Archive for the ‘Central Banks’ Category

Notes From Underground: Further Into the Fray

February 20, 2018

On Tuesday the news was filled with the release of an analysis by the research combine at Goldman Sachs warning about the negative outcomes from the increasing amount of debt as interest rates rise, lifting the negative percentage of interest payments relative to GDP. (See the CNBC story, “Goldman Sachs Sees Red Ink Everywhere,Warns U.S. Spending Could Push Up Rates and Debt Levels.”) This is another voice warning about the ill-timed fiscal stimulus and budget deficit increase late in the economic cycle. In an interesting juxtaposition, the WSJ had an article published last week titled, “Cohn Downplays Concerns Over Rising Inflation, Bond Yields.” Speaking in his position as Trump’s top economic advisor, Cohn maintained that the White House is not worried about an overheating economy. Cohn emphasized, “We know how to deal with inflation. We don’t know how to deal with deflation in this country.”

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Notes From Underground: Let’s Enter the Fray

February 19, 2018

First, thank you to all the readers and friends who posted condolences and sent private notes on the passing of my dear brother Ralph. If you want to see his creativity, search for Dwight Ralphy on YouTube. They have provided me a laugh and reminder of how forward Ralph was as this work was created in the ’80s and ’90s.

For the past couple of days I have been reviewing market action and news stories that purportedly raised the volatility levels of equity, bond and currency markets. In my February 5 post I mentioned that the synchronized key reversals of the three major U.S. indices–Dow, Nasdaq and S&Ps–provided a backdrop that we have not experienced in many, many years. In June and August 2017, the Nasdaq 100 futures put in a weekly key reversal. An outside key reversal is when a market makes all-time highs and closes below the previous week’s low. This technical indicator has been a mainstay of the week of high quality technicians and last year’s failure of this long trusted indicator drove market seers crazy.

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Notes From Underground: This Is A Week Filled With …

January 29, 2018

This week for global macro traders is packed with data and policy statements that can ignite the volatility fuse. On Tuesday night, President Trump, the conquering hero of Davos, will deliver the State of the Union address. Chair Janet Yellen will oversee her final FOMC meeting this week. There are also several data releases Thursday and Friday, culminating with the unemployment report.

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Notes From Underground: How I Learned to Stop Worrying and Love the Donald?

January 25, 2018

It seems that the White House emptied and traveled to Davos in an effort to gain control at ground zero for access journalism. The fawning media has been the epicenter for President Trump’s assault of the airwaves. The anti-globalist, drainer-of-the-swamp has become the story emanating from the Alps in an effort to destroy the memory of Chinese leader XI at last year’s conclave. President Donald was the perfect foil for the globalist masquerade party just after his inauguration but in 12 months he has hijacked the entire soiree. On Wednesday it was Trump’s minions, Mnuchin and Ross, threatening the world’s money lords with the commencement of a global trade/currency war as the U.S. Commerce Secretary was sending soldiers to the ramparts with threats of throwing dead green presidents to their doom.

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Notes From Underground: Some Issues to Contemplate

January 16, 2018

On Tuesday, Rick Santelli and I spoke, and, as usual it was way too short as we couldn’t cover anything in the depth we would’ve liked. Regardless, it allows us to get out front of many investment ideas. Rick has a stable of high quality guests: Bianco, Boockvar, Biderman, Trichet, Lazear … the list goes on and sometimes I wish my readers would let CNBC know how important Rick is for a larger discussion about ideas besides the most recent Apple price and latest Trump tweets.

Click on the image to watch me and Rick discuss the euro and the central banks.

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Notes From Underground: Europe Takes Center Stage (Again)

January 15, 2018

It is always a pleasure to talk with the Richard Bonugli at the Financial Repression Authority. Like Anthony Cruedele of Futures Radio, Richard is a very astute financial mind, which allows for deep discussions in a longer format. We cover several issues discussed in Notes From Underground so I’m sorry if it seems redundant, but I will say that we take a deeper dive on the issues. The segment taped on Wednesday, January 10 so from a trading perspective the information may be stale. But from an investors’ perspective it will still be relevant as the markets begin to unravel the mysteries of a new year. We dive deeper into Europe as I am certain the continent will provide much of the tinder for market volatility in 2018. This weekend proved the case as several stories from Europe propelled the DOLLAR lower as U.S. markets were on holiday for Martin Luther King Jr.’s birthday.

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Notes From Underground: Feeding the Ducks (Part Two)

January 10, 2018

Tonight, I’d like to expound on the recent musings from Chris Whalen, titled, “Bank Earnings &Volatility.” Whalen stresses that the FED will not be selling assets but merely ending “its reinvestment of cash when securities are REDEEMED,” (emphasis mine). In what I consider a key point raised, Whalen said, “Yet as we and a growing number of investors seems to appreciate, the FED cannot force up long-term rates so long as it is sitting on $4 trillion worth of securities THAT IT DOES NOT HEDGE. More given that the Treasury intends to concentrate future debt issuance on short-term maturities, downward pressure on long-term bonds yields is likely to intensify.” Whalen also said, “What the FOMC has done to the markets via QE is essentially reduce potential volatility by holding securities and not hedging these securities.” The key point is enhanced by the fact that both the ECB and BOJ do not hedge their security exposure either so volatility has been diminished by the reduced hedging.

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Notes From Underground: The Same Old Song, With a different Beat (Since 2017 Be Gone)

January 4, 2018
After a sharp selloff late on December 29 the market has regained its mojo and rallied 2%. While the first two days of trading for the European markets were not confirming the S&P rally, the DAX and Euro Stoxx 50 rallied with the EURO STOXX 50 closing back above its 200-day moving average on Thursday. The consensus from Wall Street analysts is for emerging markets and Europe to be better alternatives to U.S. investment prospects. Many quality strategists believe the U.S. equity markets are stretched in its valuation while Europe’s recovery is gaining momentum and emerging economies should be the major beneficiary of a synchronized global expansion.

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Notes From Underground: Things On Our Radar Screen in 2018

January 2, 2018

The last trading day of the year, me and Rick took a BRIEF look into concerns about 2018. Three minutes is not enough time but it does afford the opportunity to put some ideas out that are not people’s screens. As the month progresses we will discuss several items in greater detail. I want to tell readers to review the very vibrant discussion that is taking place on the last blog post. Thank you to all the participants for providing insights into the global macro world. The discussion is first class, representing dialectic efforts, not validation. (A tip of the cap to  Dave, Stefan Jovanovich, Chicken, Big Man  and Professor Waspi for enhancing the quality of analysis.) Dave Richards and Asherz have been regular contributors and have certainly been on top of the precious metals markets and the weakness of the dollar. Tonight I will briefly discuss some issues outside the generally accepted narrative.

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Notes From Underground: Beginning Of the End?

December 28, 2017

Happy and healthy New Year to all of my readers! Thank you for another GREAT year of contributions to make this BLOG a voice of reason in an effort to undermine the accepted NARRATIVE of conventional media investment pabulum. Today, one of the more astute anchors sustained the nonsense that the ECB and Mario Draghi have a SINGLE MANDATE (inflation), which renders the ECB policy easier to decipher as the FED has its self-defined DUAL MANDATE. This narrative as opined by the mainstream analysts is JUST DEAD WRONG. When Mario Draghi seized control of European fiscal and monetary policy in 2012, he said, “WE will do whatever it takes to preserve the EURO ….” and there would be no TABOOS. The ECB’s MANDATE is UNLIMITED and OPEN-ENDED whiles Draghi works to sustain QE and NEGATIVE INTEREST RATES. Economic data has no weight in thwarting the WILL of the ECB.This is going to be a major story in global finance 2018 as the Italians head to the polls.

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