USECV = EURO/USD
Brilliant? No, but it works.
USECV = US$-traded-equity-compilation-vehicle (e.g. as simple as SPY, or other if the programmers are more imaginative.)
If you don't own a large room filled with the latest super computers, then retreat and take on the programmers instead. There, you have a chance.
Wednesday, October 12, 2011
Why is the EURO/USD so Important to US Equities? NAS, DOW, SP?
Because of the following:
1. Money bunches/groups up... kind of like traffic on a road.
2. Funds (mutual, hedge, pension, etc.) have many $1B to over $100B of assets to "invest" i.e. not to lose or else. It's not their money, but they control it.
3. So much $ that a given fund might need to buy entire corporations representing a significant part of a major US stock index.
4. Item 3 is not feasible for volume reasons. Funds could go broke.
5. The $ need to be spread across the entire planet.
6. But, the collection is in US$ and the return payment needs to be in US$.
7. Where can they invest? Japan with the government and the BOJ salivating to ruin currency exchange rates? China where a few old guys can manipulate exchange rates in a heartbeat? Uh uh.
8. So the banks have invested in the Euro zone. And if the EURO/USD crashes, so do all banks and all institutions. So do all US equities and USD-traded commodities. Instant financial death... for all US institutions, but not necessarily for you if you have prepared correctly.
1. Money bunches/groups up... kind of like traffic on a road.
2. Funds (mutual, hedge, pension, etc.) have many $1B to over $100B of assets to "invest" i.e. not to lose or else. It's not their money, but they control it.
3. So much $ that a given fund might need to buy entire corporations representing a significant part of a major US stock index.
4. Item 3 is not feasible for volume reasons. Funds could go broke.
5. The $ need to be spread across the entire planet.
6. But, the collection is in US$ and the return payment needs to be in US$.
7. Where can they invest? Japan with the government and the BOJ salivating to ruin currency exchange rates? China where a few old guys can manipulate exchange rates in a heartbeat? Uh uh.
8. So the banks have invested in the Euro zone. And if the EURO/USD crashes, so do all banks and all institutions. So do all US equities and USD-traded commodities. Instant financial death... for all US institutions, but not necessarily for you if you have prepared correctly.
Bank of Queensland
To a direct question "do you have Euro exposure?" the response was basically - well... it's a global world and we all live on the planet Earth.
Wow. Profound. And uggg. Everyone is going down with the Euro. Even Asia.
Wow. Profound. And uggg. Everyone is going down with the Euro. Even Asia.
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