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Oil Producer’s Currencies Are Collapsing As Brent Breaks Below $40
Oil Producer’s Currencies Are Collapsing As Brent Breaks Below $40
Just when traders thought the bottom was in…
As Reuters notes, with lower oil prices likely to add to global deflationary concern and Chinese data doing little to improve sentiment, risk appetite remained fragile.
The Canadian currency fell 0.4 percent against the U.S. dollar, to C$1.3555. That was the U.S. dollar’s strongest level since mid-2004.Similarly the Norwegian crown fell a six-week low against the euro.
“If you are looking to play weak oil prices, you would want to sell the Canadian dollar and the Norwegian crown,” said Jeremy Stretch, head of currency strategy at CIBC World Markets. “With oil prices falling and some even talking about oil falling to $30 a barrel, revenues for these countries will take a beating and hence their currencies will remain under pressure.”
The Australian dollar fell 0.6 percent to $0.7220 AUD=D4 as this week’s tumble in iron ore and the latest Chinese data weighted on the currency’s woes.
Citi recommended that investors sell the Aussie through options. “The weakness in the Chinese economy will spill over to Australia through commodities demand as well as reduced demand for the Australian dollar via reserves and other channels. This should leave it vulnerable to an eventual leg higher in the dollar,” they said.
Charts: Bloomberg
With the oil price collapse accelerating (Brent just dropped below $40 for the first time since Feb 2009), the currencies of major oil-exporting nations – such as the Canadian dollar and Norwegian crown – are plunging…
America to Collapse As Dollar Dies: “You Cannot Stop What Is Coming… 25 to 50 Million Dead in 90 Days”
America to Collapse As Dollar Dies: “You Cannot Stop What Is Coming… 25 to 50 Million Dead in 90 Days”
A collapse is coming… but not as quickly as many are expecting.
There are many people high up in the power structure who not only see an end to the dollar coming soon, but an economic collapse that could trigger the death of tens of millions of Americans – rendered vulnerable by the lack of services and the stopping of checks, and harmed by the resulting looting, starvation and violence that is likely to occur.
According to an anonymous source who claims to have high level insider sources, everything from the power grid to the grocery store, to the government assistance checks that huge portions of the country depend upon will simply not be there. The result is pure chaos, tragedy and destruction.
That source is “V, the Guerrilla Economist,” who spoke to USA Watchdog’s Greg Hunter after the dire prospect of collapse:
China and others are positioning their currencies to rise with the demise of the petrodollar, which is based around U.S. military hegemony around the world – an empire of illusion that cannot last, and is under threat by the trend of foreign affairs. A global basket of currencies is expected to replace the dollar, but in the meantime, the dollar may become worthless, and people who have no plans or preparations may starve.
“V” claims that an economic crash will not come this year. Instead, it will come in the next two years to 30 months, in the wake of the end of the reign of the dollar. America may become a tragic repeat of the Weimar Republic, as other superpowers (namely, the BRICS nations) fill the void of the once-mighty United States.
…click on the above link to read the rest of the article…
Turkey Arrests Journalists, Sets Up Terrorist “Tip Line” As Currency Plunges, Violence Escalates
Turkey Arrests Journalists, Sets Up Terrorist “Tip Line” As Currency Plunges, Violence Escalates
Last month, Turkey’s central bank had a chance to give the plunging lira some respite by preempting the Fed and hiking rates.
Only they didn’t.
And not only did they not hike, they made it clear that tightening would only occur once the Fed tightened and then made matters immeasurably worse by proceeding to stumble through a “roadmap” of how they planned to deal with DM policy normalization. That, combined with political turmoil, an escalating civil war (and yes, that’s what it is), and pressure on EM in general has led directly to further weakness for TRY:
We bring this up because Turkey, like Brazil, is a country to keep an eye on and not only because of the prominent role it will ultimately play in deciding the fate of Syria’s Bashar al-Assad, but because much like Brazil, things seem to get worse by the day both economically and politically. Take Thursday for instance, when inflation came in hot, prompting Goldman to suggest that the central bank had indeed missed its window. Here’s Goldman:
Headline and core inflation accelerated sequentially in August, on broad-based price increases. This trend will likely continue, as renewed exchange rate weakness passes through to domestic prices in the coming months, and food disinflation loses momentum. We continue to forecast end-2015 CPI at 8.2% but with moderate upside risks.In our view, the CBRT may have missed an opportunity to start normalising/simplifying its policy framework by keeping all policy rates unchanged in the August MPC meeting. This raises the risk of earlier and more aggressive rate hikes than we have been forecasting. We reiterate our long-held Conviction View to own Turkey protection, through 5-year CDS spreads.
And a bit more from Credit Suisse:
We are revising our headline inflation forecasts higher. Following the lira’s depreciation in August and the recent upside surprises to food price inflation, we are revising our end-2015 inflation forecast to 8.6% from 7.8% previously and our end-2016 inflation forecast to 7.4% from 7.2% previously.
…click on the above link to read the rest of the article…
Venezuela Increasingly Looks Like A War Zone
Venezuela Increasingly Looks Like A War Zone
Over the years, we have repeatedly poked fun at the transformation of Venezuela into a “socialist utopia” – an economy in a state of terminal collapse, where the destruction of the currency (one black market Bolivaris now worth 107 times less than the official currency’s exchange rate) and the resulting hyperinflation is only matched be barren wasteland that local stores have transformed into now that conventional supply chains are irreparably broken.
Just this past Wednesday we showed a clip of what is currently taking place inside Venezuela supermarkets, noting that “the hyperinflationary collapse in Venezuela is reaching its terminal phase. With inflation soaring at least 65%, murder rates the 2nd highest in the world, and chronic food (and toilet paper shortages), the following disturbing clip shows what is rapidly becoming major social unrest in the Maduro’s socialist paradise… and perhaps more importantly, Venezuela shows us what the end game for every fiat money system looks like (and perhaps Janet and her colleagues should remember that).”
Unfortunately, while mocking socialist paradises everywhere is a recurring theme especially once they have completely run out of other people’s money to burn through, what always follows next is far less amusing – completely social collapse, with riots, civil war and deaths not far behind.
That is precisely what the video shown below has captured. In the clip, a demonstration against Venezuela’s poor transportation services quickly turned violent. End result: one person dead from a gunshot wound, more than 80 arrested and four shops looted on the Manuel Piar Avenue in San Felix.
What is most distrubing is how comparable to an open war zone what was once a vibrant, rich and beautiful Latin American country has become.
…click on the above link to read the rest of the article…
Why the Bank of Japan Can’t Stop a Sudden Collapse of the Yen
Why the Bank of Japan Can’t Stop a Sudden Collapse of the Yen
On Friday morning in Tokyo, the Nikkei stock index was up again, at 20,600, highest in 15 years. Since “Abenomics” has become a common word in December 2012, the Nikkei has soared 128% on a crummy economy, terrible government deficits, and an insurmountable mountain of government debt. This 10-day run of straight gains, or 11-day run if Friday plays out, is the longest glory streak since February 1988 when Japan was in one of the craziest bubbles the world had ever seen.
The subsequent series of crashes had the net effect that the Bank of Japan became engaged in propping up the stock market not only by pushing interest rates to zero and dousing the market with money via waves of QE, but also by buying equity ETFs and J-REITs.
Prime Minister Shinzo Abe has made asset-price inflation his top priority. Under pressure from the BOJ and the government, state-controlled entities – such as the Government Pension Investment Fund with ¥137 trillion in assets – are dumping Japanese Government Bonds into the lap of the BOJ and are buying stocks with the proceeds.
Foreign hedge funds have jumped into the fray, which is the hot money that can evaporate overnight. But fear not, every time the Nikkei drops 100 points or so, the BOJ starts buying, or creates the perception that it’s buying, and within minutes, stocks shoot back up. It’s part of the BOJ’s relentlessly communicated policy to inflate asset prices come hell or high water.
And hell or high water may now be on the way.
Ultimately, monetary policies hit the currency. So the yen has sagged about 35% since Abe took over. On Thursday in Tokyo, it hit ¥124.3 to the dollar, the lowest since December 2002. Friday morning, after some jawboning by the government and the BOJ, it recovered a smidgen.
…click on the above link to read the rest of the article…
Ukraine Enters The Endgame
Ukraine Enters The Endgame
Back in March 2014 we forecast that it in the aftermath of the US State Department-sponsored military coup in Kiev, it was only a matter of time before Ukraine (all of its sovereign gold having since “vaporized“) succumbed to full blown hyperinflation and economic implosion. Less than a year later, precisely this outcome has finally played out, and as a result, the entire nation has finally entered its economic endgame, one which has two conclusion: either it joins Greece in becoming a ward of Europe (of which it is not an official member) and the IMF (thank you Joe Q Public taxpayer), or it quietly fades away into insolvent “failed state” status.
This is in a nutshell the assessment by Goldman Sachs, presented below, which really doesn’t say much we didn’t cover earlier in “Ukraine Enters Hyperinflation: Currency Trading Halted, “Soon We Will Walk Around With Suitcases For Cash“, but which does lays out the (very unpleasant) alternatives for yet another nation brought to ruin through American neo-colonial expansion, in what may well be a record short period of time. Of these, the primary ones focus on yet another IMF bailout which the agency may find some resistance to as a result of the near-total collapse of Greece at the same time. And not only that but Goldman’s “base case of IMF fund disbursement in mid-March may not come quickly enough to stabilize the Hryvnia.” Oops.
…click on the above link to read the rest of the article…
The Swiss Franc Will Collapse
The Swiss Franc Will Collapse
I have worked to keep this piece readable, and as brief as possible. My grave diagnosis demands the evidence and reasoning to support it. One cannot explain the collapse of this currency with the conventional view. “They will print money to infinity,” may be popular but it’s not accurate. The coming destruction has nothing to do with the quantity of money. It is a story of what happens when interest rates fall into a black hole.
Yields Have Fallen Beyond Zero
The Swiss yield curve looks like nothing so much as a sinking ship. All but the 20- and 30-year bonds are now below the water line.
Look at how much it’s submerged in just one week. The top line (yellow) is January 16, and the one below it was taken just a week later on January 23. It’s terrifying how fast the whole interest rate structure sank. Here is a graph of the 10-year bond since September. For comparison, the 10-year Treasury bond would not fit on this chart. The US bond currently pays 1.8%.
Mass Murder, Widespread Starvation and Even Cannibalism Accompany a Currency Collapse | Dave Hodges – The Common Sense Show
As we race toward the end of the year, we all need to be asking each other if we have done everything that we can do to prepare for the impending collapse of the Federal Reserve Note, that we call the dollar?
Why would I ask such a ridiculous question? Simple, our economy is on the brink with our $18 trillion dollar deficit, our $240 trillion dollar unfunded liabilities (e.g. Social Security, Medicare), our negative national savings rate, the planned bail-ins of your savings accounts and of course, the mother of all debts, the estimated one quadrillion dollar credit swap derivative debt. With the full implementation of the free trade agreements, America has virtually no other source of revenue (e.g. tariffs) than the $2 trillion dollars of annual tax collection. The United States could spend every dollar, dime and nickel on these debts and not pay them off by the 50th century! An economic collapse is inevitable and it will come like a thief in the night. You will have virtually no warning from the MSM.
The collapse will be more massive than the 1929 crash! There will be no breadlines, no government welfare, no handouts, your pensions will be cut off as will your social security. You may or may not have a job to go to, but even if you do, who will cash your check. After the coming crash, our society will be reduced to trading and bartering one hand and thievery, murder and cannibalism on the other.
Russia says currency crisis over, but inflation set to soar | Reuters
Russia says currency crisis over, but inflation set to soar | Reuters.
(Reuters) – Russia said its currency crisis was over on Thursday but warned that inflation is set to climb above 10 percent, adding to the problems facing President Vladimir Putin’s government as it fights its worst economic crisis since 1998.
The ruble plunged to all-time lows last week on heavy falls in the price of oil, the backbone of the Russian economy, and Western sanctions over the Ukraine crisis that made it near impossible for Russian firms to borrow on Western markets.
But it has since rebounded sharply after authorities took steps to halt its slide and bring down inflation, which after years of stability threatens Putin’s reputation for ensuring the country’s prosperity.
Those measures included a hike in interest rates to 17 percent from 10.5 percent, curbs on grain exports and informal capital controls.
“The key rate was raised in order to stabilize the situation on the currency market. … That period has already, in our opinion, passed. The ruble is now strengthening,” Finance Minister Anton Siluanov told the upper house of parliament on Thursday.
If Wishes Were Loaves and Fishes | KUNSTLER
If Wishes Were Loaves and Fishes | KUNSTLER.
Janet Yellen and her Federal Reserve board of augurers might as well have spilled a bucket of goat entrails down the steps of the mysterious Eccles Building as they parsed, sliced, and diced the ramifications in altering their prior declaration of “a considerable period” (that is, before raising interest rates), vis-à-vis the simpler new imperative, “patience,” with its moral overburden of public censure aimed at those too eager for clarity — that is to say, the assurance that the Fed will not pull the plug on their life-support drip of funny money for the racketeering operation that banking has become.
The vapid pronouncement of “patience” provoked delirium in the markets, with record advances to new oxygen-thin heights. Behind all this ceremonial hugger-mugger lurks the dark suspicion that the Federal Reserve has no idea what’s actually going on, and no idea what it’s doing. And in the absence of any such ideas, Ms. Yellen and her collegial eminences have engineered a very elaborate rationale for doing nothing.
The truth is, they have already done enough. They have succeeded via their dial-tweaking interventions in destroying the agency of markets so that nobody can tell the difference anymore between prices and wishes. Coincidentally, it is that most wishful time of the year, especially among the professional money managers polishing their clients’ portfolios as the carols are sung and the champagne corks pop. Ms. Yellen should have put on a Santa Claus suit when she ventured out to meet the media last week.
Belarus In Full-Blown Hyperinflation Panic: Blocks News, Online Stores; Bans All FX Trading For 2 Years | Zero Hedge
“We have to do something with these Belarussian rubles,” exclaims one Belarussian as she shops to turn worthless rubles (BYR) into physical assets. As AFP reports, The Belarussian currency was dragged down by the slide of the Russian ruble last week, leading authorities to impose draconian measures, forbid price increases even for imported goods, and warn people against panic. Now, however, in an effort to stem the flood of hyperinflating domestic prices, authorities have blocked online stores and news websites to stop the run on banks and shops as people scramble to secure their savings. One of the blocked news websites noted, it “looks like the authorities want to turn light panic over the fall of the Belarussian ruble into a real one,” calling the blockages “December insanity.” And indeed they have stepped up the insanity:
- BELARUS HALTS OTC TRANSACTIONS IN FX UNTIL 2017: INTERFAX
Rouble collapse will be felt globally – Al Jazeera Blogs
Rouble collapse will be felt globally – Al Jazeera Blogs.
The Central Bank, trying as it was to catch a falling knife, had very little choice but to ramp up interest rates on Tuesday.
It’s attempt to stop the Rouble’s rapid descent, however, failed miserably. The currency has lost more than 50 percent of its value, which will lead to a crippling rise in the cost of imports.
Western sanctions have made their point: President Vladimir Putin will not get away with his annexation of Crimea and his meddling in Ukraine.
It is a heavy penalty for the Russian people. Many have taken out mortgages in dollars, meaning their repayments doubled in the last 10 months.
Gas giant Gazprom slipped out a statement on Tuesday saying it would fire up to 25 percent of its workforce – Gazprom employs in excess of 500,000 people.
But the West could also pay a heavy price.
More To Ruble’s Collapse Than Meets The Eye
More To Ruble’s Collapse Than Meets The Eye.
The ruble is dying, and fast. In what is now being dubbed ‘Black Monday’ the ruble’s value to the dollar dropped nearly 15 percent. Tuesday brought no respite and the ruble fell another 10 percent. The ruble’s collapse follows a similar – though by no means as extreme – slump in oil prices. Still, the Russian economy’s troubles are deeper than that and President Vladimir Putin will be hard-pressed to find an easy out. With a recession looming, state energy companies are struggling to stay afloat, if not directly contributing to the country’s woes.
On the year, the ruble has lost more than 55 percent of its value against the dollar, breaking psychological barrier after psychological barrier. Tuesday’s low of 80 marks a new record and harkens back to the period of hyperinflation that characterized post-Soviet Russia. Then, as now, citizens are seeing their material wealth disintegrate amid rising costs domestically.
Related: Sanctions, Oil Prices Push Russia Into Currency Crisis
Source: QZ
Putin Blames West for Russia’s Economic Crisis
Putin Blames West for Russia’s Economic Crisis.
MOSCOW—Russian President Vladimir Putin vowed Thursday to fix Russia’s economic woes within two years, voicing confidence that the plummeting ruble will recover and promising to diversify Russia’s gas-dependent economy.
Speaking with strong emotion and looking confident, Putin also displayed a defiant stance toward the West, which he insisted was still trying to destroy Russia.
Putin acknowledged that Western economic sanctions over Russia’s actions in Ukraine was just one factor behind Russia’s economic crisis, accounting for roughly 25 to 30 percent of the ruble’s troubles. He said a key reason for the currency’s recent fall was the nation’s failure to ease its overwhelming dependence on oil and gas exports.
As Putin spoke, the Russian currency was trading at 61 rubles to the dollar. That was slightly lower than last night but up 12 percent from the historic low of 80 to the dollar that it hit earlier this week. Russia’s benchmark MICEX index rallied by 5.5 percent by midday Thursday.
