QUESTION: A current evaluation by Allianz economists claimed that, ordinarily, when yields on Treasuries rise, the U.S. greenback strengthens as overseas capital pursues these larger yields. Nevertheless, the greenback weakened as yields rose. They mentioned that on this occasion, it “suggests main holders weren’t solely promoting Treasuries but in addition changing the proceeds into currencies – probably reallocating to European markets.”
This doesn’t appear to be appropriate. It appears to be like like an opinion. May you touch upon this, please?
Thank You
Greg
ANSWER: I believe lots of people fail to understand the stark distinction between the US markets and Europe. The NYSE is price MORE in whole capitalization than all of Europe COMBINED! The US client spending on a nasty day continues to be 25% of world client 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 stream evaluation, and we’ve got the precise information.
This concept shouldn’t be authentic about rates of interest and capital flows. That is the standard tutorial principle they nonetheless train in faculties right this 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 might ship capital again to Europe. Once 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 decreasing its holdings of US debt ever for the reason that 2014 Ukrainian Battle 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 want to destroy Russia.
This is the reason FOX Information or any mainstream information group would NEVER invite me as a result of I rain on their parade. That is all about feeding individuals the narrative they agree with. That is by no means about information.
BLOOMBERG
Bloomberg has crossed to the darkish aspect of propaganda; They’re extra involved about hating Trump than they’re about reporting simply the info, ma’am. They reported:
“The rotation by buyers out of American belongings will go on for years if President Donald Trump persists along with his world commerce battle.”
“The Trump administration has arguably opened the door for the nation’s monetary dominance to be challenged, with the greenback and Treasury bonds dropping enchantment in what could also be a dire shift of fortunes for America. US equities even have been underperforming world friends this yr amid worry that Trump’s technique of tariff hen will injury development and stoke inflation.”
That is all primarily based on the Democrats’ propaganda throughout the 1932 presidential election. As I’ve mentioned, there is no such thing as a critical economist I’ve ever heard blame the Nice Melancholy on the tariffs, which didn’t come into impact till June 1930, they usually had been a response to Europeans elevating taxes 33 instances after World Battle I.
By the way in which, Japan and China have additionally been dumping European Debt. With Europe pushing for World Battle III, it’s important to be insane to purchase European debt. European shares maintain the chance of capital controls, and you’ll not get your cash out when the primary bullet is fired.
So, individuals are promoting US shares and debt and shifting to Europe as a protected haven? They should be the identical people who find themselves nonetheless driving alone of their automotive with a masks on to really feel protected.
