Last night , Prime Minister Noda decided to call for new elections in Japan and that automatically ends this session of the DIET. The elections will take place in a month and the present unpopularity of the DPJ means that the LDP is the favorite. It seems that Noda was willing to call elections on the promise that the new parliament would work toward some type of election reform. Hopefully some of the readers of NFU will help fill in the specifics about the issues of election reform. The YEN was sold off on the news of Parliament’s dissolution because the present strength of the YEN and its negative impact on Japanese manufacturing is certain to be an issue. The LDP’s leader, Shinzo Abe, has been very vocal about the BOJ/MOF doing more to raise inflation in the Japanese economy and to be more aggressive in efforts to weaken the YEN. While the YEN weakened, the NIKKEI index held its overnight gains even as the S&Ps, DOW and NASDAQ were knocked lower following President Obama’s press conference.
Posts Tagged ‘Hollande’
Notes From Underground: Will Parliament’s Dissolution Become the Beginning of the Solution?
November 14, 2012Notes From Underground: The Fiscal Cliff … Waiting to Hear from Chairman Bernanke
November 11, 2012The key policy maker who raised the issue of the fiscal cliff back in April 2012 has been missing in action from the discussion. It is widely understood that the FED is not supposed to involve itself with fiscal policy, but that proposition was violated when the FED chairman voiced great concern about the failure of Congress to halt the potential drag on the economy. The FED has continually supplied the liquidity as the “only game in town” but it seems obvious that the great enabler of Congressional “benign neglect” should offer some guidance while not overstepping its mandate. More members of the G-20 were out over the weekend warning about the potential disastrous effects of a fiscal calamity in the U.S. on a very fragile global economy. What will it be Ben? I say yes, you say no. Bonds say buy and stocks say sell. Congress says goodbye. Will the FED say hello?
Notes From Underground: Mario Draghi Reveals He’s A Fleetwood Mac Fan; Says GOLD IS A “Mystery to Me”
November 8, 2012As today was central bank day in Europe, both the ECB and the BOE had rate decision meetings and left their current policies in place. The BOE did announce that it was “halting” the expansion of the QE program at 375 billion pounds as it deems the recent increases in its bond buying program to be less effective. Recently, BOE Deputy Governors Paul Tucker and Charles Bean have stated that “asset purchases may no longer have the same impact on the economy as when first introduced.” (Bloomberg) The market had different interpretations as to the reason that why the BOE was curtailing the QE bond purchases. 1. The recent rise in inflation was causing the halt; or 2. the lessened impact of recent QE was going to mean that the bank was going to increase the funding for lending scheme in which the BOE provides incentives for commercial banks to lend more money to small and medium businesses. This is of interest for FED watchers because BOE Governor Mervyn King has been a trail blazer for creative central bank actions and the FOMC may mimic some of the BOE actions to get a boost to a low velocity of money situation.
Notes From Underground: Outliers and Out Right Liars
November 5, 2012Yes, the U.S. Presidential election is finally here. After the POLITICAL-INFO COMPLEX has spent the $6 billion on various political campaigns, we are left wondering why anyone would contribute money to feed the monster and prolong our agony. I know the answer and the “road to political hell is not paved with good intentions.” There are so many polls predicting a very tight race that I care not for the popular predictions. As an investor/trader I am much more concerned about the outliers. First, the most significant result would be for the Democrats to retake the house. The 2010 Republicans claiming the majority in the House by such a wide margin was not predicted. If the Democrats were to undo 2010 it would mean a landslide victory for President Obama as well as the continued control of the Senate. The triple crown for the Democrats would be a negative for the markets as there would be no movement on the “fiscal cliff” as the Democratic leadership would be empowered with a mandate.
Notes From Underground: Was it Really a Fat Finger Mistake by Google?
October 18, 2012The equity markets began to sell off as the rumor of an early release of Google’s earnings proved to be correct. The earnings were significantly less than the market consensus and thus Google stock dropped 13% quickly, bringing the Nasdaq and S&P indexes down with the heavily weighted technology giant forcing a market wide sell off. My take is that this was not a mistake but Google testing the market.
Notes From Underground: Hollande Gets Saucy With the Germans
October 17, 2012First, the equity markets continued this week’s rally as better data in the U.S. (housing) following upon the Monday retail sales report provided more fuel for the bulls and is causing great angst for portfolio managers that are underinvested and badly underperforming their benchmarks. These investment advisers must go to sleep and pray for the U.S. to bomb Iran so that they will have some type of opportunity to buy into the global equity rally. It’s tough to chase this one. As I wrote on Sunday, the IMF “volte face” on the impact of austerity budgets was a game changer as it will mean that austerity inspired programs, like the U.S. fiscal cliff, will force policymakers to be cautious in pushing for too much austerity in times of a balance sheet recession. The pushback from Spain, Italy and others is allowing the forces for unrestrained growth to gain ascendancy over the voices of austerity led by the Bundesbank.
Notes From Underground: Back To the Sixties–Output Gaps or Phillips Curves?
September 20, 2012The FED hounds were unmuzzled after last week’s FOMC and “The Line it Is Drawn. The Curse It is Cast.” Bob Dylan must have been anticipating the difference of opinion that is developing within the Federal Reserve bank. In a speech last night, Dallas Fed President Richard Fisher said: “There are many superb PHD theorists among the 19 members of the FOMC and support staff. There are only a handful of us–four, to be exact–who have worked as bankers or in the financial markets.” Fisher discussed holding back from further QE based on evidence from his business contacts. The Dallas Fed President was dismissed when,”Some suggested that perhaps my corporate contacts were not sophisticated in the workings of monetary policy.” (Hat tip to Professor K.W. for sending the piece). It seems that the collegial attitude is eroding at the FED if the ivory tower is not the place of residence. Today, it was the Minneapolis Fed President Kocherlakota who delivered what I consider to be an outlandish speech.
Notes From Underground: Putting Significant Stories In Perspective
August 26, 2012Just as I wrote in the headline, qthere is a story in the UK TELEGRAPH that the Chinese plan to put forward a 800 billion POUND stimulus program of major projects in the provinces. At this time, the TELEGRAPH is the only outlet with the story and has otherwise not been confirmed. IF THE STORY IS TRUE AND THE AMOUNT IS CORRECT THEN THE EFFECT SHOULD PUT UPWARD PRESSURE ON ALL RISK ASSETS AS THIS STIMULUS WILL BE CELEBRATED WORLDWIDE. THE INDUSTRIAL METALS, WHICH HAVE LAGGED THE RECENT RISK ON PROFILE, SHOULD GET A HUGE BOOST SO I WOULD ADVISE WATCHING COPPER AS AN INDICATOR OF THE VERACITY OF THE CHINESE STIMULUS STORY. Again, IF the story has any veracity all asset classes except DEBT should receive a BID Sunday night.
Notes From Underground: RUMOR OF THE WEEKEND–ECB WILL CAP RATES ON PERIPHERAL DEBT
August 19, 2012There are several stories making the rounds this weekend that the ECB is planning to announce that it will CAP interest rates on Spanish and Italian DEBT. It seems that the ECB is floating an idea to see how the market responds to the idea of aggressive action by the ECB. Some are even calling it “THE BIG BAZOOKA.”
Notes From Underground: IF … In a World Of Great Uncertainty
August 15, 2012The travails of the financial markets continue even as the EURO ELITE believe that their holiday time is sacrosanct. Greece is in the headlines as financial pundits with time to fill conjecture about how long it is before the lifeline to the Greeks is cut and its economy and society set adrift outside the “safe” harbor of the EUROZONE.