It has been an interesting first month of trading as markets have gone from searching for inflation fueled by a rise in commodity prices and a weakening dollar, especially in regards to emerging market currencies. The commodity rally coupled with an upward thrust in emerging markets ran into the headwind of the spread of the Coronavirus from Wuhan, China to several other nations. The whiff of inflation was subsumed by the onset of fears of global deflation as investors continue to be concerned about China economic activity grinding to a halt as quarantines are the prescribed remedy for preventing a genuine pandemic.
Archive for the ‘trade’ Category
Notes From Underground: Ho Hum, Time For Another Unemployment Number
February 6, 2020Notes From Underground: All Tweets, No Substance
December 3, 2019On Monday President Trump sent out an early morning TWEET that sought to admonish the FED for keeping interest rates too high, coupled with an accusation that “two South American have been presiding over a massive devaluation of their currencies, which has not been good for our farmers.” ALL THE PRESIDENT’S MEN IN THE CAPACITY OF ECONOMIC AND TRADE ADVISERS OUGHT TO BE FIRED FOR MALFEASANCE.
This tweet was so off base that it should have forced the media into hyper critical mode to deconstruct its flaws. Brazil and Argentina have not been intervening to depreciate their currencies.
Notes From Underground: Unemployment Data? Frankly, I Don’t Give a Damn
August 1, 2019Usually, when the first Friday of the month comes around my concern turns to nonfarm payrolls and average hourly earnings. But after the Powell press conference on Wednesday and Trump’s tariff tweets Thursday, my analysis is Gone With the Wind. As I discussed in the last few blog posts, Trump’s tweets on tariffs have cornered the Powell Fed as concerns arise over just how much global growth is going to be negatively impacted.
Notes From Underground: Does Fear of Increased Tariffs Trump U.S. Data?
July 28, 2019This is not a rhetorical question but a very direct concern about the leverage that President Trump has in dealings with Federal Reserve Chairman Jerome Powell.
After listening to European Central Bank President Mario Draghi’s press conference Thursday and then learning about the White House meeting about the possibility of currency intervention, I am wondering whether the president is using TARIFFS as leverage to satiate his desire for lower U.S. interest rates.
Notes From Underground: G-19? Wherefore Art Thou AMLO?
June 27, 2019We at Notes From Underground are keeping it short tonight, but including a link to a podcast I recorded with the White Wave Trading. I sit down with the group one or twice a week in order to analyze potential trading opportunities. Thursday’s discussion revolved around potential outcomes from this weekend’s G-20 meeting in Osaka, Japan.
The major theme is President Trump and Premier Xi Jinping coming to a decision on the Chinese agricultural tariffs on American exports. Also, another issue to be raised next week: Why Mexican President Obrador decided to pass on the G-20 meeting given that there’s so much positive potential for Mexico at this meeting. Enjoy!
Click here to watch and/or listen to the podcast
Notes From Underground: Trump Has Weaponized The Dollar. Do the Longs Know?
June 12, 2019Some shots were fired last Friday, but it seems that the markets can only hear the siren song of White House tweets. There was an important story from Bloomberg reporter Saleha Mohsin titled, “Trump’s Currency War Plan Puts Treasury and Commerce at Odds.” The article noted that “a Commerce Department proposal to impose countervailing tariffs on countries that it determines have devalued their currencies has alarmed officials at the Treasury Department.”
It appears that President Trump has grown frustrated by Treasury’s failure to name any country as a “currency manipulator.” It has been Treasury’s bailiwick to monitor the foreign exchange interventions of countries who strive to artificially hold down the value of their currencies in an effort gain a competitive advantage versus any G20 country, especially the U.S. (from the Treasury Department perspective).
Notes From Underground: Mexico Tariffs Suffer From the Three Ills
June 2, 2019And what might those be, you ask? Ill-conceived. Ill-timed. Ill-advised.
Notes From Underground: Relevant Issues for Today’s Global Macro Environment
May 13, 2019As the latest drama of the U.S./China trade negotiations unfolds, there are several that continue to boil. The president is tweeting less about stock market valuations and more about the revenue impact from the fresh tariffs On Sunday, Fox News’ Chris Wallace disrobed Larry Kudlow. The economic adviser epitomized the age-old adage: “An honest person sent abroad to lie for their country.” Yes, Mr. President. A tariff is a tax on your populace. If tariffs are great for the U.S. economy, then raise them 1000% and balance the budget without inflicting any harm on Americans’ pocket books. [Yes, that’s sarcasm.]
Notes From Underground: Making Sense Of the Jabberwocky
May 7, 2019Fans of Lewis Carroll should know the whimsical poem from Alice in Wonderland that comes across as complete NONSENSE. The collection of tweets from the White House is the modern day version of the Jabberwocky. On Friday Trump tweeted about how well the talks were going with Chinese and that they were close to completion with a positive outcome. So between that and a strong jobs number, the U.S. equity markets had much to celebrate
Notes From Underground: Lighthizer, Always At the Ramparts Of Trade Battles
April 8, 2019As the second quarter begins, the financial markets seem fixated on China/U.S. trade frictions, or lack thereof. This narrative is old and stale. For those new to the realm of international relations, be aware that China will slow-walk these negotiations. There will be many attempts to “agree to disagree.” For example, in Monday morning’s SOUTH CHINA MORNING POST, there was an article titled, “China Refuses to Give Up ‘Developing Country’ Status At WTO Despite US Demands,” about China’s “privileged position” at the World Trade Organization. In the simplest terms, the WTO allows for countries to self-define as developing country status. This brings certain rights that allow for longer transition periods before they have to be in full compliance with WTO rules and regulations. This is described as “Special and Differential Treatment.”