Contrary to popular belief and expectation this rally is going to be epic. The market had stagnated for two years with no clear direction. The breakout either down or up was always going to be huge.

Now that the market has shot upwards there is no limit to the upside. Retail participation is still low after most of them got smacked during the GFC, when the crowd gets in on the action this bull run will beggar belief. Plus if Trump institutes tax cuts, repatriation of profits will add more fuel to it.

A hatrick of breakouts it is. Equities climb higher, dollar starts its rally and a bond sell off begins. As rates mean revert, the pain will be widespread. KE should completely forget about Euro bond 2.0 unless it is hellbent on suicidal action/borrowing.

As per usual, the PBoC takes advantage of global events to let the Yuan slide lower...currently at 6.81 vs its peg of 6.83. Its reserves have also tanked to 2011 lows. M2 to reserves ratio says there not enough CB ammo to put out the fire. A stronger dollar too suggests that the time to let the peg go has arrived on both ends of the trade.
http://www.bloomberg.com...s-since-january-turmoil

Pension Partners Rate Hike Odds:

Dec 16 - 86%
Feb 17 - 86%
Mar 17 - 88%
May 17 - 89%
Jun 17 - 93%
Jul 17 - 94%


With these kind of odds USD is aiming for infinity and beyond

$/yuan fix back at levels last seen in 2008. The USD pegs are facing tremendous stress. Will the $/riyal peg fold? That will be epic! Will OPEC survive?

I'm a novice when it comes to economics, so can someone please help me out with my thinking. Let me start off with a warning that this is a long post and my thoughts are all over.

Donald Trump has just become the next president of USA and looking at US/DXY the dollar has really surged, with experts warning us that we should brace for a strong bull under Trump. Looking at some of Trump's policies during the campaigns, i fail to see where real growth will come from.
1.) He definitely can't bring back manufacturing jobs from the likes of China and Mexico due to the low cost of production in those countries and even if he did they would become too expensive to export. We can therefore conclude that manufacturing expansion will be at a minimal.If he were to engage in trade wars with China, the US will be the victim as China is the single largest holder of US treasuries and if they were to damp them only God knows what would happen.

2.) He has promised tax cuts and less banking regulations. How does he plan on reducing debt to GDP ratio by doing that. The government will basically collect less in taxes. Every time a republican has taken over the oval office, the US economy shrinks(Reagan is an exception). The only winner here are the banks as they shall be able to report improved profits.

3.) By investing in infrastructure expansion, he would be creating thousands of jobs especially if he were to build the wall (though i wonder who will be the workers if Mexicans are locked out ). However their debt to GDP ratio is about 104% which clearly needs to be controlled if another recession is to be avoided. So how will the projects be financed?

USA is now becoming a services nation rather than a manufacturing one. Therefore the real winners here are banks and Wall Street. A strong dollar is not the best thing for US at the moment as it would hurt their exports and increase their trade deficit. In light of this, i'm i wrong in foreseeing a weaker economy come next year like in April once Trump's policies become clear and hence a weak dollar. With no meaningful growth in world economy and the rise of populism, the best thing is just holding cash or buying gold.
Is my thinking wrong in any way?

One more thing i forgot to ask. What are the capital inflows from companies repatriating their profits expected to be invested in other than treasuries? Does that really help real growth.

The Fed has been writing cheques it can't cash. From a forecasted four rate hikes in 2016, now with one month to go till year end, none of them has materialized.

Yellen is cooking up some explanation about how the election has changed their economic perspective while in actual sense they have been playing catch up to the real interest rates.

Unlike the rate hike late last year where markets moved in anticipation of the hike, this time I think there is much more to the shifts than the Fed's expected policy action.

https://twitter.com/keny...atus/799227932887511040

http://www.standardmedia...es-to-shore-up-shilling

Looks like CBK has already started currency intervention....think we will tap into the IMF emergency fund at some point next year???

Nigeria Proposes Jail Time, Fines as It Tries to Boost Naira



Welcome to USD dragon madness central. A lot of stupid capital controls coming up as govts struggle to find USD to pay back their heavy debts.