Tag Archives: newsletter

Since the initial spike higher when the BOJ provided some operational tweaks to its asset purchase program on December 18, the dollar has fallen 5.6% against the yen through Tuesday's low near JPY116.70.  We had warned that the break of JPY120 would spur a move to JPY118, and the move below JPY118 targeted the August low near JPY116.20.  While the euro often carves out a bottom, the dollar's lows against the yen are frequently characterized by spikes.  That was the case, for example in...

Many of the capital markets are enjoying reversals today.  Equity markets are mostly higher. The MSCI Emerging Market equity index is up more than 1%. Several key commodities, like oil and copper, are firmer.  Bond markets, outside the US, are firmer, with the Japan's 10-year yield slipping to new record lows slightly below 20 bp.   The dollar is mixed, as the dollar-bloc currencies firm, as are most of the freely traded emerging market currencies, with the beleaguered South African rand...

The weak growth, large output gap, low return on capital, and a host of other economic malaise are widely recognized.  There seem to be two main schools.   One is associated with Reinhart and Rogoff.    They argue that "this time is not different" and that much of disappointment with economic performances are what should be expected given the end of a historic credit cycle and debt crisis.  The other is associated with Summers, who resurrected Alvin Hanson's 1938 secular stagnation...

A subdued Chinese session, with the yuan, little changed and local equities securing minor gains, let market participants look elsewhere for directional cues.   The new lows in oil, near $30 a barrel, and the bankruptcy filing of Glencore's US subsidiary Sherwin Alumina seemed to weigh on the dollar-bloc currencies.   However, it is sterling today that has the distinction of being the weakest of the majors.  It is off about 0.4% near midday in London following disappointing BRC sales (0.1...

I was canoeing recently.  When I looked that oar in the water, it looked bent.  It wasn't my equipment, and I am a novice.  I cursed to myself and quickly pulled the oar from the water.  I smiled.  It was not bent.  It was an optical illusion. There is a chart that is making the rounds.  It shows the S&P 500 moving in tandem with the Shanghai Composite.  I have tried to recreate the Great Graphic on Bloomberg.  It does look like a good fit. but do no be misled.  The two different...

The broad measures of the US dollar are trending higher, and former Fed Chair Bernanke recently refuted claims the US was engaged in a currency war. Many observers had thought that with its unprecedented asset-purchase program, the BOJ was engaged in a currency war.  However, the yen has been the strongest major currency over the past six months, and its export volumes are contracting on a year-over-year basis.  Not to worry.  Observers who seem almost to have a pathological...

EM starts the week under broadbased pressure.  We downplay reports of competitive devaluations under way because of China’s FX moves, however.  Many in EM in experiencing negative terms of trade shocks, and so their currencies are expected to depreciate.  We do not think any policymakers in EM want a weaker currency, as most are fighting to lend support via intervention and other means.   The multi-year EM boom has ended, and valuations across all asset classes are being adjusted.  This...

Chinese shares continued last week's plunge, with the Shanghai Composite off 5.3% and the Shenzhen Composite falling 6.6%.  Both indices closed on their lows.  With the apparenthelp of officials, the onshore yuan strengthened, though the real squeeze was in the offshore yuan, which strengthened by nearly 1%, the most in four months.   Excluding the Japanese markets that were closed for a national holiday, the MSCI Asia-Pacific Index shed about 1.8%.  However, a more stable tone has been...

No doubt, many people were excited on Thursday to see a spike in the silver price. The big news almost seemed like it would be a spike in the silver price. We were not quite so exuberant, tweeting (follow us on Twitter @Monetary_Metals): “What happened to silver supply and demand fundamentals this morning?!” We expected it to be a teaser for today’s Report. However, the silver market took back the entire price move, and more, in about 13 hours. Here is a close-up, showing Thursday morning...

Developments in China seemed to overshadow other considerations as investors returned from the New Year.  The offices were open and desks manned, yet many did not appear to be prepared to re-deploy resources.  The lack of participation helps explain last week's drama. Sellers showed up or were forced through money management practices (e.g. stop-losses or options triggered).   The buyers were not really on strike, but they do not often buy right out of the gate. There was the Epiphany...