Marketvane’s Bullish Consensus
for the $US hit 90% yesterday. At the beginning of March it was 83%.
Market bullish sentiment toward the dollar has not been this bullish
since the turn of the millenium. It is a very strong contrarian signal…
The common “narrative” out there is that the dollar squeeze is being
fueled by European sovereign and corporate entities scrambling for
dollars in order to pay dollar-denominated debt obligations. Yes, this
is part of the equation. But, just like in 2008, it is a sympton of a
castrophic underlying systemic problem. After all, the Fed has created
close to $4 trillion in new dollars, $2.6 trillion of which are sitting
in the excess reserve account of the big banks at the Fed earning
interest. That’s $2.6 trillion in excess dollars that can used to fund any excess demand for dollars.
Rate cuts: 24 so far and there’s more to come
An interest rate cut from South Korea Thursday takes the number of central banks that have stepped up their monetary easing this year to 24 and that number is likely to rise, analysts say.
South Korea’s decision to cut its key rate by 25 basis points to a record low of 1.75 percent follows a rate cut by Thailand’s central bank on Wednesday and easing by central banks in China, India and Poland since March began.
Read MoreBank of Korea joins the global easing spree
Russia and Malaysia are among the countries that economists say could join the growing list of central banks that have slashed borrowing costs since the start of the year.
….
The US Dollar index is going parabolic. More often
than not, markets that go parabolic will crash. This is what happened
with the dollar in 2008 (click to enlarge):
image: http://investmentresearchdynamics.com/wp-content/uploads/2015/03/USDX1.png
The common “narrative” out there is that the dollar squeeze is being
fueled by European sovereign and corporate entities scrambling for
dollars in order to pay dollar-denominated debt obligations. Yes, this
is part of the equation. But, just like in 2008, it is a sympton of a
castrophic underlying systemic problem. After all, the Fed has created
close to $4 trillion in new dollars, $2.6 trillion of which are sitting
in the excess reserve account of the big banks at the Fed earning
interest. That’s $2.6 trillion in excess dollars that can used to fund any excess demand for dollars.Rate cuts: 24 so far and there’s more to come
An interest rate cut from South Korea Thursday takes the number of central banks that have stepped up their monetary easing this year to 24 and that number is likely to rise, analysts say.
South Korea’s decision to cut its key rate by 25 basis points to a record low of 1.75 percent follows a rate cut by Thailand’s central bank on Wednesday and easing by central banks in China, India and Poland since March began.
Read MoreBank of Korea joins the global easing spree
Russia and Malaysia are among the countries that economists say could join the growing list of central banks that have slashed borrowing costs since the start of the year.
….
“Fundamentally, the easing around the world is driven by inflation
turning out lower across the board,” Anatoli Annenkov, senior European
economist at Societe General, told CNBC.
“There is a debate about currency wars, monetary easing to push currencies lower, but fundamentally this is a story about growth and inflation,” he added.
“There is a debate about currency wars, monetary easing to push currencies lower, but fundamentally this is a story about growth and inflation,” he added.
Here’s a map showing which central banks have fired their opening salvo in 2015.
http://www.marketwatch.com/story/the-currency-wars-have-begun-2015-03-06?mod=mw_share_twitter
http://www.marketwatch.com/story/the-currency-wars-have-begun-2015-03-06?mod=mw_share_twitter
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