Currency Peg

Tyler Durden's picture

Why From China's Biggest Bear, Hugh Hendry Became One Of Its Biggest Bulls





Considering that Chinese equities are the best performing market in USD terms (second only, oddly enough, to Russia) in 2015, one can see why after a disappointing 2012 and 2013, and modest 2014, Hendry has hit 2015 out of the park with a bang, generating a 10.6% return in the first two monthes of the year. So is Hendry still bullish on China's stock market prospects?  Why yes, and then some. But is he is contrarian just for the sake of being contrarian? Does he see something in China that nobody else does? Or is he simply right... or wrong, as the case may be? We will let readers decide.

 
Tyler Durden's picture

Central Banks Are Crack Dealers & Faith Healers





The entire formerly rich world is addicted to debt, and it is not capable of shaking that addiction. Not until the whole facade that was built to hide this addiction must and will come crashing down along with the corpus itself. Central banks are a huge part of keeping the disease going, instead of helping the patient quit and regain health, which arguably should be their function. In other words, central banks are not doctors, they’re crack dealers and faith healers. Why anyone would ever agree to that role for some of the world’s economically most powerful entities is a question that surely deserves and demands an answer.

 
Tyler Durden's picture

"Spectacular Developments" In Austria: Bail-In Arrives After €7.6 Billion Bad Bank Capital Hole "Discovered"





Slowly, all the lies of the "recovery", all the skeletons in the closet, and all the bodies swept under the rug are emerging. Moments ago, Austrian ORF reported that there have been "spectacular developments" in the case of the Hypo Alpe Adria bad bank, also known as the Heta Asset Resolution, where an outside audit of Heta's balance sheet exposed a capital hole of up to 7.6 billion euros ($8.51 billion) which the government was not prepared to fill, the Austrian Financial Market Authority said.  The punchline: "The finance ministry noted that creditors can be forced to contribute to the costs of winding down Heta - or "bailed in" - under new European legislation that Austria adopted this year so that taxpayers do not have to shoulder the entire burden."

 
Phoenix Capital Research's picture

Central Banks Are Losing Control





With the Fed and other Central banks now leveraged well above 50-to-1, even those entities that were backstopping an insolvent financial system are themselves insolvent.

 
 
Capitalist Exploits's picture

This WILL Happen!





Everything has to come to an end, sometime...

 
Tyler Durden's picture

Will China's Currency Peg Be The Next To Fall?





A pegged currency rises and falls against other currencies along with the underlying currency. Now that the USD has gained 16% in less than a year, that rise is dragging the RMB higher with it, making China's goods less competitive in markets outside the U.S. (and countries which use the USD as their currency). This major move has prompted Chinese authorities to widen the peg's range to allow the RMB to weaken slightly against the dollar. Japan's stunning devaluation of the yen has prompted much speculation that China will be forced to either end the peg to the USD or loosen the peg to match the depreciation of the yen.
 
Tyler Durden's picture

Goldman Asks If Negative Rates Are Coming To The US





Now that Europe has demonstrated that one can go NIRP and not crash the system, will the Fed - once its silly obsession with hiking rates in the summer only to launch even more easing and/or QE as the ECB did in 2008 and 2011 - follow suit and join a rising tide of "developed" world central banks in punishing savers for hoarding cash? In a note released last night titled "Revisiting Negative Interest Rates in the US", Goldman shares its thought on the matter. It goes without saying that Goldman is important, because whatever Goldman's econ team shares with Goldman's Bill Dudley over at the NY Fed, usually tends to become official policy with a 3-6 month lag.

 
Phoenix Capital Research's picture

This Marked the Beginning of the End for the Central Banking System As We Know It





This was the “Rubicon” moment: the instant at which Central Banks gave up pretending that their actions or policies were aimed at anything resembling public good or stability. 

 
Tyler Durden's picture

"It's A Man-Made Tragedy; And The Men Who Made It Won't Fix It"





"It's a man-made tragedy, and the men who made it won’t fix it." So it turns out Lenin wasn’t just right that the best way to destroy the capitalist system is to debauch the currency. It’s also the best way, as Venezuela can tell you, to destroy the socialist one.

 
Tyler Durden's picture

Denmark Launches "Back-Door QE", Halts Treasury Issuance: Why DKKEUR Could Be The "Trade Of 2015"





What Denmark has just done is "back-door QE", because as some forget, there are two ways to push the price of an asset higher (thus pushing its yield lower in the case of a bond): increase demand, which is what conventional QE does when central banks buy bonds, or reduce supply. Which is what Denmark just did by completely cutting off all Treasury issuance "until further notice". As a result, paradoxically, increasingly more speculators are betting that the "Trade of 2015" could be doing precisely the opposite of what the Danish central bank is hoping will happen: i.e., shorting the EURDKK (or going long the DKKEUR) in hopes that when the Danish peg finally does break, it too will result in long Swiss France-type profits.

 
Tyler Durden's picture

Panmure: Draghi's QE Will Fail, 2015 Will Be The Year Of "The Great Unwinding"





As everyone knows by now, tomorrow the ECB will announce a QE plan that monetizes some €50 billion (and maybe more) in European government bonds per month, although Greece may be left out in the cold. It is also the reason why while European stocks have priced in more than 100% of the full impact of a €1 trillion QE, those gains are about to be wiped out. Here's why according to Panmure Gordon.

 
Tyler Durden's picture

Denmark Goes NIRP-er; Slashes Rates To -20bps Amid Currency Peg Fears





It appears the actions of the Swiss National Bank have prompted questions for all central banks as cash squirts away from the looming Euro crash (if France's Hollande is to be believed) to any and every other currency. As the Danish Krone rallied to its strongest in 10 years against the EUR in the last few days, worries over the currency breaking its peg have apparently prompted the Danish Central Bank into action:

  • *DANISH CENTRAL BANK CUTS DEPOSIT RATE TO -0.2% FROM -0.05%

The immediate reaction was DKK weakness, but that has been completely unwound and follows worrying reassurances this week from Oestergaard that "Denmark's Krone peg to the Euro is secure."

 
Phoenix Capital Research's picture

The Financial System Broke Last Week





At this point the current financial system was irrevocably broken. We simply had yet to feel it.

 
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