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 greater yields. Nonetheless, the greenback weakened as yields rose. They stated that on this occasion, it “suggests main holders weren’t solely promoting Treasuries but additionally changing the proceeds into currencies – probably 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 whole capitalization than all of Europe COMBINED! The US shopper spending on a foul day remains 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 circulation evaluation, and we now have the precise knowledge.
This concept is just not authentic about rates of interest and capital flows. That is the standard tutorial principle they nonetheless train in faculties at present. 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 lowering 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 folks or the financial system, solely their myopic want to destroy Russia.
For this 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 folks the narrative they agree with. That is by no means about information.
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 buyers out of American belongings will go on for years if President Donald Trump persists along with his international commerce struggle.”
“The Trump administration has arguably opened the door for the nation’s monetary dominance to be challenged, with the greenback and Treasury bonds shedding enchantment in what could also be a dire shift of fortunes for America. US equities even have been underperforming international friends this 12 months amid concern that Trump’s technique of tariff rooster will injury development and stoke inflation.”
That is all based mostly on the Democrats’ propaganda through the 1932 presidential election. As I’ve stated, 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 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 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 transferring to Europe as a protected haven? They should be the identical people who find themselves nonetheless driving alone of their automobile with a masks on to really feel protected.
