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Anyone Know What's Happening To The Dollar?

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Rumours of imminent QE2?

(there I've started one)

You'll be saying imminent hyperinflation in 6-9 months next. :rolleyes:

http://www.zerohedge...p-deteriorating

Goldman shaking the tree

and one for the bugs - start planning your exit strategy chaps

http://www.zerohedge.com/article/john-williams-sees-onset-hyperinflation-little-6-9-months-fed-tap-dances-land-mine

Edited by Frank Sidebottom

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It's either someone trying to get the dollar down to get in on a bounce, or they're genuinely trying to get the crowd to see the trend (dollar down, everything else up).

We'll know soon enough.

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Want To Know What Fueled That Reversal This Morning?

It was this....

“We’re talking about a moderate impact,” Hatzius said today in a conference call, discussing the effect should the Fed stage a new round of bond purchases, a policy known as quantitative easing.

“It would be significant enough from the perspective of economic forecasters but wouldn’t really be enough to make the difference between an economic outlook that is deeply negative to extremely positive,” Hatzius said. A total of $1 trillion in bond purchases would improve stability in financial markets and increase real GDP by 0.3 percentage point to 0.4 percentage point, he said.

Of course this is seen as a prediction, given that it came from Goldman, and so everyone piles into everything and sells dollars against it. The result is a FX chart set that looks like this:

And gold, copper, oil, and of course equities all scream higher.

The problem here is that monetization like this does not work.

How do we know? Because we have a nation that did this exact thing over the last 20 years - Japan - and they failed to both stem the slide in their equity markets and exit their deflationary conditions.

Of course the mouth-breathing impact of a move like this in the FX markets is going to be outsized, and it was. The dollar dropped 1% in an almost straight-line from the point where these comments were "released" (and no doubt were front-run - there was some buying done last night in the pit right near the close by some of these banks), but the question becomes one of forcing eventually (that is, the market starts to basically force The Fed to do what it wants, lest it have a "tantrum") and whether the benefits are real or not.

The retail report this morning makes clear that the "benefit" of such activity is not only muted, it is likely absent. Of particular note were the increases in sales of food and gasoline. This is not a positive thing, it is a negative one, as gas prices (and oil prices) have been generally positive over the last few months and I have also noted plenty of food price increases as well, as have others.

Yet we all need to eat, and most of us need to drive. The retail report also showed a slowing in the purchase of electronics - that is, discretionary purchases.

Whether Bernanke recognizes the danger of these sorts of machinations, or whether he's firmly stuck in a world where he can add yet another 30% to his balance sheet without serious negative consequence for the American Middle Class, is open to question.

But before buying into the belief that these moves today are "recovery" based, one had better look at the currency picture, because a quick glance there shows not expectation of recovery, but rather computer-driven panic.

Then you have CSCO "announcing" a dividend. Care to bet whether they'll fund it by issuing 1% debt, thereby basically paying the dividend with nothing? Nice, right up until the debt becomes difficult to roll in a rising rate environment and suddenly you have a wee problem and are forced to either cancel the dividend or cut into operating profits and more importantly, R&D. (For his part Chambers said today "Economy has gotten 'bumpy'; reiterates observing 'mixed signals' in the global economy - investor day comments." Uh, "bumpy" eh?

If Wall Street and CNBS wonder why the retail investor has increasingly given up and refuses to put his money into the stock market, instead choosing to either sit in cash or in bonds (which might be even more dangerous) you only need to look at the raw distortion that was introduced by this "report" - not even an official news release from The Fed, but rather the act of an organization that is seen as "connected" and thus can "push" The Fed around, to see the reason.

Of course nobody is going to investigate whether Goldman was acting in front of their own "news release", and thus whether they effective "made their own news" from which they profited - and whether that's even against the law!

Dennigers take on it.

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You'll be saying imminent hyperinflation in 6-9 months next. :rolleyes:

http://www.zerohedge...p-deteriorating

Goldman shaking the tree

and one for the bugs - start planning your exit strategy chaps

http://www.zerohedge.com/article/john-williams-sees-onset-hyperinflation-little-6-9-months-fed-tap-dances-land-mine

exit strategy? the exit is still at the end of the tunnel isn't it?

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Not for a year or two though.

Considering today's volatility in currencies it could be done in a couple of months. 50s seems a bit low though.

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Considering today's volatility in currencies it could be done in a couple of months. 50s seems a bit low though.

All getting rather interesting.

After a six year wait, the BoJ has finally had enough of the Federal Reserve's endless manipulation and has itself intervened in the currency market. The USDJPY jumps over 150 bps, the Nikkei surges 250 pts (that ES-Nikkei convergence or whatever the hell it was is closing soon) as the BOJ sells between 200 and 300 billion worth of yen. Yes, this is the time to short, short, short because if the now useless SNB interventions have taught is anything it is that central banks are populated by pompous morons who believe they can control the world, when the best thing they can do is hope for the last Viagra shot to result in priapism. For those who have taken Psych 101 - look up learned helplessnes. Next up - the SNB, and after that the Fed once again, and after that, the slow but sure end of fiat. The race to the currency devaluation bottom is now in the third and last lap. And incidentally, for all those who missed it, the BOJ's intervention is a symbolic capitulation, and the beginning of the end for the Keynesian system. Rejoice.

USDJPY%209.14_0.jpg

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So to conform, dollar was getting hammered as people moved to other assets in anticipation of qe2.

Japan also devalue to improve their own competitveness.

Cash isn't going to be worth the paper it's written on.

What do you think will play out here? What does this mean for the pound?

Very interesting.

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What do you think will play out here? What does this mean for the pound?

The same as for all other fiat currencies in history: death.

*Average lifespan of a fiat currency is roughly 40yrs. The dollar has been truly fiat since Nixon closed the gold window in the 70s.

Edited by Errol

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Ah very clever. Morgan Stanley releasing rumours of a US QE2 sends the dollar to a 15 year low against the yen. Japanese central bank intervention sends the dollar rocketing back up again. Anyone who knew what was going to happen makes a fortune. Still a bit more to go in this rally I think, I am still looking for GBPJPY to get to 137 or 140 this month.

Anyway, it now looks like the central banks of all of the major currencies are trying to devalue. That could get very interesting.

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  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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