed on balance sheets).
You beat me to post CR's link. Debt deflation = strong dollar. Hendry's right. The only thing Kudlow ever got right: "King Dollar".
Taking on debt is the same as shorting the dollar. People think that inflation will cause the dollar-denominated value of the debt to decline over time. In a deflationary environment such as exists today, people scramble to sell whatever they can to pay off existing debt, thereby causing prices to fall - which is what we are seeing. As the debt implosion continues, the value of the dollar will rise. There is a bottomless pit of dollar-denominated debt. IMHO, those who expect the dollar to continue to decline are not seeing the forest for the trees. I've been slowly accumulating OTM Dec through March calls on the dollar. Those of you who follow Hugh Hendry know that he's very bullish on the dollar. 97% of the people believe the dollar is going to decline. That's a very crowded trade.
Short Term, dollar bullish
Mid-Long Term, dollar bearish
"The household savings I guess would end up in money market funds, in which then flows into longer term tresauries.
good articles; my newest bookmarked finance site ..http://www.. hat tip: finance news & finance opinions
Short Term Dollar = Bull
Mid Term Dollar = Bear
Long Term Dollar = Dodo Bird
But Bernanke would sell his own mother to ensure that lending remains "robust" and there is ample access to "liquidity"...
If deleveraging reaches the point where the dollar has the power to grow in strength, the damage it will cause over time (destruction of financial sector, mass unemployment, overwhelming debts) is probably sufficient enough to also destroy the dollar since it would probably lose its reserve status by that point and the US would have a bleak future indeed.
What exactly happens if the borrower goes bankrupt and the debt goes to 0? What conversion to dollars takes place?
Supply destruction. Fewer dollars remaining. The ones left are worth more.
Not really, since whichever dollars lent were paid out to some other party.
But dollars remaining are worth more in that future lending and repayment expectations may be downwardly revised (in the absence of indefinite money printing).
Hendry's a smart man. I expect your calls to do very well.
Finally--someone who gets it.
"...people scramble to sell whatever they can to pay off existing debt, thereby causing prices to fall"
Yeah, but not if they default on it.
In that case, the lender is screwed and can't buy, causing prices to fall (and velocity drops because people won't lend out, causing prices to fall)
"IMHO, those who expect the dollar to continue to decline are not seeing the forest for the trees. I've been slowly accumulating OTM Dec through March calls on the dollar. Those of you who follow Hugh Hendry know that he's very bullish on the dollar. 97% of the people believe the dollar is going to decline. That's a very crowded trade."
Woot .. have Anon, HH and GS and the Big P on my side.
Been accumulating and for the record the ECB pumping Euro and all the lil' green shoots in Europe are from Goevrnment stimulus programs enacted before the US. Too much garbage out there and any hiccup will force a flight to the USD.
Longer than all the USD Longs and stocks shorties can stay solvent!
Yeah... well call me crazy, but I think the dollar will skyrocket in the short term before plunging to the depths of hell.
This is, afterall, a deflationary collapse.
+1, and you're crazy
"This is, afterall, a deflationary collapse."
No, it isn't.
Exactly. We have to get to the bottom of the debt-pile before inflation worries kick in. Hold dollars right now, that's my opinion. Gold and silver bugs who think that the fed is setting us up for imminent hyperinflation are in for a rude awakening. That may come later. The dollar game is the one to play today.
Gold and silver bugs are, by definition, not short-term traders of the metals. Imminent should not be in the vernacular.
the death of the dollar is innevitable
I prayed that he would finish, but he just kept right on...
The death of all fiat paper is inevitable, but it's what you need when the creditor calls. If you hate stocks right now, you should also hate gold, cause they're going down together against this awful currency. The dollar's last hurrah is going to astound 97% of traders.
but gold has no liability....so why should you hate it? The problem here is that there is no integrity in the system..you have no idea who is going to fall next...you have no idea who is good for that debt unless the fed steps in and guarantees it.
and the dollar is all liability.
Thanks for your observations, speculator. Much appreciated.
"The dollar's last hurrah is going to astound 97% of traders."
Umm...wasn't that like last year?
"...but it's what you need when the creditor calls."
Not if you default on the loan.
http://www.gold-eagle.com/editorials_04/paulos041604.html
the arguement in layman's terms....
Time cycles project a USD bottom around the second week of September, at which time a top in equities is expected too.
The USD will surprise everyone on the upside into the Autumn, as equities melt down to new lows.
Best,
Nothing by next week huh? bummer...
Fine with me since I am on vacation.
yes and i am sure all that you say will be driven by market forces. is that correct? :)
why does the market keep going up even though the fundamentals aren't that great? Every day, week, month the market keeps going higher. good articles; my newest bookmarked finance site ..http://www.. hat tip: finance news & finance opinions
why? you ask me why? how long have you been around here?
Thanks Tyler...saw that headline and now have a relly bad song stuck in my head. Kiling me softly.
Oh man... that's terrible. It's stating to happen to me, too.
Me too, goddammit!
Hi guys -
Can someone tell me why the dollar and S&P 500 have moved in opposite directions: as the dollar has weakened the S&P has strengthened and the opposite.
I am trying to square the idea that since stocks are going down (IMO) that means that the dollar will strengthen again - but this runs counter to the money printing going on.
Can anyone shed some light on this?
Ron
Stocks are demoninated in dollars. So they'll move up with inflation.
However, I don't beleive stocks keep up with inflation over the long run. If you're just buying and holding buying commodities over stocks would be better historically (this is all based on memory of other people's research).
A lot of people on this site are trader types that want to leverage a big score off any movement in the near term.
word.. screw buying stocks in this fake rigged economy unless you're an insider or a trader/gambler. i'm sticking with commodities and so far am up about 50% this year.
You guys are long B.S., I' long dollars.
I know this is small potatoes but won't this logic create less demand for dollars?
Bank of Israel halts daily dollar-purchase program
"History has shown that the only significant factor influencing the shekel-dollar exchange rate in the long term is the value of the greenback in the global-currency market, and [Bank of Israel] Governor Stanley Fischer knows that."
http://www.jpost.com/servlet/Satellite?cid=1249418575155&pagename=JPost/...
Good interview of Bill Fleckenstein by Eric King of King World News. Dollar/economy etc.
http://tinyurl.com/rbgxqd