Archive for the ‘Currency’ Category

Notes From Underground: Kudlow’s Dilemma, Tariffs Versus King Dollar

March 18, 2018

The newswires were flushed with either praise about the appointment of Larry Kudlow to lead the National Economic Council, or concerns about his past dalliances with drugs and supply-side economics. This BLOG doesn’t care about one’s past human foibles as we all have failings. But the addiction to supply-side economics is and will be an issue of concern as the White House attempts to push forward with a coherent policy. The great showpiece of last week’s media frenzy over Kudlow was the transparency of what I have referred to as the mainstream media’s desire for access versus genuine discourse. CNBC was giddy over the idea that one of the network’s talking heads was going to be a key figure in forthcoming economic discussions and old loyalty OUGHT to provide greater ACCESS. The questions for the consumers of financial news will be who abuses the relationship more. But enough editorializing.


Notes From Underground: Things to Contemplate

March 6, 2018

Let’s discuss the concept of tariffs with a wider historical perspective:

The Bretton Woods system crafted at the end of World War II provided the U.S. with both an enormous privilege and an enormous burden (a blessing and a curse, if you will). The U.S. acted as the provider with massive amounts of global liquidity but it also became the repository of the FREE world’s excess capacity. The Marshall Plan and the Alliance For Progress acted to spread dollars to our allies in an effort to counteract COMECON and the influence of the Soviet Empire.


Notes From Underground: Ball of Confusion

March 5, 2018

Segregation, determination, demonstration, integration, aggravation,

humiliation, obligation to our nation

Ball of Confusion that’s what the world is today [yeah, yeah]

The sale of pills is at an all time high

young folks walkin’ ’round with their heads in the sky

Cities aflame in the summer time, oh the beat goes on

Eve of destruction tax deduction

City inspectors, bill collectors,

Evolution, revolution, gun control, the sound of soul,

Shootin’ rockets to the moon,kids growin’ up too soon

Politicians say more taxes will solve ev’rything, and the band played on.


Notes From Underground: Jay Powell’s Coming Out Party

February 26, 2018

There are several important areas for discussion but first I wanted to post a podcast from the Financial Repression Authority that I participated in last Wednesday with Jim Bianco and Peter Boockvar. Pour your libation of choice and have a listen. Please post any questions or points on information on the blog in order to stimulate a discussion that creates potential profitable trading ideas.The moderator Richard Bonugli does a great job of provoking discourse but allows the conversation to freely flow in search for high quality dialectic. Enjoy.


Notes From Underground: Please, Please Pepper Spray Davos

January 24, 2018

The U.S. dollar fiduciaries wreaked havoc on markets as Secretary Mnuchin and Commerce Secretary Wilbur Ross hit dollar bulls with a one-two punch that sent the dollar index to three-year lows. I sure hope that Mrs. Mnuchin mirrored the behavior of previous Swiss National Bank (SNB) Chairman Phillip Hildebrand, who was forced to resign in January 2012 when it was discovered his wife made a currency trade three weeks prior to an SNB policy announcement. I am sure that no White House Davos participants acted in any kleptocratic fashion (sarcasm intended). The price of a $650,000 ticket to Davos has to be of some value. Now, moving beyond sarcasm, Secretary Mnuchin broke with tradition to openly suggesting that a weaker DOLLAR is good for American trade and thus economic performance.


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.


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.


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.


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.


Notes From Underground: Quackser Fortune + Horse Manure

December 26, 2017

In the famous Gene Wilder movie, “Quackser Fortune and His Cousin In the Bronx,” Wilder plays a character who picks up horse manure in the street and sells it for its rich nutrients. As horses are outlawed in the Dublin streets Quackser finds himself an unemployed manure sweeper, a negative outcome from Schumpeterian creative destruction. However, it seems Quackser resurrected his business and is now packaging horse excrement as an item of political discourse. Treasury Secretary Steven Mnuchin was the recipient of the newest symbol of public disdain for the recent tax “reform.”