Posts Tagged ‘BOE’

Notes From Underground: More Perspective In the Time Of Reflection

September 12, 2018

First, to all of those in the NOTES community who celebrate the Jewish New Year, I wish you a year of health, peace and prosperity. To those who celebrate other spiritual endeavors I offer you a wish for health, peace and prosperity. Now, to the markets. In the past month I have spent time putting issues we’ve been discussing for the last nine years into perspective. Lately, the airwaves are filled with the accolades laid upon the policy makers who SAVED CAPITALISM. Listening¬† to Paulson, Geithner and Bernanke pontificate on how they acted to save the system is enough to send me into fits of rage as the culprits who failed to act to halt the housing bubble praise themselves for the “Courage To Act.”

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Notes From Underground: Central Bank Palooza

July 30, 2018

Coming on the heels of my first Kenny Chesney concert I am viewing the synchronicity of central banks as a reflection of the rhythms of global financial repression. Last Thursday, the ECB issued its last statement before the summer recess, while this week we have the Bank of Japan tonight, the FED on Wednesday and the Bank of England on Thursday.

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Notes From Underground: The Ball of Confusion Keeps On Rolling

March 22, 2018

Tonight I am posting a PODCAST I recorded Wednesday with Richard Bonugli just after new Fed Chairman Jerome Powell’s press conference. Richard and I covered a great deal of ground in discussing the most pertinent issues confronting the world of global macro. Pour yourself a libation and enjoy the interview. I look forward to hearing thoughts from the readers of Notes From Underground.

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Notes From Underground: Did I Miss Anything?

December 17, 2017

There were myriad central bank meetings last week as the FED, ECB, BOE, SNB, Bank of Mexico and others rendezvoused. With the exception of the Fed, all maintained their current policies. (The U.S. FED raised rates, which was 99% baked in.) The ECB was as dovish (as expected) and President Draghi has a few new issues to confront as Italian elections are scheduled for March 4, 2018. The Italian situation is already impacting sovereign bonds as the Italian 10-year yield rose against the German and French equivalents. BUT I FULLY EXPECT FOR THE ECB TO BREAK THE CAPITAL KEY RULES BY PURCHASING MORE ITALIAN DEBT THAN ALLOWED. POLITICS WILL BE DRAGHI’S MAIN CONCERN.

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Notes From Underground: Quick Note on the BOE and Friday’s Jobs Report

November 2, 2017

Today, the BOE raised interest rates (as expected). But the market deemed it to be dovish and the EUR/GBP rallied 2 percent as the British pound tumbled and the euro strengthened versus the pound and dollar. On Wednesday I cautioned that the EUR/GBP failed to hold below its 200-day moving average and this provided a good technical level. As expected, the FOOTSIE index rallied more than 1 percent as investors appreciated a weaker POUND as beneficial to British corporations regardless of Brexit. The initial release of the statement revealed a 7-2 vote, which on first read was not the expected 6-3 vote so could have been a bit hawkish. But the eight paragraph statement clarified the soft-side of Governor Carney:

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Notes From Underground: A Tale of Three Central Banks

November 1, 2017

The BOJ released its policy statement on Tuesday and it was as expected. The central bank sustained its yield curve control (YCC) policy as the BOJ seeks to ensure that inflation reaches its 2% target. The 8-1 vote by the Governing Committee was a bit dovish as one of the two new members, Goushi Kataoka, voted to extend the purchases further out the curve to prevent 15-year yields from rising. The bank will also have REITS and ETFS to buy if JGB supply runs short. Bottom line is that the NIKKEI made new 27-year highs and the dollar/YEN rallied as the currency gave up some of its recent gains against the U.S. and euro currencies.

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Notes From Underground: Who Gets Eaten and Who Get’s to Eat (Sweeney Todd)

October 15, 2017

As Stephen Sondheim wrote in the dark musical Sweeney Todd, “What’s the sound in the world out there. It’s man devouring man. The history of the world, my sweet, is who gets eaten and who gets to eat.”

I open with this thought in regards to a wonderful op-ed piece in the Barron’s over the weekend by John Curran titled, “The Coming Renaissance of Macro Investing.” Curran has the pedigree of writing this piece as he served his time at one of the greatest global macro funds, Caxton Partners. There are no greater thinker/traders than Stan Druckenmiller or Bruce Kovner. When it came to understanding the role of foreign currencies in creating investment opportunities Kovner is the wisest I have ever had the pressure to read. The last 10 years have been difficult for the global macro discretionary crowd but as John Curran suggests the winds of change are blowing. This is also a theme I have been discussing of late. The big difference in my opinion is that short-term trades will morph into momentum investments.

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Notes From Underground: The More Things Stay the Same, the More the Headlines Change

September 14, 2017

The BOE held true to consensus and kept rates unchanged and maintained its balance sheet at 435 billion pounds, with the votes were exactly the same as the August meeting. The POUND fell on the initial headlines but the algos reversed as it was reported that there MAY be a need to raise rates due to the lessening slack in the economy. Governor Carney is reading from the Mario Draghi book, “Rules For Central Bankers.” He cited Brexit as the cause of a supply shortage because of reduced investment into the U.K. Wow! This is nonsense as stagnant wages are limiting domestic demand but Carney insists the negative fallout is constraining supply. With interest rates at record lows British firms could borrow all the cash they need to finance expansion. Carney needs BREXIT as the cover for his massive error. Remember when he panicked and cut rates following the BREXIT vote?

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Notes From Underground: Can Jackson Hole Foster a “Dynamic Global Economy”?

August 22, 2017

This is the topic of discussion for this week’s meeting in Jackson Hole. For the Federal Reserve system, this is a statement, but I raise it as a question. A long-held theme of this BLOG has been that what the Federal Reserve, ECB, BOJ, BOE and other central banks promote as certainty supported by mathematical models I maintain IS NOT ROCKET SCIENCE.

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Notes From Underground: Unemployment Friday, the Data On Which We’re Dependent?

August 3, 2017

The first Friday of August brings the BLS jobs report. Does it matter for the markets?In my opinion, not unless this number is above 300,000 or the rate falls below 4.1%. Average hourly earnings (AHE) is the critical variable of the economic story. The FOMC and others have been adamant that it is the fear of wage inflation that drives the discussion about either an interest rate increase or a “relatively soon” beginning of quantitative tightening. For our preparation, the market estimate is for a nonfarm payroll number of 170,000, an unemployment rate of 4.4% and, more importantly, a 0.3% increase in AHE. As an aside, a number that Art Cashin likes is the hours worked per week, which is expected to remain at 34.5. The hours worked are examined because even if new jobs aren’t created a strong economy will get employers to seek longer hours for current workers.

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