Posts Tagged ‘China’

Notes From Underground: Into the Weeds on Yen/Yuan

April 28, 2022

In the first post about the YEN/YUAN, we discussed the current significance of the cross, and with it a rising dollar. Now we will provide CONTEXT and NUANCE as to the backdrop of this cross’s significance. It is easy to forget that the Chinese economic miracle is only 40 years old as it began under the direction of DENG in 1978-79 and his rise as China’s leader. By 1994 China is beginning to feel the positive effects of Deng’s policies of white cat/black cat in pursuing modernity and western-style economic growth.

(more…)

Notes From Underground: The Meaning of the Yen/YUAN Cross

April 26, 2022

In the past three weeks I have had the pleasure of doing two major podcasts with two of the most highly regarded global macro thinkers and traders: Zoltan Pozsar and Louis Gave. Our discussions led to an attempt to explain the importance of the Chinese yuan during the current period of CAPITAL ANXIETY. During the past two years the Chinese YUAN has rallied from 7.13/dollar to 6.35, where it has sat for the last six months (a gain of 12%). And, as I have argued for the last 18 months, the strengthening YUAN during the pandemic was a signal that the Chinese were shifting to a more domestic-oriented economy using a stronger currency to enrich its nascent middle class.

(more…)

Notes From Underground: The Week That Was

December 19, 2021

This past week has been the most challenging to recap because at least 20 central banks released statements about their monetary forecasts and outlooks. The most significant banks that we were watching — the FED, SNB, BOE, ECB and BOJ — performed as expected as the FED, ECB and BOJ announced the expected outcomes.

The Bank of England raised its overnight lending rate by 15 basis points as they had already ended asset purchases so a minimal rate increase was all they had to give in order to slow the rise in headline inflation. The Powell FED took the most DOVISH route possible in an effort to placate the Biden White House and its effort to stem the narrative of headline inflation and election outcomes. We at NOTES FROM UNDERGROUND had contemplated a complete end to QE but Powell (in his efforts to do something) merely doubled the pace of tapering laying the outcome to a finality in March rather than June. This is only important if the FED maintains its “forward guidance” of no rate hikes until the U.S. central bank’s BOND PURCHASES have concluded.

(more…)

Notes From Underground: Trade Complications (The Power of the Nation-State)

July 25, 2021

That headline is courtesy of Whitewave Trading, an interactive chat room in which high-powered analysis for traders generates some great trades and uses NOTES FROM UNDERGROUND to add a fundamental view. Monday’s Whitwave has this advice: “When and if they ever taper, I’ll turn over the trading card.”

For those never on the trading floor this is in reference to going from the BLUE buy side to the RED sell side. In a follow up to last week’s blog post this makes perfect sense for as it seems that a critical indicator to an equity correction in the U.S. would begin with the FED actually moving to a real TAPERING or in Peter Boockvar’s words, A QUANTITATIVE TIGHTENING.

(more…)

Notes From Underground: A Question to Ponder

July 5, 2021

Do China and Russia have state authorities investing in the markets?

If the answer is yes then global investors have many issues to consider. The use of massive amounts of leverage (perfectly legal) utilized by Sovereign Wealth Funds and national pension funds have the power to distort prices as much as the involvement by the FED, ECB and BOJ to cause major distortions in the credit markets. Add in the Bank of Canada, Reserve Bank of Australia, the RBNZ and the price of credit is as overvalued as COPPER during the onset of the pandemic.

(more…)

Notes From Underground: An Open Letter To the G-7

June 2, 2021

Every G-7 or G-20 meeting homage is paid to the idea of free markets via the market driven value of each nation’s currency. This is hogwash of the highest order in the world of central bank asset purchase programs. The clarion call is that QE is a domestic-based program meant to meet the inflation target set by the nation’s policy makers and any impact on a nation’s currency is just unintended consequences of keeping a country out of a potential disinflationary cycle. Every central bank statement except the U.S. has a sentence or two about the relative value of a nation’s currency and if too strong then concern about a strong currency being a headwind in meeting the illusion and capriciousness of that 2% inflation target.

(more…)

Notes From Underground: The Arrogance of Janet Yellen

April 8, 2021

Since I last wrote, it has been a time for thought, contemplation and discussion. This week I recorded an FRA podcast with Richard Bonugli and Larry McDonald. It was the equivalent of the “Wide World of Sports” as we traveled around the world looking at profitable investment ideas. Enjoy the best 60 minutes in financial global macro analysis.

Click here to listen to the podcast.

(more…)

Notes From Underground: Have You All Lost Your Minds?

January 28, 2021

No, I am not referring to the gyrations in the realm of heavily shorted stocks and the attacks by the populace of Sherwood Forest to drive valuations ever higher.

The insanity following Wednesday’s FOMC statement and the Powell press conference leaves me contemplating the works of Kindleberger and Minsky. Complacency in financial markets relying on the kindness of strangers is setting the course for continued madness in all financial asset classes. The POWELL PRESS CONFERENCE YIELDED WHAT OUGHT TO HAVE BEEN THE HEADLINE FOR ALL FINANCIAL NEWS: FED CHAIR POWELL SAYS REAL UNEMPLOYMENT RATE IS 10%.

(more…)

Notes From Underground: From Bully Pulpit to Blabbermouth

April 21, 2020

ATTENTION: What you are about to read IS NOT A POLITICAL STATEMENT for I don’t care about your politics and you shouldn’t even know mine. The OVAL OFFICE provides the U.S. president a pulpit in which to amplify his/her voice in a an effort to tip the policy debates in their favor. But one a policy is ill advised from a trade/financial perspective and we will shout it from NOTES FROM UNDERGROUND.

(more…)

Notes From Underground: Man Plans, God Laughs

February 2, 2020

It has been three weeks since I have sat down to articulate my thoughts on the global macro financial system in an effort to profit from trade/investment potentials. A lot of the discourse with many readers the focus was on the situation in the Middle East.

(more…)