Notes From Underground

I am posting a new FRA podcast that was recorded May 24 with Richard Bonugli. We cover many important topics, including the rise of Bitcoin as an investable product. As I have said often, I need to learn more about crypto-currencies and their impact on the global financial system. Unlike Ben Bernanke, I understand GOLD but am seeking to understand BITCOINS. I am striving to learn the workings of the block chain mechanism and relying on the wisdom of one of favorite readers and supporters American Limey.

***Asher Edelman. There has been much written about the views of Edelman and the Plunge Protection Team. This supposed covert group works to keep a bid to the U.S. equity markets during times of great duress. During the seven-plus years I have been writing NOTES the issue of the Plunge Protection Team has arisen on several occasions and I am skeptical that such a long-term conspiracy could exist in the leak-prone hallways of Washington D.C. In a world where central banks add so much liquidity on a monthly basis and the fact that the ECB, SNB, BOJ and FED can do their liquidity adds whenever they deem necessary, one particular group is not of necessity.

Also, it seems relevant that the RISK-PARITY funds add to the market calming actions for it is aligned with the needs of the central banks. Also, option premium sellers in search of higher yield have an incentive to join the protectors of acting against a high volatility plunge. I think Professor Edelman is one of the better minds in the financial community I am not in his conspiracy-oriented camp.

***The G-7 meeting in Sicily had its moments of discord. President Trump raised the ire of his fellow leaders as he expressed reticence in supporting global warming sentiments in the communiques, as well as issues about free trade. Trump also challenged German Chancellor Merkel about the continued imbalances in global trade that continue to favor Germany in a very substantive manner. Merkel voiced her displeasure but I think Frau Merkel doth protest too much for she upstaged Trump’s trip to the G-7 and Brussels by inviting President Obama to Berlin on Thursday in what the Financial Times termed a “love fest.” Whatever the reasons for the friction between Merkel and Trump, the citation of the trade imbalances means that the issue continues to simmer. The U.S. President noted the huge profits of the German automakers who have benefited from the weak euro. I note this for our concern.

Since round one of the French elections the EURO/YEN cross has rallied 8% so the Europeans can certainly say that the recent appreciation of the EURO against the DOLLAR AND YEN should alleviate some of the Trump administration’s concerns. But if the U.S. Treasury and Commerce Secretaries continue to express concerns over trade imbalances, then we must watch the YEN because it will be the next target of the tweeter-in-chief. Do your technical work on the YEN to look at potential signs of an incipient YEN rally. It’s a high risk trade because of YEN fundamentals and rising U.S. interest rates, but trade concerns in Twitterdonia can trump other fundamentals. My charts show the 200-day moving averages in the YEN futures at 0.9153 while the dollar/yen cash level is 110.16. Just adding perspective to the recent discussions out of the G-7 meeting.

Tags: Angela Merkel, Asher Edelman, Euro/Yen, FRA podcast, G-7, Germany, President Trump, trade policies, U.S. Dollar

This entry was posted on May 29, 2017 at 6:01 pm and is filed under Currency, Equity, G-7, Germany. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.