Tag Archives: newsletter

 (from my colleagues Dr, Win Thin and Ilan Solot) 1) Mexico's FX commission tweaked its intervention program slightly  2) The political tide in Brazil has turned slightly better for the government  3) The PBOC announced a rate cut for its Standing Lending Facility (SLF) for local financial institutions  4) IMF staff has concluded that China meets the requirements to join the SDR basket  5) As promised, the Hungarian central bank started to focus on unconventional measures  6) Indonesia's...

(from my colleagues Dr. Win Thin and Ilan Solot) 1) Mauricio Macri, the mayor of Buenos Aires, won the Argentine presidential election with 52% of vote  2) The latest political developments in Brazil rocked asset prices  3) The Brazilian central bank kept rates on hold at 14.25%, as expected, but two members called for a 50 bp hike  4) China markets are under pressure after reports that the three top brokers are under investigation as part of the larger anti-corruption campaign  5)...

The US dollar is rebounding today after yesterday's correction.   Those losses seemed to have been a function of some profit-taking after the seeming confirmation in the FOMC minutes that the Fed was set, barring a significant surprise, to raise rates next month.  The dollar bulls were already beginning to buy the dip before Draghi spoke.   Draghi escalated his rhetoric regarding future ECB action.  The market took Draghi's comments as a signal that the ECB will take aggressive action...

How much of a headwind is international exposure causing US-based companies?  Factset did a study earlier this month, drawing on a combination of companies that had already reported Q3 earnings and used estimated results for those who had not reported.   It sheds light on the much-discussed earnings recession.  The blended earnings (as of November 5) of S&P 500 companies in Q3 15  declined by 2.2%.   For companies that earn over half of the their income in the US reported a 4.8% rise...

It shows how much money one needs to earn to be in the top 1% of the state's income earners.    There is great variance.  Connecticut has the highest threshold of $678k.  Arkansas has the lowest threshold at $228k.  That is a third of Connecticut.  The Economic Policy Institute finds that income equality grew in every state.  In 2012, which is the most recent data, income inequality was the greatest in New York and Connecticut. In both states the income of the top 1% was 48-times the...

The US dollar is trading heavily today.  The losses are not particularly steep against either the majors or the emerging market currencies.  A common narrative is attributing the dollar's pullback to "dovish minutes," but this is not a fair assessment, we think.  Instead, it seems that a typical buy the rumor sell the fact offers a more robust explanation.  The FOMC minutes did not contain any surprises, and it does not appear anyone's views really changed.  The December Fed funds futures...

The British historian Lord Acton famously said that "power corrupts and absolute power corrupts absolutely."  The American response is a system of checks and balances.    The Federal Reserve represents a concentration of power that  became abundantly clear during and after the Great Financial Crisis.   The Federal Reserve is a creation of the legislature, not the Constitution.  Congress is trying to reassert its control.   The latest reports indicate that the Republicans, which enjoy a...

(from my colleagues Dr. Win Thin and Ilan Solot) Brazil’s government scored an important set of political victories yesterday, many of which impact the fiscal accounts.  It’s too soon to say that the tide has decidedly changed, but there are some positive signs, and asset prices are responding accordingly. By a close margin, the government managed to maintain two important vetoes.  With a margin of only six votes, the veto stopped an increase of nearly 60% in the salaries of judiciary...

Amid light news, the US dollar’s recent gains have pared slightly.    Attention turns to the US, were several Fed officials speak, October housing starts/permits will be released, and then later in the session, traders will peruse the minutes from last month's FOMC meeting.   The euro held Tuesday's low near $1.0630, and short-covering lifted the single currency to almost $1.07 before the bears showed their hand.   Similarly, after the JPY123.50 level was tested, the dollar pushed back,...

The EU is warning that Austria, Italy, and Lithuania are at risk of not achieving their 2016 budget goals.    It also warned Spain that is too may miss its target.  Nevertheless, the EU said there were no serious violations.  At the same time, the EU will exempt proven refugee spending from the budget scorecard.  In light of the attack on Paris, the EU's fiscal discipline faces a new challenge.  French President Hollande is arguing that the security pact trumps the stability pact.  France...