Archive for the ‘Currency’ Category
January 20, 2019
Let me begin by reiterating that this is NOT a political blog but a place for the exchange of ideas dedicated to those who desire to improve trading and investing in order to increase profits. My STRENGTH is bringing an in-depth knowledge of political economy and 40-plus years of trading my own funds (while also managing other people’s money via hedge funds).
My personal political views OUGHT not to be relevant for when it comes to generating ideas. I adhere to the wisdom of Deng Xiaoping: “I don’t care if the cat is black or white as long as it catches mice.” While I might criticize certain persons in any political administration it is merely to criticize actions as a way of comprehending policy outcomes. (For example, my disdain for Steven Mnuchin is solely based on what I deem to be his incompetence, a similar contempt that I held for Tim Geithner.)
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Tags:Chinese Yuan, Davos, Mexican peso, Treasury Secretary Mnuchin, U.S. Dollar, U.S.-China trade
Posted in China, Currency, trade, United States | 7 Comments »
January 6, 2019
“I am a sick man. I am a wicked man.”
So opens the Dostoyevsky novella Notes from Underground. Sometimes I seem to be caught in a similar existential trap as I analyze the global macro data and fundamentals. I am sick because I continue to pursue the opportunities that explode before me. I have taken a turn for the worse and become sick because of the constant flow of manipulated headlines crafted to purposely activate the trading algorithms. Tweets and headlines with no context have become the coin of the realm, especially for high frequency trading operations. But their role in the market jungle does little to dissuade me from honing my craft. The bottom line: Greater preparation and more patience is needed.
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Tags:balance sheet unwind, Ben Bernanke, Gold, Janet Yellen, Japanese yen, Jerome Powell, nonfarm payrolls, QE, Treasury Secretary Mnuchin, U.S. Dollar
Posted in Currency, Fed, Japan, United States | 19 Comments »
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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Tags:Brexit, British pound, ECB, Euro, Mario Draghi, SNB, Swiss Franc, Thomas Jordan
Posted in Currency, ECB, SNB, UK | 8 Comments »
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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Tags:Canadian Dollar, Canadian nonfarm payrolls, Gold, Peter Navarro, Robert Lighthizer, S&P 500, tariffs, tax cuts, trade, U.S. Dollar, U.S. nonfarm payrolls, yield curves
Posted in Canada, Currency, Gold, United States | 7 Comments »
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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Tags:Bundesbank, corporate debt, ECB, Fed, FOMC, infrastructure, Jens Weidmann, U.S. Dollar
Posted in Currency, Debt Market, Fed | 14 Comments »
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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Tags:accommodative, Angela Merkel, Emmanuel Macron, EU, EUR/GBP, Europe, Fed, FOMC, inflation, Jerome Powell, Theresa May
Posted in Currency, Europe, Fed | 4 Comments »
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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Tags:Fed, FOMC, Gold, Japanese yen, rate hike, U.S. Dollar
Posted in Currency, Fed, United States | 5 Comments »
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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Tags:Angela Merkel, BOJ, capital key, ECB, Euro, Europe, France, Germany, Japan, Kuroda, Mario Draghi, QQE, Yen
Posted in BoJ, Currency, ECB, France, Germany | 5 Comments »
