DavidE - 5-15-2012 at 12:29 PM
"HOUSTON, May 15 (Reuters) - Gasoline in the Los Angeles spot market plummeted 27.5 cents on Tuesday traders said"
The way things are looking, 14.0 to 1 peso/dollar won't be much of a barrier. I'll give you a single guess where all that loot, €, MXN, AUSD,
whatever, is bound.
I'd bet that Banco de Mexico is indeed going to play "Guillermo Ortiz 101" and wait until things calm down versus squandering glasses of drinking
water against a forest fire. When the peso/dollar stability flattens out for several days, then Banco de Mexico is going to risk a third of a billion
dollars cash infusion into the peso market. They have to. This is an election year. Their PAN bacon is on the fire. If this thing really damages the
Mexican economy then all the work since the presidency of Miguel de La Madrid, the first technocracy, is endangered. Pointing fingers will do no good.
Mexicans are at once, apathetic, angry, disillusioned, yet always stoically hopeful for a milagro.
[Edited on 5-15-2012 by DavidE]
LaPazGringo - 5-15-2012 at 01:44 PM
David, give dense newbs like me the bottom line. How far is the peso likely to devalue?
DavidE - 5-15-2012 at 03:28 PM
You're not dense, and as my hands glide over the ball and vague images begin to form and take shape.........
This is a stress test of Mexico's financial psyche. But this time it is really complicated. There are at least a dozen major extraneous factors at
work as well as having the wealthy's treasure chests go north for a little R&R.
China is just killing Mexico. The People's Liberation Army is employing tens of millions of workers just so they can make a wage and not march enraged
in a hundred million mass and toss the politburo all the way to the Kamchatka peninsula (Russia).
Losing money at least not making any. Using Chinese freighters to haul a hundred thousand Wal-Marts a week across the Pacific ocean and dump the
merchandise.
And the USA is farting green apples to try and shake the Yuan Renminbi loose from the Dollar. Devaluing the dollar almost weekly.
The € was designed to be gorilla food and Germany the 900 pound silverback is thumping his chest and dictating what the European food chain is going
to look like.
People who have made lots of money are not stupid and they rather dislike with parting with any of it. They would rather suffer financial
constipation. Even if it means that others may suffer.
Others have suffered...
Americans are buying a lot less.
Mexicans have gone home, no more home construction.
China cannot warehouse what Americans do not want to buy.
So oil wells either have to be shut down or flood sand with black crude
The price of oil tumbles
Mexico relies heavily on oil crude sales
Mexico relies heavily on trade with its northern market, not with China, France or India. And trade is way down except for ag products.
Tourism? Maybe to Cancun. Maybe. SECTUR lies about as much about occupancy rates and tourism as Bank of Mexico does about its dollar currency
reserves.
And it's an election year. And the PAN is all but ready to be kicked out on their butt.
But they can bankrupt this country selling and burning the furniture just for one more chance at a sexenio trying to prop up the peso. El Pelon, than
little @#$%^&^%$#@!!! Carlos Salinas de Gotari did just that in 1994, bragging, the little #$$%^&*&#!! BRAGGED in October 1994 "I am the
first Mexican president in four decades to leave office with the peso being healthy!"
The peso took a nose-dive on 22 December 1994. The freakin' "Christmas Surprise"
Carlos Salinas de Gotari, took flight and exiled himself in Ireland. WHILE TRYING TO BECOME THE PRESIDENT OF THE WORLD BANK!!
About the peso I just cannot give a rational guess. If it surges past 14 and heads to 15, it may be it will be at year's end at 18 to 1. If the world
sags into DE-pression it could get much worse. Fifty to one, one hundred to one...
Look for (or not) the introduction of a 2,000 peso banknote. That's all I can say.
DavidE - 5-15-2012 at 03:37 PM
I just now copied this New York Mercantile Exchange EXCERPT. See if you can tie any of it to what I just wrote above to try and help clear this awful
fog...
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
2012-05-15 22:12 (UTC)
NEW YORK, May 15 (Reuters) - U.S. crude futures extended
losses in post-settlement trading on Tuesday after industry data
showed that domestic crude inventories rose sharply last week,
dwarfing the forecast in a Reuters poll and adding to oil demand
worries.
Crude futures earlier settled lower for a third straight day
as political turmoil in Greece stoked worries that it might
exit the euro zone, outweighing upbeat German GDP data and a
mixed set of U.S. economic reports pointing to continued,
through slower, growth.
The euro slumped on worries about Greece while the dollar
rose, prompting investors to spurn trades in riskier assets such
as equities and major commodities such as oil and metals.
Euro zone worries persisted even though data showed that the
region narrowly avoided recession in early 2012, official data
showed. However, the bloc's debt crisis had weakened the French
and Italian economies.
This added to concerns about bleaker prospects for oil
demand, a problem that has already kept investors queasy
following weak industrial production data from China last week.
The industry group Amerian Petrioleum Institute said that in
the week to May 11, domestic crude stocks shot up by 6.6 million
barrels, far above the forecast for a 1.7 million barrel
increase.
Crude stocks in Cushing, Oklahoma, the delivery hub for
U.S.-traded crude oil futures, jumped 2.8 million barrels, the
API said.
Gasoline stocks fell 2.6 million barrels while distillate
stocks declined 1.6 million barrels, the API said, both well
above the forecast for drawdowns of 500,000 barrels and 600,000
barrels, respectdively.
Refinery utilization fell 0.2 percentage points, the API
said, against the forecast for an increase of 0.4 percentage
points.
FUNDAMENTALS
* On the New York Mercantile Exchange, June crude
settled at $93.88 a barrel, down 80 cents, or 0.84 percent,
after trading between $93.78 and $95.48. Since the beginning of
the month, the contract has fallen $12.18, or 11.5 percent.
* In post-settlement trading, June crude extended the day's
low to $93.18 and further fell to $93.02, the lowest since Dec.
19's intraday low of $92.54, after issuance of the API data.
mtgoat666 - 5-15-2012 at 04:00 PM
don't worry, be happy!
always look on the bright side of life!
rts551 - 5-15-2012 at 04:02 PM
and where did the Taco come from... whoops guess that doesn't matter either
Maybe this is a little easier to understand
thebajarunner - 5-15-2012 at 06:02 PM
Today from the Wall Street Journal,
says it very well, in layman's terms (I think)
By Amy Guthrie
Of DOW JONES NEWSWIRES
MEXICO CITY (Dow Jones)--The Mexican peso continued its slide Tuesday as concerns that Greece could exit the euro zone, triggering greater economic
and political problems for the union, eclipsed indications that the Mexican economy is faring well.
The peso was quoted closing in Mexico City at 13.8160 to the U.S. dollar, 1% weaker compared with its MXN13.6750 close Tuesday, bringing the
currency's slide so far in May to 6%.
As recently as mid-March, the peso had distanced itself from its weakest-ever year-end finish of MXN13.9725 by gaining more than 11% against the
dollar. The currency is now up just 1% this year.
Data out of Mexico this week have been strong, with industrial production up 3.1% on the year in March while production and exports of cars reached
record levels in April. Retail sales also expanded on the year last month, by 7.8%.
On Thursday, Mexico's economy is widely expected to show that it gathered pace in the first quarter of 2012, with the median estimate from analysts
surveyed by Dow Jones Newswires predicting that gross domestic product expanded 4.3% on the year in the January-March period.
Mexico's economic future is largely linked not to that of Europe but to that of the U.S., which absorbs around 80% of Mexican exports and supports
millions of Mexican families via worker remittances.
Still, Europe's troubles have inspired investors to steer clear of risk. In addition to avoiding the peso, investors were reluctant to purchase
securities at the Bank of Mexico's weekly auction Tuesday; the yield on benchmark 28-day Treasury bills rose 0.08 percentage point to 4.42% at auction
while the yield on 20-year notes rose 0.09 percentage point to 7.25%.
The contagion impact of a Greek exit from the European Union is "unponderable," Brown Brothers Harriman said in a note Tuesday.
While the firm argued that exiting the euro zone could exacerbate rather than solve Greece's problems, Brown Brothers Harriman said it recognizes that
the risks of a Greek exit have increased in recent days. "However, we continue to see a Greek exit as an expensive folly for all concerned," the firm
said.