That Escalated Quickly (In Rumors)

I honestly don’t know how much clearer it could possibly get. The mainstream continues to struggle to identify the causes of the “rising dollar” when in all cases it is decidedly simple. The more the dollar goes up, the more whatever counter party country is paying for those dollars. The entire world is in a synthetic short position created decades ago, and amplified enormously after the dawn of the 21st century (coincident, not coincidentally, to the “giant sucking sound”). The more shorts there are, the higher the cost of being short whenever the whole position is squeezed by availability.

In this case we are talking about “dollars” that are more dear and therefore expensive as they become harder to source in regular and efficient fashion. If the dollar is forced up then the “value” of the other side currency goes down. It is just that simple, whether Thailand, China, or Mexico.

The past few days have seen even more intense speculation surrounding that last country. The latest should, if it turns out true, put to rest any doubts about the euphemism of the “rising dollar.” Yesterday it was reported that Banxico, Mexico’s central bank, has been in touch with the Federal Reserve about possibly requesting swap line assistance. So far Mexican officials deny the reports, and I have not seen any statement from the Federal Reserve which in all likelihood would indicate the same refutation anyway.

And yet, for what is clearly a “dollar shortage” situation for Mexican banks we are still subjected to blatant and likely intentional stupidity:

Circumstances surrounding a possible request are made even stranger by the fact that it is this very Trump talk — renegotiate Nafta, build a border wall, deport more undocumented immigrants — that has driven much of the selloff in the peso over the past year. Mexican officials, in other words, would be turning for help to the same country that is causing much of its troubles.