Watching USD -v- AUD – and the USD definitely has a few problems – okay more than a few – and whilst the U.S. has a government – as dysfunctional as it now is – their inability to implement economic changes – will allow the USD to drift lower and investors would prefer Euro – stocks and/or real estate – to attempt to offset losses.
Nothing will change until demand increases – and as I have mentioned in a prior article I anticipate this mid to late March 2018.
In the meantime – a renewed currency war?
Japan does not like the Yen strengthening and are looking to discount its value in relation to the USD – so watch that space.
Maybe action will be taken – and maybe not – but that depends on whether the Euro maintains strength and Draghi pulls his head in and allows that strength to continue – but this will be to the detriment of Germany.
Remember that ‘might is right’ and as a strengthening Euro will have ramifications for the German manufacturing and export markets – it will be interesting to see how they respond.
Yes folks – as the USD slowly self destructs – with the wishes of Trump – as he favors both low interest rates and a low U.S. dollar – then we have a problem throughout the world.
There has to be that offset – a natural balancing amongst all currencies – to the depreciating USD value – and that is simple basic accounting.
In looking at all data I was particularly interested in the Australian economic statistics – and no not the OECD Australian forecasts – which I highlighted in a prior post – that is real fairytale stuff.
This is that chart – a tad too optimistic?
The real story is in the Australian Bureau of Statistics data – but in previewing these figures I was taken aback by inclination of this government agency to gloss over problems – to ‘guild the lily’.
A classical example is shown here:-
Over the past ten years all State Governments have been selling off the State Infrastructure Utilities to balance the books – disposing of taxpayer funded assets to meet operating costs.
Note that the majority of these utilities are now private and/or private companies or offshore sovereign funds – their presence has seen a horizontal growth covering acquisitions to cover supply of electricity – gas – solar.
That impact is felt in the current GDP figures – which technical makes a mockery of the situation – as these asset purchases are recorded for GDP purposes but the corresponding sale is not.
The impact on the GDP – huge.
In other words – if one deducts the largest increase to the Utilities contributions for the quarter a – far greater GDP deficit would have been recorded.
Investors rely on this data – and they do not drill down to the nitty gritty – as it would be obvious that whilst the expense in acquisition is recorded – subsequent profits will no longer remain in Australia – and should costs increase in either Interest or wages the net effect will be increased consumer costs for essentials.
So how does one reconcile the sale of these Utilities – which has increased direct costs to the consumer?
Then the cost of rent – dictated by the value of Australian real estate – which is – in my opinion – in a bubble with the medium prices of real estate in Sydney and Melbourne – the two highly populated cities – currently being around $1.5million.
Any real estate investor would be demanding a reasonable rate of return on these investments to cover – annual costs and an investment interest return – which is compounded by increase local council rates and taxes.
Yes local councils have to increase wages for labour in line with the minimum wage set.
This therefore has consequences – and who bears the brunt of these increases?
Technically it does not matter – whichever body – owner or renter – has to bear the cost and increased payments required from ones ‘net disposable income’ – so the never ending upward spiral of diminishing returns from labour diminishes.
Simple – ignore it – as does the ABS – and continue with the incorrect indicator – net disposable income per capita – that has a direct correlation to the inflation rate.
Yes the minimum wage is adjusted for the inflation rate – which therefore can only increase year on year.
So be it – GDP distortions through sale of utilities and the continuing happy happy feeling of knowing that ‘Enhanced Living Conditions Have Increased’ over the last ten years – no disclaimer – as to the crazy methology of tying an ever increasing minimum wage – ignoring the higher hidden costs associated with the consumer basic requirements of rent and utilities.
But there is more – exports of raw materials have increased.
Therefore – whilst the country has an unsustainable debt load – both governments and individuals – then income foregone from utilities plus an ever increasing rent cost – the fairytale on the Australian economy continues – to the detriment of manufacturing – which will suffer as cost competition from cheaper imports rise.
Will investors consider these points when they invest into AUD?
Nope – they don’t care – as Australia is seen as a ‘safe haven’ for currencies – and away from foreign country conflicts – most reliable of all raw material exporting countries – together with Canada – to maintain stability.
The interesting point though – is should a currency war erupt – then how low is the Reserve Bank of Australia prepared to cut interest rates?
The country can ill afford to stand back and accept the deflationary pressures associated with either Japan or China depreciating their currencies.
Obamacare repeal – another attempt and this time it was John McCain alone – who TrumpD the repeal and replacement. It is all a game people – there can be only one winner and as demonstrated by McCain – doesn’t matter whether you are a hypocrite – to the victor the spoils.
USD – while overnight – before the vote – the USD started to gain some traction against other major currencies – another dump once McCain had finished voting.
That is all folks – Trump’s situation will not change while the swamp creatures are allowed to continue to manipulate all and sundry.
Trump cannot initiate anything – although he is POTUS – he has the power – he is not exercising this power for a reason – and that is the big question – what do they have?
In the meantime I have received a fair few complaints and referrals to the mainstream media coverage of the ‘Russian Did It’ congressional investigation and to the fact that we are all conspiracy theorists – even quoting NYT and CNN on that point.
It can only be a conspiracy it there are NO FACTS – and on Fusion GPS and the Trump Russia Dossier – try reading or listening to something else – other that left wing controlled media organizations. In fact try reading evidence submitted to the Congressional Inquiry.
Yes I know – all too hard for snowflakes…..
I kid you not – take 20 minutes and watch the video.
Now I aware that Imran Awan was arrested for wire fraud a few days ago – but this story is absolutely huge – and implicates all Democrat politicians in Congress and the Senate.
The truth may never come out and the perpetrators will no doubt walk away with a slap across the wrist – why?
1. His attorney is non other than the Clinton Foundations attorney.
2. The prosecutor is the brother of his employer Debbie Wasserman Schultz.
3. The FBI has no intention of investigating this matter as McCabe – current director of the FBI – has links to the democrat party – and Hillary Clinton – and his wife has received USD650,000 from the Clintons – which was not disclosed by McCabe when he was the Deputy Director of the FBI.
The corruption in the U.S. Intelligence Agencies is huge – this is the tip of the iceberg.
Obama ensured that all posts available were filled by politically motivated people – so any investigation of corruption is slow tracked – or evidence is destroyed.
Anthony Weiner’s – an ex congressman – his arrest and his seized laptop contents are an import issue – as these point directly to Hillary Clinton’s corrupt practices – Awan Brothers are the ‘trusted’ employees of Anthony Weiner – yet everything buried.
So a President elected on 70 percent of the registered voters in the United States is treated like a ‘piece of shit’ – by all and sundry throughout the globe – exception of course to the 70 percent of American voters – who actually voted for Trump and are fed up with the corrupt politics.
Trump is hamstrung to appointments in his Administration – as the Republicans and Democrats – the USU – United States Uniparty – defy logic and delay – defer and procrastinate on the 1,100 Trump appointments listed in the Plum Book.
From memory only 37 appointments to date – and I can assure readers that these appointments are not beneficial to Trump – nor his administration.
As I understand it Wray may be approved as the Director of the FBI – which in my view is no better or worse than Comey.
So the Republicans control Senate and Congress – but are happy to subrogate themselves to the Democratic Party and the deferment of appointments – as they are against the President and his policies.
So Trump cannot in reality do anything – the economy is flailing and Obamacare destroying individual State’s economies – whilst the Republicans bleated about repeal and replace over the 7 years of Obama – they cannot separate vested interests from the public interests.
It is not Trump that is the laughing stock of the world – it is the self interests of both the Republicans and Democrats – the neo conservatives and the big pharmaceuticals – in their attempt to dethrone this outsider.
So nothing will be done to fix the U.S. economy – and nothing will be done to address the fiasco that is Obamacare – therefore we look at the almighty dollar.
The inability of the U.S. Lawmakers to repeal and replace Obamacare – saw the U.S. Dollar dive – sunk to new lows – so it is obvious that those with capital are fully aware of the implications for America and Americans.
Janet Yellen is caught between a rock and hard place – she is in a conundrum – as is all members of the Federal Reserve – they are ignorant – as to the impact that their decisions have on the stock market and capital flows – their intent to lift interest rates to what could be described as normal – has fallen apart by mere statistics – economic statistics.
Yes the U.S. Economy is not all that great and the boost required by Trump infrastructure spending and savings within the Government and quasi government bodies – would have seen a much needed moral boost to the GDP and employment – instead we have ridiculous reforms proposed by the Republicans – who hold power and continued funding of all Democratic government initiatives and quasi government bodies implemented by Obama.
It is all languishing – jobs numbers increased overall – but individual earnings slumped – this is a sign of worker desperation – from all quarters – to take whatever is on offer to make ends meet – and having the ridiculous Obamacare levies being increased – painful to all and sundry.
So we now have we have the painful ‘wait and see’ period.
Yellen waiting to see whether things improve or not – I predict ‘not’ – as Yellen is clueless – she will take her queue from the Bond and/or the stock market – as all other Government statistics dive and the last thing she needs is a further Quantitive Easing – especially when the Federal Reserve Balance Sheet is bloated with dead assets that she is seeking to offload.
So the USD to tread water between now and the end of March 2018 – when Yellen will have to intervene into either Bonds – through either negative yields – as investors bail – or the rise in the stock market valuations – through the need of U.S. Dollar investors to seek value protection in real assets – to offset the continued USD continued weakening.
Mind you all of this is useless should Trump invade North Korea – or war declared in the Middle East – one never really knows with the U.S. rogue intelligence agencies running amuck – anything is possible.
And I thought that I would insert this collage from the Daily Mail against Trump – no respect whatsoever for the position – no let up – in that a continual barrage of fake news – as too New York Times – CNN – MSNBC.
What would a lesser man do?
And no – he is a war criminal as were his predecessors – in fact he has managed to kill 350 people – for every month he has been in office.
In a move that reflects his interest in working with Russia – President Trump has decided to end a covert CIA program supporting Syrian rebels fighting President Bashar al-Assad.
Now I wonder how Senator John McCain feels about this – as his illegal Bulgarian weapons plant can no longer ship – under diplomatic immunity – weapons and white phosphorus to the terrorists in the Middle East.
Wonder if this was the cause of his blood clot?
A temper tantrum causing a busted vein…..do not worry though folks this neo con apparently has brain cancer and that may explain his weird actions for the last fifty years.
Yes one Sen. John McCain – Good Bye – Good Riddance.
So what is Trump to do now?
An alleged chlorine gas attack by Syria – as reported by Reuters.
And if you believe this shit then you would believe anything.
Mind you the Americans have no problems using illegal phosphorus bomb attacks within Yemen Iraq and Syria.
This is a mad mad world – and it does not take much now to start a war.
The question is – will the United Nations convene and declare war on Syria and Iran and Russia?
Yes they are that stupid!