Posts Tagged ‘currency manipulation’

US Dollar About to Lose Reserve Currency Status – Fact or Fantasy?

Courtesy of Mish

A number of sites are commenting on a Bloomberg video in which El-Erian, PIMCO Co-CEO says "Dollar could lose its reserve currency status".


Bloomberg: "Mohammad what does a weak dollar signal to you, a dollar that can’t jump up here on a day like we’ve seen today?"

El-Erian: "It is a warning shot to America that we cannot simply assume flight to quality, flight to safety. That people are starting to worry about the fiscal situation in the U.S. They are starting to worry about the level of debt. They are starting to worry about what they hear about states and municipalities. So, I would take this as a warning shot that we cannot assume that we will maintain the standing of the reserve currency as we have in the past."

Reserve Currency Definition

Before we can debate whether or not the US will lose reserve currency standing, we must first define what it means.

Investopedia defines Reserve Currency as follows.

"A foreign currency held by central banks and other major financial institutions as a means to pay off international debt obligations, or to influence their domestic exchange rate."

I accept that definition. Unfortunately Investopedia rambles on with nonsense about the implications: "A large percentage of commodities, such as gold and oil, are usually priced in the reserve currency,causing other countries to hold this currency to pay for these goods."

That sentence is a widely believed fallacy. The reality is no country is obligated to hold dollars to buy goods denominated in dollars.

Currencies are Fungible

Currencies other that illiquid currencies with low or no trading volume (think of Yap Island stones or the Cuban Peso) are fungible. It is a trivial process to switch from one currency to another.

You can buy gold or silver in any country, and I assure you those transactions do not all take place in dollars. Thus, just because a commodity is widely priced in dollars does not mean it only trades in dollars.

That holds true for oil as well.

I keep pointing this out, unfortunately to no avail, that oil trades in Euros right now. There is no selling of Euros to buy dollars on the front causing the oil producers to trade dollars for euros on the back end. The oil states simply sell oil for a price in Euros and then hold Euros in their…
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America’s Jobs Losses are Permanent

America’s Jobs Losses are Permanent

Courtesy of PAUL CRAIG ROBERTS, originally published at CounterPunch

Businessman carrying office belongings

Now that a few Democrats and the remnants of the AFL-CIO are waking up to the destructive impact of jobs offshoring on the US economy and millions of American lives, globalism’s advocates have resurrected Dartmouth economist Matthew Slaughter’s discredited finding of several years ago that jobs offshoring by US corporations increases employment and wages in the US.

At the time I exposed Slaughter’s mistakes, but economists dependent on corporate largess understood that it was more profitable to drink Slaughter’s kool-aid than to tell the truth. Recently the US Chamber of Commerce rolled out Slaughter’s false argument as a weapon against House Democrats Sandy Levin and Tim Ryan, and the Wall Street Journal had Bill Clinton’s Defense Secretary, William S. Cohen, regurgitate Slaughter’s claim on its op-ed page on October 12.

I sent a letter to the Wall Street Journal, but the editors were not interested in what a former associate editor and columnist for the paper and President Reagan’s Assistant Secretary of the Treasury for Economic Policy had to say. The facade of lies has to be maintained at all costs. There can be no questioning that globalism is good for us.

Cohen told the Journal’s readers that “the fact is that for every job outsourced to Bangalore, nearly two jobs are created in Buffalo and other American cities.” I bet Buffalo “and other American cities” would like to know where these jobs are. Maybe Slaughter, Cohen, and the Chamber of Commerce can tell them.

Last May I was in St. Louis and was struck by block after block of deserted and boarded up homes, deserted factories and office buildings, even vacant downtown storefronts.

Detroit is trying to shrink itself by 40 square miles. On October 25, 60 Minutes had a program on unemployment in Silicon Valley, where formerly high-earning professionals have been out of work for two years and today cannot even find part-time $9 an hour jobs at Target.

The claim that jobs offshoring by US corporations increases domestic employment in the US is one of the greatest hoaxes ever perpetrated. As I demonstrated in my syndicated column at the time and again in my book, How The Economy Was Lost (2010), Slaughter reached his erroneous conclusion by counting the growth in multinational jobs in the U.S. without adjusting…
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German Economy Minister Accuses US of Currency Manipulation

German Economy Minister Accuses US of Currency Manipulation

Courtesy of Mish

At long last a major player is finally pointing a the currency manipulation finger where it needs to be placed, the US.

Please consider Germany Says Fed Is Headed ‘Wrong Way’ With Monetary Easing

The Federal Reserve’s push toward easier monetary policy is the “wrong way” to stimulate growth and may amount to a manipulation of the dollar, German Economy Minister Rainer Bruederle said.

Fed Chairman Ben S. Bernanke yesterday gave Group of 20 finance ministers and central bankers meeting in Gyeongju, South Korea an overview of the U.S. central bank’s efforts to jumpstart the world’s largest economy. His strategy, which investors expect will soon include greater asset purchases, drew criticism at the talks, said Bruederle.

“It’s the wrong way to try to prevent or solve problems by adding more liquidity,” Bruederle told reporters yesterday, saying that emerging-market officials were among the critics. Bruederle, a member of the Free Democratic Party, the junior partner in Chancellor Angela Merkel’s government, stepped in for hospitalized Finance Minister Wolfgang Schaeuble at the meeting.

“Excessive, permanent money creation in my opinion is an indirect manipulation of an exchange rate,” Bruederle said. The minister has taken a pro-market stance in his first year in office, criticizing state intervention in cases such as providing aid for General Motors Co.’s German Opel unit.

The Big Point

I have been saying for years that the US was every bit the currency manipulator we accuse China of being. My stance is that interest rate policy decisions in and of themselves are manipulative.

Moreover, we have since gone one step further with futile unwarranted rounds of quantitative easing baked into the cake.

Thankfully, the German economic minister is willing to say what anyone with an ounce of common sense has known for a long time: “Excessive, permanent money creation in my opinion is an indirect manipulation of an exchange rate.”

Correction:
Rainer Bruederle is "Bundesminister für Wirtschaft und Technologie", "Federal Minister for Economy and Technology", not Finance Minister. He was filling in for hospitalized Finance Minister Wolfgang Schaeuble at the meeting.

Mike "Mish" Shedlock

 


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No Children, You Cannot ALL Be Export Economies

No Children, You Cannot ALL Be Export Economies

Courtesy of Joshua M Brown, The Reformed Broker 

Children, children, please!  Stop your bickering and sit down in a circle.  China, have a seat, you too Brazil.

Japan, you get a Time Out.  That kind of aggressive currency behavior simply will not be tolerated – you lose arts and crafts privileges for one week.  Origami swans count, put that paper down!

The simple fact is that although you’d all like to be export-driven economies, this is a logical impossibility.  If everyone in the G20 is to be a net exporter, then we’ll either have to convince Mongolia to start buying a lot of stuff or find alien life elsewhere in the galaxy to market and sell to.

Ah!  Now you’re quiet!  Very good children.  Dropping your currency will be punished the same way as dropping your pants in this classroom – it is strictly forbidden.

And picking on Brazil will also not be put up with.  Brazil is a growing boy and needs to be able to export, too.  Stop snickering, Timmy, I saw right through your ‘Strong Dollar’ speech the other day.  And China, your cosmetic rate hikes are just as phony, none of us are fooled.

Here’s the deal, children…If we can go the rest of the day without any more jawboning, saber-rattling or currency manipulation I will reinstate milk-and-cookies time this afternoon.

Do try to behave.

Read More:

Market Break into G20 (Points and Figures)

FX Wars Escalate: Brazil Cancels G20 Participation (Zero Hedge)

Brazil Boosts Firepower…but is it Shooting Blanks?  (beyondBRICs) 


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Talk of Trade Wars with China, Tariffs, and Currency Manipulation Move to Forefront; US Trade Imbalance – Whose Fault is It?

Talk of Trade Wars with China, Tariffs, and Currency Manipulation Move to Forefront; US Trade Imbalance – Whose Fault is It?

Courtesy of Mish 

BEIJING, CHINA - MAY 15:  (CHINA OUT) Dollars and yuan notes are seen at a bank on May 15, 2006 in Beijing, China. China's official exchange rate rose today to 7.9982 yuan per U.S. dollar, its highest level since a revaluation in last July, the government said. (Photo by China Photos/Getty Images)

Congress is one again shaking its currency-manipulation rattle. What’s different this time is Geithner appears to be listening.

Please consider Geithner signals U.S. patience waning on China currency.

Treasury Secretary Timothy Geithner indicated U.S. patience on China’s currency policy was wearing thin on Thursday as a key lawmaker warned that he would move soon on legislation that would penalize Chinese goods.

Striking his toughest tone on the yuan since delaying a decision in early April on whether to name China a currency manipulator, Geithner told a U.S. Senate hearing Chinese policies had a harmful worldwide impact.

"A stronger renminbi would benefit China because it would boost the purchasing power of households and encourage firms to shift production for domestic demand, rather than for export," he told the Senate Finance Committee.

"The time is long past for any Treasury Department to admit publicly what everyone else already knows, that China is manipulating the value of its currency in order to gain an unfair advantage in international trade," said Charles Grassley, the senior Republican Senator on the committee.

Democratic Senator Charles Schumer told Geithner to "be prepared" because lawmakers would move forward soon with legislation that would slap anti-dumping penalties and countervailing duties on goods from China and other countries with a "fundamentally misaligned" currency.

Senator Graham Threatens Veto-Proof Currency Legislation

Congress is increasingly frustrated with the China’s currency peg, so much so that senators suggest there may be enough votes to override a presidential veto. Bloomberg reports Graham Says China Yuan Measure Has ‘Huge’ Support in Congress.

U.S. Senator Lindsey Graham said legislation aimed at getting China to raise the value of its currency has “huge” support in Congress, and President Barack Obama “runs the risk” of being overridden if he vetoes it.

“The frustrations with China’s trade practices are growing by the moment,” Graham, a South Carolina Republican, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.

He called the measure a “test” of the administration because Obama “campaigned that he would stand up to China currency manipulation.” Graham has joined Senator Charles Schumer, a New York Democrat, in sponsoring legislation targeting China’s yuan.

Lawmakers are pushing for a vote on


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Zero Hedge

DNC Chairwoman "Quarantined" From Convention After Sanders Demands "Someone Be Held Accountable" For Emails

Courtesy of ZeroHedge. View original post here.

In a "shocking" turn of events for the new normal, it appears that Bernie Sanders' campaign demands that "someone in the DNC be held accountable" over the leaked emails showing collusion to undermine any Clinton opposition, have been heard.

As CNN reports, Debbie Wasserrman ...



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Phil's Favorites

Honeywell Cuts Guidance, Boeing Gives 60-Day Notices

Courtesy of Mish.

This week, Boeing announced layoffs and Honeywell cut guidance. This was expected given my July 17 article Honeywell Internal Email Shows Airplane Boom Time Over, More Layoffs Coming.

Boeing Gives 60-Day Notices

Please consider Boeing Employees Receive 60-Day Notices As Possible Layoffs Loom.

Sixty-day notices of “possible layoffs” were handed out to Boeing employees on Friday, a company spokesperson announced.

Details of exactly how many employees received such notices have not been released. However, spokesperson Je...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Gasoline Prices Around the World: The Real Cost of Filling Up (Bloomberg)

The price of gas is on the rise again—up five percent globally in the last three months. But cost per gallon alone doesn’t give a complete picture of how big a bite gasoline takes out of an average driver’s paycheck. We ranked 61 countries by three economic measures to see who has the most affordable gas, and who feels the most pain at the pump.

BofA Trading Tops Estimates as Moynihan Vows Deeper Cuts (Bloomberg)

Bank of America Corp. posted higher profit in each of...



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Chart School

World Markets Weekend Update: The Global Rally Moderates

Courtesy of Doug Short's Advisor Perspectives.

The global rally in equities Moderated last week. The average gain of the eight indexes on our world watch list was a respectable 0.41%, down from the previous week's steroidal 3.87% average. Hong Kong's Hang Seng was the top performer with a 1.41% advance. At the other end, the chronic laggard Shanghai Composite fell 1.36%.

A Closer Look at the Last Four Weeks

The tables below provide a concise overview of performance comparisons over the past four weeks for these eight major indexes. We've also included the average for each week so that we can evaluate the performance of a specific index relative to the overall mean and better understand weekly volatility. The colors for each index name help us visualize the compara...



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ValueWalk

Relypsa Inc (RLYP) Soars On Galenica Bid

By Jacob Wolinsky. Originally published at ValueWalk.

Relypsa Inc (NDAQ:RLYP) — to be acquired by Galenica AG (VTX:GALN) for $32 per share in cash is soaring this morning up about 58 percent at the time of this writing in early morning. On the other hand shares of Galenica are down on the announcement by about 8 percent. What are the details of the deal? Here is what the sell side analysts are saying about the pharma news.

Relypsa Inc (NDAQ:RLYP) bid – analysts react

Cantor Fitzgerald

Relypsa will be acquired by Galenica for $32 per share, a 59% premium over the last closing price. We have thought that Relypsa would likely be acquired at some point, given the opportunity to grow Veltassa to be a significant commercial brand, ...



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Kimble Charting Solutions

Doc Copper going to peak again at 200 Day moving ave?

Courtesy of Chris Kimble.

Doc Copper is often viewed as a leading indicator, for global growth or lack of.

The 200 day moving average is often viewed as the line in the sand to determine if an asset is in an up or down trend.

Is Doc Copper climbing above its 200 day moving average a good or bad sign?

Below looks at Doc Copper over the past decade with the 200 MA applied.

CLICK ON CHART TO ENLARGE

Copper peaked in 2011 and since, has continued to create a series of ...



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Digital Currencies

Demystifying the blockchain: a basic user guide

 

Demystifying the blockchain: a basic user guide

By Philippa Ryan, University of Technology Sydney

Companies around the world are exploring blockchain, the technology underpinning digital currency bitcoin. In this Blockchain unleashed series, we investigate the many possible use cases for the blockchain, from the novel to the transformative.

Most people agree we do not need to know how a television works to enjoy using one. This is true of many existing and emerging technologies. Most of us happily drive cars, use mobile phones and send emails without knowing how they work. With this in mind, here is a tech-free user guide to the blockchain - the technology infrastructure behind bitcoin...



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OpTrader

Swing trading portfolio - week of July 18th, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Mapping The Market

No wonder Saudis are selling as much as they can!

Courtesy of Jean-Luc

We are getting much more energy efficient – no wonder Saudis are selling as much as they can! Who wants to be the one with trillions of dollars of oil in the ground unwanted:

http://arstechnica.com/science/2016/07/the-amount-of-energy-needed-to-run-the-worlds-economy-is-decreasing-on-average/#p3

...

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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