dollar demise or surprise?
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Dollar Demise or Surprise?. Presented by Jack Crooks President Black Swan Capital. Agora Financial Investment Symposium - Vancouver 24 July 2009. US$ Index - Where are we?. US$ Index/Commodities/EM Stocks. The dollar smile! Three scenarios!. Source: Stephen Jen, Morgan Stanley. - PowerPoint PPT PresentationTRANSCRIPT
Presented by Jack CrooksPresident Black Swan Capital
Agora Financial Investment Symposium - Vancouver24 July 2009
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Growth Risk Bid Surprise
Muddle through - IWP
Source: Stephen Jen, Morgan Stanley
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Major “green shoots” disappointment – rethink!
- Double-dip recession- China disappointment- Emerging market crisis
Capitulation out of EMMoney flow out of China European banking risk
Global Rebalancing
Hide in US Treasuries
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Overconsumption <=> Overproduction
CA Deficit Nations <=> CA Surplus Nations
United States <=> China
…an end to the symbiotic relationship!
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Potentially an end to the Export Model
Subpar global growth for years [Industrial production crushed for majors]
Heightened pain for emerging markets
Deflation the problem now, not inflation
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US-China Symbiotic Relationship Single Currency Zone Argument
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US-China Symbiotic Relationship Game Over?
Single Currency Zone Argument
Money Locked Inside the System
US Consumer Wealth Fading
Crunch
Cap Invest@ 45% GDP
Seemingly costless Chinese capital?
Property & Stock Bubbles
X
X
X
X
X
Chinese Government Explicit Stimulus
X
X
Forcing Asian Trade Partners to Adjust[China surplus up, but exports to West down]
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Source: Leto Researchwww.blackswantrading.com
Free Credit Credit Crunch
Lower CA Deficit Means US Requires Less Int’l Funding
Consumption Savings
Implicit Weak Dollar Policy
•50% 6-mo•$35T •Legacy•Non-bank
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Eurostat reports today industrial new orders in the Eurozone declined by 30.1% from a year ago. In Germany, the decline was 32.2%. This is the tenth consecutive month of sharp declines averaging above 30% per month. It seems that industrial contraction in Europe today is twice as bad as in 1929-1930. The fact that export powerhouse Germany leads the collapse raises questions about the euro, whose exchange rate is literally killing German manufacturing.
Leto Research, 7/22/09
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Front-end load infrastructure build $1.7 trillion spent in first half, in a $4 trillion
economy▪ Massive inefficiencies and excess capacity▪ Bubble Trouble…cap controls and fixed currency
▪ Stocks/Real Estate/Banking Lending
Demand slack and no exports mean… Rising unemployment = Social tension More consolidation of state power and
belligerence www.blackswantrading.com
Japan Creditor Superpower
1988 BOJ formula as US Current Account Improved1. Boost stock & property market2. Give buffer for export companies to turn inward3. Stock & property trigger wealth effect4. Stimulates consumers & residential investment
China Creditor SuperpowerUS Stock Market
Crash
Credit Crunch
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Commodities get whacked! 50% fall left?
Stocks tumble!The US dollar surges on another
major global risk bid!
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