This page has been archived and commenting is disabled.
The US Dollar Rally Will Crush Stocks…Just As It Did in 2008
The world carry trade for US Dollars is over $9 trillion.
In today’s world of monetary insanity, investors seem to forget that $1 trillion is a staggering amount of money. So to put that $9 trillion carry trade into perspective, if it were a country instead of a carry trade, it would be roughly equal in size to the economy of China, the second largest economy in the world.
Suffice to say, we’re talking about a truly staggering amount of borrowed US Dollars that have been invested into other assets/ investments.
Carry trades only work if the currency you are borrowing in doesn’t rally. As soon as it does, your trade very quickly goes into the red.
This is particularly true if you’re talking about a corporation that has borrowed in US Dollars to fund projects in countries where sales are denominated in other currencies (Europe, Asia, etc.)
The reason for this is that many multi-nationals do not hedge their currency risk. So if, for instance, they are borrowing in US Dollars without a hedge to invest in Europe and the US Dollar rallies, their projects very quickly begin to lose their appeal… and a LOT of money.
Ka-Boom:
To put that move into perspective, it’s GREATER THAN the US Dollar rally that occurred during the 2008 CRASH!
This tells us point blank that something MAJOR is happening in the financial system right now. You DO NOT get 20+% moves in the US Dollar during normal, healthy environments.
Indeed, it is not coincidental that Oil and emerging markets like Brazil imploded when the US Dollar carry trade began to blow up.
As usual, US stocks are the last to “get it.” But this won’t last for long. The S&P 500 is sitting on the ledge of a massive cliff. And when it finally tumbles, the move will be both fast and violent.
If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.
You can pick up a FREE copy at:
http://www.phoenixcapitalmarketing.com/roundtwo.html
Best Regards
Phoenix Capital Research
- advertisements -
USD going to zero.
Told that here for years.
When my comments thats not going to happen pissed someone off they deleted all my comments.
Now the USD is cycling back up for pure mathmatical Bond related reasons.
I always loved the fresh news here, but face it you became a pro gold / Anti USD / Pro Russia site.
And the tonage of adds is wrecking the site. Slow it down so much I just check headlines now and leave.
Did learn a lot here and thanks for that.
Get yourself Addblock plus. It will remove those pesky adds with ease. You'll be surpised at how well it works. It's a free download and very popular.
As for the gold, USD and Russia, I don't have any suggestions.
Het toekomstige personeeel van hotel GradjA zijn nu nog bewindvoerder bij pensioenfondsen, verzekeraars en banken. Zolang de MACHT nog steeds niet heeft besloten waneer het SCHULD=H00P-principe wordt ingeruild voor het GELD=ZUURSTOF-paradigma gebruikt @DNB de bewindvoerders alleen als KanariePietje.
http://www.volkskrant.nl/binnenland/samsom-abn-laatste-kandidaat-voor-nu...
Logisch dus dat Gerrit Zalm zich een beetje verveelt en heeft inmiddels een intern blog in het leven geroepen waarin hij zijn onderdanen gaat onderrichten op wat komen gaat ...
http://www.loyalist.nl/
De @MinPres van Griekenland is net als d'n Arend bezig om het uitrollen van de 'Logica van de 1' te versnellen.
http://www.neurope.eu/article/european-parliament%E2%80%99s-work-myths-a...
De Iraanse president Hassan Rohani is inmiddels ook op de hoogte van de volgende fase van de 3e SpinozaGolf, dus ...?!!??
USD will go to zero after most of the other world currencies go to zero first. The Yen and Euro are on the chopping block
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
They asked you before and I am asking it again:
Who is Winter?
Raise your hand if you're the country who'd like to pick a fight with the US military
Anybody? Anybody?
There, see? US Dollar!
I think the dollar is the only turd left floating in the punchbowl.
The 992nd Phoenix Capital TEOTWAWKI CRASH article in the last 1,001 days!
Markets should rally hard tomorrow! Phoenix Capital is the ultimate contra-indicator.
Higher lows + higher highs is bullish. That's day one trading stuff.
We have clearly made higher lows recently in all the majors. Hell practically every day for the past two weeks have been higher lows and as a whole this last move down was to higher lows. That leads us to higher highs being a given at this point.
Is there a chance we crash tomorrow, next week, next month, next year, next decade? Yea sure we could, over a longer period the chance of you seeing a crash is increased because of the probability played out over more occurrences but the charts are all super bullish and with every institution known to man doing everything in their power to ensure asset prices keep going up till the end of time betting they won't is a losing proposition.
You gonna stay short spoos from here to 5000?
See http://www.counterpunch.org/2015/03/06/dollar-imperialism-2015-edition/
“The dollar is our currency, but it’s your problem.” This is what US Treasury Secretary John Connally said to his counterparts in the Rome G-10 meeting in November, 1971, shortly after the Nixon administration ended the dollar’s convertibility into gold and shifted the international monetary system into a global floating exchange rate regime. The world has been suffering from this “problem” ever since the US obtained the “exorbitant privilege” of issuing the world’s reserve and trade currency under the Bretton Woods system after WWII.
The Fed effectively acts as the world’s central bank, but sets monetary policy only in its own interest. Under the pressure and the orders of financial oligopolies, it fixes interest rates and prints money to suit itself, sending economies across the globe into tailspins. [...] Today in 2015, the end of QE, a strengthening dollar and an anticipated rise in US interest rates could wreak havoc in developing economies. Since 2009, trillions of dollars hot off the printing press or borrowed at near zero rates have been flooding into the global South and East. But today’s monetary tightening is already leading to an exodus of hot money that is destabilizing these countries, with the effect of keeping the United States’ rivals in the “emerging” world down.
Like the Volcker shock, these policies aren’t enacted with the express goal of kicking the global South in the stomach, but this outcome is a necessary and predictable result of the domination of the global financial order by a sole country whose interest is to keep its hegemonic status.[...] It is absolutely unacceptable that one country should arrogate to itself the right to set a wildly loose money policy for years and then tighten it at whim, giving the rest of the world a violent thrashing. It is unacceptable that any one country control the world’s reserve currency. Because of the circumstances created by QE and the zero interest rate policy, today if the US economy does well, the global South suffers. It’s a zero-sum equation. [...]
http://www.counterpunch.org/2015/03/06/dollar-imperialism-2015-edition/
You know what Phenix : FUCK YOU !
Yes, FUCK YOU, not Bernank, not Yellen....
You keep talking about a crash, and I kept believing you, and it never happened ! NEVER !
It won't happen NEVER !
NEVER !
FUCKING NEVER !
The market will go up & up & up & up & up & up & up & up.
& up.
And the metals will take it on the chin again!
It's about time someone pointed this Carry Trade conundrum out. EMs are getting fucked out of the Bait & Switch to pump up the USD Petrodollar. Frankly, the Carry Trade is all on one side of profit for those that are invested in USD. When has EM ever come out ahead of the USD over the last twenty years?
How long will Phoenix Capital be allowed to make doomsday stock predictions? They have been at this for years and years and have been consistently wrong. You notice they almost never give dates which allows them to do this for all eternity. The one time he gave an actual date, he was wrong. I guess that taught him a lesson to keep his predictions vague and general like a fortune cookie. Bottom line, anyone following Phoenix Capital predictions over the years has lost money. Please kick this guy off ZH, he adds no value whatsoever.
Please kick this guy off ZH, he adds no value whatsoever. So, then what? We kick off everybody that doesn't appease your lazy ass cry baby calls for more ..........what ......accuracy? Who the fuck do you think you are? Seriously. Do you honestly believe that because of the Phoenix chart - we all go out and bust a nut to get short? Seriously? And what does "the one time he gave an actual date, he was wrong.". provide? Are you some kind of article ref, whom, at the slightest miscalcualtion, slightest error, slightest fuck whatever, that somehow endows you with the right to claim reverse omniscience that because Phoenix didn't get it right, means....somehow.....that you did, or are....right? Fucking prick. Its people like you who make this site difficult to stomach - not because of the errors in calls or time duration, but, because we have to wade through your pissy, whiny, complainy fucking bullshit that reaffirms what we already fucking know. "yeah no shit Trade Group - but, exactly, how am I better off reading your ZERO ADDED hissy fit because what somebody said didn't align with reality?"
Anybody. ANYBODY who understands economics, just a little bit - the intervention, and art of trading - anything - all of the things that comprise the market of the day knows ex ante that each article speaks to an idea where each says, "hey fuck - have a look at this, this is what I think, and this is what it might mean." You can disagree, and that would be honroable if you could even do that by stringing one cogent thought that contributes to the subject matter. But, you can't even do that.
So, it really comes back to my original question - Who the fuck do you think you are? Oh yeah - thats right a fucking nobody just like the rest of us. so, in the absence of contributing even a marginal thought provoking thought, why don't you do us all a favor and STFU!
Who do you think you are?
If Phoenix Capital was a weather forecaster, they'd be out of business. But they're a finance company that repeatedly (5 years plus) puts out predictions of impending doom, and as the other fella said, anyone following their advice would be broke. But they're still going so they obviously dont bet their own book. Come in muppets...
Weather forecasters especially the ones in the Al Gore camp have a much worse batting record than Phoenix.
I have quaffed the Kool-Aid, seen the light, and have had an epiphany like Saul being struck from his pony en route to Damascus.
I am going all in SHORT, selling every asset, borrowing every FRN I can get my grimy mitts on, putting the puppy up for auction, and taking out a triple mortgage on my house.
In addition I have taken my GF's engagement ring and told her a cigar band will have to suffice until our yacht comes in VERY SOON at which time I will replace it with one three X bigger with all my gains.
Even a stopped clock etc......
You can be 100% right and still go 100% broke.
A speculator profits from observation.
One enters the realm of [fanatical] when one makes the market about [you] and [your] predictions or expectations.
The market will do what it is going to do, without your help.
Therefore, if you want to increase the likelihood of your wife not keeping that cigar band, you will need to see the market through it's eyes and not your own.
There is no short cut to hard work.
As for newsletter writers...they are not in the business of market accuracy, they are in the business of selling subscriptions. Just like ZH and others, they will be right eventually.
You as a speculator, need to be right more than you are wrong to stay in business.
Every market gives you plenty time to short.
Remember, short the second shoulder, AFTER the first crash. The second shoulder is filled with too many buyers where few sellers can drop the price. This also gives you a shelf of sellers above the price to help you out.
The market is not about You. Failure to head this humility and suffer the fall of pride.
I failed to to put my <sarc on> at the end.
But your observation about the second shoulder is interesting. I'll need to go back to the 2008 crash and see if it would have worked.
http://farm7.static.flickr.com/6150/5974335325_13245d0e19_o.png
Looks right to me.
+1..., not bad for a rookie.
One thing I notice is something has to crash to keep another thing up these days. Nothing goes higher on its own merit and value, except gold in the inverse direction of course.
The Yen, the Euro, emerging market currencies, middle class etc,etc crash to keep this hot air ballon dollar/bond/stock market pumped.
Even with stocks, companies are buying back shares, pumping their eps while going deep in the red with debt. Same same.
I say it is all planned for the next financial crisis, to go into it with a strong dollar, stocks at all time highs, fake economy numbers, and everything else crushed.
Then it is a false flag and War!
BUY! MUPPETS! BUY!
If you live in Japan and borrow $usd 100k then take the $usd100k and invest it in the Nikkei you're making a shitload of money right now.
If your currency is the base currency and it's depreciating vs the $usd, you get not only the nominal gains on the equities you invested in but also the carry advantage from $usd appreciation. When you convert your profits back into $usd to pay off the loan it will cost you the same amount of yen if the loan was a swap agreement.
You profit from the $ appreciation vs the yen(more yen for the $usd when you convert the $usd back to yen & also the equity gains from your investment.)
If I go to Japan with 50k $usd and deposit in a Japanese bank, then borrow $50k worth of yen for one year, my contract for the loan has a payoff that stays the same no matter what the usd/jpy exchange rate is. I still owe the same number of yen to pay off the note after one year. If the yen depreciates even more vs the $usd, I've made money. My $50k is worth even more yen, so I can borrow even more yen to reinvest.
If you take 50k $usd to Japan be sure to declare to US Customs you are taking cash or a fiscal instrument (check) in excess of 10k $usd out of the country. You must do this before you board the aircraft. Failure to do so will result in confiscation and forfeiture of your 50k $usd.
Then after you deposit that money in a Japanese bank, be sure to notify the State Dept you are signatory to an account with a value in excess of 10k $usd. You will also need to notify the IRS of the bank account when you file your tax return. It does not matter if the account is in dollars or yen -- if its value is 10k $usd or more you are required to disclose the account.
BUT I LIVE in Tucumcari, New Mexico!!! HOw the hell is this great observation helping me???
"reinvest"
thanks for the laugh
Also I imagine most carry trades are heavily leveraged?
I guess if this moron repeats his crap contention often enough maybe he thinks it will eventually become true. The Stockmarket was in the tank well before the 2008 dollar rally began. It bottomed at 71.33 in March 2008 after an 18 month downturn. Meanwhile, the S&P had peaked at 1565 in Oct. 2007 and was down 19% at 1273 as the dollar bottomed. It could just as easily be said that the dollar's crash from October 2006 dragged the stock market down with it. But to say one caused the other is pure horseshit. Coming off its 2011 low the S&P and the dollar have been in sync, both reaching their current levels at the same time. Why not claim the S&P will cause the dollar to tank? Of course, that would spoil the HS narrative.
Totally agree re: USD/S&P relationship....seems to be a false syllogism. What does fascinate me is the rapid rise in the USD. What has caused this rise and what will bring about its reversion to the mean? That would make for a good article. My own guess is that we are seeing a somewhat contradictory flight to safety combined with a 'cleanest dirty shirt' view of the US economy. A crowded trade indeed. What will cause it to reverse course? The lofty heights get cold and lonely.....who will be able to keep buying the USD when all other currencies are tanking? At some point people will be tempted to buy Euros/their local currency with their very expensive USD. This move could constitute the start of a rush for the exit and a short squeeze......of epic proportions?? Just my two bits.
Good point. In the world of the blind, the one eyed man is king. The USD has its problems, but not compared to EUR or JPY. I think it is a pure flight to "quality".