Monday, June 06, 2016

How To Profit 
From A Higher Euro
Jim Rickards* sees the euro as getting stronger .. "Here’s a quick refresher on the Shanghai Accord. The Big Four needed to find a way to cheapen the yuan to stimulate the Chinese economy, which is slowing dangerously. The last two times China cheapened the yuan against the dollar (August 2015 and January 2016), the U.S. stock market fell out of bed. There was a borderline stock market collapse both times. The solution they agreed to was to keep the yuan pegged to the dollar and cheapen the dollar. This gave China, and the U.S., some relief. The losers were Japan and Europe, which had to endure a stronger yen and euro, respectively. That’s not what Japan and Europe wanted, but too bad. In currency wars, if someone wins (China and the U.S.), then someone else has to lose (Europe and Japan). It can’t be any other way. The Shanghai Accord is alive and well, but it’s not a day trade. It’s intended to guide currency policy among the major economies for at least a year, possibly two. That’s why we gave it the name 'Accord,' as a tribute to the Plaza Accord of 1985, which guided exchange rates for over 20 years (with a reset at the Louvre Accord, in 1987)."
LINK HERE to the analysis

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