http://www.zerohedge.com/news/2013-02-17/there-winner-currency-war
AMERICA SEEMS TO BE LOSING THIS WAR,,,
AMERICA SEEMS TO BE LOSING THIS WAR,,,
There Is A Winner In The Currency War
Submitted by Tyler Durden on
02/17/2013 20:21 -0500
With the G-20 (and G-7) concluding with what appears to be a slap on the
wrist and a wink-and-a-nod to Japan, it seems the game of competitive
devaluation will continue. Much pixel and ink has been spilled the 'potential'
winners and losers in such an evolving game, but as Bloomberg notes, there has
been one winner in the last 10 years each time the world has fretted over
"currency wars". As fear (and actuality) of currency wars flares, the
USD has borne the brunt of the buying. From 2004's JPYtervention to
Mantega's 2010 comments and each time in between, when competitive devaluation
is on the world's lips, then the USD is implicitly bid as the currency du jour
is offered to any and every willing carry trade riderthere is. The trouble is -
for the lowly US investor - each time the USD is bid, so the US equity
market has hit an FX-translated earnings hump and fallen back. So while
talking heads will exaggerate the nominal performance of Japanese and British
equity markets as their currencies free-fall, perhaps the US investor
should be careful what they wish for.
As the world's reserve currency, the effect of a devaluation of a non-reserve currency (i.e. everything else) is implicitly to put upward buying pressure on the USD...
and each time the "currency war" flare has occurred, this USD strength has led to notable US equity weakness...
so perhaps, all those 'interventionist' hopers should be a little more nervous about the apparent decoupling of the US market - as its rotation unwinds...
Charts: Bloomberg
As the world's reserve currency, the effect of a devaluation of a non-reserve currency (i.e. everything else) is implicitly to put upward buying pressure on the USD...
and each time the "currency war" flare has occurred, this USD strength has led to notable US equity weakness...
so perhaps, all those 'interventionist' hopers should be a little more nervous about the apparent decoupling of the US market - as its rotation unwinds...
Charts: Bloomberg
No comments:
Post a Comment