On Monday, Rick Santelli and I unpacked a great deal in the few minutes we were allotted on CNBC. The Turkish story remains a key to the global financial markets. The U.S. equity markets interpreted that as all-clear, and the narrative of a dynamic U.S. growth story sustains itself.
(Click on the image to watch me and Rick talk Turkey.)
Tags:capital controls, President Erdogan, Turkey, Turkish lira, U.S. equity markets
Posted in Currency, Equity, Turkey | 19 Comments »
Today we got follow-through in the global equity markets as the EUR/YEN cross rallied to three-year highs since the YEN was, again, the chief recipient of the Bank of Japan’s (BOJ) enhanced efforts to bring forth inflation from a long time deflation-plagued economy. The Japanese investors were busy sending forth YEN in search of yield but also buying NIKKEI stocks in a return for domestic yield. A positive outcome from the sudden desire of Japanese investors into equities may mean an increase in corporate democracy as the demand for dividends is going to increase. The corporate culture in Japan has always been anti-shareholder as the predominant thought is that management owns corporations and the shareholders should be quiet and not make waves. The status quo has been challenged by some foreign activist investors and always rebuffed in a very anti-democratic show of defiance. As the desire for an income stream for investors, look for the ABE government to be supportive of increased democratization of corporate Japan. The flow of corporate money to investors would aid domestic demand, especially as bond returns go negative.
Tags:BOJ, capital controls, central banks, Christine Lagarde, Eur/Yen, global currency wars, IMF, Yen
Posted in BoJ, Currency, Debt Market, ECB, Japan | 5 Comments »
It seems that if the Washington politicos fail to reach a resolution on preventing a fiscal crisis, the biggest loser will be the FED. The U.S. central bank is on record as pushing for continued monetary ease as long as unemployment remains unexpectedly high. The recent definition as forwarded by some Fed Governors and Presidents is around the 6.25% rate of unemployment. If the fiscal cliff is realized, projections are for the jobless rate to rise to between 9.5 and 10.0%. The question for the global financial markets will be: What is the FED‘s response going to be in an effort to counteract the renewed contraction in the U.S. economy?
Tags:Ben Bernanke, Brazilian real, capital controls, Credit Suisse, EUR/CHF, Fed, fiscal cliff, Glenn Stevens, Gold, IMF, Italian 10-year note, negative rate on deposits, Nout Wellink, portfolio balance channel, QE, RBA, SOMA, Swiss Franc, Yen
Posted in Currency, Debt Market, Fed, Fiscal Cliff, Gold, Switzerland | 8 Comments »
My turn. Everybody has had a comment on the appointment of the next IMF Managing Director. First, allow me again to voice my disdain for the IMF as it is usually late to the rescue party and its money and advice have done great harm to many in the the “emerging economies.” Most IMF actions have been to bailout the profligate creditors who made ill-thought out loans with the knowledge that there would be an international lending institution to backstop most losses. The post war world is replete with mal advice and ill-conceived programs that brought great pain to many economies in the underdeveloped world. Saying that does not mean that the IMF will be disbanded so the world is forced to engage the devil it knows.
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Tags:BRICS, capital controls, Christine Lagarde, Europe, Fed, IMF, OECD, rand, South Africa, Trevor Manuel, U.S.
Posted in IMF | 6 Comments »
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