Previously, I talked about similarities we have to day with the subprime crisis in 2008. The banks were in trouble. But we need to remember that the cause is very much different. In 2008, it was greed that causes bank to indulge in exotic subprime MBS that eventually got into trouble when the housing market fails. It started in the US and eventually burned all those buying those MBS. It is NOT worldwide. So what the FED did was reduce the FFR and did QE. DXY falls but recovers once EFFR reached the bottom.
The great recession in the 80s was a double dip one that caused stagflation. As you know, it was caused by the energy crisis which lead to HIGH INFLATION. Today, we have the same HIGH INFLATION which was caused by Covid and then a war in Ukraine. Do note that this HIGH INFLATION scenario is WORLDWIDE and not just limited to US. I am sure wherever you may be living, we are all paying high prices now for whatever.
I think we must think carefully with an open mind before we get carried away with the idea that $ may fall/collapse soon!!! We know that the US carries a high debt load. But so is every other country around the world. But the best thing about it is that Uncle Sam's debt is in its own dollar :)
I think the DXY is now is in an inflection point as we are about to enter into another RECESSION, potentially a global one. In all probabilities, if it is going to be a global issue, then the $ is likely to be in demand.
Another notable thing that you may already heard by now. Both the US M2 and M3 money supply is 'falling' - it is doing U-turn. If you look at the chart going way back, this has NEVER happened before, even in the previous recession/crises. As with basic economics, when supply falls, price goes UP.
So, lets keep this in mind in the coming months. We need to be careful in our trades and always listen to 'both sides of the coin'.
Good luck.
P/S : Do not just believe what I say. Use your common sense.
The great recession in the 80s was a double dip one that caused stagflation. As you know, it was caused by the energy crisis which lead to HIGH INFLATION. Today, we have the same HIGH INFLATION which was caused by Covid and then a war in Ukraine. Do note that this HIGH INFLATION scenario is WORLDWIDE and not just limited to US. I am sure wherever you may be living, we are all paying high prices now for whatever.
I think we must think carefully with an open mind before we get carried away with the idea that $ may fall/collapse soon!!! We know that the US carries a high debt load. But so is every other country around the world. But the best thing about it is that Uncle Sam's debt is in its own dollar :)
I think the DXY is now is in an inflection point as we are about to enter into another RECESSION, potentially a global one. In all probabilities, if it is going to be a global issue, then the $ is likely to be in demand.
Another notable thing that you may already heard by now. Both the US M2 and M3 money supply is 'falling' - it is doing U-turn. If you look at the chart going way back, this has NEVER happened before, even in the previous recession/crises. As with basic economics, when supply falls, price goes UP.
So, lets keep this in mind in the coming months. We need to be careful in our trades and always listen to 'both sides of the coin'.
Good luck.
P/S : Do not just believe what I say. Use your common sense.
Comment:
Comment:
www.bis.org/statistics/gli2301.htm
This is something interesting. This is global US$ credit to non-financial sector. It is still in an upward trajectory while Euro is showing signs of reduction. Let's say we are now entering a recession whereby $ flows will slow down as business activities drop. But $ debt would still need to be repaid. Think of the what will happen to the $ exchange rate!!!
I would continue to monitor the interest of the BIG players and follow. It would be wise to check the COTR every week!!!
This is something interesting. This is global US$ credit to non-financial sector. It is still in an upward trajectory while Euro is showing signs of reduction. Let's say we are now entering a recession whereby $ flows will slow down as business activities drop. But $ debt would still need to be repaid. Think of the what will happen to the $ exchange rate!!!
I would continue to monitor the interest of the BIG players and follow. It would be wise to check the COTR every week!!!
Comment:
This is where I get my COTR or CFTC weekly:
www.investing.com/ec...ative-positions-1611
www.investing.com/ec...ative-positions-1611
Comment:
Comment:
Here are two graphs that may be of interest to all:
fred.stlouisfed.org/series/WSHOMCB
fred.stlouisfed.org/series/WSHOTSL
They are MBS and UST held by the FED. It increases when the FED does QE and decrease when the FED does QT.
Notice that when Covid starts, the FED was doing a LOT of QE. If you compare it to DXY, you would also notice $ initially went down but by beginning of 2021 went UP a lot, in line with QE!!!
And if we pay close attention, DXY begins to fall sometime in 09/2022 when the FED start QT!!!
So, do you think later when the FED starts easing by cutting rates and doing massive QE, $ would rise or fall?
fred.stlouisfed.org/series/WSHOMCB
fred.stlouisfed.org/series/WSHOTSL
They are MBS and UST held by the FED. It increases when the FED does QE and decrease when the FED does QT.
Notice that when Covid starts, the FED was doing a LOT of QE. If you compare it to DXY, you would also notice $ initially went down but by beginning of 2021 went UP a lot, in line with QE!!!
And if we pay close attention, DXY begins to fall sometime in 09/2022 when the FED start QT!!!
So, do you think later when the FED starts easing by cutting rates and doing massive QE, $ would rise or fall?
Comment: