The Global Wrecking Ball that is the U.S. Dollar

Join our Larry McDonald on CNBC’s Trading Nation, Wednesday June 1st, at 2pm.

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MAY ISM MANUFACTURING: 51.3 vs 50.3 exp.
PRICES PAID: 63.5 vs 58.5 exp.
Sub Indices:
– New Orders Index: 55.7 vs 55.8 prior
– Production index: 52.6 vs 54.2 prior
– Employment Index: 49.2 vs 49.2 prior
– Inventories 45.0 vs 45.5 prior
(So higher prices drove the beat in ISM, most other components weak/unched)
ISM ManufacturingOver the last year, the global wrecking ball that is the U.S. dollar index has ripped apart the global economy.  The pull back from February – April in the greenback was a breath of fresh air for markets.  Last year, U.S. ISM Manufacturing was hammered by the dollar’s surge, today it surprised to the upside.
The price of a Fed “liftoff” (strong dollar) is a lot higher than economists tell you, they don’t look at risk.
We have our top 5 trading ideas looking ahead at the Fed’s next move, pick up our latest Bear Traps Report menu here.
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Air Ball: China Manufactured PMI

Join our Larry McDonald on CNBC’s Trading Nation, Wednesday June 1st, at 2pm.

Pick up our latest Bear Traps Report here.

Breaking News: They call it China Manufacturing PMI, but it’s just manufactured.

Manufacturing PMI at 50.1 vs expected 50.0 vs prior 50.1. ( the range was 49.7-50.2; 27 economists, or lost persons searching in the dark).
Non-manufacturing 53.1 vs prior 53.5.
One would have hoped a $1T stimulus program, coming on the back of a massively re-leveraged banking system,  a less pathetic result would have come forth.  They’re running out of gas.

 

China PMI

China’s capital outflows will ONLY accelerate as yuan depreciates in response to a stronger dollar (sharpest surge since 2014) in response to the Fed’s beloved rate hike plans.

State Owned Enterprises represent 50% of ALL the loans of the Chinese banking system, and these SOE loans are the most troubled loans. The total claim of Chinese banks on the non financial Chinese corporations reached 175% of GDP by end Q1.

If 25% of SOEs become NPL (non-performing), they wipe away the ENTIRE capital base of the Chinese banking system.  For our full report, click below.

Pick up our latest Bear Traps Report here.

 

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