I am very confused by the constant bombardment of the news headlines that tend to contradict each other. One begins to wonder if the “ARMS” race media outlets are running is to craft headlines that have the greatest market impact. In a world of keyword algo readers, the market impact can be immense in a mere TWO SECONDS.
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Posts Tagged ‘Australian dollar’
Notes From Underground: Bernanke, Deliver Us From This Madness (Annie Hall or Deliverance)
June 17, 2013Notes From Underground: Mario Draghi Sings Castrato At The Frankfurt Financial Opera House
June 5, 2013Tomorrow brings two central bank interest rate announcements. First, at 6:00 a.m. CST the Bank of England will deliver its last decision under the guiding hand of Governor Mervyn King. Consensus calls for no change in the 0.50% lending rate or the current BOE asset purchase program. Governor King has been in favor of increasing the quantitative easing amount but has been outvoted by his board three consecutive meetings. It would be silly to affect a policy change before the new governor takes his place. Forty-five minutes later, the European Central Bank will announce its decision and it is expected to hold rates at 0.50%–the ECB cut its rate by 25 basis points at its last meeting.
Notes From Underground: Does Tapering Lead to a Narrow PEG of a Pant Leg?
May 13, 2013Now that the FED has provided the U.S. and world financial system with a suit of liquidity, it is trying to figure out how to reduce the amount of material. The word “TAPER” is not my favorite for it fails to define what I believe is the goal of the FOMC. Who cares if the FED reduces it security purchases? That is not the problem. If the economy has any real traction the current balance sheet of more than $3 TRILLION should be quite sufficient to keep interest low. The dilemma is how to remove the LIQUIDITY without causing a collapse in Bernanke’s beloved PORTFOLIO BALANCE CHANNEL.
Notes From Underground: Why Are The G-7 Finance Ministers Meeting In England This Weekend?
May 10, 2013There was a Reuters story yesterday by William Schomberg, “G7 Finance Chiefs to Discuss Bank Reform Push.” Very few people picked up on this but it seems strange that all the sudden a meeting is called to discuss what elements of bank reform. Are they going to try to persuade Germany to get behind the EU push for a banking union and if so why the hurry before the September German elections? The idea of a banking union with resolution authority is sure to be a lightening rod for all the German angst about the bailouts of the peripheral nations. The Reuters piece notes that some G-7 officials are upset that the U.K. called the meeting so soon after the recent IMF talks in Washington. One official said, “I am really annoyed I’ve got to give up my weekend for this.”
Notes From Underground: My Response To Larry Summers
May 7, 2013First, the RBA finally cut the lending rate by 25 basis points to 2.75%. By the close of the market, the Aussie dollar remained weak as some were surprised by the move. As I promised my readers of NOTES it is the 2/10 yield curve where the indicator of further currency and bank action will be found. The 2/10 steepened a slight three points, but the action ahead will be the key. Failure to take out recent steepener highs will be an indicator that the RBA has more work to do if it wishes to give a boost to the Australian economy.
Notes From Underground: FOMC as Benny and the Jets–Will They Propel Further QE?
January 30, 2013Wednesday brings the news of the FED‘s newest intentions. There is no press conference so the FED‘s FOMC statement is released at 1:15 CST. The consensus is for no change in the current FED policy as the recent economic data has been somewhat mixed. Housing data has a positive tone to it but consumer confidence is tepid and even the durable goods data was weaker than the headlines suggested. It seems that some defense orders were brought forward into December to circumvent the possibility of budget sequestration. The VOTE of the FOMC will be of interest as the new year rotation of FED presidents brings a list of new voters. Gone will be Jeffrey Lacker, the dissenter, and the perma dove John Williams from San Fran Fed is a non-voter.
Notes From Underground: Four Central Bank Meetings, and, Oh Yeah, the Fiscal Cliff
December 2, 2012The weekend news was rather sparse as the Greeks got their trust fund check from the overlords in Brussels. The Greeks need to be leery of Eurocrats bearing gifts. The Sunday news shows in the U.S. highlighted the vast chasm between Speaker Boehner and Secretary Geithner. There was finger-pointing all around about as to which group was holding up the negotiations as to affect genuine compromise and a resolution to the fiscal cliff. As the rhetoric heats up, the S&Ps and global stock indices all closed higher on the week, showing that the price action speaks louder than words. The market has fears that failure to resolve the fiscal crisis will result in a new U.S. recession and will also undermine the global economic recovery, but yet the COPPER closed above the 200-day moving average for the first time in many weeks. Other industrial metals also performed well last week making me wonder if all the fiscal cliff rhetoric is missing some larger picture. We will watch to see if the COPPER can sustain its recent strength or whether we are in the midst of a short covering rally.
Notes From Underground: THE SWISS ARE NOT LIKE YOU AND ME; THEY HAVE A PRINTING PRESS
September 3, 2012Jackson Hole is over and the ECB and BOE meet on Thursday so let’s take a minute and look at what is going on with the Swiss National Bank and the impact its EURO policy is having on world asset pricing. As the SNB maintains its present floor on the EUR/CHF cross rate–REMEMBER 1.20 is the level–the BANK is forced to continue buying EUROS to maintain the PEG. All those EURO PURCHASES have to go somewhere as the SNB does not want to be left holding the proverbial bag if the Germans say NEIN to the EU and the EURO would collapse. The SNB has been forced to buy German, Dutch, Austrian, French and Finnish sovereign debt, but with those instruments yielding negative rates on 2-YEAR NOTES the Swiss are forced to seek out alternative assets to alleviate the massive exposure to the peripheral sovereigns.
Notes From Underground: SPD LEADER SIGMAN GABRIEL SAYS THE R-WORD … REFERENDUM
August 12, 2012When the Greeks under Papandreou suggested a referendum on the GREEK AUSTERITY plan, the Greek PM was met with great consternation by the ruling elites in Brussels. A giant don’t-you-dare-call-a-referendum greeted PM Papandreou and basically forced his abdication. I warned then that the idea of a referendum on any issue of economic austerity was anathema to the EUROCRATS for the denizens of Brussels were/are fearful of testing the “PUBLIC WILL.” Every time a referendum was held it resulted in a decision opposite of the elite’s will: Another referendum was called until the “correct” result was realized. (It was usually preceded by warnings that all financial and budgetary agreements would be rendered null and void.)
Notes From Underground: It’s March and We Hear the Wind Blowing
March 4, 2012Do you have to be a weatherman to hear the wind blow? There are many cross currents alive in the investment world as the LTRO is behind us, ISDA defaulted on its role as a referee on global financial issues in the face of political threats from the EUROCRATS, and the Bernanke FED looks to be waiting for a new crisis to erupt before undertaking another further easing. March is always a difficult month for trading YEN as the JAPANESE CALENDAR YEAR ENDS MARCH 31 so repatriation of corporate profits is always a wildcard for any short YEN positions.
