Today (August 23, 2024), MMTed releases Episode 4 in the Second Season of our Manga series – The Smith Family and their Adventures with Money. Have a bit of fun with it while learning Modern Monetary Theory (MMT) and circulate it to those who you think will benefit …
William Mitchell — Modern Monetary Theory
Episode 4 of the Smith Family Manga (S2) is now available
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
Jackson hole:
ReplyDeletehttps://oilprice.com/Energy/Oil-Prices/Oil-Jumps-2-During-Fed-Jackson-Hole-Meeting.html
"WTI crude rose more than 2% as the Fed delivered its Jackson Hole meeting. Stocks, bonds, and gold prices rose during the meeting, as the dollar lost some of its strength."
It's going out of whack already Gentlemen.
During this recent decline in the oil price from $80 to $72.
EUR/USD ↑ Over 300 pips
GBP/ USD ↑ Nearly 400 pips
AUD /USD ↑ Over 300 pips
NZD/USD ↑ 400 pips
All consistent with the $ now being On an oil standard.
USD/JPY ↓ 600 pips
USD/CAD ↓ 300 pips
USD/CAD ↓ 300 pips
Again All consistent with the $ now being On an oil standard.
The Jackson hole meeting and a rate cut in September just pushed the oil price up 2%.
And none of the FX reacted they all continued to act as if the oil price was still falling.
If next week the zombies continue to pile in and increase the oil price due to rate cut expectations all of these recent FX moves as the oil price dropped will be reversed.
The only thing right now that saves those long the £, Euro, Aussie and Kiwi. Those short Yen, Car and Swiss Franc is if the oil price keeps falling.
The oil price has already fallen over $10 since the start of July, as we approach the end of driving season and refinery shut down for maintenance a couple of months away. How much more downside is there ?
How far will the Zombies next week push up the oil price after Jackson Hole comments ?
On Monday will the FX pairs finally react to the 2% oil price rise on Friday.
Now that the $ is On an oil standard there has to be an adjustment. The 2% increase in the oil price simply can't be ignored. Unless oil continues to plummet on Monday which looks unlikely.
Latest news
ReplyDeletehttps://oilprice.com/Energy/Oil-Prices/Oil-Prices-Drop-as-War-Premium-Evaporates.html
I don't believe any of it. Netanyahu doesn't want a peace deal, he wants victory.
China's demand will pick back up. China buys when the price is low and stores it massively within China itself. Rinse and repeat , rinse and repeat.
China will be buying now as prices are low to be delivered in Sept, Oct, November. Whilst using some of what they stored previously.
Goldman Sachs have just downgraded their forecasts to $77 a barrel for the rest of 2024 while Vitol says demand will pick up 2nd half of the year and oil will trade between $80 - $100.
Vitol produces, refines, and is the worlds biggest trader of physical oil and products and Goldman does not.
I know which one I believe.
Therefore, I am going for it and properly trade FX for the first time in years. On the basis of the $ now being On an oil standard.
a) There will be no peace deal. As Iran will retaliate.
b) China's demand will pick back up until the end of the year.
Short GBP/USD @ 1.32160
Short EUR/ USD @ 1.11250
Short AUS/USD @ 0.67850
Short NZD/USD @ 0.62440
And
Long USD/CAD @ 1.34630
Long USD/JPY @ 1.44299
Long USD/CHF @ 0.84338
Hoping that I can fill the bushel basket over the next couple of months.
Mike says face adversity and put yourself in a position of uncomfort. Well here goes.
Oil keeps falling I will be tested, Oil turns and moves above $80 in the coming weeks and my bushel basket will be full.
Derek, Trump plan is to increase production/productivity of US energy for lower domestic prices and for export… if he wins then expect much lower US energy prices and increased output… oil/gas/electricity…,
ReplyDeleteIf he gets that then “inflation” will be seen as low by the Art Degree morons at the Fed and Trump will put in people there who will slash US interest rates ideally back down to Obama levels… but ofc he has to win first… May not be a bad idea to hold off on big positions until we see US election results..,
ReplyDeleteMike would not advise you take a position on the basis of a) peace/no peace in the middle east.
ReplyDeleteI'll be out long before Trump gets his way.
ReplyDeleteI might have gone in several weeks early
Here:
https://seekingalpha.com/article/4225632-clarifying-linkages-oil-price-production-and-oil-inventories-not-clear-cut-you-may-think-is
Yeah, I think there will be no peace.
I haven't leveraged at all and went in very small so won't bankrupt myself. It is a learning exercise deal with adversity and a tool that will allow me to use the new oil/$ paradigm moving forward.
Just you watch they won't stay out of sink for very long. The elastic band is stretching and stretching until eventually all the currencies will revert to the oil price.
From the charts above. I like the 6 months lag between consumption and oil price. Why normally we get a rise from late Autumn to the new Year. The fall in consumption we see as driving season ends doesn't show up until next year and bottoms around Feb.
I want to catch that but like I say, I might of went several weeks too early. Maybe should have waited until Oct, Nov.
Either way I'm going to learn a lot from it.
Hurricane season as it gets going, might actually snap the elastic band anyway.
ReplyDeleteIf the rate cuts don't snap it first.
ReplyDeleteRobert Balan has decided to put the reputation of his models on the line. The models that have made him $ 100's of millions over the last few years.
ReplyDeleteHere:
https://seekingalpha.com/instablog/910351-robert-p-balan/6056223-move-was-called-misguided-offloaded-tmfs-and-loaded-up-on-tmvs-short-term-why
Says the 10 year yield is going to rise over the next few months. After getting some push back from his team.
Using trading economics 1 year charts and plotting the oil price v's the 10 year yield - What do you see ?
Looking at the chart, I see the oil price driving it, not the other way round. The oil price is driving so many things since the Trump first term paradigm shift.
It will be very interesting to see what happens from here. Will oil drive higher taking the 10 year with it or not ? If not, will Robert's prediction of the 10 year fail for the very first time ?
Predicting the 10 year yield is how he has made nearly a $ billion since he started PAM on seeking alpha. I think he is at $ 800 million right now.
ReplyDeleteIf Trump's plan is to increase production/productivity of US energy for lower domestic prices and for export… if he wins then expect much lower US energy prices and increased output… oil/gas/electricity…,
ReplyDeleteAnd he succeeded, which is a very big if, we will all fill our bushel baskets. When it happens.
Lower oil prices now knowing the $ is now on an oil standard. You would just set your FX position to catch the lower $ as oil prices fell.
https://www.atlanticcouncil.org/blogs/menasource/red-sea-attacks-houthis-biden-administration-leadership/
ReplyDeleteWe may just leave the area and offer EZ energy products as the North Atlantic supply lines are secure and more reliable…