Archive for the ‘Currency’ Category

Notes From Underground: Narrow-Minded Hypocrites, All I Want Is the Truth

December 13, 2018

Gimme some truth. That is what John Lennon craved back in 1971. In 2018, it seems that investors and traders crave the same thing:

       I’m sick and tired of hearing things
       From uptight, short-sighted,narrow-minded hypocrits
       All I want is the truth, just Give me some truth
       I’ve had enough of reading things
       By neurotic, psychotic, pig-headed politicians
       No short-haired, yellow-bellied, son of tricky dicky
       Is going to mother hubbard soft soap me
       With a pocketful of hope
       Money for dope, money for rope

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Notes From Underground: Not Such Benign Neglect for the Payrolls Report

December 9, 2018

In what appeared to be a “soft” unemployment report, the equity markets discarded the  traditional Goldilocks response to weaker data and spent the entire session in sell mode. That sent the S&Ps to a 4.5% LOSS for the week. The BULLS are in trouble for the market rejected what was regarded as POSITIVE news and continued the 11-week long correction. The G-20, “dovish” FED and softer data were cast aside as new negative stories, like the arrest of a significant Chinese business leader and the Mueller investigation closing in on the president. OPEC’s agreed cut in oil production sent crude oil prices moderately higher on Friday, which would have given a boost to the S&Ps as energy stocks would have been bid in past occasions.

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Notes From Underground: Much to Be Thankful For. Now Back to Work

November 25, 2018

Tonight, we at Notes From Underground will clean up some unfinished business. We will discuss a couple of important speeches and articles from the past two weeks.

Then I will answer the questions Mike Temple made on the previous blog post. In responding to some of Mike’s points I come back to the idea of INFRASTRUCTURE, which I addressed in a few other blog posts. The reason I foresee aggressive fiscal stimulus put forth by the G-20 is precisely because of some of the fears that Mike raises about the damage coming to the investment grade corporate bond market while the FED’s shrinks its balance sheet and raise interest rates. It may be having a greater impact than the FOMC wants to acknowledge.

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Notes From Underground: Another FRA Podcast

September 30, 2018

I am posting the latest PODCAST from the Financial Repression Authority (FRA), in which Peter Boockvar and I talk markets with Richard Bonugli. This PODCAST sets out the market issues that financial markets will confront in the fourth quarter.

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Notes From Underground: Powell Confirms It Ain’t Rocket Science

September 26, 2018

Over the last nine years, a major theme from the wit and wisdom of Notes From Underground has been that FED policy is not rocket science, the premise being that no matter how much math is applied the forecasting ability of the FOMC has been less than stellar because of the use of flawed models. Unlike genuine rocket science in which astrophysicists can land a vehicle on the moon and return the capsule to a pre-programmed landing site, the FED cannot predict the economy with any sense of proximity. Yet the FED built a massive balance sheet depending on those flawed models. The financial media was awed by the high maths of the FED‘s models so mainstream pundits offered little to no pushback, genuflecting at the altar of academia.

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Notes From Underground: Fed Forecast — 100% Chance of a 0.25% Rate Hike

September 25, 2018

The market is absolutely, positively certain that the FOMC will increase the FED funds rate by its Greenspanian 25 basis points, although there are some Wall Street pundits suggesting the possibility of a 50 basis point hike because of the recent return of robust data. I have suggested that the FED would have done well by raising rates in a more aggressive fashion. But with the November elections within polling range, Trump’s trade policy causing angst in the emerging markets and several of U.S. trading partners, it’s looking very unlikely (less than 5 percent chance).

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Notes From Underground: Around the World With Yra + Rick

September 20, 2018

On Thursday Rick Santelli pushed and prodded and as a result, we were able to travel from Japan to Europe in an effort to discuss some of the more pressing issues confronting the global macro world. First, we stopped in Japan to discuss how the BOJ and Governor Kuroda will be able to extricate itself from five years of QQE which has seen the BOJ accumulate Japanese debt and equities. Of course the end game is to reach the self-imposed inflation level of 2 percent that has proved to be an agonizing level to achieve. As a reminder, when a nation is saddled with huge debts the best relief is to be found in inflation, which results in an ultimate money illusion as debts are paid back with an ever-depreciated currency.

Click on the image to watch me and Rick discuss global policy.

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Notes From Underground: Larry Kudlow, White House Eunuch

September 17, 2018

Make no mistake, Larry Kudlow is worthless as a source of financial wisdom because he wishes to be everybody’s friend. That prevents him from having a discussion about serious financial concerns. The Kudlow mantra is: Pay attention to the growth coming from the tax and regulatory reforms put in place by the Trump administration. I agree with the great need for regulatory reform, but the Kudlow mantra of “don’t worry about budget deficits because growth will take care of it” is RUBBISH. The Trump administration has increased spending while cutting taxes, which in my opinion has merely resulted in INTERTEMPORAL MISALLOCATION. The TRUMP White House has merely brought forth demand from the near future with no genuine way to pay for it. This is of course right out of the Nixon play book in which “we are all Keynesians now.”

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Notes From Underground: Trump Moves Markets Without Moving His Fingers

August 21, 2018

The noise just keep on coming and each are disrupting the markets in its own way and the president. Monday’s headlines from the financial press had large impacts on GOLD, COPPER, EQUITIES, and, of course, CURRENCY markets. Let’s look at the substance of the comments.

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Notes From Underground: Depending On the Outcome of Rational Actors?

August 19, 2018

So much of social science is dependent on various actors making rational decisions. Economics has regularly proven that “actors” certainly fail to act rationally as manias, crashes and panics in repeated form are proof (see Charles Kindleberger). In the realm of politics, the dependence on nation-states to behave rationally has led to many major policy errors. During the Cold War the balance of nuclear weapons prompted both super powers to remain reticent to embark on direct confrontations and avoid an unthinkable shooting war. The fear of world destruction also meant that the USSR and UNITED STATES would leash their “allies” to prevent any direct conflict between the two major hegemonists.

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