Posts Tagged ‘Euro’

Notes From Underground: May Day or Mayday Mayday Mayday?

May 3, 2020

On Friday the world “celebrated” May Day, when the red flags of the world’s workers united in solidarity are traditionally unfurled. The fall of the Berlin Wall unleashed the rush for economic development and a plethora of workers in search of capital to lift its productivity. And for the past 30 years have capital and wages have been elevated for the emerging economies yet stagnant for the developed region. It has been capital that has been the recipient of increased profits as global capital went to the lowest wage regions.

(more…)

Notes From Underground: Merkel Doesn’t Approve of Macron’s Package

April 23, 2020

It seems this would be a good headline for the New York tabloids if any mainstream U.S. media outlets actually paid attention to what took place in Europe. Again, EU leaders failed to agree on a large fiscal stimulus backed by a common funding mechanism, or as George Soros and others recommended, a perpetual EUROBOND of at least a TRILLION EUROS or more. The Germans and their running dogs fail to acknowledge that the collapse of the European financial system if the Italians choose the “nuclear option” and say CIAO to the EURO the cost will far exceed any amount being discussed.

(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: The G-7 Meet on Tuesday

April 13, 2020

On Monday, Treasury Secretary Mnuchin said the G-7 will be holding a video conference Tuesday, which will include all the central bankers. What is on the agenda? It has not been announced so we are left to GUESSING. The Swap LINES have been opened, massive asset purchase programs are in place, new facilities have been created and fiscal stimulus is raining down in all the old familiar places. The OIL agreement is in place and the FED has even embarked on a program of exchanging CASH for high yield bond ETFs in an effort to prevent a continued negative feedback loop in corporate debt markets. What is there for the G-7 to discuss?

(more…)

Notes From Underground: Just a Song Before I Go

April 5, 2020

At this time of great chaos in the world I am going to take a 10 day hiatus to sit back and reflect as it is the time of Passover and Easter. These holidays will take on special significance this year as the Covid-19 impacts our plans.

So as I retrench I put forward the words of the Prophet Micah for something to contemplate: “To Act Justly, and to LOVE MERCY and to walk HUMBLY with YOUR GOD.” Wishing all my readers a meaningful period of the holidays before us. I may post a podcast I recorded this morning with Anthony Crudele but that will be it, although I will respond to all questions in an effort to stay alert to critical issues in a rapidly changing global environment. Now to the issues before us.

(more…)

Notes From Underground: The G-7 Was All About the Dollar

March 5, 2020

The other day I called question to the tepid G-7 statement, which was followed by a 50 basis point CUT from the Federal Reserve. On Thursday the Financial Times published a story saying the Fed’s move was counter to a history of G-7 collaboration. Let us first dissuade the popular mythology of the G-7 as relevant to any serious global action. The colonial remnants of the authority of the bailiwick of theĀ  mechanism for the containment of the Soviet Empire are a JOKE. During the financial crisis it was the moves made by China that did more to stabilize global growth than any action by the G-7.

(more…)

Notes From Underground: “It’s Good News Week”

December 10, 2019

What an appropriate song for the band Hedgehoppers Anonymous. This week is loaded with potential market-moving outcomes. On Wednesday we have the final FOMC statement of the year followed by Chairman Jerome Powell’s press conference. The CONSENSUS is for no change in the current fed funds target range of 1.5% to 1.75%. The real key will hopefully be Powell’s press conference as market participants are hoping for any sort of dialogue about the Fed’s role in the repo market.

(more…)

Notes From Underground: The Jobs Picture Is Robust, But Where Is the Wage Increase?

December 8, 2019

This is a rhetorical question of course, for the lack of wage growth is to be found in the vast amount of money chasing a global labor pool.

It is capital that had benefited from the last 30 years of the unleashing workers after the fall of the Soviet Empire and the black/white cat policies of Deng in pursuing growth in China. Now that other emerging economies are attracting capital in an effort to create jobs, there still remains a great deal of downward pressure on wages. Even the movement of supply chains out of China will act as a drag on global earnings as manufacturers will act to hold down wages as way of remaining attractive to foreign direct investment. The world has been watching as Chinese earnings growth has accelerated over the last 10 years but one of the outcomes from the Trump tariffs will be to force a slowdown in China’s wage inflation.

(more…)

Notes From Underground: Was Trump Addressing Mnuchin or Powell?

November 19, 2019

On Monday, Treasury Secretary Steven Muchin and Federal Reserve Chairman Jerome Powell met with President Trump at the White House where the duo “advised” and “forecasted” the economy to the president as 2020 election posturing is in full swing. NOTES FROM UNDERGROUND has maintained that Trump used the tariff threat to cajole Jerome Powell into lowering interest rates, weaken the DOLLAR and end the balance sheet runoff that the administration believed has held back the U.S. economy. What was Powell buying insurance against?

(more…)

Notes From Underground: The ECB and the Swan Song of Mario Draghi

September 10, 2019

We are coming to the end of Mario Draghi and the “Whatever It Takes” era. Remember, the head of the European Central Bank said he would do whatever it takes to preserve the EURO. This fealty to the currency has resulted in a -40 basis point deposit rate, a massive expansion of the ECB’s balance sheet via sovereign and corporate bond purchases.

(more…)