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Re: The $ is getting K I L L E D
Great spot Mike. The deflation trade is dead. Anyone still worrying about deflation understands nothing about the markets - stocks don't keep going higher in a DEFLATIONARY environment.Originally posted by Mega View Post
This is also why shorting is dangerous. I was bearish on stocks at the 9000 mark - but shorting in a money printing environment is dangerous stuff.
The next year will be very interesting. The scale of money printing going on around the world and the rocketing growth of new loans in China is setting the stage for a crisis - when this next crisis will hit is hard to say. But there is already talk of Italian sov default. If that happens, we will get havoc on a bigger scale than when Lehman's went under. -
Re: The $ is getting K I L L E D
But Karl Denniger is a deflationist. He and I have many arguments over the years that he ended with his adamant assertion, made in a very rude and disrespectful way:
1) That the Fed will never, ever engage in quantitative easing, they'd sooner "put a gun to their heads and pull the trigger"
2) That the inflationary impact of a devalued dollar is irrelevant compared to downward pressures on prices caused by the collapse of the domestic money and credit supply
Since then I have not paid any attention to his forecasts.Comment
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Re: The $ is getting K I L L E D
Fed actions have been to prevent "collapse" not to achieve balance or growth. It has been over a year since the money faucet turned on and almost a year since the hose from the fire department was unleashed. Is the time constant of the economy really that long?
The third-rate mind is only happy when it is thinking with the majority. The second-rate mind is only happy when it is thinking with the minority. The first-rate mind is only happy when it is thinking. —A. A. MilneComment
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Re: The $ is getting K I L L E D
Slow down...
Soon forex markets will realise that EURO ( Germany ) is worse off more so than USA, for the forex guys its a matter of picking the less ugly duckling when it comes to forex.
Germany exports, the world buys, if the world does not buy, Germany cant export, thus its sinks hard.
http://www.ft.com/cms/af1f4356-e399-...0779fd2ac.html
German Export model doomed !
So $USD may see a reversal soon...Comment
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Re: The $ is getting K I L L E D
Thats my next play ...
Looking for a shift in momentum to go long USD, for a short time (long/short). (does that make sense?)
I also want to go long / long on C$, but not at these prices. Like to get in at 86.Comment
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Re: The $ is getting K I L L E D
Sorry Eric
I thought the bust up was with MISH.....If i known i wouldn't have posted.
MikeComment
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Re: The $ is getting K I L L E D
Originally posted by icm63 View PostGermany Will Secure Exports To Russia With a New Treaty
09 July 2009
Combined Reports
A treaty to be signed between Germany and Russia will protect German exporters from billions of euros in losses they would otherwise incur because of the Russian credit crunch, a German business expert said Wednesday.
Klaus Mangold, head of the Committee on Eastern European Economic Relations, said Russian financing problems were threatening German firms with some 5 billion euros ($7 billion) of losses.
“Russian firms … are having growing difficulties undertaking imports, even though advance payments have already been partly made,” he said.
German Chancellor Angela Merkel and President Dmitry Medvedev are to sign the treaty at a scheduled summit next week in Munich. Under the plan, a branch of German state-owned bank KfW will extend more than 500 million euros credit to Vneshekonombank to help companies pay for import orders.
“It is not a solution to all the problems, but it is an important breakthrough,” Mangold said.
For years, Russia was Germany’s fastest growing export market, but exports fell by one-third in the first quarter of this year under the weight of the financial crisis.
http://www.themoscowtimes.com/article/600/42/379403.htm
They are trying, maybe even snuggling up to Russia.Comment
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Re: The $ is getting K I L L E D
This Graph is disturbing. I have to admit.
is it just a noise or a real tremour from underneath ?
Dollar down and Bond up, and Gold up ? What is Happening !!!
Originally posted by Karl DenningerI have a very disturbing pattern here on a few charts today.....
The dollar is getting trashed.
10 year bond futures are skyrocketing (yield collapsing); the yield gapped under a "must hold" trendline this morning and has continued down since.
Gold (as expected with the dollar collapsing) is skyrocketing.
What is this all telling us?
It appears to be that traders in the FX market (who by the way tend to be smarter than the average equity or bond trader) have deduced that the entire "improvement" in 2Q GDP came from government spending.
Well that's not hard to figure out - it did.
They also appear to be making a bet that the US Government will attempt to continue this, along with The Fed monetizing the debt through its buyback programs to destruction of both the government and currency.
This is not positive for our economy. At all.
But this is the meme today - traders are piling into bonds expecting more Fed buybacks, they are shorting dollars like crazy, and Gold is of course reacting to these two facts.
This is a "collapse of government due to spending into bankruptcy" play folks, or at minimum "currency crisis around the corner."
Right or wrong this is the trade being put on in size; the dollar selling in particular is especially pernicious and troublesome - that chart is essentially straight down since the GDP release this morning.Comment
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Re: The $ is getting K I L L E D
There's certainly a lot of trouble ahead for the EU. But the economy and the currency aren't the same thing. Given the EU structure, there is a lot less scope for QE than there is in the US. And the Germans, who largely control the ECB, are very wary of inflation given the Weimar history.Originally posted by icm63 View Post
So you might see equally bad economies in both regions, with the EU engaging in less QE, and EU national governments instead being forced to restrain spending and borrowing. IMF style austerity packages.
The implication for the currency would be that the Euro stays relatively strong, and the US dollar slides, even if the EU is experiencing more pain.
But it wouldn't suprise me to see the relative strength of the Euro and US dollar see-saw back and forth a few times in the medium term, as the mood of the market swings.
I'm still expecting another big leg down in the Dow before the inflation kicks in next year, I'll be very suprised if March was actually the bottom.
So we could see the dollar rise against the Euro one more time as we get another "flight to safety".
I still think the US needs to increase the QE by an order of magnitude before the inflation dam bursts and the dollar collapses. EJ's prediction of 1st quarter 2010 looks plausible. But personally I'm drawn to the idea that we'll mirrror the 1929 bear market and hit a nominal bottom around July 2010. Obviously this only works if we remain in a deflationary environment until then - if inflation kicks in earlier we end up with a bear market that looks more like the 70s, or Japan in the 90's. The question is whether we are rhyming with 1929 or with Japan.Comment
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Re: The $ is getting K I L L E D
I'm of the opinion that stocks in the US over time does well in a deflationary environment, and poor in a inflationary environment (and pretty much inversely to emerging market stocks), IF an inflationary environment is defined as a trend of rising commodity prices, while a deflationary environment is a trend of flat or sinking commodity prices. Now I am talking about trends and not temporary market dislocations.Originally posted by hayekvindicated View PostComment
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Re: The $ is getting K I L L E D
wrong. stocks in the usa do well when wages are falling.Originally posted by nero3 View PostComment
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Re: The $ is getting K I L L E D
I think stocks does well when real wages are rising, and profit margins increasing, and commodity pricing falling, as in a deflationary trend, I think 1950-1965, 1982-2000, anyway, I am just referring to Warren Buffet.Originally posted by metalman View Post
Stocks are doing well now to, but I am really sceptically that we are in the start of a new a secular and deflationary bull-market, I am thinking cyclical bull in a ,secular inflationary bear market. I think the market will be much more stable in the final recession, before the shift from secular bear to secular bull happen, than the case was in this recession. That's because the market then will be much cheaper, so less of a decline is to be projected in the next recession. Nothing more than a 30 % decline, max I think.Last edited by nero3; July 31, 2009, 09:15 PM.Comment
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Re: The $ is getting K I L L E D
buffet's part of the deal. a child can figure that.Originally posted by nero3 View Post
as i said.. wrong...Stocks are doing well now to, but I am really sceptically that we are in the start of a new a secular and deflationary bull-market, I am thinking cyclical bull in a ,secular inflationary bear market.
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Re: The $ is getting K I L L E D
Originally posted by metalman View Post
I don't understand what you disagree with, I just think you are acting difficult, because it is me posting it. I now think it is a trend of declining real wages, and that's compatible with the view that this is cyclical bull, in an inflationary secular bear market.Comment
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