Jump to content
House Price Crash Forum
Sign in to follow this  
Guest Shedfish

Are Global Market Bubbles Set To Blow?

Recommended Posts

Guest Shedfish

sorry if already posted. this article took me by surprise a little, it's tone is vaguely familiar to anyone who's been reading Bonner, Puplava and co, but the BBC?

Wall Street giant Morgan Stanley told investors that its indicators were showing a "full-house" in terms of sell triggers, and that this had only happened five times since 1980.

Share this post


Link to post
Share on other sites
Wall Street giant Morgan Stanley told investors that its indicators were showing a "full-house" in terms of sell triggers, and that this had only happened five times since 1980.

Why would Morgan Stanley say that?

Edited by Sinking Feeling

Share this post


Link to post
Share on other sites
sorry if already posted. this article took me by surprise a little, it's tone is vaguely familiar to anyone who's been reading Bonner, Puplava and co, but the BBC?

I, for one, believe something major is on the way. The 3 day rally on US equity markets this week has me baffled and when one swithches to Bloomberg or CNBC today we are told stocks are rallying because of tame inflation readings which are likely to keep the Fed on hold. Tuesday's stock market downturn was put down to firmer US economic data which now more or less ruled out a rate cut later this year. How can the same argument support a move downwards and then a move upwards? But when we look at what happened to the yen today, we begin to get a clearer picture. Traders and those that advise them just want to keep on buying, at any cost and at any risk. The only way is up as Yazz and her plastic population used to say. Complacency has now reached frightening levels.

The only method to take out this bull it seems is to slay it. The Reserve Bank of New Zealand's direct currency market intervention earlier this week to try and halt carry trades on the Kiwi dollar was largely ignored. It is exceptionally rare for a Central Bank to directly intervene to influence the value of its own currency and while the Bank of New Zealand's reserves are too small to worry world financial markets, other Central Banks will have taken notice. One could also say that the SNBs current series of interest rate hikes is a form of intervention to try and prop up the Swiss franc (a major funding currency in the carry trade). With the franc again falling to record lows against the euro today, the SNB will feel more than a little frustrated, having only raised rates on Wednesday. The Bank of Canada's David Dodge said only yesterday that the Canadian dollar's recent meteoric rise went against historical trends for the currency - in other words he said it is over-valued and it is what the bank categorises as a 'type-2' appreciation - driven by speculation. The markets have basically ignored warnings from all 3 Central Banks this week, believing they are just going through the motions and are powerless to do anything about it. The Bank of Canada could punish speculators by failing to raise interest rates, which they are expected to do, when they convene in July. They could justify it on the basis that recent 'type 2' currency appreciation was reducing the cost of imports and thus would bring down inflation, so the Bank's MPC don't now need to tighten at this time.

As many currency pairs are trading at levels never seen before or at levels not seen for 30 years, major central bank intervention, in a real way, may be closer than we think. The yen is the big problem and with the Bank of Japan yawning their way through this whole crisis, it is time for others to step in and be counted. Why don't US political officials complain about the value of the yen in the same way as they do about the yuan? No global currency is manipulated in the same way as the Japanese yen. The Fed's Janet Yellen apparently said today that there is a major responsibility for the world's central bankers to work together to resolve the major global capital imbalance issue that persists. Significant investors in US assets should be more concerned about the yen than the yuan, because one of these days a trigger is going to pull the rug from under the entire carry trade and the whole house of cards is going to come down. That day is coming soon, very soon.

Edited by Sebastian

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 355 The Prime Minister stated that there were three Brexit options available to the UK:

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.