Dateline Japan: When the BOJ released its policy decision in the wee hours of December 18, the algos interpreted the news as an expansion of monetary stimulus and assumed it was the QQE program. In the press conference, BOJ Governor Kuroda explained that the extension was not an additional easing but merely an extension of bond duration that the BOJ would buy. Because there’s a dearth of bonds available for purchase, the BOJ is extending purchases to include those of 12 years in length.
Posts Tagged ‘oats’
Notes From Underground: More Proof of Algo-Driven Volatility
December 20, 2015Notes From Underground: The OATS Prove a Better Sale
June 14, 2015In late April I wrote a blog post titled, “Why Bill Gross Is Right and Wrong.” I noted that Bill Gross’s call on selling German bunds was inherently correct but the French OATS–the French 10-year note, would be the more profitable sale. The yield differential at the time was 23 basis points but with the news out of Europe on Friday, the differential widened to 38 basis points. The area of concern for me is that with Germany maintaining twin surpluses–trade and budget–the ECB QE program would enhance the demand for German assets in a world of diminishing supply. The French budget and current account deficits, as well as a trade deficit, means the underlying fundamentals of the French economy are much weaker than Germany’s.
Notes From Underground: From One Italian Crooner to Another, That’s Life
May 12, 2015The markets are playing with ECB President Mario Draghi. Just a few short weeks ago the suave performer of the ECB press conference only had to be concerned about being doused with paper confetti from an anarchist demonstrator decrying the dictatorial powers of the central bank. Post-ECB meeting, the BUNDS, OATS and BTPs made all-time highs in the futures and yields on German and French 10-year notes touched extreme lows. As the ECB paraded the success of QE the EURO currency was also trading at multi-year lows, 1.06 euros to the U.S. dollar.
Notes From Underground: Yellen Dethrones Bernanke
October 20, 2014Last Friday, Chair Yellen delivered a speech at the Boston Fed’s Conference on Opportunity and Inequality. The present Fed Chair has frequently opined on the social and economic problems of income equality and I have been very critical of her wading into the waters of social and fiscal policy for many of the previous 80 years issues of wealth inequality have been dealt with through fiscal and social action. I don’t have a moral issue with Yellen’s outlook on wage inequality but I do not think it is the purview of the Federal Reserve Board to use its financial authority in placing the issue into the public domain. The FOMC has enough on its list of responsibilities without taking on the role of advocate for workers of America. Yellen’s dinner table and social engagements is a fine arena for her moral views but she dreads into very dangerous waters when using the political power of her office.
Notes From Underground: George Soros Gets It Right; Cyprus Follows Britain Down An Ugly Yellow Brick Road
April 10, 2013Over the last few years of writing Notes From Underground, I have taken his eminence, George Soros (aka the palindrome) to task for advocating that the German polity surrender its sovereign authority to a federal EU entity as he pushed for a harmonization of fiscal authority and then an EU-wide EUROBOND. Previously, Mr. Soros has pushed that the Eurocrats not pursue this Eurobond through a nation-by-nation vote but rather just foist it upon the citizens of Euroland. In a paper released yesterday, Mr. Soros is again pushing a Eurobond backed by a union-wide banking structure and a Euroland harmonized tax system, in which all nations surrender some sovereign authority to a centralized power. There will be no BUNDS, OATS, SPANISH or ITALIAN bonds. It will just be a Eurobond backed by the full credit of the EU fiscal authority. This time around though, Soros does advocate the German government should seek the consent of the electorate.
Notes From Underground: The DREADS of the Redemption Song
December 19, 2012It 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: FOMC convenes Tuesday
August 8, 2010Friday’s unemployment report was worse than expected and to make matters worse June’s tepid numbers were revised downward. Prior to the U.S. release, we got news that Canada had negative job growth but that is not a terrible thing as the three previous Canadian numbers were very robust. The question facing all economic policy makers is whether or not the global economy is indeed slowing or merely treading water at very tepid rates of growth? All the news reports from the U.S. during the weekend reflected concern that the U.S. recovery was grinding to a halt and the Obama administration was searching for a new policy mix to stimulate the moribund jobs market.