The US dollar index now down about 1%, recovering a bit of the initial plunge after the “unexpectedly” weak GDP report. Against the Yen, the dollar is doing much worse, down about three percent.
US Dollar Index Reaction to US GDP
US Dollar vs. Yen
Direction on the above chart is opposite the first. The Yen has strengthened about 3%. Some of that is due to a US GDP reaction, but the bulk of the move is on the heels of a market reaction to actions by the bank of Japan.
Traders expected more QE than the bank of Japan delivered this morning. For details, please see Wild Swings in Nikkei, Yen as BOJ Disappoints Markets That Expected More QE.
Mike “Mish” Shedlock
The weakest business cycle since 1949. The Fed is currently paying .5% on tier one bank’s excess reserves to give them an incentive to lend out money at rates no lower than .5%. Growth? why is the re no growth? Velocity of money at the consumer level has been thwarted by this policy and there’s just too much debt. We got to get through the election in November, yaknow.
The insanity of our markets.
The Yen soars because their QE was slightly less than expected.
How does this insanity end?
In war and misery.
Strong oil and strong yen are bullish for silver…should be a wash trade at this point but interestingly on account of Brexit has not been. Not sure why that is and certainly hard to recommend mining plays that have moved up an incredible 300 percent in many cases ytd. No one…certainly here anyways…has explained the move higher in US Steel either. ERJ which makes absolutely top shelf jet aircraft from Brazil has been annihilated today as well…so not everything us Unicorns and Faery Dust on yet another all time high for equities.
Combined with a boom in super tall construction both in the Greater New York City area, New Jersey and West Philadelphia such realities do have a massive impact on global capital flows (into dollars…yet another reason to be bearish on debt actually and certainly dispositive when it comes to explain the “re collapse” of oil)
A lot of generic thinking in these here parts….good thinking I think….but there is a failure to drill down on to the specifics of what in fact has been going on for years now and then simply outlandish generalizations called “conclusions” that simply have almost no basis in either fact or reality.
The irony of course is sites such as this, zero hedge and Seeking Alpha …the latter two of which I have been with with since the beginning … are constantly Braying against “Unicorns and Faery Dust.”
I can’t speak for Mish but both of those sites and the near totality of “financial professionals” still have a lot of explaining to do post Lehman.
No you won’t see me jumping on “the Fed is a bunch of morons” and “blame Germany” either.
Most people who come up from the sewer system wind up right back down there.
Guess that makes me a sewer dweller. The central banks understand one thing only. Their economies are riddled with Ponzi agents. Per Minsky a Ponzi agent is one who can only meet current obligations by selling assets. In downturns all economic actors move on a spectrum toward Ponzi status. Agents who easily met cash obligations from ongoing cash flows of cash generating assets move toward lower cash flows from those assets. Asset flippers who never intended to live on earnings from their assets but rather always planned to sell same at a capital gain start sweating because asset prices start falling instead of rising. The world economy is now riddled with Ponzi entities. Very few economic agents can meet current obligations from earnings of their assets. This is why CBs are making sure asset prices don’t decline and also that the many Ponzi agents everywhere have cash to meet current obligations. This is so predominant in CB minds that GDP growth is back burnered. Pathetic yes, I know, but that’s what’s going on.
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Your Ponzi Scheme is failing if gold and silver are surging …. worse still oil prices collapsing at the same time.
The basis behind any Ponzi Scheme is real growth and little to no inflation…neither of which have been true in this so called “recovery.”
I do agree interest rates don’t seem to be reflecting the risks associated with the “non recovery recovery”….but that’s not a leading indicator. That just might mean a bunch of other people are covering up THEIR Ponzi scheme.
Gold and silver soaring in price says to me at least as far as the USA is concerned we have “Ponzi Fail” actually.
In other words the USA is posting huge “losses” (price to earnings, price to sales, even actual sales period) but it doesnt seem to bother the SPECULATORS.
Not Ponzi schemes. Ponzi schemes are willful frauds. I’m thinking more like pension funds that have to sell assets or default on their pension obligations, or nations with external debt in currency they cannot print selling islands like Greece. When just a few entities are Ponzi you can let them fail and distribute their assets to creditors in bankruptcy. When half your economy is a Ponzi you don’t really want to distribute half your nation to creditors or you may find that half a nation is pissed and has other options available to it like voting in someone more, shall we say, amenable to debt forgiveness and wealth redistribution.
“According to the Bank for International Settlements’ statistical releases, the gross value of bank-held derivatives has been contracting since 2013. Notional amounts of outstanding OTC contracts peaked at end-2013 at $711 trillion, and by June 2015 had declined to $553 trillion. This is an important point, because an unseen bubble at the heart of the financial system is deflating with unknown consequences.”
“Markets fluctuate”….only fools waste their time on such “analysis”
The dollar trades erratically as the currency of a corrupt African government led by a dictator chief with a bone in his nose.