On December 6, I had the pleasure of talking with Anthony Crudele at Futures Radio. Anthony and I covered Russia, yield curves, gold/currencies and the Chinese tariff situation. Enjoy the discussion, be it on the tread mill, stationary bike or sipping your favorite libation. My favorite drink is now Wild Irish Rose sent to me by the great trader and humorist P. Lynch. And please, keep the comments coming as powerful questions lead to quality discourse and potential profitable trades.
The markets continued to sustain increased volatility on Monday as the market swung between making new recent lows as the SPOOS pushed through the late-October level of 2603. By the end of the day, the market closed higher, led by a surge in Nasdaq stocks. Just something to monitor as a potential short-term bottom.
However, I caution that the world remains in a highly fragile state as Brexit, China, the Fed and, of course, the White House keep the media busy pushing out headlines designed to foment volatility. On Monday, Brexit dominated the headlines as the May Government postponed Tuesday’s vote in an effort to secure a better deal with Brussels over the Irish border dilemma. This is a very complicated issue, which is why I have not commented on its politics. The British pound took a beating on the aborted vote and spurred a 1 percent rally in the euro/sterling cross.
I will add this observation: When the world’s stock indexes were in full sell mode, the Footsie 100 was virtually unchanged as the depreciating currency was having a positive effect on British equities. Even British gilts (10-year notes) were well bid CLOSING at their lowest yield in 12 months. Yes, while investors perceive that a complete break would be disaster for Britain’s economy the Footsie is proclaiming a weakened POUND would provide some relief for the British economy. This is a financial tool that Italy does not have in negotiations with Brussels, an independent currency. Enjoy Futures Radio.
Tags: Brexit, British pound, Footsie, S&P 500
December 10, 2018 at 7:26 pm |
Hey Yra,
Love the content you put out here, it is very insightful. Thanks for posting your thoughts.
I had a question on why you think the traditional risk off currencies (such as the yen) have performed very poorly given the moves in equities.
Thanks
December 11, 2018 at 11:16 am |
Roy–very good question.The Yen is struggling because the monetary policy of the BOJ is maintaining the policy to pursue its deflationary battle means the rush to the YEN is not as dynamic but it needs to be watched very closely–the speech last week by BOJ deputy governorMasazumi Wakatabe was very important
December 11, 2018 at 5:38 pm
Thanks Yra!
Makes a lot of sense
December 10, 2018 at 8:53 pm |
A lower fx and lower yields without QE; no other central banker could ever have it so good! If only May would realize her opponent has cancer and she can afford to throw a punch or two.
Yra, I also wanted to recommend a book – The Germany Illusion – for any interested in their domestic imbalances. I would love to hear GreenAB’s perspective but as you frequently point out, all is not well.
December 13, 2018 at 2:26 pm |
GE tests $6.66, who would’ve guessed….
December 15, 2018 at 12:40 pm |
Yra,
As mentioned in your interview with Anthony, removing some froth from the markets should, in the long term, be healthy. Also, short vol traders have certainly had their share of pain. They may face a bit more as I believe the Spoos may check the April and possibly the Feb. lows in search of a bid. Finding one, leaves the remote chance of a positive year end outcome. If not, well…