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Meanwhile In Submerging Markets: An FX Bloodbath
Things were already bad enough for emerging markets going into August. Persistently low commodity prices, slumping demand from China, depressed global trade, and a “diminutive” septuagenarian waving around a loaded rate hike pistol in the Eccles Building had served to put an enormous amount of pressure on the world’s emerging economies.
And then, the unthinkable happened.
No longer able to watch from the sidelines as the export-driven economy continued to buckle from the pain of the dollar peg, China devalued the yuan. What happened next was nothing short of a bloodbath. The carnage is documented below.
First note that just moments after the PBoC's yuan move we said the following:
Biggest immediate loser from China's devaluation: Brazil
— zerohedge (@zerohedge) August 11, 2015
Well sure enough, with the exception of the kwacha, the Belarusian ruble, and the tenge (which went to a free float overnight late last month), that has proven to be demonstrably correct as you can see from the following overview of EM FX performance since China’s deval:
And here's the big picture which also shows that EM FX has fallen 16 of the last 18 weeks with this week being the worst stretch since March:
Now just imagine what this will look like if the Fed pulls the trigger...
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The dollar's down while stocks get crushed. Trade that.
Pull my finger...please
I hope they do it....Warm buttery popcorn for sale....
I want candy, HEY!
Raisinettes please!
~ Hedley Lamar, Blazing Saddles
Look honey, it's Hedy Lamar!
THAT'S HEDLEY!!!!
But looks like the 230p pump is doing its thing. Today was more about the USD/JPY than anything else. Yen weakens....markets up. Yen strengthens, market down.
'cuse me while I whip this out...(gasp)
They will all abandon the dollar, sooner rather than later. What trigger is the US then going to pull ???
You give them too much credit. Politicians are as rigid and stupid as any human can get. I pick later; much later.
We'll see.
There is no later, now what?
the EM FX storm will soon arrive in our Ports.
IMO, their crisis will lead to a stronger dollar which will lead the EM to demand more dollars. The yuan and ruble are not their yet in terms of viable alternative currencies. Years down the road maybe, but not with next 3 to 6 months.
the trade?
short equities and long flight to safety longer dated Treasuries
The EM FX storm can perhaps be viewed as yet another gasp of a dying empire (fiat USD): "If you EMs don't toe the motherfucking line we are going to raise our interest rates and destroy you." These things must be seen in the context of realpolitik.
Politicians are, on average, much more clever and devious than normal people. That is often precisely the problem, as it gives rise to populism and demagoguerey. As Goethe once put it:
“Fools and wise-folk are alike harmless. It is the half-wise, and the half-foolish, who are the most dangerous.”They'll do what they always do create a false flag incident. like the one the clown in Millis Massachusetts caused...
http://www.foxnews.com/us/2015/09/03/massachusetts-police-officer-fired-...
Dear emerging markets,
You fucked up, you trusted us...
Yours truly, the FED etal
Get along little doggie!!
Otter knows ....
Even if Janet had a trigger (which she doesn't) it wouldn't do her any good. Her bazooka has no bullets. nada...nichto. All she can do now is run to the end of her chain and bark.
Fate the Magnificent
"Push the Button, max"
Thanks for a good laugh! Wolf! Wolf!
Run to the end of her chain and bark. +100. Gotta remember that phrase
OK dude....THAT was fucking funny as hell...and I never laugh.
Run to the end of her chain and bark lolol
My opponent has all the qualities of a dog, save loyalty.
What do you guys think of things like wealthfront.com? Discuss.
for fools who have more dollars than cents. here today. gone tomorrow. maybe worth time studying its strategies. maybe not
They used to have multiple strategies, but now it looks like they take ETFs with low management fees and use portfolio theory to calculate the fund mix based on the investors risk level.
And.... they still sell gold. Unbelievable.
They don't sell gold, they sell a piece of paper that's redeemable in gold. Not even close to the same.
It's redeamable in gold when nobody wants gold.
When you really need gold, it will probably look like the line at DMV.
Sure, it's fractional reserve. It's made up bullshit just like our banking system.
lololololol submerging.
Clint Eastwoods answer to the Feds possible rate hike. http://foxmuldar-conservative-thinker.blogspot.com/2015/09/clint-eastwoo...
More manipulation as the Dow climbs 100 from its lows as we approach the days close. Would expect the buyers are looking for a strong open on Tuesday following a Holiday.JMOP
That looks like inflation and aren't those people humans too. If they are then the central banks are creating starvation and civil unrest around the world.
I think somebody should provide a solution with bitcoin or some other limited issue currency.
Is that the wife of some wall street hedge fund manager?
Priced in.
This reminds me of a situation when, recently arrived, I was confronted by a predicament in Mexico where most of the staff had dollar debts while receiving Mexican peso salaries. That was in 1982, when, at the end of the term of president Lopez Portillo, the Mexican peso suddenly plunged. Needless to say, the staff debt had to be extended and re-negotiated while the peso slowly recovered. Similarly today, the repayment of dollar debts by emerging market participants will be difficult, if not impossible, to be made. But it is necessary to point out that commodity prices, beginning with agriculture, have been falling, in dollar terms for more than a year. These falling prices, added to the dollar's steady climb, both predated the devaluation of the Chinese yuan by 4%. We must distinguish between the catalyst and the participants in this drama. The Chinese devaluation was the psychological catalyst that drew the world's attention to the risks of massive capital flows, but it was not the cause of the imbalances. These were already underway in the form of declining commodity demand and capital flight to the dollar as a perceived safe haven in world turmoil. Note also that the graph in this item shows currency devaluation in terms of the dollar, not in terms of each other, or in major currencies like the euro, pound or yen. We all have profound habits of thought that place the dollar as the center of the universe. This will have to change.
I love the little tits on that last pic.
I talked to a friend in Rio this morning. She lost her job and luckily has found a new one due to being bilingual. Inflation is causing everything to go sky high and wages are stagnant. Political corruption is rampant and now taxes are skyrocketing. It's just another day in paraíso .