If Bernanke Dumps the USD, OIL will Threaten this Economy.
This is exactly though what it appears the Fed is saying, as we read a quote from the embedded video: "Ben Bernanke asks us traders, banks and fund managers to assist in pushing down the US dollar"
Oil is tied to USD and to let it sink is not only bad for American's gas prices, but also their pockets.
Bernanke the USD and Oil
Bernanke pressuring the USD and pumping Oil?
"Ben Bernanke asks us traders, banks and fund managers to assist in pushing down the US dollar" Oscar Carboni
With the Fed chief, Ben Bernanke's comments yesterday; as the DXY or USD against 6 other major currencies comes close to it's 2008 and historical lows (DXY now at 73.19), it is important to tie this all together. Keep in mind, oil is going for $112 a barrel as of today...
Many traders, such as the YouTube famed Short Term Trading Live with Oscar, see this as a positive note for the indices or stocks and a continued downward trend for the USD. In Oscar's video, he goes so far to say this about what the Federal Reserve boss said in yesterday's 1st ever press conference after a Fed meeting, about the USD:
"Traders, this is my 29th year in this business. One of the things I have learned to do is to listen to The Fed. I know how to plow through information, read through it and figure out what The Fed is trying to tell us. And I am here to tell you this. Ben Berkeake got in front of the cameras today and he had ONE MESSAGE to give us, everything else was fluff traders. I absolutely listened to everything he said, I thought about it for hours. Here is what his message was:
Ben Bernanke asks us traders, banks and fund managers to assist in pushing down the US dollar!"
Now, I have seen Oscar be wrong in the past, but he has also often been right on the money. His analysis seems correct, on face-value. Yet, could the Fed really want to push the USD into a position of all time lows; Bernanke himself admitted in the Q&A afterwards that the USD was at risk of losing it's position as a safe-haven. So what gives?
Remember, remember, the USD and oil back in mid 2008! History can help us here. As the USD tanked on the DXY to it's low of low's just before the stock implosion, oil skyrocketed! Check out this 2008 piece from May of that month; their analysis turned out to be ON THE MONEY, although a few months early and it also outlines, as history repeats itself, what very well may be at work here:
"As the dollar declines in value, so does the price of oil in non-dollar terms," explains Michael Woolfolk at the Bank of New York Mellon. "Consequently, foreigners bid up the price of oil and other dollar-denominated commodities. The result is that the price of crude oil and other commodities rise in dollar terms as the dollar falls in value against other currencies." Source: USD/oil negative correlation breaking down: A bullish development for the USD?
In effect, if anything what we see is that oil gains FAR MORE, percentage wise, when the USD falls. Both Ben Bernanke and Oscar agree that OIL IS the WILD CARD! So in effect, I do not think they are able to 'see the forest for the trees' at this stage. This is a dangerous situation.
Today, once again, the DXY is at 73.19 and oil is going for $112 per barrel on the free markets. Mind you, this is on top of an already battered economy. July is when all of the major corporations who have had carry-on effects from the Japanese disaster and crisis have to report second quarter earnings for 2011. It is possible that many major symbols on the indices will have a tough time hitting their expected targets, due to key parts being delayed in delivery out of Japan. This coupled with the USD low and oil highs could be one trifecta we will all want to hope does come across the finish line.