The dichotomy of Europe spending $80b per mo on QE and US policy to tighten rates is having a profound effect on the euro, which is plunging again today to 104.
To put the decline in context, it’s important to note the currency is down about 50% from its peak and is now entering levels unseen since the early 2000s.
This trend, naturally, will cause many European asset managers to conduct carry trades, like greedy goblins — borrowing in euros to buy US stocks, which at some point in the future will become a tinder box of volatility when the dollar stops rising.
For now, this trade is dominant and no one seems to care how much the dollar goes up, most likely because foreign interests are making an absolute killing buying American stocks and enjoying the dual benefits of a soaring dollar.
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FYI, the ECB is spending $60B per month now. They cut the monthly figure when they announced the extension.
What’s $20B between friends?
60b starts after march. Still 80b until then.
When the eurozone crisis hits it will leave that continent in shambles for minimum 10 years. They have a wonderfully high standard of living they are hoping to maintain via their German and French arrogance but the arrogance is their downfall. Rising $US is always a troublemaker even if it is not at home so to say. Thinking dollar cost averaging gold on its way down. 5% to 10% portfolio max.
“If you borrow money, you can pay it back with cheaper dollars”
-People years ago, when dollars were cheaper.
LOL!!!!!
I think the background behind the rate hike is this.
The Fed knows they are basically out of bullets. There has to be a strong feeling amongst the govna’s that if another SHTF moment occurs, they have no cushion to left to fall back on in terms of stimulus. They are up against the wall and know they need to buy some more ammo.
No. 4.6% unemployment. (“4.6”). Meaning they look like a joke if they still couldn’t. Yellen said too high valuations 2 years ago 20% higher now is normal. Indexes still being forced higher both gapopen and intraday (still apparent). Doubt it is pro trump just like markets suddenly became pro brexit. I just think your argument is more 2015.
There is always unforeseen consequences, which someone will capitalize on.
This was the path
You all set on
When you committed to
A perpetually higher stock market
K that was 5 give or take years ago
Bullshitter shitheads talking to you
The path would solely require
Maintenance of forever rising
Obviously that’s
Not possible,
All the shit strewn on the side of the road
Being pointed out in resounding fashion?
Trash heap accumulates under your statist programmed indexes
Deepening wind of culmination surrounding your piteous pile
Showtime, your shit is beyond old. Stop with your stretch of a wannabe “Fly” thesaurus imagination.
?
My fight dude
Butt out
Hey tool keep raising rates.I need a discount
on my new Jetta.
How does this party end? Two possible ways:
1. Relentless Inflation forcing the normalization of rates
2. War
US and Euro will never allow systematic defaults and will keep printing money, ban cash and whatever else they come up with for monetary policy. China will continue to add the debt load by making their own rules as they go.
War seems unlikely. Why? It risks the power of leaders in Russia, China, and Iran. Opportunity cost seems to high to engage in a non-proxy war by these nations.
The collapse of the EU, possibly but not ready to make the claim that it would end the party for US financial markets.