U.S. Dollar Suffers Its Worst Month in a Decade

[left-of-center2012]

The euro rose the most in a decade this month, the British pound is headed for its best July since 1990, and for the first time this year, every major currency in the world rose against the greenback. A gauge of the dollar against its biggest peers is down 4.4% this month, the worst rout in a decade.

The world’s reserve currency of choice was already on the back foot when U.S. President Donald Trump raised the idea of delaying elections this year. He added fuel to a rout that was driven by falling U.S. Treasury rates, real yields near all-time lows and disappointment over America’s response to the coronavirus compared to Europe.

Data Thursday showed the world’s biggest economy shrank at a record 32.9% annualized pace in the second quarter, even amid unprecedented levels of monetary and fiscal stimulus from the Federal Reserve and the U.S. government. While that’s a 9.5% contraction on a non-annualized basis -- significantly less dire than economic data out of Europe this week -- the likes of Germany and France were quicker to implement lockdowns.

Also, the U.S.’s jobless claims figures, which showed an almost 900,000 increase in the number of people claiming continued benefits, warns of the impact a resurgence of the virus across the nation will have on the economy.

https://finance.yahoo.com/news/u-dollar-suffers-worst-month-110244381.html

[Claustrum]

1. Well, that's expected when you keep printing money to pop up the stock market

Yes, they delayed the stock market crash and the rich is getting richer right now. But we, the normal American, will be paying the price for years to come, both with the debt and the inflation and devaluing of the American dollars.

There is no economic reason for the stock market to be at where it is right now.

[Warpy]

2. Well, it won't be for long

as a lot of retirees out there who have been using dividends to supplement social security start having to dump stock to make ends meet, and there are millions of such people out there, tiny minority of retirees that they are.

I figure it's going to be one step forward, two or three steps back as earnings dive across the board. It's not just oil earnings that will take a dive.

[Claustrum]

3. Trump and the GOP needed the stock market to at least say they are good for the "economy"

If the stock market is at under 20k now, his approval rating would be in the low 30s instead of mid-high 30s. It's a delay tactic so they can still campaign with the "economy". They could care less about it once Nov. 3rd come and go. Either Biden or Trump wins, we will see the fed support stop and the stock market takes a nose dive. The stock market will then correlate to the real economy out there.

[Warpy]

5. That is fine with me, but a lot of people will be furious

because they got used to those artificially inflated net worth numbers. No one can retreat into the relative safety of the bond market, either, it's paying bupkus.

The only way to turn any of this around is going to be the old fashioned cures of scraping it off the very top and infusing it at the bottom via public works jobs, and Sulis knows our infrastructure needs all the help it can get. Those policies will, of course, contribute to plutocratic resentment and the endowment of new think tanks to come up with yet another retread of mercantilism under another name to sell small businessmen.

Until we do things like this, the country's economy will be moribund, the demand side choked off, innovation unfunded, and the supply side sitting on more money than any of them know what to do with except compare numbers with their neighbors.

[progree]

4. Q1 SP500 Earnings per share: 2017: 27.46, 2018: 33.02, 2019: 35.02, 2020: 11.88 😲 👀

https://ycharts.com/indicators/sp_500_eps

Edited to add: we don't have the full Q2 earnings yet. But likely to be a lot worse, given that Q1 GDP declined by 5%, and Q2 GDP declined by 32.9% (both on an annualized rate basis). So it would be pretty much impossible for Q2 earnings to be anything but a lot worse than Q1 earnings.

Shiller P/E (looks like CAPE to me) - https://www.gurufocus.com/shiller-PE.php

Wilshire 5000 to GDP ratio (a proxy for The Buffett indicator, updated daily, a proxy for market cap to GDP ratio) https://www.gurufocus.com/stock-market-valuations.php

[Warpy]

6. Yep. Been watching it every month.

That's why I think the long term prospects for a hyperinflated stock market are not good.

[OrwellwasRight]

7. This is a good thing.

It means our exports are cheaper.