Posts Tagged ‘El-Erian’

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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PIMCO’s El-Erian: Stocks Have Hit A Wall

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PIMCO’s El-Erian: Stocks Have Hit A Wall

Courtesy of mohamed el-erian pimcoLawrence Delevingne at Clusterstock  

Mohamed El-Erian has called the recent Wall Street rally a "sugar high." Now, he says U.S. stocks have hit a wall.

The chief executive of bond-king PIMCO said on Reuters TV that U.S. stocks had topped out because valuations have shot up too quickly.

Reuters: Asked if U.S. stocks have hit a wall, El-Erian told Reuters Television: "I think we have, and I think what you are seeing is a massive tug of war going on."

World stock markets fell Monday, with the Dow Jones industrial average .DJI declining 2 percent and China’s Shanghai Composite Index .SSEC falling 5.8 percent, shaking off recent optimism amid doubts about the sustainability of a solid economic recovery.

"On the one hand, pushing stocks higher are powerful technicals, the fact that very low yields on the front end have pushed cash out of the money market segment and into the risk assets," El-Erian said. "But on the other hand, the fundamentals are such that valuations are ahead of fundamentals. What you have seen over the last couple of days is a recognition that fundamentals matter."

Watch the interview here.

See Also:

Mohamed El-Erian: July Rally Was A "Sugar High"

PIMCO’s El-Erian Explains The "New Normal"…And It Blows

PIMCO’s El-Erian Bristles At Being Called One Of The "Chosen Ones" (VIDEO)

 

 


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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

U.S. Corporate Profits on Pace for Third Straight Decline (WSJ)

U.S. corporate profits, weighed down by the energy slump and slowing global growth, are set to decline for the third straight quarter in the longest slide in earnings since the financial crisis.

Weakness was felt across the board, with executives from Apple Inc. to railroad Norfolk Southern Corp. and snack giant Mondelez International Inc. saying the current quarter remains tough. 

...



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Zero Hedge

Goldman Sachs Stopped Out Of "Short Gold" Recommendation

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

With the Yen and Yuan surging, it appears money is greatly rotating out of US dollars and into an 'alternative' currency as Gold soars over $1290.

As Gold is bid after the BoJ Shock...

More problematically for Goldman Sachs' Jeff Currie is his "Short Gold" recommendation just got s...



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Phil's Favorites

Battery operated Mercedes AA Class Car

It's a new thing. 

Julia Louis-Dreyfus Does a Commercial For Battery-Operated Mercedes AA Class Car.


Julia Louis-Dreyfus mocked the Mercedes A Class car on “Saturday Night Live” with a commercial for the new Mercedes AA Class, which she noted is the “first fully electric luxury sedan powered entirely by AA batteries.” 

...

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Chart School

Two Measures of Inflation and Fed Policy

Courtesy of Doug Short's Advisor Perspectives.

Note: The charts below have been updated with the latest Personal Consumption Expenditures price index from the Bureau of Economic Analysis. The annualized rate of change is calculated to two decimal places for more precision in the side-by-side comparison with the Consumer Price Index.

The BEA's Personal Consumption Expenditures Chain-type Price Index for March, released yesterday, shows core inflation below the Federal Reserve's 2% long-term target at 1.56%, down from its February reading of 1.72%, which was the highest since late 2012. The most recent Core Consumer Price Index release, also data through March, is higher at 2.19...



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Kimble Charting Solutions

King Dollar breaking down, below monthly support, says Joe Friday

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

Starting in 2014, the US Dollar experienced one of its strongest 12-month rallies in its history. That strong rally pushed it up to the top of a trading channel and drove monthly momentum to the highest levels in the past 15-years.

Over the past 12-months, the US$ has pretty much just traded sideways.

Joe Friday Just The Facts; US Dollar could close out the month at “new monthly closing lows” when looking back over the past 15-months, as momentu...



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ValueWalk

THE MOST IMPORTANT THING BY HOWARD MARKS

By Jacob Wolinsky. Originally published at ValueWalk.

THE MOST IMPORTANT THING BY BILLIONAIRE HOWARD MARKS

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Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Published on Mar 14, 2016

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Subscribe to The Investors Podcast on iTunes: ...



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All About Trends

Mid-Day Update

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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

PRGO, VRX and an Overpriced Papa

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

By Ilene 

Remember this? It was Monday. PRGO is down from around $130 to under $100 since I started following it LAST WEEK. That's down almost 25% in a week, and almost 50% in the last year. So I wrote, 

"Perrigo CEO Joseph Papa leaves Perrigo (PRGO) to lead Valeant (VRX) while PRGO issues a warning about missing earnings expectations. Not surprisingly, PRGO stock plummeted today. 

Robert Ingram, Chairman of the [Valeant] Board, stated, "The Board has conducted a thorough search process and believes that Joe is the ideal leader for Valeant at this time. He has a strong shareholder orientation,...



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OpTrader

Swing trading portfolio - week of April 25th, 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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Digital Currencies

Is Bitcoin About To Soar?

Courtesy of ZeroHedge. View original post here.

Back on September 2, 2015 when bitcoin was trading at $230, we laid out the simplest and most fundamental reason why, irrelevant of one's ideological persuasion with "alternative" or digital currency - bitcoin would soar.

it was earlier this summer when the digital currency, which can bypass capital controls and national borders with the click of a button, surged on Grexit concerns and fears a Drachma return would crush the savings of an entire nation. Since then, BTC has dropped (in no small part as a result of the ...



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Mapping The Market

About that debate last night

Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,

The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now. 

And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now. 

Phil writes back,

I was expecting them to start throwing poop at each other &n...



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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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