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The Most Important Takeaways From A Bad News Week
The bad news is... everything, really.
It's not so much that there's a "bull market" in doom and gloom. Well, there is. But that's always the case. The problem currently is that there's no good news to be had. It's all bad news. Literally. From the macro to the geopolitical to domestic politics to markets, there are scant few rays of sunshine.
Rabobank's Michael Every underscored as much on Wednesday in a characteristically rollicking daily called, appropriately, "more bad news." It was chock-
While king Dollar rides high, alternatives will emerge.
Spoiler alert: TINA
I decided not to quote “Credit and Liquidity Programs and the Balance Sheet” from the Fed but you can find it. The Bank of England has standing liquidity swap arrangements with the Fed. If this “Fed swap line” would have helped, the pound should not be depreciating so quickly. However the swaps are for three months and the unwind is at the same exchange rate. (“Dollar liquidity swaps have maturities ranging from overnight to three months.” “At the same time, the Federal Reserve and the foreign central bank enter into a binding agreement for a second transaction that obligates the foreign central bank to buy back its currency on a specified future date at the same exchange rate.”) Without constructive changes from the Liz Truss government, the crisis might be delayed but not avoided.
I hope traders in other currencies, especially the pound and the euro, realize the need tread very lightly. Our world already has enough chaos to go around.
I expect they are trying to do a Soros . . .
https://theeconreview.com/2018/10/16/how-soros-broke-the-british-pound/