Woke Up Got Out Of Bed, Dragged A Mouse Across My Desk … I read the News Today Oh Boy …
French Official:Obama Said Strong Dollar Is ProblemU.S. Official:Obama Didn’t Say Strong Dollar Was A ProblemWhite House Denies Obama Said Strong Dollar A Problem
The G-7 meeting in Germany certainly discussed the two major trade issues currently on the table: the Trans Pacific Partnership and the TransAtlantic Trade and Investment Partnership. President Obama has been fighting a major battle with Democrats and Tea Party Republicans to get Congress to pass a bill providing the president with Trade Promotion Authority (TPA). A sticking point for some legislators is the fact that some countries use currency manipulation as a tool of attaining trade advantages. These concerns about currency manipulation have given some of the opponents to TPA a way to openly block the two trade agreements by attaching currency manipulation amendments to the agreements, knowing that the signatories to the trade pacts will be opposed to any added riders by the U.S. President Obama MAY have commented that the recent strength in the DOLLAR or conversely the weak EURO and YEN were providing opponents to the trade agreements with political ammunition to block passage. So yes, in reference to this, President Obama may have remarked that the DOLLAR was a problem.B ut politics being politics and 2+2=5 in our world of global macro, we just don’t know.
However, this we do know: The EURO, SWISS, YEN retraced all their losses from the close previous to Friday’s unemployment data. (Even the Dollar Index closed today below Thursday’s close of 95.59.) There is no question that Friday’s jobs numbers were strong and provided a solid reason for the U.S. dollar to rally. Today’s market action is problematic for dollar Bulls because of strong data giving way to political concerns. I will caution that one day does not a trend make but it is important to be aware of price action contrary to market fundamentals. Also, in a breakdown of previous correlative action, a sharp drop in the dollar failed to provide for a SPOO rally as global equities were on the defensive all day. Some analysts believed that the strong rally in the EURO was due to a “positive resolution” on the Greek situation but that is not to be believed but merely to be more gibberish from the talking heads polluting the airwaves and broadbands.
In a story that ran on Sunday, the FT’s Stefan Wagstyl reported that “Germany’s Ruling Coalition Closes ranks on Greek Crisis,” in which it is alleged that even Chancellor Merkel’s Social Democratic coalition partners are tiring of the shenanigans of the Greek leadership. As the reporter notes, “With the opposition Green and far-left Linke parties still backing more aid for Greece, Ms. Merkel would almost certainly win a parliamentary vote on assisting Athens further. But a failure to keep her own troops in order would embarrass the Chancellor.”
It will not happen that Angela Merkel’s CDU members will oppose her for the G-7 Summit in Germany certainly revealed that Chancellor Merkel is the most powerful leader on the world scene. In a comic tragedy though, CDU member Detlef Seif conceded that Athens “could not reasonably repay its debt.” Herr Seif seemed to be adamant that “The EU IS NOT A TRANSFER UNION.”
Please, make note of this quote for it will come to the forefront over the next two years: “IF THE EU IS NOT A TRANSFER UNION ITS ENTIRE REASON FOR BEING IS CALLED INTO QUESTION. GERMANY MAY NOT BELIEVE IT IS THE TRANSFER AGENT BUT THE EU PERIPHERY AND GLOBAL INVESTORS BELIEVE IT IS SO. HOW ELSE CAN THE ULTRA LOW SOVEREIGN BOND YIELD BE EXPLAINED FOR THE ECB IS ONLY AS SOLID AS THE GUARANTEE OF THE GERMAN FINANCIAL SYSTEM. IF THE GERMANS FAIL TO GUARANTEE THE CREDIT STANDING OF THE ENTIRE EU PROJECT THEN THE GLOBAL FINANCIAL SYSTEM WILL BE IN TURMOIL” HERR SEIF
The EU is nothing but a transfer union until the GOOD BAVARIAN BURGHERS SAY OTHERWISE. Oh, about that dollar…