by I began my career as a reporter on the floor of the Chicago Mercantile Exchange, covering the currency futures and short-term interest rate futures for a news wire. Among other things, I learned that often, the locals, people trading with their own money and wits, would take the opposite side of trades of the institutional players. The institutional operators had deeper pockets but were looking to lay-off risk. It was a David vs. Goliath story often. It is, therefore, a special pleasure to talk with Ben Lichtenstein as he and his team help prepare the futures traders for the new session. We cover several significant issues in this 7.5-minute clip (here). I try to make four points. First, that the consolidative/corrective phase in the capital markets that began
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I began my career as a reporter on the floor of the Chicago Mercantile Exchange, covering the currency futures and short-term interest rate futures for a news wire. Among other things, I learned that often, the locals, people trading with their own money and wits, would take the opposite side of trades of the institutional players. The institutional operators had deeper pockets but were looking to lay-off risk. It was a David vs. Goliath story often. It is, therefore, a special pleasure to talk with Ben Lichtenstein as he and his team help prepare the futures traders for the new session.
We cover several significant issues in this 7.5-minute clip (here). I try to make four points. First, that the consolidative/corrective phase in the capital markets that began shortly after the May jobs data in early June appears over. The dollar fell through the month-long uptrends against several currencies last week. The fact that the dollar fell in the face of the third week the Fed’s balance sheet has shrunk, an uptick in the Fed funds rate and new record lows in Europe’s overnight unsecured interest rate struck me as a reflection of the creeping bearish dollar sentiment.
Second, there is a fiscal cliff approaching as the moratorium on evictions and foreclosures is set to end in a few weeks, and then the $600 extra unemployment insurance is terminated, as the way it stands now, at the end of the month.
Third, and turning to international events, I noted that the UK-EU trade talks that were to be accelerated this month ended early last week as the two sides continue to have fundamental disagreements. I remain skeptical that a new trade agreement will be struck, and this will increase the uncertainty and likely disruption late this year and the first part of next year.
Fourth, Chinese and Hong Kong stocks have rallied, and it is also related to the Cold War that I think continues to unfold between the two largest economies. Many Chinese companies cannot be secure with their US listing, and HK has seen a flurry of IPOs, which mainland investors are buying. This supports the Hong Kong dollar and Hong Kong shares even though arrests have begun under the new security law. Many in the US complain that the Fed’s actions encroach on the private sector and distort the price discovery process. It is much worse in China, where the stock market has traditionally been dominated by retail investors, who have been encouraged to buy papers that are understood to be official.
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From my remote location in Ocean Grove (next to Asbury Park of Bruce Springstein fame), I joined Martin Soong and Sir Jegarajah for a brief interview as the Asia session was about to begin the new week. A three-minute clip of the interview can be found here.
FX Daily, June 30: When Primary is Secondary
The gains in US equities yesterday carried into Asia Pacific trading today, but the European investors did not get the memo. The Dow Jones Stoxx 600 is succumbing to selling pressure and giving back yesterday’s gain. Energy and financials are the biggest drags, while real estate and information technology sectors are firm. All the markets had rallied in the Asia Pacific region, with the Nikkei and Australian equities leading with around 1.3% gains.
FX Daily, July 1: Second Verse Can’t be Worse than the First, Can it?
The resurgence of the contagion in the US has stopped or reversed an estimated 40% of the re-openings, but the appetite for risk has begun the second half on a firm note, helped by manufacturing PMIs that were above preliminary estimates or better than expected. Except for Tokyo and Seoul, equities in the Asia Pacific region rose. The MSCI Asia Pacific Index rose almost 15.5% in Q2.
FX Daily, July 6: New Record Number of Covid Cases Doesn’t Curtail Appetite for Risk
Overview: A new daily high number of contagions globally has been reported, but the risk-appetites have been stoked. Chinese stocks have been on a tear. The Shanghai Composite rallied 5.7% today to bring the five-day advance to 13.6%. Most other regional markets, including Hong Kong, rallied as well (3.8%). Australia was the main exception, and it pulled back by 0.7%. It is still up a solid 3.4% over the past five sessions.
FX Daily, January 9: Animal Spirits Roar Back
Overview: The S&P 500 recovered from a 10-day low to reach a new record high, which set the tone for the Asia Pacific and European markets today. The MSCI Asia Pacific Index jumped by the most in a month with the Nikkei’s 2% advance leading the way. More broadly, the markets in Taiwan, South Korea, Hong Kong, India, and Thailand all rose more than 1%.
FX Daily, January 20: Stocks Stall while the Dollar Remains Bid
Overview: The new week is off to a quiet start as the US celebrates Martin Luther King’s birthday, and investors look for a fresh focus. Hong Kong and Indian markets were suffered modest declines while most of the other large Asia Pacific markets edged higher. European stocks are trading a little lower, and the Dow Jones Stoxx 600 is threatening to end a four-session advance. Most benchmark bond yields around half a basis point in one direction or the other.
FX Daily, February 10: Quiet Start to the New Week in which Politics may Dominate
Overview: The global capital markets have begun the new week on a cautious tone as investors seek to assess the latest news on the new coronavirus. Nearly all the markets in Asia fell but China. European bourses are lower as well, with the Dow Jones Stoxx 600 off about 0.3%. US shares are soft but little changed.
FX Daily, February 18: Apple’s Warning Weighs on Sentiment
Overview: Apple’s warning that it will miss Q1 revenue due to the knock-on effects of the coronavirus seemed to be a modest wake-up call to investors, who, judging from the equity market, were looking beyond. Equities have fallen, and bonds have rallied. Japan, Hong Kong, and South Korean stocks fell by more than 1%, and only China and Indonesia were able to post gains.
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