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The US, its Dollar, and the premature celebration

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The US, its Dollar, and the premature celebration

 

16725483-celebration-event-with-concept-

 

SWINGS and Roundabouts ... will the Ruble and the Dollar reverse direction together?

 

Right now, it must seem like the USD has won the war. But will that last?

 

Here's the USD measured in Rubles - vs. the Bear Oil etf ... update

 

Ruble-vsOILB_zps3d7e37b0.gif

 

So weak was the Ruble, that late last week, the Russian central bank made a "surprise" rise in rates - to 9.5%!

This could be very damaging, at a time when the Russian economy is being depressed by low oil prices - their biggest export.

It just shows how ugly the choices get during the downphase in a cycle.

 

And when you read THIS (below), you may think: there's little to endanger the dollar now:

 

Fall in Commodity Prices welcome - SCMP main editorial today

 

"The go-go years of the commodity super-cycle now feels like a distant memory."

"Across a whole range of industrial commodities, prices have been falling, and in some cases dramatically,

since the start of this year. Meanwhile, the price of gold, the world's favorite precious metal has stayed flat

after a brief spike early in the summer."

 

"Coal, cotton, corn, iron ore, and copper are all at multi-year lows. Oil has dropped to US$80, after averaging

well above US$100 since 2011. The benchmark Bloomberg commodity index has fallen 8 per cent this year

and hit a five-year low."

 

"Many factors contribute to the fall in prices. A significant slowdown in China's economy, long the world's key

commodity buyer is a key cause. A glut in supply is also to blame. A sign of a sluggish world economy, falling

prices are a symptom..."

 

The article goes on to say that a study by the IMF shows that cheaper oil is "a net positive" for the global economy.

... and ends thusly:

"The world has lived too long with high commodity prices. Now is a welcome time for consumers to enjoy some

benefits from falling prices."

... Yeah. Sure. But for how long.

Does anyone else think celebrating seems just a bit too premature. Is inflation truly dead?

Will oil stay down, or might something like a shrinking of capital investment into Fracking reverse the present trend ?

(4 Days later / intraday 7-Nov.2014):

==

 

DXY made it up to 88.00 ... update : Friday close: 87.566

DXY-10d_zpsee7442b5.gif

 

DXY - all Data ... update

DXY-all_zpsf88c133f.png

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The following prediction of a "sustained Rally" may be right...

Or this could be just "topping Talk" which will bring in the last buying surge

 

Resurgent Dollar set for sustained Rally (4-yr High) - says FT (pg. 22, back)

 

But faster economic growth in China will slow losses for metals and energy prices

 

NOTES: (Sure, it could happen. But where are the weak points?)

======

+ Central banks, pumping out more non-USD currency have reignited the Dollar rally

+ There are implications for commodity prices, from the growing monetary stimulus

+ Yen is the "favored currency" for carry trades

+ Other CB's may follow Japan; USD to benefit

+ Currency trends tend to be persistent, longer than the 4 month's seen so far

+ Stronger USD and tighter Fed may hit equities

 

 

Meanwhile...

I am impressed by things like the strength of the Philippines economy - and how they have brought down Debt

.

Falling oil prices: A boon to the Philippine economy

Philippine Star-2 Nov 2014
Oil prices have dropped by more than 25 percent since June on the back of weak global oil demand, a supply glut from North America and a ...
.
philippines-government-debt-to-gdp.png?s
.
This could help the Peso, relative to the USD
.
USDPHP / USD in Phil.Pesos ... 2-yrs : 5-yrs : All-Data / 10-d
PHP_zps45a6d024.png
... But while the govt. has controlled its debt, Philippines corporations are borrowing more;
Debt-Hungry Philippine Firms Exposed as Markets Falter
Bloomberg-16 Oct 2014
Philippine corporate exposure to foreign debt climbed to 26 percent of total
... expansion in the Philippines to remain strong in 2014 and 2015.

.

Debt spree exposes Philippine firms as world outlook dims

Chicago Tribune-17 Oct 2014
By year-end, Philippine companies would take as long as a record four years to repay debt using operating earnings,
said Xavier Jean, the ...

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The Ruble is "getting messy" thanks to falling Oil prices, and sanctions

 

RUBLE versus DTO (the Oil Bear etf) ... update : USDRUB : 46.80, hit 53.7 yesterday ! (year low: 33)

 

Ruble-vsOILB_zpsdadfc5a9.gif

 

Ruble Slide Continues as Investors Fret Over Stagnating Economy
Wall Street Journal-13 hours agoShare
The ruble fell to fresh lows on Thursday as investors worried about the deepening impact of western sanctions on Russia's stagnant economy ...
Russian Ruble Continues to Fall
Voice of America-5 hours ago
=== ===
The Russian ruble fell to fresh record lows Thursday as investors sold the currency heavily a day after the central bank said it would cut back costly intervention and allow the exchange rate to be set mainly by market forces.
. . .
A strong dollar, declining oil prices, and a weak economy have finally taken the wheels off the Russian ruble. It has finally sunk in that the Central Bank is not going to act in defense of the ruble anytime soon. And on Thursday, the currency fell 3.87% to RUB46.68, it’s weakest level in 14 years.
Last month, the Finance Minister, Anton Siluanov, said that the government was not going to blow through its reserve fund to keep the ruble from weakening. Now that it has a strong dollar and weak oil dragging it down, it has become evident that the Central Bank is going to sit quiet, at least for now.
The ruble is down 12.4% against the dollar in the last month, making it the worst commodity currency in the market.
“Our near-term expectation is for the ruble to reach 45, but it could move to 47 or higher,” said Vladimir Signorelli, founder of investment research firm Bretton Woods LLC.

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Does this look and sound like Trouble for the Buck ?

 

usd1_zps1e48e99d.jpgQUOTE

http://www.zerohedge.com/news/2014-11-08/speculators-have-never-been-more-long-dollar

Speculators Have Never Been More Long The Dollar

After a brief hiatus the previous week, speculators have piled back into the most-over-crowded trade in the world - Long The US Dollar. As Goldman Sachs notes, overall USD speculative net long positioning increased $2.0bn to $45.7bn - a new record high.

 

Friday's action before the Close at 87.566 :

DXY made it up to 88.00 ... update

 

DXY-10d_zps50fdf623.gif

=

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THE TRIANGLE in DXY has finally ended ... 10-day update

 

dxy_zps973d0a42.gif

 

After such triangles, you will often get a "last gasp" move up... following by a reversal.

 

What I find amazing is that the 15-minute / 10 day chart looks as if it is a Fractal image of

the Weekly / All Data chart shown below ... All-Data update:

 

DXY-all_zpsd397468e.gif

 

What's coming next for the USD?

The interesting thing is, that if these Fractals continue to follow each other, as the 10-day chart

catches up with the Weekly-AllData chart (later today?), the MOVE after that, may tell us what is coming

in the bigger picture. (No gtee, of course. But I love to watch these patterns coming and going.)

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Are the markets setting up for a Golden Reversal ??

=

http://www.vineyardsaker.co.nz/2014/11/25/grandmaster-putins-golden-trap-by-dmitry-kalinichenko/#more-1518

 

GRANDMASTER PUTIN’S GOLDEN TRAP, BY DMITRY KALINICHENKO

 

.... right now, Putin is selling Russian oil and gas only for physical gold.

Putin is not shouting about it all over the world. And of course, he still accepts US dollars as an intermediate means of payment. But he immediately exchanges all these dollars obtained from the sale of oil and gas for physical gold!

.... look at the dynamics of growth of gold reserves of Russia and to compare this data with foreign exchange earnings of the RF coming from the sale of oil and gas over the same period.

....... “The world will not be able to survive if oil and gas from Russia is subtracted from the global balance of energy supply”.

Thus, the Western world .... cannot survive without oil and gas supplies from Russia. And Russia is now ready to sell its oil and gas to the West only in exchange for physical gold! ....

Because Russia, having a regular flow of dollars from the sale of oil and gas ... will be able to convert them to gold with current gold prices, depressed by all means by the West. ....

There is another interesting element in Putin’s game. It’s Russian uranium. Every sixth light bulb in the USA depends on its supply. Which Russia sells to the US too, for dollars.....

.... Putin puts the West led by the United States in a position of a snake, aggressively and diligently devouring its own tail....

.... Putin has thereby started the countdown to the end of the world hegemony of petrodollar. ...

.... physical gold is rapidly flowing to Russia, China, Brazil, Kazakhstan and India, the BRICS countries, from the reserves of the West. At the current rate of reduction of reserves of physical gold, the West simply does not have the time to do anything against Putin’s Russia until the collapse of the entire Western petrodollar world. ...

Traditionally, the West has used two methods to eliminate the threat to the hegemony of petrodollar model in the world....

One of these methods – colored revolutions. The second method, .... military aggression and bombing.

But in Russia’s case both of these methods are either impossible or unacceptable for the West....

How long will the West be able to buy oil and gas from Russia in exchange for physical gold?

And what will happen to the US petrodollar after the West runs out of physical gold to pay for Russian oil, gas and uranium, as well as to pay for Chinese goods?

....this is called “Checkmate”.... The game is over.

=

The Surprising Victory of the Paper Bugs

=

BONDS UBER ALLES this year -- whodathunkit?

 

TLT (Bonds) vs. other assets ... 2014-update

 

TLT-etc2_zps1717be96.gif

 

So many people, like the Jim Willies of the world, were talking about what a bust binds would be.

(Someone should send the Jackass this chart - with a note: "Hey, what happened, Jim?)

=

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This Could be huge...

 

CHINA has about $4 Trillion in Foreign Currency reserves

 

The FT has an article ( "Turning Away from the Dollar" ) talking about how China will divert its reserves away from US Treasuries,

and into infrastructure in neighboring countries.

 

TLT vs. China stocks, Russia 3x Bull (RUSL) and OILB (Brent etf) ... update

 

TLT-etc_zps3fc11b45.gif

 

Can this be good news for US Treasury bonds? I doubt it

 

$40 Billion is the initial size of China's "Silk Road Fund"

 

- just one of three development projects, backed by Beijing

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Max got this right, it seems :

(and the FT got it badly wrong)

 

 

Just after ruble hit 80 - I said ruble crash was a hoax and buy it 'till your hands bleed: https://www.youtube.com/watch?v=MpYXMZbjGdY … #YoureWelcome

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The strong USD is beginning to hit earnings and Stocks

 

SPY vs. DXY (trade-weighted USD) ... update

 

SPY-vsDXY_zps65b5829b.gif

 

The Perils of a Strong US Dollar - Edward Luce, in the FT

 

+ The US Dollar is surging and export growth is slowing

+ A rising dollar is not the picnic it is made out to be

+ US Tbond yields are just 1.7%, higher than Germany (0.3), Japan (0.25), etc

+ Canada, India, and Singapore have all reduced rates recently

 

DANGERS for US Co's:

1/ Negative impact on earnings

2/ Jobs growth in the US threatened; with political implications

 

Consequently:

+ Yellen can keep US rates down for longer

+ US growth is highly vulnerable when rates do rise

+ "It is striking how few are buying homes"

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