Archive for the ‘United States’ Category

Notes From Underground: Trump Delivers on Using the Dollar as a Policy Tool

April 12, 2017

In an interview with the Wall Street Journal, the tweeter-in-chief was reported to have said, “The DOLLAR IS GETTING TOO STRONG.” As some pundits discussed, instead of Trump calling China a currency manipulator it seems he wants to use the dollar as a cudgel to pressure others into not embarking on policies to weaken their currencies. As I wrote on April 2:

“The Trump Administration’s efforts to curb the U.S. trade deficit may see the executive branch try to depreciate the U.S. dollar if Secretary Mnuchin and Secretary Ross fail to persuade certain global actors to embark upon policies to adjust their current account and trade surpluses. The Fed’s recent tightening has not rallied the dollar–it actually closed lower on the quarter–so if the political status quo is sustained in Europe and no new political crisis emerges, the DOLLAR will become a barometer of Trump’s policies on trade.”

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Notes From Underground: The Unemployment Report Revealed Little

April 9, 2017

The headline nonfarm payroll number was much weaker than expected and confused traders because it was so wide of the April 5 ADP release of 263,000, but the rest of the data was tepid though not weak enough to dissuade the FOMC from further efforts to raise rates. The important average hourly earnings was up 0.2%, in line with expectations, but the weekly hours worked slipped 0.1, which may have been in response to the early March storms. The unemployment rate dropped to a recovery low of 4.5% but that may be because of the amount of workers having left the labor force. The markets’ initial reaction to the headline NFP was the bonds rallied, the dollar weakened and the precious metals rose. By day’s end all the moves reversed from early rallies inspired by the U.S. missiles fired at Syria. The market had deemed the cruise missiles fired at the air force base in Syria as a market destabilizing event, spurring a purchase of what are deemed safe haven assets: GOLD, YEN, BONDS. But the end of day reversal nullified Syria as a one-off event. So the market is confused as to the genuine impact of the unemployment report and we will have to wait for more economic data to weigh all the “communication” coming from FED speakers. Chair Yellen will be speaking with a Q&A session on Monday afternoon so late market action should not be discounted.

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Notes From Underground: The Second Quarter Begins

April 2, 2017

First, let me apologize to my readers. I erred when I said Marine Le Pen made it to the second round of the 2012 French presidential election. Reader Al 13 corrected me. It was her father Jean-Marie Le Pen who made it to the second round in 2002 and got trounced, garnering 18% of the vote to Jacque Chirac’s 82%. But read Al 13’s comment on the previous post because he notes that if the second round were to be a choice between Le Pen and one of the two far-left candidates–Melenchon or Hamon–the impact would be highly volatile for European markets.

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Notes From Underground: A Quick Take On Today’s Key Points

March 23, 2017

The vote on the Trump health care plan is important only from the perspective of what the Freedom Caucus was promised in return for acquiescing to the desires of the White House. President Trump is desirous of a win, any win and the Freedom Caucus seems to know they have great leverage in the current political scrum. Whatever the House passes the Senate will have home field advantage and last bat so the initial Trump victory will Pyrrhic at best. What was compromised to assuage the conservative wing of the Republican party? How far will Trump have bent to bring this deal to fruition? The strident nature of the Freedom Caucus has been elevated and what value was extracted?

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Notes From Underground: FRA Podcast Replay (January 29)

March 19, 2017

It has been a month since I last wrote. My hiatus was inadvertently extended as Ecclesiastes certainly entered my personal life. My sister Joyce suddenly passed away, which caused me to slow my mind and reflect on many things. Losing your baby sister will  cause one to ponder, or as it was said in Cool Hand Luke: “When a man’s mother dies and he gets to thinking rabbit and running, a night in the box.” So I have put myself in a mental box. However, I have also experienced the birth of my second grandson, thus to every season a time and purpose.

During the seven-plus years I have been writing Notes From Underground I have shared many life-changing moments with my extended family of readers. So it is with a renewed spirit and laser focus thoughts that I embark on analyzing the global-macro world in search of profitable trades and investments. The FRA podcast I posted January 29 (click the highlighted text) is a renewal of this year’s focus on crafting the NOTES narrative. There has been much in the way of global political events during my hiatus but I will refer to some as significant in various aspects as we proceed.

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Notes From Underground: CNBC Santelli Exchange, February 21

February 24, 2017

During my hiatus, I spoke with Rick Santelli (click on the image below) to discuss some of the new issues presenting investment opportunities, in addition to concerns surrounding potential negative fallout from ill-conceived models, such as the effect of the border adjustment tax on the global financial system.

Yra and Rick, February 21, 201 6

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Notes From Underground: Just a Song Before I Go

February 14, 2017

We had to get back home

And when we opened up the door

 I had to be alone
Notes From Underground will be taking a short break. I will be relaxing unless something major breaks, in which I will chime in with commentary. I will also be reissuing previous blogs related to Greece and the IMF from these dates:
July 20, 2011
November 9, 2011
November 26, 2012
May 26, 2015
Every now and then I like to revisit the 1,200 or so blogs I have written since December 2009 and take a measure of their relevance in today’s world. WordPress has a high quality archive so my readers can scroll back and look to see where we have traveled since the inception of Notes From Underground.
Now, let’s look at Tuesday’s testimony from Fed Chair Janet Yellen before the Senate Banking Committee, as well as other news tidbits.

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Notes From Underground: Another FRA Podcast

January 29, 2017

Tonight I am posting the latest episode from the Financial Repression Authority (click on the blue link to listen). I do these for no remuneration as I think the information flowing out of this group creates great conversation and can generate some very profitable investment opportunities. Yes, it’s 34 minutes long but it is more LEARNATIVE than the network news. So pour a stiff whisky and listen while doing other reading. I share this with, you readers because I am honored to be a part of this great dialectical process. One of the key points in tonight’s post is the development of a narrative in which to analyze the world of Trump. It is not a partisan narrative but one I am developing as I attempt to discern the unfolding global dialogue being put forward by Team Trump.

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Notes From Underground: Putting Perspective To Our Narrative

January 24, 2017

Let’s be clear about the unfolding political and economic landscape: It is the desire of the Trumpians and the anti-Trumps to control the political dialogue. The media is putting President trump and his appointees under a microscope, which is what the press should always be doing. (My apolitical belief for the fourth estate is that a free press should be responsible in pursuit of the “facts,” but if they have a bias it should be “to afflict the comforted and comfort the afflicted.”) In my opinion, during the past 20 years the U.S. press has devolved into a sycophantic mob as everything becomes about access to those with the greatest celebrity status, which usually means wealthy. The financial media especially bows to the rich because if you are a billionaire your views go unchallenged for fear of being shunned as it  undermines the concept of, “if you’re rich, they think you really know.”

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Notes From Underground: Now Starring in the Music Man … Mario Draghi as Professor Harold Hill

January 19, 2017

Oh yes, we got trouble right here in Frankfurt City! It rhymes with T and starts with G and is spelled Germany. Today (and of no genuine market surprise), the ECB made no adjustments to its current QE and negative rate policy. The press conference was where all the potential market moving “tweets” would take place, but Professor Mario Draghi danced around the very fine questions from the European financial cognoscenti. Draghi was sharp as he insisted that “we need lower interest rates to get higher rates.” Also, when one inquisitor asked if the ECB was ready to DO LESS if inflation reached close to the MAGIC 2% level, President Draghi admitted that we only considered doing more QE (never LESS). Thus, the ECB allowed us a look at the asymmetric BIAS of all central banks. The ECB is far more worried about low growth, low inflation that the main concern is always more. And Draghi’s ultimate fallback position for the construction of counterfactual policy formation is the ongoing deleveraging process in Europe.

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