Archive for December, 2020

Notes From Underground: Never Have Been and Never Will Be

December 21, 2020

… a supporter of Treasury Secretary Steve Mnuchin. In my opinion, he’s another Wall Street hack devoid of any genuine knowledge of the global macro world in which he his sent to do battle on a daily basis. Last week’s decision to label Vietnam and Switzerland as “currency manipulators” is badly timed, badly chosen and badly misinformed. Why would you name Vietnam a currency manipulator when a large part of the Trump administration’s policy is directed toward relocating global supply chains away from China. In addition, labelling Vietnam a “currency manipulator “is an immoral and unconscionable act. Even Bob McNamara is spinning on his “rotisserie in hell.”

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Notes From Underground: Was Powell’s Press Conference Loaded for Bears?

December 18, 2020

Wednesday’s FOMC release and the Jerome Powell press conference provided the market with enough ammunition to power even higher and send the DOLLAR lower. There was NOTHING hawkish about the FED decision regardless of the conclusions drawn from the ridiculous forecast from the SUMMARY OF ECONOMIC PROJECTIONS, which have as much value as teats on a bull. The SEPs have been never met in all the years the FED has released them as “quality” forecasts. Why did the market resolve to take a DOVISH view?

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Notes From Underground: Going Around and Around

December 13, 2020

There two issues whose headlines are creating intraday volatility: Brexit and Congressional tweets surrounding another covid stimulus package (or not). As it stands, so many workers are struggling due to job losses — though no fault of their own — and small businesses are trying to keep their doors open.

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Notes From Underground: The Darkness of Foreign Exchange

December 10, 2020

There were two central bank meetings in the past two days: The Bank of Canada and the European Central Bank. The BOC stayed its current course with no change in policy. Several analysts were looking for more dovish action because of the appreciation of the Canadian dollar but the BOC was wise in noting that a “broad-based decline” in the U.S. exchange rate has contributed to a “further appreciation of the Canadian dollar.” As a result, the BOC has ZERO concerns about its currency appreciating as long as it is BROAD-BASED.

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Notes From Underground: Return of the Bond Vigilantes?

December 6, 2020

After the performance of the 30-year yield on Friday, we must ask this question. The overall release was on the weak side as jobs created were far less than expected, even though the RATE dropped to 6.7% and average hourly earnings increased by 0.3%, higher than forecasted. The AHE are difficult to measure as it can reflect lower wage earners being left out of the job market, as well as bonuses paid out to middle- and upper-level management.

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Notes From Underground: Closing In On Critical Levels

December 3, 2020

In the past six months, NOTES FROM UNDERGROUND has always been more podcast than blog posts so it’s a very good time to review and put the markets into perspective are as we approach 2021. NOTES has been on the bearish side of the DOLLAR trade since Wolfgang Schaeuble — the purveyor of the German NEIN and infamous Schwarz NULL (black zero) — pivoted and promoted a large grant program to help the severely impacted European economies suffering from COVID and a massive debt burden. As Schaeuble suggested, giving more loans was similar to giving the debt plagued nations ROCKS, weighing them down ever more, while giving large GRANTS was similar to providing BREAD.

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Notes From Underground: A Tumultuous Year

December 1, 2020

Sorry to state the obvious but 2020 has been a tumultuous year. Between covid-19 and U.S. politics — and the politics of covid — interest rates have returned to the zero lower bound after the second-quarter disaster. The FEDERAL RESERVE has declared that it’s on hold until the wages and jobs lost to the most vulnerable have been recovered.

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