Euro Surges As Trump Fears Slam Dollar; Futures Poised For New Records

Tyler Durden's picture

In a replica of Monday's early trading, European shares are down, this time led by health-care stocks even as the Euro surges above 1.1050, the highest level since the US election. Asian equities rose, while S&P futures were unchanged although we expect the ramp to kick in any second, and take the NASDAQ to another all time high. Meanwhile, the US dollar weakened for a fifth day after a WaPo report cited anonymous sources who said President Trump revealed classified information to Russia’s top diplomat.

The dollar fell against all its major peers after the Washington Post reported the president last week shared closely held intelligence with Russia’s foreign minister and ambassador. The greenback’s weakness translated to gains for precious metals, while crude rose a fifth day as Goldman Sachs released not one but two bullish reports on oil Monday, saying the willingness by Saudi Arabia and Russia to extend output cuts will likely sway other countries; of course the one that matters most, the US, was not mentioned.

According to Bloomberg, the market's reaction to the latest in a string of controversies to dog Trump highlights growing uncertainty that the president will be able to deliver on plans to boost infrastructure spending and cut taxes. "That could prove key to investors, who are weighing historically pricey equities and ominously low volatility just as data from both China and the U.S. casts a shadow on global growth." And yet we have yet to see any actual adverse impact on the S&P from these "controversies", with E-minis trading 2,398.75, one tick in the green at this moment, essentially a new all time high..

“This sort of discussion is very new indeed and has caused a lot of U.S politicians to raise more concerns and that has clearly rippled into the markets,” said Andrew Milligan, head of global strategy at Standard Life Investments Ltd. in Edinburgh. “We can still buy into the interest-rate differentials arguments for the dollar but the arguments about fiscal stimulus and cross-border flows look more tenuous and have made us neutralize our bets on the dollar.”

In equity markets, Asian stocks climbed to a fresh-two year high on the back of an overnight rise in Wall Street, while oil extended gains after major producers Saudi Arabia and Russia pledged to push for an extension of supply cuts into 2018. Investors in regional equities, however, are growing increasingly wary as valuations look stretched and with the latest rally taking place in thin volumes and led by just a few sectors. Asian regional stock markets were largely  mixed with Chinese stocks leading laggards and Thailand among the best performing stock market of the year.

Europe is set to follow with index futures pointing to a mixed start. Concerns are rising that as some may be shunning the US, Europe is getting increasingly expensive in line with JPM's recommendation to clients to start shoring European stocks.

"We are approaching a short-term resistance as the breadth of this rise is very unhealthy and the market momentum looks tired," said Alex Wong, a fund manager at Ample Capital Ltd in Hong Kong, with about $130 million under management. In Hong Kong, the broader market rose to its highest level since June 2015 on the back of extended buying into Chinese lenders and market heavyweight Tencent before declining 0.3 percent.

With overall volumes declining and share valuations looking extremely stretched, investors are growing cautious. Hong Kong's technology sector, for example, is the most expensive, trading at a price-to-earnings multiple of more than 42 times. The MSCI index of Asia-Pacific shares ex-Japan was flat after hitting its highest level since June 2015 in opening trades.

But going back to the big story overnight, it was all about FX, and specifically the surge in the euro, which extended its recent gains to levels last seen during the US presidential election amid concerns by dollar bulls that political turmoil over the Atlantic will push back the implementation of much-anticipated reforms by the Trump administration.

The dollar, as measured by the Bloomberg Spot Index, dropped for a fifth day, its longest losing streak in almost two months. The euro rose above the high seen after the final round of the French presidential elections as hedge funds and macro investors added fresh longs, according to foreign-exchange traders in Europe. The common currency gained as much as 0.7 percent to $1.1050 as of 11:00 a.m. London time, its strongest level since the aftermath of the U.S. elections.

The common currency has risen by 1.7 percent since Friday, and given one-week realized volatility traded near a 2 1/2 year low hit on April 19, further gains may take longer to materialize. Take-profit offers were seen near $1.1050 and $1.1100, said the traders. Interbank desks were looking to fade a move below $1.10 instead of chasing the market higher. Still, the short-to-medium term remains constructive for euro bulls. Volatility smile analysis on the one-week tenor shows how a rise in demand for euro calls has outweighed that for puts since the release of U.S. soft data on Friday. With a lack of hefty nearby expiries up to Wednesday, focus could be drawn toward options worth 4 billion euros rolling over at $1.10 on Thursday. The dollar fell against most of its G-10 peers as U.S. President Donald Trump’s top foreign policy advisers raced to contain political damage from a report saying he revealed sensitive classified information to Russia’s top diplomat during an Oval Office meeting last week

Oil steadied around the $52 per barrel level after hitting its highest level in more than three weeks on Monday, after Saudi Arabia and Russia said that supply cuts needed to last into 2018, a step towards extending an OPEC-led deal to support prices for longer than first agreed. [O/R] Global benchmark Brent crude rose 0.4 percent to $52 per barrel. U.S. West Texas Intermediate (WTI) crude futures were up 0.4 percent at $49.03 per barrel.

Brent crude has gained nearly 9 percent over the last week though some analysts were skeptical about the durability of the rally despite the proposed supply curbs. "That is going to be easier said than done, it appears, with U.S. production running at its fastest pace since August 2015 and data yesterday confirming that Chinese growth momentum continues to moderate," ANZ strategists wrote in a daily note.

Economic data include housing starts. Home Depot, Staples are among companies scheduled to publish results.

Global Market Snapshot

  • S&P 500 futures down 0.01% to 2,398.25
  • STOXX Europe 600 down 0.2% to 395.28
  • MXAP up 0.2% to 151.42
  • MXAPJ up 0.2% to 495.95
  • Nikkei up 0.3% to 19,919.82
  • Topix up 0.3% to 1,584.23
  • Hang Seng Index down 0.1% to 25,335.94
  • Shanghai Composite up 0.7% to 3,112.96
  • Sensex up 0.7% to 30,547.70
  • Australia S&P/ASX 200 up 0.2% to 5,850.52
  • Kospi up 0.2% to 2,295.33
  • Brent Futures up 0.8% to $52.24/bbl
  • Gold spot up 0.3% to $1,233.94
  • U.S. Dollar Index down 0.4% to 98.50
  • German 10Y yield rose 1.3 bps to 0.433%
  • Euro up 0.6% to 1.1042 per US$
  • Brent Futures up 0.8% to $52.24/bbl
  • Italian 10Y yield rose 2.5 bps to 1.982%
  • Spanish 10Y yield fell 2.6 bps to 1.606%

Top Overnight News from Bloomberg

  • President Trump’s top foreign policy advisers raced to contain political damage from report saying he revealed sensitive classified information to Russia’s top diplomat during an Oval Office meeting last week
  • Multispeed euro-area recovery, with 0.5% growth in 1Q confirmed on Tuesday, underpins ECB’s call for caution
  • The pound fell against the dollar, declining from a one-week high, after data showing the fastest inflation since 2013 wasn’t enough to convince investors of an imminent tightening of policy from the Bank of England.
  • Russia says OPEC deal may be expanded to 3-5 more countries
  • Elliott Demands BHP Oil Review, Drops Call on Listing Shift
  • HSBC Agrees to Settle Bondholder Group Suit Over Libor- Rigging
  • Oil Market Is Rebalancing Yet OPEC’s Work Not Finished, IEA Says
  • New South Korean President Seen Hindering Nuclear Ambitions
  • Saudi Aramco said to make leadership changes ahead of IPO
  • Aramco said to plan at least 10 agreements during Trump visit
  • Nigeria warning strike includes workers from Shell, Eni, Total
  • Facebook Violates Dutch Data Protection Law, Dutch Agency Says
  • Ford Making Some Voluntary Job Buyout Offers in Germany: Union
  • Netflix Can’t Dodge Relativity Suit Over Pre-Release Streaming
  • Wal-Mart Launches Sam’s Club Global Flagship Store on JD.com
  • JPMorgan Names Brian Gu Chairman of APAC Investment Banking
  • Arconic Urges Holders to Vote for All Five of Company Nominees
  • Cisco, Emory, Texas A&M, Back $140 Million European Tech Fund

Asian equity markets traded mixed after the region failed to sustain the impetus from the positive US lead, where broad-based sentiment was underpinned by a 2% jump in oil prices after Russia and Saudi Arabia agreed to extend output cuts. ASX 200 (+0.2%) and Nikkei 225 (+0.1%) were buoyed at the open following the Wall St gains in which the S&P 500 and Nasdaq posted fresh record highs. However, Nikkei 225 then stalled just shy of 20,000 as China markets entered the fray and dampened risk tone in the region, with Shanghai Comp. (+0.7%) and Hang Seng (-0.1%) reeling on continued regulatory concerns. 10yr JGBs were lower with demand dampened amid mild gains in Japanese stocks, while today's 5yr JGB auction also failed to provide support as the results were mixed with accepted prices lower than prior.

Top Asian News

  • ‘Chili Mafia’ Hunted by Bank Indonesia for Stoking Inflation
  • Noble Climbs Even as Moody’s Flags $900 Million Funding Gap
  • One Belt, One Road, One Man: Xi Looms Large at China Summit
  • World’s No.1 Money Fund Said to Face Pressure to Cut Inflows
  • Hong Kong’s Link REIT CEO Says Was Approached to Sell 10% Stake

In European bourses, with macro newsflow once again relatively light, all eyes were largely on the latest inflation report from the UK which saw firmer than expected CPI (Y/Y 2.7% vs. Exp. 2.6%) for all three main metrics. With GBP/USD already heading higher into the release, the pair saw a further boost of around 20 pips to move back above 1.2950. However, markets then saw a reversal of this move, given the potential concerns around the UK economy of higher inflation if we get a disappointing jobs/retail report this week which could place further pressure on households. Furthermore, GBP was also hampered by news that the ECJ will require all EU members to ratify their trade deal with Singapore which could have ramifications for future Brexit negotiations. From an equity standpoint, trade has been particularly directionless after taking a similar lead from Asia-Pac trade. The FSTE has been supported by index-heavy weight Vodafone (+3.9%) who reported earnings pre-markets with performance across the sectors relatively broad-based. Elsewhere, the CAC 40 has been modestly hampered by some ex-div companies in the index but moves have been relatively modest. The energy sector has been relatively stable after yesterday's gains with the latest !EA monthly report not providing markets with any traction. In fixed income markets, paper across the continent trade modestly lower with some of the downside led by Gilts in the wake of the aforementioned UK data while the long-end has been hampered by impending supply. More specifically, France have opened books on their longer duration OAT after mandating banks yesterday, while the UK are expected to come to market with a 2057 syndication. Some market participants have also suggested that Italy could come to market within the next month with their own-longer-dated syndication which has subsequently led to steepening of the BTP curve.

Top European News

  • German Investor Optimism Rises After French Elect Pro-EU Leader
  • U.K. Inflation Resumes Ascent as Air Fares, Energy Prices Rise
  • Glencore Says Electric Car Boom Is Coming Faster Than Expected
  • Deutsche Bank Shakes Up Investment Banking Management in Spain
  • Hungary Will Probably Issue Panda Bonds This Year, Varga Says
  • Italian Bonds Outperform Bunds While 30-Year Sector Lags Rally
  • Italian Growth Pace Fails to Speed Up Amid Weak Industry Output

In currencies, the Bloomberg Dollar Spot Index slid 0.3 percent as of 10:06 a.m. in London, falling for a fifth day to the lowest since April 26. The euro climbed 0.7 percent to $1.1048, the most since Nov. 9. The yen rose 0.2 percent to 113.59 per dollar, after dropping 0.4 percent Monday. The focus this morning has been on GBP, with traders looking to the inflation data up on expectations as the yoy CPI rate rose from 2.3% to 2.7%. This initially gave the Pound a bid, with Cable testing above 1.2950, but this was short lived as it was not long before the market started refocusing on Brexit matters. News that the EU 28 will have to ratify the Singapore trade pact now sets precedent for the negotiations ahead for the UK, and this does not bode well for a deal to concluded inside 2 years. This has greater implications for EUR/GBP, which has now taken out a series of resistance levels through 0.8500, but we suspect pre-0.8600 will be a challenge in the near term, but dips proving shallow for now. Cable now sub 1.2900. EUR/USD gains are largely seen to be on the back of USD weakness, but we also have to factor in future expectations of a change in ECB stance which are being front run yet again. That said, the Q1 GDP read was confirmed at 0.5%, with the trade balance higher and ZEW sentiment across the EU better than expected. Next key area higher up is at 1.1120-30.

In commodities, oil prices are in consolidation mode after WTI rallied into the mid USD49.00's and Brent through USD52.00. This was a direct result of Saudi Arabia and Russia agreeing in principle to extend the current output deal by another 9 months. We have highlighted USD50.00 as a notable resistance level for WTI, so we watch from here. Metals, led by Copper have coat-tailed the recovery, but we would expect China's Silk Road proposals will have lent a helping hand. Copper now holding the lower end of the USD2.50-2.60 range, but on the day, Platinum and Palladium showing gains. Gold following Treasuries, with geopolitical risk adding support, but little traction seen on the upside as US yields have ticked higher this morning. Silver is back in the upper half of the USD16.00's. !EA Monthly Report shows that global oil supply fell by 140K BPD in April as non-OPEC, and especially Canada, pumped less, OPEC crude production rose by 65K BPD in April to 31.78m1n BPD as higher output from Nigeria and Saudi Arabia more than offset lower flows from Libya and Iran.

Looking at the day ahead, we’ll get April housing starts and building permits (expected to climb +3.7% mom and +0.2% mom respectively) followed then by the April industrial production report (+0.4% mom expected). Away from the data there’s some ECB speak scheduled with Nowotny and Coeure both due to speak this afternoon. Finally it’s worth keeping an eye on some of the earnings releases scheduled for today, particularly in the US where the retail sector will once again be under the spotlight with Home Depot, TJX and Staples amongst those due up.

US event calendar

  • 8:30am: Housing Starts, est. 1.26m, prior 1.22m; MoM, est. 3.7%, prior -6.8%
  • 8:30am: Building Permits, est. 1.27m, prior 1.26m; MoM, est. 0.24%, prior 3.6%
  • 9:15am: Industrial Production MoM, est. 0.4%, prior 0.5%; Capacity Utilization, est. 76.3%, prior 76.1%
  • 9:15am: Manufacturing (SIC) Production, est. 0.4%, prior -0.4%
  • 10am: MBA Mortgage Foreclosures, prior 1.53%; Mortgage Delinquencies, prior 4.8%

DB's Jim Reid concludes the overnight wrap

Any lingering concerns that the weekend North Korea missile launch, a softening in China activity indicators and a global hacking epidemic would see markets struggle on Monday were laid to rest fairly on yesterday. Instead it was the decent rally across the commodity complex and particularly for energy which helped risk assets start the week on the front foot. WTI Oil (+2.11%) closed in on $49/bbl again following those comments from the Saudi and Russian energy ministers calling for an extension of the supply cut agreement to Q1 2018. Metals also got a boost following China President Xi’s infrastructure spending comments over the weekend with Aluminium (+0.77%), Copper (+0.96%) and Zinc (+0.67%) all up.

Commodity sensitive sectors rallied in sync and the S&P 500 (+0.48%) saw its biggest rise in just under 3 weeks, closing above 2,400 for the first time ever and also notching up its 17th record high of the year. It’s still got some way to go to catch the Nasdaq (+0.46%) though which finished with a new record high for the 33rd time this year. Gains weren’t quite as impressive in Europe but the Stoxx 600 (+0.09%) still edged higher. The DAX (+0.29%) also made a new record high, no doubt boosted by Chancellor Merkel’s state election win on the weekend. Not to be left out, the FTSE 100 (+0.26%) was another to hit a new record high yesterday. It is interesting to see that these record highs for equity markets are happening as measures of global data surprises plummet to multi-month lows. Indeed a closely followed global measure has fallen to the lowest level since November last year while a US-only measure is at the lowest since last May and well into negative territory now. A strong earnings season has undoubtedly been a big driver recently and the overriding trend, although it also perhaps reflects how far expectations for economic data have come in recent times.

Staying with markets, measures of volatility tried their best to push higher early on yesterday but ultimately collapsed again into the close with the VIX finishing at 10.42 and more or less where it finished on Friday. That now makes it 16 sessions in a row that it has closed below 11.00, stretching the record run. Meanwhile EM currencies had a strong day with the Colombian Peso (+1.40%), South African Rand (+1.39%) and Russian Ruble (+1.34%) amongst those sharply higher. The MSCI EM equity index also rallied +0.78% and has now closed higher for six sessions in succession.

Elsewhere bond markets were weaker which wasn’t a great surprise in the context of a positive day for risk and rising Oil prices. 10y Treasury yields finished 1.8bps higher at 2.344% while 10y Bund yields were 3.1bps higher at 0.417%. The ECB’s Praet spoke and said that the last ECB meeting showed that “growth still needs a high degree of accommodation” and that “risks are more balanced but still tilted to the downside”. Also in Europe, Germany’s Merkel and France’s Macron met yesterday but there wasn’t much significant news to come from the meeting with both leaders pledging to create a new “road map” for reviving the EU and medium-term co-operation. Speaking of Macron, yesterday the new French President named centre-right MP Edouard Philippe as the new French PM. It’ll be interesting to see if the appointment attracts more moderate centre right politicians who had supported Juppe, with the legislative elections in June not far off.

Before we look at how markets are doing this morning, the most significant news since the closing bell last night is that of a Washington Post article suggesting that President Trump revealed highly classified information in a White House meeting last week to both the Russian foreign minister and ambassador. The article goes on to say that the information was considered so sensitive that the details of which were withheld from allies and tightly restricted even within the White House itself. Remember that this story is emerging just after the President fired FBI Director James Comey last week in the middle of a bureau investigation involving links between Russia and the Trump campaign. Safe havens like the Yen (+0.25%) and Gold (+0.24%) are firmer post the report going out.

Equity bourses in Asia are a bit more mixed this morning however. While the Nikkei (+0.19%), Kospi (+0.20%) and ASX (+0.11%) are modestly higher, both the Hang Seng (-0.25%) and Shanghai Comp (-0.34%) have weakened. US equity futures are also modestly in the red, while Treasuries have undone most of yesterday’s move higher in yield. Oil has built on yesterday’s rally with another +0.30% move up.

Staying with Asia, shortly after we went to print yesterday our economists in China published a note summarising the April activity indicators which were released yesterday morning. In addition to the headline indicators, they also highlight that the government’s tightening measures have slowed property transactions down with growth of property sales in April dropping to +7.7% yoy from +14.7% yoy in March in volume terms and from +24.4% yoy to +10.0% yoy in value terms. However, they also made the point that property developers seemed to maintain their sanguine expectations, at least for the moment. This is  reflected in land sales where volume growth over the three months to April picked up to +1.8% yoy from -11.7% yoy in the three months to March. The latest credit aggregates data also revealed strong growth in mortgage credit. In their view the strong property markets will provide a cushion to the economy through the fiscal channel. Summing it up, the latest round of data in April is consistent with their view that  real GDP will likely slow but, cushioned by the property sector, not collapse in 2017. They expect real GDP to grow 6.8%, 6.6% and 6.5% in Q2, Q3 and Q4 respectively, and 6.7% in 2017 as a whole.

Speaking of data, the ECB’s latest CSPP holdings data was released yesterday. It showed that the average daily run rate last week was €303m which compares to €356m since the programme started. The  average monthly run rate since April 2017 (after QE trimmed) is also €7.37bn (assuming 21 business days per month) which compares to €7.56bn in an average month between July 2016 and March 2017. So the absolute pace of purchases has come down only moderately since the overall QE was trimmed in April. The CSPP/PSPP ratio was 11.6% between July and end-March while it’s been 12.3% since April. So in conclusion the best we can say so far is that we’ve only seen a mildly less than proportional CSPP trimming so far.

The other data yesterday was reserved for the US. It was a bit of a mixed bag. The empire manufacturing print came in at -1.0 in May (vs. +7.5 expected) which was down over 6pts from the April reading. The details also revealed that the new orders component tumbled 11.4pts to -4.4. That is the first regional report we’ve seen for May although it is worth noting that the decline in new orders follows similar weakness for components is the ISM manufacturing and Philly Fed surveys in April. The other data in the US yesterday was the NAHB housing market index print for May which rebounded 2pts to 70 and to the second highest reading since 2005.

Before we move onto today’s calendar, it’s worth updating for the latest opinion polls in Italy where, in recent days, polls have swung back in favour of the Democratic Party over the euro-sceptic 5SM Party. The last three opinion polls (Demos, Ixe and SWG) show average support for the PD of 29.1% compared to 27.7% for 5SM, and therefore an average lead of 1.4%. The 3 polls prior to this showed average support of 27.6% for PD and 30.1% for 5SM, implying an average lead of 2.5% for 5SM. So a decent swing but it’s worth noting that polls remain fairly volatile and the overall difference between the two parties is still very small. Looking at the day ahead, this morning in Europe the early data is out of France where we’ll get the final revisions to the April inflation data. Shortly after that the focus turns over to the UK where the April CPI/RPI/PPI data docket is due out.

Market expectations is for a +0.4% mom headline CPI print which would lift the annual rate to +2.6% yoy, while the core is expected to print at +2.3% yoy, up from +1.8% in March. Shortly after that we’ll get the second reading on Euro area growth for Q1 where the initial flash estimate came in at +0.5% qoq. Also due out is the May ZEW survey in Germany. This afternoon in the US we’ll get April housing starts and building permits (expected to climb +3.7% mom and +0.2% mom respectively) followed then by the April industrial production report (+0.4% mom expected). Away from the data there’s some ECB speak scheduled with Nowotny and Coeure both due to speak this afternoon. Finally it’s worth keeping an eye on some of the earnings releases scheduled for today, particularly in the US where the retail sector will once again be under the spotlight with Home Depot, TJX and Staples amongst those due up.

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pc_babe's picture

Meanwhile JnJ is up 4% on a no news upgrade from JPM

Let it Go's picture

When you consider just how destabilizing currency swings can be it is easy to see how a strong dollar could obliterate the global economy. It should not be a surprise in our current global economy that behind the curtain central bankers could be busy manipulating currencies so they trade in a narrow range that will not rock the boat.

Many market watchers have become dubious of recent market moves and over the top efforts of both governments and central bankers to keep this so-called recovery moving forward. More on the merit of this controversial opinion and the ramifications it holds in the article below.

 http://brucewilds.blogspot.com/2017/03/currencies-are-trading-in-false-paradigm.html

jamesmmu's picture

Whats the indicator that stocks will go down? Now, dollar down, gold up, stocks still going up. even 10yrs fall back wont impact on stocks, what the fuck is going on?

quadraspleen's picture

OT but lookee here: https://www.theguardian.com/technology/2017/may/15/wannacry-ransomware-n...

It's ok, guys..you can stop the Russian probe. It was DPRK wot dun it

LOL

gunzeon's picture

Gee, The Guardian is quicker to bash America's enemies that America itself. I've got mates that still believe that The Guardian is a beacon of the progressive left would you believe - yes - they have a core of faithful readers that still lap it up; back in the day these guys were getting the email version sent to oz. Today they tell me it's "non corporate" and "neutral" but we see talked about here often the exact ilk of it's staff and bosses. Personally i look at it occasionally hoping to see some original untainted news has slipped through but alas, the same spin on the same fake news as most of the legacy media, why bother again I ask myself. They are past it and now a mere propaganda fawcett spouting such contrived tales as this one on the hapless Norks.

 

IntercoursetheEU's picture

Governments are increasingly  irrelevant. Sovereign debt can never be repaid. Equities aren't rising, the debt market is sinking. In this scenario wouldn't it be better to own a business rather than an IOU? Capital flows where it's  treated well

Cordeezy's picture

Wapo reports some BS with unsubstantiated claims and the dollar gets slammed? Fickle investors will likely lose all money

www.escapeamazon.com

gunzeon's picture

unsubstanciated, i like that ... more than likely the wapo reporter is banging a he/she office worker that spilled the story so yes, unsubstantiated

yogibear's picture

It's been the Central Bank mantra since Bernanke's QE rounds. Central banks keep pumping stocks higher showning the economy is sound.

To central banks, the stock market is the only indicator of a healthy economy. 

So they will not let price discovery occur.

Thebighouse's picture

That is it Yogi

How many billions a month are central banks pouring into the market?

Need a Fang plus two ETF Ha

Need to quit thinking

 

Thebighouse's picture

That is it Yogi

How many billions a month are central banks pouring into the market?

Need a Fang plus two ETF Ha

Need to quit thinking

 

Peter K's picture

"The dollar fell against all its major peers after the Washington Post reported the president last week shared closely held intelligence with Russia’s foreign minister and ambassador."

 

Talk about FAKE NEWS on so many different levels.

 

If the USD moves on a fake accusation that has no material evidence supporting it, and it is known that there is no material evidence supporting it for NINE months now, then what we have is a FAKE MARKET.

 

And that's the scary part.

Stormtrooper's picture

What we really have is a fake USD.  And a fake Euro.  And a fake Yen.  Etc., etc.  There is no underlying value to any world currency and no true way to value any of them.  Their only intrinsic value is in their BTU content for heating a house or cooking a meal.  So, you are correct, we have a fake FOREX market.