Posts Tagged ‘riksbank’

Notes From Underground: I Am Not Your Beast of Burden

October 29, 2019

In the global financial system, the central banks are indeed the are system’s beasts of burden. With the November FED FUNDS contract pricing in 93% chance of a rate cut, Federal Reserve Chairman Jerome Powell will attach himself to the plow and till the soil, spreading more fertilizer for equity purchases and further financial repression of creditors. As we discussed Monday, the week is filled with central bank meetings of importance and further impacted by unemployment and GDP data. But there is so much more in the political realm that we haven’t even entertained:


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 Fed Came, Saw and Failed to Conquer Its Fear

March 19, 2015

The results of the FOMC meeting: Ray Dalio–1, Janet Yellen–0 (h/t KM). It seems that the FED is fearful of upsetting the Dalio apple cart by raising rates and possibly tipping off a sell off in global assets. As I wrote on Tuesday, the walk back of taking the “patient” off the respirator would result in a DOLLAR selloff as long dollar positions were hopeful of an unequivocal position statement from the Fed on a near-term interest rate increase. Notes From Underground believed the FOMC statement would remove patient from the release and then Yellen would defang the hawks by being cautious about the strong dollar and continuing concern over the lack of wage growth in an economy with improving employment metrics.


Notes From Underground: Nik Wallenda’sTIghtrope Act, Merely a Prelude To the ECB and Mario Draghi

November 5, 2014

Walking a tightrope suspended 40 stories above the ground without a safety net was a tremendous feat, but bringing the ECB to a genuine quantitative easing program will be nothing short of miraculous. In yesterday’s grist from the rumor mills, Reuters reported ECB President Draghi will meet intense resistance in his effort to “do whatever it takes” to secure the EURO currency and economic growth in Europe. It seems that at least 12 members of the ECB are angry that Mario Draghi promotes stimulus plans that the ECB governing group has not sanctioned. (I’m talking about the famous “no taboos” speech of July 2012, as well as his speech at Jackson Hole this summer where he promised to prevent the onset of deflation.) The problem for Draghi is that many of the world’s central banks are moving ahead with aggressive stimulus plans while the EU provides jawboning but little action.


Notes From Underground: The Swedes Plumb the Interest Rate Depths

October 29, 2014

First, I will say it again. QE3 is over and the Fed will maintain its “forward guidance” and be data dependent. The next bout of important data will be the U.S. unemployment release on November 7, which buys the Fed one more month of doing nothing. James Bullard painted the FED into a tight corner when he PANICKED and said the FED may want to refrain from removing QE3 while the SPOOs and other equity markets were at a 10 percent correction low. Bullard revealed that the Fed’s REACTION FUNCTION is the equity markets and of course Chairman Yellen’s concern about the lag in wages. The two key variables for the Fed have both been steady since the last meeting. The spoos are lower by 0.75 percent while the September unemployment report showed wage gains had no increase.


Notes From Underground: The Bank That Kicked the Hornets Nest

July 7, 2014

The release of Thursday’s U.S. employment data synchronized with ADP’s private sector report of 281,000 jobs created. The Department of Labor had a gain of 288,000, including the strongest growth in government jobs since the onset of the great financial crisis. Being that July 3rd had very limited volume because of the holiday weekend, it was difficult to determine the genuine nature of the shortened trading activity. Thursday did see a rally in the SPOOs, a strengthening in the U.S. dollar and a downside correction in the precious metals. The most difficult market was the interest rate and yield curve. The immediate reaction was a sizable selloff in all interest rate tenors but by day’s end the LONG END recovered and the 2/10 was a bit flatter. Yesterday saw a correction in the SPOOS as some analysts now believe the FED will bring the projected hike in interest rates forward to a rise in the second or third quarter of 2015.


Notes From Underground: The Tight Rope Walker Was The Key Circus Performer

September 6, 2012

As I covered in NOTES yesterday, the three-ring circus was coming to town Thursday and the show was so fantastic that it dazzled investors worldwide. The RIKSBANK began the show by cutting its rate by 25 basis points to get the audience in a festive mood. Mervyn the Magnificent from the Bank of England did his laying down and going limp act so as not to be sawed in half by the by those magicians of the slight of hand. The BOE left everything as is and presented a very benign statement that offered up very little as to its rationale for maintaining the present rates as well as the same ASSET BUYING PROGRAM. The market was gawking at the rising financials in Europe when in the center ring, Marvelous Mario dropped his cape and headed out on the high wire in which the safety net was pretended to be removed or was totally transparent.


Notes From Underground: On Thursday the Three Ring Circus Comes to Town

September 5, 2012

Quick Hitter: Thursday brings the interest announcements of three central banks. The Swedish RIKSBANK, THE BANK OF ENGLAND, and, of course, the ECB. The most important event will be the ECB press conference at 7:30 a.m. CST where President Mario Draghi will face the financial media and be pressed to provide some insight into the ECB’S plan going forward about BOND PURCHASES OR SOME VARIATION ON THAT THEME.



July 6, 2011

Tomorrow the Bank of England and the European Central Bank announce their interest rate decisions. It is a foregone conclusion that the BOE will hold the overnight lending rate at 0.50% as the U.K. economy is fragile and struggling to gain some upward momentum in the face of budget austerity. The BOE will also hold its QE program at 200 billion pounds and not look to increase the liquidity add as the POUND is relatively weak against most of the world’s currencies. Mervyn King is not worried about the inflationary impact of high food and energy costs, for he is more concerned about higher prices being a severe headwind for the average wage earner, which places him in the Bernanke camp.