Archive for the ‘United States’ Category
May 21, 2020
This Memorial Day weekend I’m going to take some time to reflect on those who gave their lives to provide the opportunity for all of us. This epidemic has made a shambles of everything we thought was a certainty just three months ago. In that spirit I present a 50-minute discussion with the highly respected Louis Gave of GaveKal on all things macro. Be at peace and enjoy.
Also, a note to Secretary of State Mike Pompeo: Tone down the China rhetoric, especially on the Taiwan issue. A thermonuclear war is not a quality vaccine against COVID (Where are you Tom Lehrer?)
Click here to listen to the podcast.
Posted in Podcast, United States | 8 Comments »
May 17, 2020
(NOTE: The following post is not political in any sense, but just a criticism of a major ill-conceived POLICY.)
This is a story of two pivots.
The first is Federal Reserve Chairman Jerome Powell in January 2019. The second is President Donald Trump in May 2020.
Powell’s pivot away from interest rate increases and balance sheet shrinking created a significant rally in equity and asset prices. Trump’s pivot on the DOLLAR will have disastrous results that are manifested in the GLOBAL DEFLATION that central banks have been trying to prevent. What is the reasoning behind the President’s recent shift away from a weak dollar to promoting the positive outcomes of a strong currency?
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Tags:deflation, Federal Reserve, Gold, Jerome Powell, U.S. Dollar
Posted in Currency, Fed, United States | 17 Comments »
May 10, 2020
Friday’s unemployment report was as bad as forecast and probably worse. Yes, the unemployment rate was not as high as suspected but once the data was analyzed it appears the actual number was close to 20%. The most problematic data point going forward is the AVERAGE HOURLY EARNINGS (AHE). The jobs report revealed a historic 4.7% monthly increase but this was for the worst reason.
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Tags:average hourly earnings, Christine Lagarde, ECB, European Union, Federal Reserve, German Constitutional Court, Jerome Powell, U.S. nonfarm payrolls
Posted in ECB, Germany, United States | 30 Comments »
May 4, 2020
Question: Why does the Swiss National Bank become an important topic for discussion?
Answer: Since Mario Draghi’s “whatever it takes” and “no taboos” comments in 2012 about saving the euro. The SNB has been in a defensive position of trying to prevent a dramatic appreciation of the FRANC as the SWISS acts as a haven for Europeans. The geographic location provides for what economists refer to as home basis.
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Tags:SNB, Swiss Franc, U.S. Dollar, U.S. Treasury Steven Mnuchin
Posted in Currency, SNB, United States | 24 Comments »
April 28, 2020
On Monday, the Bank of Japan promised to buy all the bonds (or as much as necessary). On Wednesday, the FEDERAL RESERVE will offer little as they will be following Dr. Fauci’s lead and proclaim to know little about the end of Covid-19, as Chairman Jerome Powell should. But the key will be the market’s search for a timeline in response to a turn in the economy. Wall Street is looking for forward guidance as to when the Powell Fed will PIVOT from the massive liquidity injections. Will it be an inflation target, employment condition or a return to positive GDP? Powell will use DON’T KNOW and will be patient in removing stimulus as wanting to see any secondary effects.
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Tags:Federal Reserve, Jerome Powell, U.S. Dollar
Posted in Currency, Fed, United States | 31 Comments »
April 27, 2020
First off, I’d like to thank everyone who contributed to the Santa Mike/Covid relief at St. Vincent de Paul, a long-standing charity that gives every penny to those seeking help for hunger, clothing and medical assistance. Thanks to you, we have contributed more than $30,000 and for that Santa Mike is very grateful. As Mike keeps telling me, “Do you know how much $30,000 dollars of food is when bought in BULK?” This truly makes a difference for those struggling to get by in these extremely difficult times. SO THANK YOU ALL SO MUCH. Every donation matters and there are multiples because Peter at St. Vincent de Paul has procured some donors who are doing matches. That only makes NOTES FROM UNDERGROUND worth doing in even bigger ways.
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Tags:Federal Reserve, Gold, inflation/deflation, Jerome Powell, U.S. Dollar
Posted in Currency, Fed, United States | 11 Comments »
April 21, 2020
ATTENTION: What you are about to read IS NOT A POLITICAL STATEMENT for I don’t care about your politics and you shouldn’t even know mine. The OVAL OFFICE provides the U.S. president a pulpit in which to amplify his/her voice in a an effort to tip the policy debates in their favor. But one a policy is ill advised from a trade/financial perspective and we will shout it from NOTES FROM UNDERGROUND.
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Tags:China, Christine Lagarde, deflationary spiral, dollar-denominated debt, ECB, Euro, Fed, U.S. Dollar
Posted in Currency, ECB, United States | 29 Comments »
March 22, 2020
This headline would have seemed ridiculous eight weeks ago but today it has great relevance. If I ran the PBOC (or rather had the totalitarian impulses of President Xi), the command from above would be trade in the overvalued U.S. debt instruments for a 3,000-year vehicle that’s a reliable store of VALUE. The world’s central banks have confirmed a central theme of NOTES FROM UNDERGROUND: It is not inflation they fear but the onset of a DEFLATIONARY SPIRAL.
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Tags:dollar funding, emerging markets, Fed, Gold, swap lines, Treasury
Posted in Coronavirus, Currency, Fed, United States | 55 Comments »
March 5, 2020
The other day I called question to the tepid G-7 statement, which was followed by a 50 basis point CUT from the Federal Reserve. On Thursday the Financial Times published a story saying the Fed’s move was counter to a history of G-7 collaboration. Let us first dissuade the popular mythology of the G-7 as relevant to any serious global action. The colonial remnants of the authority of the bailiwick of the mechanism for the containment of the Soviet Empire are a JOKE. During the financial crisis it was the moves made by China that did more to stabilize global growth than any action by the G-7.
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Tags:Aussie Dollar, Canadian Dollar, Euro, G-7, U.S. Dollar, Yen
Posted in Currency, United States | 26 Comments »
