A case of big-figureitis

Oh dear, looks like the DXY has a case of big-figureitis....

One can only imagine the thoughts of the guy who paid 100.  Must be something like this...

A cold winter night; Greece still in debt
The euro's at its lowest yet
A rush of the blood to the head
Buy some dollars from my bed

Dollar, dollar, give me the news
I got a bad case of lovin' you
No squeeze, please I'm on my knees
I got a bad case of lovin' you

A pretty chart sends flutters to my heart
I learned that buddy from the start
Buying dollars is all I can do
'Cause the ECB's doin' QE, too

Dollar, dollar, tell me the news
I got a bad case of lovin' you
No squeeze, please I'm on my knees
I got a bad case of lovin' you

I know you like it, the dollar's on top
Tell me, Dixie, are you gonna stop?

Pay 100 on a tasty clip
Then I see Judas hangin' on my tip
Shake my fist as it starts to fall
My stop's been done, hear the broker call

Dollar, dollar, tell me the news
I got a bad case of lovin' you
No squeeze, please I'm on my knees
I got a bad case of lovin' you

With apologies to Robert Palmer.   Anyone too young to remember the original (released in 1978) has never seen a proper dollar bull move.....



 
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Anonymous
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March 12, 2015 at 1:05 PM ×

Itel- Here we go. No one's buying PC's anymore. They're all buying gold plated Apple watches. And, while we're at it, USD is hurting us.

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CV
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March 12, 2015 at 2:19 PM ×

Yeah well, you know that when the...

"Look son, if you are under 30 you don't get anything"

...stories start gathering traction, the Jim-latecomer is bound to have his b***s shot off ;). Retail r'US LLP is doing slightly better today on account of investors deciding that Brazil may not sink into ground just yet. But is it very early days yet ... we are still not worried about that one!

Meanwhile, this could of course just be a chance to add to bucky longs, we will see. The market now demands a response from Yellen or more specifically punters should choose their reason to buy the greenback carefully.

Do you think;

a) The dollar is going up because everything else is either shit or being debased?

b) The dollar is going up because Yellen/the Fed has nuts of adamantium, and will start a hiking cycle in June.

Saying "both" is a cop-out although I am willing to hear a riposte based on this.

Now on EM and "Hey kids, you weren't around in 1998" stories ... g-i-v-e m-e a b-r-e-a-k.

Since the taper scare, we have been led to believe that the EM scare is a NEW thing, that is suddenly something dawning on the markets. The price action in China, Brazil, Russia, and Asia ex-China (divergence anyone?) since 2011(!!!) kind of makes mince meat of this argument very quickly. EMs are under pressure due to the original sin of, once again, borrowing too much in USD, but the world IS different from 1998. The ECB and the BOJ makes it very difficult for the Fed to simply put on the hiking boots and go. I.e. it makes it more difficult for the Fed to NOT supply USD to the global system. If you can paint a picture in which the Fed moans and screams at enough G7 meetings to persuade Draghi and Kuroda that they need to normalise, well ... fine, I am right there with you in the panic room (cue 2006 all over). But sometimes, we need to approach the situation with fresh eyes and look at what is actually going on.

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Anonymous
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March 12, 2015 at 2:48 PM ×

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/11465481/Global-finance-faces-9-trillion-stress-test-as-dollar-soars.html

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washedup
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March 12, 2015 at 3:10 PM ×

CV - I'm going with b), for the simple reason that the crash and burn scenario for world GDP is greatly exaggerated, and so is the threshold at which Janet is OK hiking - I mean she's pretty much shared her personal pink diary with Mr Market via Hilsenrath at this point and punters still believe what they'd rather believe - quite astounding.
I will point out that a grinding away outcome which I believe in, with US GDP at 1.5%-2% and ROW at, well, 1.5%-2.0%, will be better for real GDP and wages than it will be for asset prices - hell, I could frankly see them go in two different directions quite easily.

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Anonymous
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March 12, 2015 at 3:37 PM ×

Farmer,

@CV,
I am going with b). All this volatility will be gone once Fed raises rates and everyone finds out that it is not the end of world. Then you will have the the mother of all last stage rallies of stock bubbles, or the train to the last stop of the world.

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CV
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March 12, 2015 at 3:40 PM ×

Jeez guys, you are almost making me constructive and bullish here! ;)

Claus

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washedup
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March 12, 2015 at 4:35 PM ×

CV - read the last statement in my response again.

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CV
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March 12, 2015 at 5:02 PM ×

Saw that Washedup ... ;), but this is where I think EMs/EZ could shine as a classic late cycle outperformer, before the inevitable deluge.

How long do you take before we get the "Eurozone GDP outperforms US"? ... it could be as early as Q1!

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washedup
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March 12, 2015 at 7:03 PM ×

CV - eurozone gdp outperforming US in absolute terms is a bit of a stretch, since the much weaker euro would take a good 9-12 months to start impacting ground reality (ditto for say, oil patch layoffs to start impacting labor statistics in the US).

I think most likely in 2015, Europe surprises a bit to the upside, US surprises a bit to the downside, and China is the wildcard, the x factor, the kaiser soze which I am not smart enough to forecast - given data we currently have, i don't think up to Q3 2015 will be as eventful an inflection point for GDP growth as some think - after that we re-evaluate evidence.

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Mr. T
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March 12, 2015 at 7:28 PM ×

Dollar peg has to be hurting China. I would think real hard about a thesis that relies on China export growth.

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Leftback
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March 12, 2015 at 7:31 PM ×

Nice one MM, and one can only wonder if we will see a follow-up duet from Mr Robert Palmer and Dame Janet Yellen, along these lines:

"You know, you're going to have to face it
You're Addicted To Dove"...

Addicted to Love

Btw, I applaud the tedious and unexciting forecast cited above where US slows down and just pootles along at 1-1.5% in 2015 and RoW outperforms at 1.5-2%. This is far from unlikely (look at what UK did after all the BoE rate hike chatter), yet markets have priced the probability of this somewhere below West Ham winning the Champions League.

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Skippy
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March 13, 2015 at 7:05 AM ×

MM, love the note as always.

LB, "addicted to dove" - I expect a full rendition.

I won't mention the cricket

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