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USD, American Dollar Discussion
bg99
post Posted: Apr 9 2020, 04:51 PM
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In Reply To: mullokintyre's post @ Apr 9 2020, 08:48 AM

with a fairly large symmetrical triangle concluding, a large move one way or the other should materialise imminently
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mullokintyre
post Posted: Apr 9 2020, 08:48 AM
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From my fav currency guru, Chuck Butler, from the Daily Pfennig newsletter


QUOTE
The currencies had a good day yesterday, adding onto their gains from the night before… I have to say that this is the first time I’ve seen a good trading day for the currencies following good overnight trading for the currencies, in what seems like a month of Sundays! I’ll tell you one thing, economists and analysts are split down the middle, with ½ of them saying the dollar is King, will remain King, no questions asked, and the other ½ of them saying that once the Oil contracts begin to take the dollar out of the picture, and trading countries us their own currencies, then the trap door springs on the dollar, and suddenly, everyone begins to fret about all the debt the U.S. accumulated….

So, go ahead and pick your side…. I’m of the opinion that we’re going to see a change in the financial system, and that dollars won’t play as big a part as they do now…. This has been going on for some time now folks…. You see, the Fed, was bailing out foreign entities, without Congress or the public knowing about it, back in 2008…. Well, the President has put a stop to that, and even with the Fed’s new Unlimited amount that they can buy, they had better make sure it’s only from U.S. Corporations/ banks…. This lack of dollars overseas has become a real problem… There’s a ton of dollar denominated debt coming due overseas, and they don’t have enough dollars to pay them off…. So, what will these foreign entities do? They will search for ways to go around dollars, so that this never happens again…. Uh-oh….. And that will be the beginning chip to be thrown on the poker table, that will lead to a big pot, that causes a collapse of our financial system…. I’m just saying…


From NY TIMES
QUOTE
HONG KONG — Companies in the Asia Pacific need to raise a near record $69.3 billion to refinance their existing borrowings in the second quarter, Refinitiv figures show, as the region's capital markets remain turbulent due to the coronavirus pandemic.

The level of U.S. dollar corporate debt due to mature in the region, including Japan and China, is the second highest on record and only slightly behind the $71.4 billion that was due during the same time last year.

Some of China's largest state-owned enterprises are the leading contenders to refinance debt with oil giant Sinopec Group, which has a 5-year bond worth $2.48 billion maturing in April while power utility State Grid has a three-year $898.5 million bond expiring at the same time, according to Refinitiv.

The data shows a Soft Bank Group bond worth $2.48 billion due to mature on April 18, and the conglomerate flagged it planned to carry out $41 billion worth of asset sales to buy back shares and pay down debt.


Of course the other option is to default on Debt. According to the WSJ, Lebanon is about to do just that

QUOTE
Lebanon said it would default on its dollar-denominated debt, intensifying the Middle Eastern state’s financial turmoil and setting up a possibly messy negotiation with foreign investors.

Beirut’s failure to honor its massive debt load was long expected and not related to the economic turmoil caused by the coronavirus outbreak. But it comes at a time when the global financial system is on edge.


Argentina may well follow suit fromBuenos Aries

QUOTE
Argentina is already admitting that it cannot meet its original March 31 deadline for debt restructuring, the Bloomberg news agency reported Friday, saying the government intends to roll it over until May 7, when a major payment of US$ 1.4 billion falls due.recent series of conversations between bondholders and government officials have converged towards that date as the moment of truth for avoiding default, according to sources privy to those meetings.

Restructuring talks could stretch to the end of May or even several months in a context of global crisis and coronavirus, according to other sources.

Furthermore, there are fears that continually plunging bond values will eventually place them in the hands of the holdouts – more commonly known in Argentina as the los fondos buitre, or “vulture funds.”

A payment of US$ 1.9 billion to the Paris Club will also be falling due in May but the government is confident that an extension can be negotiated, Bloomberg reported.


And from the Institute of International Finance
The following is a quote, but the SS limits the numbers of block of quoted texts.

Global debt across all sectors rose by over $10 trillion in 2019, topping $255 trillion. At over 322% of GDP, global debt is now 40 percentage points ($87 trillion) higher than at the onset of the 2008 financial crisis—a sobering realization as governments worldwide gear up to fight the pandemic.

FX debt in EMs now exceeds $5.3 trillion. Excluding China, FX debt makes up 20% of EM debt outside the financial sector.

Over $20 trillion of global bonds and loans come due through end-2020; $4.3 trillion of that in EMs. Emerging markets will need to refinance $730 billion in FX debt through end-2020.
COVID-19 SPOTLIGHT:
With the COVID-19 fiscal response in full swing, the global debt burden is set to rise dramatically in 2020; gross government debt issuance soared to a record high of over $2.1 trillion last month, more than double the 2017-19 average of $0.9 trillion.

As social distancing becomes the norm across most mature economies, global recession looms: a recession which would begin with $87 trillion more in global debt than at the onset of the 2008 financial crisis.

Using a simple top-down estimation, if net government borrowing doubles from 2019 levels—and there is a 3% contraction in global economic activity (nominal terms)—the world’s debt pile would surge from 322% of GDP to over 342% this year.


Just another reason to be wary.
Mick



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mullokintyre
post Posted: Mar 16 2020, 08:32 AM
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In Reply To: mullokintyre's post @ Mar 16 2020, 07:59 AM

and now on the opening this morning, the AUD HAS fallen 100 points from the overnight 62.47 to 61.23, and gold is up 20.
Gold is still above 2500 in AUD terms.
Can't see why those goldies won't have some sort of rally.
Mick



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mullokintyre
post Posted: Mar 16 2020, 07:59 AM
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In Reply To: mullokintyre's post @ Dec 12 2019, 08:02 AM

It was only dec 12 last year I said

QUOTE
QUOTE
So, the FEd says rates are staying where they are, and ;ottle chance of them moving in 2020.
So what happens, the USD falls 1% against the AUD, gold and silver both up, and the DOW up by a few cents.
One assumes the market expected another rate cut, and don't look like getting one any time soon.


We hasve already had one emergency cut this month, and last night we get another from ABC News

QUOTE
The US Federal Reserve has slashed interest rates by a full percentage point to nearly zero as it aims to help the economy withstand the impact of the coronavirus pandemic.

The move puts the benchmark US interest rate in a range of 0 to 0.25 per cent, effectively bringing it to zero.

The Fed also said it was re-starting "quantitative easing," in a bid to get money flowing again in markets and the broader economy.

The Fed vowed to "use its full range of tools" to support the economy and the "smooth functioning of markets".

"In light of these [coronavirus] developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent," the Fed said in a statement.

The Australian dollar fell to 62.47 US cents after the announcement, which is the second emergency rate cut this month.


I think the ABC actually meant to say rose to 62.47 cents.
Just a small error.
Mick



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nipper
post Posted: Dec 12 2019, 08:54 AM
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In Reply To: mullokintyre's post @ Dec 12 2019, 08:02 AM

I think they're trying to soften us up. Apart from Trump, everyone knows the experiment has not succeeded. The original intent a decade ago averted worse, but low rates are throttling "animal spirits''. There's a lot of second guessing, and any Powell Put is no certainty.

Next challenge is, How bad will the next medicine taste?



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
mullokintyre
post Posted: Dec 12 2019, 08:02 AM
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So, the FEd says rates are staying where they are, and ;ottle chance of them moving in 2020.
So what happens, the USD falls 1% against the AUD, gold and silver both up, and the DOW up by a few cents.
One assumes the market expected another rate cut, and don't look like getting one any time soon.
Mick



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mullokintyre
post Posted: Nov 29 2019, 11:22 AM
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Once again, we may have been a little premature about the demise of the US.

From Financial Times

QUOTE
The pace of the US economy’s expansion has picked up in the back half of 2019, with data showing gross domestic product rose in the third quarter by more than initially forecast.

The economy expanded at a 2.1 per cent annualised rate in the three months ended September 30, according to the second estimate of GDP from the Bureau of Economic Analysis. That is up from an initial estimate of 1.9 per cent and an increase from the 2 per cent pace in the second quarter.

The new estimate, as well as data showing a bigger-than-expected rebound in durable goods orders in October, may help allay concerns about the health of the US economy, particularly manufacturing and business investment, which continues to be tested by the impact of Donald Trump’s trade war on China.

The upbeat data helped support US stocks, with the S&P 500 up 0.2 per cent on Wednesday morning from the previous session’s record closing high. The US dollar index rose by the same margin.

“The increase in real GDP in the third quarter reflected positive contributions from [personal consumption expenditure], federal government spending, residential investment, private inventory investment, exports, and state and local government spending that were partly offset by a negative contribution from nonresidential fixed investment,” the BEA said on Wednesday.

Data also showed orders for long-lasting manufactured goods rebounded in October from their steepest drop since May. Durable goods orders rose 0.6 per cent last month, easily topping Wall Street forecasts for a 0.8 per cent drop, and marking a solid recovery from the downwardly revised 1.4 per cent fall (previously minus 1.2 per cent) in September.

New orders for non-defence capital goods excluding aircraft, considered a proxy for business investment, surged 1.2 per cent, from an upwardly revised 0.5 per cent drop in September. Economists pencilled in an October decline of 0.3 per cent.

“The rise in durable goods orders last month was driven by a surge in orders for underlying capital goods, suggesting that business equipment investment is holding up better than anticipated,” Michael Pearce, senior US economist at Capital Economics said.

“Overall, we’re still expecting economic growth to slow further in the near-term, but that slowdown appears to be more modest than we had initially expected,” he added.

Price growth remained soft at the start of the fourth quarter even after the economy performed better than forecast, supporting the case for the US central bank to keep interest rates low.

The core personal consumption expenditures (PCE) index, which Federal Reserve officials use as their preferred inflation gauge and excludes volatile food and energy prices, was up 1.6 per cent year-over-year in October, according to the commerce department. That was down from the 1.7 per cent growth seen in the prior month.

The inflation reading “underlines that interest rates are unlikely to be raised again for the foreseeable future”, according to Andrew Hunter, senior US economist at Capital Economics.

“If economic growth slows as much as we expect it to, corporate pricing power is going to weaken, and core inflation is likely to again begin to decelerate,” Joshua Shapiro, chief US economist at MFR, said.

Household spending in October grew 0.3 per cent month-to-month on a seasonally adjusted basis, matching the consensus estimate in a Thomson Reuters poll.


Just when ya think its breathed its last, it has a bit of a rally.
With the DOW at all time high. things can't be all that bad.
Especially when you look at the Chinese stock market. Down 30% from its 2015 high.
And if you were investing from outside China, the currency depreciation would add to the losses.
The markets seem to suggest that so far, the US is winning the trade war.
Mick



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mullokintyre
post Posted: Jun 4 2019, 11:33 AM
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From The Street


QUOTE
U.S. Treasury Secretary Steven Mnuchin on Thursday led a secret meeting of top U.S. financial regulators on the risks to global markets from the recent surge in corporate borrowing -- a growing concern as fears mount that the economy might be headed for a slowdown or a recession.

The Financial Stability Oversight Council, formed in the wake of the 2008 financial crisis to prevent a repeat, met "in executive session," or behind closed doors, according to a statement released by the Treasury Department's public-affairs unit following the meeting.

Members of the group include Federal Reserve Chairman Jerome Powell as well as the heads of the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., Consumer Financial Protection Bureau, Securities and Exchange Commission and Commodity Futures Trading Commission.

No details were provided on the gist of the discussion, though according to the statement the panel heard an "update" from Craig Phillips, a counselor to Mnuchin, on recent market developments involving "corporate credit and leveraged lending."

Leveraged lending is the financial industry's term for the practice of making loans to companies with poor credit ratings, colloquially known as junk. Historically, the market was dominated by banks, but in recent years investment firms and other non-bank lenders joined in; the outstanding amount of the loans has mushroomed over the past decade to about $1.2 trillion, eclipsing the more-established junk-bond market.

There's also been a surge in borrowing by companies with triple-B ratings, which rank just above junk but could face dire downgrades if an economic slowdown shrinks profits for those borrowers. That category of debt has climbed to an unprecedented level of more than $3 trillion, according to Standard & Poor's, sparking warnings from officials including Robert Kaplan, president of the Federal Reserve Bank of Dallas.

The concern is that if the economy falters, loan losses would climb dramatically and other companies would be more likely to default on their outstanding bonds.

Minutes from the Financial Stability Oversight Council's March 6 meeting, released Thursday, show that Ted Berg, a Treasury Department researcher, warned panel members that even the non-junk debt could see $300 million to $1 trillion of credit-rating downgrades during the next downturn.

Since then, President Donald Trump's trade war with China has intensified, casting a pall over global markets. The Federal Reserve Bank of New York estimates that the president's new tariffs could add about $800 to the average household's annual costs while hurting business sales and potentially pushing the U.S. into its first recession in a decade.

"Credit stresses are multiplying," analysts at Bank of America, the second-biggest U.S. lender, wrote last week in a report. "Reduced risk appetite leads to restricted capital access, which in turn has the potential to set the stage for elevated distress and eventual defaults."

In recent days, yields on 10-year U.S. Treasury notes have slipped below those on shorter-term bills and notes -- an unusual phenomenon known as a "yield-curve inversion" since investors usually demand higher returns to compensate for the extra risk that comes with a longer payback period. It's often seen as a classic sign of an impending recession.

The borrowing binge by U.S. companies has garnered so much attention from investors lately that Powell, the Fed chairman, devoted an entire speech to the topic on May 20. He said there's currently a "moderate" risk that business debt triggers a full-blown financial crisis, although "the level of debt certainly could stress borrowers if the economy weakens."

"Once again, we see a category of debt that is growing faster than the income of the borrowers even as lenders loosen underwriting standards," Powell said.

The Office of the Comptroller of the Currency, a branch of the Treasury Department that supervises national banks, wrote in a May 20 report that "years of growth, incremental easing in underwriting, risk layering and building credit concentrations result in accumulated risk."

The corporate-lending surge has been fueled by firms like Blackstone (BX - Get Report) and Apollo Global Management (APO - Get Report) , which rely on junk-grade loans to finance the acquisitions they make through their private-investment funds.

In recent years, the firms have also waded into the corporate-lending business themselves and they now routinely package junk loans into new bonds known as "collateralized loan obligations," or CLOs -- some with pristine triple-A ratings that can be easily sold on to investors with promises of attractive yields.

U.S. Sen. Elizabeth Warren, a Massachusetts Democrat and declared 2020 presidential candidate, has likened the process to Wall Street's assembly-line-style packaging of subprime mortgages into triple-A rated bonds in the years before the 2008 crisis.

Indeed, with U.S. banks facing tighter scrutiny over the past decade, the private-equity industry has had almost free rein to take over a bigger portion of the financial markets. The five biggest private-equity firms, including Powell's former employer, Carlyle Group, now manage some $1.37 trillion of client money overall, based on a tally by TheStreet.

Mnuchin and other Treasury officials have proposed to exempt these "non-bank firms" from getting designated as "systemically important" -- a label that would subject them to much tougher oversight. Instead, regulators would supervise the firms' "activities."

According to Thursday's statement, the oversight council "heard a presentation from Treasury staff" on public comments submitted in response to Mnuchin's proposal.

The presentation wasn't released, but the comments are publicly available on a government website. They include a May 13 letter to Mnuchin from the American Investment Council, the main U.S. trade association for private-equity firms, advocating for the exemption.

Yet there's still powerful opposition -- from the likes of former Treasury secretaries Timothy Geithner and Jacob Lew as well as former Fed chairs Ben Bernanke and Janet Yellen.

"Regulation, of course, carries burdens for individual firms, but these consequences have to be measured against the tragic and indiscriminate costs of a crisis," they wrote to Mnuchin and Powell in a joint letter, also dated May 13.


History repeats as they say.
So how long before it all comes crashing down and US fed bails out its mates again??
Mick





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nipper
post Posted: May 6 2019, 06:49 PM
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In Reply To: mullokintyre's post @ May 6 2019, 07:19 AM

QUOTE
Lots and lots of people are talking about wage inflation because lots and lots of companies are talking about it. I can also assure you that Jerome Powell is thinking about it.

https://www.nytimes.com/2019/05/02/business...th-economy.html

Ultimately it is all about the degree of emphasis. People like me put a lot of emphasis on it and most people say, “yup, we can see its going up, but it’s not a problem.”

Anyway, they argue, it’s all very marginal. If wage inflation goes from 3.2% to 3.5% or 4% what difference does it make so long as consumer price inflation remains subdued. They have a good point and the latest evidence would appear to support their argument. Headline inflation has remained very low for a long time.

We all know why..... Globalisation, technology etc etc. And this is why forecasting is so challenging.

To put it in blatantly obvious terms a forecast is about what the future will look like, not about what has happened. Human beings extrapolate from the past into the future. What has happened is expected to happen again in the future.

And just because The Wizards on Wall Street have fancy degrees from Harvard, Stanford and Oxford doesn’t mean they are any better at forecasting than anyone else. In fact financial history tells us that the Wizards invariably fail to predict each and every major inflection point or dislocation. You can imagine that I could go on and on about this...on and on and on and on!!

The fact is that just as with politics we each retreat into our respective echo chambers to find solace and reaffirmation of what we already believe. Sadly, the rise of the internet and social media appears to have reinforced these human faults. Or should I say it has given us the means and tools to search out someone who agrees with us wherever they may be. This serves to further accentuate and strengthen what we already believe.

This is a long winded way of saying that it will take a sledgehammer to break the narrative that wage inflation is not a problem.
Jonathan Pain



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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mullokintyre
post Posted: May 6 2019, 07:19 AM
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In Reply To: mullokintyre's post @ May 4 2019, 06:36 AM

Chuck Butler is a little peeved about the quality of the stats quoted by the feds.
From his daily Pfenning email

QUOTE
OK... I can't hold my breath any longer, I've got to let it out... What a bunch of BS! 1st QTR GDP was revised upward, yes, I said upward, to 3.2% from a previous reading of 2.3%... What a bunch of hogwash! Yes, the March numbers are coming in a little better than previously thought, but that’s just one month of the quarter, the first two months were horrendous with data!... And a little better than previously thought March, brings the 2.3% print to 3.2%? I’m not buying it, and you shouldn’t either folks… I’ve come to the realization that whenever we see a negative or weak print one month, that the boys in the back room that count the beans get called on the carpet and told to not let that happen again… And thus, we see immaculate turnarounds in data from month to month… I know there’s nothing I can do about it, so I’m not going to let this get me all ticked off and such… I’ll just say my piece and move along…

Oh, and let us not forget that the U.S. Gov’t was shutdown for a period of time during the 1st QTR… Are the bean counters telling us that it had no effect what-so-ever on economic growth? Or did they forget, that we have long memories and would remember the shutdown? I’m betting that it was the latter of the two! These guys that put together the economic reports have become so brazen, with their reporting, that someone, somewhere with a strong identity, should stand up and be heard that it’s all a bunch of hogwash! Pig slop, road pizza, whatever it’s all getting on my nerves, and it should be getting on yours too!

And don’t just take my word that the GDP print was hogwash… Let’s listen to what one of my fave economists, David Rosenberg, had to say about it… “This was a low-quality GDP report. All one-offs - lower imports, higher inventories & Pentagon spending. Real final private sales a puny 1.3%. Removing more lipstick from this pig shows cyclically-adjusted GDP contracting at a 2% annual rate; deepest decline in nearly a decade .” – David Rosenberg from his Twitter feed.

And did you hear this one? Global Growth has dipped negative in the first quarter of the year on a year on year basis, this is the first time that’s happened in over a decade! And we’re supposed to believe that a negative Global Growth in the first quarter, led to an upward revised GDP of 3.2% here in the U.S.? Come on, what do you guys take us for a bunch of dolts?

I guess using the fact that they printed the number and didn't look back, that they do undoubtedly take us for a bunch of dolts! Well, I'm mad as hell and I'm not going to take it any longer! Or something like that...
But as Neil Young sang... Don't let it get you down, it's only castles burning...

I've been so keyed up about writing this morning regarding the upward revised 1st GDP report, that I've spent the whole letter, just about on just that! But you can see from my talking about it so much that it means something to me, that these things happen for a reason, and the reason is... to keep everyone happy, and from grabbing their shovels and pitchforks and rakes and marching on their respective state house... Oh? What's that you say? People don't do that any longer because they've become so about themselves, that they wouldn't report a crime if it happened in their front lawn? Oh, I don't believe that for one minute! But it sure seems that we, as a people, are heading in that direction, to ignore these types of things, instead of proactively writing or calling one's representatives and giving them a piece of their minds... I'm just saying...


The figures surprised more than a few people.
Maybe the Feds have taken a leaf out of the Chinese playbook and work on the theory that economic stats are what you want them to be.

Mick



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