Posts Tagged ‘gold/euro’

Notes From Underground: Riding High in April

April 25, 2018

In 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: Draghi Holds Back From Any Rate Cut or QE

January 21, 2016

Today, President Mario Draghi guided the ECB Board to a status quo decision on the monetary policy of the EU. In yesterday’s NOTES, I opined that when Merkel and Draghi met in Berlin last Friday it was to receive the blessing from the Empress of Europe for a renewed effort at monetary stimulus. Chancellor Merkel was reticent to fan the flames of the AfD and other parties disillusioned with the present state of Germany’s position in the EU. The repression of German savers in an effort to bail out the European financial system is a below the surface issue for voters who are protesting in the streets against the ill-advised policy of a million refugees. Before Draghi can embark on more QE or some other unconventional monetary tool, GERMANY MUST BE SUPPORTIVE.


Notes From Underground: “A Single Spark Can Start A Prairie Fire” (Mao, 1930)

January 11, 2016

You don’t have to be a weather man to know which way the wind is blowing, or so says Bob Dylan. As long as all things are emanating out of China it may be the time to dust off the sayings of Mao for as the talking heads are reminding us daily: “The East Wind Is Prevailing Over the West” in all things financial. THE PROBLEM FOR ME IS I DON’T ACCEPT THAT VIEW AND AM IN THE CAMP OF FORMER DALLAS FED PRESIDENT RICHARD FISHER that all roads lead to the FED and certainly the European Union for providing the tinder for a financial prairie fire. There has been so much volatility during the first six trading days of the year it is difficult to get a handle on what is  algo-driven non-fundamental and what may be the commencement of a change in previous momentum trades. Today I will go through a list of POTENTIAL SPARKS TO IGNITE THE  FLAMES OF A FINANCIAL FIRE so that we can be aware of what constitutes  a genuine change in momentum:


Notes From Underground: The IMF’s Role Has Become Too Subjective to be Objective

June 22, 2014

One upon a time, the IMF‘s mission was to aid countries suffering balance of payments problems and dealing with the possible credit problems that would arise for over-extended nations. Recently, the Christine Lagarde-led IMF has acted in a more aggressive capacity when it became involved in the bailouts of the debt-plagued European peripheries. The IMF took a proactive stance in becoming one of the troika–ECB, European Commission, IMF–in an effort to stem the stress of Greece, Portugal, Cyprus (and possibly Spain and Italy). The IMF became involved not because Europe was lacking the funds but because the Germans were wavering as to how far the ECB should go in expending capital to bail out the so-called PIIGS. The European elites called upon the IMF to use its funding power to alleviate the pressure from Berlin’s demands that debtors undertake severe austerity in order to resolve the problems of recession and budgetary malfeasance. IMF Director Lagarde was very happy to open the IMF’s treasury to her comrade’s in arm: the European finance ministers. Remember, prior to Lagarde’s position at the IMF, she was the French finance minister.


Notes From Underground: Has the Fed Potentially Created a Trap For Itself??? (Maybe)

May 13, 2014

As the talk turns to concern about inflation in the U.S. and possibly the U.K., we must ask ourselves a question that will be our focus for at least the next six months.


Notes From Underground: Why All the Noise From Friday’s Unemployment Data?

April 6, 2014

Friday’s jobs data was almost as the pundits had predicted. Why was there so much activity when the nonfarm payrolls and average hourly earnings and length of work week were basically the right on the consensus predictions? Yes, I’m aware that the “whisper number” was 250,000-plus due to the removal of harsh weather conditions. However, if that was the case, the dollar should have weakened and the short-end of the U.S. yield curve OUGHT to have outperformed the long end resulting in a STEEPENING of the 2/10 (none of which occurred). The 2/10 curve actually flattened as the U.S. stock markets began selling off, a drop initiated by the Nasdaq 100’s key momentum stocks. The weekly charts of the S&P and the Nasdaq took different turns as the SPOOs closed higher on the week and the Nasdaq closed lower, an indication of some reallocation from the momentum-oriented stocks to the more solid large-cap, earnings-based equities.


Notes From Underground: The DREADS of the Redemption Song

December 19, 2012

It was only a year ago that the PRECIOUS METALS were laboring under the continued selling of GOLD and SILVER as the John Paulson hedge funds were liquidating long positions to meet the huge amount of redemptions by long-time investors exiting the decade’s best performing FUNDS. In a repeat, Morgan Stanley announced today that it was redeeming its investors out of Paulson’s two largest funds after another year of questionable performance. In today’s world where one hedge fund can hold massive positions, divestment by disgruntled investors can initiate massive corrections. In 1980, when the Hunt Brothers caused great turmoil in the silver markets, they had a mere BILLION DOLLARS to play with (the Paulson funds control close to $15 billion under management.) As traders and investors it’s our job to be cognizant of all the animals in the jungle. When the elephants retrace their steps from the watering hole, small animals can get crushed (Niederhoffer).


Notes From Underground: The FED Goes From Quantitative to Qualitative … You Do the Math

December 13, 2012

Well, the famed modeler from M.I.T. has finally admitted that he has been an avid reader of Notes From Underground and in the world of global macro finance, 2+2=5. The FOMC statement was a surrender to the work of Michael Woodford as was pre-released in a Janet Yellen speech a few weeks ago. The FED will give great credence to a 6.5% unemployment and a 2% inflation threshold, give or take a 0.5%  discretionary prerogative. The 6.5% unemployment threshold is also subject to FED discretion for it seems to depend on whether or not the labor participation rate is increasing while the unemployment rate declines.


Notes From Underground: Somebody Please Cancel Silvio Berlusconi’s Viagara Prescription

December 6, 2012

Due to the availability of virility enhancers, the Italian political arena is plagued by billionaires who still believe they remain relevant. The ability to sustain an erection does not make you politically astute. Today’s effort by Silvio Berlusconi to undermine the Monti government led to a selloff in the Italian debt markets which caused 10-year rates to rise 13 basis points. Mr. Berlusconi didn’t want to bring the present government down but merely wanted to exhibit his relevance to the Italian political establishment. What the Greek debt problems couldn’t do, a 76-year-old man with a bottle of Viagra was able to accomplish. Elections are going to be held soon and the Monti coalition will be called to account. Now with all the problems confronting the peripheral governments the attempts of a disgraced former prime minister to prove his manhood is just an exhibition of the absurd. Pay no attention to the man with unnatural bulge in his ego.


Notes From Underground: GOLD … All the appearances of a tired BULL?

March 13, 2012

Yes, the FED released its FOMC statement today and there were no changes to the FED’S POLICY NOW AND FOR THE EXTENDED PERIOD INTO 2014. So here was nothing to upset the markets and as I read the statement for the third time in a 15-minute period, old man thoughts turned to BUYING GOLD. As a veteran trader and subsequently global macro investor for 35 years, the price action did not perform to my satisfaction. The January 25 FOMC statement was very similar. While that FOMC missive provided for the impetus for GOLD to rally and close on its highs, the action today was totally opposite as GOLD sold off and the EQUITY MARKETS RALLIED. The January 25 release also saw the EQUITIES RALLY into the close but today the stocks left the GOLD behind.