Sorry. The current situation in the European Union has been well forecasted by NOTES FROM UNDERGROUND so until the storm clouds clear and the Italian ruling coalition begins to initiate some of its campaign proposals I treat everything in Europe as a trade and not an investment. Even the talking heads are waking up to the potential financial damage that bank balance sheets loaded with ZERO RISK-WEIGHTED sovereign bonds can cause a healthy bank’s bloated balance sheet.
Posts Tagged ‘Euro’
Notes From Underground: Is April The Cruelest Month?
April 29, 2018As T.S. Eliot warned in The Wasteland, April is the cruelest month, as the thaw of winter gives way to hope as the world returns to rejuvenation. April has delivered the first quarter corporate results and it is no exaggeration to state that revenue and earnings have exceeded expectations. However, the equity market results have failed to respond to the robust numbers as the SPOOS have gained a mere 1.25% and remain unchanged on the year. The NASDAQ 100 has been a much better performer as the TECH sector continues to cruise.
Notes From Underground: Riding High in April
April 25, 2018In building on the discussions in Tuesday’s POST it is important to note that the debt discussion that has taken place in Notes From Underground is gaining traction as an important piece of the financial narrative. The failure of the SPOOS, NASDAQ, and DOW to gain traction with the robust earning releases is forcing the perplexed to confront the impact and collateral damage from Ben Bernanke’s Portfolio Balance Channel, also known as QE or large-scale asset purchases.
Notes From Underground: The Week That Was …?
March 26, 2018What a week last week turned out to be (and that was if you just followed the headlines). Tariffs are taxing the global financial markets as they try to guesstimate the economic impact from the effect of tit-for-tat responses to the initial U.S. measures efforts to gain support for dealing with Chinese trade violations. The FOMC added to market volatility as the suspense over three or four rate hikes still impacts the DOT PLOTS. The Bank of England confused markets as they voted 7-2 to sustain the current interest rate policy, even though consensus assumed a 25 basis point increase. By week’s end the confusion reverberating around the globe did serious damage to equity markets as the S&PS were down almost 6 percent on the week and the European stock indices continued their continued their selloff, making them the weakest of all regions (in contravention to the punditry’s call for the buying of European stocks).
Notes From Underground: Jay Powell’s Coming Out Party
February 26, 2018There are several important areas for discussion but first I wanted to post a podcast from the Financial Repression Authority that I participated in last Wednesday with Jim Bianco and Peter Boockvar. Pour your libation of choice and have a listen. Please post any questions or points on information on the blog in order to stimulate a discussion that creates potential profitable trading ideas.The moderator Richard Bonugli does a great job of provoking discourse but allows the conversation to freely flow in search for high quality dialectic. Enjoy.
Notes From Underground: Let’s Enter the Fray
February 19, 2018First, thank you to all the readers and friends who posted condolences and sent private notes on the passing of my dear brother Ralph. If you want to see his creativity, search for Dwight Ralphy on YouTube. They have provided me a laugh and reminder of how forward Ralph was as this work was created in the ’80s and ’90s.
For the past couple of days I have been reviewing market action and news stories that purportedly raised the volatility levels of equity, bond and currency markets. In my February 5 post I mentioned that the synchronized key reversals of the three major U.S. indices–Dow, Nasdaq and S&Ps–provided a backdrop that we have not experienced in many, many years. In June and August 2017, the Nasdaq 100 futures put in a weekly key reversal. An outside key reversal is when a market makes all-time highs and closes below the previous week’s low. This technical indicator has been a mainstay of the week of high quality technicians and last year’s failure of this long trusted indicator drove market seers crazy.
Notes From Underground: How I Learned to Stop Worrying and Love the Donald?
January 25, 2018It seems that the White House emptied and traveled to Davos in an effort to gain control at ground zero for access journalism. The fawning media has been the epicenter for President Trump’s assault of the airwaves. The anti-globalist, drainer-of-the-swamp has become the story emanating from the Alps in an effort to destroy the memory of Chinese leader XI at last year’s conclave. President Donald was the perfect foil for the globalist masquerade party just after his inauguration but in 12 months he has hijacked the entire soiree. On Wednesday it was Trump’s minions, Mnuchin and Ross, threatening the world’s money lords with the commencement of a global trade/currency war as the U.S. Commerce Secretary was sending soldiers to the ramparts with threats of throwing dead green presidents to their doom.
Notes From Underground: Please, Please Pepper Spray Davos
January 24, 2018The U.S. dollar fiduciaries wreaked havoc on markets as Secretary Mnuchin and Commerce Secretary Wilbur Ross hit dollar bulls with a one-two punch that sent the dollar index to three-year lows. I sure hope that Mrs. Mnuchin mirrored the behavior of previous Swiss National Bank (SNB) Chairman Phillip Hildebrand, who was forced to resign in January 2012 when it was discovered his wife made a currency trade three weeks prior to an SNB policy announcement. I am sure that no White House Davos participants acted in any kleptocratic fashion (sarcasm intended). The price of a $650,000 ticket to Davos has to be of some value. Now, moving beyond sarcasm, Secretary Mnuchin broke with tradition to openly suggesting that a weaker DOLLAR is good for American trade and thus economic performance.
Notes From Underground: Feeding the Ducks (Part Two)
January 10, 2018Tonight, I’d like to expound on the recent musings from Chris Whalen, titled, “Bank Earnings &Volatility.” Whalen stresses that the FED will not be selling assets but merely ending “its reinvestment of cash when securities are REDEEMED,” (emphasis mine). In what I consider a key point raised, Whalen said, “Yet as we and a growing number of investors seems to appreciate, the FED cannot force up long-term rates so long as it is sitting on $4 trillion worth of securities THAT IT DOES NOT HEDGE. More given that the Treasury intends to concentrate future debt issuance on short-term maturities, downward pressure on long-term bonds yields is likely to intensify.” Whalen also said, “What the FOMC has done to the markets via QE is essentially reduce potential volatility by holding securities and not hedging these securities.” The key point is enhanced by the fact that both the ECB and BOJ do not hedge their security exposure either so volatility has been diminished by the reduced hedging.
