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'King dollar' reigns supreme in world of slowing growth, European risks

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#1 pdx5

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Posted 12 November 2018 - 11:28 AM

I thought the growing federal borrowing/printing to cover Trillion+ budget deficits would tank the US Dollar.  Instead,  the dollar surged to nearly 17 month high on Monday against a basket of major currencies. Got me baffled!

 

Anyone has opinions on what a strong dollar will do to the market?


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#2 zoropb

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Posted 12 November 2018 - 11:52 AM

Temporary situation about to reverse.


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#3 MaryAM

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Posted 12 November 2018 - 01:17 PM

Don't think this will reverse.  Money multiplier is lower today than it was during the great depression.  Debt will undoubtedly default as it was incurred with a much cheaper dollar.  It will just die and go to money heaven if the dollar goes high enough.  I have been predicting hyper deflation for a few years - we will see.  A deflationary depression at least will mean we keep our country and government.   Hyperinflationary depressions always result in the overthrow of government.   



#4 zoropb

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Posted 12 November 2018 - 01:25 PM

Temporary deflation followed by inflation but it will go mostly to food.


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#5 Dex

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Posted 12 November 2018 - 01:58 PM

I thought the growing federal borrowing/printing to cover Trillion+ budget deficits would tank the US Dollar.  Instead,  the dollar surged to nearly 17 month high on Monday against a basket of major currencies. Got me baffled!

 

Anyone has opinions on what a strong dollar will do to the market?

 

Flight to safety

 

Fed may not raise rates

 

Harm some exports

 

Help imports & soften Trump tariffs

 

Net ... not much of a factor, except in the news media.


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#6 pdx5

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Posted 12 November 2018 - 04:29 PM

Don't think this will reverse.  Money multiplier is lower today than it was during the great depression.  Debt will undoubtedly default as it was incurred with a much cheaper dollar.  It will just die and go to money heaven if the dollar goes high enough.  I have been predicting hyper deflation for a few years - we will see.  A deflationary depression at least will mean we keep our country and government.   Hyperinflationary depressions always result in the overthrow of government.   

MaryAM---High inflation years were late 1970's and early 1980's. High inflation like those years is highly improbable now because of one major difference compared to now versus then. And that difference is manufacturing capacity in Asia currently is larger by orders of magnitude than during Carter admin. In fact the manufacturing there is operating actually at  below capacity. 

 

Any high inflation will be limited to food and fuel which can not be manufactured excessively. Zoropb is correct about this.

Of course if US $ tanks, then Americans will experience high inflation. But the king $$ is doing very well right now thanks to other countries in worse shape than us, especially China because the tariffs are hurting them really bad. We can hurt China 4 times more with tariffs than they can hurt us, because they sell us 4 times more than we sell them.


"Money cannot consistently be made trading every day or every week during the year." ~ Jesse Livermore Trading Rule

#7 pdx5

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Posted 12 November 2018 - 04:31 PM

 

I thought the growing federal borrowing/printing to cover Trillion+ budget deficits would tank the US Dollar.  Instead,  the dollar surged to nearly 17 month high on Monday against a basket of major currencies. Got me baffled!

 

Anyone has opinions on what a strong dollar will do to the market?

 

Flight to safety

 

Fed may not raise rates

 

Harm some exports

 

Help imports & soften Trump tariffs

 

Net ... not much of a factor, except in the news media.

 

Correct on flight to safety.

But higher rate by Fed actually attracts more foreign money coming here to receive better yield.


"Money cannot consistently be made trading every day or every week during the year." ~ Jesse Livermore Trading Rule

#8 Rogerdodger

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Posted 12 November 2018 - 05:19 PM

"the king $$ is doing very well right now thanks to other countries in worse shape than us"

"Flight to safety"

"higher rate by Fed actually attracts more foreign money coming here to receive better yield."

 

My favorite is: "Cleanest Shirt in the laundry"

 

 

Wasn't this all part of Armstrong's predictions for the US Dollar??

 

a 26-year rally into 2020/2021 and should be a nominal new high. That will break the back of emerging market debt, and probably the European banking system.

Keep in mind that the USA took the bad loans out of the banks and stuffed them in Freddie and Fannie. In Europe, the bad loans are still on the books of the banks because everyone fears that a bailout would result in money flowing from the north to the south. This is why Draghi is keeping QE in place and buying debt that matures. The banking crisis just never ends. That combined with Draghi leaving next year means that and any halt to QE by the ECB will leave marginal governments unable to sell their new debt. The whole thing gets very dicey very fast.

 

https://www.armstron...al-or-adjusted/


Edited by Rogerdodger, 12 November 2018 - 05:26 PM.


#9 trioderob

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Posted 12 November 2018 - 06:05 PM

 

Don't think this will reverse.  Money multiplier is lower today than it was during the great depression.  Debt will undoubtedly default as it was incurred with a much cheaper dollar.  It will just die and go to money heaven if the dollar goes high enough.  I have been predicting hyper deflation for a few years - we will see.  A deflationary depression at least will mean we keep our country and government.   Hyperinflationary depressions always result in the overthrow of government.   

MaryAM---High inflation years were late 1970's and early 1980's. High inflation like those years is highly improbable now because of one major difference compared to now versus then. And that difference is manufacturing capacity in Asia currently is larger by orders of magnitude than during Carter admin. In fact the manufacturing there is operating actually at  below capacity. 

 

Any high inflation will be limited to food and fuel which can not be manufactured excessively. Zoropb is correct about this.

Of course if US $ tanks, then Americans will experience high inflation. But the king $$ is doing very well right now thanks to other countries in worse shape than us, especially China because the tariffs are hurting them really bad. We can hurt China 4 times more with tariffs than they can hurt us, because they sell us 4 times more than we sell them.

 

 

the flip side is they can hurt our markets worse

 

if their market goes  down it not a huge deal  if the SPX500 crashes its enormous problem 



#10 pdx5

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Posted 12 November 2018 - 11:28 PM

trioderob wrote:

 

the flip side is they can hurt our markets worse

if their market goes  down it not a huge deal  if the SPX500 crashes its enormous problem 

-----------------------------------------------------------------------------------------------------------------------

Our much bigger worry for markets should be growing debt levels from federal gov't down to states, cities and individuals. The FED with it's ZIRP policy has exploded asset values. What happens to mortgages on $Million homes in coastal cities bought by MIDDLE class people, when the economy takes a downturn?

 

China can not afford tariff wars because theirs is export based economy. But even if China stops importing US manufactured goods completely, not a big deal because size matters. Ours is $19.4 Trillion economy and what China buys from us is $130 Billion. I am sure we all can do the math, and realize how insignificant our exports to China really are in relation to our economy size. On the other hand US Housing is valued at $31.8 Trillion!


Edited by pdx5, 12 November 2018 - 11:32 PM.

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