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 the 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.
Posts Tagged ‘Yen’
Notes From Underground: The G-7 Was All About the Dollar
March 5, 2020Notes From Underground: Around the World With Yra + Rick
September 20, 2018On Thursday Rick Santelli pushed and prodded and as a result, we were able to travel from Japan to Europe in an effort to discuss some of the more pressing issues confronting the global macro world. First, we stopped in Japan to discuss how the BOJ and Governor Kuroda will be able to extricate itself from five years of QQE which has seen the BOJ accumulate Japanese debt and equities. Of course the end game is to reach the self-imposed inflation level of 2 percent that has proved to be an agonizing level to achieve. As a reminder, when a nation is saddled with huge debts the best relief is to be found in inflation, which results in an ultimate money illusion as debts are paid back with an ever-depreciated currency.
Click on the image to watch me and Rick discuss global policy.
Notes From Underground: This Is A Week Filled With …
January 29, 2018This week for global macro traders is packed with data and policy statements that can ignite the volatility fuse. On Tuesday night, President Trump, the conquering hero of Davos, will deliver the State of the Union address. Chair Janet Yellen will oversee her final FOMC meeting this week. There are also several data releases Thursday and Friday, culminating with the unemployment report.
Notes From Underground: Will the Year of the Rooster Deliver a Wakeup Call?
December 18, 2016In a September 11 post, I criticized the Japanese Central Banks’s policy for its technical approach to attempt to steepen its 2/10 yield. I wrote the following:
Notes From Underground: Oh, When Will They Ever Learn?
November 28, 2016This is a tough POST to write for I will criticize a newspaper I have read every day for at least 30 years. (In fact, I still have it delivered on my doorstep and read most of it online in the evening before the hard copy arrives.) The London Financial Times had a front page story, “Troubled Italian Banks Face Fresh Risk of Failing If Renzi Loses Vote.” This is a deplorable headline for it harkens back to the days of the mainstream media warning of dire consequences if Brexit passed and the Trump was elected president. THIS IS SCARE MONGERING. It raises the question: When will the Davos crowd EVER LEARN?
Notes From Underground: For What It’s Worth
November 21, 2016Everybody has opinions on the recent election outcome but as usual most of the opinions are from the echo chamber and not factual in any way. This blog is dedicated to seeking profitable investment and trading opportunities as I sort through the noise of the financial media. As with Brexit, the punditry found itself trapped in its own rhetoric and every prediction but the weakness of the pound proved to be WRONG, at least in the short to medium-term. British Gilts (10-year notes) rallied substantially in the post-Brexit confusion and most importantly the Footise stock index rallied 15% off its election night bottom. The POUND did weaken substantially against the U.S. dollar and the euro currency but I have argued for a few years that the British current account made the relative strength of the POUND to its key trading partners unsustainable.
Notes From Underground: Clearing Up Some Odds and Ends
August 1, 2016This week brings Prime Minister Abe’s fiscal plan, the Reserve Bank of Australia’s rate decision, the Bank of England’s monetary results and U.S. nonfarm payrolls on Friday. So let’s put some perspective to tonight’s main events. The RBA will announce its overnight interest rate and consensus is calling for a 25 basis point CUT to 1.5%. Analysts believe that the weakness in the natural resource sector is aiding the reduction in capital expenditure. Also, Aussie inflation is at the bottom of the RBA‘s target range, which provides rationale for the RBA. I am not so sure of a CUT for this is coming at the end of Governor Stevens’s term at the RBA. Dr. Phillip Lowe will take over September 16 so this is the penultimate meeting for Mr. Stevens.
Notes From Underground: The Paroxysms of Brexit Polls, Or Lies, Damn Lies and Statistics
June 13, 2016This 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.
Notes From Underground: Wrigley Field and the Unemployment Data = 38,000 Filled Seats
June 5, 2016Being a life-long CUBS fan it is with a sense of irony to note that the nonfarm payroll number almost equaled Friday’s attendance at Wrigley Field. I will venture to guess though that the cheers from the FOMC were louder than all of the voices cheering the CUBS onto victory. Janet Yellen and her insider clique on the FOMC cheered as the softness in the JOBS data provided the rationale for the FOMC not to raise interest rate before the BREXIT vote. Everyone in the financial world knows that the FED is “data dependent” … at least when it fits their needs. Yes, the unemployment rate dropped to 4.7% from 5.0% but this substantial fall calls into question the credibility of the Fed models. The drop in the rate was due to participants leaving the job force, and, more importantly, those departing the labor market are not at the retirement age level but more in the middle of the age timeline, which makes investors challenge the idea of the economy gaining strength.
Notes From Underground: Consensus is the Last Refuge of Cowards (Michael Crichton)
April 27, 2016Today the Fed delivered as expected, leaving rates unchanged and the market conjecturing about the sincerity of the FED’s data dependency (again). Some analysts and algo readers initially thought the FOMC statement was “hawkish” because the FED removed most of the rhetoric about the headwinds of international global and financial developments. I say most because the Fed left in “net exports have been soft.” This is either a concern about the lack of global growth and/or an overly strong U.S. dollar. It is MY OPINION that the Fed removed the language about international financial risks as an offering to the HAWKS as a way to get consensus.