Aug 27

Chinese Wall in the Mist

It’s Official: China Confirms It Has Begun Liquidating Treasuries, Warns Washington (ZeroHedge, Aug 27, 2015):

As Bloomberg reports, “China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter. Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. China has communicated with U.S. authorities about the sales.”

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Aug 27

What China’s Treasury Liquidation Means: $1 Trillion QE In Reverse (ZeroHedge, Aug 27, 2015):

The size of the epic RMB carry trade could be as high as $1.1 trillion. If China were to liquidate $1 trillion in reserves (i.e. USTs) in order to stabilize the yuan in the face of the carry unwind, it would effectively offset 60% of QE3 and put around 200 bps of upward pressure on 10Y yields. So in effect, China’s UST dumping is QE in reverse – and on a massive scale.

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Aug 23

PetrodollarImage_0

Full article here:

Why It Really All Comes Down To The Death Of The Petrodollar (ZeroHedge, Aug 22, 2015):

Last week, in the global currency war’s latest escalation, Kazakhstan instituted a free float for the tenge causing the currency to immediately plunge by some 25%. The rationale behind the move was clear enough. What might not be as clear is how recent events in developing economy FX markets stem from a seismic shift we began discussing late last year – namely, the death of the petrodollar system which has served to underwrite decades of dollar dominance and was, until recently, a fixture of the post-war global economic order.

 

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Aug 23

currency wars

– China chooses her weapons (Gold Money Aug 20, 2015):

China’s recent mini-devaluations had less to do with her mounting economic challenges, and more to do with a statement from the IMF on 4 August, that it was proposing to defer the decision to include the yuan in the SDR until next October

The IMF’s excuse was to avoid changes at the calendar year-end and to allow users of the SDR time to “adjust to a potential changed basket composition”. It was a poor explanation that was hardly credible, given that SDR users have already had five years to prepare; but the decision confirming the delay was finally released by the IMF in a statement on Wednesday 19th. Continue reading »

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Aug 14

China-gold

Gold Jumps After China Reveals It Bought Another 19 Tons In July (ZeroHedge Aug 14, 2015):

Putting what China has just done in very simple context: China announces an increase in its gold holdings of over 58% (June and July)… and then it devalues its currency by nearly 5% in one week. 

Even the most brainwashed Keynesians should be able to figure out what is going on by now.

Continue reading »

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Aug 12

Dollar Tumbles As Fed Rate Hike Suddenly Looking Very Uncertain To Goldman, Bank Of America (ZeroHedge, Aug 12,  2015):

After China’s shocking currency devaluation, which some more conspiratorially-minded observers have concluded was China’s retaliation to the west for the IMF’s recent snub that pushed back China’s evaluation for inclusion into the SDR to some indefinite point in 2016, the only question on everyone’s mind is whether the Fed will delay or outright cancel any imminent “data-dependent” rate hikes as a result of the implicit tightening of monetary conditions thanks to China, and the dramatic appreciation of the USD which would not have taken place without China.

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Jul 22

And so it begins …


China’s Record Dumping Of US Treasuries Leaves Goldman Speechless (ZeroHedge, July 22, 2015):

On Friday, alongside China’s announcement that it had bought over 600 tons of gold in “one month”, the PBOC released another very important data point: its total foreign exchange reserves, which declined by $17.3 billion to $3,694 billion.

China gold reserves revised_0

We then put China’s change in FX reserves alongside the total Treasury holdings of China and its “anonymous” offshore Treasury dealer Euroclear (aka “Belgium”) as released by TIC, and found that the dramatic relationship which we first discovered back in May, has persisted – namely virtually the entire delta in Chinese FX reserves come via China’s US Treasury holdings. As in they are being aggressively sold, to the tune of $107 billion in Treasury sales so far in 2015.

China vs Reserves

We explained all of his on Friday in China Dumps Record $143 Billion In US Treasurys In Three Months Via Belgium, and frankly we have been surprised that this extremely important topic has not gotten broader attention.

Then, to our relief, first JPM noticed. This is what Nikolaos Panigirtzoglou, author of Flows and Liquidity had to say on the topic of China’s dramatic reserve liquidation

Looking at China more specifically, it appears that, after adjusting for currency changes, Chinese FX reserves were depleted for a fourth straight quarter by around $50bn in Q2. The cumulative reserve depletion between Q3 2014 and Q2 2015 is $160bn after adjusting for currency changes. At the same time, a current account surplus in Q2 combined with a drawdown in reserves suggests that capital outflows from China continued for the fifth straight quarter. Assuming a current account surplus in Q2 of around $92bn, i.e. $16bn higher than in Q1 due to higher merchandise trade surplus, we estimate that around $142bn of capital left China in Q2, similar to the previous quarter.

JPM conclusion is actually quite stunning:

This brings the cumulative capital outflow over the past five quarters to $520bn. Again, we approximate capital flow from the change in FX reserves minus the current account balance for each previous quarter to arrive at this estimate (Figure 2). Continue reading »

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Jun 17

Highly recommended … for all those you haven’t seen this yet.


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May 07

Weak Dong Forces Vietnam Central Bank To Devalue Currency (Again) (ZeroHedge, May 6, 2015):

Having put off the decision to devalue the Vietnamese currency in March, the Dong has pressured the weaker limit (1% trading band) of the reference rate ever since. This has led to Vietnam’s central bank devaluing the dong reference rate to 21,673 (from 21,458) for the 2nd time this year. This is the softest the dong has ever been relative to king dollar, pushing them deeper into the currency wars.

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May 06

FYI.


Martin Armstrong The System Will Crack And One World Currency Is Coming

Related info:

Martin Armstrong: Big Losses Coming In The Bond Market – Fall 2015 Turning Point – European Banks Will Collapse – Civil Unrest And Riots Globally – Gold To ‘Max Out At $5000 Per Ounce’ (Video)

Martin Armstrong Warns ‘Abandon The UK Before You Can’t’

 

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Apr 30

Dollar Suffers Worst Month In 4 Years – Ends Record Streak Of Gains (ZeroHedge, April 30, 2015):

After an unprecedented 9 months in a row of gains, for a greater-than-27% gain, The US Dollar slumped in April. Down 3.5%, this is the biggest monthly drop for the greenback since April 2011 (near the end of QE2).

20150430_dollar1

As we noted yesterday, this could be a major problem as a USD-reversal is likely to drive the great unwind of consensus positioning… Continue reading »

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Apr 29

The Great Unwind Begins: US Dollar Plunges To 2-Month Lows (ZeroHedge, April 29, 2015):

Just when you thought it was safe to pile all your money (at maximum leverage) into USD-denominated assets, the greenback plunges… The last 4 days have seen the 2nd biggest drop in 6 years. This has very significant consequences for a world that has become entirely consensus-based across at least 5 major themes… This poses a problem for talking-heads: if USD strength as indicative of US economic strength… what does a plunging USD imply?

The Strong Dollar regime has changed…

USD-Index

This suggests the huge consensus trades surrounding the inexorable USD strengthening are all in trouble also… Continue reading »

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Apr 27

federal-reserve-quantitative-easing-printing-money

Boston Fed Admits There Is No Exit, Suggests QE Become “Normal Monetary Policy” (ZeroHedge, April 26, 2015):

Perhaps it was inevitable. After all, the term “QEfinity” entered the financial lexicon long ago and there were already quite a few commentators out there suggesting that it may now be too late to remove the punchbowl, meaning an “exit” will not only prove difficult, but may well be impossible.

Take Makoto Utsumi, who oversaw foreign-exchange policy at the Japanese Ministry of Finance from 1989-1991, for example. Utsumi recently said a BoJ QE exit was out of the question “for the foreseeable future” and went on to note that “even the thought of an exit is a nightmare.” Meanwhile, it’s virtually impossible to say what effect Fed tightening will have in both the Treasury and corporate bond markets given the lack of liquidity in both and then there’s EM where carnage unfolded in 2013 after a certain bearded bureaucrat said the wrong thing about the direction of Fed policy.

Given all of this, we’re not surprised to learn that in a new paper entitled “Let’s Talk About It: What Policy Tools Should The Fed ‘Normally’ Use?”, the Boston Fed is now suggesting that QE become a permanent tool at the disposal of the Fed. After all, “financial stability” depends on it… Continue reading »

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Apr 25

Presenting De-Dollarization In One Simple Map (ZeroHedge, April 24, 2015):

Sometimes a picture is indeed worth a thousand words (or a thousand yuan) which is why we present the following map which shows all of the countries that have joined the China-led Asian Infrastructure Investment Bank with no comment other than to say “spot the odd G-7 nations out”…

AIIBMap

 

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Apr 15

The Collapse Of The Petrodollar: Oil Exporters Are Dumping US Assets At A Record Pace (ZeroHedge, April 15, 2015):

Back in November we chronicled the (quiet) death of the Petrodollar, the system that has buttressed USD hegemony for decades by ensuring that oil producers recycled their dollar proceeds into still more USD assets creating a very convenient (if your printing press mints dollars) self-fulfilling prophecy that has effectively underwritten the dollar’s reserve status in the post WWII era. Now, with oil prices still in the doldrums, oil producers are selling off their USD assets in a frenzy threatening the viability of petrocurrency mercantilism and effectively extracting billions in liquidity from the system just as the Fed prepares to hike rates.

 

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Apr 15

Russian Ruble Extends Outperformance – Surges To Strongest Since November (ZeroHedge, April 15, 2015):

Isolated Russia continues to see its currency dramatically outperform the US Dollar. Breaking below 50 today, this is the strongest the Ruble has been since Nov 2014… The Ruble is now up almost 22% against the US Dollar year-to-date.

Strongest since November…

20150415_RUB

and best performing currency of the year…

20150415_RUB1

Charts: Bloomberg

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Apr 15


Apr 12, 2015

Description:

Renowned financial analyst Martin Armstrong says you can forget about the U.S. dollar crashing in value. Armstrong contends, “No, that’s absurd. The euro is in terrible shape. The yen is in terrible shape, and honestly, you can’t park money in yuan or Russian rubles, yet. I mean, let’s be realistic here, but eventually–yes.”

Armstrong says the bond market is a different story as the Fed is going to be forced to raise rates. He contends just a few percentage points in rising rates are going to cause big losses and big changes. Armstrong predicts, “People will be losing huge money. We are looking at a few percentage points, and you are going to blow the national debts of all these countries way out of whack, and that’s what’s going to force political change.”

Join Greg Hunter as he goes One-on-One with Martin Armstrong of ArmstrongEconomics.com.

* * *

keep-calm-buy-goldGold-101

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Apr 06

gold-dollar

A Global Financial Reset Is Coming: ‘A Deal Is Being Made Between All The Central Banks’ (SHFTplan, April 5, 2015):

There is an unprecedented reset coming to world financial markets and if you’ve been paying attention it’s impossible to ignore the signs. In fact mega-investment funds, governments and central banks have been secretly buying up and storing physical gold in anticipation of an event that will leave the U.S. dollar effectively worthless and governments around the world angling for a new global currency mechanism, according to mining executive Keith Neumeyer.

But before the reset can happen Neumeyer, who recently founded First Mining Finance and has partnered with billionaire alternative asset investors like Eric Sprott and Rick Rule, says that foreign creditors must first deleverage their U.S. dollar debt, a move that is happening right now and is evidenced by the recent strength of the U.S. dollar. Continue reading »

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Mar 26

As I’ve said many times before:

“Only physyical gold and silver are real.

Everything else is an illusion.”

Paper investments in gold and silver will not be covered and there is a bloodbath coming.

The coming crisis will make 2008 look like a walk in the park.


 

gold-trap

Madness Coming To Gold Market: “There Are Thirty to Fifty Owners For Each Ounce of Gold That’s Out There” (SHFTplan, March 25, 2015):

Though the price of gold has seen a significant drop over the last two years from it’s all time highs of about $1900 per ounce, many experts and analysts believe that western central banks and their colleagues at major financial institutions have been manipulating the price. The rampant manipulation is believed to stem, in part, from the formerly Rothschild owned London Gold Fix, an organization made up of five large banks that make a daily determination of what the price of gold should be.

It is this unilateral control by western banks that recently prompted the Chinese to create their own Shanghai Gold Exchange. What separates the two is that the Chinese will be using their currency, the Yuan, as the reserve rather than the U.S. Dollar. Moreover, unlike their European counterparts, the Chinese will be trading in actual physical dollars.

The Daily Coin explains: Continue reading »

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Mar 25

De-DollarizeAnti-Dollar-Alliance

US Hegemony, Dollar Dominance Are Officially Dead As China Scores Overwhelming Victory In Bank Battle (ZeroHedge, March 25, 2015):

It’s official: everyone has caught onto the fact that the Asian Infrastructure Investment Bank story is extremely important. We’ve covered this exhaustively over the past month, but to summarize, the China-led development bank essentially marks an epochal shift away from traditionally US-dominated multinational institutions like the IMF and the ADB. Meanwhile, it also represents an implicit attempt by the Chinese to usher in a kind of sino-Monroe Doctrine and solidify their regional — and, to a certain extent their international — ambitions. In a desperate attempt to undermine the effort and preserve what’s left of US hegemony, Washington aggressively lobbied its allies last year to refrain from supporting the effort. Then the UK decided to join calling the bank an “unrivaled opportunity.” That effectively opened the floodgates and in short order, a bevy of Western nations and close US allies suddenly reversed course and indicated they were likely to support the new institution.

Here’s more: Continue reading »

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