Posts Tagged ‘New Zealand’

Notes From Underground: The clock to the end of the first quarter and the money from the BIG EASY has overwhelmed

March 29, 2011

Wow, what a long strange trip it has been. This quarter has certainly been visited by the four horsemen of the apocalypse. Every time the market thinks it has seen a cataclysmic event, something new arrives on the stage. Floods in Australia, earthquakes in New Zealand and Japan, high food prices and riots in the world over, and of course there is always war breaking out somewhere. In a prior time (THINK 1960s), we had a different hedge group writing: IT’S GOOD NEWS WEEK by  the HEDGEHOPPERS.

All these calamities and still the equity markets in the U.S. have rallied and the DOLLAR has failed to invoke its haven status. The only explanation I can discern from this action is that EASY MONEY from our friends at the FED has trumped all else. It seems that DOLLAR-based investors are searching for any type of investment that can yield more than inflation. Risky assets get bid up as money scours the investment map. Commodities, high-dividend yield stocks, high-yield corporate bonds are all desired.

Yet, as the Financial Times reported today,  the demand for MUNI BONDS isn’t there post Meredith Whitney as the yields are insufficient to overcome the fear of default. At least GREECE pays you a true risk yield to purchase its SOVEREIGN DEBT. The end of the quarter leaves me thinking that the FED and all the other QE-providing BANKS have so perverted the global interest markets that the decision to remove the monetary stimulus will create a great deal of volatility. The question is, when?

The coming quarter will begin to answer that question but the political stage will continue to surprise as 2012 brings forth many elections. In May, the Canadians will go to the polls and the Portuguese will follow. I am certain that other Parliamentary Governments will fall as the austerity budgets begin to take a toll on voters of many Western nations. As the quarter comes to an end, the EUR/YEN cross that has been the barometer of so much of the risk on/risk off paradigm, is breaking out to new highs since the second quarter of 2010. Is this a reflection of the G-7 intervention or merely the need for Japanese investors to seek higher yields outside of Japan?

The FT reported yesterday that several macro hedge funds suffered severe losses from the March 17 YEN rally that sent the DOLLAR/YEN rate to 76-plus. As the quarter ends, there are more questions than answers but I sincerely hope that the FED will begin to remove some of the haze that engulfs global financial markets. The politics will create volatility. Responsible central bank policies would do much to help remove some of the greater uncertainties. For many, this was certainly a “WINTER OF DISCONTENT.” Being a CUBS FAN, it is time for HOPE to SPRING ETERNAL.Hey Bernanke, PLAY BALL.

Notes From Underground: Axel is ALARMED and DANGEROUS

February 21, 2011

NOTES FROM UNDERGROUND has been banging on the table for Axel Weber to become the president of the ECB but my desires were dashed as Herr Weber resigned his presidency of the BUNDESBANK last week and announced that he wished not to be considered for the ECB job. Axel broke our hearts as he would have been the strong voice for the BAVARIAN BURGHERS. Alas, Axel did not enjoy being thrown under the bus by Chancellor Merkel to placate the French who were opposed to the ECB being run by a “hard money man.”

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Notes From Underground: Just like Frank Zappa, the markets are like a Penguin in Bondage

December 8, 2010

During the last two days the markets have heard from the Australian and Canadian central banks and both institutions held its rates steady. Both banks cited its strong currencies and the still-fragile state of the global economy outside of emerging Asia as the primary reasons for holding.  (more…)

Notes From Underground: Did Obama’s Labor Day speech give birth to any new ideas?

September 6, 2010

The markets are very quiet today as the U.S. celebrates Labor Day and Canada has a bank holiday. President Obama was in Milwaukee where he laid out plans for a transportation bill that extends out six years and provides for roads, rail and airport construction. This should have been part of the original stimulus package but its lack of immediacy in job creation raises more questions than answers.

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