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What Happens Next?
The last three times Asian currencies collapsed against the US Dollar at this rate, the global financial system was shaken to the core. With China piling on this time, we wonder - what happens next, as a tsunami of deflation is exported towards the shores of the "we'll hike no matter what" Fed's American shores...
What happens next?
Note: USDollar strength relative to Asian currencies is indicated by a lower index - i.e this chart implies an USD per "Asian currency" rate - how many USDollars can an "asian currency" unit buy?
A glance at the chart and one might wonder if this time is different... and we break the 18 year trendline.
With Q3 GDP estimates tumbling, we leave it to SocGen's Albert Edwards to sum up what happens next...
We have long believed that we are only one misstep from outright deflation in the west with core inflation in both the US and eurozone at just 1%. We expect the acceleration of EM devaluations to send waves of deflation to the west to overwhelm already struggling corporate profitability and take us back into outright recession. As investors realise yet another recession beckons, without any normalisation of either interest rates or fiscal imbalances in this cycle, expect a financial market rout every bit as large as 2008.
His conclusion: "Low growth (and low inflation) to prompt more QE - everywhere!"
h/t SocGen's Albert Edwards
Chart: Bloomberg
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this guy has been predicting a 2008 repeat for years, it's a joke he's still speaking and being quoted.
So true! It will never happen again, because this time the central banks got it all under control.
You see 1% inflation too?
I'm brazilian, dude, all I see is bad news in local politics, oil falling, my model girlfriend and my finances being eroded everyday.
Simple, Americans become super rich and lives happily ever after by printing endless amounts of USD in the computer files. While the rest of the world toils in eternal wage slavery to get their hands on that sweet USD digital files.
"What's past is prologue"
-Shakespeare
If you see your 'model girlfriend' getting eroded everyday, you should perhaps try applying some lube the next time you fu*k your 'model' silicon doll... ;-/
romario: "I'm brazilian, dude, all I see is bad news in local politics, oil falling, my model girlfriend and my finances being eroded everyday."
I hope you're being sarcastic.
Yeah. None of that happened in 2008 and 2009, right?
Enjoy your collapse. Embrace it.
You deserve it after all.
So what? My critique is that this guy has predicting a US stocks crash for years, he's worse than Roubini. Why do I deserve a collapse?
You don't deserve a collapse. No one does. Why do you ask that? Is it cuz you're Brazilain with a model girlfriend?
Only part of the piece is from your guy. The narrative says we are fucked. Not just you.
Edwards is one of the very few who are standing up against the mainstream dumbness and he is doing so with a heck of a soild foundation of arguments to support his case. He has been right all along. If course, when the Fed/ECB, BoJ etc. do all they can to delay the inevitable, milk the lower and middle classes dry in order to serve the upper 0.1% you get asset bubbles, temporarily. The important thing is: they are but a transitory episode towards much lower real asset prices. Edwards never said, in 2010 we will see SP500 at 600. He is way too experienced and too smart to even try such foolish predictions.
But it seems, people like you just want that: exact predictions that always turn out correct so that you simply need to push some buy or sell button. gimme a break, schmuck!
Guess I'll start planting banana trees...
Yeah, just 1% inflation which is less than half the Fed's mandate 2%. [sarc]
But, in one month I saw prices for eggs, bread, chicken, beef, potatoes chips, and yogurt rise anywhere from 2% to 10% plus they added more air and less chips in a bag or a cup of yogurt. Potatoes chips used to be 16 oz for a big/family bag which now a family sized chip bag is 9.5 to 10.5 oz. WTF? Single Greek yogurt cups for all brands at the local grocery stores were 6oz. Now this year they are 5.3oz. WTF? And I'm paying more for less. What a great scam!
I conclude that BLS BSers & FED bankers do not include "normal people" food and "normal people" energy usage in the core CPI not because the FED can't dampen price shocks in food and energy prices but, because they survive off the lives and blood of others. [sarc] maybe its a little true
If you buy packaged ham or turkey the label reads "contains up to 30% broth". Talk about WTF! 30% salty water is a pretty good deal, for them. That my friend is INFLATION.
We exported our inflation to CHina for 30 years. They consumed it as growth ... investment ... Deflation is always the result of inflation.
Please tell me what exactly is deflating? The USD is the best performing currency over the last 3 years or so. Tell me what is cheaper now than 3 years ago? ABSOLUTELY NOTHING.
>> what is cheaper now than 3 years ago?
Old boats.
Hookers and weed (legal states)
talk , tweets and useless posturing on fakebook. cheaper than ever. though there is no bottom in sight anyway...
What's cheaper?? Really?? What about commodities. Didn't we already discuss that?
precious metals?
LOL, and don't forget oil which will hit $20 "soon"
Oil, Gold, Labor, Copper, Cement, Steel, your opinion.
Nothing? Take a look at copper, cement, iron ore, coking coal, dry shipping rates, lumber, and commodities in general. Huge overcapacity, ultimately due to central banks distorting interest rates, is colliding with recessionary slowdown, i.e. lower demand.
The US dollar is strong precisely because that is what happens in a deflation. The purchasing power of the currency goes up, but debts become harder to repay. And with debt levels where they are today, it won't take much to make them unpayable.
Well, you are wrong. Bitcoin is up from $3 dollars to $260 over the last 3 years. If you are going to hold a currency that would have been the smart one. As for the unreported inflation in dollars, that's obvious isn't it?
btc inflation over 10% a year. Just saying.
1% core inflation... This guy is a fucking shill.
Lie big and lie often, that's what is taken for truth in this world of newspeak.
Edwards is not saying he believes those numbers. he is just using them to illustrate where things stand, from, the perspective of the crooks at the CBs. and what will inevitably follow from that perspective.
Moar QE?!? That sounds great!!! To the moon Alice...
Moarey says: That's music to my big Jewish ears
Gas is rising while oil is dropping. We don't have deflation we have corruption in every corner
I fully believe by any objective measure it has collapsed to worse than 2009. Citadel for now is able to support the market price, we see if they keep that up. This time around there are no jobs to cut as evey company is already at the minimum to keep the lights on.
MOAR Asian juntas and collectivism...hooray!!!
...expect a financial market rout every bit as large as 2008.
pure comedy
I do think I see a pattern in that chart . . .
Rachel Phelps: I think he'll fit right in with our team concept.
Charlie Donovan: That reminds me, I was going to ask you. What exactly *is* our team concept?
Charlie Donovan: Vaughn's been looking good out there today.
Rachel Phelps: Don't worry, he'll blow it.
Board Member 1: I've never heard of half of these guys and the ones I do know are way past their prime.
Charlie Donovan: Most of these guys never had a prime.
Rachel Phelps: The fact is we lost our two best players to free agency. We haven't won a pennant in over thirty-five years, we haven't placed higher than fourth in the last fifteen. Obviously it's time for some changes.
Board Member 2: This guy here is dead!
Rachel Phelps: Cross him off, then!
Rachel Phelps: [Charlie and Rachel are having a meeting about the team] Any ideas?
Charlie Donovan: On how we can get worse?
Rachel Phelps: Mmmmm...
Charlie Donovan: How about a series of fines for good play? Maybe a $30,000 bonus to the guy voted Least Valuable Player.
[/Major League (1989)]
Luckily deflation is impossible with an unrestricted printing press. Forward comrades!
CRB index tells a different story - closed below Mar 2009 low today - again.
Check your deflation at the CPI door please...
I know what happens. I've been a $usd bear for how long now?
All this talk of the EUR/CNY carry is getting old. The same trade has been on with Japan for how long now? usd/jpy long hedged vs the depreciating yen.
Why is it that short yen traders can hedge their trades against nominal gains in the Japanese equity markets, and the same trade can't happen with the eur/cny carry?
I't's obvious the trades were hedged to some extent, or a petty PBOC policy statement, wouldn't have caused the eur/usd trade to back down 1 percent. This all about capital outflows in China.
If the Chinese equity markets and Yuan traders were long vs the eurodollar, (naked) then it makes sense there's huge outflow potential.
Don't let assclowns that went all-in the Chinese equity markets, without covering their bets tell you otherwise. These are the same sociopaths that insisted that China wouldn't impact global markets, or that Chinese equities weren't reflective of the Chinese economy.
These are the same sociopaths that blew the very bubble that they find themselves trying to exit from. Bitchez
It scares me.
The Wolf: Now boys, listen up. We're going to a place called Monster Joe's Truck and Tow. I'll drive the tainted car. Jules, you ride with me. Vincent, you follow in my Acura. We run across the path of any John Q. Laws, nobody does a fucking thing unless I do it first. What did I just say?
Jules: Don't do shit unless.
The Wolf: Unless what?
Jules: Unless you do it first.
The Wolf: Spoken like a true prodigy.
Ecclesiastes 1 9-11
"The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun.
Is there any thing whereof it may be said, See, this is new? it hath been already of old time, which was before us.
There is no remembrance of former things; neither shall there be any remembrance of things that are to come with those that shall come after."
US stocks have been melting to the ground but the fed is doing something tricky and deceiving. LIke selling/shorting the vix? This pushes up the indexes and makes things look like they are not collapsing but stocks really are. Look at all the stocks at their 52w LOWS. All energy stocks are, cat, intc, yelp, z, stx, wynn, lvs..... i couls list hundreds of stocks that have absolutely crashed.
If the Chart Master could reveal the volume on the X axis, then any John Magee / Larry Livingston understander could tell you today, right now, if that trend line breaks now or not.
Thanks again to ZH for appealing to percepts and not concepts!
Trade War begets Currency War begets Shooting War