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Tag Archives: Federal Reserve

Yen Slips, Yuan Jumps, Dollar is Mostly Softer

Overview: The dollar is mostly a little softer today in thin market conditions, with Tokyo, Seoul, and London closed for holidays. The Japanese yen is the weakest G10 currency, losing about 0.5% and slipping through last Friday's lows. At first, after Fed Chair Powell did not endorse rate hike speculation, the market thought he was dovish. But after the softer than expected jobs data and weakness in the ISM services, the market shifted from doubting one cut to...

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May Day Fed Day

Overview: Much of Asia and Europe are off for the May Day labor holiday. The dollar is mostly softer in the thin activity. However, the dollar has edged higher against the yen and approached JPY158. The euro initially fell to $1.0650, a six-day low and where a billion euros in options expire later today. It has recovered to almost $1.0675. Emerging market currencies are subdued. Central European currencies, the South African rand, and Mexican peso are sporting...

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Retail Sales Data Suggests A Strong Consumer Or Does It

The latest retail sales data suggests a robust consumer, leading economists to become even more optimistic about more robust economic growth this year. To wit: “It has been two years since forecasters felt this good about the economic outlook. In the latest quarterly survey by The Wall Street Journal, business and academic economists lowered the chances of a recession within the next year to 29% from 39% in the January survey. That was the lowest probability...

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Immigration And Its Impact On Employment

Is immigration why employment reports from the Bureau of Labor Statistics (BLS) continue defying mainstream economists’ estimates? Many are asking this question as the U.S. experiences a flood of immigrants across the southern border. Concurrently, many young college graduates continue to complain about the inability to receive a job offer. As noted recently by CNBC: The job market looks solid on paper. According to government data, U.S. employers added 2.7...

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Blackout Of Buybacks Threatens Bullish Run

With the last half of March upon us, the blackout of stock buybacks threatens to reduce one of the liquidity sources supporting the bullish run this year. If you don’t understand the importance of corporate share buybacks and the blackout periods, here is a snippet of a 2023 article I previously wrote. “The chart below via Pavilion Global Markets shows the impact stock buybacks have had on the market over the last decade. The decomposition of returns for the...

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Digital Currency And Gold As Speculative Warnings

Over the last few years, digital currencies and gold have become decent barometers of speculative investor appetite. Such isn’t surprising given the evolution of the market into a “casino” following the pandemic, where retail traders have increased their speculative appetites. “Such is unsurprising, given that retail investors often fall victim to the psychological behavior of the “fear of missing out.” The chart below shows the “dumb money index” versus the S&P...

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Presidential Elections And Market Corrections

Presidential elections and market corrections have a long history of companionship. Given the rampant rhetoric between the right and left, such is not surprising. Such is particularly the case over the last two Presidential elections, where polarizing candidates trumped policies. From a portfolio management perspective, we must understand what happens during election years concerning the stock market and investor returns. Since 1833, the S&P 500 index has...

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China Returns, the US is on Holiday, and the Dollar Consolidates

Overview: US markets are closed for President's Day, while China's markets re-opened from the long Lunar New Year holiday. Mainland stocks advanced, while the yuan slipped slightly. The US dollar is mostly softer but in narrow ranges. The Antipodeans and yen lead, while the Swiss franc the only G10 currency that is slightly softer. Most emerging market currencies are lower, led by about a 0.5% loss of the South African rand. The Mexican peso's and South Korean won's...

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Fed Chair Powell Just Said The Quiet Part Out Loud

Regarding the surprisingly strong employment data, Fed Chair Powell said the quiet part out loud. The media hopes you didn’t hear it as we head into a contentious election in November. Over the last several months, we have seen repeated employment reports from the Bureau of Labor Statistics (BLS) that crushed economists’ estimates and seemed to defy logic. Such is particularly the case when you read commentary about the state of the average American as follows. “New...

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A perfect storm in the making 

Share this article The New Year is usually associated with a new beginning, a fresh start, or a “clean slate”. Unfortunately, for millions of Americans, these are wishes that are bound to remain unfulfilled – for them, the New Year has nothing “new” to offer at all: it will only perpetuate all the same burdens, obligations and worries of the past year and of the ones that came before. One physical, practical manifestation of this (though it is certainly not a unique, or even a rare,...

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