Is the breakout in the USD today going to continue?
Chris Temple joins us to wrap up the markets with a focus on the technical breakout in the US Dollar today. Finally moving above the 200 day MA and 50 week MA if the dollar can hold above these levels for the rest of the week we could be in for continued strength through this month and possibly all of summer.
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Helicopter Ben..
That’s likely a part of the story
Thanks to the race-baiting president, the murder of policemen continues.
Re-introduction of Glass-Steagall as Trump seems to want, being discussed at Republican Convention will kill the wounded banking system. We are probably at the point of needing some other kind of reform.
Certainly we need a fix/regulation reform for derivatives.
Alas, the US bureaucrat seem too stupid by far to even understand the problem; let alone design a solution.
My iPad likes to correct plurals and ed on the end of words, and I often don’t notice, sorry.
I don’t think Renzi has set the date for the Italian Referendum yet.
He is rightly scared of the results. However, it seems to me power must be devolved to the regions or risk a break up of the country.
The expected date for the referendum was in October, so this could give a measure for timing the first black swan event in Europe.
From Dent email:
Forget Brexit!!
Europe Has a MUCH Bigger Problem
By Harry S. Dent Jr., Senior Editor, Economy & Markets
The Dow dropped nearly 1,000 points (5%) and the London FTSE dropped 10% after the Brexit vote surprised the markets on June 23. After two days though, markets were marching back up again.
That’s just like markets on “crack!” They react to political events, but totally miss the fundamentals.
Yes, Brexit is important. Years from now it will be recognized as the beginning of the end for the great Eurozone experiment.
It isn’t just about the renegotiations on trade agreements with Britain and initial slowing of GDP. It’s also about the threat that more countries will choose to exit the economic bloc. The euro and Eurozone have 40%-plus unfavorable ratings in polls in France, the Netherlands and Italy. That many areas within countries will break free of their overlord. And then this rush for nationalism will spread across the globe like wildfire.
But here’s the 800-pound elephant in the room (I talked about this in detail in the February issue of The Leading Edge). The one Wall Street seems blind to at the moment…
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Italy is the next Greece!
It’s bad – non-performing bank loans have risen to 18%.
At 10%, most banks are technically bankrupt. That’s the percentage of capital and pledged deposits they have against bad loans. Our pledged deposits, not theirs.
At 18%, they’re no longer “technically” bankrupt. They ARE bankrupt!
Greece still has bad or non-performing bank loans of 34%, Ireland 19% and Portugal 12%. And we haven’t seen the next serious financial crisis yet.
Yet nothing has been done to seriously restructure debt in southern Europe. The EU just bailed out Greece to stop the dominoes from hitting other countries. They’re pumping in heavy doses of QE to keep the banks and economy temporarily liquid and solvent.
But the problems are growing even worse. The blood is getting harder to hide…
Just look at Deutsche Bank. It had its largest loss in history in the fourth quarter of 2015: $7 trillion, without any help from the next financial crisis!
Its stock is now down 89% from its early 2008 high, and 62% from its 2015 high.
See larger image
It’s the largest bank in Germany.
Why is Wall Street ignoring this!?
UniCredit is the largest bank in Italy. Its stock is down 94% since the 2008 high, and 71% since its 2015 high.
Banca Carige, another major Italian bank, is down over 99% from its high in 2008.
HSBC in the UK lost 15% since Brexit, while the Royal Bank of Scotland dropped 40% and Barclays bled 41%.
Investors in these stocks are suffering tortures no investor should ever endure. And there’s more pain to come.
Depositors in these banks are willingly settling their heads into the guillotine!
But here is the worst part…
To raise capital after the 2008 global financial crisis, Deutsche Bank issued CoCo bonds. They didn’t want to dilute their shareholders or their senior bond holders, so they issued a new B.S. bond that ranked just below senior level. But – and this is a pretty significant “but” – the 6% coupon only gets paid if the bank has sufficient cash flow… and any missed payments don’t have to be made up. If they continue to miss payments, the bonds get converted to stock. And there’s nothing the bond holder can do about it!
These should have been called Coo-Coo, not Co-Co, bonds!
The yields have now spiked above 12% and the bonds have been devalued substantially already…
And again, we haven’t even seen the next real financial crisis yet.
If Deutsche Bank is in this much trouble, you know many other major banks are.
Before the Brexit vote, most of these guys were trading at well below book value, while the broad markets trade at 2-times-plus book value. Italy’s Banca Carige is trading at just 3% of book value. Citibank is at 54%, Spain’s Banco Santander is at 58%, Deutsche Bank is at 59%, Credit Suisse is at 63%, and HSBC is trading at 69% of book value. Since then, they’ve gotten worse.
And the bank with the highest exposure to the most leveraged and toxic of all assets – credit default swaps (largely mortgage derivatives) – is Deutsche Bank! It holds 10% of this $550 trillion nuclear bomb. Not billion. Not million. Trillion!
At 10%, that means Deutsche Bank has $54.7 trillion credit default swamps on its books. JPMorgan isn’t far behind, with $51.9 trillion. Citibank has $51.2 trillion, Goldman Sachs has $43.6 trillion and the Bank of America has $27.8 trillion.
Markets should be much more worried about the coming default in Italy.
They should be much more worried about the largest banks in the world failing… and they will fail.
Yet they seem more concerned about political factors like Brexit, or when Janet Yellen will raise the fed funds rate 0.25%.
Investors are going to get their asses handed to them.
Mark my words: a major collapse is bearing down on us. Don’t be among the blind investors flattened when it arrives!
Already posted in this forum days ago.
and Dent is wrong about Brexit. It is irrelevant for timing estimation.
(which is what I am trying to get a handle on.)
I question Dent’s wisdoml
Close Update: Dow Extends Winning Streak, but Nasdaq, S&P Weighed Down by Fatigue, IMF, Mixed Earnings
04:35 PM EDT, 07/19/2016 (MT Newswires) — Stocks were mixed at Tuesday’s close with the Dow buoyed by upbeat earnings from component stock Johnson & Johnson (JNJ), but Nasdaq closing lower for only the second time in ten days as a result of losses in the technology and healthcare sectors.
The blue-chip index struggled to stay positive for most of the day as lower oil futures, technical resistance into 18,600, and a downgrade in global growth from the International Monetary Fund was blamed for potentially halting a seven-day rally.
This morning’s housing market data was briefly supportive as both housing starts and permits beat Wall Street expectations. The Dow opened higher but could never convincingly pierce the 18.600 level that has capped the upside for four straight days. The Nasdaq and S&P 500 remained defensive from the open, with the Nasdaq weighed down by disappointing results from Netflix (NFLX) and all ten S&P 500 sectors trading negative.
In Europe, the recent rally in equities came to a halt in reaction to a significant deterioration in the ZEW index measuring economic sentiment. The German ZEW fell to negative 6.8 in July from positive 19.2 in June, while the EU ZEW plummeted to negative 14.7 from positive 20.2 in June. Both indices measured economic activity after the June 23rd UK referendum and reflect considerable investor pessimism. Coupled with selling pressure on mining stocks exacerbated by a disappointing production update from Rio Tinto (RIO), Euro-zone bourses closed in the red, while the FTSE-100 barely closed in the green.
I apologize Paul L, if my post above sounded angry.
I am listening to National Public Radio coverage of the Republican convention and the Commentators are so left wing biased it really annoys me.
My kids were watching the convention last night and I got home late thinking they were watching Saturday night live reruns and they laughed it is the real.
Americans are like Canadians as dumb as a brick wall, they want change but when it confronts them they criticize anything that hasn’t been the status quo for a long time.
DT ….I THINK YOU ARE ON TO SOMETHING
Ohio just changed their colors.
Trump. ..
1725
Ryan ….mumbo jumbo…..
Ryan — Eddie Munster half-grown up
Funny.good one
Big Owl loves him.
Ryan..USA….USA….USA
I grew up about four miles from The American border our family was middle class in those days but we were envious of our cousins who lived in Michigan only a few more miles away. They had everything, the new cars that rolled off the assembly lines, the best of housing and food, why because The US allowed business to be operate in an open society that was unfettered. We couldn’t get a drink on Sunday and our industry only existed because we were next to a powerhouse. Now look at the change, Canada does not have a dynamic society but our standard of living has gotten better because the restriction’s on American industry has driven factories here and in Mexico. We have improved our technology but without The US we would still be the mouse that roared. America wake up and look at what you have done. Canada needs a strong partner with leadership, and The US has forgotten what made it great.
Ditto America has been aleep,thinking we were ok, and safe with a gov’t that cared
Only the kids are awake
Lady and gentleman.
Alaska..37b…..read the rule
Donald is the man…..Mitch jobsMcDonald needs to get a real job
Indiana..Mike sound man,cut taxes
8 year old fights for her life in Southern France after being stabbed with her mother and two sisters because they were too scantily dressed. How dare they wear shorts and T-shirts!
The perp was sexually offended by an 8 year old.
What kind of books is he reading?
Trump’s in Ryan will soon be gone.
Time…for term limits
OFF TOPIC:
A short video discussing racism with some correct statistics
https://m.youtube.com/watch?v=LK3ZpFyQ8Fg
DXY may reach 100. But that’s it. The long term prospects of the USD is lower.
How can the long term prospects be lower, when the yen and euro have such far worse structural financial issues?
Exactly Chris……exactly.
Read about the self-serving rot that permeates the Obama Injustice Departments.
Be sure to include the “read more” section.
Great comments in today’s interview Cory and Chris. Always appreciate you guys ideas and thoughts.
Turd C. Hemke at Usawatchdog
http://usawatchdog.com/financial-system-held-together-with-bailing-wire-chewing-gum-craig-hemke/
The SGE has the price of silver held at $20.01
The COMEX is getting knocked down hard, but now the SGE is closed it is possible the $20.01 price their will pull the COMEX price back up as it has the last couple of days.
There not their! My mistake.
Likewise the SGE has gold at $1334.78
Will the difference pull the COMEX price back up?
If you are going to talk the USD, you must reference interest rates.
It’s a currency and interest rate war.
Been awhile since anyone mentioned that.
We are in a currency war, as we all know the next step is trade war then a hot war.
I wonder how negative rates can actually go.
For anyone interested this is Ben Carson informing people that Hillory figures Lucifer is a pretty neat guy.
At the Republican national convention no less. lol 5 mins.
But is anything real anymore?
Last time that Japan actually formally announced more QE the Yen went up in value.
As did gold)
Mosquito carried Zika arrives in Florida.
The move in the dollar was engineered in Japan. The real question is whether it was the consequence of Bernanke’s visit.