Posts Tagged ‘SNB’

Notes From Underground: I Knew I Would Return

August 2, 2017

Last week’s FOMC meeting proved BORING and left me speechless … but not thoughtless. The only phrase of significance was the use of “RELATIVELY SOON” in placing some forward guidance to the beginning of quantitative tightening (h/t Boockvar). We have no idea what “relatively soon” means but I continue to ask: WHY WAIT? Yes, it may be because the FED is nervous about the potential of DEBT CEILING caused by a Congress filled with know-nothings and do-nothings clogging the day-to-day financing of government operations.

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Notes From Underground: Cleaning Out The Financial News Stables

July 24, 2017

Today, Rick Santelli and I offered insights into this week’s FOMC meeting, coupled with the recent ECB actions. I noted that the Italian BOND FUTURES Monday were trading above the June 27 close when ECB President Mario Draghi roiled global credit markets with his Sintra,Portugal speech, which suggested that the removal of a deflationary scare would allow the ECB to begin tapering its QE program. The fact that Italian 10-year yields are lower today than four weeks ago is indicative of the power of the QE bond purchases. Why?

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Notes From Underground: Warren Knocks Out Mnuchin

May 18, 2017

In Thursday’s testimony before the Senate Banking Committee, Treasury Secretary Steven Mnuchin took a beating from Senator Elizabeth Warren over the issue of Glass-Steagall. There are many policy issues in which I disagree with Senator Warren but when it comes to Wall Street regulation, she is one of the most knowledgeable people in the Senate and far beyond those walls. During the Great Financial Crisis she appeared regularly on CNBC and Bloomberg television networks. While merely a Harvard law professor, she offered great insights and understood the depths of the problems that caused the crisis. If Jamie Dimon had not blocked her appointment as head of the Consumer Finance Protection Bureau (a wild conjecture on my part), she would not be a U.S. Senator. After president Obama caved in to Wall Street pressure, Warren ran for the Senate in Massachusetts in 2012, defeating Scott Brown.

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Notes From Underground: Au Revoir, Marine Le Pen

May 8, 2017

Now we can finally put the French elections behind us as its citizens maintained the status quo and elected Emmanuel Macron to a five-year term. Parliamentary elections follow in June but the two main parties, Socialists and Republicans, aren’t expected to face challenges. But, if the more conservative Republicans gain control of the Parliament and the prime minister post it will force Macron to move further to the right-center. If Macron moves away from the Hollande Socialist camp it will result in political protests from the Left. Macron will experience a difficult presidential term if the government is gridlocked by continual demonstrations. The German chancellor is going to ask a great deal from Macron: fiscal austerity, as well as a restructuring of the French domestic economy.

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Notes From Underground: The Second Quarter Begins

April 2, 2017

First, let me apologize to my readers. I erred when I said Marine Le Pen made it to the second round of the 2012 French presidential election. Reader Al 13 corrected me. It was her father Jean-Marie Le Pen who made it to the second round in 2002 and got trounced, garnering 18% of the vote to Jacque Chirac’s 82%. But read Al 13’s comment on the previous post because he notes that if the second round were to be a choice between Le Pen and one of the two far-left candidates–Melenchon or Hamon–the impact would be highly volatile for European markets.

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Notes From Underground: A Quick Take On Today’s Key Points

March 23, 2017

The vote on the Trump health care plan is important only from the perspective of what the Freedom Caucus was promised in return for acquiescing to the desires of the White House. President Trump is desirous of a win, any win and the Freedom Caucus seems to know they have great leverage in the current political scrum. Whatever the House passes the Senate will have home field advantage and last bat so the initial Trump victory will Pyrrhic at best. What was compromised to assuage the conservative wing of the Republican party? How far will Trump have bent to bring this deal to fruition? The strident nature of the Freedom Caucus has been elevated and what value was extracted?

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Notes From Underground: Switzerland Was Named The Fourth-Happiest Country

March 22, 2017

In an inane study of the world’s countries by the U.N. and released on World Happiness Day (what an absurd concept) the land locked nation with its active printing press was heralded as ranking FOURTH while the U.S. fell to 14th. To paraphrase Tolstoy: Happy countries are all alike; every unhappy country is unhappy in its own way. On March 17 Bloomberg ran a story, “Swiss National Bank (SNB) Foreign Reserves Soar, Signaling Interventions.” In February the SNB’s reserves increased by 3.8% to 668.2 billion francs, “the biggest increase since December 2014.”

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Notes From Underground: Is Nato Over? The Answer Lies In Turkey

December 12, 2016

The question for the political uncertainty confronting global markets will be the rollback of the U.S. influence via the reduction of its presence in various regional treaty agreements. Trump’s “faux pas” over Taiwan should cause the entire NATO structure to be reviewed. The ONE CHINA issue was pledged by the Nixon/Kissinger framework forged during the d├ętente with China. The People’s Republic of China maintained that Taiwan’s independence was a domestic affair and should be resolved by the Chinese people. But the bottom line for the U.S. was: Would Washington risk a thermonuclear war to maintain Taiwan’s independence? Well, a similar question is relevant today in regards to Turkey. Would the U.S. risk war with Russia if Vladimir the Magnificent attacked Turkey in an effort to further destabilize the Middle East, resulting in a greater Iranian presence and further strengthening the KURDS?

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Notes From Underground: Taking Pulse of a Dead Market

August 8, 2016

Wow! Was it quiet in today’s market? The simple answer is yes but Notes From Underground never takes things at face value. The global markets digested Friday’s “robust” employment report and seemed content with the market results: stronger dollar, stronger equities, higher yields and selling of precious metals. The euro and gold were steady today, but the yen and Swiss were weak as the safe haven’s were shunned as the risk-on trade is back en vogue. I have no problem with the market’s assessment of the jobs data but there were other stories that piqued my interest.

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Notes From Underground: The Paroxysms of Brexit Polls, Or Lies, Damn Lies and Statistics

June 13, 2016

This is a week loaded with data. The U.S. retail sales numbers are reported tomorrow and it will take a tremendous increase in consumer purchases to put any pressure on the June FOMC meeting to raise rates. Currently, the market consensus is for a 0.4% increase in core sales and I would venture a guess that it will take an increase of more 1.0% to move the needle on any talk of June being on the table. There are several British inflation numbers released tomorrow morning but with the Brexit vote next Thursday and a Bank of England meeting this Thursday there will be no change in BOE policy. Wednesday of course brings the FED and again the retail sales number would have to be very robust to move the FOMC. It ain’t going to happen. Wednesday night and Thursday morning brings the Bank of Japan and the Swiss National Bank into focus. These two banks are more interesting as the recent strength in the Swiss franc and the Japanese yen provide some rationale for each of these banks to increase monetary stimulus to drive the respective currencies lower . However, both the BOJ and SNB will be careful not to roil the markets ahead of the BREXIT vote. Yet the Japanese seemed to be perturbed over the G-7 signaling its anger at the Japanese for its previous efforts to weaken the YEN. The Japanese authorities are not happy with the recent cut in Korean interest rates which have resulted in a weakened Korean won.

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