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Aug 31 • 7 tweets • 4 min read
ADXY (Asian Dollar Basket) vs. MSCI EM Markets

#the_dollar_wrecking_ball
ADXY (Asian Dollar Basket) vs. iShares JP Morgan USD Emerging Markets Bond ETF

#the_dollar_wrecking_ball
ADXY (Asian Dollar Basket) vs. Oil (Brent)

#the_dollar_wrecking_ball
ADXY (Asian Dollar Basket) vs. Gold

#the_dollar_wrecking_ball
ADXY (Asian Dollar Basket) vs. CRB Commodity Index

#the_dollar_wrecking_ball
ADXY (Asian Dollar Basket) vs. US ISM Manufacturing

#the_dollar_wrecking_ball
ADXY (Asian Dollar Basket) vs. HYG - iShares iBoxx High Yield Corporate Bond ETF

#the_dollar_wrecking_ball

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More from @mnicoletos

Michael Nicoletos Profile picture
Sep 1
1/ There is a considerable debate regarding inflation and currency debasement - and a lot of people are puzzled why some hard assets (gold, silver, bitcoin, and soon real estate) are not responding as the literature would suggest in such an environment.

This is how I see it >>
2/ Let’s say you have a bucket full of water (liquidity of money) where you constantly pour more water in it (money supply + new credit) because it has small holes in it (structural deflationary pressures) to keep the water level constant (economy running). >>
3/ And suddenly, the bucket holes start getting larger (CB raises interest rates). Thus, increasing the water leakage (liquidity drainage). As you can understand, the larger the holes (the more interest rates rise), the larger the leakage gets (liquidity leaving the system). >>
Read 8 tweets
Michael Nicoletos Profile picture
Mar 11, 2020
1/11 A thread on the #euro and why I think its existence is about to be tested.
2/11 #Europe is about to face a simultaneous endogenous & exogenous economic shock. The #COVID19 is creating multi-level disruptions, and the #EU will need to act swiftly to address them. However, history has shown that #EU's decision-making process is very rigid. #euro
3/11 Yesterday, the European Commission pledged 25bn to tackle the economic crisis caused by the #coronavirus outbreak. This amount is equal to ~0.15% of #EU's GDP. Hence, bolder moves will be needed to address the upcoming economic disruption. #euro

news.trust.org/item/202003101…
Read 11 tweets
Michael Nicoletos Profile picture
Nov 14, 2019
A Thread on #China. Some data and some thoughts. I hope you find it useful.

What's different about China's GDP number?
Is China growing at 6% as it lets everyone else believe?
Can China come out of this without devaluing its currency?
1/ #China’s GDP is an input number and not an output figure like in western economies. National accounts are based on data collected by local governments which are rewarded for meeting growth targets; hence, they have an incentive to skew the data they provide to the Central Gov.
2/ Looking at different data sets one will see that #China is merely growing. PMI sentiment is falling fast; a number below 50 denotes a contraction and not an expansion as the GDP growth rate suggests. Manufacturing (49.8) & New Export Orders (48.2) have already fallen below 50.
Read 26 tweets
Michael Nicoletos Profile picture
Aug 30, 2019
1) Is China’s currency undervalued like the everyone seems to believe or overvalued?

Are #China’s FX reserves sufficient to prevent a further devaluation of the #Yuan (#RMB)?

Are #China’s FX reserves what they appear to be?
2) Why would China need to clamp down capital flight if the #Yuan is undervalued and/or FX reserves are more than enough, as China claims?

#China clamps down on capital flight risk as #yuan weakens asia.nikkei.com/Business/Marke…
3) Stricter bank oversight while real estate developers will have restricted access to foreign currency bonds. If the fin system is judged to be on the brink of instability SAFE will declare the situation "abnormal" & banks will be evaluated on the #Yuan amounts wired offshore.
Read 12 tweets
Michael Nicoletos Profile picture
Apr 11, 2019
#HongKong: Pressure on the #USD - #HKD peg is mounting. The rising #US interest rates have put enormous pressure on the HKD peg. This has depleted Hong Kong's excess FX reserves.
#HongKong has FX Reserves of $438bn (March 2019) plus another $6.9bn from the HKMA Exchange Fund which is there to stabilize the #HKD peg. Looking at the HKMA Exchange fund it is clear that money has been leaving HK. Since 2016 the fund has gone from $55bn to $7bn.
#HongKong M2 is currently 1,8 trillion USD. However, the total FX Reserves / M2 are only at 24%.
Read 8 tweets

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