Posts Tagged ‘U.S. Dollar’

Notes From Underground: The G-7 Meet on Tuesday

April 13, 2020

On Monday, Treasury Secretary Mnuchin said the G-7 will be holding a video conference Tuesday, which will include all the central bankers. What is on the agenda? It has not been announced so we are left to GUESSING. The Swap LINES have been opened, massive asset purchase programs are in place, new facilities have been created and fiscal stimulus is raining down in all the old familiar places. The OIL agreement is in place and the FED has even embarked on a program of exchanging CASH for high yield bond ETFs in an effort to prevent a continued negative feedback loop in corporate debt markets. What is there for the G-7 to discuss?

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Notes From Underground: Just a Song Before I Go

April 5, 2020

At this time of great chaos in the world I am going to take a 10 day hiatus to sit back and reflect as it is the time of Passover and Easter. These holidays will take on special significance this year as the Covid-19 impacts our plans.

So as I retrench I put forward the words of the Prophet Micah for something to contemplate: “To Act Justly, and to LOVE MERCY and to walk HUMBLY with YOUR GOD.” Wishing all my readers a meaningful period of the holidays before us. I may post a podcast I recorded this morning with Anthony Crudele but that will be it, although I will respond to all questions in an effort to stay alert to critical issues in a rapidly changing global environment. Now to the issues before us.

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Notes From Underground: Three Cheers for Christine Lagarde

March 19, 2020

While the rate cutters were busy dumping on ECB President Christine Lagarde for not cutting and only announcing an increase in bond purchases I opined that Lagarde was getting more by doing less. Lagarde did not go down the Draghi route and lock up with Jens Weidmann and the Fiscal Austerians in the Hanseatic League. The ECB president played for a bigger prize and tonight she delivered with an announced 750 billion euro bond buying program of both public and private issues.

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Notes From Underground: We Walked Off to Look For America

March 15, 2020

These are challenging times is the understatement of the decade.

The fear of pandemic has arrived and is causing great distress for families and the nation at large as we are tending to the sick and those forced into a change of everyday patterns. Since the beginning of February, we at NOTES FROM UNDERGROUND have been discussing the onset of the DEMAND SHOCK which would cause problems in the financial system because of the massive build-up of debt on a global scale. If businesses cannot operate as people hunker down in an effort to slow the spread of the virus then it goes without saying that DEMAND would suffer. If demand suffers on a global basis borrowers without cash reserves will struggle to sustain their businesses.

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Notes From Underground: It’s Time For the Owl

March 8, 2020

Well things are on the bubble as the Russians and Saudis had a “falling out” as lovers often because the OPEC talks resulted in an ostensible all-out war to break oil prices. The consensus loser will be the U.S. oil patch as the FRACKERS are carrying huge amounts of debt, which will not be paid while prices sharply decline.

There will be talks about a credit crisis as banks and other oil creditors will have to absorb losses and probably restrict lending to other borrowers. Those with private equity investments in the Bakken, Permian and others will be taking inventory on how battered their portfolios will be. The wily Putin will finally have his way as the sanctimonious Americans will have to rescind the ill-devised/ill-advised SANCTIONS that have had little impact.

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Notes From Underground: The G-7 Was All About the Dollar

March 5, 2020

The other day I called question to the tepid G-7 statement, which was followed by a 50 basis point CUT from the Federal Reserve. On Thursday the Financial Times published a story saying the Fed’s move was counter to a history of G-7 collaboration. Let us first dissuade the popular mythology of the G-7 as relevant to any serious global action. The colonial remnants of the authority of the bailiwick of theĀ  mechanism for the containment of the Soviet Empire are a JOKE. During the financial crisis it was the moves made by China that did more to stabilize global growth than any action by the G-7.

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Notes From Underground: Into the Dark Recesses of My Mind

March 3, 2020

Three weeks ago we at NOTES FROM UNDERGROUND suggested the Fed needed to cut interest rates by 50 basis points in an effort to get ahead of the potential negative economic fallout from a DEMAND SHOCK caused by the Covid-19 virus. But the rate cut was to be presented with the caveat that this was an economic cut and financial considerations were not involved. If the demand shock from the VIRUS never materialized the cut would be RESCINDED. After announcing an emergency cut Tuesday Chairman Jerome Powell took a few questions from the media.

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Notes From Underground: A New Form of Asian Contagion

February 23, 2020

On July 2, 1997 the Thai baht entered crisis mode, kicking off what become known as 18 months of Asian Contagion. The so-called Asian Tigers experienced massive capital disruptions as the Chinese economic miracle undermined the capital expenditure projects that were creating the manufacturing capacity to lift the TIGERS out of poverty and into significance in the global supply chain. The emerging markets learned that as fast as capital flows in to support foreign direct investment it can hurriedly depart as it seeks alternative venues with a better competitive advantage .

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Notes From Underground: Man Plans, God Laughs

February 2, 2020

It has been three weeks since I have sat down to articulate my thoughts on the global macro financial system in an effort to profit from trade/investment potentials. A lot of the discourse with many readers the focus was on the situation in the Middle East.

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Notes From Underground: Whistling Past the Tombstones

December 29, 2019

As we approach 2020, it seems as though the financial world is unconcerned about the dramatic increase in DEBT. Yes, the airwaves are alive with news of the extremely low level of mortgage delinquencies but fail to discuss the growing delinquency of 90-day auto loans and the $1.5 trillion pile of student loan debt, an albatross for college graduates over the 20 years. Corporate debt has increased by the magic of financial engineering in which share buybacks and dividend increases are greased with the benevolence of central banks caught in a trap of their design.

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