Now that the first six months of the year have come and gone, the markets have a cacophony of events to look forward to as algos react to price, and fundamental macro analysts are trapped between WHAT OUGHT TO BE. The current concerns over tariffs, trade wars, strife between friends/allies, political uncertainty in Europe, Middle East conflagrations, the Russia/Saudi alliance on energy, Chinese growth concerns, RISING U.S. INTEREST RATES AND INCREASED QUANTITATIVE TIGHTENING (along with elevated TREASURY FUNDING NEEDS), decrease in capital inflows into emerging market economies leading to potential dollar funding concerns and U.S. Congressional elections. Yet, the markets remain are not pricing in the relevance of such concerns. Wise traders and investors do not fight markets but profit from the opportunities presented. To do otherwise is mere commentary. So to paraphrase John Maynard Keynes: When the facts change so do I, what do you do madam?
Posts Tagged ‘Gold’
Notes From Underground: Are We Reliving 1930?
June 25, 2018Upon taking some time to reflect on the current state of the global macro world it seems that the most relevant are the years between 1928 and 1933. This was when the U.S. Congress was debating the famed Smoot-Hawley tariffs while the Treasury was reining in spending, and the FED was tightening liquidity and credit. While we don’t have a restricted Treasury (quite the opposite, actually), the Fed seems intent on raising rates to curtail the impact from an ill-advised fiscal stimulus at a time of 3.8% unemployment.
Notes From Underground: Headlines Drive the Algos and the Circle Remains Unbroken
June 12, 2018I’m going to be off for a few days, even if this Fed meeting proves to be the most market-moving week in many years.
The news from North Korea proves to be a non-event (as suspected). On Wednesday, we get the FOMC statement, which OUGHT to meet market expectations with a 25 basis point increase and some sense of the interest on excess reserve (IOER) rate in reference to fed funds. There is much discussion about the FED reaching “normal” interest rates, meaning neither too weak nor too strong to reach its dual mandate.
Notes From Underground: The Importance of Being Lighthizer
May 24, 2018The plot thickens as the media is filled with one leak after another in regards to tariffs or threats to embark on a road to perfidy by invoking section 232 of the 1962 Trade Act: Using the broad cover of national security to justify increased import duties on autos. [In a hat tip to A. Limey] It is time to acknowledge that the “brain” of President Trump’s trade team is Robert Lighthizer.
Notes From Underground: More FRA Podcast
May 2, 2018On Wednesday, I had the great pleasure of talking with David Rosenberg, one of the most prominent financial analysts of the last 30 years. As moderator Richard Bonugli sets the tone, the conversation covered many of the topics discussed in Notes From Underground throughout the past year. The power of podcasts can provide so much information in a condensed format, which would take 100 posts to reproduce. Enjoy the discussion and recognize that this was recorded three hours before the release of the FOMC statement.
Notes From Underground: Another FRA Podcast
May 1, 2018While waiting for the FOMC‘s rate decision on Wednesday, I am posting a new PODCAST in which I discuss the global macro situation with a woman who whose work I had not been familiar. Nomi Prins has written a new book called Collusion, in which she investigates the role of central banks in its current predicament. I thoroughly enjoyed the 51-minute podcast as Richard Bonugli does a fine job of allowing the guests to discuss in deep detail. I will certainly be buying the book (it was released Tuesday) as it explains in detail what the central banks have accomplished in destroying the signalling mechanisms of capitalism and markets. The Financial Repression Authority has been an important platform for allowing deep discussion on matters of global investment concerns. Enjoy the discussion as I await my readers feedback on the issues we covered and hope it will lead to profitable trade opportunities.
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: Strange Days Indeed
April 17, 2018The market has several themes it is trying to digest, which made Tuesday’s price action interesting. Reported earnings have been as strong as whispered and with the Syrian bombing over the weekend, the markets had time to analyze the outcome (and as usual it was treated as a minimal event with no proliferation).
On Sunday night there was an immediate rally as the SPOOS gained 0.5 percent on the open. Strong earnings kept the rally in gear but what’s interesting that the financials failed to hold their initial rallies. This is important because most analysts were predicting significant growth in bank ROES, especially for the large Wall Street banks. Goldman’s FICC revenue increased by more than 20 percent as trading volatility provided an opportunity for one of the few remaining large prop shops remaining on the Street. The Goldman rallied fizzled and finished 2 percent down on the day.
Notes From Underground: A Podcast With Futures Radio
April 12, 2018On Monday, I taped a podcast with Peter Boockvar and Anthony Crudele, the host of Futures Radio. Anthony does a splendid job of getting to the crux of the investing mind. Enjoy the 36 minutes of conversation.
The yield curve continued to flatten and even Rick Santelli was able to question Professor Ken Rogoff about the FED‘s most recent efforts to raise interest rates. There are now voices raising concerns over the continued flattening of the curve, which will remain a theme here at NOTES. As tensions eased in Syria the GOLD gave back all of Wednesday’s gains while holding onto a slight increase for the week. The rise in short-term yields without any new political revelations allowed the U.S. dollar to rally. Enjoy the podcast and your weekend.
Notes From Underground: Flattening Curves — All Action and No Talk
April 11, 2018In the political realm, the concern about tariffs has been lessened as Chinese President Xi took the high road with some silky conversation. It is not in the Chinese interest to raise the level of shouting/tweeting, nor to allow the YUAN to depreciate. The last blog post weighed the harm China would do to itself if the YUAN were to depreciate for it would then have to face the acrimony of many nations it is trying to placate. From a TECHNICAL perspective, it appears that the YUAN is going to test three-year lows between 6.11/6.20 to the dollar. As the Chinese tensions eased, the world now turns its eyes to Syria.
