SNB & CHF

For the first time this week, the PBOC set higher central reference rate for the yuan and Chinese shares rallied, with the apparent assistance of officials, after the circuit breakers were abandoned.    This, coupled with somewhat firmer oil prices, is helping to facilitate some semblance of stability in the global capital markets.   Global equities are retracing part of yesterday's losses.   In the Asia-Pacific region, Japan and Australia were exceptions.  The Nikkei slipped 0.4%,...

Chinese equities continued their precipitous decline, interrupted by the new circuit breakers, which reportedly will be suspended.  Global equity markets are also in a dramatic decline.   However, do not be misled.  Knowing the direction of China's blue chips (CSI 300) does not really help predict the direction of the US equity market, even though it may have felt like that in recent days.    The correlation between China's CSI 300 and the S&P 500 may not be what you think.  Over the...

The dollar has broken down against the yen.    Although many talk about safe haven role for the yen, this seems to be a misconception.  Investors are not buying the yen to escape the turmoil of the markets.   The yen's strength itself is the turmoil.  The yen was used as a funding currency to purchase risk assets, like equities, emerging markets, etc.  As those risk assets are being liquidated, the funding currency is bought back.  Earlier today, the Ministry of Finance reported the...

One might be forgiven for believing that nail-baiting start to the year is all China's fault.  It has repeatedly for eight sessions fixed the yuan lower, including earlier today, at a seemingly accelerating pace.  The new circuit breakers, introduced on Monday, appear to be adding to the volatility.  Chinese share trading was stopped today after the first hour with the CSI 300 off 7%.  It appears that the central bank through its agents intervened in the offshore (CNH) market.  The...

There is no shortage of sound money conferences. They’re regularly put on by think tanks, and dutifully attended by all the free market academics who can get travel budget. But I have a premonition. The move to the gold standard won’t be led, or driven by these events. Many of their presentations are all but free of free-market money ideas. For example, the Cato Monetary Conference in November, had numerous central bankers promoting updated versions of the same old monetary central...

Chart 1 This Great Graphic is a favorite of mine.   Created on Bloomberg, it depicts the 2-year spread between Germany and the US on two-year money (white line) and the euro-dollar exchange rate (yellow line).  The chart covers the past five years. The scales of the two time series are different so it makes little sense to claim that euro gravitates toward the rate differential.  And there have been some significant misalignment, like in 2013 and into 2014.  However those periods seem...

Thanks for watching RTD Interviews. Join the RTD INTERVIEW EXTRA community for the full interview with today's guest Keith Weiner here: http://bit.ly/RTD-EXTRA Keith Weiner, (Economist and Monetary Scientist), sits down with us to discuss the state of our monetary system and his thoughts on the future of the dollar. Mr. Weiner is the founder of the Gold Standard Institute, a educational organization, dedicated to spreading awareness of the usage of gold as money. In our discussion we...

It was a miserable week that ended a miserable year, followed by an apparently bad first week in 2016. In fact it was the S&P 500’s worst since the start of the bull market in 2009, ending the year down 0.73% at 2043.94 points! Volume was seasonally very low. If you are frustrated with the stock market’s performance, I can well understand it, but if you look at the video (Ctrl + Click) below, “Ouch! 5 CEOs lost a combined $20 billion in 2015!”, you may be comforted to see that Warren...

Last year was the fourth consecutive year that the yen fell against the dollar.   However, what is obscured by this factoid is that over the past  six months, the yen has been the strongest of the major currencies, rising almost 3.2% against the US dollar. While some may be tempted to attribute the yen's strength to the dismal start of the year for equities, the fact of the matter is that the yen's strength began before this week.  Recall that 48 hours after the Fed hiked rates last...

Chinese shares and the yuan stabilized with the apparent help of the government's guiding hand, but global markets are still on the defensive.     The euro extended yesterday's decline through the $1.08 level.  The next immediate technical objective is near $1.0730.   The greenback is firmer against most major and emerging market currencies.  The chief exception is the Japanese yen.    Lower equity prices and the continued pullback in US yields are often associated with a stronger yen. ...