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King Dollar - Be Careful What You Wish For
It's so good to be the cleanest dirty shirt, right? Wrong...
As the dollar has strengthened in recent weeks, so the performance of stocks in the S&P 500 most dependent on overseas revenue has collapsed... and furthermore, a strong dollar implies (all else being equal) a weaker oil price and as is already evident from Energy stocks, likely means significant capital-spending cutbacks among E&P firms...
Not exactly the escape velocity, rates will rise, Fed is only leaving coz things are so awesome, King Dollar meme now is it...
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As Barclays previously warned... it is the root cause of dollar strength that is most important
While the S&P 500 may not be correlated to the dollar and translation may be dismissed as accounting, dollar strength is important, in our opinion, because it is a symptom of decelerating international economic growth. This is particularly true for Europe, which is the second largest market for S&P 500 companies. European growth has continued to slow and our 2014 GDP estimate is now just 0.7%. In addition, deflation remains a concern, with recent inflation readings of just 0.5% and long-term expectations falling below 2%. Outside of Europe, China has slowed, Japan is growing at just 1.1%, and Brazil is grappling with recession.
For the S&P 500, which derives upwards of 30% of sales from outside the U.S., decelerating international growth is surely a risk.
Source: Bloomberg
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What will happen if the dollar weakens and there is still no demand for US goods? Because... you know... THERE IS NO DEMAND!
but prices will continue to rise..
$4.29 for a # of butter??? at wally world???
no wonder people are pissed off and looking for an excuse to protest..
"Strong dollar" works if you have an economy that exports something tangible and value-added, like real manufactured goods in high demand. When your chief export is weak dollars, well, let me do the math for you...carry the two...order of operations...OK, got it...let me check...carry the four...yep, when your chief export is weak dollars to spend in the Chucky Cheese-arcade-style marketplace, no, strong dollar doesn't help you.
Yes it does. You get more of their stuff for your dollars.
The analysis in the article was one sided and failed to account for the reduced cost of imported things. Since we inport much more than we export, strong dollar is good.
Too bad its transitory, a reflection of deleveraging and margin calls.
Until the point that no one wants an artificially strong dollar and no longer sell you plastic Jesus statues just in time for Christams.
Yes, but according to tmosley, you can buy more plastic Bejuses with your strong dollar.
An opionion that always assumes that there will be a seller.
Factories have to make something. Global interconnected economics is a bitch. Once your on the hamster wheel it's hard to exit.
And those factories will continue to make "stuff", they'll just sell the "stuff" to someone else. Hell, the worst thing that could happen to America is if the wages of Chinese workers went up. Creating a middle class of 400 million would probably create enough customers to buy the "stuff" their neighbor makes. Kinda like when everything was made in the states, a lot of it stayed right here, as it was bought by the people/families of the employees that made the "stuff". Cant see how it would be any different if the shoe were on the other foot. I guess it must be some kind of timing thing they are waiting on. Stronger Chinese currency probably? But wouldnt the Chinese currency become stronger if they were able to buy more "stuff" with it? So isnt it really artificial Chinese DEFLATION of their currency making our dolalr seem stronger than it is? Chinese secrets? Dunno, Im just watching it, trying to understand the best I can.
Wheel keeps on spinning, no matter what. 400 million middle class consumers need plenty of calories and joules to burn. Prices for consumer goods are meaningless so tell nothing. Energy prices are the indicators, and I do include calories when I say energy. Keep energy and food flowing into China is the meme du jour, damn the American consumer. Dump cheap liquor and corn products into that riot!
You left out one crucial component in the export of dollars: the dollar is a debt instrument, those greenbacks are lent out. A strong dollar in this case is not "good," but a lot of money can made on calling loans and margin calls on emerging and EU economies over the next two years. Why buy plastic junk when you will be able to buy stocks, bonds, companies and real estate at 90% off? 1997/1998 style crisis is coming.
Obama's administration will not release 2015 health care rates until after the election.
Obama will not announce his illegal executive amnesty until after the election.
Obama will not release the Bergdahl terrorist swap report until after the election.-Shoot that fucking deserter !
Obama will not announce his choice for Attorney General until after the election.
The Pooper announces,,,,Obama is an ASSHOLE!
"Obama will not announce his illegal executive amnesty until after the election."
The answer to that and the other items, is to vote just the way you would if he did so before the election.
I am not fooled by the postponements.
Sorry, but Obama is a CIA puppet of the elite.
This past summer, the fake illegal flood, Ebola scam, etc. are designed to piss off and "reinvigorate" the right-wing, neo-con, evangelical Christian sheeple base and dishearten the left-wing sheeple base.
The "after the election" stuff is so that is can be slowly leaked BEFORE the election and further piss off the right-wing sheeple.
An American, not US subject.
"Caution: Dictatorship Ahead"
There is nothing fake about the illegal hordes crossing the borders. Just in California there are almost 3 million illegals who makeup an estimated 10 percent of the state’s workforce:
http://rt.com/usa/185188-immigration-statistics-california-us/
California Governor Jerry Brown said all Mexicans, including illegal immigrants, are welcome in California:http://www.breitbart.com/Big-Government/2014/08/26/Jerry-Brown-to-Mexica...
Los Angeles Mayor Eric Garcetti is welcoming illegal immigrants who have crossed America’s southern border to Los Angeles, saying the city is an appropriate place to reunify children with their families:http://www.breitbart.com/Breitbart-California/2014/07/16/LA-Mayor-Eric-G...
Calling them "illegal" would seem to imply that we are governed by incontrovertible laws whereas I would assert that we are governed by arbitrary laws that can change at the whims of arbitrary rulers.
Calling these people "illegal" suggests to me that you are not only behind the curve of our arbitrary rulers wishes but are reinforcing those wishes by giving their system credibility by suggesting that we are governed by incontrovertible laws.
>>Sorry, but Obama is a CIA puppet of the elite.<<
Exactly - Obama is a paid spokeshole. He's looking forward to making $100s of millions once he gets out of office - and not from the schmucks who actually believed their $5 donation meant a d*mned thing!
Isn't Blair making $1 million a year working for JP Morgan on their direct payroll? Good thing he didn't anger JP Morgan's owners while working for JP Morgan indirectly on their payroll, now isn't it?
News flash; is Obama really black or he used self tanning cream and spray tan to be come first (black) president?!?!
Man!
No, that stuff just makes you orange.
Just obseerve when Reggie Loves lips turn orange.
He says he is half black and half white. His black half handles the Presidential job, and his white half plays golf.
I'm sure ISIS is enjoying that strong dollar too with all those oil sales and high tech weapons the USA gave them for free.
Just wondering, can I fed ex them a blood donation if I get a hot fever in west Africa. I just want to do my part.
"Oh, what a tangled web we weave, when we first practice to deceive" -Shakespeare
The Money Changers cum Banksters have been weaving and deceiving the world for a very long time indeed, and yet these Shylocks have more power and influence than ever, and their Day of Judgement keeps being postponed.
Roll the guillotines already, dammit! Hark, me thinks I hear something yonder...
[crickets, and grazing and baying of sheep]
Even with 50% of the world unemployed there will still be spending. Printed money or not, spending at very reduced levels will continue.
But we have a huge trade deficit. More companies make money from a strong dollar than lose it (ie they can buy more foreign goods for sale in the US). Should be a net positive.
Yes, they somehow missed including that factor, and it's a big factor.
But what do you mean that this is a net positive, for whom is it a net positive, for China? As a first effect sure, but then the second effect is a depression in their best customer the US, so that counters it. Unfortunately the whole thing is structurally unsound.
I think the stronger dollar is net negative for the US. It has a positive feedback loop on itself as more foreign money runs in to get in on the trend - which in theory should counter the trend. But perhaps the weakness around the world is greater - article today on people leaving France because of the taxes but also because their entire economy is constipated, not to mention the social unrest from their Muslim guests. They're mostly going to London but maybe a few will end up in the US.
Are the US markets going to shit blood red, in the bed, tomorrow ?
Mr. Yellen vs. Ebola.
Depends on FED plan. I think that ebola delivering more important
Long Depends!
What a "Tug Job" this article is. The usd isn't going to remain strong if there isn't demand.
These assclown banksters don't seem to understand flows. Just because the usd is being hoarded doesn't mean it translates into a stronger $ in the money markets.
"For the S&P 500, which derives upwards of 30% of sales from outside the U.S., decelerating international growth is surely a risk."
How can it be a risk when the S&P has tripled in 5 years, to 2000, where it doesn't belong in the first place? The real risk has been to artificially jack up the market, setting up another crash.
Quite badly constructed post.
The Faulty logic of this post considers USD to be just a national currency, not world reserve
To understand, please look at USD as the ....export...itself
Yup. The US' largest export by far.
I'd venture a guess that while the export still continues, the volume is declining as other countries set up direct trade agreements and shift the mix of their reserves in the process (holding fewer dollars in reserve). How would one identify real data to test this guess?
No such thing as real data. That data is national security for any country.
There are ways to guage it by looking at affordability of buying things that we need like food and energy.
Affordability is going down the drain. World is avoiding USD because there is too much of it
Hilarious post after years of ZH bitching about the dollar. How is the ruble doing, ZH, because for many months now you've had your lips firmly wrapped around Russia and their meaningless Chinese deals.
Whatever helps you to sleep at night, shill boy.
How is he/she a shill? What part of his comment is incorrect?
Doublethink
I still don't get it. Ever since i've been around here (2009), the drums have been beating against the USD and the rise of Russia and China. I even made some nasty comments agianst ZH about the pro china propoganga before it became fashionable around here. Now it's official, USD is King, not the Rubel and certainly not the Yuan.
Shill boy? From the boy who gives Shithead Ferguseon cyber head jobs! U r a piece of work Tee hee Mosey along.
A strong currency is never a bad thing. It attracts investment (as long as your economy is competitive). We have some work to do on that front but hoping to rectify it by weakening the currency is a losers' game...
The U.S. Dollar must be in serious trouble. Google just deleted Harvey Organ's precious metals blog, harveyorgan.blogspot.com.
Jesse's Cafe Americain just wrote an article about the deletion of Harvey's blog:
http://jessescrossroadscafe.blogspot.com/2014/10/harvey-organs-gold-and-...(Jesse%27s+Caf%C3%A9+Am%C3%A9ricain)
As someone who has read Harvey Organ's daily blog columns, I can say that he was claiming that the Comex had no more gold and silver left and was engagin in outright fraud. He also noted that SLV was a complete fraud and had no silver whatsoever.
It looks like the banksters felt too many people were paying attention to Harvey.
http://www.youtube.com/watch?v=aZwSiHBxm0c
Harvey Organ interviewed by Greg Hunter.
Jim Willie has been saying for a couple years that the dollar will go up, up, up,
Then down and die.
http://www.allnewspipeline.com/They_Know_Chaos_Is_Coming.php
Thanks for the links. Great info!
The "Cheese Pope-ery", is getting thick. Bond yields aren't doing what the banksters want, so now they're pimping USD long positions to save their asses.
Boring stupid article. short the British Pound and have a timeline of several months, at least, maybe 9. Brazil is struggling recession; what a joke; Brazil has so much money piled up they could 'struggle with recession: for the next 9 years and it wouldn't make any difference. Kyle Bass says buy 13%Argentine Bonds; why? cause they just discovered a new oil field there; huge; easily drillable, and technicians are down there now; and madame idiot is going out of office early next year; at some point in the next 4 years your bonds will trade at par; they have dollar bonds available.
wasn't putin in argentina a month or so ago, didn't he and argentina sign a number of agreements?
The dollar is just the tallest midget in a high jump contest. The Japanese will not be the only country talking about quadrillions.
What's the point of a strong dollar, when the US doesn't really export that much?
If you want to buy machine tools or cars, you buy them from Germany.
If you want to buy scientific equipment, you talk to the Swiss or the Germans, or the Japanese.
Only if you want missiles and planes, you might talk to the US. But they usually come with strings and gloryholes attached for sucking cock, which only some people are willing to do.
If you want GMO grain or corn, I guess you'd talk to the US. Coal also, but for everything else except financial engineering, other countries provide better service, without the obligatory ass fucking.
Strong dollar or weak dollar, it simply doesn't matter anymore.
what? since when did revenue matter? and for that matter why is supply/demand of oil suddenly a concern?
I'll buy more PM's with my strong dollars.
Could be a good idea but it brings up an interesting question. Why is Gold inversely correlating to $USD and I'm no talking about the presumably obvious answer?
Gold traditionally reacts to instability, fear and you guessed it, deflation due to the uncertainly brought upon by depreciating/exploding assets but currently we are seeing a stalemate between inflation and deflation or at least, there is no indisputable direction. For more clues, we must turn to the Bond yields which are also dropping.
So we have Equities down, Oil down, PM's down, UST yields down = Dollar Short. That's it.
For all the perma-inflationists out there, please explain.
For all the perma-inflationists out there, please explain.
Dang near straight lower left to upper right for the past 5 years in equities and we get a blip on the chart and "perma-deflationists" are high fiving and spiking the football?
There is little risk in betting on central bankers doing what is necessary to create inflation of asset prices. What is risky is betting on deflation in an inflationary environment.
This little deflationary episode(and dollar strengthening) is an attempt to punish BRICS for attempting to insulate themselves from the status quo. It also gives FED cover for reversing stance on taper.
Good question. Two possible answers. First is that the gold/PM markets are being heavily manipulated and are stuck in their own loop now. Second is that gold/PMs are at long last losing their monetary roles and are being discounted from what history would lead us to expect. Probably some truth in both of those.
"Second is that gold/PMs are at long last losing their monetary roles and are being discounted from what history would lead us to expect."
Would this be the first time in history? I mean as long as gold has been revered?
"Could be a good idea but it brings up an interesting question. Why is Gold inversely correlating to $USD and I'm no talking about the presumably obvious answer? "
Everything is inversely correlated to the $USD. When the dollar is strong, everything is cheap. That is what the words "strong dollar" mean.
Nope, that's the obvious answer. Gold, like UST, has a special function in that it transcends the USD in terms of security. It is why there are situations where the USD and Gold rise in unison. It's a flight to safety instrument where security is worth more than liquidity or yield in regard to UST.
you make the mistake of thinking there can be two ends to a trail. the true end to the trail is gold. that is bourne out throughout the history of currency debasement economies. the irony in the reserve currency form of fiat currency theory is the reserve currency will strengthen as it becomes the "last resort" of safety and liquidity in a monetary environment of possible model dysfunction and collapse but will also collapse itself into the real last resorts, gold, silver, real estate, precious gems and food and water.
Got it but for the time being, security or trails as you say, come in many forms. Gold happens to be one of them. USD's and UST's are another. No one can predict the collapse of the USD especially when there is no alternative as deep or liquid or is backed up by the biggest guns ever to exist in human history.
A strong dollar can only be good news for the export nations of the world, with the exception of China with their little currency pegging thingy. Saudi Arabia however gets a double whammy by (1) pegging its currency and (2) trading its No. 1 export in USD.
China should depeg and enjoy higher USD instead of playing house with Putin.
Cheap oil comes with the higher dollar... petrodollar.
Short term thinking on their part.
You talk about a higher dollar as if it is the natural order of things in our "new normal". You have heard of QE and what it means? QE is a giant middle finger to countries that buy treasuries in order to play the game of maintaining an unsustainable status quo. All those years that countries bought 2, 10, 20 and 30 year treasuries had an expectation of getting a return on their investment of some % points. QE artificially and effectively redeems those notes at effective negative returns. Everyone knows QE99 is coming and you say these countries should double down and take another good fucking?
Dollar is a trade unit and is compared in value to all other trade currenies.
They are mobile and transferable into other units or into any physical object.
Never were store of value but a way to make trade possible.
That is present day trade not comparble to trade in some other time frame past or future.
You will have to read about how money is destroyed as well as created.
You have to understand why they bought the bonds in the first place it was not about interest returns, it was about not converting the USD into local currencies they gained from trade with America.
Dollar is a trade unit and is compared in value to all other trade currenies. No it isn't--under current USD hegemony status quo other currencies are compared to and react to the dollar.
They are mobile and transferable into other units or into any physical object. No they are not--clearly reserve currency status and all of it's ramifications refutes this nonsense.
Never were store of value but a way to make trade possible. The way it should be but the way it should be and is are two seperate issues. Human nature (and hegemonic status)dictates how things are.
That is present day trade not comparble to trade in some other time frame past or future. Present day trade in the context of the status quo is all about extrapolating the past into the future.
Selling American stocks generates demand for USD.
If you bought at $10,000 and sell now at $60,000 more dollars involved in the trade. They are not coming from the Fed vault so open market demand raises the USD.
Hey foreign money - BTFATH!!!!
Elliott Wave look at the dollar. Should pull back temporarily as it is stretched at the moment. Longer term it is headed much, much higher.
Most debt around the world is denominated in U.S. dollars. As the global economy slides into deflation, the tendency will be for people and businesses to save and pay down debt rather than borrow and spend. Both saving and debt destruction will increase the demand for U.S. dollars.
http://www.globaldeflationnews.com/u-s-dollar-indexelliott-wave-update-f...
I agree. You can't have it both ways. A stronger dollar assumes higher interest rates. Lower interest rates flooded the world with too much liquidity. A stronger dollar WILL destroy the stock market bubble. QE was a bank bailout; it was also an attempt to inflate bubbles in commodiities by keeping the Dollar weak. A weak Dollar was the lynchpin of the FED's failed monetary plans. There is no easy way out of the situation we are in. Higher rates is the only direction out of this; but this will be a painful medicine.
Don't whine about weak-dollar policy and then whine about strong-dollar results. The strong dollar is going to pop all the bubbles. Get ready to swimm.
I agree. You can't have it both ways. A stronger dollar assumes higher interest rates. Lower interest rates flooded the world with too much liquidity. A stronger dollar WILL destroy the stock market bubble. QE was a bank bailout; it was also an attempt to inflate bubbles in commodiities by keeping the Dollar weak. A weak Dollar was the lynchpin of the FED's failed monetary plans. There is no easy way out of the situation we are in. Higher rates is the only direction out of this; but this will be a painful medicine.
Don't whine about weak-dollar policy and then whine about strong-dollar results. The strong dollar is going to pop all the bubbles. Get ready to swimm.
Look I flatter myself >= 1 sd above 2 sds below the low end tail of a bell curve i.e. I'm an idiot but not a complete moron.
That said wtf kinda graph is the one used in this article? One line 100X something divided by something else equally wgtd?
The other another measurement INVERTED? I'm in the "k-i-s-s" club and confess unable to decipher. Any clarifying assistance appreciated ...
As for USD strong vs weak my rule-of-thumb understanding is: "Strong" USD good for buying foreign goods (imports), bad for selling domestic goods (exports.) Hurts balance of trade which leads to reduced jobs in USA which is bad for economy (GDP). So "strong" dollar actually not good for avg Joe & Jane 6pack.
Again any tutorial-age welcomed ...
Disclaimer: Sun afternoon. Already low wattage cranial bandwidth set to weekend "energy saver" mode.
Do any of you ever take your Federal Reserve Notes out and just stack them up and stare at them? Hold them. Smell them. Move them between your fingers. Turn them from one side to another marveling at the intricate artwork. Admiring the pretty colors and that magical magnetic strip that just screams 'I am KING OF THE FIATS!'
Yep, me neither.
For everything else, there is GOLD & SILVER.
I like my large stack of benjamins, keep them crisp with dessicant. I like how they snap when I flick them with my index finger. Alongside my shiny metals they look rather nice. Got to have it covered all ways. People will still love the benjamin even if the system goes down. Get some other presidents too, they'll come in handy when no one else has them.
There will always be a demand for US dolars. I'd live in a 787 if I had a few dollars.
Dr. Kissinger, or how I was made to stop worrying and love the bubble.
Forward, Zimbamerica. Yes you can('t).
What someone thinks about the dollar is not as important as the fact people want out of the yen, euro, and to some extent the pound. Recently released minutes from the last Federal Reserve meeting confirmed growing concern about the pressure a stronger dollar is putting on other currencies around the world. Bottom-line is other currencies are under assault because both economies are weak and countries are buried in debt they can never repay at real market interest rates. When investors become unwilling to buy the bonds of heavily indebted nations causing the bond bubble to burst the values of currencies in those countries will tumble.
While there are not many Bond Vigilantes there are a slew of Currency Vigilantes and they are ready to make their presence known. Recent weakness in the value of the Yen, Pound, and Euro must not go unnoticed. The Currency Vigilantes are acutely aware of when a currency is overvalued or ready to be re-pegged and pounce on the weak currency to tear it apart. The article below questions just how stable the currency markets really are and may be a signal that currency trading is about to get very wild. Please note, this may also be sending a signal that the whole system is unstable and the stock market is about to drop like a stone.
Many people are looking for a "disinflationary crash" and it is possible or we may see money shift from bubble to bubble. I have pondered the possibility that what we have been going through is the "major deflationary period." More and more often we seen Central Bankers forced to pull rabbits out of their hats. When we stand on the abyss central bankers will be forced to print so much worthless paper the money it will act as a cushion to our fall but not change the reality. Before you discount this possibility that we will skip a period of deflation and move directly into the final stage of massive inflation consider that hyperinflation paves an easier transition to a replacement currency and a reset of the system.
http://brucewilds.blogspot.com/2014/10/fed-concerned-that-stong-dollar.h...
nonsense, the people are not getting out of the Euro or pound, it's the banks on the Eurozone now that have near 0 interest rates that are buying $ that made the $ stronger, now, why they want this $, to pay debts, oil and other adquisitions, or maybe even stocks when they crash. The question now is where is going to end up parked all this $. If they end up on the pocke of the Americans, they better buy abroad because if they buy at home it will ignite inflation.