I’ve discovered the glory that is smoked paprika. Yesterday afternoon, we had a smoked pork shoulder, seasoned in this wonderful spice, plus a few other choice flavorings. The results were remarkable; I’ve got the urge to start rubbing the stuff on every cut of meat I’ve ever sampled, just to see what it does.
The 9th floor is starting to reveal a lull coming. I wouldn’t say I’m less busy at the moment; I’m still rushing to get things done. But for the first time in a while, I can start to see light at the end of the tunnel.
One of these days, I’m going to finish a process, reach over to grab the next document on my desk, and find my hand comes up empty. It will be, without a doubt, satiating. It’s hard to believe that barely more than a year ago, I was sitting around doing nothing.
So, how about those manufacturing numbers out of Europe, eh? Coupled with the GDP numbers, the employment numbers, the deficit numbers, and just about everything else I have seen, I’d say there won’t be much left of Europe in another couple of months.
Atlantis? Pssh, step aside…
The problem for us and Europe is that, while the economies in Europe are definitely contracting, their costs are simultaneously ramping higher. This makes easing a very difficult maneuver for them. It also means that their economies will likely continue contracting until something breaks.
My guess: foreign currency holders start asking why the hell they’re holding onto euros if Europe’s manufacturing (sometimes called “stuff you actually buy”) continues to evaporate.
How I see the next few months playing out is something as follows:
1. As EU stealth printing (LTRO, ESM, EFSF, etc.) starts to show a multi-trillion dollar nightmare and currency traders realize this is just to keep things going as they have been (contraction), the euro will be sold heavily against the dollar. EURUSD goes to 1.00.
2. The exchange rate damage this causes is dreadful, as Europe’s trade partners take a massive exports hit. The US sees all recent growth exenterated. China’s GDP slams towards zero and their loans start blowing up.
(HAHAHA. A quick aside, have you looked at China’s claims on loan losses? Apparently the banks discovered a few million “high quality” people they could write loans to who are expected to default at a fraction of the rate of the rest of their portfolio….enabling them to hold much less in loss reserves and claim significantly more cash flow as income. SURE, and I just found El Dorado. Those loans are fucked…)
3. And finally, we get a significant correction, exactly as we have for the past two years in a row.
But this time, you can bet I’m out of all shorts before September. What we’ve seen, consistently, is central banks letting commodities take a hit so that the blood of traders can give them ground to ease further. I’m not betting they don’t print more money. I’m just betting we bleed again first.
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What happens to gold amongst all of this?
good question.if the euro drops to parity with the usd at 1.00, the flight to metals for safe haven,but this time will be more physical than paper,and that would out the dollar also.
If the Euro was dropping to parity, why would people buy physical or paper gold? Why wouldn’t they just buy dollars? Maybe gold will go up as well, but no one knows that for sure, so what would compel money managers to take on an added level of risk? Only logical reason I would see someone skipping dollars and going straight to gold is if you were banking on Bernanke out printing Europe. Or you could buy into the idea that the dollar will demise right here right now, which is an absurdly risky bet.
But if our annual mini crisis of the past two years is any judge, treasuries are still going to outperform all in times of panic.
well lets do a hypothetical here based on common knowledge. 1:bric countries want to do commerce based on their own currency amongst them selves.hence dollar loses it’s value just by default through commerce.2: it’s common knowledge amongst the entire trading community that paper gold and silver are what they are,zilch,backed by nothing.3: a new way of settling oil instead of dollars. so, where does that lead the dollar.4: dollar loses it’s reserve status,then what…….and treasuries,sure,i’ll be paying the fed to hold my money………that will be the day.
So it’s a bet on a combined commitment between four very large/very independent countries? The ways to screw this up are endless. It could happen but there is a LOT of risk involved.
I get they want to trade amongst themselves in a better way than they currently have, but what are they going to do? Create a combined currency just like Europe? That’s not working out too well right now. Or is oil going to be settled in five different currencies? What is China going to do with all the dollars coming in from their exports? Are they going to split them up between multiple currencies and lose a couple billion dollars in the process just to have “independence,” all the while still shipping countless exports to the US and receiving more dollars?
People preaching gold always talk about this being a very long trend. Well, paying the Fed to hold your money has been a very long, very profitable trend for anyone involved.
I’d add to leftcoast’s points:
What are they going to trade oil in? These developing nations have traditionally weakened their currency to maintain an advantage with their exports.
This has actually helped them with oil, as their dollar reserves get incrementally stronger between being rolled over into the next round of oil purchases.
If they switch to their own currencies or some other basket situation, then their printing makes the cost of oil higher before they can spend. They could run up the price of crude on themselves.
You trade using US brokerage account and you talk about buying dollars? You are already in dollars, bud. Already bought the farm in dollars.
Exactly. Europe exports deflation to us, unless we try and “beat” them.
China GDP going to zero? You’re getting all Hugh Hendry on us Cain. I thought “hard landing” was suppose to be 5% GDP. Lol.
As for the loans, people are just numbers. Looks like China makes people for lending purposes, much like US unemployment makes people disappear.
No, not to zero. Towards zero, as in, “the general direction of zero”. I have no idea how China will react to their export market contracting/slowing.
China is communist country with news propaganda that issues bullshit disinformation. Same goes for most US news.
Assuming China is going to hell based on propaganda and faked data does not mean China is going to hell.
Oh I don’t think they’re going to hell because of their data. I already guessed their data was bullshit and rosy.
But for illustrative points, it works well enough. China is not going to defy the same logic and boundaries that govern every other nation on Earth.
Hey. a little secret for you.
You can dry any pepper and then smoke it in a BBQ. Then dry it some more and make a powder out of it in a coffee grinder.
Not just for paprika. Make your own spice blends.
Thanks for the tip
They could run up the price of crude on themselves.
Russia and soon to be Brazil don’t give a fuck. I’m sure they could find some way to work India and China into some barter agreements to appease them as well.
Hey, what have you seen recently in the oil space? You’re an oil services guy, right?
I’m just curious about what companies are doing with their oil production capacity at the moment?
Also, how is production utilization looking amongst existing wells right now?