QUESTION: A latest evaluation by Allianz economists claimed that, ordinarily, when yields on Treasuries rise, the U.S. greenback strengthens as international capital pursues these greater yields. Nevertheless, the greenback weakened as yields rose. They mentioned that on this occasion, it “suggests major holders were not only selling Treasuries but also converting the proceeds into currencies – possibly reallocating to European markets.”
This doesn’t appear to be appropriate. It seems like an opinion. May you touch upon this, please?
Thank You
Greg
ANSWER: I feel lots of people fail to understand the stark distinction between the US markets and Europe. The NYSE is value MORE in complete capitalization than all of Europe COMBINED! The US shopper spending on a nasty day continues to be 25% of worldwide shopper spending. Europe accounts for $1.20 out of each $10 spent. Europe CANNOT be a reservoir for giant capital. It’s so socialistic, it’s a joke. We invented capital movement evaluation, and we’ve got the precise knowledge.
This concept will not be authentic about rates of interest and capital flows. That is the everyday tutorial principle they nonetheless educate in faculties at the moment. In 1927, that was the FIRST G4 assembly the place Britain, France, and Germany petitioned the NY Fed to decrease rates of interest in hopes that that will ship capital again to Europe. After they did that, it CONFIRMED that there was a debt disaster, and much more cash poured into the USA.
The Fed reduce charges within the US to assist Europe, and the markets continued to rise as capital flows into the US intensified. The cash was pouring into the US equities, and the Dow greater than doubled because the Federal Reserve raised charges from 3.5% to six%.
China has been lowering its holdings of US debt ever because the 2014 Ukrainian Struggle started and the Biden Administration threatened China with sanctions if it helped Russia. That is what I’ve spoken in regards to the BRICS is all about: geopolitical theater, not economics. China noticed eradicating Russia from SWIFT as utilizing the world monetary system as a geopolitical device. The Biden Administration was run by the Neocons, who don’t care in regards to the individuals or the financial system, solely their myopic need to destroy Russia.
BLOOMBERG
Bloomberg has crossed to the darkish facet of propaganda; They’re extra involved about hating Trump than they’re about reporting simply the information, ma’am. They reported:
“The rotation by investors out of American assets will go on for years if President Donald Trump persists with his global trade war.”
“The Trump administration has arguably opened the door for the country’s financial dominance to be challenged, with the dollar and Treasury bonds losing appeal in what may be a dire shift of fortunes for America. US equities also have been underperforming global peers this year amid fear that Trump’s strategy of tariff chicken will damage growth and stoke inflation.”
That is all primarily based on the Democrats’ propaganda through the 1932 presidential election. As I’ve mentioned, there isn’t a critical economist I’ve ever heard blame the Nice Despair on the tariffs, which didn’t come into impact till June 1930, they usually have been a response to Europeans elevating taxes 33 occasions after World Struggle I.
By the best way, Japan and China have additionally been dumping European Debt. With Europe pushing for World Struggle III, you must be insane to purchase European debt. European shares maintain the danger of capital controls, and you’ll not get your cash out when the primary bullet is fired.
So, persons are promoting US shares and debt and shifting to Europe as a secure haven? They should be the identical people who find themselves nonetheless driving alone of their automobile with a masks on to really feel secure.
