I fully follow the concept: Inflation ahead and USD maintained low (vs yuan,oil and gold)..no choice
But I have to sail my own boat: so AUD or NZD is what is critical in a selfish way.
The AUD or NZD have fallen vs the USD in the last years, should I expect this to continue: us being a us proxy .in worse..
Or should we expect a surge of the AUD as a gold/material proxy currency?
I think this is a question many are wondering about as the AUD USD rate is so critical to both assets values here and for many of the ASX 200 companies.
Sure, gold or silver could be a safe(r) play but manipulation is well known and there is only so much shiny bits you can own store
Bonjour,
If the USD is weakened systematically, then all other currencies in theory should rise against it. Of course, other currencies may peg, may run even more radical policies, have import/export policies that encourage/discourage currency depreciation/appreciation.
How long is a piece of string?
Energy is where you can try and estimate the length of the string.
The larger the dependency on energy imports the larger the lean towards letting their currency strengthen against the USD. Of course counter-balancing that is how to earn USD on exports. Too strong a currency can impact export/import trade balances. Which is why a number of currencies have moved to buying energy in non USD and settling in net trade balances + gold. That way you can have a weak currency (for exports) and preserve your USD/UST reserves for any Eurodollar debt that you may carry.
Oil News:
Friday, March 15th 2024
Brent futures have broken through the $85 per barrel for the first time since November, indicating that the gradually improving sentiment, further buoyed by Ukrainian drone strikes on Russian refineries this week and declining US inventories, is here to stay.
White House Signals Discontent with US Steel Takeover. The Biden administration is
rumored to have expressed concerns over Nippon Steel’s $14.9 billion takeover of iconic steelmaker
US Steel (NYSE:X), citing national security concerns and a lack of trade union consultation.
Drone Strikes Lead to Higher Russian Oil Exports. After this week saw several large-scale drone attacks on Russian refineries in Nizhny Novgorod, Ryazan, and Novoshakhtinsk, Russia’s Energy Ministry said the country’s crude
exports will rise, in defiance of OPEC+ commitments.
Glencore Mulls Moving Main Listing to Australia. Activist investor Tribeca Investment Partners has
called on mining giant
Glencore (LON:GLEN) to move its primary listing from London to Sydney and abort plans to spin off its lucrative coal business to boost its share price.
Mauritius Emerges as Key Bunkering Hub for Rerouted Tankers. After global traders Mercuria and Trafigura
suspended refueling operations in South Africa over a tax dispute with local authorities, Mauritius has become the main refueling station for all tankers avoiding the Red Sea and going around the Cape of Good Hope.
US M&A Frenzy Still Far from Over. US investment firm Kimmeridge Energy Management made an
improved $2.1 billion offer for Eagle Ford-focused oil and gas producer
SilverBow Resources (NYSE:SBOW), proposing to create a combined company and pledging to provide the necessary financing.
China’s Leading Smelters Agree on Production Cuts. China’s leading copper smelters Jiangxi Copper, Tongling, Jinchuan Group, and China Copper are reported to have
concluded a rare agreement to cut production as spot fees to process copper concentrate fell to their lowest in a decade.
Nord Stream Sues Insurers for $440 Million. Pipeline operator Nord Stream AG is
seeking $440 million from its insurers Lloyd’s Insurance and Arch Insurance in a lawsuit filed at London’s High Court, weeks after both Sweden and Germany found traces of explosives relating to the incident.
The UK’s Ambitious Green Agenda Gets Gas Reality Check. The government of the United Kingdom is
proposing to build new gas-fuelled power plants, with the Energy Ministry suggesting 5 GW of generation capacity would be needed to avoid blackouts amidst a renewables pivot.
Cutting Fuel Prices, India Prepares for Elections. India’s state fuel retailers are
cutting the price of gasoline and diesel this week to 94.72 and 87.62 rupees per liter respectively, the first change in two years, ahead of the 2024 Indian general election in April-May.
US Commissions First Major Offshore Wind Farm. The first utility-scale offshore wind farm in the United States, the 132 MW South Fork Wind project operated by
Orsted (CPH:ORSTED) and
Eversource (NYSE:ES) some 35 miles from Long Island, NY, has been launched this week.
China Discovers Another Huge Oil Field. China’s offshore-focused state oil firm CNOOC
reported the discovery of Kaiping South in deepwater South China Sea, with the find believed to contain more than 100 million tonnes of oil equivalent in recoverable volumes.
Venezuelan Gas Attracts Key Oil Major. Concurrently to Shell’s 3.2 TCf Dragon field, UK oil major
BP (NYSE:BP) is in
talks with Venezuela’s PDVSA to develop the Manakin-Cocuina gas field straddling the border of Venezuela and Trinidad and Tobago, to be fed into Atlantic LNG.
IEA Continues to Upgrade 2024 Demand Outlook. The International Energy Agency
raised its view on 2024 oil demand growth for the fourth time since November, expecting it to rise 1.3 million b/d, up 110,000 b/d compared to its forecast from last month.
So this is a good point.
Let's look:
SMH (semi conductors) are running away. NVDA and others. Chasing them at this point, very dangerous.
XLY (consumer retail) should be a concern. Oft cited, the consumer is 70% +/- of the economy. We saw yesterday credit card defaults on the rise. Inflation (real) is probably hovering at a true 20%. My grocery bill each week has from 18mths ago literally doubled.
XLE on the rise. Oil back into an eight handle. Trend is up. Not good news.
1 week heat map:
Tepid.
SMH. Is this 'passive' allocation?
Then we have BTC. Still 'tethered' to the QQQ's.
This chap:
https://www.goldpriceforecast.com/g...lver-key-invalidations-in-bitcoin-and-nasdaq/
From Palantir's CEO:
Us and Them
Ok then! Yesterday produced a soundbite to remember, courtesy of Palantir Technologies, Inc. CEO Alex Karp on CNBC:
I love burning the short sellers. Almost nothing makes a human happier than taking the lines of cocaine away from these short sellers, who are going short on a truly great American company — not just ours — they just love pulling down great American companies so that they can pay for their coke.
And the best thing that can happen to them is, we will provide — we will lead their coke dealers — to their homes, after they can’t pay their bills. . . go ahead, do your thing, we’ll do our thing.
Yet those unloved skeptics have plainly exerted a dwindling hold on “great American companies” as the titanic bull market unfolds. Median short interest as a percentage of market capitalization within the S&P 500 (which does not include Palantir) stood at 1.7% last month per Goldman Sachs, down from roughly 2.6% as of 2016 and 3% as the financial crisis ebbed in 2010.
Karp’s business software concern has likewise shed its share of nonbelievers during its near 300%, post-2022 stock price rally, which has pushed its market cap to $54 billion. As Jim Chanos points out on X, short sellers have indeed helped furnish that levitation, purchasing a net 60 million shares since March 2023 as the short interest has receded to just under 5% of the float from 8% over that stretch.
Conversely, Palantir management has taken the other side of the order book, ringing the register with relish. Insiders sold $274 million of stock over the past three months, more than all but six of the 265 U.S. tech firms tracked by Bloomberg. Yesterday, co-founder Peter Thiel filed paperwork with the SEC to sell a further 7 million shares, equivalent to nearly $175 million in proceeds at current levels.
Ongoing dilution has helped furnish that lucrative activity: Share-based compensation registered at $1.82 billion during the three years through 2023, easily topping Palantir’s $1.11 billion of cumulative net income over that period. The company’s class-A common share count stood at 2.11 billion as of Feb. 13, up just over 20% from three years prior.
LOL. Sounds like 1999 again.
An article on China: So this chap is a hedge fund manager.
- To understand what will happen in China and its impact on the global economy, we simply need to invert what happened over the last two decades.
China has had the largest housing bubble in human (and possibly galactic) history, for a decade and a half. It has lasted much longer than any reasonable analyst, including yours truly, expected it could last. One thing about bubbles is that the longer you sustain them the bigger they get and the harder they implode.
The China housing bubble is now bursting, putting immense strain on internal demand from consumers and its economy. The banking system and Chinese consumers will bear the brunt of this situation, but we’ll probably feel it across the world.
- It would obviously be wrong to say that all economic growth in China came from the building of ghost towns; China has tremendously improved its infrastructure and a large chunk of global manufacturing has moved there. However, capital investment as a percentage of GDP was above 40% for decades, double the level of the US. It is likely that capital investment will revert towards the US level, which in turn will reduce demand for industrial commodities (think iron and copper).
Commodities are priced on incremental (marginal) demand; the last few percentage points of demand above the inelastic (short-term) supply are the ones that set prices. Secondary effects of a decline in the demand and prices of industrial commodities will be felt in countries like Australia and Brazil that benefited from China’s ascent.
- There are some factors that may offset the decline in Chinese appetite for industrial commodities. Selective deglobalization is forcing companies to bring factories out of China to more friendly countries, resulting in more construction and thus more demand for industrial commodities in those regions.
The US has passed the Inflation Reduction Act, which should result in more spending on industrial goods. Lastly, India, the most populous country in the world, has one of the world's worst infrastructures, and it will be receiving upgrades.
- One bright spot in the Chinese economy was its tech sector (Alibaba, Tencent, and others), but Xi viewed it as a threat to the power of the Communist Party. Xi cracked down on these companies, reducing their competitiveness. Also, sanctions from the US have further damaged these businesses.
- The slowing (possibly shrinking) economy, an ocean of bad debt, enormous losses of life savings on investments in ghost towns, and a broken banking system all substantially increase the risk of social instability in China.
- China is becoming a more dangerous place to conduct business, as we are starting to see headlines about China not allowing capital and foreign employees to leave the country. Foreign investment into China likely peaked before the pandemic. In the past, companies emphasized their investments in China (think Starbucks, car companies); these investments will start looking like liabilities.
China, not the overheating of its iPhone 15, is the biggest risk to Apple, not just from consumption but also from the production perspective. Tim Cook has to move production out of China without China noticing it – the most difficult magic trick ever performed.
- China also has troubling demographics. The one-child policy, which was revoked in 2015, created a drastic imbalance between males and females and caused the rapid aging of China’s workforce, thus limiting its economic growth. (On a sarcastic note, a marriage of inconvenience between Russia and China seems like a good idea – China has a lot of single men and Russia has a lot of single women.)
- We are no longer in the foothills of a Cold War with China; we are in that war. The Chinese navy may not have the same quality as the US’s, but it has definitely begun to dominate the US Navy in terms of quantity. The US has little commercial shipbuilding capacity, and we will likely need a bigger navy to counter the threat from China.
Compared to the Soviet Union during the Cold War, China has a much bigger economy that is very good at building things. This is why we are doubling down on our defense stocks, especially the shipbuilders.
- A Chinese invasion of Taiwan is probably one of the most important geopolitical risks. There are two lines of thinking here: A weaker Chinese economy may diminish China's ability and willingness to start a war that would further isolate it from the West. However, it is the wounded animal that is dangerous, not the fat and happy one.
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Not mentioned is that China is working with the US to weaken the USD as against the Yuan. This is the 'San Francisco Accord'. Much the same as Japan and the 'Plaza Accord" back in the day (referenced many times).
USD liquidity is crucial for the global economy. USD liquidity means a lower (weaker) USD. Which is why ISDA will pass, allowing US Banks to undertake a massive QE operation.
So
@peter2 has a thread here:
https://www.aussiestockforums.com/t...portfolio-wkly-dly.35039/page-63#post-1270250
BTD.
If equity markets dip and they do look that way, will they bounce and resume their trajectory higher? Or will a topping process begin?
I'm agnostic on the issue atm.
On the one hand, the powers that be definitely want equity markets to continue higher. On the other hand, with inflation heating up again the Fed (already delaying any cuts until June, originally February) may further delay rate cuts out to September+. The irony is of course, that the higher rates are driving inflationary pressures.
Your market ASX will follow (pretty much) the US markets as your interest rates are from the Fed. LOL.
We can see that the leverage is pretty high, with high entry prices having been paid. Any pullback will amplify the move down as leveraged players are forced by margin calls to liquidate. TSLA is a prime example currently.
US consumer (as indicated by XLY) is pretty much burned. This is an early warning/indication of recession biting far deeper. The vast majority of 'jobs' added have been of the low pay and shite variety. They will evaporate in any hint of a recession getting under way. That will push fiscal deficits (much) higher.
So will you BTD?
If it is phase ii of the bear, bear rallies are fast and furious. Any BTD stock can be sold into the rallies (assuming they move high enough) but 'timing' will become increasingly critical.
But what if? What if the bull just resumes?
jog on
duc