Global Macro Trading Journal
- Thread starter Daal
- Start date
Continent is in a recession, with much of it in severe recession - lower rates and a lower exchange rate are typical policy tools. I expect we'll get both eventually. Italy can't devalue, Greece can't, Spain can't. Europe can. If they want to hold this together, the ECB is going to have to let the currency go a bit. If they allow it to shoot higher, the stress on the system goes even higher, virtually assuring a collapse. Like I said, you've got the line to Brussels, I'll defer to you. I'm just happy to be break-even on the euro short after the fireworks this week.
Isnt the price of everything because of taxes and regulations?
Why does a gallon of gas costs 2 cents in Quatar? Why does a Vietnamese worker costs 1$ an hour?
Regulations...and taxes...no.
Anyway... The UK saw it's PMI drop of the cliff this week so unlike the likes of Hendry etc I don't see the gigantic benefits of being in controll of ones own currency really....
Wait another 10 years they say.
Ok. Let's.
Quote from ralph00:
Continent is in a recession, with much of it in severe recession - lower rates and a lower exchange rate are typical policy tools. I expect we'll get both eventually. Italy can't devalue, Greece can't, Spain can't. Europe can. If they want to hold this together, the ECB is going to have to let the currency go a bit. If they allow it to shoot higher, the stress on the system goes even higher, virtually assuring a collapse. Like I said, you've got the line to Brussels, I'll defer to you. I'm just happy to be break-even on the euro short after the fireworks this week.
well it is not that textbook easy...
the biggest net exporter in the world based on common currency is eurozone (and the countries closely linked to it) . I don't see why the global imbalances have to be made even worse (by devaluing EUR) to solve europe's problems. It is like saying China is slowing down we need to devalue Yuan...
Europe's problems are structural and they need to be solved within the common currency if it has to survive. If the Europe shows a will to do that EUR will strengthen due to global flows into EUR (and out of USD).
I am not a fan of lowering rock bottom rates either - there is no prove that it stimulates economic growth...and ECB has a single mandate on top of that.
that's all from me - i showed up only to warn gmst on his trade idea, i.e. not to discuss macro issues with a junior trader who keeps saying how good he is.
The U.K. PMI came in above expectations and I'm the last one that says being able to print currency whenever you like is a panacea - it's obviously not, as I've maintained on this thread for months. Hendry has been long short sterling forever and I'm sure very pleased with the position.
I'm not sure why you mentioned $10 gasoline in the first place, but if it was in context to the exchange rate, you were off base. While the majority of the gasoline price in the U.S. has to do with the actual price of oil, refining, and so forth, a much higher % in Europe has to do with taxes. That makes the euro exchange rate (short of a massive devaluation or revaluation) almost irrelevant in determining the price at the pump.
Divergences. Bring it on baby!
http://www.robertsinn.com/2011/12/02/divergences/
The end of the risk correlation trade is something all should be looking forward to.
http://www.robertsinn.com/2011/12/02/divergences/
The end of the risk correlation trade is something all should be looking forward to.
You don't see the benefits of a free-floating currency? You can't be serious?
It has benefits but so does a currency union.
A saver in Italy or Spain might have seen his savings devalue 50% overnight without the Euro.
I just think far to much emphasis is being put on the independent monetary policy VS being in a currency union.
Neither of them is a magical pill in any form.