Information = Edge
We view the incoming coalition as openly hostile to the New Zealand dollar, all else equal, though Labour’s coalition lead is a moderating force compared with what would be the case if NZ First party leader Peters were fully in charge. This means risks increase notably for the kiwi dollar but not in an extreme fashion overnight.
Central bankers have flat lined risk and investors have crossed to the other side expecting nirvana & free money forever.
A major Bloomberg article gaining traction essentially lays out the case for why nothing matters anymore in risk asset markets. Just keep calm and buy the dip–and by dip, that means any dip you can find. No dip? No problem. Just buy anyways. Anything is better than getting left behind sitting in the dugout on a pile of rotting cash while passive index investors trot around the bases effortlessly.
The main driver of cryptocurrency demand, which we describe as “revenge of the savers,” is what concerns central banks, governments, and too-big-to-fail banking behemoths such as JP Morgan Chase.
USD is acting more like an injured EM commodity currency with political risk typically witnesses in developing countries, not a safe haven.
ECB dovishness only reinforces the notion of a central bank behind the curve with yield suppression reversal pressure mounting until the data begin to reinforce the jawboning.
Venezuela: a tragic reminder of the follies of political corruption, unjustified increases in money supply, and heavy handed actions by central planners to cheat basic economics.
Dominant Currencies Through History: Why USD is at Risk as a Reserve Currency and What Would Replace It
The types of existential threats which hampered the euro currency during the European debt crisis have largely receded for the time being.
China credit impulse with a 9 month lead is taking a dive.
The nuanced hawkish rhetoric shift by other advanced economy central banks recently, particularly from the RBA’s key commodity producer counterpart in the west, the Bank of Canada, was not imitated by RBA Governor Lowe.
What has been overlooked by most are the strong back-to-back personal income figures of 0.4% m/m in May and 0.3% m/m (revised from 0.4%) in April. While April was revised a tick lower, May’s rebound capped off an impressive two month gain of 0.7% in personal incomes.
Retail Industry Credit Risks Are in Dangerous Territory As “Taper 2.0” Approaches
Emerging markets are experiencing steady capital inflows and currency appreciation on a broad basis, with a few exceptions.
Inadequate Historical Valuation Measures and What Comes Next in This Monetary Bubble Investing Frontier
USD Soft Patch to Set the Stage for Another Grind Higher in Asset Prices and Interest Rates
