• Tag Archives Euro
  • German Elections Void of Any Critical Discussion

    The German Bundestag election campaign has seen a total black-out of any discussion of the major crisis that is building in Europe. Nobody is mentioning that Euro crisis, ECB monetary policy, disintegration of the EU, refugee crisis, pension crisis, the municipalities on the brink of insolvency, or the drastic increases in taxation coming AFTER the election that will only lower disposable incomes and extend deflation.
    The politicians, and the press, are in full swing to hide the real trend at foot. The press is running stories why the Germans Love Merkel, yet she has never won even 40% of the popular vote. Even the press outside of Germany is in on the ‘selling’ of Merkel because she is the leader of Europe – good – bad – indifferent.
    Perhaps the monetary policy of the ECB has set the stage for a serious monetary crisis over the coming years that will seriously disrupt the German economy, in one way or another, depending upon the industry. Mario Draghi has experimented with negative rates which has kept the Eurozone governments on life-support – but they have not used the time to reform anything.

    This post was published at Armstrong Economics on Sep 23, 2017.

  • Bill Blain: “Let’s Pretend”

    Blain’s Morning Porridge – Fed Acts, ECB Smoking – but what?
    The Fed acts. Normalisation. Hints of a rate rise in December, confirmation of further ‘data-dependent’ hikes to come next year, and ending the reinvestment of QE income. Exactly as expected – although some say three hikes in 2018 is a bit hostage to the global economy. The effect: Dollar up. Bonds down. Record Stocks. Yellen threw the bond market a crumb when she reminded us low inflation will require a ‘response.’
    Relax. US markets will sweat, but not break. Dollar ascendant.. Yen collapses.. What about Yoorp?
    Not quite as simples in Europe.
    I’m indebted to my colleague Kevin Humphreys on BGC’s Money Market desk for pointing out yet another Northern European central banker with a smug self-satisfied smile on his face this morning.
    Klass Knot (Holland) has been telling us the European reflationary environment is improving to the extent where the tail risk of a deflationary spiral is no longer imminent. He said ‘robust’ economic developments have improved confidence inflation will rise in line with the ECB’s mandated aims. He added the appreciation of the Euro reflects an improving assessment of the EU’s economic success. And, he concludes the ECB should focus on the more important structural and institutional issues facing Europe, rather than the short-term stabilisation and crisis management – WHICH ARE NO LONGER REQUIRED.

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

  • Traders Yawn After Fed’s “Great Unwind”

    One day after the much anticipated Fed announcement in which Yellen unveiled the “Great Unwinding” of a decade of aggressive stimulus, it has been a mostly quiet session as the Fed’s intentions had been widely telegraphed (besides the December rate hike which now appears assured), despite a spate of other central bank announcements, most notably out of Japan and Norway, both of which kept policy unchanged as expected.
    ‘Yesterday was a momentous day – the beginning of the end of QE,’ Bhanu Baweja a cross-asset strategist at UBS, told Bloomberg TV. ‘The market for the first time is now moving closer to the dots as opposed to the dots moving towards the market. There’s more to come on that front. ‘
    Despite the excitement, S&P futures are unchanged, holding near all-time high as European and Asian shares rise in volumeless, rangebound trade, and oil retreated while the dollar edged marginally lower through the European session after yesterday’s Fed-inspired rally which sent the the dollar to a two-month high versus the yen on Thursday and sent bonds and commodities lower. Along with dollar bulls, European bank stocks cheered the coming higher interest rates which should help their profits, rising over 1.5% as a weaker euro helped the STOXX 600. Shorter-term, 2-year U. S. government bond yields steadied after hitting their highest in nine years.
    ‘Initial reaction is fairly straightforward,’ said Saxo Bank head of FX strategy John Hardy. ‘They (the Fed) still kept the December hike (signal) in there and the market is being reluctantly tugged in the direction of having to price that in.’
    The key central bank event overnight was the BoJ, which kept its monetary policy unchanged as expected with NIRP maintained at -0.10% and the 10yr yield target at around 0%. The BoJ stated that the decision on yield curve control was made by 8-1 decision in which known reflationist Kataoka dissented as he viewed that it was insufficient to meeting inflation goal by around fiscal 2019, although surprisingly he did not propose a preferred regime. BOJ head Kuroda spoke after the BoJ announcement, sticking to his usual rhetoric: he stated that the bank will not move away from its 2% inflation target although the BOJ “still have a distance to 2% price targe” and aded that buying equity ETFs was key to hitting the bank’s inflation target, resulting in some marginal weakness in JPY as he spoke, leaving USD/JPY to break past FOMC highs, and print fresh session highs through 112.70, the highest in two months, although it has since pared some losses.

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

  • Catalonia Independence Vote October 1st

    The Spanish government refuses to listen to anything from Catalonia and announced it would intervene in Catalonia’s finances to ensure that ‘not one euro’ of public money was used to fund the ‘illegal’ vote. Meanwhile, the Spanish police arrested 13 people in the region of Catalonia and Madrid for their alleged involvement in planning a vote to secede from Spain. This is clearly demonstrating that the Spanish government is reverting to its old fascist ways for it is the boldest move yet by Spanish authorities to stop the separatist movement.
    It was 1931 when the nations defaulted on their debts that saw Estat Catal and other parties began to form Esquerra Republicana de Catalunya (Republican Left of Catalonia)(ERC). The ERC won a dramatic victory in the municipal elections that year and this is when we must regard the first major step in the separatics movement.

    This post was published at Armstrong Economics on Sep 21, 2017.

  • Stocks and Precious Metals Charts – On the Daedalian Wings of Paper Money and Corrupted Power

    “The conventional wisdom seems to be that the problems of the euro zone are, as economist Martin Feldstein once put it, ‘the inevitable consequence of imposing a single currency on a very heterogeneous group of countries.’
    What this commentary gets wrong, however, is that single currencies are never the product of debates about optimal economic solutions. Instead, currencies like the U. S. dollar itself are the result of political battles, where motivated actors try to centralize power.
    This has most often occurred ‘through iron and blood,’ as Otto van Bismarck, the unifier of Germany put it, as a result of catastrophic wars. Smaller geographic units were brought together to build the modern nation state, with a unified fiscal system, a common national language that was often imposed by force, a unified legal system, and, a single currency. Put differently, war makes the state, and the state makes the currency….
    European leaders weren’t stupid or self indulgent when they decided to move ahead with the euro, without fiscal union or strong Europe-level democracy. They just cared more about politics and international security than economics. They wanted to build a Europe that had transcended the divisions of the Cold War, and bind together Germany, which was reunited and much more powerful, with the rest of Europe.”
    Kathleen McNamara, This is what economists don’t understand about the euro crisis – or the U. S. dollar
    “Another cause of today’s instability is that we now have a society in America, Europe and much of the world which is totally dominated by the two elements of sovereignty that are not included in the state structure: control of credit and banking, and the corporation.

    This post was published at Jesses Crossroads Cafe on 18 SEPTEMBER 2017.

  • Euro Tumbles On Report ECB Is “Concerned And Divided” Over End To QE

    Talk ’em up, then slam ’em down.
    The familiar pattern of “clear and transparent” central bank communication was on full display moments ago, when following months of build up to an ECB taper announcement, the ECB used its favorite mouthpiece, Reuters, to “trial balloon” that an ECB decision over whether to announce a firm end-date to the central bank’s bond buying could be “put off until December” as a result of disagreement among the ECB council stemming from “concern over Euro strength” which is leading to “uncertainty and divide within the council.”
    As a result, some within the ECB want to be able to “extend or expand” buys if needed, in other words if the EURUSD rises too far above 1.20.
    The highlights from Reuters:

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

  • Suddenly, ‘De-Dollarization’ Is A Thing

    For what seems like decades, other countries have been tiptoeing away from their dependence on the US dollar. China, Russia, and India have cut deals in which they agree to accept each others’ currencies for bi-lateral trade while Europe, obviously, designed the euro to be a reserve asset and international medium of exchange.
    These were challenges to the dollar’s dominance, but they weren’t mortal threats.
    What’s happening lately, however, is a lot more serious. It even has an ominous-sounding name: de-dollarization. Here’s an excerpt from a much longer article by ‘strategic risk consultant’ F. William Engdahl:
    Gold, Oil and De-Dollarization? Russia and China’s Extensive Gold Reserves, China Yuan Oil Market
    (Global Research) – China, increasingly backed by Russia – the two great Eurasian nations – are taking decisive steps to create a very viable alternative to the tyranny of the US dollar over world trade and finance. Wall Street and Washington are not amused, but they are powerless to stop it. So long as Washington dirty tricks and Wall Street machinations were able to create a crisis such as they did in the Eurozone in 2010 through Greece, world trading surplus countries like China, Japan and then Russia, had no practical alternative but to buy more US Government debt – Treasury securities – with the bulk of their surplus trade dollars. Washington and Wall Street could print endless volumes of dollars backed by nothing more valuable than F-16s and Abrams tanks. China, Russia and other dollar bond holders in truth financed the US wars that were aimed at them, by buying US debt. Then they had few viable alternative options.

    This post was published at DollarCollapse on SEPTEMBER 15, 2017.

  • Trying to Save the Euro from Total Disaster

    European Commission President Jean-Claude Juncker has now come out in a very desperate move telling that those members of the EU who are non-euro countries should introduce the euro ASAP. ‘The euro is destined to be the single currency of the EU as a whole,’ Juncker declared. Juncker then proposed a ‘euro preparation instrument’ to provide technical and financial assistance to make this transition.
    The Euro is in serious trouble because of the total mismanagement of the ECB. Low to negative interest rates have totally failed to stimulate the economy after almost 10 years. Now that rates must rise to try to avoid a massive pension collapse in Europe, the ECB could suffer a major default and will need to be bailed-out itself by the government since it owns 40% of euro-zone debt.

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

  • Euros, Dollars and Central Bank Manipulations

    Peter Schiff has been talking a lot about the weakening dollar. In a recent Schiff Report video, Peter said he sees the ‘mother of all dollar bear markets’ on the horizon. The dollar has already dropped about 12% on the year, and it’s on track for its worst year since 1985. That was the beginning of a decade long bear market for the dollar. Peter says he thinks this one will be worse.
    I think this one is going to be the mother of all dollar bear markets, and I think the dollar is going to fall much further than it did in any prior bear market.’
    The following article by economist Dr. Daniel Lacalle, published at the Mises Institute FedWatch, provides some further insights into monetary policy by looking at the strength of the euro in relation to the dollar. His analysis sheds light on the relationship between strong and weak currencies, and the cost and benefits of each.
    The primary purposes of the incorrectly named ‘unconventional monetary policies’ are to debase the currency, stoke inflation, and make exports more competitive. Printing money aims to solve structural imbalances by making currencies weaker.

    This post was published at Schiffgold on SEPTEMBER 14, 2017.

  • Global Stock Markets Mixed In Quieter Trading

    (Kitco News) – World stock markets were mixed in quieter trading overnight. U. S. stock indexes are pointed toward weaker openings when the New York day session begins, on some mild profit taking. The U. S. stock indexes have set record highs this week.
    Gold prices are higher in pre-U. S.-session trading. Gold prices are still in a near-term uptrend despite some profit-taking pressure seen this week.
    In overnight news, the Euro zone reported its July industrial output rose by 0.1% from June and was up 3.2%, year-on-year.

    This post was published at Wall Street Examiner on September 13, 2017.

  • Why Is the Euro Still Gaining Against the Dollar?

    The primary purposes of the incorrectly named ‘unconventional monetary policies’ are to debase the currency, stoke inflation, and make exports more competitive. Printing money aims to solve structural imbalances by making currencies weaker.
    In this race to zero in global currency wars, central banks today are ‘printing’ more than $200 billion per month despite that the financial crisis passed a long time ago.
    Currency wars are those that no one admits to waging, but everyone wants to fight in secret. The goal is to promote exports at the expense of trading partners.
    Reality shows currency wars do not work, as imports become more expensive and other open economies become more competitive through technology. But central banks still like weak currencies -they help to avoid hard reform choices and create a transfer of wealth from savers to debtors.
    The Euro Rallies So how must the bureaucrats at the European Central Bank (ECB) feel when they see the euro rise against the U. S. dollar and all its main trading currencies by more than 12 percent in a year, despite all the talk about more easing? The ECB will keep buying 60 billion euro a month in bonds, maintain its zero interest-rate policy, and keep this ‘stimulus’ as long as it takes, until inflation growth and GDP growth are stable.

    This post was published at Ludwig von Mises Institute on Sept 12, 2017.

  • My 2017 Silver Price Prediction Is Extremely Bullish Thanks to the U.S. Dollar

    The silver price has been looking extremely bullish the past two weeks.
    After hovering near the $17 level from Aug. 17 to Aug. 25, silver prices pushed all the way to a five-month high last week. Between Friday, Sept. 1, and Friday, Sept. 8, the metal climbed 1.7% to $18.12 – the highest settlement since April 19.
    That was 6.1% above the 200-day moving average of $17.08, which has served as a sort of resistance level. By surpassing $17.08, silver looks poised to go higher.
    But first, I expect we’ll see the price of silver retreat from here in the short term. A pullback following a 14.4% rally in just two months would be healthy at this juncture.
    In fact, I think we have already seen a start to this move, as a possible bounce for the U. S. dollar may be in the cards. The U. S. Dollar Index (DXY) – which tracks the dollar against other currencies like the yen and the euro – is already up from 91.35 to 92.07 today (Tuesday, Sept. 12).

    This post was published at Wall Street Examiner on September 12, 2017.

  • Austria Makes History With First 100-Year Bond Sale Into Public Euro Markets

    Austria, a country which itself is less than 100 years old, made European history today when it launched a 100-year government bond: the first such deal to be sold into eurozone public markets. While Austria is not the first nation to sell 100 year bonds – last year Ireland and Belgium both sold privately-placed century-long bonds – while Austria itself sold a 70 year bond, Austria’s planned 100-year bond is unique in that it would be the first such debt sold directly into public markets in the eurozone according to the WSJ.
    It is unclear if the lack of a private sale suggests there was no reverse inquiry for the high duration product among institutions, however the return of this highly convex and duration-laden instrument suggests that European yields are unlikely to shoot higher, at least judging by the anticipated demand. On the other hand, yields are about to spike from the perspective of Austria, which is simply seeking to lock in the longest-possible term financing before the ECB begins tapering/tightening, and yields spike, as Fasanara Capital warned yesterday.

    This post was published at Zero Hedge on Sep 12, 2017.

  • Shares of the Swiss National Bank Soar 64% in Two Months

    What the heck is going on? The central bank of Switzerland has become a huge hedge fund since it decided in January 2015 to print Swiss francs – for which there is huge global demand – and sell these freshly created francs to buy bonds and stocks that are denominated in euros and dollars. US stocks are a particular favorite. The Swiss National Bank (SNB) has thereby created a fantastical money-fabrication scheme. This scheme is publicly traded. And the shares have become a doozie.
    Today, the shares (SNBN) closed at a new high of 3,126 Swiss francs, having soared 64% since July 19 in cryptocurrency-fashion. This chart shows the daily moves since May:
    In January 2015, the SNB ‘shocked’ the financial markets globally by scrapping its minimum exchange rate of CHF 1.20 to the euro and switched to a draconian negative-interest-rate policy and massive asset purchases – massive for a tiny country like Switzerland – to keep the value of the franc from rising against the euro.

    This post was published at Wolf Street on Sep 11, 2017.

  • Is the Gold Price Going Up from Last Week’s One-Year High?

    Not only did the gold price manage to stay above the $1,300 resistance level last week, but the metal surely and steadily climbed even higher. From Friday, Sept. 1, to Friday, Sept. 8, the price of gold gained 1.6% to $1,351.
    Gold was clearly buoyed by the U. S. dollar’s plunge to a nearly three-year low. The U. S. Dollar Index (DXY) – which measures the greenback against other currencies like the yen and the euro – dropped from 92.81 to 91.33 last week. That was the lowest since December 2014.
    But North Korea’s testing of a hydrogen bomb – considered the country’s most powerful to date – on Sunday, Sept. 3, sent gold prices higher. On Tuesday, Sept. 5, the price of gold jumped 1.1% to $1,345.
    Despite falling since then to $1,339 today (Monday, Sept. 11), gold is now up 16.2% in 2017, easily beating the S&P 500’s 10.9% gain since then.
    Some indicators are starting to place the metal in overbought territory. While this could lead to a brief dip, I remain bullish on gold in the medium and longer terms. Today, I’m going to share with you my bullish gold price target for the end of 2017.
    First, let’s look at gold’s 1.6% rise last week…

    This post was published at Wall Street Examiner on September 11, 2017.

  • Global Stocks Roar Back To All-Time Highs As Irma, North Korea Fears Fade

    And we’re back at all time highs.
    With traders paring back risk positions on Friday ahead of a weekend full of potential risk events, Monday has seen a global “risk-on” session in which global stocks rose back to record highs and US futures jumped, the dollar gained, Treasuries retreated, while VIX and dollar slumped as appetite for risk returned to global markets after North Korean failed to conduct an anticipated missile test failed to materialize and Hurricane Irma appears to have struck the U. S. with less force than feared. The MSCI All-Country World Index increased 0.3% to the highest on record with the largest climb in more than a week, while that “other” trade also outperformed, as the MSCI Emerging Market Index increased 0.4% to the highest in about three years. Safe havens such as the yen and Swiss franc all also fell.
    Amid the risk-on tone, the dollar registered its biggest gains in the currency markets in ten days. It added 0.5 percent against its perceived safe-haven Japanese counterpart the yen JPY and clawed back ground against the high-flying euro as an ECB policymaker flagged caution about the single currency’s recent rise.

    This post was published at Zero Hedge on Sep 11, 2017.

  • Market Report: Have we lift-off?

    As can be seen in our headline chart, gold and silver powered ahead further this week, and appeared to be undergoing a rerating. Gold this morning in early European trade was trading at $1354, up from $1320.80 at last Friday’s close. Gold is now up 17.5% on the year so far. Silver this morning is trading at $18.16, up from $17.73 last Friday, and is up 14% on the year. Silver still has some catching up to do, and appears cheap relative to gold.
    Continuing weakness in the dollar, notably against the euro, is being reflected in higher prices for precious metals. At the same time, commodity prices are rising, led by demand from China. China is offsetting some of the higher dollar prices for raw materials by allowing the yuan to rise against the dollar, which is up 8% this year.

    This post was published at GoldMoney on September 08, 2017.

  • Venezuela Is About To Ditch The Dollar In Major Blow To US: Here’s Why It Matters

    Authored by Darius Shahtahmasebi via TheAntiMedia.org,
    Venezuelan President Nicolas Maduro said Thursday that Venezuela will be looking to ‘free’ itself from the U. S. dollar next week, Reuters reports. According to the outlet, Maduro will look to use the weakest of two official foreign exchange regimes (essentially the way Venezuela will manage its currency in relation to other currencies and the foreign exchange market), along with a basket of currencies.
    According to Reuters, Maduro was referring to Venezuela’s current official exchange rate, known as DICOM, in which the dollar can be exchanged for 3,345 bolivars. At the strongest official rate, one dollar buys only 10 bolivars, which may be one of the reasons why Maduro wants to opt for some of the weaker exchange rates.
    ‘Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,’ Maduro said in a multi-hour address to a new legislative ‘superbody.’ He reportedly did not provide details of this new proposal. Maduro hinted that the South American country would look to using the yuan instead, among other currencies. ‘If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,’ Maduro also said.

    This post was published at Zero Hedge on Sep 8, 2017.

  • Crashing Dollar Sends European Stocks, US Futures Reeling; Yuan Has Best Week On Record

    European stocks dropped, Asian and EM market rose, and S&P were lower by 0.3% as investors assessed the latest overnight carnage in the USD which plunged to the lowest level since the start of 2015, sending the USDJPY tumbling to 107, the euro extending gains to just shy of $1.21 and a slowdown in China’s export growth which however did not prevent the Yuan from posting its best weekly gain on record.
    It was all about the seemingly huge currency moves overnight as the dollar plunged for the 7th day in a row, the biggest 7 day drop in 4 months, amid doubts about further Federal Reserve tightening, North Korea tensions and as Hurricane Irma threatens South Florida. The Yen rose to the strongest level against the dollar since Nov. amid nervousness about possible provocation from North Korea ahead of its foundation day on Saturday; yen surged past 108 per dollar as options barriers gave way, triggering a series of stop-losses. The Yuan rallied toward 6.45/USD in both onshore and offshore markets as traders speculate PBOC will tolerate a stronger currency after it rose past the psychological 6.50 mark Thursday. The Australian dollar surged to the highest in more than two years on the back of dollar weakness while the cherry on top was the 10Y TSY yield touching a YTD low of 2.014% before rebounding to ~2.035%.
    Meanwhile, natural disasters were aplenty, including the most powerful earthquake this century to shake Mexico, while Hurricane Irma is projected to hit Florida Sunday, and North Korea is widely expected to launch an ICBM on its September 9 holiday.
    As reported last night, the big overnight story was the dramatic plunge in the dollar in Asian trading….

    This post was published at Zero Hedge on Sep 8, 2017.

  • Gold Prices Probe Key $1356 Level

    Gold prices fell below $1350 per ounce Friday lunchtime in London, cutting the metal’s weekly Dollar gain to 1.7% and heading for a loss against other major currencies after touching a new 12-month high for US investors at what some chart analysts called a key level.
    The Euro rose back to its strongest Dollar value since January 2015, peaking just shy of $1.21, while the Chinese Yuan hit USD levels last seen in December that year.
    Listen to Jeff Christian on Metals, Lithium, and Electric Vehicles
    “After a phase of consolidation [after] a major trough late 2015,” says the latest technical analysis of Dollar gold prices from French investment and bullion market-making bank Societe Generale, “gold has recently accelerated the up move, as shown by the break above the descending trend in force since the all-time high in 2011.
    “More importantly, gold formed a massive multi-year bullish reversal pattern (Inverted Head and Shoulder pattern)…and just probed its confirmation level at $1356.”

    This post was published at FinancialSense on 09/08/2017.