Bernard L. Madoff

Got FOREX

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Interesting, at least for me - RUB drops in face of sanctions.

https://www.zerohedge.com/news/2018-04-09/toxic-assets-ruble-crashes-russian-stocks-plunge-most-4-years-after-us-sanctions

When sanctions were introduced back in 2014 there was a liquidity crisis in Russia leading to a massive drop in value of the ruble. Fingers crossed it will happen again!

https://www.xe.com/currencycharts/?from=USD&to=RUB&view=5Y

https://www.xe.com/currencycharts/?from=AUD&to=RUB&view=5Y

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4 hours ago, Mr Medved said:

Interesting, at least for me - RUB drops in face of sanctions.

https://www.zerohedge.com/news/2018-04-09/toxic-assets-ruble-crashes-russian-stocks-plunge-most-4-years-after-us-sanctions

When sanctions were introduced back in 2014 there was a liquidity crisis in Russia leading to a massive drop in value of the ruble. Fingers crossed it will happen again!

https://www.xe.com/currencycharts/?from=USD&to=RUB&view=5Y

https://www.xe.com/currencycharts/?from=AUD&to=RUB&view=5Y

The oligarchs would not be happy with the Russian ruble or stocks:

Rusal shares plunge over 40 percent on U.S. sanctions

Having said that, I'm sure a lot of their personal wealth would already be held outside of Russia.

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10 hours ago, Mr Medved said:

Interesting, at least for me - RUB drops in face of sanctions.

https://www.zerohedge.com/news/2018-04-09/toxic-assets-ruble-crashes-russian-stocks-plunge-most-4-years-after-us-sanctions

When sanctions were introduced back in 2014 there was a liquidity crisis in Russia leading to a massive drop in value of the ruble. Fingers crossed it will happen again!

https://www.xe.com/currencycharts/?from=USD&to=RUB&view=5Y

https://www.xe.com/currencycharts/?from=AUD&to=RUB&view=5Y

Have you read Armstrong's latest? Wait til the end of the year for possible 'fire' sales - BYO lead shield!

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13 hours ago, cobran20 said:

Have you read Armstrong's latest? Wait til the end of the year for possible 'fire' sales - BYO lead shield!

AUD/RUB has gained about 10% in the last two days. A nice little move but I'm hoping for a larger collapse. The dilemma I have is whether to buy RUB or USD... at the moment just the latter.

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They have long AUD/USD as a "Costanza trade" for 2019. Charts in the linked article:

https://www.zerohedge.com/news/2018-12-31/here-are-costanza-trades-2019

 

7) Long Aussie$ 

A slowing Chinese economy and therefore slowing commodity demand, trade wars, and a decelerating domestic housing market have all led to a steady decline in the Oz in 2018.

Will keep this one short and sweet, as it is really the same idea as the other long risk asset trades. The AUD will really benefit from anything positive around the China/Trade War negotiations.  Some sort of deal and the Aussie$ will scream higher.  It’s that simple.

There is one micro issue Costanza should be concerned about and that is the Interest Only (IO) refi wave which will convert those IO mortgages into principle + interest loans.  The reset wave started in 2018 and will increase in intensity in 2019.  This will cause the average borrower to pay about $7,000 more per year in additional payments.  That is a major hit to the housing market via delinquencies, and may be a crushing blow to consumers’ discretionary spending.

image051.jpg

The one saving grace for Australia has been the RBA remaining on hold for (jokingly) 37,000 consecutive meetings.  As the below chart shows, at this level of housing collapse, the RBA tends to cut.

image052.jpg Source: AMP

Instinct: Australia has felt the effects of the China slowdown and trade wars, along with its own domestic issues.  The currency will need to continue to depreciate to offset that pain.     

  • Costanza: the equity market weakness will force Trump to play ball with the Chinese which will reverse the AUD higher.  Additionally, the new economic weakness in the US and a Fed that could move to cut rates should weaken the USD.

Estimated probability of Costanza being right: 55%.  Basically a better long than FANGs and credit, as being long AUD$ could also benefit if the Fed moves to an outright easing bias (which will depreciate the USD vs. the AUD).  Apparently, long USD is now the most crowded trade in the market (according to a BAML survey).   A housing crisis in Australia will be the major headwind for the Costanza long.

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