the strong usd

[Woodsman]

Re: the strong usd

Positively darling of you, dear!

[seanm123]

Re: the strong usd

HI everyone, still lurking here after all these years. Anyway I thought I would share some research from Morgan Stanley.

Stay Strong, Stay Healthy, and most importantly Stay Away!

[Mega]

Re: the strong usd

Hi 123
Mike here, struggling to open the attachments, what's the bottom line?
Cheers

[shiny!]

Re: the strong usd

The bottom line? By the time "they" get their act together with regards to testing and medical supplies, the worst will already be over.

[seanm123]

Re: the strong usd

Jpeg attached.

[kbird]

Re: the strong usd

otoh, i think the health workers who are going to work at the hospital every day, in spite of what i consider inadequate ppe, are truly heroes, risking themselves to help others.

+1000

[peakishmael]

Re: the strong usd

Yup, exponential growth can be a bitch and early on it's not easy to build models that aren't off by a factor of 2X or more. I've re-calibrated my model over the last 2+ weeks as I was too optimistic. My current model for the US is within 3-4% over the last week and I expect it will require some adjustment as the long tail of this unwinds.

I guess we are both doing the same thing - adjusting our models/estimates.

That is massively incorrect. Today's growth rate in Italy was ~4%. That's a doubling over 17-18 days, not a doubling over ~4 days.

If you read my post carefully I think you will see that I was talking about the U.S. there, not the world.

Sweet Jesus, you don't want to hang your argument on the coat hook of that buffoon?! "It's a democratic hoax" to 200,000 dead? If you support one, please support both.

I don't support either. I think he's low both times. Just saying I think he's moving in the right direction. I guess you think he's now too high.

As I asked before, please just give it up. You're just making up numbers. At this point it looks like 15-30,000 dead in the US.

Hope you are right. 8,500 right now.

Agree, we should have been prepared, we should have put health above finance, we didn't do either. It would have been better to have an effective leader in the administration but I think what we've learned again is that the US system is quite resilient in its design. We've seen governors step up and work with their health care systems to manage the outbreak. We've also seen them, (and the virus), shame the administration into working to slow this outbreak. This is not a train wreak, this is how the US F*s up most critical issues and then out performs almost every other country and finally pretends we invented every solution.

You could not have invented a worse person to lead this effort in the US but he is an American. As a group we are wired to always believe we're correct until we've been beaten over the head a few times and realize our ideas are s*it. Then we adopt a new path, pretending it was always our desired path. We're totally annoying that way but we have no allegiance to a losing cause. Watch what happens over the next month.

Well said.

[jk]

Re: the strong usd

Same here. Almost to the point of death.

recommend reading the article, then watching the brief video at the top

coronavirus-hospitals-bronx.html

[Chris Coles]

Re: the strong usd

recommend reading the article, then watching the brief video at the top

coronavirus-hospitals-bronx.html

And then we find this: "“I hate it,” said Chelsea Gifford, 29, a physician assistant at Montefiore Moses. “You have this horrible feeling in the pit of your stomach when patients say they’re scared and you don’t have any treatment.”

Except that simple low cost treatments involving the likes of vitamin C have been actively suppressed from the beginning. Would that physician be in the same dilemma if they had been allowed to use the solution created by Dr. Paul Marik, where intravenous Vitamin C, Hydrocortisone and Thiamine that allows the patient, the next day from overnight treatment, to be removed from ICU?

There are treatments that are being actively suppressed; they involve cheap, readily available ingredients. Scandalous comes to mind.

[Chris Coles]

Re: the strong usd

recommend reading the article, then watching the brief video at the top

coronavirus-hospitals-bronx.html

And then we find this: "“I hate it,” said Chelsea Gifford, 29, a physician assistant at Montefiore Moses. “You have this horrible feeling in the pit of your stomach when patients say they’re scared and you don’t have any treatment.”

Except that simple low cost treatments involving the likes of vitamin C have been actively suppressed from the beginning. Would that physician be in the same dilemma if they had been allowed to use the solution created by Dr. Paul Marik, where intravenous Vitamin C, Hydrocortisone and Thiamine that allows the patient, the next day from overnight treatment, to be removed from ICU?

There are treatments that are being actively suppressed; they involve cheap, readily available ingredients. Scandalous comes to mind.

[GRG55]

Re: the strong usd

i've never seen so many references to the hotel california as in discussions of zirp and nirp.
debt levels are so high that the global economy can't take interest rates much above, or even at, zero.
we can check out, but we can never leave UNTIL WE GENERATE SIGNIFICANT INFLATION. we're not there yet.

Looks like we aren't going to get there for a while longer. US Dollar liquidity is being reduced, should lead to a resumption of a rising US$ trend.

Major central banks to cut frequency of dollar-funding operations, BOJ says

Friday, June 19, 2020 6:37 a.m. EDT

by Thomson Reuters

TOKYO (Reuters) - Major central banks across Europe and Japan will reduce the frequency of their seven-day dollar liquidity-providing operations from July as the market tension caused by the coronavirus pandemic has eased, the Bank of Japan said on Friday.

In view of improvements in U.S. dollar funding conditions and after consulting with the U.S. Federal Reserve, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank have jointly decided to reduce the frequency of their seven-day operations from daily to three times a week, the BOJ said in a statement.

The change will take effect on July 1, it said.

"These central banks stand ready to re-adjust the provision of U.S dollar liquidity as warranted by market conditions," the statement said...



ECB cuts frequency of dollar operations as markets improve

Friday, June 19, 2020 4:15 a.m. EDT

by Thomson Reuters

FRANKFURT (Reuters) - The European Central Bank will cut the frequency of its dollar swap operations conducted in partnership with the U.S. Federal Reserve as funding conditions have improved, it said on Friday.

The ECB, along with other major central banks like the Bank of Japan and the Bank of England, will offer 7-day dollar funds three times a week instead of daily while 84-day operations will continue to be conducted weekly.

The change will be effective July 1 and the new frequency will be in place "as long as appropriate".

[jk]

Re: the strong usd

i think we're in a period of deflation that will last 1-3 years [i tend towards pessimism so maybe less], which will then slowly segue into stagflation. the fed will have to exercise yield curve control, i.e. impose financial repression, as it did in the 1940's when debt/gdp was comparable to now. and it will allow inflation to run hot, creating negative real rates, and thus gradually devalue the debt and - as long as the inflation is not fully reflected in cpi - devalue the boomers' entitlements.

i've been saying for years that we've been re-running the 1930's, and i don't think we're done with that. at the same time we've started down the road to the economic policies of the 1940's.

[GRG55]

Re: the strong usd

My thesis at the moment is we are stuck globally in a "nearly endless Ka".

I don't think we have much chance of an inflationary Poom anywhere unless and until there is a complete loss of confidence in a national currency. There are a few examples of that now. And we are seeing signs the usual trouble spot nations are now being joined by a few others.

The most recent IMF data I could find (April 2019) shows the usual suspects Argentina at 43.7% and Zimbabwe at 73.4%. Venezuela is officially shown as "No data available", but the IMF chart is showing >10 million% (Yikes! ). Sudan is 49.6%, Iran now 37.2% with neighbouring countries in the teens: Turkmenistan (13%), Uzbekistan (16.5%) and Turkey (17.5%). A smattering of African nations are also all in the teens; Nigeria, Libya, Egypt, Zambia and Angola. At the other end of the spectrum the only nation showing negative inflation in the IMF data is Saudi Arabia at -0.7% (but its currency is still a US$ proxy).

I expect this inflationary bias will slowly spread to other fiscally marginal small economies as capital flows continue to become more discriminating on the approach of the next global recession. Central Banks will, of course, continue to fight this by desperately pumping as much cheap money into the global economy as they collectively can, using ZIRP and NIRP to try to increase the velocity of that money. We should all be listening for the sound of rotor blades revving up.

North America, Europe (including the eastern block and Nordic nations), ANZ, the west coast of South America and China are all officially printing <3% in the IMF dataset.

Mainland China still appears to be grappling with capital outflows. My long standing scepticism about the strength, durability and resilience of the Chinese miracle economy may yet prove correct. If I am right this will continue to contribute to the global deflationary bias currently in place.

But if I had to pick a developed economy region where I think confidence cracks appear first it is the Euro zone. The ECB is rapidly approaching "zero degrees of freedom" for its policy choices (there is talk of a two-tier interest policy, so the banking system can be relieved of the cost of having to pay the ECB for reserves on deposit in this crazy NIRP world). The EU does not have the social cohesiveness of Japan to see it through as its accelerating NIRP policy combined with Germany's austerity demands continue to tear at the fabric of European society. Brexit is just the beginning. It seems inevitable at some point Germany is going to be asked to exit so the Euro currency can be devalued more aggressively. When that finally happens it will be a marker milestone on the way to a European Poom. But as we have seen so many times before, things can go on much longer than anyone expects, so who knows how long before we see something like this.

In the meantime, despite its problems and its politics, betting against the US economy still seems seriously bad odds. It is, by far, the least dependent on exports of all the major economies. And although agriculture has been hard hit in the tariff wars now underway, ag exports will be redirected to alternate markets that are left short if China tries to source elsewhere. Frankly, I don't see how the Trump Administration is going to be able to prevent continued yield seeking and safe haven capital flows into US Dollars and US Dollar denominated assets as the building credit problems in the rest of the world start to play out first.

Well here we are another year later, and the "nearly endless Ka" still seems well entrenched, despite the recent swoon in the USD index.

Central Bankers everywhere are doing extraordinary things to keep the outright deflation monster at bay - just imagine what would be happening in the global economy right now if governments hadn't adopted Bernanke's infamous "helicopter money" (mailing cheques directly to citizens)

The drop in the US$ exchange is helping prop oil prices (and gold, of course).

Much is being made of the fact the charts show the $ index at a potential break below support (see attachment) But I remain skeptical that we are at a significant cyclical or secular trend change in the US$ - we might be, but I think the jury is still out. I do note that the US$ hasn't really fallen against most of the lesser currencies, so not yet a huge help with EM economies - which one will want to back up the truck and load up on if the US$ is indeed on the verge of a major cyclical downtrend.

I am skeptical because this recent US$ action may be nothing more than the accumulated short term capital flow influences from the combination of the shambolic US response to the virus (and the now apparent consequences of that) + the emotional response to the BLM/antifa protests + the uncertainty over the coming election + the narrowing of T-bill/bond interest spreads with other major currency blocs (Euro, Yen primarily).

[thriftyandboringinohio]

Re: the strong usd

Thanks GRG55. It's hard to argue against any of your observations from a year ago or again today.

One might argue the longer term the outlook for the dollar vs Euro has gotten softer.