Markets searching for a shred of news

The news lull of August is in full swing. I have been looking for two hours for a shred of meaningful news to opine about.

A quick look at the financial headlines tells you everything you need to know about global markets. Currency devaluations in Turkey and China are making markets jittery for lack of any real news.

Now don’t get me wrong, China cutting the value of the yuan as a response to President Trump’s tariff threats has meaning to the backwater currency trading markets, but to make global markets move on the scale they have this morning is a bit of overkill and a result of lack of news on other fronts.

The same with the Turkish lira devaluation taking down the emerging markets. This is less than a blip on the screen any other time of the year. Today it’s leading the WSJ.com website.

So now we have big moves in currencies and sovereign bonds — two markets that most investors know very little about — driving overall stock markets.

Well perhaps later today we can get back to real market-driving news like Tesla’s Elon Musk on Twitter showing the check he received from Amazon’s Jeff Bezos to take the electric automaker private.

If this continues tomorrow, I think I’ll give you an update on my honey bees and the honey I harvested. It’s a helluva more interesting than currencies and sovereign bonds.

Advertisements

Trump’s trade talks are simple, if you want a strong US

As I wrote in the late spring when the tariff war talk started, this is truly the art of the deal for President Trump.

By the actions of numerous previous administrations, the world and China particularly, took on the task of being our manufacturing base for better or worse.

So Trump said if they have to sell to us, which they do, then we need to get better terms. A business mentality, not a pie-in-the-sky globalist view of trade.

Look no further than the deal Trump has worked out with the EU. Trump told EC president Jean-Claude Juncker, if you want Mercedes and BMWs in our driveways, then you have to give us this and this. Leveling the playing field had to win the day, the Germans had too much riding on staying competitive with their cars.

Look at China as the perfect example. Since the initial $50 billion in tariffs was floated, its stock market has tanked and its currency, the yuan, has cratered to a 13-month low. This despite the yuan being pegged to the US dollar, which has not moved that much over the same time frame.

China has far too much invested in migrating its people from the countryside to the cities to create its nascent middle class of manufacturing workers to walk away from US trade.

Is Foxconn going to sell knockoff iPhones to Nokia?

To be honest it’s not even a fair negotiation on these tariff talks. Oh, sure China and the EU can be boastful and full of bluster about Trump’s tactics, but at the end of the day these products need to be here or else those widgets have no other natural market on the scale of the US.

Anyone of the last five presidents could have done this deal if they wanted to, but that’s the problem, they didn’t. They were beholden to globalist espousing one world government and currency.

So if you come at trade from an America First point of view, you get the best terms possible, like the EU paying us to ship their cars to the US, which is essentially what this new deal is because they took tariffs off our exports to the continent.

It’s really easy to get your terms when you acknowledge that there are borders to countries and they are there for a reason and we will defend ours both economically and militarily.

China has seen that and right after Labor Day it will capitulate to our terms in order to feed their people over the winter. Trust me on this, as TrumpĀ  says.

Saudi ‘reverse coup’ bolsters bitcoin, while dollar forex, crude may crater

Bitcoin soared past $7,600 in early Sunday trading as news came out of a Saudi Arabian crackdown on the royal princes in a consolidation of power for the new king.

Among the 50 royals detained on Saturday evening was Prince Al-Waleed bin Talal, the billionaire investor behind Twitter, News Corp. and Citigroup. Continue reading

Bitcoin thrives on dollar weakness

As bitcoin has recovered some of its JPM chief Jamie Dimon/China crackdown attack of last week, it awaits the next onslaught.

Trading roughly a $1,000 off its almost $5,000 high earlier this month the cryptocurrency has better resolve than other currencies including the US dollar.

The dollar has lost roughly 10% of its value against other currency this year. Trading near a high of 94 on the WSJ dollar index, today it stands at 85.3. The chart is one long slope down with no peaks since January.

Funny how this metric never comes up in Federal Reserve meeting or discussions. Cheapen the dollar to spur growth is not a sound basis to build a recovery. But Wednesday when the Fed announces its rate decision, we will not hear anything about the dollar’s worth vs. world currencies.

So how much of the roughly $3,000 price gain in 2017 can be attributed to dollar weakness? I would say it can take credit for almost half the gains as more sophisticated investors sought a hedge against a depreciating dollar. Especially the Chinese, which have their yuan pegged to the dollar.

Look for bitcoin to rise further after the Fed holds rates on Wednesday. This will give you more of an indication of who is using bitcoin as a hedge.