Chapter 935 Abnormal rise caused by fluctuations in the value of the US dollar

Author: Khurav

Chapter 935 Abnormal rise caused by fluctuations in the value of the US dollar

The value of the entire market is inflated!

When this idea comes to mind, self-doubt inevitably arises.

Is it true that the entire market is overvalued? In other words, where does the money that suddenly appears and the sharp increase come from?!

Before thinking about this problem, there is another thought that can't help but emerge, that is.

Take this opportunity to short this market!

In the heart of almost every trader, or in other words, anyone interested in the securities market, there is a common idol and spiritual mentor: Jesse Livermore!

Livermore, who had great ups and downs, his greatest achievement in his life was the legend of almost shorting the entire U.S. stock market before the Great Recession of 29-33!

Today, Carter seemed to smell a hint of the smell from fifty years ago.

"General, I think I need to go to Japan!"

"Going to Japan now? What happened?"

"The plan is all normal. On June 10, that is, five days later, at the Jamsil Sports Complex, the plenary session will hold a symbolic referendum for Roh Tae-woo of the Democratic Party. If nothing else happens, it is only a matter of time before Roh Tae-woo takes over. But I.

Something happened in the business. The communication efficiency in Japan will be higher, so I need to go there to deal with it! Don’t worry, I will rush back as soon as there is a need here! "

After taking leave from General Livesey, Carter called his traders and analysts to meet in Japan, and took a national defense flight to transit in Japan.

It wasn't until two days later that Carter rented a hotel in Fukushima. In the conference room, Carter got the data he wanted.

"The recent beginning of this small bull market started in 1982. It should be the return flow of Latin American funds into the stock market!"

In 1982, it was a year when U.S. interest rates skyrocketed. Overnight lending rates, five-year, and 10-year Treasury bond rates all hit record highs.

This was also the year when the Reagan administration gave up cutting fiscal spending and instead issued bonds in an attempt to stimulate the economy by expanding aggregate social demand, or to ensure that the U.S. economy would not be directly killed by Volcker's knife.

Looking back at the data report in his hand, it was not difficult for Carter to figure out why in 1982, the U.S. economy was in a slump, but the stock market began to rise, and the reason why the Mavericks appeared:

Treasury bonds with high interest rates will attract the return of U.S. dollars. After a large amount of U.S. dollars are bought into Treasury bonds, money will go into the government's pockets.

Then, the Reagan administration used this money to increase defense spending, launch the "Star Wars Project", and invest in related companies.

For the time being, we will not look at the economic effects that these upstream and downstream companies that get money can bring. We only look at one question: how do those companies that make money spend the money they earn?!

The real economy is sluggish or even in recession; although bank interest rates are high, many banks have gone bankrupt due to thunderstorms. Putting surpluses in banks has concerns about capital security on the one hand, and on the other hand, the inflation rate in 1982 was not low.

At that time, the market did not have much confidence in Volcker’s ability to defeat inflation!

When depositing money in a bank, even if there is no problem with the bank itself, you still face an embarrassing situation where you may end up losing money!

And the security is somewhat guaranteed, and the most I can thank is a little national debt. Sorry, the previous ones have been sold out!

At such a time when physical investment is not feasible and it is not daring to deposit money in banks, investing in the stock market and bond market seems to be the only place for those surplus funds to go!

"Our analysis also believes that this is the case, and then driven by this first amount of funds, more people saw that the stock market seemed to be profitable, at least more reliable than depositing in banks, and then more and more funds poured in.

Entered the stock market”

"But this still can't explain this year's anomaly!"

Things in the past are reasonable.

From 1982 to the end of 1986, in the past five years, the U.S. stock market has been rising, but it has never been so exaggerated since the beginning of this year.

"Even if he is a fanatical speculator, his emotions cannot appear for no reason, right?! Or, even if there is such emotion, where does the extra funds come from?!"

"The source of emotion should be the panic caused by the rapid depreciation of the US dollar after the Plaza Accord! People urgently need a way to ensure that their assets do not depreciate! The continuously rising stock market may have become a depression for capital."

"I also think so. The U.S. dollar has depreciated too fast in the past few years! It may have been okay at first, but last year, Treasury Secretary Baker stated twice in a row that he would not let the U.S. dollar continue to depreciate, but a new round started at the end of the year.

The depreciation has never stopped."

"People can't bear it anymore! In other words, people can no longer believe that the U.S. government will guarantee the value of the U.S. dollar! Then, if you keep the U.S. dollar in your hands or deposit it in a bank, there is a high probability that your assets will shrink. This is

When, a rising stock market

Black Flag’s analysts, you and I expressed our thoughts one by one.

From how quickly they found a possible direction, Carter understood that they should have done their homework on the way here. But.

"It makes sense! More and more money pouring into the stock market will lead to stronger liquidity in the stock market. The rising stock prices will attract more capital inflows, and then form a false prosperity!"

In addition to this point, thinking from the perspective of the impact of the sharp depreciation of the US dollar after the Plaza Accord, Carter also thought of a possibility: Japanese capital!

It is still the clichéd "J effect". After the Plaza Accord, Japan's annual surplus in US dollars has not decreased, but has actually increased than before! Looking at the total export trade of Japan, the US dollar surplus has increased by nearly 19%. This figure

It’s too big!

Ordinary people, ordinary companies, and ordinary small financial institutions will still face the pressure of the depreciation of the US dollar, and urgently need to find a safe haven for assets to minimize the losses caused by the depreciation of the US dollar. Then these Japanese.

They have a huge amount of U.S. dollars in their hands. Every time the U.S. dollar depreciates a little, it is a huge loss that cannot be ignored for them!

Perhaps these Japanese, who have a large amount of US dollar currency in their hands, are also the driving force behind this unusual reaction this year?

"Who is in charge of the Japanese market? Have you noticed the recent changes in the Nikkei Index?"

“It’s also rising rapidly!”

A trader stood up:

"Not only the Nikkei Index, but also the London Times Financial Index, exchanges in the City of Paris, Frankfurt, Sydney and other places have experienced extremely violent increases recently. Mr. Black, after receiving your warning, we began to focus on observation

Past trading records of these exchanges.”

"Trading records show that, except for our U.S. stock market, which began to rise on a large scale in 1982, in other places, the rapid growth that broke through the box range occurred during the period from the end of 1986 to the beginning of 1987."

"This point in time is basically consistent with Treasury Secretary Baker's hint that the U.S. dollar can continue to depreciate! We have enough reasons to suspect that this time the global stock market surge is related to the instability of the U.S. dollar value. The difference may only be the strength of the correlation.

Weakness makes a difference!"
Chapter completed!