Posts Tagged ‘U.S. Dollar’

Notes From Underground: In An Algo-Driven World Headlines Matter

December 3, 2017

Friday: Dateline. INACCURATE NEWS.

There is GOLD to be found in the digital world where headlines can move financial markets faster than your eyes can blink or your brain can separate fact from fiction. ABC investigative journalist Brian Ross published a report that said President Trump asked Michael Flynn to reach out to Russia during the campaign. The network was forced to correct the story, clarifying that the request was carried out during the transition period, and suspended Ross. President Trump tweeted that investors harmed by ABC’s action should sue for damages. Trump may actually have a legitimate opinion but I believe the President’s Tweets carry the same litmus test.

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Notes From Underground:

November 26, 2017

(Click on the image to watch me and Rick discuss yield curves and central bankers.)

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Notes From Underground: Who Gets Eaten and Who Get’s to Eat (Sweeney Todd)

October 15, 2017

As Stephen Sondheim wrote in the dark musical Sweeney Todd, “What’s the sound in the world out there. It’s man devouring man. The history of the world, my sweet, is who gets eaten and who gets to eat.”

I open with this thought in regards to a wonderful op-ed piece in the Barron’s over the weekend by John Curran titled, “The Coming Renaissance of Macro Investing.” Curran has the pedigree of writing this piece as he served his time at one of the greatest global macro funds, Caxton Partners. There are no greater thinker/traders than Stan Druckenmiller or Bruce Kovner. When it came to understanding the role of foreign currencies in creating investment opportunities Kovner is the wisest I have ever had the pressure to read. The last 10 years have been difficult for the global macro discretionary crowd but as John Curran suggests the winds of change are blowing. This is also a theme I have been discussing of late. The big difference in my opinion is that short-term trades will morph into momentum investments.

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Notes From Underground: The FOMC, BOJ and German Elections Lead the Way to Quarter-End

September 18, 2017

As the earth rock keeps spinning we continue to monitor global events that could make investors/traders dizzy. This week the FOMC is EXPECTED to announce that it will begin its quantitative tightening (QT) by revealing the date of its plan to shrink its balance sheet by a net $10 BILLION of assets a month ($6 billion of Treasuries, $4 billion of MBS) and increasing the amounts quarterly so the program results in little market disruption. Remember, Chair Yellen has said she believes that it will be “like watching paint dry.” The world’s equity markets — especially the U.S. — are reflecting little concern about the Fed withdrawing “small” amounts of liquidity.

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Notes From Underground: A Take On Mario Draghi in Two Parts

September 10, 2017

Part I: Mario Draghi, the master of obfuscation was at his best Thursday as he dodged MULTIPLE questions about the recent STRENGTH in the euro. Journalists were very well prepared and even threw back Draghi’s previous responses about how a 10 percent currency appreciation would lower inflation measures by 0.5 percent. But Draghi met each question with a, “Yes, we discussed it as some members of the ECB Board were concerned about the EURO and its impact on exports and import prices.”

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Notes From Underground: Jobs Report Gives the Fed the OK to QT

August 6, 2017

Friday’s unemployment report was on the strong side, although certainly not much stronger than market consensus. Yes, nonfarm payrolls were on the high-end but average hourly earnings were right on target, hours worked remained the same at 34.5 and the unemployment rate dropped to 4.3%, but that could be due to a slight rounding error. The markets traded as if the FED could possibly raise rates in September, but I believe the jobs report provides the impetus for the FED to commence with QT. The U.S. yield curves reacted in such a manner as the 2/10 curve actually rose 3.5 basis points, closing at 91.5.

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Notes From Underground: Mario the Magnificent Keeps the Crowd Enthralled

July 23, 2017

Let me be perfectly clear: THE ECB’s THURSDAY PRESS CONFERENCE WAS DOVISH.

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Notes From Underground: The BOJ and the ECB Provide the Recipe For … ?????

July 19, 2017

Before I preview the BOJ and ECB I want to expound on the piece that I mentioned in the previous post written by Bloomberg reporter Alexandra Harris, who cites the thoughts of JPMorgan strategists Alex Roever and Kim Harano. The piece lists four arguments for bringing forward the FOMC‘s announcement to shrink its balance sheet:

  1. Economic conditions are supportive of balance sheet run-off;
  2. The vast amount of discussion has already prepared the market and September won’t make it any clearer;
  3. Starting NOW buys a “few extra months” of the measurement of the market impact of normalization;
  4. Finally,September is an “awkward time” because of the murky outlook for addressing the debt limit before funding runs out in October.

I agree with all these arguments and would HOPE the FED announces its intention to start shrinking the balance sheet at next week’s meeting, press conference be damned.

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Notes From Underground: Brainard’s Speech Was So Significant She Delivered It Again

July 13, 2017

Yes, Fed Governor Lael Brainard actually delivered Tuesday’s speech, “Cross-Border Spillovers of Balance Sheet Normalization,” AGAIN. This time it was to the National Bureau of Economic Research Summer Institute in New York City. Of course I jest as to why she redelivered it. Brainard was overshadowed by Chair Yellen’s testimony to the Senate Banking Committee, even though the Fed Chair deviated very little from Wednesday’s House testimony. The interesting thing was that Yellen backtracked on her hubristic statement she made last week about not experiencing another systemic financial crisis in her lifetime. A brazen statement like that is Greenspanish but certainly out of character for the demure Janet Yellen.

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Notes From Underground: Ben Bernanke Channels Karl Marx

June 26, 2017

Set your way back machines to and visit the philosophy of the Young Marx in his famous musings, The Economic and Philosophic Manuscripts of 1844. Read the concerns that Marx raises about the ALIENATION of LABOR. In the book edited by Dirk J.Struik, I am citing pieces from the chapter, “Wages of Labor.”

  1. “Wages are determined through the antagonistic struggle between capitalist and worker.”
  2. “The demand for men necessarily governs the production of men,as of every other commodity. Should supply greatly exceed demand, a section of the workers sinks into beggary or starvation.”
  3. “The worker need not necessarily gain when the capitalist does,but he necessarily loses when the latter loses.”

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