Posts Tagged ‘DOHA’

Notes From Underground: WAS BERNANKE HAWKING A HAWKISH OUTLOOK???

June 22, 2011

I feel like I’m the odd analyst out in that Bernanke failed to impress upon me that he is a DOVE in HAWKS’ feathers. Reading the FOMC statement over and over leaves me wondering just what made the statement so strong an anti-inflation stance. The FOMC release reiterated that the FED is relying on closing the output gaps, “including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate for an extended period.” This is not the musings of an inflation HAWK.

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Notes From Underground: Mr. Bernanke, Remember your Bailiwick is MONETARY POLICY

June 15, 2011

Today’s economic data continued the recent pattern of tepid activity. The EMPIRE MANUFACTURING INDEX was very soft but the analysts believe that the Japanese earthquake played havoc with global supply chains and thus impeded some manufacturing sectors. The CPI number was right on target and thus had no impact. The CAPACITY UTILIZATION and INDUSTRIAL PRODUCTION were on the soft side, which added more concern to the fragility of the U.S. economy. Markets are left with moderate growth while being plagued with the continual problems of the PIIGS.

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Notes From Underground: G-20 is History

November 15, 2010

The G-20 is history and so should be the U.S. Treasury Secretary. It seems that the U.S. was the whipping boy of the new and improved world conclave. It was George W. Bush who set the wheels in motion by granting so much HOPE to the G-20 and the U.S. has been unable to accomplish almost nothing at this forum. So much hyperbole goes into the media guide and so little tangible comes out.

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Notes From Underground: Do financial markets believe in redemption and resurrection?

March 31, 2010

In the world of global financial investment and trading, we always want to examine  what changes appear on the horizon. We see investors shun currencies that have strong underlying fundamentals, while desire weak, structural economies because of high interest rates in a world of relatively low rates. Our  goal is to be on the alert for changes in fundamentals, as well as investor sentiment, for we believe that the nature of trading is one of great dynamism. While others rely on models and “sound” math, we look at the entire picture and try to put together scenarios that will reward whatever strategies our readers wish to employ. Analyzing the macro world to find the rewards of 2+2=5 is our goal.

The first quarter is history but mostly a prologue for the unfolding economic and political events. Tomorrow is the end of the FED buying MBS and we will begin to see if in fact the market has already anticipated the event and priced the long end to the preconceived event. This thought will be tested if the unemployment situation starts to significantly improve. Friday will bring the first positive NONFARM PAYROLL in many moons, but the ADP number today has already tempered the exuberance that had been building for a 300,000-plus number. The Easter- and Passover-shortened market will make a robust number that much difficult to interpret. Whatever markets are available to trade will be erratic and volatile. If we get a 300,000 number because of the census and other government jobs, the interest rate markets will get slammed but we would look to buy a large break in the short end of the market as a one-off number distorted by government hiring will not get the FED excited. The process to tighten will need a pattern of job growth to remove the political heat from a premature increase in rates. Check resistance levels on the 2/10 curve to verify this analysis. Also, the unemployment rate is very important because as job growth takes place, many of the long-term unemployed will come back to search for jobs, which should drive the rate higher in the short-term, even as the job picture improves. The FED will be reluctant to raise rates with a 9.5% unemployment rate, especially with Congressional election season upon us.

In the realm of 2+2=5, there was a story today that members of the G20 (US,UK,France,South Korea and Canada) sent Chinese leaders a letter reprimanding it for obstructing the G20 process for coordinating national strategies to promote global growth. In an FT article, the letter signed by Obama, Sarkozy and the other three heads of state said,

“The need to design cooperative strategies and work together to ensurethat our fiscal,monetary,foreign exchange trade and structural policies are collectively consistent…”

This letter of reprimand is an example of the unbalanced thought that poses as policy on the world stage. First, China is reprimanded for failing to live up to soft agreements when the European has hard agreements that 16 countries with a common destiny cannot even live up to. Second, why would you go on public record with a reprimand to a country that you are asking so much from–currency cooperation and, of course, an Iranian sanctions agreement? Is this really the time for reprimand and recrimination toward a potential partner? Third, the letter reprimands China for failure to push the DOHA round to a final agreement. Do the signees look at their agricultural policies and other non-competitve trade practices that each of their domestic political needs demands? Sugar and ethanol duties on Brazil is a good place to start.

Thus, we enter the second quarter with many  variables in play and a high probability that anything that is on the burner will come to a boil. Tonight there’s a story that China is ready to okay harsh sanctions against Iran and finally move a U.N. vote. We are skeptical to say the least, for it would look as if China was caving to global pressure, but we await the outcome. Welcome to the season on RENEWAL!