- Trump at center stage as Republicans square off in first debate (Reuters)
- Cleveland Debate Offers GOP Hopefuls a Chance to Break Away from the Pack (WSJ)
- Bank of England Keeps Key Interest Rate at 0.5% in 8-1 Vote (BBG)
- Emerging stocks submerged, UK gears up for 'Super Thursday' (Reuters)
- No IMF decision on Greek bailout until autumn, Swedish rep tells paper (Reuters)
- Japan Heads Toward Nuclear Unknown With Post-Fukushima Restarts (BBG)
- Activist Ackman Takes $5.5 Billion Stake in Snacks Giant Mondelez (WSJ)
It's time to challenge the notion that the decline of a currency can be measured simply by the rate of price increases. This price-centric view misses the ongoing hyperinflation.
Regardless of where one thinks the dollar is going in the long-term, here is a discussion of where it will likely go in the short-term.
Earlier today, the SNB which is perhaps the most transparent hedge fund of all central banks and actually lays out its financial statements in a respectable manner every quarter, released its results for the second quarter (and first half) of 2015. The result: another absolutely epic loss, amounting to €50.1 billion ($51.8 billion) of which €47.2 billion on currency positions - a whopping 7% of Swiss GDP - meaning that in Q2 the SNB lost another €20 billion. This happened despite the SNB having invested 17%, or $94 billion, in foreign - mostly US -stocks.
Greece has no future, so long as it clings to the euro. The dollar won't servce you much better. A drachma will only harm the Greek people. That leaves one other option.
The action in gold in 2013 was a warning about the “dollar”, a warning that went completely unheeded yet has been largely fulfilled. Again, 2013 provides a guide as to why gold prices may be declining in sharp moves, especially right at the open or in weaker trading hours, and it has very little to do with interest rates apart from fixed income suggesting the same factors about the “dollar.” Whether it is growing unease about the global economic picture or the “sudden” recurrence of financial irregularity almost wherever you wish to gaze, the “dollar” is once more wreaking havoc. This isn’t controversial at all, but somehow economists can miss that gold is global and universal collateral and when the eurodollar system is stressed it becomes activated in that manner.
The Fed may raise rates from 0.25% to 0.3% or possible even 0.5% sometime in the next 24 months… but these moves will be largely symbolic. Here's why...
With the mainstream media onslaught against precious metals climaxing this weekend as WSJ's Jason Zweig proclaimed gold "like a pet rock," describing owning gold as "an act of faith," we thought it worthwhile looking back at the last time 'everyone' was slamming gold and entirely enthused by the omnipotence of central bankers... May 4th, 1999 - "Who Needs Gold When We Have Greenspan?"
The dollar made new multi-year highs against the dollar-bloc and is bid against most major and em currncies. Why?
In a January 2013 report “Report of the Working Group to Study the Issues Related to Gold Imports and Gold Loans by NBFCs”, the Reserve Bank of India estimated that the ratio of paper gold trading to physical gold trading is 92:1. That is a lot of unbacked paper gold instruments. This has almost entirely separated the “gold price”, such as it is (the clearing price for vast volumes of paper gold “representations” with a fractional backing) from the fundamental supply and demand dynamics for actual physical gold bullion.
As Mr L. famously quipped. "Ever get the feeling you’ve been cheated?"
Non-bombastic look at the price action and speculative positioning, with the hope of anticipating next week's developments.
In hyperinflation, the currency's purchasing power collapses. Many Fed critics have predicted this will come soon, though it hasn't happened yet. However all is not well with the dollar.
Tumbling Futures Rebound After Varoufakis Resignation; Most China Stocks Drop Despite Massive InterventionSubmitted by Tyler Durden on 07/06/2015 06:52 -0400
More than even the unfolding "chaos theory" pandemonium in Greece, market watchers were even more focused on whether or not China and the PBOC will succeed in rescuing its market from what is now a crash that threatens social stability in the world's most populous nation. And, at the open it did. The problem is that as the trading session progressed, the initial 8% surge in stocks faded as every bout of buying was roundly sold into until every other index but the benchmark Shanghai Composite turned sharply red.
Initial conditions matter when contemplating impact of Greek referendum
We warned previously that when (not if) the market crashes next, The Fed is going to need a scapegoat (other than British traders living at home with their parents) and judging by The Fed's Lael Brainard's comments today, high-frequency-traders (HFT) are in the crosshairs. Crucially, Brainard warns that HFT "may amplify market shocks," and The Fed is "studying possible changes in liquidity resilience."