• Tag Archives Dollar
  • Pakistan Plans Replacing Dollar With Yuan In Trade With China

    Pakistan is considering replacing the U. S. dollar with the Chinese yuan for bilateral trade between Pakistan and China, Pakistan’s Minister for Planning and Development Ahsan Iqbal said according to Dawn Online and The Economic Times. Interior Minister Iqbal, who has been central to the planning and implementation of China-Pakistan economic ties, was reported discussing the proposal after unveiling a long-term economic development cooperation plan for the two countries, Reuters added.
    ***
    Iqbal spoke to journalists after the formal launch of Long Term Plan (LTP) for the China-Pakistan Economic Corridor (CPEC) signed by the two sides on November 21, Dawn online reported on Tuesday. The CPEC is a flagship project of China’s Belt and Road initiative. The 3,000 km, over $50 billion corridor stretches from Kashgar in western China to Gwadar port in Pakistan on the Arabian sea.
    Asked if the Chinese currency could be allowed for use in Pakistan, the minister said the Pakistani currency would be used within the country but China desired that bilateral trade should take place in yuan instead of dollars, in yet another push to de-dollarize what China considers its sphere of influence.

    This post was published at Zero Hedge on Dec 21, 2017.


  • These PE Firms Are About To Get Crushed By Their Subprime Auto Bets

    In the aftermath of the ‘great recession,’ private equity firms placed massive bets on subprime auto finance companies with the typical “thesis” going something like this: “well, people have to get to work don’t they?”…genius, if we understand it correctly.
    Of course, the “thesis” seemed to be confirmed when auto securitizations performed relatively well throughout the financial crisis, amid a sea of mortgage bonds getting wiped out, and private equity titans were off to the races with wall street titans from Perella Weinberg to Blackstone and KKR scooping stakes in small niche lenders.
    Unfortunately, as Bloomberg points out today, the $3 billion bet on subprime auto lenders hasn’t played out precisely to plan as the “well, people have to get to work” thesis has proved to be somewhat less than full proof.
    A Perella Weinberg Partners fund has been sitting on an IPO of Flagship Credit Acceptance for two years as bad loan write-offs push it into the red. Blackstone Group LP has struggled to make Exeter Finance profitable, despite sinking almost a half-billion dollars into the lender since 2011 and shaking up the C-suite multiple times. And Wall Street bankers in private say others would love to cash out too, but there’s currently no market for such exits.
    Since the turn of the decade, buyout firms, hedge funds and other private investors have staked at least $3 billion on non-bank auto lenders, according to Colonnade. Among PE firms, everyone from Blackstone and KKR & Co. to Lee Equity Partners, Altamont Capital and CIVC Partners waded in.

    This post was published at Zero Hedge on Dec 21, 2017.


  • BOOM: AMERICAN COMPANIES RAIN DOWN CASH ON EMPLOYEES IN RESPONSE TO TRUMP TAX CUTS

    After Republicans passed sweeping tax reform Wednesday, some of the largest employers in America began dropping cash bombs on their employees. The businesses also pledged to invest hundreds of millions of dollars into the American economy.
    The GOP tax bill cuts the corporate tax rate nearly in half.
    Here is a round up, so far, of companies that are celebrating the tax cuts by enriching their employees.
    1. AT&T

    This post was published at The Daily Sheeple on DECEMBER 21, 2017.


  • Why it’s essential you keep a portion of your savings in physical cash

    [Editor’s Note: As we’re coming up on the end of the year, we thought it would be appropriate to republish some of our most popular articles. Today’s was originally published on January 6, 2016]
    Think of the word ‘money’ for moment. What’s the first image that comes to mind?
    Perhaps the folded paper in your wallet. Or the balance in your bank account.
    Or perhaps the investments in your brokerage account.
    In our modern financial system where unelected central bankers wield totalitarian control over the financial system, all three of these are forms of money.
    But the relationship between them is very tenuous, and very risky. I’ll explain:
    1) Physical cash No matter where you live in the world, just about every civilized nation on the planet has some form of physical currency in various denominations. Dollars. Pounds. Euros. Yen. Renminbi.
    We pass around these pieces of paper as a medium of exchange.

    This post was published at Sovereign Man on December 21, 2017.


  • Global Liquidity Crisis Is Over… Dollar Shortage Suddenly Disappears

    Remember last week when the world was desperately willing to pay excessive spreads to get their hands on dollar liquidity (the worst liquidity crisis since the European crisis)…
    Well that’s all over now!
    EUR-, JPY-, and GBP-cross currency basis swaps have suddenly snapped higher (less negative) as dollar liquidity is suddenly not a problem anymore…

    This post was published at Zero Hedge on Dec 20, 2017.


  • Expand Tax Breaks to Expand Education

    The Tax Cuts and Jobs Act is working its way through both chambers in an attempt to make it onto President Trump’s desk before Christmas. One amendment added by Senator Ted Cruz (R-TX) has some advocates of the school choice movement very enthusiastic while critics say it’s a symbolic gesture unlikely to have much of an impact.
    The amendment will expand the use of 529 plans that currently allow families to save money using after tax dollars without having to pay taxes on the accumulated amount (principal and interest) when the savings are used to pay for qualified higher education expenses. Specifically, 529s allow savers and investors to save for education purposes because income gained through these accounts are subject to less taxation. Specifically, 529’s help investors better avoid dividend and capital gains taxes which can be as high as 28 percent. The plans also help taxpayers avoid income taxes on interest earned through the accounts.
    So far, 529s have only been legal for use in higher education expenses. Cruz’s amendment, however, would expand the accounts to include k-12 expenses such as private and religious schools, homeschooling materials, online education courses, as well as tutoring for students with developmental disabilities for amounts up to $10,000 per year.
    In addition to expanding the use of the savings account, the amendment also includes language allowing families to open the 529 plans at the moment of the child’s conception as opposed to their birth, thus expanding the time during which funds can be accumulated.

    This post was published at Ludwig von Mises Institute on December 21, 2017.


  • Are Bonds Really On The Run? Why One Trader Is Skeptical

    Yesterday we observed the biggest 2-day steepening in the 2s30s yield curve since the Trump election, following a confluence of events which we discussed in this post, and which resulted in a generous payday for at least one rates trader.
    ***
    So has the long-awaited moment of a long-end selloff arrived? Or, as SocGen’s FX strategist, Kit Juckes, put it, are “Bonds on the run?” Maybe not so fast, especially since much of the recent increase in yields has been for breakevens. Here are his thoughts.
    Bonds on the Run?
    The Tax Bill is still moving towards the Oval Office, and even critics concede that it boosts
    growth a bit (more from the corporate tax cut than from the income tax cuts). While the
    relationship between growth, economic slack and inflation remains as much a mystery as how
    Father Christmas gets down the chimney, an uptick in breakeven inflation and in 10-year Note
    yields isn’t shocking. The more breakevens rise, the less real yields rise, the less this affects the
    dollar, unless or until it triggers a wholesale rethink on where Fed Funds are headed. So far, the
    market remains convinced the destination is 2-point something. Bearish bond bets may make
    sense, but FX conclusions are messier. We like short yen trades for now, but as with any carrybased
    FX trades, it feels a bit like picking up pennies in front of a present-loaded sleigh…

    This post was published at Zero Hedge on Dec 20, 2017.


  • How That $1.4 Trillion In Repatriated Cash Might Result In U.S. Job Losses, Not Gains

    Moody’s estimates that there is roughly $1.4 trillion dollars belonging to U. S. corporations that has been building up in foreign bank accounts for years now to avoid the 35% corporate tax that would be levied on them if they were brought back to the U. S. Of course, getting that $1.4 trillion back to the U. S. has been a critical component of the Trump administration’s tax reform bill as Gary Cohn and Steve Mnuchin have repeatedly argued that the money would be put to good use building factories and creating jobs for American workers.
    That said, if history, math and logic are any guide, then the overwhelming majority of that money would be promptly returned to shareholders via stock buybacks and dividends immediately upon hitting U. S. shores. In fact, as University of Chicago law professor Dhammika Dharmapala told the Wall Street Journal, when a similar tax holiday was enacted in 2004 roughly $0.94 of every $1.00 was spent on buyback and dividends…something Gary Cohn apparently found out for the first time via a recent impromptu survey that yielded some ‘surprising’ results, if only to him…

    This post was published at Zero Hedge on Dec 19, 2017.


  • A Nightmare Before Christmas: China Set to Launch Yuan-Denominated Oil Contracts

    China wants to dethrone the dollar and it could take a step in that direction before the end of the year.
    According to numerous reports, China is prepared to launch a yuan-denominated oil futures contract before Christmas. Last week, the Shanghai International Energy Exchange successfully completed a fifth round of yuan-backed oil futures testing. According to a report by RT, the organization has met all the listing requirements and is set for an official launch.
    Chinese trader Yuan Quwei told Bloomberg the holiday season would be the perfect time to get oil trading in yuan off the ground.
    An official launch during Christmas would be appropriate. The Western market would be quiet and allow the Shanghai exchange as well as Chinese investors to adjust in the early days.’
    This could be a nightmare before Christmas for the petrodollar.

    This post was published at Schiffgold on DECEMBER 19, 2017.


  • Taxes, Balance Of Payments, & The USDollar Paradox

    Investors were finally treated yesterday to some of the most important compromise provisions to come out of the House-Senate conference on the Tax Cuts and Jobs Act. Among them were:
    21% corporate rate Reduction of the top wage rate to 37% 20% deduction on pass-through income Full corporate expensing of capital investments for the next five years Repealed corporate AMT Mandatory one-time tax on corporate cash held overseas (taxed at 15%) and foreign-domiciled PP&E purchased with foreign earnings taxed at 10% $10K deduction on individual state, local, and property taxes Mortgage interest deduction on the first $750K of a mortgage Doubling of the estate tax exemption Lower individual rates are temporary and will be phased out over time Net, net, this tax reform bill could a few very notable things from a macroeconomic and balance of payments perspective if economic agents obey the incentives.

    This post was published at Zero Hedge on Dec 18, 2017.


  • ‘Twas The Week Before Christmas: US Dollar Swaptions Dive To Lowest Point Since 2005 As US Treasury 30Y-2Y Curve Lowest Since Sept 2007

    Twas the night week before Christmas, when all through the (financial) house
    Not a creature trader was stirring, not even a mouse;
    With the exception being traders sending 2Y30Y Swaptions down to their lowest level since 2005. Not to mention sending the 2Y30Y Treasury curve down to 86 basis points, the lowest since September 2007.

    This post was published at Wall Street Examiner on December 18, 2017.


  • Greece Is The Patsy For Europe’s Failure (And The Ordeal Is Far From Over)

    Authored by Raul Ilargi Meijer via The Automatic Earth blog,
    I feel kind of sorry this has become such a long essay. But I still left out so much. You know by now I care a lot about Greece, and it’s high time for another look, and another update, and another chance for people to understand what is happening to the country, and why. To understand that hardly any of it is because the Greeks had so much debt and all of that narrative.
    The truth is, Greece was set up to be a patsy for the failure of Europe’s financial system, and is now being groomed simultaneously as a tourist attraction to benefit foreign investors who buy Greek assets for pennies on the dollar, and as an internment camp for refugees and migrants that Europe’s ‘leaders’ view as a threat to their political careers more than anything else.
    I would almost say: here we go again, but in reality we never stopped going. It’s just that Greece’s 15 minutes of fame may be long gone, but its ordeal is far from over. If you read through this, you will understand why that is. The EU is deliberately, and without any economic justification, destroying one of its own member states, destroying its entire economy.

    This post was published at Zero Hedge on Dec 18, 2017.


  • 16/12/17: Remember the Russian Attack on the Internet?

    In 2016, a bot, named Mirai, wrecked havoc over the global internet with massive waves of DoS attacks on anything, from French telecoms, to U. S. web services, to Russian banks, to African airports and beyond. Per Wired, “As the 2016 US presidential election drew near, fears began to mount that the so-called Mirai botnet might be the work of a nation-state practicing for an attack that would cripple the country as voters went to the polls.”
    Of course, the minute there is any suspicion of the ‘nation-state’ actors behind the attack, we know that is the code word for ‘the Russians’. And, of course, given the sheer number of ‘security research’ lackeys eagerly awaiting for the U. S. or UK or EU dollars/pounds/euros in grants and subsidies, the ‘Russian’ spectre loomed large in the wake of Mirai havoc. Here’s a snapshot:

    This post was published at True Economics on Saturday, December 16, 2017.


  • Global Dollar Liquidity Shortage Explodes – Worse Than European Crisis

    Very quietly, in the last few days, cross currency basis swaps (CCBS) related to the dollar have reversed their rise and started collapsing deeper into negative territory… again. This might not be of much interest to buyers of global equity markets at this point, but it is signalling ominous signs of growing funding stress in the financial ‘plumbing’.

    As Bloomberg notes ‘cross-currency basis swaps, which money managers and corporate treasurers outside the U. S. can use to borrow in dollars, remain close to the widest levels since January even after quarter-end, when such financing strains typically dissipate. The market was a key indicator of stress during the financial crisis, and while it’s nowhere near the alarming levels of that era, it’s still garnering the attention of analysts.’

    This post was published at Zero Hedge on Dec 15, 2017.


  • Market Talk- December 15, 2017

    Asia drifted with prices for core all closing around -0.5% lower for the day. Volumes were light but the lack of conviction as well as year end book-squaring were the key discussion topics. The Dollars decline did not help Exporters within the Nikkei, but that has been an issue for a few days this week. However, late in the US trading day, we have seen a reversal of these declines with the DXY clawing back some earlier losses and is happy playing high 112’s against the Yen. Stocks had opened weak and did well to recover into positive territory at one stage probably the result of a good Tankan print. However, that was lost again at the cash close. Late in US trading we see futures back up but lets see how cash opens again on Monday. The Hang Seng suffered most with a little over 1% decline. This was due mainly to property and financials trading heavy.

    This post was published at Armstrong Economics on Dec 15, 2017.


  • Stocks, Yield Curve Slammed After China Hike, Draghi Taper, & Tax Tumult

    Did Senators Lee and Rubio (and Hatch) just go full “Leeroy Jenkins”?
    A surprise China rate hike (and disappointing retail sales) sparked weakness in Chinese stocks…
    Mario Draghi managed to talk the Euro and Bund yields lower (despite attemptting to raise inflation forecasts)…
    Since the FOMC meeting, Bonds and Bullion are well bid as stocks and the dollar sink…

    This post was published at Zero Hedge on Dec 14, 2017.


  • Canada Home Values Hit ‘First Quarterly Decline since Q1 2009’ as Household Debt Binge Hits New High

    How exposed are over-indebted household to rising interest rates?
    Household debt in Canada rose to a new record of C$2.11 trillion in the third quarter 2017, up 5.2% from a year ago and up 10.7% from two years ago, Statistics Canada said on Thursday in its quarterly report on national balance sheets. Mortgages accounted for 65.6% of the total. Canada’s infamous household-debt-to-disposable income ratio, one of the highest in the world, rose to a breath-taking record of 173.3%.
    The ratio means that households, on average, owed C$173.3 for every dollar of after-tax income earned. This chart shows how the indebtedness in relationship to after-tax income has soared since 2001, when Canada’s housing boom took off in earnest:

    This post was published at Wolf Street on Dec 14, 2017.


  • It’s Central Bank Bonanza Day: European Stocks Slide Ahead Of ECB; S&P Futs Hit Record High

    One day after the Fed hiked rates by 25 bps as part of Janet Yellen’s final news conference, it is central bank bonanza day, with rate decisions coming from the rest of the world’s most important central banks, including the ECB, BOE, SNB, Norges Bank, HKMA, Turkey and others.
    And while US equity futures are once again in record territory, stocks in Europe dropped amid a weaker dollar as investors awaited the outcome of the last ECB meeting of the year: the Stoxx 600 falls 0.4% as market shows signs of caution before the Bank of England and the European Central Bank are due to make monetary policy decisions as technology, industrial goods and chemicals among biggest sector decliners, while miners outperform, heading for a 5th consecutive day of gains. ‘The Federal Reserve raised interest rates last night, but they weren’t overly hawkish in their outlook. This has led to traders being subdued this morning,’ CMC Markets analyst David Madden writes in note.
    The stronger euro pressured exporters on Thursday although overnight the dollar halted a decline sparked by the Fed’s unchanged outlook for rate increases in 2018, suggesting “Yellen Isn’t Buying Trump’s Tax Cut Talk of an Economic Miracle.”
    That said, it has been a very busy European session due to large amount of economic data and central bank meetings, with the NOK spiking higher after the Norges Bank lifted its rate path, while the EURCHF jumped to session highs after SNB comments on CHF depreciation over last few months. The AUD holds strong overnight performance after a monster jobs report which will almost certainly be confirmed to be a statistical error in the coming weeks, while the Turkish Lira plummets as the central bank delivers less tightening than expected. Meanwhile, the USD attempts a slow grind away from post-FOMC lows.

    This post was published at Zero Hedge on Dec 14, 2017.


  • The US Government Is Spending Money Like a Drunken Sailor

    The US federal government is spending money like a drunken sailor.
    And that’s probably unfair to drunken sailors.
    In November alone, the US government reported a $139 billion deficit.
    Pause for just a moment and think about what that actually means. Last month, the government spent $139 billion (billion – with a B) more than the revenue it took in. In other words, it put $139 billion on a credit card.
    In one month.
    Of course, this is nothing new. In November 2016, the feds reported a $137 billion deficit.
    Economists polled by Reuters projected a $134 billion deficit last month. So, the government actually managed to spend $5 billion more than expected. But what’s a few billion dollars between friends, right?
    Through the fiscal year to date, the US government has run up a $202 billion deficit, compared to $183 billion in the comparable period for fiscal 2017. You might be thinking, oh, well that’s not too bad for the whole year. But you have to remember the fiscal year for the US government starts in October. So that’s $202 billion in two months.

    This post was published at Schiffgold on DECEMBER 13, 2017.